Final Project( May b)

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A

PROJECT REPORT ON

THE LUXURY CAR SEGMENT

Submitted By:-

Aafreen Tinwala

TYBMS (Semester 6)

Project Guide:-

Mr Moiz Lakdawalla

Year of submission

2011-2012

JAI HIND COLLEGE

BASANTSING INSTITUTE OF SCIENCE &

J. T. LALVANI COLLEGE OF COMMERCE

23-24, Backbay Reclamation, A Road, Churchgate, Mumbai 400 020

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Certificate

I, ____________________________________________________ Hereby

certify that Aafreen Tinwala ofJai Hind College of T.Y.B.M.S.

(Semester V) has completed the project on THE LUXURY CAR

SEGMENT the Academic year 2011-2012. The information

submitted is true and origin all to the best of my knowledge.

Signature of guide

Signature of

College principal

Signature of course

Signature of

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coordinator

external examiner

Declaration

I declare that the project entitled THE LUXURY CAR SEGMENT under

the guidance ofMr. Moiz Lakdawalla submitted in partial fulfilment of

the requirement for the award of the degree ofBachelors ofManagement studies to Mumbai University, Mumbai, is my original

work carried out during The year 2011-2012, and not submitted for

the award of any other degree, diploma, fellowship or other similar or

prize to any other institute, organization or university by any other person.

Signa

ture of the Student

Aafreen Tinwala

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Acknowledgement

In preparation of this report by me, I feel great pleasure because it gives

me extensive practical knowledge in my career. I get idea about TheLuxury Market by this project.

I am thankful to Mr. Moiz Lakdawalla for his valuable inspiration and

guidance provided me throughout the course of this project.

His patience and critically gone through the subject matter. I would like to

take opportunity to express my gratitude towards all of them who have

contributed directly or indirectly in my project work.

At last I would like to extend my deep sense of gratitude to my friends,

colleagues and each individual who directly or indirectly help me during

the project work.

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EXECUTIVE SUMMARY

The luxury car market in Indiahas registered a fair amount of growth in the last few yearsand is growing at the rate of 25% per year. A luxury car is a luxuriously styledautomobile which is designed to give satisfaction and comfort to its owner. Aluxury car typically has carrying capacity of 6 passengers. The luxury cars in the Indianmarket are very expensive, with price tags that start from Rs. 20 lakh. Hence,luxury cars can only be afforded by the people who belong to the high income group andthere are a lot of such takers in the Indian automobile market. Almost every sector is eyingIndia as a potential investing hub, and automobile sector is no exception. Besides being still adeveloping country, it shouldnt be a surprising fact that Indian ranks world number 3 interms of the number of millionaires. This era of development in India has been at its best,despite recession, strong fundamentals of Indian economy have managed to post a decentGDP growth last year.

Increase in disposable income of the people has led to a different lifestyle. Now, the mindset

of Indian consumer is a lot different. Previously, Indian consumers used to check the prices

of everything they bought. Now, the consumer looks at the experience of the company during

the buying process. More than price, Quality matters. This paradigm shift has also changed

the way companies look at India. Slowly and steadily the luxury car market which was in a

very nascent condition in India, is now counting on big revenues from the countrys

customers.

Of late, there had been a steep increase in the luxury car market. Year 2009 recorded awhopping 25% growth in the luxury car market. It would be news for many of us that India

ranks number 1 in exporting automobile components. The German machines which have

fame all over the world use components which are imported from India.New entrants like

Volkswagen are going to heat up the competition even more. Currently the fight is in between

BMW and Merc. Despite being a late entrant in the Market, BMW has been successful in

capturing a considerable amount of market share. But, this fight between just two companies

is not going to stay for long as new players are entering the Indian market.

This increased demand for luxury cars, is not something that spurt all of a sudden. The

gradual development of the Indian economy and the increased disposable income has

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influenced people to make a status symbol with respect to their cars. Luxury sedans are

available from the price range of Rs. 20 lakhs 30 lakhs which are mostly preferred by the

first time buyers in this segment. The achievers, who adapt to the latest happening and like to

be dominant, are always quick in buying the heavy priced sedans.

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Contents

1. Introduction71.1. Growth of luxury automobile sector..............................................................................71.2.Objectives of study.8

1.3.Scope of study91.4.Research methodology...101.5.Research limitations

122. The three competing luxury car brands in India....13

2.1.BMW vs. Mercedes Benz...142.2.Latest and fastest- Audi.....16

3. History of the 3 luxury car brands.183.1.BMW..183.2.Mercedes Benz

19

3.3.Audi....204. Review of literature....214.1.Brand personality....214.2.Creation of brand

personality..224.3.Brand personality of

cars.....235. Luxury car

segment.....255.1.Characteristics......2

56. Luxury cars inIndia.266.1.BMW....2

66.2.Mercedes

Benz.286.3.Audi..3

17. Consumer behaviour

trends.337.1.Cognition to

emotion........337.2.Splurge for special

337.3.Its mine concept

337.4.4p trends

337.5.Moving forward

358. Data analysis and

interpretation...37

8.1.Primarydata......37

8.2.Secondary


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CHAPTER 1: INTRODUCTION

1.1Growth of the luxury automobile sector

India, the world's second-fastest growing auto market, is in top-gear growth. The country is a

hot destination for automobile manufacturers due to its robust economic growth, favourabledemographics, higher disposable income, changing lifestyle and positive industrial eco-system. India is expected to become the third biggest automaker in the world within next

decade.

The various reasons for the growth of luxury cars in India are:

The economy is r is ing in the country which has g iven the people moredisposab le income which they are spending in buying luxury cars.

Various loan schemes have been launched by the automobile manufacturers and the

financial institutions. This has made it very easy for the people to buy luxury cars and this hasboosted the luxury car market in India.

With the IT boom in the country many youngsters are earning high paypackages which enable them to buy luxury cars. And this have further given boost to themarket of luxury car in India.

T h e g o v e r n m e n t h a v e f o r m u l a te d m a n y p o l i c e s s u c h a s t h e r e l a x a t i ono f eq u i ty regulations and the reduction of import tariffs pertaining to the automobileindustry. These have helped to reduce the prices of the luxury cars, which in turnhave led to the growth of the luxury car market in India.

The various automobile companies manufacturing luxury cars for India are:

BMW manufacturers the BMW 530i and BMW 760li models

Rolls Royce manufactures the Rolls Royce Phantom V 12 model

Porsche manufactures the 911 Carrera, 911 Carrera S, and Cayman S models

Daimler Chrysler manufactures the Mercedes Benz C and E class models

Bentley manufactures the Bentley Range and Bentley Continental models

Luxury car market in Indiahas grown over the last few years. That it continues to grow moreefforts must be made by the Indian automobile industry and the government of India. Andonly then the luxury car market in India will be able to reach its heights.

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1.2Objectives of study

The research objective is a statement, in a precise terminology as possible of what

information is needed. The research objectives should be framed so that obtaining the

information will ensure that the research purpose is satisfied. In India, the sky is bright for the

luxury car makers. . The Indian consumers inclination for owning a luxury car shots up thedemand for such cars for the past few months. Many car companies are now introducing cars

in the luxury car segment to attract new customers.

The various objectives of the studies are as follows:

To determine the scope of luxury cars in India.

Growth opportunities of luxury cars in India.

To identify and analyze the factors influencing the purchase of cars

To determine the demographic variables of the customers of different brands of cars

.

1.1 Scope of study

Defining the scope of the research or research boundaries ensures the desiredprecision or accuracy of the result .It is aimed to study the luxury car market and its scope

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in India. The main focus of the project is to study the growth of cars like BMW,MERCEDES BENZ and AUDI. It also leads to identify and understand the scope andgrowth opportunities ofluxury car brands in India

Nowadays, car has become a necessity and forms a part of life. Therefore, there is a

significant scope to examine the perception and purchase behaviour of the consumers of cars.

Knowledge of the buying behaviour of the different market segments helps a seller to select

their target segment and evolve marketing strategies to increase the sales. The scope of this

research has a very good future.

1.2Research methodology

A research process consists of stages or steps that guide the project from its conception

through the final analysis, recommendations and ultimate actions. The research processprovides a systematic planned approach to the research projects and ensures that all aspect of

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the research projects is consistent with each other. This chapter aims to understand the

research methodology establishing a framework of evaluation and revaluation of primary and

secondary research. The techniques and concepts used during primary and secondary

research. The techniques and concepts used during primary research in order to arrive at

findings which are also dealt with and lead to a logical deduction towered the analysis and

results.

The research process has 4 distinct yet interested steps for research analysis:

1. Formulation of problem2. Collection of data3. Making sampling plan4. Research limitation

1.4.1 Formulation of problem

I propose to first conduct intensive primary research and secondary research to understandthe full impact and implication of the luxury car industry, to review and critique the industry

norms and reports on which certain issues shall be selected which I feel remain unanswered

or liable to change this shall be further taken up in the next stage of exploratory research.

Each step is viewed as a separate process that includes a combination of task, step, and

specific procedure. The steps undertaken are logical, objective, systematic, reliable, valid,

impersonal and ongoing.

1.4.2 Collection of data

The collection of data is done by exploratory research

Exploratory research

The methods I used for exploratory research are as follows:

1) Primary data-The primary data was collected by getting some questionnaires filled bythe customers.

New data gathered to help solve the problem at hand. As compared to secondary data which

is previously gathered data. An example is information gathered by a questionnaire.

Qualitative and quantitative data are the newly collected in the course of research. Consist oforiginal information that comes from people and includes information gathered from surveys,

focus groups, independent observation and test results. Data collection took place with the

help of filing questionnaires. The questionnaire method has come to the more widely used

and economical means of data collection. The common factor in all varieties of the

questionnaire method is the reliance on verbal responses to questions, written or oral. I found

it essential to make sure the questionnaire was easy to read and understand to all spectrums of

people in the sample. The questionnaire administration would not take more than 4-5

minutes. The data was collected by interacting with 40 respondents who filled the

questionnaires and gave me the required necessary information. The respondents consisted of

housewives, students, businessman, young executives, professionals etc. The requiredinformation was collected by directly interacting with these respondents.

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2) Secondary data- Secondary data is being collected by through internet, variouswebsites.

Some articles on the research topic were also taken into consideration. There are twotypes of secondary data: internal and external secondary data. A secondary source of

data used consists of books and websites.

1.4.3 Making sampling plan

It is a description of the characteristics ofthat group of people from whom a course is

intended. It attempts to describe them as they are rather than as the describer would like them

to be. Also called the audience the audience to be served by our projects includes key

demographic information ( ie age, sex,etc). The target population is the population I want to

make conclusions about.

1.4.3.a Sample size

This involves figuring out how many samples one need. The sample size in this research is

40.

1.4.3. b Area of sampling

The area of sampling of this research was Mumbai , India.

1.4.3.c Sampling technique

A Simple random sample is a group of subjects ( a sample) chosen from a large group (a

population). Each subject from the population is chosen randomly and entirely by chance

such that each subject has same probability of being chosen at any stage during the sampling

process. This process and technique is known as simple random sampling and should not be

confused with random sampling.

1.1Research limitations

This study conducted has the following limitations:

The scope of the research study is Mumbai. So the population considered may not be the actual representative of the population of

the nation. The information given by the respondents can be biased. Frequency of usage, in the question that asks for highly consumed brand.

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CHAPTER 2: THE THREE COMPETING LUXURYCAR BRANDS IN INDIA

Major luxury cars in India- Mercedes-Benz, BMW and Audi put together have around

85%market share.

Fig 2

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The German car brand Mercedes-Benz had first mover advantage as it had started

operations in India in 1995 and there was no direct competition in this category. So, it

r e ma i ne d Nu me r o U no l ux ur y c a r b ra n d i n I n di a f o r m or e t h an a

de ca de . Bu t, ma rk et dynamics have changed significantly after the entry of

BMW in 2006 followed by Audi in2007.The overall market share of luxury cars has

been reorganized due to the new entrants. This has resu lted in new equations being

forged amongst the various players, driven primarily by a rapidly swelling

millionaire-club having diversified choices and preferences. In 2006, BMW had 9% market

share which has now grown to 42%, catapulting BMW as the number one luxury

brand in terms of sales. Audi which started its operations in 2007 has had the fastest growth-

rate amongst the three and has now captured 20% of the luxury car market. So, the Indian

l u x u r y c a r m a r k e t i s f a v o u r a b l e f o r n e w e n t r a n t s w h o a r e c a p a b l e o f

g rabb ing the untapped oppor tuni ties by fol lowing the cus tomer-or iented

app roach and having abi li ty to induce demand by innovation at each level of marketing

mix. To get a deeper understanding of the scenario we need to develop into the competitivestrategies of these three brands.

2.1 BMW and Mercedes-Benz

Mercedes-Benz India Limited was established in November 1994 as a join venture betweenDaimler-Benz AG and erstwhile Telco (presently, Tata Motors). It has traverseda long j o u r n e y s t a r t i n g w i t h t h e l a u n c h o f o n e o f t h e m o s t s u c c e s s f u l

mo d e l s wo r l d wid e th e Mercedes-Benz E Class (W124) in March 1995.MercedesIndia, now known as DaimlerChrysler India Private Ltd. , has a state-of-the-ar tfully-equipped manufacturing unit in Pune. Mercedes-Benz is known for providing theIndian customers, latest models and technology following strict quality standards. Thecompany considers India as one of its most promising markets. The Mercedes-Ben z C Class and Mercedes-Benz E Class cars are locally manufactured while theMercedes-Benz SL-Class cars are imported as completely built units (CBUs). The companyoffers S-Class, E-Class, C-Class, M Class, CLS-Class, SLK-Class, CL-Class and theMaybach.

Fig 2.1

European Major BMW entered in India in 2006. The company with headquarters in Gurgaonand production unit in Chennai had initial investment of 1.1 billion rupees. It hasswiftly developed both infrastructure and dealership network. The production

plant at Chennai, established in 2007, has an annual capacity of 3000 units in asingle shif t and it produces BMW 3 series and BMW 5 series sedans. The rest of models-BMW 7 series, X3 and X5 are imported as CBUs. BMW 3 and 5 series account for80% of the total sales of company in India, of which BMW 5 series has highestsales.BMW India, with its aggressive marketing, fast expansion of product

prof iles, str ategic dealership location selection and supplementary financial serviceoffering, has managed to wrest biggest market share from Mercedes-Benz. BMW andAudi,

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both focus on sportier features and new launches to encourage young buyers. Decrease in theaverage age of luxury car buyers is a favourable condition for this kind of selling strategy.In the Indian scenario, where 75% of passenger cars and 60% of luxury cars are purchasedthrough financing, financial supplementary support is critical to success of thecar makers. Taking this into account, BMW Group is planning to introduce BMW

Fin ancial Services India, which will provide services to BMW customers, providingfinancing facilities to fleet-owners and commercial-financing to their dealers.Discounting older models is another successful strategy applied by the company.It is also planning to launch Pre-Owned Car Sales Program in 2010. BMWs 5-year coverage (after sales) is another attractive factor compared to the 2-yearwarranty prov ided by Mercedes-Benz. In the Indian scenario, the luxury cars aregenerally chauffeur-driven. This trend has been well-imbibed by BMW as it has focusedmore on back-seat facilities during designing and marketing. The companyhas b een fo cu s in g o n s o me o th e r t ech n o lo g ies l ik e In te g ra l Ac t i v e -St ee ri ng , P a r k D is t an c e Control (PDC) and Head-up Display (X5) for providingenhanced features for comfort in the Indian driving conditions.BMW has been acting very

swiftly in identifying its dealership locations so as to achieve maximum sales volume aligned.BMW with 15 dealership locations (two locations in Delhi and Mumbai) competes withMercedes-Benz having 32 dealership locations because it has strategically expanded itsdealership network to higher demand luxury car markets. In next phase BMW is planningto target emerging tier 1 and 2 cities like Jaipur and Lucknow to compete withMercedes whose 25-30% sales revenue comes from tier 2 cities.

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2.2 Latest and Fastest- Audi AG

Audi India started operating in 2007 by establishing its own sales company in Mumbai. Thecompany started production of Audi A4 in November 2007, followed by Audi A6 in 2008 inits Aurangabad plant. Rest of the models - Audi A8, Audi Q5 and Q7, Audi TT

and su per s p eed ra c in g ca r Au d i R8 a re imp o r ted as CBUs . Au d i in v es te dsignificantly in brand building, marketing the product qualities and improvingafter sales services in India. Audi offers technology with composure and agilityto current techno affluent Indian youth. Known for its technology, luxury and style, thisGerman car maker has received five different awards by Indian auto media. Audiscommitment to innovative and sophisticated design is widely endorsed by car buyers. One ofthe reasons of Audis global success is its ability to identify potentia l markets forexpansion. The co mpany selected India as it s second production site after China.

Fig 2.2

Th e lo ca l p ro d u c t io n p ro v id es Au d i , ab i l i ty to ca t e r cu s to mer n eed s in ac os t e f fe c t iv e manner. Audi is always a first choice of techno-geeks who want to getmore involved during the drive. Besides being the fastest growing luxury brand in India, Audiregularly brings new models and variants of existing models to surprise the car lovers. AudiQ5 is the most endorsed imported sports utility vehicle (SUV) in India. The companyfollowed the same dealership location strategy as BMW by selecting similar sales regionsofhigh demand (four dealership locations in northern and central regions Delhi,Gurgaon, Chandigarh and Ludhiana) at 13 locations country-wide. Due to these efforts,Audi has rapidly captured market in India and has exerted considerable pressure on the otherdominant players. The company noticed a 65% jump in sales (200 cars) in May 2010compared to May2009 (121 cars). Both Audi and BMW have focused in the world classmusic system facility and ultra luxury looks in their models. Luxury car segment is going tochange as there are many new cars lined-up for launch during the period 2010-2012 withapproximately 50 to 60 new models from major global brands. The marketfutures will not only be driven by product itself but also services associated with it. So itwould be a war of biggies, competing on diverse parameters. Automobile market will benoticing a great shift but as the prev ious patt ern of market shows, the only mantra ofsuccess wil l be a hol ist ic approach aligned to the companys brand image and customeroriented vision.

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CHAPTER 3: HISTORY OF THE 3 LUXURY CAR

BRANDS (BMW, MERCEDES BENZ, and AUDI)

3.1 BMW

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Although BMWs current fame and reputation as one of the greatest automobile

manufacturers can be mostly linked to models produced in the last two decades, the history ofthe marquee stretches back almost 90 years and contains numerous achievements that have

established it as a benchmark.

B M W s t a n d s f o r B a y e r i s c h e M o t o r e n W e r k e o r B a v a r i a n M o t o r C

ompany. The company was established in 1913 and based in Munich, G er man y . I t

s tar ted ou t as an aero eng ine manufactu rer , hence the company logo . The

logo comprised of four quadrants of alternating white and blue color. It is a

s ty l i zed repr esen t a t i on o f an a i rp l ane propel ler spinn ing against the c lear

blue sky. The logo represen ts a white propeller blade against a blue sky. It reflects the

origins of BMW as a maker of military aircraft engines during WWI. Also, white

and blue are the traditional colours of Bavaria.

3.2MERCEDES BENZ

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The M erce des -B enz logo i s one o f th e mos t fam ous b r ands i n o th erworld.The Benz logo is a simplistic three-pointed star that represents i t s d o mi n a t io n o f th ela nd , th e se a, an d th e ai r. Th e fa mo us th re e- pointed star was designed byGottlieb Daimler to show the ability of his motors for lan d, air and sea-usage. It wasfirst seen on a Daimler in1909, and was combined with the Benz laurel wreath in 1926 tosignify the union of the two firms. Mercedes- Benz is the worlds oldest automobilemanufacturer.

The companys founders, Gottlieb Daimler and Carl Benz, continued to make automotivehistory following their invention of the automobile in 1886. As an automotive pioneer,Daimler and its employees are committed to excellence and act responsibly towards societyand the environment, to shape the future of safe and sustainable mobility with

groundbreaking technologies and high-quality products.

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3.3 AUDI

The Audi badge the 'Four Rings' is the emblem of one of the oldest car manufacturers in

Germany. It symbolises the 1932 merger of the four independent motor-vehicle

manufacturers: Audi, DKW, Horch and Wanderer. Together with the NSU brand, which

joined in 1969, these companies are the roots of the present-day AUDI AG. After the war the

Audi name - which is Latin for "Hear!" - disappeared, but was revived in 1965, using the four

rings as a logo. Also, the name is sort ofa pun on 'hoerch', German for 'hear', name ofone of

the founders. The company itself is more than a century old. The four rings in the logo have

nothing to do with the Olympic rings.

CHAPTER 4: REVIEW OF LITERATURE

4.1 Brand Personality

Abrand is a set of expectation and association evoked from a company or product. A brandis how your key constituents- customers, employees, shareholders etc. experience what you

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do. Some brands are of such great importance to people, that we speak of them as a partofones life and identity, being used to express one. Some would say that these

brands have their own personality, the brand personality, which can be defined asthe set of human characteristics associated with a given brand. Thus, itincludes such characteristics as gender, age and socioeconomic class, as well as

such classic human personality is both distinctive and enduring. Based on the premisethat brand can have the personalities in much the same way as humans, brand personalitydescribe brands in terms ofhuman characteristics. Brand personality is seen as valuablefactor in increasing brand engagement and brand attachment, in much the same way as

people relate and bid to other people. Much of the working the area of brand personality isbased on translated theories of human personality and using similar measure of personalityattributes and factors. Brand personality refers to the set of human characteristics weassociated with the brand. A common way of determining this is to reply on the metaphor :If the brand was a person, what would he/she be like? we then lis t and group thetraits to describe the brand as, for example: caring, approachable and trustworthy.

4.2 Creation of brand personality

Brand personality traits are formed and influenced by any direct or indirect contact that the

consumer has with a brand. A brand, unlike a person, cannot think, feel or act. A brand has

no objective existence at all its simply a collection of perception on the minds of the

consumer. Consumers accept the marketing actions to humanize brands. Indirectly, the brand

personality is created by all the elements of the marketing mix. Betra, Lehman and Singh

suggest that the personality of a brand is created over time, by the entire marketing mix of the

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brand- its price ( high or low, odd or even), retail store location( imaginary association),and

product form( solid/liquid.etc) benefits), packaging details (colour, size, material, shape),

symbol; used an all phases of the brand communication, sales promotion, and media

advertising

One of the advantage of the brand personality is that based on their distinctive personalities,consumers are able to differentiate between brands. Another advantage is that the consumer

can interpret the brands image in such a way that it is personally more meaningful. Thus the

consumer put more efforts in creating and using the brand personality. A further advantage

of brand personality is that life is given to a brand. By vitalizing a brand, another perspective

of brand personality can be examined, namely the role of a brand as relationship

partner in a consumer brand relationship. Next we will concentrate on these consumer brand

relationships, Whether the brand is a product or a company, the company has to

dec ide what per sonali ty traits the brand is to have. There are various ways of creating

brand personality. One way is to match the brand personality as closely as possible to that of

consumers or to the personality that they like. The process will be:

a) Define the target audienceb) Find out what they need, want and likec) Build a consumer personality profiled) Create the product personality to match that profile

4.3 Brand personality of cars

Are you what you drive? That is what are companies seem to be asking and in the

same breath trying to convince you about. In other words, are you the Hyundai accent owner

who commands immediate respect wherever she goes (including fro the potential father-in-

law) or are you the suave executive from the Chevrolet ad who is ever ready to share a

moment with loved one? With a plethora of new models in the market, and generic benefits

(such as space or fuel eff iciency) of a particular car segment hardly ad is tingui sh ing fac to r be tween car mod el s, marke te r a re inc reasingly

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differentiating on the emotional pay-off a particular car model/brand provides to the

customer. This, of course, varies from the segment to segment and also on how long a

particular model has been in the market. For ins tance , whi le advertising for entry l eve l

or smaller cars tends to focus more on the rational or functional benefits of the

vehicles, the differentia tions is increas ingly on the emotional benefits when it comes

to high end cars.Generally, it has been seen as one move up the value chain, the

differentiation is more on the emotional pay-off. People buy car as an extension of

their personality rather than just features. A car, in India, helps build up show off, social

esteem value. The advertising would al so va ry ac co r di ng to t he se gm en t wh ic h

one is targeting, he says. For instance, the Chevrolet Optra ad (which depicts a

young husband driving his wife to see the moon on the occasion of Karvachauth) shows

an Optra consumer as someone who believes in family values and indulging loves

ones.We find that typically profile of an Optra consumer is someone who is in the age group

of35-45years and has a chauffeur. He buys a car not only for himself but also for the family

and tries to make up, for not being able to spend enough time, by indulging love ones, pointsoutdated. The positioning goes well with the companies catch lines of for a

special journey called life. High end car maker Skoda auto too, through its

advertising, attempts to connect with its consumer on emotional level. Car is

the extension of the personality and our advertising shows the consumer to be

youthful, image-conscious and even bit a macho. The campaign jointly made by

Skodas marketing department and ad agency IB&W not only communicates the quality of

the brand but an appreciation for the finer things in life. The target Skoda consumer is a SEC

A1, primarily male, businessman or someone in the senior management, says Shashank

vaid, manger (marketing), Skoda Auto India. Surely, image building does come higher in the

consumers scheme of priorities when buying a new car than ever before.

The importance of brand image has risen sharply in the last few years. At the segment level,

the increase in importance is greater for the mid-size cars, indicating the relevance of brand

among the more expensive market segments. The manufacturer need to focus

more o how co n s u mers p e rce iv e th em as o f fe r in g ex c i t in g ca r s an d b e in g

c ommi t t e d t o war d s th e m. Contemporariness of model has a big impact on purchase

decision. The perception of the car in terms of its perfor mance and des ign , qual ity,

sales, af ter sales, cos t o f ownersh ip, apa rt from brand image, all impact upon the

purchase decision.

Brand image is not driven by good advertising alone but is significantly impacted upon by the

cars performance and design, quality, and the cost of ownership. Among the three, product

quality has the highest correlation with brand image. Small car buyer seeks

capabi li ty in advertising, and fuel efficiency is relatively more important to them.

Technology, innovation, and good influence premium mid-size buyers. One reality for us in

India is that the market is extremely price/value conscious. While making purchases based on

above, there is rationalised, which does have an impact on the decision on a particular make

and model of car. Be it rational or an emotional decision, consumers would have to think as a

bevy of new models flood the Indian market.

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CHAPTER 5: LUXURY CAR SEGMENT

Luxury vehicle is a marketing term for a vehicle that provides luxury- pleasant anddecent desirable features beyond strict necessity at increased expense. The term suggest avehicle with greater equipment, performance , construction precision, comfort, designingenuity technological innovation or features that convey brand image, cachet, status, or

prestige or any other feature or combination of features. Automobile manufacturers marketspecific makes and models that are targeted at particular socio-economic classes, and thus"social status came to be associated more with a particular vehicle than ownership of a car

per se. Therefore, automakers differentiate among their product lines in collusion with thecar buying public.

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While a high price is the most frequent factor, it is "styling, engineering, and even publicopinion which cars had the highest and lowest status associated with them."Every era inautomobile history has had "a group of car marquees and models that have been expensive to

purchase, due to their alleged superiority of their design and engineering. Aimed at wealthbuyers, such automobiles might be generically being termed luxury cars. "This term is

also used for unique vehicles produced during "an era when luxury was individualisticconsideration and coachwork could be tailored to an owner like a bespoke suit." Althoughthere is considerable literature about specific marquees, there is a lack of systematic andscholarly work that "analyzes the luxury car phenomenon itself.

Th o u g h wid e ly u s ed , th e t e rm lu x u ry i s b ro ad an d h ig h ly v a r i ab le . I t i sa p e r c e p t ual, conditional and subjective attribute and may be understood differently bydifferent people:"What is a luxury car to some... may be 'ordinary' to others."

5.1 Characteristics

Luxury cars tend to offer a higher degree of comfort than their mainstream

counterpart.

The var ious charac t er i s t i c s o f luxury cars are :

T h e i m p o r t a n t c h a r a c t e r i s t i c s i n c l u de g e n u i ne l e a t h e r u p h o l s t e r yan d p o l i s h ed wo o d g ra in lo o k d as h b o ard s .

The luxury cars now a day have traditionally emphasized more on comfortand safety.

Luxury vehicles are also a status symbol for consumption. Contemporary luxury carsalso offer higher performance and better handling, which is often k n ow n as sort. New safety technologies and comfort amenities, such as anti-lock brakes ,

electronic stability control and DVD entertainment systems, before they trickledown to mass market cars. Numerous "smart car" features are largely only foundon luxury cars as of 2009.

European marquees like Mercedes BMW, and Jaguarhave almost never adopted front-wheeldrive and retained a line-up mostly or entirely made up.

CHAPTER 6: LUXURY CARS IN INDIA

6.1 BMW

BMW, the manufacturer of world-famous Rolls-Royce cars, has officially entered the Indiancar market.

BMW , India was set up as a sales subsidiary in Gurgaon in 2006 to spearhead the formation

of its dealer network, and followed it closely by setting up a state-of-the-art assembly plant in

Chennai in January 2007.BMW AG, or Bayerische Motoren Werke AG, was initially

a German aircraft engine manufacturing company. In 1919, they turned to land vehicle

engines, and in 1927 built their first BMW car christened BMW 3/15. For the greater part of

the past century. BMW Car hassled the world in creating cars for the rich. Exceptional

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design concept and elegance has always been a part of the BMW cars.BMWCars in Indiaput

innovation, intelligence and technology to ensure the safety and driving comfort of its proud

owners. BMW India competes with its rivals by exhibiting powerfully performing vehicles

and having a slight edge over the others.

BMW CARS FALLING IN THE LUXURY CAR SEGMENT

6.1.1 BMW 3 SERIES

The smallest of the BMWs in India, the 3 Series is a highly competent entry-level luxury

sedan. As is the case with all cars from the Bavarian marquee the 3 Series is a car that packs

in superb performance with high-end features. With uniquely BMW design, the 3 Series

comes with four engine options - the inline 4 320i, inline 6 325i, the inline 6 330i and the

inline 4 320d. Equipped with iDrive multimedia technology, perfect handling-steering

precision and power-packed performance, the 3 Series is to be experienced to be believed.

The 3 series in an exquisite sports sedan available both in petrol and diesel. It falls in the

luxury segment. The exterior exudes confidence and a powerful flow of expression. The

individual exterior details display elegance that reveals themselves subtly to the eyes. The 3

series with its petrol and diesel variants targets the upper middle class and the rich Indian

consumer with BMW cars having a price range between rupees twenty five and thirty lakhs.

6.1.2 Prices of BMW 3 series BMW 3 Series Car Price List luxury car from BMW

Variants Price range

BMW 3 series 320d corporate edition Rs 24,40,000

BMW 3 series 320i Rs 27,80,000


BMW 3 series 320d highline Rs 31,50,000


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6.2 Mercedes Benz

Merced es Ben z ca r s o f f i c i a l ly came to In d ia in 1 9 9 4 in co l l ab o r a t io n with Telco.Traditionally, MercedesBenz cars have consistently catered to wealthy, rich,and super-rich consumers. The manufacturer's name keeps on changing, butMercedes-Benz cars remain Mercedes-Benz, for the Mercedes-Benz name has agreater brand relationship with world consumers than their manufacturers currentcorporate name - Daimler-Benz, Daimler-Chrysler, orDaimler AG. Popular Mercedes Benzsedan car prices range between around rupees twenty-nine lakhs to Mercedes-Benzes at a bitabove one crore thirty lakhs rupees.

Mercedes Benz presence in India

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Mercedes-Benz has been associated with India for more than 50 years. Presently, Mercedes-Benz Indias engagement in India covers several domains:

a) Local production of Mercedes-Benz carsb) Making available imported Mercedes-Benz carsc) Commercial Vehicle operations

d) Global sourcing of auto components

Social Involvement of Mercedes-Benz

Mercedes-Benz is also involved with social-oriented programs across India like:

a) Biofuel from Jatrophab) Road safety project for childrenc) Automotive education, etc.d) Captive automotive technology research and development

Mercedes-Benz India has been delighting customers with strong brands and a wide range ofproducts equipped with the latest in automotive technology. The company has been the

pioneer of the luxury car segment in India with its inception way back in 1995. It is the onlyluxury car maker in India to have such a wide range of cars. The different ranges availabletoday are the C-Class, CL-Class, CLS-Class, E-Class Saloon, E-Class Coupe, E-ClassCabriolet, GL-Class, M-Class, R-Class, S-Class, SL-Class, SLK-Class, and the Maybach.

6.2.1 Mercedes Benz C -Class (Sedan)

Mercedes Benz (Sedan) The C Class Sedan is the entry level sedan in theluxury segment. The C class is a signature statement of the refined andthe upwardly mobile. The Mercedes Benz C-Class with its petrol and dieselvariants targets the upper middle class consumer with Mercedes-Benz carprices between rupees twenty five and thirty lakhs.

The Mercedes-Benz C-Class is an entry level luxury car in the Indian market.

Direct competition to the BMW 3 Series and Audi A4, the C-Class has remained

as the elegant choice amongst the cars. Solid built, classic good looks and well

appointed interiors are synonymous with the brand and this is what drives

customers to this car. Available in a choice of trim levels and petrol and diesel

engine options, the C-Class is a definite way to announce that you have indeed

arrived in life. Adding to this, The C-Class now comes in with a panoramic sun

roof, Attention Assist and a host of other features.

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6.2.2 Pricing of Mercedes Benz

Variants Price range

C 200 CGI Elegance Rs. 28,30,000

C 200 CGI Avantgarde Rs. 29,53,000

C 200 CGI Elegance Blue EFFICIENCY Rs. 28,58,000

C 200 CGI Avantgarde

BLueEFFICIENCY

Rs. 29,79,970

C 250 CDI Elegance Rs. 32,03,500

C 250 CDI Avantgarde Rs. 32,81,500

C 250 CDI Elegance BLueEFFICIENCY Rs. 32,03,000

C 250 CDI Avantgarde Rs. 32,30,000

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BLueEFFICIENCY

6.3 Audi

The famous 'Four Rings' - of Audi are symbolized on its badge. It has ruled European roads

since 1932, though Audi began manufacturing in 1899. The four rings of the

Audi badge symbolize four p ioneer car manufacturers of Germany: Audi,

DKW, Horch and Wander er. Audi AG came from amalgamating these companies in

1932. Audi cars symbolize status and pre st ig e fo r Au di co ns um er s wo rl dw id e,

an d fo r Au d i co n s u mers , Audi Carsare more works-of-art than simple super

efficient machines. A n Audi car is a statement of who-you-are. Audiare regarded as

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a symbol of class, elegance and luxury. Audi India began o p er a t io n s in 2 0 07 a s a

d i v i s i on o f V o l k s wa g e n G r o u p S a l e s I n d i a P v t . L t d . b a s e d i n Mumbai.

Audi cars now in India are fully imported or assembled at the Aurangabad plant of Skoda

Auto. Audi India is projecting its cars to the Indian elite as the best luxury cars

to match their status. Audi cars are starting to fire the fancy of the rich Indian consumer and

the upper middle class wit h the ir cur ren t ran ge of Aud i A4, Audi A6, Aud i

A 8, a nd A ud i Q 7 s ed an c ar s. Audi India is expanding the network of Audi

dealerships across Indian metros. Popular Audi models range in on-road price from below

rupees thirty-two lakhs to a bit above rupees one-Crore.

6.3.1 Audi A4

The 2012 Audi A4 ranks 3 out of 21 Upscale Midsize Cars. This ranking is based on our

analysis of 29 published reviews and test drives of the Audi A4. With its sharp interior and

exterior styling, available all-wheel drive and good fuel economy, the 2012 Audi A4 is a

viable alternative to more costly rivals. Frequent comparisons are drawn to rivals such as

the BMW 3-Series, which test drivers often consider to be the benchmark for performance

within the class. Many say that the Audi A4 may ultimately suit drivers better in the real

world. The A4 may be best in class, period, writes Automobile Magazine. Purists and

weekend racers will rightfully stand behind the better-balanced BMW 3-series, but for the

majority of buyers looking for German driving dynamics, great design, and good fuel

economy, this may be the best bet.

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6.3.2 Pricing of Audi

Variants Prices

Audi A4 1.8 TFSI Rs 29,71,400

New Audi A4 2.0 TDI multitronic Rs 29,00,000

Audi A4 2.0 TFSI Rs 31,66,400

New Audi A4 3.2 FSI tiptronic Quattro Rs 36,00,000

Audi A4 3.0 TDI Quattro Rs 37,72,000

CHAPTER 7: CONSUMER BEHAVIOUR TRENDS

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In the past, prestige was due to real financial distance. At heart, luxury is about exclusivity.

Today, given the rise in purchasing power, luxury consumption is no longer reserved for the

few. This is a time in history when the affluent masses are no longer at a financial distance

from luxury. But prestige and exclusivity has to be driven by distance except this distance

is no longer financial, but intellectual and cultural. A better way to look at the trends that

exist in this market is to segregate them into categories, namely the marketing mix trends

(product, price, place, promotion) and consumer behaviour trends.

7.1 Cognition to emotion

The Indian consumer, today, is influenced more by the affective components than

by the cogni tive e lements. In the case o f Mercedes Benz, the companycommunicates the strong relationship of the car with status, snob value andimage. In the case of Audi, the company communicates sleek design and so on.However, it is no longer necessarily true that customers will take the cognitive route while

purchasing a luxury car. Customers may view Mercedes Benz, Audi and BMW as parity cars

(equivalents) based on cognition, andmake the final choice based on the affective route. Thisis where the trend takes us. The luxury brands have taken this affective route and try to evokeemotion through style and design. A report says that Mercedes Benz sold 3000 cars in Indiain 2007, but is expecting a drop in sales this year because Audi and BMW haveen te red the Indian market with more stylish cars and the consumers feelings towards thesecars are extremely positive.

7.2 Splurge for special

The most important day for an Indian is his/her marriage, a ceremony which has for longseen people spending for the special day without hesitation. Given that the day belongs to the

bride and the groom, people are increasingly demanding the most -splurge able item thatthere can be; a term now synonymous with luxury cars. That is why; increasingly rentalcompanies are purchasing Mercedes and its likes - because there is an increasing demand forthe same from the marriage market. This trend shall continue with enhanced demand, as thedemand f o r t h e d e ma n d f o r t h e se c a r s f o r s pe c i al o c c as i on s w i l l

pe ne tr at e th e mi dd le i nc om e categories in the country.

7.3 Its mine concept

For a consumer who chooses his house and his workplace, the car (which is probably hismost prized possession) will not remain something he cant choose for long. The futuretrends would witness customized luxury cars entering the Indian market.

7.4 4P Trends

7.4.1 Product

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Each of the companies started off in India with only 1-2 cars. Audi started with A4, BMW

with BMW 3 series and Mercedes with C220 and D250. Mercedes started its operation in

India in 1996 and then slowly BMW and Audi came in. The cars were imported as

completely built units. And the indigenisation was initially very less to the tune of 2.5 to 3

%.At present; the range of cars which a company provides in India is almost equal to its full

global portfolio. Also, companies started their production units in the country. Audi started its

production in Aurangabad and Mercedes has started it long ago in Pune. The company bring

in the cars as knocked down units and assemble them in India, thus saving substantially on

the cost of the 110 % import duty of import of luxury cars. Also the indigenization of the cars

has increased from 2-3 % to more than 60-70 %.

7.4.2 Price

The cars launched by Mercedes, BMW and Audi were in the range of 20-30 lakhs in the mid

90s, a price range which was synonymous with extreme luxury. Today, not only has the range

expanded to approximate the global portfolios, there has been a massive play with the floor

and ceiling prices of luxury cars which is now 20 lakhs to almost a crore. The ultra luxury

segment hasnt made an inroad in India, but there have been a few sales per year where the

consumers import the car. This has prompted companies like Rolls Royce and Maybach to

enter India.

7.4.3 Place

In the past, the luxury car companies only had 1-2 dealers in the metros, majorly Mumbai and

Delhi. Now with the demand coming in, not only from the metros but also the smaller Tier 2

cities, the numbers of dealerships have gone up substantially and the companies are trying to

expand as fast as possible. Also, since the cars were imported, the spare parts delivery wasntso good. The lead time required to get a spare part was quite high. Today companies

understand that the luxury consumer is a very demanding customer and is very particular

about taking care of the car. With the expansion of the dealership network in the country, the

problem of the spare part delivery gets better. Now the companies have a chance to build

customer loyalty through total customer satisfaction.

7.4.4 Promotion

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From what used to be a minimal level of presence in Indian Auto Expos, luxury

automobile companies are increasingly moving towards melding with the suave

consumers:

a) Studio BMW in the corporate heart of National Capital Region with a purpose of

capturing share of heart

b) Participation in fashion weeks and photo exhibits e.g. -Audi W12 Quattro

presented in Lakme India Fashion Week

c) Product placement in Bollywood movies, with the recent BMW placement in Rock

On!

d) Association with lifestyle sports e.g. Audi organizing the Audi Quattro cup in India,

associating with golf and motorsports.

7.5 Moving forward

Although the growth in the luxury automobile segment is compared to the recent Chinese

markets, the forces shaping the development are quite different in India and China. If Chinas

starting point was a slate wiped clean by Mao, Indias is a chalkboard covered with myriad

traditions, religious beliefs, colourful festivals, a there-but not-there caste system all sewn

together into a vocal democracy. If the task in China was to fill a near vacuum, in India

luxury brand have to find a way to blend in with the milieu of local traditions. For the same,

we develop a 7-point framework for seamlessly capturing Indias growing fascination with

luxury consumption:

a) Respect: Connect with luxury consumers as a selective target. Luxury brands need

to respect this point of difference in all interactions between the brand and the

consumer.

b) Segment: Acknowledge luxury consumer subsets. Luxury brands need to identify,

differentiate and prioritize the most profitable subsets for targeted strategies.

c) Insight: Identify what is important to the defined target. Motivations could be based

on personal and non-personal factors.

d) Connect: Assess which brand interactions really matter. For example, friends and

family are an important influence on luxury consumption in India.

e) Experience: Establish emotional connectivity. Deep and meaningful relationships

need to be developed in order to win the soul of the luxury consumer.

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f) Indianness: Embrace and celebrate the Indianness brand. India has a very powerful

and unique identity, and this needs to be leveraged within a luxury brand context.

g) Consistency: Adopt a truly holistic approach, to ensure that all brand interactions,

whether advertising or customer service, are consistent with the brand positioning.

Consumer Behaviour consists of all human behaviour that goes in making purchase

decisions. An understanding of the consumer behaviour enables a marketer to take marketing

decisions which are compatible with its consumer needs. There are four major classes of

consumer behaviour determinants and expectations, namely, cultural, socioeconomic,

personal and psychological. The socio-economic determinants of consumer behaviour consist

of age, marital status, occupation, education, income, family size etc .Realizing the

importance of passenger car industry in the present economic situation, the researcher has

analyzed the perceptions, and behaviour of consumers related to this product. It is rightly

said; yesterdays luxuries are todays necessities. Hence in this digital world, car is no longer

a luxury. From the discussions made in the previous chapters, there are certain product

attributes which are identified in the study as influencing the purchase decision and satisfying

the consumers. The growth in the population of India and the increasing number of middle

class consumers has attracted the attention of car manufacturers and marketers. The

manufacturers and marketers who study the behaviour of consumers and cater to their needs

will be successful. It may be concluded that consumer behaviour has a greater role to play in

the LPG era of economic activities for which a necessary survey and research should be

conducted in an efficient manner.

CHAPTER 8: DATA ANALYSIS AND INTERPRETATION

8.1 Primary data collection

The data was collected through questionnaires from 40 customers. The collected data are

going to get analyzed here by using tables and charts like pie charts and bar diagrams.

Further, the inferences are been made from the collected data.

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QUESTIONNAIRE

Q1) Which age group is most interested in buying luxury cars?

Table 1.1

Age No of respondents

18-24 6

25-34 14

35-44 11

45-54 7

55 and more 2

Total 40

Analysis:

According to the respondents, Age group of 25-34 is most interested in

buying Luxury cars that is around 34% followed by Age Group of 35-44.

Q2) Does purchase of Luxury is car directly related to income level?

Table 2.1

Answers No of respondents

Yes 37

No 3

Analysis:

The result was totally skewed to one side and respondents agree that Purchase of

Luxury cars is totally related to the Income level ofan Individual which is 92%.

Q3) Rank the following parameters on your purchase preference?

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Table 3.1

Answers No of respondents

Price 10

Quality 15

Availability 7

Involvement 5

Recommendation 3

Total 40

Analysis:

Most of the respondents prefer quality followed by price and availability. This

response shows that customers are ready to pay of quality.

Q4) Why does one person purchase a Luxury Brand?

Table 4.1

Value No of respondents

Quality 3

Flaunt value 20

Interested in art 7

Exclusivity 10

Analysis:

In opinion of respondents, majority of people buy luxury cars because they want toflaunt their superiori ty over o thers. Followed by those people who reallyhave taste of ar t and exclusiveness of the luxury that is around 30%.

Q5) Is the quality of Luxury brands are more superior then others?

Chart 5.1

Analysis:

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Our assumption is correct, about 73% of the respondents believe in thesuperior quality of luxury cars.

Q6) Are services provided by luxury brands is better than others?

Chart 6.1

Analysis:About 72% of the respondents are of the view that service quality in luxury car

brands is more superior then other brands.

Q7) What is the factor the effect most while purchasing a car?

Chart 7.1

Analysis:The graph indicates that majorly people tend to see as brand of the car as the major factorthata f f e c t s t h e b u y i n g d e c i s i o n o f a c u s t o m e r a n d o t h e r f a c t o r s t ha t a r e t o o t a k e n i n t o considerations are engine power, shape, looks, etc.

Q8) What are the factors that influence the occupations in buying decision?

Table 8.1

Types of job No of respondents Percentage

Professionals 24 48%

Government employees 6 12%

Nris 11 22%

Businessman 9 18%

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Total 50 100%

Analysis:

From the above chart it can be found that the 48% customers are professionals, 22%

were NRIs.

Q9) What is the purchasing pattern of luxury cars?

Chart 9.1

Analysis:

From the above chart it can be found that 88% of the customers have no previous

experience with buying luxury cars.

Q10) What are the sources of information to get to know about the luxury cars?

Table 10.1

SOURCES NO. OF RESPONDENTS PERCENTAGE

Television 22 44%

Newspaper 3 6%

Personnel sources 6 12%

Product demos 2 4%

sales representatives 5 10%

Experienced users 12 24%

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TOTAL 50 100%

Analysis:

From the above chart it can be found that 44% were influenced by the TV advertisement. 24

% influenced by experienced users, 12% were influenced by Personal sources and 10% were

influenced by sales representatives. News paper and product demos were influenced by 6%

and 4% respectively.

Q11) What are the general factors that influence a customer purchase decision?

Chart 11.1

Analysis:

The above table shows that most of the customers rates comfort as the most important factor

for purchasing a car, then comes mileage, style and price respectively. Colour is not having

that much influence on buying decision.

Q12) What are the customers opinion on style for purchasing a luxury car?

Chart 12.1

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Analysis:

From the above table we can see that, 34% customers were highly influenced and 64

% were influenced by the style of the luxury cars while making their purchase

decision. The rest 2% were not influenced by the style.

Q13) What is the customers opinion about comfort?

Chart 13.1

Analysis:

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The above chart shows that 70 % customers were highly influenced and 30% were

influenced by the comfort and convenience while making purchase decision.

Q14) What is customers opinion about price?

Chart 14.1

Analysis:

The chart above shows that 48 % customers were influenced and 42% were highly

influenced by the price. The remaining 10% were not influenced by the price.

Q15) What is customer opinion about price of luxury cars?

Chart 15.1

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Analysis:

From the above table we can see that 82% customers were influenced and 14% were highly

influenced by the product features of luxury cars. 4% was not influenced by the product

features.

Q16) What is customer opinion about technology while purchasing a luxury car?

Table 16.1

Level of influence No of respondents Percentage

Highly influenced 14 28%

Influenced 33 66%

Not influenced 3 6%

Total 50 100%

Chart 16.1

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Analysis:

The above table shows that 14% customers were highly influenced and 33% customers

highly influenced by the technology. Remaining 3% was not influenced by the technology.

Q17) What is customers opinion about brand image of luxury cars?

Chart 17.1

Analysis:

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The chart above shows that 62% of customers were influenced by the brand image while making

their buying decision whereas 38% respondents were not influenced by the brand image.

Q18) What is the purpose of customers buying decision?

Chart 18.1

Analysis:

The chart shows that 96% customers using their car for personal purposes. The remaining

4% were using it for official purposes.

Q19) What is the opinion of customer about after sales service?

Table 19.1

LEVEL OF INFLUENCE NO OF RESPONDENTS PERCENTAGE

Highly influenced 16 32%

Influenced 13 26%

Neutral 14 28%

Less influenced 6 12%

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Not influenced 1 2%

Total 50 100%

Analysis

This shows that 32% customers are highly influenced with the after sales service of the

companies where as there is a mere 2% customers who arent satisfied with the after sales

8.2 Secondary data collection

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Secondarydata is data collected by someone other than the user. Common sources of

secondary data include censuses, surveys, organizational records and data collected through

qualitative methodologies orqualitative research.

The recent growth in the luxury car market in India is much more than mere market dynamics

in a particular car segment. It is a reflection of the changing lifestyle of the affluent class inthe country. In India, the luxury car segment (Average Price 25-30 Lakh) has been growing at

an average rate of 20% or above during recent years; it seems to be least affected

by the global financial crisis. During worst recession period when world was facing

low market demand trends , Indian lux ury ca r seg men t gre w at 23% to 6 ,6 71

v eh ic les acco rd in g to th e So c ie ty o f In d ian Au tomo bi le Manufac tu re rs

(SIAM) despite a 0.5% decline in passenger car sales, to 11.04lakh vehicles

(April-December 2008 Report). But financial year ended March 2010 has shown

g r ow t h o f a u to m ot i v e s e c t o r u p b y 2 5 % t o 1 5 . 2 6 l a k h v e hi c l es . T h is

indicates optimistic sign of recovery of sector. While the Indian auto industry is

expected to g row at 17% to 19% on an aver age, sa le s o f l uxury and super-

l u x u r y c a r s a r e e x p e c t e d t o g r o w exponentially. Luxury car segment

accounts only for 3-4% of total car sales in India. But what lures the international

majors is the fact that this segment is growing at 25%-plus (2009sales), much higher than 15-

17% growth registered by the small passenger car segment over the past few years. This

growth of luxury car sales is driven majorly by increased wealth-creation within

average Indian population and the desire of individuals to join the millionaire-c lu b b y

f l a u n t i n g t h e i r w e a l t h . G r o w t h o f I n d i a n e c o n o m y h a s b e e n f a s t e r t h a n

o th e r emerging economies during recent times. Globally, India had the highest growth-rate

(22.7%) of millionaire population during the year 2007. India added 23,000 millionaires from2006 to2007, taking total figure to around 123,000 millionaires; wealth as measured in US

Dollars (Mer r i l l Lyn ch Cap Gemin i Rep o r t ) . Ho wev er , d u r in g reces s io n ,

th e c o u nt ry n o t i ce d a decline of 31.6% in number of millionaires. But post-recession

recovery was much faster compared to other economies. These numbers are expected

to grow up to 1,40,000 by the year 2010. This robust growth in the number

of millionaires in the country, being one of the highest globally, paves the way

for further growth of the luxury car market.

Graph 8.2.1

Graph 8.2.2

In the pas t few years this growth of luxury car sales is driven majorly byincreased wealth-creation within average Indian population and the desire of individuals to

join the millionaire-c lu b b y f l au n t in g th e i r wea l th . Gro wth o f In d ianec on om y ha s be en fa st er th an ot he r emerging economies during recent times.

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Globally, India had the highest growth-rate (22.7%) of millionaire population during the year2007. India added 23,000 millionaires from 2006 to2007, taking total figure to around123,000 millionaires; wealth as measured in US Dollars ( Me r r i l l Lync h Cap G emin iRep ort ) . How eve r, dur ing rec ess ion , the cou ntr y not ice d a decline of 31.6%in number of millionaires. But post-recession recovery was much faster compared to other

economies. These numbers are expected to grow up to 1,40,000 by the year 2010.This robust growth in the number of millionaires in the country, being one of thehighest globally, paves the way for further growth of the luxury car market. Inaddition, the average age of an Indian millionaire has come down to 35-40 years from theearlier average of 50 years. An increasing number of young entrepreneurs and professionalsfrom various fields are buying luxury cars and this affluent segment has been boosting salesvolumes. If we look into citywise wealth distribution, the northern region inIndia( comprising of cities like Delhi, Chandigarh , Ludhiana, Shimla, and Jalandhar )comprises higher density of millionaire population than rest of the parts. This regiontherefore has the highest luxury car sales. After this come, Greater Mumbai, Ahmedabad,Pune, and Chennai.

T he se c it ie s h av e a l ux ur y c ar s al es p at te rn w hi ch i s s ti ll h ig he r c omp a re t o r es t o f t he country. The historical regional sales data of luxury cars sold inIndia, shows that 32-35% of the total a re sold in Delhi region only. This is possiblydue to the psycholog ica l pre ference shift among the North Indian population to showoff their wealth. Delhi is followed in this list by Mumbai, and Punjab state, where Ludhianaand Jalandhar are at the top two slots. Delhi also happens to be the biggest market forMercedes-Benz, Mumbai ranks second fol lowed by the s tates of Gujarat ,Karnataka, Tamil Nadu and Punjab. This geographically distributed populationcould be clustered into classes on the basis of overall behavioural patternsobserved in luxury brand consumers.

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CHAPTER 9: CONCLUSION

The advancing demand of luxury cars across the globe represents a promising

trend to the growth of the automobile industry. The rising demand of luxury cars in India isa sign of people getting richer day by day as well as their desires are also increasing

and there i s a lso increase in the spend ing power o f the customer which shows that

economy of India is also developing at a fast rate. There has been a 200 % growth in the

automobile industry in India especially in the luxury segment and the sports car segment. Due

to which European luxury car makers are introducing most of their sports cars models in

India due to the rising demand and interest of the people.

Increase in disposable income of the people has led to a different lifestyle. Now, the mindset

of Indian consumer is a lot different. Previously, Indian consumers used to check the prices

of everything they bought. Now, the consumer looks at the experience of the company during

the buying process. More than price, Quality matters. This paradigm shift has also changed

the way companies look at India. Slowly and steadily the luxury car market which was in a

very nascentcondition in India, is now counting on big revenues from the countrys

customers. Of late, there had been a steep increase in the luxury car market. Year 2009

recorded a whopping 25% growth in the luxury car market. It would be news for many of us

that India ranks number 1 in exporting automobile components. The German machines which

have fame all over the world use components which are imported from India. New entrants

like Volkswagen are going to heat up the competition even more. Currently the fight is in

between BMW and Merc. Despite being a late entrant in the Market, BMW has been

successful in capturing a considerable amount of market share. But, this fight between just

two companies is not going to stay for long as new players are entering the Indian market.

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CHAPTER 10: BIBLIOGRAPHY

10.1 Bibliography books

1. Marketing management Philip Kotler, Tenth Edition, Prentice Hall India

2. Methodology of research in social sciences Dr. O.R. Krishnaswami & Dr. M.

Ranganatham, First Edition, Himalaya Publishing House.

3. Consumer Behavior- Leon G. Schiffman and Leslie Lazar Kanuk, Ninth Edition,

Pearson Education.

4. Consumer Behavior- Hawkins, Best and Coney, Eighth Edition, Tata McGraw-Hill.

5. Overdrive- October 2011 edition pg no, 98-100.

6. Auto car- September 2011 edition pg no 138-141.

10.2 Websites

1. Gathered information related to the growth of luxury car segment in India fromwww.wikipedia.com .

2. www.bmw.com/india .

3. www.mercedes.com/ India.

4. www.audi.com/india.

10.3 Annexure

A set of questionnaire

Q1) Which Age group is most interested in buying Luxury cars?

a) 18-24

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b) 25-34

c) 35-44

d) Above 55

Q2) Rank the following parameters on your purchase preference?

a) Price

b) Quality

c) Availability

d) Involvement

e) Recommendation

Q3) Does purchase of Luxury is car directly related to income level?

a) Yesb) No

Q4) Why does one person purchase a Luxury Brand?

a) Quality

b) Flaunt valuec) Interested in artd) Exclusivity

Q5) What quality of Luxury cars is more superior then others?

a) Strongly agreeb) Agreec) Neutrald) Disagreee) Strongly disagree

Q6) What are the services provided by luxury brands is better than others ?

a) Strongly agree

b) Agree

c) Neutral

d) Disagree

e) Strongly disagree

Q7) What is the factor the effect most while purchasing a car?

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a) Engine powerb) Shapec) Acceleration timed) Lookse) Brand

Q8) What is the purchasing pattern of luxury cars?

a) Yesb) No

Q9) What are the sources of information?

a) Televisionb) Newspaperc) Personnel sourcesd) Product demose) Sales representativesf) Experienced users

Q10) What are the general factors influencing purchase decision of the customers?

a) Styleb) Comfortc) Mileaged) PriceColour

Q11) What is the customers opinion on style for purchasing luxury cars?

a) Highly influencedb) Influencedc) Less influenced

Q12) What are customers opinions about comfort for purchasing luxury cars?

a) Highly influencedb) Influencedc) Not influenced

Q13) What are customers opinions about price for luxury cars?

a) Highly influenced

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b) Influencedc) Not influenced

Q14) What are customer opinions about product features for luxury cars?


Q15) What are customers opinions about technology for luxury cars?


Q16) What are customers opinions about brand image for luxury cars?

a) Yesb) No

Q17) What is the purpose of buying decision of customers for luxury cars?

a) Officialb) Personal

Q18) What is the opinion of customers about after sales service for luxury cars?

a) Highly influencedb) Influencedc) Neutrald) Less influenced

e) Not influenced

Final Project( May b)

Documents

Transcript of Final Project( May b)