Indian Automobile Industry

The high growth in the Indian economy has resulted in many foreign car manufacturers
entering the Indian market. Rolls Royce, Bentley and Maybach are examples of the few
high end automobile manufacturers to enter India in the recent years.

Chennai is the automobile capital in India. It has a lot of foreign direct investment in
automobile industry. Chennai is often called as the 'Detroit of Asia

There were only a few hand full of cars in the Indian market in the 1980s. Most of these
were outdated models like Hindustan Motors' Ambassador (which is still produced and
sold). The only car with the latest technology then was the Maruti 800. It became very
popular because of the low price, high fuel efficiency and good reliability. Since then the
market has grown with over 20 manufacturers and hundreds of models and variants. The
Maruti 800 is at the lower end of the price range costing approx US $5,000 and Bugatti
Veyron at the other with a price tag of over 2 Million US dollars.

The Indian automobile industry has matured over the years and is now highly
comptetitive with major Japanese, Korean, European and Indian companies all holding
significant market shares.[1] In addition to foreign models like the Hyundai Santro and
the Ford Escort various indigenous cars like the Tata Indica and the Mahindra &
Mahindra SUV, the Scorpio are also popular. These cars exported to the markets
worldwide. An electric car is also manufactured by a local company, REVA. Tata Motors
plans to produce the world's first air powered in partnership with MDI of France.

The passenger vehicle sales in India crossed the one million mark in 2005. This segment
grows at 10-15% annually. Around 85% of the cars sold in India are financed as against
the global average of 70%. In neighbouring China,only 15-20% vehicles are financed.
There are only three cars in India for 1000 people as compared to the other extreme 500
cars for 1000 people in the United States. Goldman Sachs has predicted that India will
have the maximum number of cars on the planet by 2050 overtaking the United States.

A well developed transport network indicates a well developed economy. For rapid
development a well-developed and well-knit transportation system is essential. As
Indian’s transport network is developing at a fast pace, Automobile Industry is growing

1
too. Also, the industry has strong background and forward linkages and hence provides
employment to a large section of the population. Thus the role of Automobile Industry
cannot be overlooked in Indian Economy. All kinds of vehicle are produced by the
Automobile Industry .It includes the manufacture of trucks, buses, passenger cars,
defense vehicles, two-wheelers etc. The industry can be broadly divided into the car
manufacturing, two-wheelers manufacturing and heavy vehicle manufacturing units.

2
 CHARACTERISTICS OF INDIAN MARKET

Philip Kotler has rightly said, “Market may be defined as the relationship between
the consumer and the producer occurring at time and place and a value mutually
agreeable and acceptable to the concerned parties”.

It is the responsibility of the marketing system to discover and serve the market
demands. It provides the vital link in connecting production (supply) and consumption
(demand). Optimum production and optimum consumption will ensure a desired
standard of living in an economy.

The standard of living of people in India is low. An increase in the efficiency of the
market operation can bring down the prices and thus, contribute to an improved standard
of living by bringing more goods within reach of the poorer section of the population.

Improved marketing productivity in India will not only add to the profits of the company
which makes as effort to achieve better marketing efficiency but will also give inputs to
the development of the country.

3
 INDIAN AUTOMOBILE INDUSTRY GROWTH

The passenger car and motorcycle segment in Indian auto Industry is growing by 8-9 per
cent.

Current Scenario

 The Indian automobile industry crossed a landmark with total vehicle production
of 10 million units.

 Car sales was 8,82,094 units against 8,20,179 units in 2004-05.

 The two-wheeler market grew by 13.6 per cent with 70,56,317 units against
62,09,765 units in 2004-05.

 Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units against
3,18,430 units in 2004-05.

MAJOR AUTOMOBILE MANUFACTURERS

Major Car Manufacturers -

Hindustan Motors, Maruti Udyog, Fiat India Private Ltd, Ford India ltd, General Motors
India Pvt Ltd, Honda Siel Cars India Ltd, Hyundai Motors India Ltd, Skoda India private
Ltd, Toyota Kirloskar Motors Ltd.

4
 INTRODUCTION

The Indian Automobile Market is expected to grow at a CAGR of 9.5 percent amounting
to Rs. 13,008 million by 2010. The Commercial Vehicle Segment has been contributing
to the automobile market to a great extent. Many foreign companies have been investing
in the Indian Automobile Market in various ways such as technology transfers, joint
ventures, strategic alliances, exports, and financial collaborations. The auto market in
India can boast of attractive finance schemes, increasing purchasing power, and launch
of the latest products.

Total sales of major car manufacturers in India registered a figure of 0.674 million units
at the end of March, 2007. The number of car exports in India was 39,295 units. General
Motors, Maruti, and Honda accounted for 60 percent of the market sales at the end of
April, 2007. There has been an increase in the purchase of motorcycles and cars both, in
the rural as well as urban areas.

Maruti Suzuki is India’s No. 1 customer satisfaction car company. Its sale is more than
50% of care of Indian car market. But now it is getting a good competition with other
new car company and foreign companies and its sales is going down because other car
companies are trying to present different types of new car in different segment. So in our
study in we had tried to study Maruti Suzuki segmentation of cars and its sales trend and
its effect on customer. This project is all about segmentation and sales trend study of
Maruti Suzuki. Through our study we are trying to analyze the customers behavior for
maruti Suzuki cars. We are also analyzing Maruti Suzuki sales trend. We had also
collected some secondary data of different study done on Maruti Suzuki and based on
that we are trying to present the sales trend analysis of Maruti Suzuki.

5
Maruti Suzuki- at a glance

Maruti Suzuki India Ltd

Maruti Suzuki India Limited is a
publicly listed automaker in
India. It is a leading four-wheeler
automobile manufacturer in
South Asia. Suzuki Motor Type Public (BSE MARUTI, NSE MARUTI)

Corporation of Japan holds a

Founded 1981[1]
majority stake in the company. It
was the first company in India to Headquarters Gurgaon, Haryana, India
mass-produce and sell more than
R C Bhargav , Chairman
a million cars. It is largely
Key people Shinzo Nakanishi, Managing
credited for having brought in an
Director
automobile revolution to India. It
is the market leader in India. On Industry Automotive
17 September 2007, Maruti
Udyog was renamed to Maruti Products Cars

Suzuki India Limited. The

Revenue ▲US$2.5 billion (2005)
company's headquarters remain
in Gurgaon, near Delhi. Employees 6,903[2]

Parent Suzuki

Website www.marutisuzuki.com

6
Profile

Maruti suzuki is one of india ‘s leading automobile manufacturers and the market
leaderin the car segment, both in terms of volume of vehicles sold and revenue earned.
Until recently, 18.28% of the company was owned by the Indian government, and 54.2%
by Suzuki of Japan. The Indian government held an initial public offering of 25% of the
company in June 2003. As of May 10, 2007, Govt. of India sold its complete share to
Indian financial institutions. With this, Govt. of India no longer has stake in Maruti
Udyog.

Maruti Udyog Limited (MUL) was established in February 1981, though the actual
production commenced in 1983. Through 2004, Maruti has produced over 5 Million
vehicles. Marutis are sold in India and various several other countries, depending upon
export orders. Cars similar to Marutis (but not manufactured by Maruti Udyog) are sold
by Suzuki in Pakistan and other South Asian countries.

The company annually exports more than 30,000 cars and has an extremely large
domestic market in India selling over 500,000 cars annually. Maruti 800, till 2004, was
the India's largest selling compact car ever since it was launched in 1983. More than a
million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the
sales charts.

Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is
commonly used to refer to this compact car model. Till recently the term "Maruti", in
popular Indian culture, was associated to the Maruti 800 model.

Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has
been the leader of the Indian car market for over two decades.

It’s manufacturing facilities are located at two facilities Gurgaon and Manesar south of
New Delhi. Maruti’s Gurgaon facility has an installed capacity of 350,000 units per
annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly
plant with a capacity of 100,000 units per year and a Diesel Engine plant with an annual
capacity of 100,000 engines and transmissions.

Manesar and Gurgaon facilities have a combined capability to produce over 700,000

7
units annually. More than half the cars sold in India are Maruti cars. The company is a
subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti. The
rest is owned by the public and financial institutions. It is listed on the Bombay Stock
Exchange and National Stock Exchange in India.

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all,
over six million Maruti cars are on Indian roads since the first car was rolled out on
December 14, 1983.

Maruti Suzuki offers 10 models, ranging from the people’s car, Maruti 800, for less than
Rs 200,000 ($ 5000) ex-showroom to the premium sedan SX 4 and luxury SUV, Grand
Vitara.

Suzuki Motor Corporation, the parent company, is a global leader in mini and compact
cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and
performance into a compact, lightweight engine that is clean and fuel efficient.

Maruti is clearly an “employer of choice” for automotive engineers and young managers
from across the country. Nearly 75,000 people are employed directly by Maruti and its
partners.

The company vouches for customer satisfaction. For its sincere efforts it has been rated
(by customers)first in customer satisfaction among all car makers in India for seven years
in a row in annual survey by J D Power Asia Pacific.

Maruti Suzuki was born as a government company, with Suzuki as a minor partner, to
make a people’s car for middle class India. Over the years, the product range has
widened, ownership has changed hands and the customer has evolved. What remains
unchanged, then and now, is Maruti’s mission to motorize India.

8
 SERVICES OFFERED

The following products are offered by Maruti Suzuki:-

1. Maruti 800: Launched 1983. Largest selling car in India, until 2004. Cheapest car
in India. 3 Face-Lifts.(P)
2. Maruti Omni: Launched 1984. 2 Face-Lifts.(P)
3. Maruti Gypsy: Launched 1985.(P)
4. Maruti Wagon-R:Launched 1999, 2 Face-Lifts.(P)
5. Maruti Alto: Launched 2000. Currently the largest selling car in India. 1 Face-
Lift.({{Tooltip|P|Petrol
6. Maruti Versa(2003-) (P)
7. Maruti Zen Estilo(2005-) (P)
8. Maruti Suzuki Swift 1 very small face-lift(2006- ) (P & D)
9. Maruti Suzuki SX4 (May 2007- ) (P & D)
10. Maruti Grand Vitara Sports Utility Vehicle Launched in (July 2007- ).
Imported(P)
11. Maruti DZiRE Sedan Version of swift launched in (March 2008- ) (P)

Upcoming models in 2008

1. Suzuki Splash
2. Suzuki A-Star

Future Maruti Suzuki Plans

1. Maruti Omni Face-Lift in 2009

2. New Mini-SUV in 2010 Likely to be a four-door Jimny.
3. New Luxury Sedan in 2010 Likely to be a production version of the Kizashi.
4. New Swift in 2011
5. New Alto

9
z

(Price wise product segmentation by Maruti Suzuki)

10
 GENERAL DISCRIPTION OF MODELS

MARUTI 800:-

Maruti 800 is a city car manufactured by Maruti Udyog in India .It used to be the
largest selling car in India until the Maruti Alto recently
took that title. It is also exported to a number of
countries in southeastern Asia including Bangladesh and
Sri Lanka, and to some South American markets (as
Chile, sold as Suzuki Maruti), and was available in
selected European markets between 1988 and 1992, sold as the Suzuki Maruti. In
Morocco it is currently sold as Suzuki Maruti (as of March 2008). The car comes in
different versions including one with air conditioning and one without. It was launched
in December 1984 with almost 100% imported components.

MARUTI OMNI :

The Maruti Omni is a microvan manufactured by Indian automaker Maruti Udyog

Limited. The first version of Maruti Omni had the same 796 cc
engine as the Maruti 800 city car. This was the second vehicle to
be launched by Maruti, one year after the 800, in 1984. Later
version of the Omni includes the

 Omni (E), released in 1996, 796 cc engine, 8 seater

capacity vehicle
 Omni XL - 1999, same engine, modified with a
higher roof.

 Omni Cargo LPG - 2004, created to answer the growing popularity of this car being
used as an inter-city cargo vehicle. Omni LPG - 2003, same 796 cc engine, added
with a factory fitted LPG Kit, authorised by the Indian RTOs (Regional Transport
Offices). This makes it the most economic 4 wheeler in India, as far as the driving
costs are concerned

11
 MARUTI GYPSY

The Maruti Gypsy is a four wheel drive SUV based on the

Suzuki SJ long wheel base.Produced in India, it is also a
common sight in Chile and Kenya. Within Europe, it is most
often found in Malta and Hungary. In contrast to the Suzuki,
the Maruti is available with 4 seats and a sizeable trunk. The Maruti Gypsy is available
as a "soft top", "hard top " and as an "ambulance car". In India, it is widely used by the
police and defense forces. In civilian use, the Gypsy is a popular choice as a low-cost
SUV and is a common sight at rally events.

MARUTI WAGON-R

The Maruti Wagon-R is a made for India version of Suzuki Wagon R. The Wagon-R
was born out of Japanese kei-jido-sha restrictions which
dictated a limited length and engine size. This boxy, tall-
boy design has now completed five years of presence on
Indian roads. Now the car has found a market for itself,
especially among young Indian urban professionals who
don't mind its boxy slab-sided looks, but value its Maruti
lineage. The car is currently among India's top five best-selling cars.

MARUTI ALTO

The Maruti Alto is a city car manufactured by Maruti Udyog in India. It is the best-
selling car in India.It is India's largest selling car
and has recently crossed the 1 million production
figure.It is exported to a number of countries
including Bangladesh and Sri Lanka, and to Chile.
Alto has crossed the 150,000 export target. The
popularity of the Alto has increased over the past
few years, mainly due to the reduction in prices. This reduction in prices has mainly

12
come in due to the reduction in excise duty over time. It has now become the first choice
of young car buyers intending to upgrade from a 2 wheeler. Some of its appeal is from
stylish looks, attractive features, and impressive fuel economy at very affordable prices
compared to the other cars in the Indian market.

MARUTI VERSA

The Maruti Versa is a micro van produced by Maruti Udyog Limited and sold in India
since October 2001. The Versa is a clone of the now
discontinued Suzuki Carry. It is the second van released
by Maruti Udyog since the Maruti Omni was released in
1984. There are two basic versions of this car in
production; the two 8-seater DX/DX2 versions, and the
5-seater STD version. The DX2 version of the Versa is
equipped with twin air conditioners for front and rear.

MARUTI SUZUKI SWIFT

The MARUTI Suzuki Swift is name plate marketed by Suzuki carried by vehicles of three
distinct derivations:

1.Generations I, II, III: a super mini that began as an

export nameplate of the Japanese domestic market of
suzuki .

2.Generation IV: the current JDM, Europe and

Oceana generation, a significant departure from the previous
models, marketed solely under the nameplate "Swift". (this
article)

Canadian Swift+: the current Canada-only generation marketed under the

Suzuki swift.

Currently this varient is hot seller in India in the mini car segment.
13
 MARUTI SUZUKI SX4

In an attempt to strengthen its position in the of Sedan

cars market, Maruti Udyog Ltd. has launched its
premium model bearing name SX4. After Maruti
Suzuki Swift, SX4 is the second international model
being launched in India. Suzuki SX4, is an A3
segment sedan car, with a perfect combination of
style, performance, safety and comfort. There are two
versions of Suzuki SX4: Vxi and Zxi that gets power from latest and efficient 1.6-litre M-Series
engine delivering impressive 102 BHP of power. Having the price tag of between Rs. 6-6.5 Lacs,
Maruti Suzuki SX4 will provide tough competition to its rivalry models like Ford Fiesta,
Hyundai Verna, Honda City, and Indigo XL.

MARUTI SUZUKI DZIRE

Maruti Swift Dzire is the new entry level sedan from Indian automaker Maruti Suzuki.
Launched on March 26 2008, Maruti DZiRE is based on the popular Maruti Swift
platform. The DZire replaces Maruti Suzuki’s popular entry level sedan, Maruti Suzuki
Esteem, production of which was discontinued in late 2007. Maruti Suzuki has
introduced DZire only in the Indian market. The car is pitted against the other entry level
sedans in the Indian market, such as the Mahindra Renault Logan and the Tata Indigo.

MARUTI SUZUKI ESTEEM

Sophisticated big structured Maruti Suzuki

esteem is one of the old car of the Maruti
Udyog group. To run this huge car its engine
is made of lightweight all-aluminum. This
contemporary engine has capacity of 65 bhp
at 6000 rpm . According to *Mileage (Auto
India , Nov 2005), Esteem holds the topmost
position on mileage among the other category of cars including the small cars. The Esteem was
introduced in the global market in 1995 as Suzuki's first attempt in the compact segment, at the
time dominated by European cars such as the Volkswagen Bora/Jetta and Opel Astra, and
Japanese models such as the Nissan Sunny/Sentra and Toyota Corolla. As a North American

14
replacement for the Suzuki Swift sedan (the 3-door hatchback remained after it was redesigned in
1995), it was built on a slightly stretched Suzuki Cultus platform for improved cabin room, but
otherwise sharing most of internal components with the smaller model — and marketed as a
distinct model

MARUTI SUZUKI BALENO

The Baleno has the looks and feel of a winner. This was
Maruti Udyog's first D-segment car launched in India to
compete with the Mitsubishi Lancer and the Honda City.
This is also Suzuki's biggest passenger car and in Japan
and other markets. The Baleno is called the Cultus in
Japan. Suzuki restyled the Baleno in 1999. The car was
given a new front end, with a rounder grille and new headlights, and the engine lineup
was expanded.

MARUTI SUZUKI ZEN-ESTILO

Estilo has got Wagon R's engine and chassis and

Suzuki MR Wagon's shape. Whatever remains is
taken from Zen, well does anything remain
actually? This is the mixture of zen and wagon -
R . 'Zen Estilo'. In essence its stylish Wagon R,
Japan's MR Wagon, combination of the two or
anything but Zen. It seems Maruti wants to exploit Zen brand-image hence named this
car after Zen. With this model MSL has given it’s B segment a new variant by which it
may compete with the models of other company.

15
Segmentation of Maruti Suzuki

CAR MARKET CLASSIFICATION

It is necessary to understand the Indian car market classification and the segments in
which MUL operates.

There are two principal systems of classification in the Indian passenger car industry:

A. Price Based Classification

Price based classification is the widely accepted classification basis in the Indian
passenger car industry.

The different price segments used by Maruti were as follows:

1. Segment A – cars priced lower than Rs. 300,000

2. Segment B – cars priced between Rs. 300,000 and Rs. 500,000

3. Segment C – cars priced between Rs. 500,000 and Rs. 1,000,000

4. Segment D – cars priced between Rs. 1,000,000 and Rs. 2,500,000

5. Segment E – cars priced above Rs. 2,500,000

B. Length & weight Based Classification:

In April 2002, SIAM introduced a new segmentation of cars on the basis of the length of
the cars, in order to establish a uniform industry standard. The new segmentation of
passenger vehicles is as follows:

1. Passenger cars

• Segment A1 (Mini) – cars having a length up to 3,400mm

• Segment A2 (Compact) – cars having a length of 3,401- 4,000mm

• Segment A3 (Mid-size) – cars having a length of 4,001- 4,500mm

• Segment A4 (Executive)– cars having a length of 4,501- 4,700mm

16
• Segment A5 (Premium) – cars having a length of 4,701- 5,000mm

• Segment A6 (Luxury) – cars having a length of more than 5,000mm

1. Utility vehicles

• Weight up to 3.5 tonnes

a) Seating capacity not exceeding 7 (including driver)

b) Seating capacity between 7 and 9 (including driver)

• Weight up to 5 tonnes

a) Seating capacity not exceeding 13 (including driver)

• Multi-purpose vehicles (Weight up to 3.5 tonnes).

Maruti’s Offering and Competitors in Different Segments:

Manufacturer Name of the Segment as per Segment as per

Model length-based price-based

classification classification

1. Daimler Chrysler C Class A4: Executive E`

India Pvt. Ltd.
A6: Luxury

E 250 A5: Premium E

S Class S Class E

17
2. Fiat India Fiat Palio A2: Compact B
Automobiles Pvt.
Ltd.
Fiat Siena A3: Mid-size C

Fiat Uno A2: Compact B

Palio Adventure A3: Mid-size C

3. Ford India Ltd. Escort A3: Mid-size C

Ikon A3: Mid-size C

Mondeo A5: Premium D

4. General Motors Opel Astra A3: Mid-size C

India Ltd.
Opel Corsa A3: Mid-size C

Opel Swing A3: Mid-size C

5. Hindustan Ambassador A3: Mid-size B

Motors
Contessa A4: Executive C

Lancer A3: Mid-size C

6. Honda SIEL Accord A5: Premium D

Cars India Ltd.
City A3: Mid-size C

7. Hyundai Motor Accent A3: Mid-size C

Company Ltd.

Santro A2: Compact B

Sonata A5: Premium D

18
 Maruti Udyog Maruti 1000 A3: Mid-size C
Ltd.
Maruti 800 A1: Mini A

Maruti Swift A2 : Mid size

Alto A2: Compact B

8. Baleno A3: Mid-size C

Esteem A3: Mid-size C

WagonR A2: Compact B

Zen A2: Compact B

Versa Utility vehicles C

Omni Utility vehicles A

9. PAL-Peugeot 118NE A3: Mid-size B

Ltd.

10. Tata Engineering Indica A2: Compact B

& Locomotive

Company Ltd

19
SECTOR OUTLOOK

Between fiscal 2002 and fiscal 2007, the entire Indian passenger car market had a growth
of approximately 9.5%, largely as a result of increasing demand for segment B cars .

Segment A

This is the entry-level and the most price sensitive segment. Maruti is the sole
manufacturer in this segment since fiscal 2000. Models like Maruti 800 are the ruler in
this segment anybody who is economic wants to buy this model so during the period of
2000-05 this was the hot selling product from Maruti.

Segment B

This segment is shining with a growth of approximately 57.6% of the Indian

passenger car market. Due to the present low per capita income in India, the price and
cost of ownership of cars are significant factors that affect demand for cars in this
segment. Alto, Zen , Swift, Wagon-R , Gypsy etc are the models that anyone can find
them in any corner of this country. This segment comprise of 69% from the whole sale of
Maruti Suzuki. This segment is always focused by Maruti and it is still improving this
segment.

Segment C, D, and E

There are 11 manufacturers with approximately 20 models in these segments.

These segments typically have low sales volumes; therefore, high growth rates of 11%,
19% and 35%, respectively . But in this segment Maruti has lesser number of product .
SX4 , Dzire and Grand Vitara is the few models in this segment. New model launches,
growth in per capita income levels, high aspirations and status associated with larger
cars, are the key factors affecting demand for cars in these segments. Maruti has to
improve this segment to fight with others.

THE PRE-OWNED CAR MARKET

The size of the pre-owned car market in India has been estimated to be more then the
size of the new car market. The A and B segments account for between 70 and 80% of
the total sales volumes in the pre-owned passenger car market in India. The proportion of

20
pre-owned cars from segment B is increasing and is expected to form the largest portion
of the pre owned passenger car market. Mid-size and large cars are less popular in the
pre-owned passenger car market. Here also Maruti Suzuki started its own market known
as TRUE VALUE. Here the company sell all kind of cars without altering their
specification,

COMPARATIVE STUDY OF MODELS OF MARUTI AND ITS

COMPITATORS IN DIFFERENT SEGMENTS

MARUTI TATA HYUNDAI HONDA GM TOYOTA FORD SKODA

A M-800 INDI SPARK

CA
OMNI ------------- ----------- ------------ ----------------- -----------

B GYPSI INDI SANTRO AVEO- IKON

GO UAV
ZEN GETZ ------------ ------------

WAGON -------------

ALTO

SWIFT

C SX4 SAFA ACCENT CITY AVEO INNOVA FIESTA FABIA

RI
DZIRE VERNA OPTRA COROLLA FUSION
SOM
TRAVERA
O

D VITRA -------- CIVIC CAPTIVE CAMRY ENDEAVOUR OCTAVIA

CRV ALTIS

E SONATA ACCORD PRADO LAURA

---------- -------- TUCSON SUPERB

-

21
This table shows that the Maruti Suzuki has larger number of variety in the
segment A&B so the sales must be good in this segments. But it is lacking behind its
competitors in segment C,D & E

STRENGTH OF THE COMPANY

 Separate showroom for cars.

 Well equipped workshop with all infrastructural facilities.

 Workshop is well supported by an organized spare parts division.

 Their goodwill in the possess trained, sincere and efficient manpower to encounter
present market condition.

 Established strong and transparent systems in all the departments.

 We positional quality product.

 Trained man power.

 Excellent marketing network for fixed coverage.

DEPARTMENT OF THE COMPANY:

1. Sales

2. Workshop or service

3. Spare parts

22
 INTRODUCTION OF CONSUMER BEHAVIOUR

As a consumer we are all unique and this uniqueness is reflected in the consumption
pattern and process of purchase. The study of consumer behavior provides us with
reasons why consumers differ from one another in buying using products and services.
We receive stimuli from the environment and the specifics of the marketing strategies of
different products and services, and responds to these stimuli in terms of either buying or
not buying product. In between the stage of receiving the stimuli and responding to it, the
consumer goes through the process of making his decision.

The task of marketing is to identify consumers’ needs and wants accurately, then
to develop products and services that will satisfy them. For marketing to be successful, it
is not sufficient to merely discover what customers require, but to find out why it is
required. Only by gaining a deep and comprehensive understanding of buyer behavior
works to be mutual advantage of the consumer and marketer, allowing the marketer to
become better equipped to satisfy the consumers’ needs efficiency and establish a loyal
group of customers with positive attitudes towards the company’s products.

Consumer behavior can be formally defined as––the acts of individuals directly involved
in obtaining and using economic goods and services, including the decision processes
that precede and determine these acts. The underlying concepts of this form a system in
which the individual consumer is the core, surrounded by an immediate and a wider
environment that influences his or her goals. Passing through a number of problems
solving stages leading to purchase decisions ultimately satisfied these goals. In the past,
the main input to the theory of consumer behavior has come from psychology. More
recently, the interdisciplinary importance of consumer behavior has increased such that
sociology, anthropology, economic and mathematics also contribute to the science
relating to this subject.

Objectives

After reading this lesson you should be able to:

· Understand the development of the marketing concept.

· Define customer value, satisfaction, and retention.

· Exploring the link between marketing and Customer orientation

23
· Definition, role and importance of consumer behavior for a marketer

· Identify the major factors that influence a consumer’s purchase decision and behavior

· A simplified model of the consumer decision-making framework

· Define consumer behavior.

· Describe the societal marketing concept.

Product Life Cycle in consumer behavior

Like us human beings, products also take birth through introduction, develop (grow), age
(mature), and eventually decline (die). In the first phase, a newly developed product is

introduced in the market, which finds relatively few customers. If it is an innovative

product (say a perfumed fabric) then the marketer stimulates primary demand by
educating the customer. In the growth stage, more and more customers start buying. But
new brands also enter the market. Hence the marketer has to talk about differentiating
features of his brand.

In maturity the brand competes with other successful brands for selling in a stagnant
market. So price cuts, exchange offers or add-ons are used to woo the customers.
Communication is image based attempting to perfect and reinforce the brand loyalty.
Finally, many products face a phase of obsolescence. Some products may of course have
a cyclical demand pattern. They bounce back after a gap. For example, in 2001 larger
frame sunglasses have omeback. The marketer may even reformulate/reposition a
product to begin a new life like Dabur Honey or Milkmaid. On the other hand some
products have a ‘stillborn’ fate or may die an infantile death, like Real Value Vacumizer.

Pricing

Price has to be fixed in such a manner as on one hand it is lower or equal to the value
delivered by the product, and on the other hand it should cover at least all manufacturing
and post manufacturing (transportation, warehousing, promotional) costs plus the

24
targeted level of profit margin. Actual price fixing of course depends on the functional
features of the product and the image of the brand. Then there is the degree of
competition that dictates the price of a brand vis-à-vis its competing brands-. That is why
you would find Pepsi and

Coke priced at same level. Price can also act as a communication tool. For example price
package may give the message of affordability, exclusiveness, etc. Cartier watches, for
example.

Factors Affecting Consumer Behavior

1. Social and Cultural Influences

Culture is learned behavior that has been passed down over time, reinforced in our daily
lives through the family unit and through educational and religious institutions. Cultural
influences, therefore, are powerful ones and if a company does not understand the culture
in which a particular market operates, it cannot hope to develop products and market
them successfully in that market.

In some cases, they constitute individual market segments for certain product areas.
Subcultures can also exist within the same racial groups sharing common nationality.
Their bases may be geographical, religious or linguistic differences and marketers must
recognize these differences and should regard them as providing opportunities rather
than posing problems.

2. Specific Social Influences

Social Class

This is the most prominent social influence. Traditionally, one of the chief determinants
of social class was income. Since pay structures have a great deal in terms of the lower
C2, D and E categories moving more towards level previously enjoyed by the higher A,
B and C1 categories over past thirty years or so, classification of consumers on the basis
of lifestyle is becoming more meaningful today. Income aside, social class is an indicator
of life-style and its existence exerts a strong influence on individual consumer and their
behavior.

25
Reference Groups

This can be described as a group of people whose standards of conduct mould an

individual disposition, beliefs and values. This group can be small or large. Reference
group can range from the immediate family to individual is unlikely to deviate too far
from the behaviors norms laid down by the members of a club or hobby group.
Reference group theory not state that individualism cannot exist within a group but it
does suggest that even rigid independent thinkers will at least be aware of what is
considered normal within a group.

In a small group be the family the advice and opinion of these who are regarded as
knowledge will be highly regarded. Such people are termed opinion leaders. Extraneous
to groups’ influences might also be at the work in opinion forming, and here there is the
existence of opinion leaders who are outside of the immediate group. The opinion
followers take up their opinions. In the case of a number of products, deliberate direct
appeal is made to the so-called snob appeal. This is done by using marketing of
company’s products acceptable to opinion leaders, or famous personalities (Who are paid
for their endorsement) in the hope that other sectors of the population will follow them.

The family life cycle traditionally contains six stages, although more recently different
division has been quoted. These divisions are:

Unmarried––Here, financial commitments and family responsibilities tend to be low,

with disposable income being high. These younger unmarried consumers tend to be more
leisure-oriented and more fashion conscious. This segment thus comprises a very
important market for many are and innovative products.

Young newly married couples and no children––This group focuses its expenditure on
that item considered necessary for setting up home.

Young married couples with children––Outlay here is children oriented, and there is little
surplus cash for luxury items. Although they are respective to new product ideas. This
group sees economy as being the over-riding factor when making purchases.

26
Older married couples still with children at home––Disposable income will probably
have increased, often with both parents working and children being relatively
independent. In some cases children may be working and the parents are able to be
engage increasingly in leisure activities often in the form of more than the standards
annual holidays. Consumers durable, including major items of furniture, are often
replaced at this stage. Such purchases are often made with different motivation to the
original motivations of strict functionality and economy that was necessary at an earlier
life cycle stage.

Older married couples with no children living in the home––Here, disposable income can
be quite high. However, tastes are like to be firmly rooted reflected in unchanging
patterns. Thus marketers will have difficulty when attempting to change predisposition,
soothe best policy will be through attempts to refine and add value rather than to
introduce new concepts and ideas.

Older retired couples and single people––At this stage, most consumer durable have been
purchased although occasional replacements will be required. Purchasing is low and
pattern of purchasing is conservative and predictable. This group of consumers
increasing rapidly. Such people tend to be less reliant solely on the State Pension, many
having subscribed to occupational pension from former employers, which boost the state
pension. This allows to leads more active lives and the tourist industry now actively
targets this particular market segment.

Individual Buyer Behavior

As well as being influenced by the outside environment, people also have their own
individual beliefs. It is important that we should know that these are in order that we can
better understand how individuals respond to marketing efforts. Individuals are different
in terms of how they look, their education, their feelings and their responses to marketing
efforts. Some will behave predictably and other less predictably according to an
individuals personality. The individual consumer absorbs information and develops
attitudes and perceptions. In marketing terms, this will affect an individual need as well
as determining how to satisfy them. The task of marketing is to identify patterns of
behavior which are predictable under given conditions, which will increased the
27
marketer ability to satisfy customer needs, which is at the very base of marketing. In
order to more fully understand this concept we shall concentrate on five psychological
concepts to understand buyer behavior. These five psychological concepts are:

Personality and Self-concept

This means how we think other people see us, and how we see ourselves. As individuals
we might wish to create a picture of ourselves that is acceptable to our reference group.
This is communicated to the outside world by our individual behavior as it is related to
our purchase and consumption of goods. The sum of this behavior is an individual self-
statement and is a non-verbal form of communication.

Self is influenced by social interaction and people make purchases that are consistent
with their self-concept in order to protect and enhance it. The constant process of re-
evaluating and modifying the self-concept results from a changing environment and
changing personal situations. Personality is the principal component of the self-concept
of the self-concept. It has a strong effect upon buyer behavior.

INTERNAL INFLUENCES ON CONSUMER BEHAVIOR

Personality

A person's distinguishing psychological characteristics that lead to relatively consistent

and

lasting responses to stimuli in the environmentWe are each unique as individuals, and we
each respond differently as consumers. For example,some people are "optimizers" who
will keep shopping until they are certain that they have found 40 the best price for a
particular item, while other people are "satisficers" who will stop shopping when they
believe that they have found something that is "good enough." If you are a salesperson in
a retail shoe store, how might you work differently with these two personalities?

Lifestyle and Psychographics

28
Lifestyle is a pattern of living expressed through a person's activities, interests, and
opinions.

Psychographics is a technique for measuring personality and lifestyles to developing

Lifestyle classifications.

Motivation: Multiple motives

Consumers usually have multiple motives for particular behaviors. These can be a
ombinationof:·

Manifest known to the person and freely admitted·

Latent unknown to the person or the person is very reluctant to admit

Note: different motives can lead to the same behavior; observing behavior is not
sufficient to determine motives.

Motivation

An early thinker insofar as motivation in concerned was the psychologist Sigmund Freud
who lived between 1856 and 1939. His theories have been criticized, but his theories are
of fundamental value. He was responsible for identifying three level of consciousness.

The conscious, which includes all sensations and experience of which we are aware. The
preconscious, which includes the memories and thoughts, which we have stored from our
experience and we can bring to mind when are wish. The unconscious that is the major

29
driving force behind our behavior and this include are wishes and desires, of which we
are not always aware.

Within these levels of consciousness there are mental forces at work attempting to
reconcile our instincts with the social world in which we live and there are not always in
accord so we experience emotional difficulties. Freud’s terms for these are:

The id, which is the reservoir for all our psychological and sensual instincts. It is selfish
and seeks instant gratification regardless of social consequences.

The superego, which develops as we grow and learn from family, friends, teachers, and
other influences. It functions as our internal representation of the values and morals of
the society in which we have grown up. It is a potent force and comes in to conflict with
the demands made your id for the gratification of what might be anti social desires.

The ego, which attempts to resolve the conflict between the id and the superego and tries
to redirect our id impulses in to socially and morally acceptable modes of expression.

30
Marketers are interested in motivation when it relates to purchasing behavior. This
behavior related to the motive for wishing to possess the goods or services in question,

Self-Needs
NNNNNactualization
Esteem Needs

Social Needs

Safety Needs

Physiological Needs
Hierarchy of Needs (From A. H. Maslow)

and it has been termed goal-related behavior. For a motive to exist there must be a
corresponding need. Motives like hunger, thirst, warmth, and shelter are physiological.
Others, like approval, success and prestige are psychological. Motives like staying alive
are instinctive while motives like cleanliness, tidiness and proficiency are motives that
are learned during life. We can also discern between rational and emotional motives.
Most purchasing decisions are a composite of such motives, quite often a deciding factor
might be price which is of course more of an economic restriction than motive. It can
therefore, be seen that a number of motives might be at play when making a purchasing
decision––some motives are stronger than other is and the final decision might be a
compromise solution.In 1954 the psychologist Abraham Maslow put forward his classic
Hierarchy of Needs, which is shown in the given below. This hierarchy is now central to
much thinking in buyer behavior.

Physiological needs are concerned with self-preservation and these are the basic needs of
life involving those elements required to sustain and advance the human race. Safety
needs relate to protection against danger and deprivation. Once the more basic needs
have been satisfied, behavior is influenced by the need for belonging, association and
acceptable by others. In many texts the next two needs are put together, but here we have
separated respect and self-esteem in terms of qualification and recognition above this.
The final need is what Maslow termed Self-actualization, which means self-fulfillment in
terms of becoming that entire one is capable of being and one has reached the pinnacle of
personal potential.

31
It is argued that when more basic needs like hunger and thirst have been satisfied, then
individual will move towards satisfying higher order needs towards the apex of the
pyramid and look increasingly for satisfactions that will increase status and social
acceptability. When the apex of the pyramid has been reached and other satisfaction has
been achieved the prime motivation is then one of acquiring products and accomplishing
activities that allow self-expression. This can be in the from of hobbies, particularly
collecting, which may have been desired for a long time, but have been neglected until
the lower order needs have been satisfied. It is of course not possible to formulate
marketing strategies on the hierarchy theory on its own. Its real value is that it suggests
that marketers should understand and direct their efforts at the specific needs of their
customers, wherever the gods one is attempting to promote is in the hierarchy.

Perception

Unlike motivation that required retention to stimulus, perception relates to the meaning
that is assigned to that stimulus. As marketers are interested in how buyers perceive and
react to products in relation to such matters as quality, aesthetics, price, and image, since
products not only exist in practical terms, but also how the are perceived by consumers
in relation to need satisfaction. This perception by buyer is affected by the nature of the
product itself, by the circumstances of the individual buyer, and by the buyers’ innate
situation in terms of how ready they are to make the purchase in terms of needing it at a
particular point in time, it is, of course, necessary the product or service (i.e. the
stimulus) receives the attention of the potential buyer.

Attitudes

Our strongest basic attitudes are implemented in our formative years and these come
largely from the influence of our close family group another social interaction. More
refined attitudes develop later. In marketing terms, the sum total of our attitudes can be
regarded as a set of conditions that a potential buyer has in relation to stores or
companies go out of their way to engender favorable attitude and it is why manufacturers
see to induce loyalty towards their particular brand of products. Once this attitude has
been establishes in the mind of the customer, it might be difficult to alter. Even a minor
dissatisfaction can against a manufacturer or retail establishment, and a method of

32
attempting to change attitude is through promotional appeals and through a program of
public.

Learning

Experience precedes learning and this can alter perceptions and attitudes. It is also
intensifies a shift in behavior, so when a buyer perceives that certain products are more
favorable than others within his or her reference group, repeat purchases are made to
promote this acceptability. Every time a satisfactory purchase is made, the consumer
becomes less likely to depart from this purchasing behavior. The result is brand loyalty,
and the ultimate success of marketing is in terms of customer making repeat purchase of
becoming brand loyal.

A fundamental aim of marketer is to bring about satisfaction for their customer and this
is cardinal to the concept of the marketing. Having looked at some of the issues that
make up consumer behavior, we can now like at the consumer central goal. Because they
are continually occupied in the quest for satisfaction, competitive offerings will always
have potential appeal. Firms must seek continuous improvement to the products or
services and the levels of support they provide. This is a matter of balancing costs and
potential profit with customer demands, as total satisfaction, except in a minority of
cases, is an unrealistically expensive goal.

Models of Consumer Behavior

Now that we have examined the psychological factors that influence consumer buyer
behavior now we are in a position to examine some consumer models. The aim is to
bring together our present.

Understanding by presenting a series of models that endeavor to explain the purchase

decision in relation to pertinent variables.

The Buyer Decision Process

33
Different buying tasks present different levels of complexity to the purchaser. The AIDA
model that is presented in Figure 2 considers the steps leading to a purchase in the form
of a sequential problem solving process.

Awareness

Interest

Desire
AIDA Model of buying behavior

Late Dr. E. K. Strong first promoted this classical model in 1925 and it is still useful
Action
today because it is easy to apply as it describes the activities involved in the buyer
process. Products and services vary in the complexity of decision making involved in
their acquisition. The purchase of a new shower unit, for instance, is more complicated
than the purchase of a tube of shower gel.

34
Robinson, Faris, and Wind in 1967 put forward a model that viewed purchasing as a
problem. This is shown in Figure 3 and it describes the activities involved in the

Purchase
Marketing Inputs
Decision
Consumer

Product
Product Choice
Place
Location Choice
Promotion
Brand Choice
Price
Other Choice
Psychological

Input

Culture

Attitude

Learning
Problem Recognition
Perception


Information Search

Evaluation of Alternatives


The Buyer Decision Model

Purchase Decisions
purchasing process.

An individual needs a particular product. Information will be short from a variety of
Post Purchase Behavior
sources including family and friends (Called word of mouth) from advertising, from
catalogues, from visits to retail establishments, and from many other sources. The more
complex the products the greater will tend to be this information search. The task of
marketing is to ensure that the company products receive high exposure during these

35
information search periods and that the best point of product is emphasizes during the
evaluation of alternatives phase.

This will put the company’s product in the best light prior to the purchase decision
because even then the consumer is still susceptible to further influences in relating to
marketing the correct choices.

Marketer must also be aware of post purchase behavior because this can affect repeat
business and forward looking companies attach as much importance to after sales
services as they do to making the initial sales. This reduces the degree of satisfaction (or
dissonance) in the case of genuine complaints. One method that is now predicted for
sales of major items like new motor cars is where companies follow up a sale by some
form of communication by letter or telephone with their customers. This builds
confidence in the mind of the customer in having made the correct purchasing decision.
The terminology that has been attached to this kind of after sales follow up is customer
care.

The Adoption Process

The buyer decision model was not specifically designed for new products and its
substance was concerned with search and problem solving. Everett Rogers advanced the
model shown in Figure 4, and it related to new products. It is being with awareness.
Marketers must first create awareness and then assist customer with subsequent stages of
the process. Consumers’ cannot being to consider a new product or service as a solution
to need related problems without this awareness. Successfully innovative products

Awareness

Interest/Information

Evaluation

Trial
The Adoption Process


Adoption
36


Post Adoption Confirmation

should attempt to be problem solving as far as the customer is concerned.

Awareness can come about as a result of the marketing effort of the company or simply
by word of mouth communication. If the product has potential interest and appeal, then
potential purchasers will seek further information. Consumer then evaluates the new
products against existing products, and then makes an initial adoption by obtaining a trial
sample. Which might be a free sample or a trial purchase. The adoption stage is started
when a decision is made whether to use the product or not (In case of FMCG [Fast
Moving Consumer Goods] goods). Post adoption confirmation is when that product has
been adopted and the consumer is seeking reassurance about the wisdom of his purchase.
After a major purchase, dissonance (termed as Cognitive Dissonance) is present in the
sign of unease that that what was thought to be value for money at the time of purchase
may not, after all, turn out to be true value. Such dissonance should be encountered by
the provision is some kind of follow up either written or through the telephone.

A more detailed model is suggested in Figure 5 that develops that adoption process. A
series of inputs feed in to the knowledge base. The self-input includes the psychological
notions of perception, attitudes, motivation, and learning. Similar to other inputs, they set
the scene for knowledge to be interpreted into a favorable situation of awareness. Figure
5 also shows that persuasion governs the rate of adoption that is affected by relative
advantage, compatibility, complexity, trial opportunity, and absorbing power. The model
also allows for review after the decision stage, and here consumers can be sensitive to
the influences of external information sources for promotional appeals and form such
influences as reference groups.

Relative Advantage

Compatibility

Complexity


New Product Purchasing Decision
Process
Trial Ability

Absorbability
37
It can be seen that various inputs contribute to knowledge, ranging from personal factors
to company marketing activity. Persuasion is an important phase and here a number of
factors, which are function of the product itself, can lead to the decision whether or not
to purchase the new product or service in question. The decision means adoption or
rejection.

If it is adoption, them good experience can lead to its continued adoption, but if the
experience of the product or service is bad then it will be discontinued. Conversely,
rejection, or later adoption, perhaps, in the latter case through hearing good experience of
reference group members, who have purchased. Continued adoption and later adoption
need confirmation in order to continue the repeat purchase pattern.

It is important that we look an innovator categories insofar as purchasing behavior is

concerned because consumers, as individuals, can be more, or less, respective to new
product or service idea.

The process of the diffusion of innovations propose that certain groups of consumers will
take on new ideas more quickly than other groups and they tend to influence later
consumer groups. These groups have particular common features.

Innovators are the first small segment to take on new product ideas and they are likely to
be younger people, from well educated, relatively they affluent background and having a
high social status. They are more probably unprejudiced, discerning people whose
understanding of the new product has been more objectively ascertained than through a
sale people or company from promotional material.

Early adopters, possesses some of the characteristics of innovators, but they are more
part of local systems, acting as opinion leaders within their specific group.

Early majority adopters tend to be above average in terms of social class and rely upon
company promotional efforts for data. Opinion leaders of the early adopter category will
tend to be their biggest inspiration.

Late majority adopters tend to adopt the product or services because earlier groups have
generally accepted it.

38
Laggards make up the final group. They tend to be more careful and older and of lower
socio-economic standing. Clearly, adopter category will tend to differ depending upon

Awareness


Knowledge


Liking


Preference


The Innovation Adoption Model
Conviction


the new product or service being marketed.
Purchase
Hierarchy of Effects

Lavidge and Steiner produced a Hierarchy of Effects model of purchasing behavior in

1961. The model starts at the awareness stage, but it could be argued that there is a stage
prior to this, which is when the potential purchaser is completely unaware of the product
or service offering, and it is through marketing communication that such awareness is
made known.

39
TYPES OF PRE PURCHASE DECISION BEHAVIOUR

Introduction

Consumer buying behavior varies with the type of buying decision. The buying decision
process further varies with the type of product involved. For instance, while a decision
for

Buying bread is almost automatic, the decision for buying a laptop is more deliberate and
time consuming. Similarly, there is a great deal of difference in buying a tube of
toothpaste,

Apparels for yourself and a Television set for your home. This will depend on how
complex the decision is likely to be and the degree of involvement required from the
participants. In other words, more complex the decisions, more the involvement of
buying participants and more the buyer deliberation.

Objectives

After reading this lesson, you should be able to:

· Differentiate between types of buyer decision behavior

· Identify and explain the factors influencing problem solving.

1. Variables that shape the decision Process

How people make decisions continue to interest researchers and strategists because of its
complexity and dynamic nature. Even with all the options available to them, people are
usually quite rational and make systematic use of the information, and usually consider
the implications of their actions before they decide to engage or not engage in a given
Behaviour. In this section, we summarize information about variables that can influence
decision-making. Consumer decision making is influenced and shaped by many factors
and determinants that fall into three categories:

40
a. Individual differences

b. Environmental influences

c. Psychological processes.

a. Individual Differences

There are five major categories of individual differences, which affect behaviour, viz.,

(a). Demographics, psychographics, values andpersonality: The decision

processes and buying behavior gets very much affected by how people differ. You have
read about these influences earlier. These variables include what has come to be known
as psychographic research to probe into those individual traits, values, beliefs, and
preferred behaviour patterns that correlate with behavior in market segments.

(b). Consumer resources: Each person brings three primary resources into every
decision-making situations: (1) time, (2) money, and (3) information reception and
processing

capabilities or attention. Generally there are distinct limits on the availability of each,
thus requiring some careful allocation.

(c). Motivation: Psychologists and marketers alike have conducted a wide

variety of studies to determine what takes place when goal-directed
behavior is energized and activated.

(d). Knowledge: Knowledge is defined as information stored in memory. It

encompasses a

vast array of items such as the availability and characteristics of products and services;

Where and when to buy; and how to use products. One main goal of advertising and
selling is to provide relevant knowledge and information to consumers so as to assist
them with decision-making, especially in extended problem solving.

41
(e). Attitudes: Behavior is strongly influenced by attitudes toward a given brand or
product. An attitude is simply an overall evaluation of an alternative, ranging from
positive

to negative. Once formed, attitudes play a directive role on future choice

and are difficult to change. Nevertheless, attitude change is a common
marketing goal.

b. Environmental Influences:

In addition to individual variables, the decision process behaviour of consumers is also

influenced by environmental factors which include culture, social class, family, personal
influence and situation

(a). Culture: Culture refers to the values, ideas, artifacts, and other
meaningful symbols that help individuals communicate, interpret, and
evaluate as members of society. cultural issues from both a global as well as
domestic perspective.

(b). Social class: Social classes are divisions within society that comprise
individuals sharing similar values, interests, and behaviors. Socioeconomic
status differences may lead to differing forms of consumer behavior, say for
example, the types of beverages served, the make and style of car driven,
the kind of food liked, and the styles of dress preferred

(c). Family: Since the field of consumer research was founded, the family
has been a focus of research. As you have learnt in earlier chapters, the
family often is the primary decision-making unit, with a complex and
varying pattern of roles and functions. Cooperation and conflict often occur
simultaneously with interesting behavioral outcomes.

42
c. Psychological Processes:

At the end, those who wish to understand and influence consumer behaviour
must have a practical grasp of three basic psychological processes:

(a). Information processing: Communication is a bottomline marketing

activity. Therefore, consumer researchers have long been interested in
discovering how people receive, process, and make sense of marketing
communications.

(b). Learning: Anyone attempting to influence the consumer is trying to

bring about learning, the process by which experience leads to changes in
knowledge and behaviour.

Learning theory is relevant, especially for those products and services

bought on the basis of relatively little reflection and evaluation.

(c). Attitude and behaviour change: changes in attitude andbehavour are

an important marketing objective that reflects basic psychological
influences and have been the subject of decades of intensive research.

Types of decision behavior

Sometimes consumers undertake a complex decision process requiring substantial

amounts of time and energy. In situations in which consumers are making a decision for
the first time, actions must be based on some form of problem solving. When this
process is very complex, it is called extended problem solving (EPS). Limited

problem solving (LPS),

However, represents a lower degree of complexity. At the lowest end of the continuum
stands what is known as reutilized response behavior (RRB)

43
1.1 Initial Purchase

We will now distinguish these three major types of buying behavior:

(1) Reutilized response behavior (RRB)/ Habitual buying behavior: This

is the simplest type of behavior. This occurs when the consumer already has some
experience of buying and using the product. Usually, this kind of behavior is adopted for
the purchase of low cost, frequently used items. In such cases the buyers do not give
much thought, or search and also do not take a lot of time to make the purchase. Most of
the time the buyer is

Familiar with the various brands available and the attributes of each and has a well-
established criteria for selecting their own brand. The buyers are well aware of the
product class, know the brands and also have a clear preference among the brands. The
degree of involvement in buying such products is low. In such a case, the marketer has to
ensure

two tasks: (a) The marketer must continue to provide satisfaction to the existing
customers by maintaining quality, service and value. (b) He must try to attract new
customers by making use of sales promotion techniques like points of purchase displays,
off-price offers, etc., and also introduce new features to the products.

(2) Limited problem solving (LPS)/ Dissonance reducing

buying behavior: In this type of buying behavior, the consumer is familiar with the
product and various brands available, but has no established brand preference. Here the
buyer is more complex as compared to routine buying behavior because the consumer is
confronted with an unfamiliar brand in a familiar product class. The consumer would
like to gather additional information about the brands to arrive at his brand decision. For
instance, a

housewife buys refined vegetable oils for her cooking and she may be familiar with the
concept of vegetable oil, vanaspati and ghee. She may also know that Dhara, Dalda

and Sun drop are some of the leading brands available. But to establish her choice of
brand, she would like to check with her friends and regular store about the attributes of
44
each. This buying behavior as described limited problem solving because the buyers are
in a situation where they are fully aware of the product class but not familiar with all the

brands and their features. Limited problem solving also takes place when a consumer
encounters an unfamiliar or new brand in a known product category. The housewife,

who buys refined vegetable oil, on her next visit to the market, sees a new brand of oil,
Saffola. Apart from buying a new brand, this brand of oil also claims the unique attribute
of being low in cholesterol. To arrive at a decision, whether or not to buy this brand, the
housewife needs to gather information about the new brand, which will allow her to
compare it with the known brands. Here the marketer’s job is to design a communication

Programmed, which will help the buyer to gather more information, increase his brand
comprehension and gain confidence in the brand.

(3) Extensive problem solving (EPS)/Complex buying

behavior: This buying is referred to as a complex buying behavior because

the consumer is in an unfamiliar product class and is not clear about what
criteria to consider for buying. Extensive problem solving occurs when the
consumer is encountering a new product category. He needs information on
both the product category as well as the

various brands available in it. This kind of decision is the most complex
type. For instance, you may become interested in purchasing a Color
Television set to replace the existing black and white one. You may have
heard of the various brand names like BPL, Akai, etc. but lack clear brand
concepts. You do not know what product attributes or features to consider
while choosing a good television set. So yours is an extensive problem
solving.

45
Repeat Purchases

Most purchases are repeated over time. When repeat purchases occur, there are two
possibilities: (a) repeated problem solving, and (b) habitual decision-making.

(a) Repeated Problem solving: Repeat purchases often require continued problem
solving. Several factors including dissatisfaction with a previous purchase resulting in a
brand switch or retail stock outs when the retailer doesn’t have product available can
lead to this outcome.

(b) Habitual decision making: Habitual takes different forms, depending on the
decision process followed in the initial purchases:

· Brand loyalty/Company loyalty: Consumers have certain expectations about the

products they buy and the retailers from whom they buy. The satisfaction that consumers
experience when their expectations are met or exceeded often results in loyalty to that
product or retailer. For the most part, consumers want to reward these companies with
continued use over time—that is, brand or company loyalty, which can be highly
resistant to change.

MODELS OF CONSUMER BUYING

Introduction

A model is very often referred to as an abstract representation of a process or

relationship. We tend to hold various models in our minds, which allow us to make sense
of the world, and also help to predict the likely course of events. To put it simply, models
help us in the development of theories, understanding complex relationships, and
providing the framework from discussions and research work. IN this chapter we have
made efforts to examine the various models having relevance to the consumer decision
process. The primary concern is to use the models to understand consumer behavior.
Consumer

Behaviorists as well as marketers are interested in understanding how and why certain
decisions are made.

46
Objectives

After going through this lesson you should be able to:

· Understand the importance of Consumer modeling in decision-making.

· Explain the different simple models used in decision-making

· Explain the Howard-Sheth model of decision making

· Analyze the Engel-Kollat-Blackwell model of decision making

1. Consumer Decision-Making

Since the 1960s, the study of consumer behavior has focused largely upon consumer
decision-making processes. Influenced by cognitive psychology, a number of so-called
modal models (or “box-and-arrow” models) have been proposed, presenting the various
stages the consumer goes through when choosing a product to buy or store to shop in,
presented in a flow-chart format (e.g. Nicosia, 1966; Engel et al., 1995). A rather
stylized summary of these modal models might look something like this:

47
Models of Consumer Behaviour

1. Economic model: Economic model of consumer behaviour is one-dimensional.

This means that buying decisions of a person are governed by the concept of futility.
Being a rational man he will make his purchase decisions with the intention of
maximizing the utility benefits. Economic model is based on certain predictions of
buying behavior

(a) price effect-lesser the price of the product,more will be the quantity purchased

(b) Lesser the price of the substitute product, lesser will be the quantity of the original
product bought (substitution effect)

(c) More the purchasing power, more will be the quantity purchased (income effect).

2. Learning model: Classical psychologists have been interested in the formation

and satisfaction of needs and tastes. They argued that living beings were influenced by

48
both innate needs such as the primary needs of hunger, thirst, sex, shelter and learned
needs like fear & guilt. A rive or internal stimulus which when directed towards a drive-
reducing object becomes a motive. The various products or service will act as a stimulus
to satisfy drives. For example, if you are a hungry you will be driven towards food,
which after consumption will reduce the drive and provide and provide satisfaction.

3. Psychoanalytical model: This model is based on the work of psychologists who were
concerned with personality. They were of the view that human needs and motives
operated at the conscious as well as subconscious levels. Sigmund Freud developed this
theory. According to him human behavior or personality for that matter is the outcome of
three components, viz.,

(a) ‘Id’ which is the source of all psychic energy which drives us as action

(b) ‘Super ego’ which is the internal representation of what is approved by the society

(c) ‘Ego’ which is the conscious directing ‘id’ impulses to find gratification in a socially
acceptable manner. Thus we can say that human behavior is directed by a complex set of
deep-seated motives. This means that buyers will be influenced by symbolic factors in
buying a product. Motivational research has been involved in investing motives of
consumer behavior so as to develop suitable marketing implications accordingly.
Marketers have been using this approach to generate ideas. for developing product-
design, features, advertising and other promotional techniques.

4. The sociological model: According to this model the individual buyer is a part of
the institution called society. Since he is living in a society, gets influenced by it and in
turn also influences it in its path of development. He is playing many roles as a part of
various formal and informal associations or organisations i.e., as a family member, as an
employee of a firm, as a member of a professional forum and as an active member of an
informal cultural organization.

49
 RESEARCH METHODOLOGY

Meaning of Research

Research in common parlance refers to a search for knowledge:

“A careful investigation or enquiry specially through search for new facts in any branch
of knowledge”.

- Advance Learner’s Dictionary of current English

“Research comprises defining and redefining problems, formulating hypothesis or

suggested solution; collecting, organizing and evaluating data; making deduction and
reaching conclusions and at least carefully testing the conclusion to determine whether
they fit the formulating hypoth - Clifford Woody

Research Methodology

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. Researchers need
to know, which of the methods or techniques, are relevant and which are not, and what
would they mean and indicate and why. Researcher also need to understand the
assumptions underlying various technique and they need to know the criteria by which
they can decide that certain techniques and procedure will be applicable to certain
problems and others will not.

Research methodology has many dimensions and research methods to constitute a part of
the research methodology. When we talk of research methodology we not only talk of
the research methods but also consider the logic behind the methods we use in the
context of our research study and explain why we are using a particular method or
technique and not others to that research results are capable of being evaluated either by
the researcher himself or by others.

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Research Process

To carry out my research effectively I the used following research process, which
consists of series of actions or steps.

Research comprises the following steps

Formulating the research problems

Research design

Sample design

Fact-finding

Procedure for conducting research

Analysis of data

Interpretation

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Research Type/Design:

Research plays an important role in the project work. The results of the project are
completely based upon the research of the facts and figures collected through the
different ways of research. That is why it is also called a movement from known to
unknown. Research is the original contribution to the existing stock of knowledge. This
section includes the overall research design, the sampling procedure, the data collection
method, the field method, and analysis and procedure.

RESEARCH is a scientific and systematic search for pertinent information on a specific topic. It
is also said to be the pursuit of truth with the help of study, observation, comparison and
experiment. research methodology is a way to systematically solve the research problem.

Research can classify 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.

52
 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 These research designs are used to investigate the cause and effect
relationship between two or more variables. The experimental approach is used in such
as investigation experimental designs can be of two types;

 Laboratory
 Field experimental

53
OBJECTIVES OF THE STUDY

1) To know the technical, social & family factors influencing the customer’s behavior
before purchasing a car.
2) To know the media which effect most of the potentional customers.

DATA COLLECTION

In dealing with any real life problem it is often found that data at hand are inadequate &
hence, it becomes necessary to collect data that are appropriate. Data are of two types:

1. Primary Data: - It is what which consist of original information for the

Specific purpose at hand. It is collected for the first time.

Primary Data sources are-

 Questionnaire,
 Personal contact.
2. Secondary Data: - It is the information that already exists somewhere, having
collected for another purpose. These data are located quickly and inexpensive.

Secondary Data sources are:-

 Previous record, article, magazines, and data of maruti suzuki

 Internet.

Sample size and selecting sample

1) Universe
Kota City

2) Sample Unit

Car User & Non Car User

3)Sample size
100 Respondent

3) Sample design

54
  Judgment Sampling

 Convenience Sampling

4) Research type
Exploratory

Statistical Tool

o Mean Analyze.

o Percentage Analyze.

o Other------ Graphical and Tabular Analysis

Limitations of the Study

It is extremely important to evaluate and consider the limitations of the study in advance
in order to assess the reliability of the findings. In our study the following limitations
were encountered:

1. The sample size is limited to 100 Nos of respondents, who represent the population.

2. Because the information collected from the customers by meeting them at their
working places, company service centers, during the business hours, or at the parking
lot where they may or will be busy with some other work, the information extracted
would not be sufficient from the respondents.

3. The opinion now about Hyundai may not be the same after some says because of new
entrants.

4. The knowledge of the person doing the project is of graduation level only.

5. The study is limited to Kota city only.

6. Consumers sometimes find it difficult to express their feelings due to various barriers
and thus the results may be far from reality.
7. The time and money are also big constraints in the course of the research process.
8. he sample size being smaller may not lead to the generalized results for a larger
population base.

55
9. The intensity of advertising, their frequency and media has a combined effect on
consumers along with their cultural background. Thus it is quite difficult to segregate
and measure the individual factors’ impact on customers.

56
 Analyses and interpretation

1. Car user.
Yes No

40% 60% Respondent

Car user & Non car user

40% Yes
No

60%

Interpretation

According to above map, only 40% of respondent are car user in Kota and 60% of
respondent have not got car in Kota recently.

57
2. Car modal use by respondent.

Car modal Respondent

Maruti Suzuki 70%

Tata 25%

Hyundi 10%

Other 5%

70%

60%

50%

40%

30% East

20%

10%

0%
Mruti tata hyundi other
suzuki

Interpertation

According to above map, 70% of respondent have marui suzuki , 25% of respondent
have tata car, 10% of respondent have hundai car and only 5% of respondent have other
companys car.

58
3. Techanical thing respondent set in thir mind before buying car.

A. Comfort.

Ranking (1) Respondent (2) Total (1x2)

5 75 375
4 20 80
3 5 15
2 0 0
1 0 0
Total 470
Total average score of respondent is 4.70

80
70
60
50
40 respondent

30
20
10
0

Interpretation

According to the average mean score 4.70 the maximum respondent gave more then
Average marks to this features that mean they pay more attention for comfort.

59
B.Mileage.

Ranking (1) Respondent (2) Total (1x2)

5 58 290
4 27 108
3 15 45
2 0 0
1 0 0
Total 443
Total average score of respondent is 4.43

60

50

40

30 respondent

20

10

Interpretation

According to the average mean score 4.43 the maximum respondent gave more then
Average marks to this features that mean they pay more attention for mileage.

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C. Brand.

Ranking (1) Respondent (2) Total (1x2)

5 45 225
4 35 140
3 15 45
2 5 10
1 0 0
Total 420
Total average score of respondent is 4.20

45
40
35
30
25
respondent
20
15
10
5
0

Interpretation

According to the average mean score 4.20 the maximum respondent gave more then
Average marks to this features that mean they pay more attention for brand.

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 D. Price.

Ranking (1) Respondent (2) Total (1x2)

5 25 125
4 20 80
3 15 45
2 15 30
1 25 25
Total 305
Total average score of respondent is 3.05

25

20

15
respondent
10

Interpretation

According to the average mean score 3.05 the maximum respondent gave more then
Average marks to this features that mean they pay more attention for price.

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 E. Cabin space.

Ranking (1) Respondent (2) Total (1x2)

5 45 225
4 25 100
3 20 60
2 8 16
1 0 0
Total 401
Total average score of respondent is 4.01

50
45
40
35
30
25 respondent
20
15
10
5
0

Interpretation

According to the average mean score 4.01 the maximum respondent gave more then
Average marks to this features that mean they pay more attention for cabin space.

63
F. Performance.

Ranking (1) Respondent (2) Total (1x2)

5 50 250
4 30 120
3 20 60
2 0 0
1 0 0
Total 430
Total average score of respondent is 4.30

50
45
40
35
30
25 respondent
20
15
10
5
0

Interpretation

According to the average mean score 4.30 the maximum respondent gave more then
Average marks to this features that mean they pay more attention for performance.

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G. Safty features.

Ranking (1) Respondent (2) Total (1x2)

5 80 400
4 20 80
3 0 0
2 0 0
1 0 0
Total 480
Total average score of respondent is 4.80

80
70
60
50
40 respondent

30
20
10
0

Interpretation

According to the average mean score 4.80 the maximum respondent gave more then
Average marks to this features that mean they pay more attention for safety features.

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H. Attractiveness.

Ranking (1) Respondent (2) Total (1x2)

5 45 225
4 30 120
3 15 45
2 10 20
1 0 0
Total 410
Total average score of respondent is 4.10

45
40
35
30
25
respondent
20
15
10
5
0

Interpretation

According to the average mean score 4.10 the maximum respondent gave more then
Average marks to this features that mean they pay more attention for attractiveness.

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4. Family Factors.

A. Income of respondent.

Income(000) Respondent

1,50-2,50 25%

2,50-350 35%

3,50-5,00 30%

Above 5,00 10%

Respondent

10%
25%

30% 1,50-2,50
2,50-350
3,50-5,00
35% Above 5,00

Interpertation

According to above mab, 25% of respondent have income between 1,50,000-

2,50,000. 35% of respondent have income between 2,50,000-3,50,000. 30% of
respondent have income between 3,50,000-5,00,000 and only 10% of respondent
have income above 5,00,000.

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 B. Respondemt mostely belone from.

Family Respondent

Nuclear 60%

Joint 40%

Respondent

40%
Nuclear
Joint
60%

Interpretation

According to above map, 60% of respondent are belong from nuclear family and 40 % of
respondent are belong from joint family.

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 C. Purpose of buying car.

Purpose College Office Travelling House Business

hold

Respondent 18% 23% 12% 37% 10%

40%
35%
30%
25%
20%
15%
10%
5%
0%
College Office Travelling House hold Other

Data interpretation

According to above map, 18% of respondent are using car collage, 23% of respondent
are using car for office, 12% of respondent are using car for travelling, 37% of
respondent are using car for house hold and 10 % respondent are using car for business.

69
5. Social class.

A. Respondent social class.

Social class Respondent

Higher 20%

Upper higher 55%

Lower higher 25%

Respondent

20%
25%
Higher
Upper higher
Lower higher

55%

Data interpertation

Acording to above map, 55% of respondent are belong from upper higher social
class, 25 % of respondent are belong from lower higher and 20% of respondent
are belong from higher social class.

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 B. Mode of purchase car.

Mode of purchase respondent

Direct 30%

Lone 70%

respondent

30%

Direct
70% Lone

Data interpertation

Acdcording to above map, 70% of respondet buy car buy lone, and only 30 % of
respondent buy car by direct.

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 Finding And Conclusion

1. 40% of respondent have car in Kota.

2. 70% of respondent have Maruti Suzuki in Kota.

3. 75% of respondent mostly consider comfortable factor before buying car.

4. 58% of respondent mostly consider millage before buying car.

5. 40% of respondent mostly consider price factor and 25% of respondent are
consider only quality of car before buying car.

6. 80% of respondent have primary need of safety feature. they mostly consider this
factor before buying car.

7. 35% of respondent have income between 2,50,000-3,50,000.

8. 60% of respondent mostly belong from nuclear family.

9. 55% of respondent are belong form upper higher social class.

10.70% of respondent want to buy car by lone.

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 Suggestions

1. Today the prices of petrol are increasing speedily. Company should manufacture
more & more verities of Diesel, Gas engine vehicle.
2. Easy Finance scheme should launch more and more. Because easy finance is
most competitive tool to increase the sale.
3. Proper service facility is also the key factor, which contributes in the increment
of Sale. A company can increase its sale by providing good & proper service
facility.
4. Company should manufacture the car model as per the requirement of the
customer. Customer satisfaction is the pivot of the economy. So, company
should concentrate on the satisfaction level of the customer.
5. When it comes to increasing reputation or creating brand image for a car, TV
should be given superiority than any other medium what so ever.
6. Sports people were found to be of the highest credibility by most of the people.
So, they should be used more and more in advertisement of Cars.
7. Company should follow the principles of marketing. Four P’s principles should
satisfy to lead the market.

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 Questionnaire

A) Name :______________________________________________
B) Address :______________________________________________
C) City :_________________________________________-____
D) Occupation:
1) Salaried (Privet) 2) Govt. service

3) Business 4) Retired

5) Other please specify

E) Mobile no. :__________________ F) Age :_________

Q.1 Do you use car?

A) Yes B) No

Q.2 Which car modal do you use?

A) Maruti Suzuki B) Tata

C) Hundai D) others

Q.3 What is technical future do you set in your mind before

purchasing car?

A) Technical thing:

Ranking grad 5 4 3 2 1

o Comfort
o Mileage

74
 o Brand
o Price
o Cabin space
o Performance
o Attractiveness
o Engine capacity
o Safety feature
o Fuel tank capacity

Q.4 Family factors.

A. how much are you family income?

A) 1,50,000-2,50,000 B) 2,50,000-3,50,000

C) 3,50,000-5,00,000 D) Above 5,00,000

B. How many numbers of members in the family?

A) Adults B) Childs

C. You reside in?

A) Nuclear family B) Joint family

D. For what purpose you use car?

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A) College B) Office

C) Travelling D) House hold

E) Other work

Q.5 Social factors .

A. To which social class you belong?

A) Higher B) Upper higher

C) Lower higher D) Lower

B. you are a member of which of the following clubs?

1) Rotary club: A) Yes B) No

2) Lions club: A) Yes B) No

3) Other: please mention__________________________

C. which mode of purchase would you use?

A) Direct B) Lone

Q.6
Suggestion____________________________________________

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
------------------------------

(Siddhant Srivastava)

76
 BIBLOGRAPHY

Books

 Kotler, Phillip Marketing Management-Analysis, Planning and

Control, PHI New Delhi

 Kothari, C.R. Marketing Research, Vishwa Prakashan,

New Delhi

 SUJA.R.NAIR Consumer Behaviour

Journals

 BUSINESS INDIA

 AUTO INDIA

 OVER DRIVE

WEB SITE

 www.maruti suzuki.com

Others

 Company Manuals,Cataloges

 Annual Reports of maruti suzuki

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