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Management Research Project FINAL REPORT ON Measuring success of new product launches in the Indian automobile industry Submitted To: Submitted By: SUPERVISOR NAME YOUR NAME COLLEGE NAME Enroll No.XXXXX

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Page 1: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Management Research Project

FINAL REPORT

ON

Measuring success of new product launches in the

Indian automobile industry

Submitted To: Submitted By:

SUPERVISOR NAME YOUR NAME

COLLEGE NAME Enroll No.XXXXX

Page 2: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

TABLE OF CONTENTS

1. Objectives…………………………………………………………3

2. Abstract……………………………………………………………4

3. Indian Automobile market…………………………………………5

4. Segmentation & Profile…………………………………………...11

4. New product development………………………………………...21

5. New Product: Success or failure…………………………………..23

5. Problem of measuring success of new product……………………25

6. Critical factors of success of new products………………………..26

7. Measuring Success of New Products……………………………...28

8. Measuring success for automobiles...……………………………...31

9. Market share and product portfolio…………………...…………...34

10. Buying Behavior………………………………………………….44

11. Satisfaction survey………………………………………………..52

12. Awareness………………………………………………………...56

13. Advocacy………………………………………………………….57

14. Conclusion………………………………………………………...58

Annexure- I-Questtionnaire……………………………………………61

Annexure- II-SIAM data………………………………………………65 References…………………………………………………………………………..71

Page 3: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Objectives

To study the various new products launch in Indian automobile industry.

To understand various factors that affect preference of consumers while

purchasing an automobile

Critical factors responsible for the success of new product in Indian automobile

industry

Page 4: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Abstract

The Indian auto industry, worth US$ 34 billion in 2006, has grown at a CAGR of 14 per

cent over the last five years with total sales of vehicles reaching around 9 million vehicles

in 2005-06. That number is likely to see a significant boost, given that the first half of

2006-07 has already witnessed a staggering growth rate of 17.12 per cent.

This project deals with a critical analysis of Indian automobile industry and its growth it

has shown in past years. Even though industry has been showing good growth in numbers

it is more important to see whether it is really moving up the ladder. The growth it shows

should be in terms of success of new product launches. So this project is to analyze the

success rate of new product launches and to see whether the growth shown in Indian

automobile industry is really due to new product launches and their success. Due to

exhaustive nature of the industry, the study would be confined to cars only. Now the

project deals with measuring success of new product launch for cars launched in the past

four years. Further, short listing of some car models have been done to make the study

more specific and effective.

Page 5: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Indian Automobile Industry

History and development

The history of the automobile industry in India actually began about 4,000 years ago

when the first wheel was used for transportation. In the early 15th century, the Portuguese

arrived in China and the interaction of the two cultures led to a variety of new

technologies, including the creation of a wheel that turned under its own power. By the

1600s, small steam-powered engine models were developed, but it was another century

before a full-sized engine-powered automobile was created. The dream a carriage that

moved on its own was realized only in the 18th century when the first car rolled on the

streets. Steam, petroleum gas, electricity and petrol started to be used in these cars.

On a growth path

The Indian auto industry, worth US$ 34 billion in 2006, has grown at a CAGR of 14 per

cent over the last five years with total sales of vehicles reaching around 9 million vehicles

in 2005-06. That number is likely to see a significant boost, given that the first half of

2006-07 has already witnessed a staggering growth rate of 17.12 per cent. Domestic car

sales for the April-September 2006 period stood at an impressive 4.86 million vehicles,

including cars, two-wheelers and commercial vehicles. According to industry experts, if

Page 6: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

this trend continues, sales could touch 10 million by March 2007, clocking an annual

growth rate of 20 per cent. In addition, the Government‘s announcement to cut excise

duty on small cars will soon see India emerging as the world's largest manufacturing hub

for small or compact cars.

Destination India

India is on every major global automobile player‘s roadmap, and it isn‘t hard to see why:

India is the second largest two-wheeler market in the world

Fourth largest commercial vehicle market in the world

11th largest passenger car market in the world

Expected to be the seventh largest by 2016

Robust production

India‘s car production capacity is in for a US$ 2 billion boost. Auto majors have

announced massive investment plans which will push the country‘s car production past

the psychological 2 million mark by the end of fiscal 2006-07, up 70 per cent from 1.4

million units now. Even at 2 million, India, which stood at No.11 among global car

producing nations, will move two steps ahead, past UK (1.6 million) and Canada (1.35

million). It will be neck and neck with Brazil‘s 2-million capacity at No.8.

The automobile industry witnessed a growth of 19.35 percent in April-July 2006 when

compared to April-July 2005, as is evident from this year‘s production trends.

Page 7: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Automobile Production Trends

Category 2004-05 2005-06 (In no.s)

M&HCVs 214807 219297

LCVs 138896 171781

Total CVs 353703 391078

Passenger Cars 960487 1045881

Utility Vehicles 182018 196371

MPVs 67371 66661

Total Passenger vehicles 1209876 1308913

Scooters 987498 1020013

Motorcycles 5193894 6201214

Mopeds 348437 379574

Total Two Wheelers 6529829 7600801

Three Wheelers 374445 434424

Grand Total 8467853 9735216

Source: Society of Indian Automobile Manufacturers (SIAM)

Domestic Sales

Increased affluence, wider selection and the ready availability of car loans is driving the

Indian car market through the roof. During the last five years (2000-05), the production

of passenger cars in India increased by more than 100 per cent. India achieved the sales

of 1.11 million vehicles last year (2005).

Page 8: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Domestic sales have been growing at a clipping pace:

Passenger car sales rose by 22.84 per cent during April-September 2006,

compared to the corresponding period last year.

The cumulative growth of overall sales of passenger vehicles during April-

September of 2006-07 was 20.73 percent.

Utility Vehicle (UVs) sales grew at 12.85 per cent during the same period.

Overall, the two wheeler market grew by 15.49 per cent during the April-

September period of financial year 2006-07, over the same period last year.

Motorcycles grew by 18.53 per cent, scooters at 0.12 percent and mopeds at about

6.53 percent over April-September 2005.

Three wheeler sales grew at 19.90 per cent. Goods carriers grew by 26.16 per cent

and passenger carriers grew at 15.78 per cent during the April-September 2006

period, over the same period last year.

Overall, the commercial vehicles segment grew at 36.96 per cent. Growth of

Medium and Heavy Commercial Vehicles was 39.92 per cent. Light Commercial

Vehicles also performed well with a growth of 32.86 percent.

Exports

India is fast emerging as a manufacturing base for car exports. According to the Society

of Indian Automobile Manufacturers (SIAM), a total of 89,338 vehicles were exported in

September 2006, a 58.07 per cent jump as compared to the same month last year. While

passenger vehicle exports grew at 13.15 per cent, two-wheelers and commercial vehicle

exports grew at 27.80 per cent.

Investments

The Indian automobile sector has witnessed a slew of investments in the first half of

2006, dominated by plans for new plants and ramped up capacities. Here are some of the

vehicle manufacturers dominating the headlines with their impressive plans:

Page 9: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Punjab-based International Cars and Motors (ICML) will invest US$ 223.7

million in Himachal Pradesh to set up a plant to manufacture diesel-operated

multi utility vehicles (MUVs).

Nissan is set to establish its manufacturing base in Gujarat. The company, along

with Suzuki, is planning to invest upto US$ 671.2 million for a 600,000 cars per

annum plant.

Toyota Kirloskar Motors is likely to set up its second plant near its existing

facility in Bidadi, Karnataka.

Hyundai Motor is set to invest an additional US$ 700 million into its Indian

operations based in Tamil Nadu, to expand the company‘s passenger car capacity

to 600,000 units per annum from the present 300,000, as well as in a new engine

and transmission unit.

The Government is planning to set up three dedicated corridors for automobile companies

exporting to the rest of the world. Dedicated rail corridors are proposed between Gurgaon

and Mumbai port, Pune and Mumbai including JNPT and Jamshedpur and Kolkata. A

dedicated highway for automobile movement is also being considered between Gurgaon

and Delhi. The proposal also includes creating the last-mile, road-port connectivity at all

the four ports.

Foreign players in India

Calendar 2006 has seen the entry of many high-end brands into the country. The Indian

automobile market will see at least 30 new launches, spanning everything from

affordable hatchbacks to mid-size models to super luxury high-end cars and SUVs.

Mercedes, BMW, Porsche, Audi, Bentley and Rolls Royce are already here. Now,

the Italian marquee Lamborghini is also planning to enter the country. The Italian

marquee plans to launch the Gallardo.

German luxury car maker Audi AG is preparing to drive into India a range of

sporty, lifestyle cars like S8 and RS4 early next year. The year 2007 will also

mark Audi's entry into merchandising in Indian car bazaar.

Page 10: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

General Motors launched Aveo this year. GM plans to bring in a sporty variant of

the Chevy Optra to add to its existing line-up.

The automobile companies manufacturing cars in India are :

Maruti Udyog Limited

Tata Motors

General Motors

Hyundai Motors India Limited

Toyota Kirloskar

FIAT Automobiles

Hindustan Motors

Ford Motors

BMW

Skoda Auto

Honda Siel

Mahindra Renault

Daimler Chrysler

Nissan Motors

Volkswagen

Audi

A brief about some top car companies which are relevant with the project is mentioned. It

also includes the segmentation of the Indian market which is on the basis of length of the

car.

Page 11: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Segmentation of the Indian Car Market

Segmentation of cars in Indian markert is mainly done on the length of the car or the

price of the car. Segmentation on the basis of length is done as:

Passenger cars

• Segment A1 (mini) – cars having a length of 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

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

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

The less than US$6,500 segment or the ‗A‘ class, the Maruti 800 is the only model in this

segment, has received a new lease of life when most had written about its demise. The

‗B‘ segment US$6,500 to US$10,900 is being powered by growing sales of Hyundai

Santro and Maruti Wagon R and Alto models. It is the mid-sized or the ‗C‘ segments

US$10,900 to US$21,750 and the premium or ‗D‘ segment US$21,750 and above which

has witnessed a lot of activity in the recent past. This market insight discusses a few

developments taking place in these two sub-segments.

The launch of the Skoda Octavia in late 2001 started this trend. Priced at an attractive

US$21,000 to US$22,500 with a luxury feel to it, the model gave its higher priced peers

in the ‗D‘ segment like the Honda Accord, Ford Mondeo and Hyundai Sonata a run for

their money. Within a short time, this vehicle became the largest selling model in the

premium end of the segment. It sold 6,019 units during the period April 2002 to March

2003 – half of entire sales in the ‗D‘ segment. Following its footsteps, General Motors

India launched the Chevrolet Optra. Priced at US$17,200 it power steering, safety

airbags, and air filters are included in this purchase price. This vehicle is aimed at beating

Skoda. There is also Tata‘s mid-sized sedan Indigo, which is priced at approximately

US$10,600 and has signaled new competition for the Maruti Esteem and Ford Ikon. It

seems that price competition will be the new mantra going forward. Price competition

will be in a segment, which many believed was relatively price inelastic. This has been

Page 12: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

disproved by the success of the Octavia. Time will tell whether the new launches will be

able to match its success.

What will the likely success of ‗C‘ segment cars mean for the largest selling ‗B‘

segment? Given the improving economic climate and easy availability of credit, some

customers would certainly think of replacing their existing ‗B‘ segment cars with a

competitively priced ‗C‘ segment model. However, it widely known that a large body of

Indian consumers would still prefer the low cost of ownership of a ‗B‘ segment car like

Maruti Zen. Frost & Sullivan believes that the new launches in the ‗C‘ segment cars

could also affect the fortunes of the premium end of the market. With models like the

Optra carrying a host of advanced features, some consumers would count it as a premium

class vehicle. Such a model could well be the vehicle of choice for an owner of a

premium end car.

Activity in the ‗D‘ segment is being dominated by new model launches. After tasting

success with its utility vehicle Qualis, Toyota launched its Corolla and Camry models.

General Motor launched the Vectra in early 2003. The Mercedes ‗C‘ Kompressor priced

at US$54,300 will soon be launched. Skoda has also confirmed plans to launch its Superb

priced at approximatelyUS$70,000.

A large part of the limelight is also been shared by new launches of sport-utility vehicles.

Until recently, this segment only had the Tata Safari as part of the lineup of vehicles.

With the launch of the Mitsubishi Pajero, the Chevrolet Forrester, and the Hyundai

Terracan, this segment seems crowded. Given the price range of these models, their

manufacturers do not expect big sales numbers. However, their launches signal that

global automakers now sense an increasing level of maturity in the Indian market.

Although sales have risen across the board, the current spate of developments in the

passenger car segment is largely concentrated in the higher end of the market. This has

coincided with the return of the ‗feel good‘ factor in the Indian economy. Customers are

feeling more confident about the future and automakers hope to see this translate in to

Page 13: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

greater sales of higher end cars. A brief profile of car manufacturing companies is

mentioned in the following section :

Page 14: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Hyundai Motor India Limited

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor

Company, South Korea and is the second largest and the fastest growing car

manufacturer in India. HMIL presently markets 16 variants of passenger cars in six

segments. The Santro in the B segment, Getz in the B+ segment, the Accent and Verna in

the C segment, the Elantra in the D segment, the Sonata Embera in the E segment and the

Tucson in the SUV segment.

Hyundai Motor India, continuing its tradition of being the fastest growing passenger car

manufacturer, registered total sales of 299,513 vehicles in calendar year (CY) 2006, an

increase of 18.5 percent over CY 2005. In the domestic market it clocked a growth of

19.1 percent a compared to 2005, with 186,174 units, while overseas sales grew by 17.4

percent, with exports of 113,339units.

HMIL‘s fully integrated state-of-the-art manufacturing plant near Chennai boasts some of

the most advanced production, quality and testing capabilities in the country. In

continuation of its investment in providing the Indian customer global technology, HMIL

is setting up its second plant, which will produce an additional 300,000 units per annum,

raising HMIL‘s total production capacity to 600,000 units per annum by end of 2007.

HMIL is investing to expand capacity in line with its positioning as HMC‘s global export

hub for compact cars. Apart from expansion of production capacity, HMIL plans to

expand its dealer network, which will be increased from 183 to 250 this year. And with

the company‘s greater focus on the quality of its after-sales service, HMIL‘s service

network will be expanded to around 1,000 in2007.

Page 15: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

The year 2006 has been a significant year for Hyundai Motor India. It achieved a

significant milestone by rolling out the fastest 300,000th export car. Hyundai exports to

over 65 countries globally; even as it plans to continue its thrust in existing export

markets, it is gearing up to step up its foray into new markets. The year just ended also

saw Hyundai Motor India attain other milestones such as the launch of the Verna and yet

another path-breaking record in its young journey by rolling out the fastest 10,00,000th

car.

Page 16: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

FORD INDIA LIMITED

The very first mass produced vehicle was the model T.built in 1908, in Ford plants

around the world. Ever since the company has been coming out with models with

breakthrough technology. Now the company stands tall among all automobile

manufacturers and now houses some of the world‘s most favourite brands of cars. If there

is anything that‘s made this possible its Ford‘s ―Can Do‖ philosophy. The philosophy that

triggered Ford‘s growth worldwide. In India, this is reflected in the company‘s sprawling,

350 acre manufacturing plant in Maramalai Nagar near Chennai.

A project that has been set up with a investment of Rs.1700 crore. Ford India Limited is a

subsidiary of Ford Motor Company, currently Ford has a 78% stake, which is going upto

92% soon.The Maraimalai Nagar Plant of Ford India Limited, located roughly

45k.m.from Chennai, provides employment to over 20000 people.The plant has the

capacity to manufacture 1,00,000 vehicles per annum, equipped with state-of-the-art

vehicle manufacturing technology from Ford.

Presently offering seven different models, Ford India Limited (FIL) is catching up fast

with the Indian consumer. Looks like FIL is all set to conquer the Indian market like rest

of the world.

Page 17: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

General Motors

Founded in 1908, General Motors Corporation, the world's largest vehicle manufacturer,

designs, builds and markets cars and trucks worldwide. GM's vision is to be the world

leader in transportation products and related services, by unveiling new products and the

most exciting lineup in its history. GM's major markets are North America, Europe, Asia

Pacific, Latin America, Africa and the Middle East. Its largest market is North America,

where it is in its 78th year as market leader.

GM cars and trucks are sold under the following brands: Cadillac, Chevrolet, Buick,

GMC, Holden, Hummer, Oldsmobile, Opel, Pontiac, Saab, Saturn and Vauxhall.

GM, the worldwide leader in car manufacturing, has had a long association with India –

from 1928 till 1954, it used to assemble Chevrolet cars, trucks, buses and batteries for the

domestic market as well as for exports. General Motors India was formed in 1994 as a

50:50 joint venture between General Motors Corporation and the C.K. Birla Group of

Companies. In 1999, GM bought out its partner‘s shareholding and GM India became a

fully-owned subsidiary of GM Corporation. The total investment in GMI as of today is

approximately US$ 252 million. GM India offers products under the Chevrolet and Opel

brands in the country and has a total workforce of 1,200 personnel.

GM India launched its first car model, the Opel Astra, in 1996. The next model, Opel

Corsa, was launched in 2000 and two variants of this model have been subsequently

launched – Corsa Swing in 2001 and Corsa Sail in 2003.

In 2003, the company entered the MUV segment and launched the Chevrolet brand in

India through the Forester. It also launched the Opel Vectra and Chevrolet Optra. Vectra

Page 18: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

and Forester were imported as CBUs while Optra was assembled in the Halol plant. In

2004, the company has launched another MUV model, the Tavera.

With the recent launch of its new car models and a few others in the pipeline, GM India

is on the road to breaking even and profitability this year. The company is targeting a

turnover of US$ 375 million during the year, up by US$ 208 million from last year.

Page 19: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Maruti Suzuki

Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of

Parliament, as a Government company with Suzuki Motor Corporation of Japan

holding 26 per cent stake. It was entrusted the task of achieving the following:

Modernization of the Indian Automobile Industry.

Production of vehicles in large volumes

Production of fuel efficient vehicles.

Suzuki was an obvious choice because of its unparalled expertise in small cars.

The Joint Venture agreement was signed between Government of India and Suzuki

Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982.

The company went into production in a record time of 13 months and the first car

was rolled out from Maruti Udyog Limited Gurgaon in December, 1983.

Market Share

Till date, over 6 million (60,00,000) Maruti cars have rolled out from its

manufacturing facilities.

At the end of 2005-06, Maruti had a market share of about 54 per cent of the Indian

passenger car market. The company sold 5,61,822 vehicles in 2005-06 including

exports of 34784 units. Maruti‘s cumulative exports are over 4 lakh units.

Page 20: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Tata Motors

Tata Motors Limited is India's largest automobile company, with revenues of Rs.

24,000 crores (USD 5.5 billion) in 2005-06. It is the leader by far in commercial

vehicles in each segment, and the second largest in the passenger vehicles market with

winning products in the compact, midsize car and utility vehicle segments. The

company is the world's fifth largest medium and heavy commercial vehicle

manufacturer.

Tata Motors, the first company from India's engineering sector to be listed in the New

York Stock Exchange (September 2004), has also emerged as a global automotive

company. In 2004, it acquired the Daewoo Commercial Vehicles Company, Korea's

second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles

Company has already begun to launch new products.

Page 21: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Toyota Kirloskar

As a joint venture between Kirloskar Group and Toyota Motor Corporation, Toyota

Kirloskar Motor Private Limited (TKM) aims to play a major role in the development of

the automotive industry and the creation of employment opportunities, not only through

its dealer network, but also through ancillary industries.

TKM's growth since inception can be attributed to one simple, yet important aspect of its

business philosophy - "Putting Customer First". While managing growth, TKM has

maintained its commitment to provide quality products at a reasonable price and has

made every effort to meet changes in customer needs.

TKM firmly believes that the success of this venture depends on providing high quality

products and services to all valued customers through the efforts of its team members.

TKM, along with its dedicated dealers and suppliers, has adopted the "Growing

Together" philosophy of its parent company TMC to create long-term business growth. In

this way, TKM aims to further contribute to progress in the Indian automotive industry,

realise greater employement opportunities for local citizens, improve the quality of life of

the team members and promote robust economic activity in India.

Page 22: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

New Product Development

Identifying and developing a new product is always a messy, experimental process. For

many companies this process is more difficult and less successful than necessary. The

process of introducing new products is as risky as it is vital to the long-term success of

companies. The number of new products introduced globally is increasing every year, but

most of them fail. Revolutionary new products often come from upstart players or

companies outside the industry whose vision is not limited by a focus on the current

business and markets. To remain successful innovators, business managers must

continually review their

companies' to meet the three conditions for effective innovation:

• Closeness to customers – Managers must know their customers and understand their

needs and requirements well,

• Multifunctional teamwork – Successful product innovations are almost invariably

the result of people in the company working together in teams rather than independently,

and,

• Cross-functional communications – Innovations in most companies refer to the

information flow between the key functions.

One of the most important themes in innovation research has been an attempt to identify

the factors that are associated with new product success. Measuring new product

outcomes from innovation is also crucial for our understanding the organizational

behaviors related to, and the resource allocation provided to, new product development.

Although the importance of measuring new product success is widely recognized, its

treatment remains elusive, partly due to the multidimensional nature of such success, the

different levels of analysis that can been examined, and the multiple stakeholders who

look for different things in the new product development product. This has resulted in the

use of large number of measures in the assessment of new product performance. There

are numerous problems in measuring new product success. Taking into consideration the

importance of a new product for business performance of enterprise as a whole, it is

necessary to identify both the critical success factors and the measures. A review of

relevant literature indicates greater simplicity in the process of critical success factors'

Page 23: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

identification. Logically, there are some differences, depending on the character of

innovation (for example, radical versus incremental innovations), business model of

enterprise (market-oriented enterprises as different forms of networks versus enterprises

with traditional business models), size of enterprise (big global companies versus small

and medium enterprises), etc. However, the problems arise in identifying the system of

new product success measures. The point is not in the deficiency of individual measures,

but in imprecise definition of the subject of measures as well as in inadequacy of result

interpretation. Isolated measures that are not integrated in the system of performance

measures of enterprise as a whole, distort the picture of efficiency and effectiveness of

enterprise. This is especially related to the new product success evaluation. Attempting to

overcome the problem, the different models for valuation have been created. The authors

first analyze the critical factors of new product success, especially in condition of

expressed connection of different participants in value chain, and, after that, they point

out some problems in selection of new product success measures.

Page 24: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

New Product : Success or Failure

The experiences of a large number of enterprises show that the failure in product

development, particularly related to the products representing the basis for the creation of

a whole range of other, so-called product platforms, originates from the phase of the

product concept definition. The risk is more pronounced in the cases of developing the

products that should create the needs of consumers. In such circumstances, when

completely new products of high risk are created, technological and marketing

uncertainties have to be studied in order to reduce or eliminate the risk of their

implementation. The enterprises that are successful in this field are characterized by the

management through projects, which enables successful management of each individual

project and a network of projects within the enterprise, of interactions and relations

among different projects and of the relationships with the environment . The surveys of

the practices of successful companies suggest that adequate approaches (methods and

Page 25: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

techniques) in the product creation and development should be selected in the conditions

of abrupt technology and market changes. Different approaches may be applied.

Page 26: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Problems of Measuring Success of a New Product

• Creates a clear product course map of the enterprise where the managers, regardless of

their functional location, understand the significance of the product for the enterprise.

Product maps help in defining key priorities, in timely decision-making and in defining

the products that shall represent the grounds for further development. This enables not

only the improvement of final products but also the elimination of the lost efforts that

divert the enterprise from more important activities. The product maps, as well as the

processes that create them, are the central parts of the total product development process;

• Develops the product strategy "without voids". Successful firms create a multitude of

products in order to fill up the appearing voids in the market and satisfy new needs of

their consumers. By studying the consumers and their purchasing motives, new market

opportunities are identified and competition is neutralized;

• Collects and uses valid information from the market and cooperates in particular with

consumers and suppliers. The product creation process includes consumers-innovators,

who are the first to accept the product and who appear in the role of referential groups,

which facilitates not only a full satisfaction of consumers but enables the realization of

the desired enterprise performances.

Page 27: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

CRITICAL FACTORS OF THE SUCCESS OF NEW PRODUCTS

A significant issue related to the success of managing a new product development project

is the identification of critical factors of success. This is the basis of their selection,

determination of priorities and allocation of resources, starting from the characteristics of

the new product project, major competencies of the enterprise and features of the market

(consumers and competition, above all). Since the measures of new product success are

different and each enterprise uses its own system of standards, the enterprise management

should decide on the project selection criteria within the framework of a complex system

of business performance measurement. Technology was formerly considered as the only

factor of a new product success. A new product was the result of a proactive research and

development and the application of science. Such approach is known as the technology

pushing. This approach is still very successful, especially in high-technology branches,

where the changes in the market are very fast and projects are extremely expensive and

risky. The development cycles of such technologies, as well as of the products resulting

from their application, are ever shorter. The producers of high-technology products are

forced to shorten the periods of new product development and launching. The process of

new product development is progressively acquiring the characteristics of a market-

managed project. Rapid technology and market changes impose the need to coordinate

research-developmental, technological and marketing strategies.

Numerous empirical research projects show that the critical factors of the new product

success are the following:

• Definition of a new product prior to its development – the analysis and selection of a

target market, identification of the benefits for potentially profitable consumers;

• Integration of consumers into the process of value creation (from the idea to the

realization of the product). This is a very complex process, in which the most difficult

part is to provide reliable information necessary for shaping a customized offer. The

application of modern information and communication technologies and the execution of

Page 28: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

online marketing research enable successful overcoming of limitations, while the costs of

activities in the customization process are reduced to acceptable limits;

• The product innovativeness;

• The product superiority based on the quality as a strategic instrument and on the

superior value delivered;

• Superiority based on other elements of the offer – services offered to consumers, which

eventually increase the product value;

• Controlled cannibalization;

• Flexibility enhancing the adjustment potentials even in the industries falling into the

group of so-called mature ones. Computerized operations are the most flexible. In view

of the situation in some industries and branches, particularly in certain enterprises, the

levels of competence in flexible production, and therefore innovation, are varying largely.

However, empirical research points out that the organizational culture is crucial for the

enterprise transformation into a flexible system that reacts proactively

to the market requirements;

• Inter-functional coordination, technological and marketing synergy and involvement of

the top management into the process of new product development, which contributes to

more efficient time management;

• High-quality performance of new product development activities;

• Organization and guidance of the project of a new product development, launching and

ommercialization by adequate strategic positioning;

• Logistic activities largely restrain successful commercialization of a new product. It is

not enough just to make a product fit the buyer's standards. Although the activities related

to the product delivery to the buyer enlarge the value for customers, they may represent

significant limitations as well. Alongside with the development of the Internet and

electronic trade, that is of the appropriate marketing infrastructure, it becomes easier to

solve the problems of delivering value to consumers

Page 29: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Measuring Success of New Products

New products are important for business success of enterprise as a whole. Measuring new

product success and its contribution to business performance of enterprise as a whole is a

very complex process. A fundamental problem when measuring new product success lies

in the meaning of such success, as it has not been well defined. The interpretation of

success is affected by the interest groups involved in new product development (R&R,

production, marketing). Complexity of measuring comes from character of innovation -

radical, incremental, compatible and incompatible. Radical innovation has a high

probability of failure but can be more profitable than incremental innovation. Similarly,

incompatible innovation can be more profitable than compatible one. An idea is radical if

it meets one or more of three tests: it changes customer expectations and behaviors, it

changes the basis of competitive advantage and it changes industry economics

Once you've introduced a new product or service or developed significant improvements

to existing ones, you'll naturally want to do some follow-up to measure the success of the

project. Whether the introduction is ultimately successful or not, you need to be able to

learn from the process to achieve more success down the line.

Most small companies cannot afford the complex and costly consumer tracking studies

used by larger, more sophisticated competitors:

usage and attitude studies that examine consumer usage and attitude about

products, advertising, brand awareness, and brand image at a given point in time

trial and repeat purchase tracking studies that record weekly purchases of similar

products by target consumers, as well as the reasons for buying or not buying the

products (this type of study is sometimes called a diary panel)

simulated test marketing called "experimental primary lab research," which is

usually conducted in store malls under controlled conditions

controlled field testing called "experimental primary field research," which is

usually conducted in a controlled group of stores

Page 30: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

advertising awareness and recall studies that examine the efficacy of print and

electronic advertising on target buyers, often conducted by the Burke, Starch, or

AC Nielsen market research companies

But small companies can conduct low-cost or free qualitative research:

Talk to buyers and consumers about product satisfaction and purchases. From a

marketing research standpoint, this is biased, qualitative research without standard

interview controls. But it is timely information and may be actionable. And it

places you at point-of-purchase, close to your buyers (e.g., retailers) and end

users.

Conduct a test of advertising spending levels in different test markets or, with a

single business in one location, over different time periods. It is relatively easy to

vary introductory spending in each market, if you are testing a number of

geographical markets. However, one should have significant spending differences

of at least +/- 50 percent in each market for each spending variable. Small

companies (e.g., one store) may have to vary spending levels over matched

periods of time and compare sales results. For example, try increasing your local

newspaper advertising spending 50 percent over the same quarter of the previous

year.

Examine weekly company sales receipts for new account sales, compared to receipts for

reorders. This is an indirect, but free, way to measure initial purchase vs. reorder sales.

There are no reconciled opinions in the literature on new product success measures.

The three most important aspects to be measured are:

Financial performance

Market impact

Opportunity window dimensions

Page 31: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Various other measures that have been suggested by certain authors are:

rate of success

percent of sales

profitability relative to investment

range of technical success

influence on sales

influence on profit

success in meeting sale goals

success in meeting profit goals

profitability relative to competition and global success.

.

Page 32: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Measuring Success for automobiles

Development of a new product in case of automobiles is a very difficult job. For different

markets different conditions have to be taken into account . It‘s important to look at the

business from the customer‘s and market‘s perspective. People are buying from you. The

more you understand your customer‘s needs and wants the more you can satisfy them.

And the more you understand how they buy — that is, their buying decision process —

the greater the likelihood your sales and marketing efforts will be successful. The

measure of success for an automobile is very difficult. Different organizations define it in

their own way. Time horizon has big say in measuring of the new product success. The

time over which you want to evaluate your product success changes the the volume or

amount you are expecting. But overall success for an organization should fulfill these

objectives:

Business acquisition/demand generation, which can include metrics such as

market share gains, lead acquisition and deal flow.

Product innovation/acceptance, which can include market adoption rates, user

attachment and affinity, loyalty and word-of-mouth.

Corporate image and brand identity, which can include growth in brand value and

financial equity, awareness and retention of employees.

Corporate vision and leadership, which can include share of voice and discussion,

retention and relevance of messaging, and tonality of coverage

. Due to exhaustive nature of the industry, the study has been confined to cars only. The

project deals with measuring success of new product launch for cars launched in the past

four years. Further, short listing of some car models have been done to make the study

more specific and effective. Few models from varying segments and different

manufacturers have been short listed .These have been introduced in the past few years

and are new to the industry .

Page 33: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Few models that have been shortlisted are :

Maruti Suzuki Swift

Toyota Innova

Hyundai Getz

Tata Indigo

Ford Fiesta

GM Aveo

There are certain parameters on the basis of which a car is evaluated in the Indian market.

Most of them include:-

1. Fitness for purpose

2. Relevance to the Indian market

3. Value for money

4. Design & styling

5. Engine, gearbox & performance

6. Ride , handling & brakes

7. Driving pleasure

8. Fuel efficiency

9. Safety

10. Ownership experience

In order to determine which success factors to measure and the appropriate metrics for

each, marketers must have a clear understanding of the company's goals. A young

company looking to gain traction in the market is focused on different factors than a more

established company wanting to improve its customer relationships.

The following parameters have been selected to measure the success of new products in

Indian automobile industry:

Page 34: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Market share

Awareness

Repeat purchase and advocacy

Customer Satisfaction

Page 35: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

MARKET SHARE

The passenger car industry was dominated by Premier Automobiles Limited (PAL) and

Hindustan Motors Limited (HM) before 1980. With the entry of MUL in 1982, the

market structure of the passenger car industry in India changed dramatically. MUL

captured a major share of the market as it offered a better product at a lower price.

Subsequent to the entry of MUL, the market share of PAL and HM declined rapidly even

as they were able to sustain sales in volume terms. MUL continued to strengthen its

dominance in the passenger car market and faced virtually no competition till the sector

was opened up in 1993. MUL's market position was not affected even after the entry of

many foreign players as none of the new entrants targeted the small car segment. MUL's

pricing was very competitive as it had relatively higher indigenisation levels and

established vendor base besides a depreciated plant, and none of the newer players could

penetrate this segment.

However, in the late 1990s, Hyundai, Tata Motors and Daewoo launched Santro, Indica

and Matiz respectively, in the Rs. 0.3-0.4 million range. Although MUL continued to be

the market leader, its share in the total passenger car sales has been declining and stood at

50.8% in FY2003 as against 54.5% in FY2002 accounted for by its models (Maruti 800,

Omni, Zen, Alto, Wagon R, Esteem and Baleno, Versa, Grand Vitara) across different

price ranges. The company has been able to strengthen its market share during

H1FY2004 at 50.2% (up from 48.1% in H1FY2003). In just four years since the

commencement of production, Hyundai Motors India has emerged the second largest

player in the Indian automobile market.

Page 36: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Market Share of Players in the domestic passenger car market

H1FY2005 H1FY2006

Page 37: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Profiles of Select Players in the Indian Automobile Industry

Name Indian

Partner Collaborator

Foreign

Equity

Year of

incor-

poration

DailmerChrysler

India Private Ltd None DailmerChrysler AG 100% 1995

Fiat India

Automobiles Pvt

Limited

None Fiat Auto SPA, Italy 100% 1997

Ford India Limited Mahindra &

Mahindra Ltd

Ford Motor

Company, USA 84.1% 195

General Motors

India Limted -

General Motors

Corporation, USA 100% 1995

Hindustan Motors CK Birla Group None 100% 1940s

Honda Siel Cars

India Limited Siel Limited

Honda Motor

Company Limited,

Japan

99% 1995

Hyundai Motor

India Limited None

Hyundai Motor

Company, Korea 100% 1996

Maruti Udyog

Limited

Government

of India

Suzuki Motor

Company, Japan 54.2% 1982

Tata Motors

Limited Tata Group None - 1942

Toyota Kirloskar

Motors Limited

Kirloskar

Group

Toyota Motor

Corporation, Japan 88.9% 1997

The sales to capacity ratio for select players4 in the Indian passenger car industry has

improved from 66% in FY1999 to 73% in FY2004.

In most mature markets, there are around half a dozen players dominating the

passenger car industry. The volumes of most players are below 100,000-150,000

units a year, the level that is considered viable in the developing economies. With

low volumes, the manufacturers are not able to realise economies. Further, with

the new environmental norms being proposed, the cost of compliance may add to

Page 38: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

the cost of production. Some of the critical success factors for passenger car

manufacturers in the emerging scenario are indigenization levels, reach of dealer

network, efficiency of after-sales service, volumes, and pricing.

With the liberalization of the automobile sector in the early 1990s, most of the

international players entered the Indian market through the joint venture (JV)

route. While foreign manufacturers brought in the latest in automobile

technology, the Indian partners contributed their understanding of the local

market. This understanding of the local markets was particularly useful in

building dealership and distribution networks.

However, with the Indian JV partners not able to pump in the requisite capital for

expansion, some JVs have been converted into wholly owned subsidiaries of the foreign

parent or the foreign parent has increased its stake in the JV significantly. Ford India and

Toyota Kirloskar Motors are cases in point. With leading international players

demonstrating increasing commitment to their Indian ventures, the market is likely to

consolidate over time.

Page 39: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

FORD FIESTA

The Ford Fiesta has quickly climbed up the market share ladder. Within a year of its

launch, the car has become the second largest selling family sedan in the Indian market.

Ford Fiesta enjoys a market share of about 18 % in its segment.Of course, the more

popular (by a big margin) of the two models — petrol and diesel — is the latter, and for

obvious reasons. The Fiesta 1.4 TDCi, with its advanced, `fuel-frugal' common rail

injection diesel technology engine and its diesel fuel advantage is clearly the first choice

amongst fuel-efficiency conscious sedan buyers.

GM Aveo

The Aveo's big, deep-set grille, trapezoidal headlights and strong chin give it an imposing

look that makes it look bigger than it actually is. GM has also gone all out to make the

Aveo's interiors look and feel plush. It falls short in a few areas like the handling, high

speed composure and gearshift, but still manages to come across as a value-formoney

package.The Aveo is available in two engine capacities 1.4 and 1.6 litre petrol variants. .

The sedan is priced at a nifty Rs 5.5 lakh for the base model.In the Indian automobile

market, the Aveo will give primarily compete with the Honda City, Ford Fiesta and

Page 40: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Hyundai Accent. The Aveo has quickly acquired a market share of around 5 % in a very

span of time.The Aveo has given GM a push in the Indian automobile market. This is the

first

time GM entered the volume segment. GM wanted to be seen as volume player in India

and Aveo has just given them that .

Tata Indigo

Tata Engineering signaled its impending entry into the mid-size segment with the naming

of the indigenously developed Tata Indigo, India‘s first sedan. The car derives its name

from the words ‗India‘ and ‗go‘, as it symbolizes a nation on the move and is aimed at

Indians on the go wanting to make a purposeful statement.

Page 41: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Tata Indigo is targeted at people who exude energy, enthusiasm, ambition and the desire

to succeed and are raring to go, undaunted by new challenges. Powered by a 85 bhp

petrol and a 62 bhp turbo-diesel engine, the car will be launched with 14-inch wheels and

a first-in-class independent three link and strut type rear suspension with anti-roll bar

seen only in more premium segment cars. It has 500 litres of trunk space and 42 litres of

fuel tank capacity, more than adequate for long outstation drives with the family.

Currently it enjoys a market share of around 17 % in its segment.

Page 42: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Maruti Swift

Maruti Swift brings a feeling of freshness to the compact car segment. Its appealing

looks, spacious interiors, and a whole lot of user-friendly features at once catch your

attention. Maruti Swift comes in three variants-Maruti Swift LXi, Maruti Swift VXi, and

Maruti Swift ZXi.

Maruti Suzuki Swift comes with a number of safety features such as collapsible steering

column, front seatbelt pre-tensioners with load limiters, and energy absorbing trim all

around. Active safety technologies include dual front airbags, and antilock braking

system together with electronic brake-force-distribution. Swift enjoys a share of more

than 50 % in its hatch back segment and sells around 5500-6000 units per month.As a

result it is giving tough competition to cars even in other segment due its big car

features..

Hyundai Getz

Page 43: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

The 3810 mm long Getz is in the B plus segment in terms of length, but is truly `smack

bang' in the C class in terms of interior room, comfort, refinement and performance. In

terms of all these it is at least a match for the Ford Ikon, the Maruti Esteem, or the Tata

Indigo and even its own sibling, the Accent. It enjoys a market share of about 20% in its

segment.

Toyota Innova

Showing the way forward in though and execution as also a new way of motoring life is

Toyota with the classy and powerful Innova, heralding a whole new category. The look is

all new and refreshingly curvy and pleasing where the boxy Qualis looked like a

weightlifter on skinny legs. Toyota has probably the best diesel engine in its class on

offer, period. Toyota's famous D4D common rail diesel engine is a proven performer,

having excelled not only in various pick-ups and SUVs in Asia but also in certain saloons

in Europe. This engine has capacity - 2494cc - to begin with, has a strong dohc 16-valve

Page 44: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

top end force fed by a turbocharger and the latest generation common rail diesel injection

system to make for not just a punchy and frugal prime mover but also a very refined

powerplant which effortlessly meets the latest Euro III emission norms.It enjoys a market

share of above 40 % in the MUV segment.

Page 45: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Buying behavior exhibited while purchasing an automobile

According to the primary research conducted emotive needs such as potency, prestige,

and status account for over 50% of the car buyers in India.

The study identifies the following six need segments in the Indian automotive market:

Contrary to the belief that prestige and status needs are pre-dominantly among buyers of

higher-end vehicles, the study clearly reveals that needs exist across vehicle segments.

While prestige and potency related needs are the key motivators for entry luxury buyers,

these needs exist across segments, including the cheaper small cars.

The key drivers for the six need segments in India are summarized below:

Potency buyers are motivated by a need to attract opposite sex and feel powerful;

brand image of trendy and innovative appeals to this group.

Utility buyers seek a need for basic transportation and care for family; Value for

money and cost of ownership are the benefits that these buyers associate with.

Prestige buyers are motivated by a need for prestige, indulge self, and exclusivity;

They are least price sensitive and desirous of latest/ futuristic features in cars

Adventure buyers seek fun & adventure and to increase popularity; SUV finds

preference for these buyers who relate to their cars as ―lover‖.

Status buyers want to show-off success and attract attention; Superior craftsmanship

and best technology are imagery issues that this group relates to.

Liberation is the smallest of the six need segments – these buyers seek increased

freedom and latest technology; safety consciousness is relatively higher among them.

It is apparent from the need segment drivers that a majority of motives are about what a

consumer desires to communicate to the outside world based on the car he/ she

uses.Therefore, it is vital to understand these underlying drivers for consumer behavior

and position brands accordingly instead of solely focusing on rational elements of

Page 46: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

purchase such as fuel economy and engine power.

While brands cut across different need segments due to a similar identity, the varying

degrees of ―fit‖ is determined by its soul or persona. Needs such as adventure and

liberation are more expressive, while status need is more subdued. Similarly, potency

need is about self-assertion and more individual oriented, whereas prestige is more about

affiliation and family oriented.

The two examples below further illustrate the essence of these differences.

Hyundai and Maruti: At a rational-level, both these makes finds similarities on some

of the rational brand drivers such as good fuel economy, easy to maintain, practical

cars, and good after-sales service coverage. However, Hyundai‘s persona is more

expressive, while Maruti‘s is more protective. For example, increase popularity and

show-off success are stronger motivations for Hyundai, while basic transportation

and fit-in socially is higher for Maruti. Consequently, Hyundai finds a relatively

better ―fit‖ with adventure and potency as compared to utility and status for Maruti.

Honda and Toyota: Superior craftsmanship is a key similarity for both these brands

at a rational-level. However, Honda‘s positioning is closer to the individual oriented

zone of self-assertion – reflected in one of its key motive of ―feel powerful‖. Toyota,

in comparison, falls more on the expressive and affiliative side with motives like

―feel young‖ and ―for adventure and fun‖.

Page 47: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Key Demand Drivers

Disposable income was perceived as the key factor driving passenger car demand. But

over time, other factors included the need for greater mobility, non-availability of public

transport services, availability of cheap finance, development of the used-car market,

introduction of new technologically superior models, increasing levels of urbanisation,

and changing consumer profiles.

Page 48: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

Market Characteristics

Product Penetration

The penetration of passenger cars in India stood at five per thousand persons as against

27 for two-wheelers in 2000. Significantly, the Indian figures are lower than even those

for economies like Indonesia (14 and 62). The relatively high penetration of two-

wheelers in India reflects the population's need for mobility and their limited

affordability.

Automotive Penetration (vehicles in use per thousand persons)*

Passenger Cars Two wheelers

USA 478 14

United Kingdom 373 12

Japan 395 115

Germany 508 36

China 3 8

Indonesia 14 62

South Korea 167 59

India 5 27

*Source: World Bank

Market Segmentation

Considering that affordability is the most important demand driver in India, the domestic

car market has been segmented on the basis of vehicle price till SIAM introduced the

length-based2 classification of passenger cars since FY2003. The automobile industry in

India is still concentrated around the mini and the compact segments which together

account for around 81.8% of the automobile market in terms of units sold in FY2004.

Page 49: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

The following table presents various models in each segment of the domestic passenger

car market. SIAM classification of Motor cars(Segment-Wise) is discussed in following

section

Mini Compact Mid-Size Executive Premium Luxury

Vehicle Length

3400mm

3401

to

4000

4001-4500 4501-4700 4701-5000 >5001

Maruti Udyog Ltd.

800

Omni

Alto Zen

Wagon R

Esteem Baleno

Altura

Hyundai Motor India Ltd

Santro Accent Sonata

Hindustan Motors Ltd.

Ambassador

Contessa

Mitsubishi

Lancer

Contessa

Fiat India Automobile Ltd.

Palio Siena Adventure

General Motors India Ltd.

Opel Corsa

Sail

Opel Corsa

Chevrolet Optra Opel Vectra

Honda Siel India Ltd.

City Accord

Ford India Ltd.

Ikon Mondeo

Tata Motors

Indica Indigo Mondeo

DaimlerChrysler India Ltd

Mercedes-

Benz C

Class

Mercedes

Benz E

Class

Mercedes

-Benz S

class

Skoda

Octavia Laura superb

Toyota Kirlosker

Corolla Camry

Page 50: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

As surveyed 44% of the people would like to change their car within 3- 5 yrs of their

purchase, where as only 24 % of the people would retain their car for next 5-7 yrs.23 %

of the people will retain their car for only next 1-3 yrs from the date of purchase. This

percentage depends upon the age group of the people and their disposable income. People

with increasing level of incomes are more willing to change their car model and upgrade

to a better one. This results from their aspiration for growth in their lives both

professional and personal. Hence,the new car they upgrade to must be a kind of aspiration

to them and must inspire to reach for it.

1 to 3yrs

23%

3 to 5 yrs

44%

5 to 7yrs

24%

more than

7yrs

9%

1 to 3yrs

3 to 5 yrs

5 to 7yrs

more than 7yrs

Also which came out as a surprise around 58 % of the people surveyed are attracted by

the styling and performance (combined) of the car.Only 24 % people are attracted by the

mileage as a first criteria for their attraction towards a car which was considered to be the

Page 51: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

main criteria by most of the companies. Also 18 % still think brand name is most

important to them over other parameters when they first notice an automobile.

24%

34%

24%

18%Mileage

Styling

Performance

Brand name

Nowadays we see the automobile manufacturers advertising their new technological

terms such as CRDI, Duratorq , turbo as a feature of the car which they believe will

attract most customers but most of the people do not understand these terms.

21%

79%

yes

no

When we talk about the brand names most of the people rate Japanese as better

manufacturers of cars (around 36 %) where as 27 % of people still trust Germans the

Page 52: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

innovators & quality specialists as the best car manufacturers. Around 16 % and 13 %

of people rate Koreans and Americans (respectively)as preferred car manufacturers.

A few people still like Indians as manufacturers of automobiles.

13

27

8

36

16

0

5

10

15

20

25

30

35

40

1

Americans

Germans

Indians

Japnese

Korean

While choosing an automobile, styling is very important/important to 56 % of the people,

where as 68 % of the people think mileage is very important to them. 31 % of the people

still think power and performance is important/very important to them while only 16 % of

the people think brand name is very important/important to them. 26 % people believe

that interiors and ride quality is important to them while 34 % of people believe hat after

sales service is important to them.

Satisfaction Survey , Awareness and Repurchase as

measure

Page 53: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

As mentioned earlier satisfaction survey is one of the method to to measure the success of

a car. A survey is carried out with the existing owners of the the products and they are

asked to give their rating on the based if their experience with the product . Customer

satisfaction can help your business achieve a sustainable competitive advantage. It's

about understanding the way a customer feels after purchasing a product or service and,

in particular, whether or not that product or service met the customer's expectations.

Customers primarily form their expectations through past purchasing experiences, word-

of-mouth from family, friends and colleagues and information delivered through

marketing activities, such as advertising or public relations. If the customer's expectation

isn't met, they will be dissatisfied and it's very likely they will tell others about their

experience.

Why customer satisfaction is important in automobile industry

A high level of satisfaction can deliver many benefits, including:

Loyalty: a highly satisfied customer is a loyal customer.

Repeat purchase: a highly satisfied customer buys more products.

Referrals: a highly satisfied customer tells their family and friends about the

product or service.

Retention: a highly satisfied customer is less likely to switch brands.

Reduced costs: a highly satisfied customer costs less to serve than a new

customer.

Premium prices: a highly satisfied customer is willing to pay more for the

product or service.

Satisfaction surveys are an important method for collecting information about how your

customers think and feel about your brand, product or service. In the automobile industry

which is a high involvement product there are large no. of parameters while purchasing

an automobile. Different people have different needs and they choose the product

Page 54: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

accordingly. In a car there are large number of factors such as mileage, engine power and

performance, interiors, mechanical components, handling , braking etc which make an

automobile . So all these components have to be equally effective or according to their

weights demanded by the customer to make an automobile successful. More over the

segmentation for the vehicle has to be clearly defined. Even though segmentation in

Indian market is done on the length it should be done on the customer needs. Different

profile or set of profile should be made and segments should be defined accordingly.

A satisfaction survey can help you to understand the expectations of your customers,

determine whether your customers believe you are meeting those expectations, identify

new customer requirements or trends in the market and determine what areas of your

business need investment.

A good customer satisfaction survey will also help you to understand the causes of

dissatisfaction among your customers. Once you've identified these issues, you'll be able

to implement new practices to improve customer satisfaction.

Each owner who takes part completes a sixteen question evaluation .They include likes

and dislikes about their car, what problems they‘ve had, quality of dealer service and a

section on running costs.

Owners rate their cars using a scale of 2 to 8(2,4,6,8) – 2 represents not satisfied while 8

is very satisfied. Then the data is divided into six categories which covers all the aspects

of the car from mechanical components to after sales service.

THE CATEGORIES EXPLAINED

Mechanical Problems - uncovers satisfaction levels with the reliability of the car‘s

engine, suspension, transmission and braking systems.

Interior Problems - explores satisfaction with the reliability of seats, heating, air-

conditioning and ventilation, sound systems, dashboard and interior.

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Exterior Problems - surveys body panels, paint problems, rust and corrosion and

exterior lights.

Vehicle Performance - looks at appeal of the car‘s ride, handling, braking, engine and

transmission.

Dealer Service - evaluates the performance of the franchised dealer network, from the

ease of booking a service to customer care. It also looks at how competent the service

department is at diagnosing and rectifying faults.

Ownership Costs - discloses owners‘ perceptions of value for money when at the filling

station, insuring and servicing the car.

Finally the car is given an overall score. This takes every aspect of the car into account

and is influenced most by reliability and vehicle quality, followed by vehicle appeal, then

ownership costs, and finally dealer service. This pivotal figure is then expressed

as a percentage and an overall rating.

34

39

41

29

35

32

0 10 20 30 40 50

swift

fiesta

innova

aveo

indigo

getz

Series1

Findings

Page 56: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

It has been founded that according to the satisfaction survey Toyota Innova tops the

customer satisfaction ratings. It has achieved a highest points i.e. the 41points.This

shows customers who have purchased Innova are highly satisfied with their car taking all

the factors such as mechanical components , interiors , exteriors after sales service into

consideration. Ford Fiesta has also reached a competitive total of 39 which sets it apart

from the other vehicles in its class. Even though it got less scores in appealing , styling

and interiors it got highest in the ownership costs since it delivers a highest mileage.

Fiesta is followed by Tata Indigo and Swift which have achieved a score of 35 and 34

respectively.Indigo is a good car but uts engine still needs refinement.The engine delivers

good power and mileage but has the shortcomings of a diesel engine. Swift is an excellent

car with drawbacks only with the mileage and probably the price of the car. Also being a

hatchback it should have bigger boot which it lacks. With introduction of diesel engine in

swift which maruti has recently launched its sure going to be hit. Rest remaining are

Hyundai Getz and GM Aveo which have achieved a score of 32 and 29 respectively.

Awareness

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According to survey 36 % of the people come to know about the car from their friends

and relatives. It is the the word of mouth that makes a car popular.

34%

18%

36%

12%

Advertisements Magazines Friends/Relatives On the Road

So the experience of the owner with the product has to be a satisfactory one. More than

50 % of the people said they were aware of the product before the actual launch. This

clearly shows that awareness was high among them but they were just waiting for the

launch and wanted a market review.

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Advocacy

41%

24%

22%

13%

convince

recommend

won't recommend

negative recommend

41 % of people say they would convince a person planning to purchase a car that they

have purchased whereas 24 % say they would only recommend only.22% say they would

not recommend anyone and would not like to influence anyone decision.13 % of people

feel they would give negative recommendation.

Conclusion

Page 59: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

On the basis of the parameters selected it clearly shows that Toyota Innova and Ford

Fiesta have topped the rankings in the satisfaction survey.

More than 72 % of Innova owners say they are willing to repurchase it if provided with

subsequent developments with time . They would (around 60%) convince others to

purchase this car if in the same segment.Also taking other factors that is the market share

and the sales volume of the car it is clearly a success for Toyota

Hence Innova has topped the group with that and the next car that closely follows it is

the Ford Fiesta . Around 63 % of people owning a fiesta say they are willing to

repurchase fiesta if buying a second car or changing the car.

Hence , Fiesta is the runners-up.Also taking sales volume and market share Fiesta is

clearly not lagging behind Innova and is sense of pride for Ford.

Next car that comes up is the Maruti Swift. Swift is an excellent car wih a sales volume

of around 5500- 6000 per month. With mileage being only drawback and the boot it will

top rankings when diesel model is introduced.Around 54 % of people say they repurchase

this car if improved mileage could be delivered.

Next car is the Tata Indigo which has a higher satisfaction score than swift but is more in

Taxi segment and had an good sales volume initially but with introduction of Fiesta sales

volume has gone down. .

In the automobile industry which is a high involvement product there are large no. of

parameters while purchasing an automobile. Different people have different needs and

they choose the product accordingly. In a car there are large number of factors such as

mileage, engine power and performance, interiors, mechanical components, handling ,

braking etc which make an automobile . So all these components have to be equally

effective or according to their weights demanded by the customer to make an automobile

successful. More over the segmentation for the vehicle has to be clearly defined. Even

though segmentation in Indian market is done on the length it should be done on the

Page 60: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

customer needs. Different profile or set of profile should be made and segments should

be defined accordingly.

TRENDS IN THE INDIAN PASSENGER CAR MARKET

Changing Manufacturer-Customer Relationship

With competition among firms intensifying and new models being launched, the Indian

car industry has transformed into a buyers market. There has been an increase in the

bargaining power of buyers while the power of suppliers is on the decline. This led to the

industry providing technologically superior models at competitive prices and consumers

getting attractive finance schemes and various cars off the shelf.

Further, there are opportunities for players to spot gaps in the market and cater to

particular niches like sports utility vehicles. The key strategies in the Indian car market

will be offering good-quality cars that provide value for money, running innovative

marketing campaigns to attract potential buyers, and providing excellent after-sales

service. Companies which have a range of vehicles in all the segments of the market, will

be at a significant advantage because of their ability to cross-subsidise models.

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Changing Face of the Indian Passenger Car Industry

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Annexure I Dear Respondents,

The present research work is being carried out by the students of ICFAI Business School,

Gurgaon as a part of their academic curriculum. The objective of this research is measure

the success of new products in Indian automobile industry

. Please feel free in giving your response as the

information provided will be kept confidential and will be utilized only for research

purpose. There is no right or wrong answers and there is no time limit to finish but try to

finish it as soon as possible.

Please give the following particulars:

1) Name ____________________ Age

________________(yrs.)

2) Gender

i) Male

ii) Female

3) Occupation

i) Service

ii) Business

iii) Professional

iv) Student

v) Others

4) Monthly household income

a) Less than Rs.5000

b) Rs.5001-15000

c) Rs.15001-30000

d) More than Rs.30000

Page 63: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

1. Car that you own ………………

( i ) Swift

( ii ) Getz

(iii) Aveo

(iv) Fiesta

(v) Innova

(vi) Indigo

2. How much time it has been with your car ?

(i) Less than 1 yr

(ii) 1-2 yrs

(iii) 2-3 yrs

(iv) 3-4 yrs

3. How often do you change your car or purchase a car ?

(i) 1-3 yrs

(ii) 3-5 yrs

(iii) 5-7 yrs

(iv) more than 7yrs

4. What is the first thing that attracts you towards a car ?

(i) Mileage

(ii) Styling & looks

(iii) Power, performance & ride quality

(iv) Brand name

5. How important to you are the following while purchasing a car :

Very Important Important Less Important Not Important

Styling(looks) ___ ___ ___ ___

Mileage ___ ___ ___ ___

Price ___ ___ ___ ___

Brand Name ___ ___ ___ ___

Technology ___ ___ ___ ___

Ride Quality & ___ ___ ___ ___

Interiors

Power &

Performance ___ ___ ___ ___

After sales service ___ ___ ___ ___

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6. Rank these car manufacturers in the order you feel think they are better than the

others?

(i) Americans

(ii) Germans

(iii) Indians

(iv) Japnese

(v) Korean

7. Do you understand the technological terms such as CRDI, Duratorq, DICOR,

Turbo etc.

(i) Yes

(ii) No

8. Where did you first saw/spotted or came to know about the car you are owning ?

(i) Advertisements

(ii) Magazine reports

(iii) Friends/ Relatives

(iv) On the road

9. How much you are satisfied with the mechanical components(engine, suspension,

Transmission etc) of the car ?

Very Satisfied Satisfied Less Satisfied Not satisfied

___ ___ ___ ___

10. How much you are satisfied with the interiors (seats, air conditioning ,dash board,

ventilation etc) of the car ?

Very Satisfied Satisfied Less Satisfied Not satisfied

___ ___ ___ ___

11. How much you are satisfied with the exterior (styling , body panels ,paint , rust

& corrosion prob. , exteriors lights etc) of the car ?

Very Satisfied Satisfied Less Satisfied Not satisfied

___ ___ ___ ___

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12. How much you are satisfied with the vehicle performance (car ride ,handling

braking etc) of the car ?

Very Satisfied Satisfied Less Satisfied Not satisfied

___ ___ ___ ___

13. How much you are satisfied with the after sales service(dealer network,spares etc)

of the car ?

Very Satisfied Satisfied Less Satisfied Not satisfied

___ ___ ___ ___

14. How much you are satisfied with the ownership costs(mileage, insurance, spare

costs,servicing etc) of the car ?

Very Satisfied Satisfied Less Satisfied Not satisfied

___ ___ ___ ___

15. A friend or relative of yours purchasing a car in the same segment as of your car

you would :

(i) Convince him

(ii) Recommend him

(iii) Won‘t recommend

(iv) Negative recommendation

16. If purchasing a second car or changing your car would you like to go for your

current car again ?

(i) Yes

(ii) No

Page 66: Marketing Project Report on Measuring Success of New Product in Indian Auto Mobile Industry1

References

Websites

www.ibef.org www.siamindia.com www.automonitor.co.in/siam.asp www.cybersteering.com www.indiacar.com

Books

SIAM journals

ICMR Journals

Magazines

Autocar

BS Motoring

Business Today