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Consumer preferences of small car in India


The reason for this analysis is to gain a better understanding of factors that influence consumer buying habit in cars. Specifically, we considered lots of inside factors that influence consumer habit including perception, inspiration and learning. How a consumer's attitude, which is a lasting evaluation of any person, subject, or issue, make a difference what they buy also analyzed.

Reviewed other factors that impact consumer purchasing decisions and buying action including personal, social, and situational issues. The personal influences on consumers are important determinants with their needs and needs. Such factors as get older, income, family status, and chosen lifestyle are tightly related to to the types of products people buy and the precise brands they select.

Examined the levels of the consumer decision-making process for buying an automobile: problem reputation, information search, analysis of alternatives between different brands of autos, product choice and post purchase analysis with respect to after sales service, customer marriage, and resale value of the car.

Also addressed the impact of the amount of effort expended and of recognized risk; factors associated with comparative importance and recognized effects of the purchase, from the consumer's point of view.

1. 1 The Decisional Factors

Buyer decision processes are the decision making functions carried out by consumers in regards to a potential market purchase before, during, and after the purchase of something or service.

Consumers have to make different types of decisions each day according to their different needs. A number of the decisions are participating in critical functions in consumers' lifestyle, for example, purchasing a new home or investing in a car, whereas some times the decisions are made on a almost programmed basis. There are not a lot published research articles available on the decision-framing process. Puto, C. proposed a conceptual style of the buying decision framing process.

This model targets the info search phase which includes two reference details: an initial which is internal to the company-expectations and buying objectives, and a final one that considers the sales communication and justification/pay back of the offer.

These two stages lead to the final choice. Burt and Babin developed a model, see Amount. . . This model is consistent with earlier one but gives an focus on an evaluation phase in the process.

This model includes five phases: problem identification, information search, analysis of alternatives, purchase decisions, and final results.

Locational Marketing blend is used to bolster the benefits of the automobile carefully reflecting its key values and positioning. It confirms how and why it will be of interest to various segments of the car-buying community.

Influences on the Consumer Purchase Decision Process

Marketing combination influences

  • Product
  • Price
  • Promotion
  • Place



  • Motivation
  • Personality
  • Perception
  • Learning
  • Values, beliefs
  • Lifestyle.

˜Price' - Reflecting the Setting Strategy

The company must have a clear knowledge of its key marketplace for e. g. (Young people and other price-conscious car purchasers) for small car portion and really should design-pricing strategies to best address their needs and the setting of the car.

˜Advertising' - Communicating

Publicity by means of motoring reviews and test drives are critical to the success of a trade release as this activity should create sufficient consumer interest and fascination with the new models. By getting potential car potential buyers to test drive a car, product usage rises. This has a knock on impact to car sales. The primary above the line medium used to market and communicate a fresh car is through advertising. The decision of Television set and outdoor advertising makes perfect marketing sense.

Socio-Cultural Affects like the cultural influences, caste setup and hierarchies, sex

role participating in also laterally or straight influences the ultimate decision

The consumer's behavior is also influenced by (other) public factors as the guide groups, family, public guidelines and statuses

A buyer's decisions are also strongly affected by personal characteristics, like:

  • Age and Life-cycle Stage
  • Occupation or Profession
  • Economic Situation
  • Lifestyle

1. 2 Research Purpose

  1. To review how inner and exterior factors influence middle class consumers' decision-making functions for buying an basic level car.
  2. To research the repurchase, purchase, and post purchase activities consumers engage in when coming up with decisions of buying a fresh car.
  3. Understand how situational factors can impact consumer behaviour.
  4. Describe how consumers' romantic relationships with other people and sources impact their decision-making functions.

Primary Objective:

To analysis the buying process and associated behaviors in entry level cars and the perception Indian brands versus Global brands in the heads of the Indian school conscious consumers.

Secondary Objective:

  1. Evaluate the passenger car portion and assess noticeable changes which have taken place over time.
  2. Buying behavior with regards to the passenger car portion.

1. 3 Scope of the Study

At the finish of the analysis, the next aspects would be Protected:

  1. Understand how consumer find any noticeable distinctions in the global vs Indian brands.
  2. How would it results buying decisions?
  3. Influence of the traders if any in the final decision making process.
  4. Environmental impact if any.
  5. Extent of availability of alternatives-CSD, USED Autos Market -and their resultant affect of decision making process altogether



Understanding the motor vehicle purchase process is crucial for motor vehicle manufacturers and dealers. Huge amount of information open to consumers require manufacturers and retailers to understand consumer decision-making and the modes of affect which can affect consumer new car purchasing.

Kotler et al. describes the customer buying behaviour as the buying behaviour of the ultimate customers who purchase goods and services for personal consumption. An organization get great advantages by understanding how customers respond to marketing stimuli that include the four P's: product, price, place and promotion.

Other stimuli in the customer's environment such as economic, technological, politics and social also impact all customers' buying decision. All these stimuli go into the buyer's dark box where they, through the buyer decision process, are turned into a set of buyer reactions.

A consumer behavior model, Wheel of Consumer Examination, was created by J. Paul Peter and Jerry C. Olson (1994) as a basis for detailing car buying behavior.

According to the North american Marketing Association, consumer patterns is thought as the dynamic conversation of affect and cognition, patterns, and environmental occurrences by which human beings conduct the exchange areas of their lives.

Marketers can analyse consumer patterns situation in line with the three elements using the Wheel of Consumer Research the environment, habit, and have an impact on/cognition. However, because these three factors interact and effect each other, no-one factor can be isolated from the other.

Parenthood changes the area of responsibility whereby parents are expected to utilize their electricity in the hobbies of the infant, not themselves.

The children are used in books and videos to symbolise a lessening in materialistic tendencies of parents, and the authors check out show that there are differences between the materialism degrees of parents (lower) and non-parents (higher).

Many researches have been done on the buyer buying process and associated behavior but the study done by Valerie S. Folkes (from University or college of Southern California) actually helped to discover the new interpretation of the buying behaviour.

He concluded, " It's the interaction of the problem and the average person that causes behavior. The analysis of consumer tendencies is justified as a separate area of inquiry since when situational cues lead visitors to understand themselves as customers, then they interpret the globe differently than when they don't understand themselves as customers, and that influences their action.

A study conducted by Evan Hirsh, Steve Hedlund & Draw Schweiger in 2001 about the understanding of the brands, which concludes that in the lack of a solid brand, price is the only plausible way to influence near-term demand. Hence, curtailing incentives in an effort to "build brand is improbable an economically feasible option.

Many manufacturers have made brand placement and development a key item on their marketing agenda. Yet brands are not the product of manufacturers' marketing efforts. Instead, consumers base their understanding of an motor vehicle brand's value on their gathered experience with that brand's products. If you wish to change the Brand, change the products - for the better.

The research conducted on the buying behaviour of autos and what role does the brand play in it by Sankar Radhakrishnan in June 2001 was a great help for executing survey on the consumer behaviour for buying autos with relation to the understanding of brands.

A thought provoking point tossed up by the study was the view that advertising does not have any effect on the decision of a particular brand by the possible buyer. Buying a new car often set in motion by mental need-based factors. The analysis found that a lot more rational known reasons for buying a car are frequently sparked off by the mental benefits that owning a car bring.

Emotions also work throughout the purchase process, right down to the choice of the brand. The study found that both logical and emotional factors trigger the decision to buy a car and also operate throughout the purchase process.

The review drives home a point that branding is here to remain. "This is particularly true of the category such as vehicles, where it is often difficult to tell apart between the competing models on simply technical or practical variables. The brand thus becomes the most significant differentiator and a safe choice. As the functional guidelines do trigger your choice to purchase a car and also operate through the purchase process.

Many studies have been done on the consumer buying behaviour but the analysis done by Valerie S. Folkes (in the University of Southern California) actually helped to find the new interpretation of the buying behaviour.

He concluded, " It's the interaction of the problem and the average person that leads to behavior. The analysis of consumer behavior is justified as another domain name of inquiry since when situational cues lead visitors to perceive themselves as customers, then they interpret the planet differently than when they don't perceive themselves as customers, which influences their tendencies.

A review conducted by Evan Hirsh, Steve Hedlund & Make Schweiger in 2001 about the belief of the brands, which concludes that in the lack of a solid brand, price is the sole plausible way to have an impact on near-term demand. Hence, curtailing incentives in an effort to "build brand is improbable an economically practical option.

Many manufacturers have made brand placement and development a key item on their marketing agenda. Yet brands are not the product of manufacturers' marketing work. Instead, consumers bottom their understanding of an motor vehicle brand's value on their accumulated experience with that brand's products. If you want to change the Brand, change the products - for the better.

All these details were found very helpful from the marketer's point of view to increase the image of the brand in the minds of the consumers. Since brand form an important attribute for your choice making of a high involvement product just like a car.

The moral and non-ethical techniques in marketing are under exercise also. Marketing practice is now busy integrating the probable of information and communication solutions through the use of databases and Internet marketing. Vast amounts of potential consumers is now able to be come to this way.

Singhapakdi (1999) exhibited that marketing managers who understand an moral problem in a situation are more likely to have an honest purpose. Hence, we claim that marketing professionals take part in more thought and think about their marketing tactics on the Internet. This could lead to a larger consciousness and therefore to the introduction of more ethical motives and routines.

The question of adopting an ethical marketing behavior does not only boil right down to providing a firm's insurance plan concerning information privacy, it should also be shown in marketing actions.

According to Cherrier (2005) there are two ways to see ethical usage: Conservative and liberal. According to the conservative view consumers need to follow a prescriptive group of ethical norms in order to take ethically.

As the number of marketing messages increases, the more difficult it is to reach out with the intended marketing meaning. The cluttered marketing environment and the ongoing vulnerability of marketing communication are challenging for marketers. (Rosengren, 2008)

Consumer perception and purchase of reasonable trade products have been a subject of intrigue for experts for a long time, as a result of complexities involved with accurately measuring why and exactly how consumers go for moral goods. Prior research has attributed the reasonable trade idea to be of interest to only a small group of usually ethically minded consumers, and just lately to more highly educated high income women.

Demographics also played out a great part in the honest buys of consumers, with research from Littrell and Dickson (1999) that fair-trade potential buyers were demographically homogeneous and consisted of highly educated, well-off women in their forties, with a large portion being professors, medical researchers and social personnel.

Forte & Lamont (1998) found out that there surely is a rise in purchases based on a company's role in the modern culture, with consumers more likely to purchase from an organization that is actively involved in social activities in their communities than those that aren't.

Social responsibility and honest purchase is not the prominent issue in consumer purchase decision (Boulstridge & Carrigan, 2000) cited in Pelsmacker et al (2005) as most consumers do not perform what they state they'll do during answering research questions.

According to Boulstridge and Carrigan, (2000) individuals are anticipating that companies have high ethical behaviour and are prepared to pay more for products made by companies with high honest behaviour.

However, products produced from companies that are unethical are still bought, nonetheless they are anticipated to be cheap. The consumers' way of retribution against unethical companies are through lowered willingness to pay high prices. Another aspect is the way the businees ethics affect business human relationships.

According to Zineldin (2000) long-term romantic relationships are built on ethical and moral understanding which is crucial for mutal benefits and a rewarding relationship. Furthermore, the value of business ethics depends upon consumers desire for a just and good society.

Making the decision regarding a car in not at all different. It vibrates on the same program and requires similar decisional inputs prior to the consumer finds the final term.

The National Surveys

Tata Engine' s Nano has been positioned last among entry level small autos in conditions of client satisfaction, according to advertise research organization TNS.

In the "2010 four-wheeler Total CLIENT SATISFACTION (TCS)" analysis by TNS Automotive, Maruti Suzuki India's (MSI) top selling model Alto topped the entry level small car category. Omni and the once bread-and-butter model M800 implemented the list.

The customer expectations even at the bottom end are increasing. The owners of Tata Nano expect more in conditions of design and Maruti 800 owners expect better servicing as the years pass.

Nano has been having issues pursuing fire situations with six reported circumstances since its introduction in 2009 2009. Tata Motors experienced wanted to provide additional safety measures free of cost as a precautionary solution, although it claimed that the Nano is absolutely safe. The study pointed out that car owners in Northern India are relatively less satisfied in comparison to those in other areas of the country, generally because of after sales services as the age of the car grows. In addition to the entry level compact car section, MSI's Zen Estilo and A-Star jointly topped the premium compact car category in client satisfaction. The survey covered 9, 300 car customers, deciding on 56 models.

In interviews, companies determined two critical issues for the expansion of the tiny car market:


Affordability & Credit: In Indian conditions even small cars are costly - the average small car costs around 12 times average total annual disposable income. Small, fuel efficient cars will remain the main market. It isn't only a subject of the price tag on the vehicle in the showroom, additionally it is the full total cost of possession. But what's changing is the fact vehicle demand used to be powered by authorities, by corporations and private companies - now it has been motivated by private, middle-class consumer demand. And for this set of consumers, affordability is the main element issue. The financing and taxation will continue steadily to shape the market for larger cars. The medium portion is still dominated by company cars, the sort of thing that medium- to high-level managers get. Either companies buy fleets, or they offer employees financing. And in this portion a whole lot will be based upon whether there are new fringe advantage taxes.


Attitudes: Indians are savers, they can be frugal, they are really cost conscious, plus they are very powered by affordability. Most companies assume that which means that medium sized cars will remain hard to sell in volume level - but that despite the conservatism of consumers, frame of mind changes will drive small car sales. There's a huge social switch in India. People are via rural areas to the towns, two-wheelers are presenting way to four wheelers, and therefore the very small 800-1000 cc car market is going to grow very fast. Plus we have been moving to an era of dual incomes, husband and wife both working, and we are also viewing new concerns about two-wheeler safe practices that support small car sales.

A growing percentage of vehicles in the Indian market will operate on alternative fuels

Crisil Research said the Nano price point would visit a 65 % increase in the number of families that are able an automobile.

However, it forecast that at the significantly redefined threshold for car possession in India, gross annual car sales have the potential to increase by 20 per cent over 2007-08.

India's entry-level car market is estimated at 400, 000 devices a year, primarily comprising Maruti-Suzuki's 800 and Alto plus some base types of the Hyundai Santro and Maruti's Wagon-R, autos that are priced below Rs 300, 000 to Rs 3, 50, 000 on the highway.

The Nano, which is likely to hit the market in September/October 2008, will cost at approximately Rs 1, 30, 000 (Rs 100, 000 excluding VAT and transportation costs), appealing to be the world's cheapest car.

Several other manufacturers-- Bajaj Car, Ford and Honda included in this -- also plan entry-level car launches, nonetheless they are unlikely to be at price things only the Nano.

The immediate potential demand for a car at 1. 6 million items is based on non-car owner respondents who were asked if they were aspiring to buy a car-- any car-- in the next twelve months.

The survey got a sample size of just one 1 million households, extrapolated to 215. 9 million households in India with at least one earner.

The survey examination shows that the potential buyers of autos are homeowners with an annual income of Rs 200, 000 and above that do not own a car.

The examination considers all homes that can afford a small car, nor currently own an individual car. Based on the survey, which possessed a sample size of practically a million households, over 12. 88 million homes from the 19 million households with twelve-monthly income above Rs 200, 000 presently do not own an automobile (either new or second hand).

In the case of homeowners with annual income between Rs 1, 50, 000 and Rs 200, 000, there are 10 million homeowners that own a two-wheeler, but do not now have a car.

The review shows nearly 55 per cent of the 1. 6 million demand is expected from rural India and smaller cities, with the near-term demand from the six very metros projected at 0. 25 million. In this, as many as 0. 8 million non-car homes, who were likely to buy only a two-wheeler may now aspire for a car due to the lower price point for an automobile like the Nano.

If one were to suppose that no household, with annual income above Rs 500, 000 would buy a little car, the near-term demand estimate is still high at over 1. 26 million items.



3. 1 Research design and method

Research Method

The review will be divided into three parts:

  1. The desk research
  2. The field research
  3. Report writing

The office research will comprise of evaluating the extra data to examine the next:

  1. Understanding the entire passenger car market.
  2. Assess the noticeable changes that took place in the market.
  3. Evaluate the existing trends in the customer behavior.
  4. Understand the existing consumer approaches towards global vs Indian brands.

The field research will be re-validation of the results of the supplementary data findings and also to achieve the principal objective.

  1. Method of data collection: Structured disguised questionnaire will be developed to comprehend the consumer belief of global vs Indian brands.
  2. Sampling:
  1. Sample Account: This will likely a mix of dealers and prospective consumers of car, picked through the easy arbitrary sampling. For the supplier it'll be stratified sampling selection strategy used.
  2. Sample Size : Dealers - 10, Consumers - 50
  3. Sampling Strategy: Simple random sampling for the consumer and stratified sampling for the traders.

Limitations of the Study

  1. Sample size is not large enough to obtain total results. Variability may exits.
  2. The study is based on the findings of single city only i. e. . . . the Mumbai city only.
  3. The research is restricted to the mini cars section only.
  4. The genuineness of data may be questioned.

3. 2 Data

Method of data collection:

Structured disguised questionnaire will be developed to comprehend the consumer belief of global vs Indian brands.


This will a mix of dealers and potential consumers of car, chosen through the simple arbitrary sampling.

The fieldwork would be performed with the organized disguised questionnaire to understand the middle category consumer's perception of global Vs Indian brands.

The Sample Account comprises of dealers and prospective school conscious consumers of car, decided on through the easy arbitrary sampling.

For the supplier will be stratified sampling selection technique used a sample size of 10. The sample size of consumers comprises of 50.



Car purchasing decision is an important decision for almost all of India young consumers. More than half of respondents made their decision from preliminary decision to buy to positioning the order between two weeks to 90 days.

People get information from different channels, car sales staff, Internet, family/friend word of mouth, car shows etc.

From this survey, we find out that with the quick development of Internet, a great deal of consumers begin to use Internet to get car information (Internet is becoming 2nd most used channel to get information and is merely behind dealer staff in our review).

The Internet is usually the first place for young consumers to visit when they would like to buy an automobile; their next step maybe happen in the showroom, then followed by a try.

The fieldwork is carried out with the structured disguised questionnaire to understand the consumer notion of global Vs Indian brands. The Sample Profile consists of dealers and possible consumers of car, picked through the simple random sampling. For the dealer it'll be stratified sampling selection technique used fir a sample size of 10. The sample size of consumers consists of 50.

Simple arbitrary sampling is utilized for the consumer and stratified sampling for the traders.

The age group of the test account is depicted in the Diagram1. The diagram reflects the 20-30 years age group comprises 43% of the sample.

The diagram 2 reflects the monthly income of the clients surveyed. It shows the majority of the clients earn monthly income less than Rs. 25, 000.

By Diag. 3 it is found that out 50% of the respondents have significantly more than 2 automobiles.

From Diag. 4 & 5, In Mini-sized car segment, Hundai Santro is possessed by maximum respondents followed by Fiat Palio and Maruti Zen. In Mid-sized section, Hundai Highlight is had by maximum respondents accompanied by Honda City and Maruti Esteem.

Mini-Segment Cars

Mid-segment Cars

Consider the next Parameters for his or her Purchase of Autos:

Diagrams 6-13 depict the parameters that folks consider to buy a fresh car. Out of the total respondents surveyed, 45% of individuals highly agree, "BRAND as parameter; 50% as STYLE, 58% as MILAGE, 44% as SPACE, 26% as comfort, 54 % as CREDIT SCHEMES, 54% as COLOUR, 34% as accessories.

Diagram 14 reflects the respondent's need to buy a fresh car. 48% of the respondents said they might buy a new car as their family size is increased, 46% to up grade for a much better car, in support of 6% were first-time buyers.

Diagrams 15-18 In the mini-segment car companies' maximum customers are highly content with the good dealer coverage and the facilities in the store of Maruti Udyog. Subsequently, most of the clients consider that Hyundai Motors (Korean Company) has surfaced to be the No. 1 brand today and with maximum customers being highly satisfied with its after sales service. Tata Motors image and brand is deteriorating. Fiat India is doing average in all aspects



5. 1 Implications

As the younger people get of buying age, consumers will spend additional time on Internet and buy increasingly more products by Internet, including automobiles, therefore, car manufacturers and retail traders should think about how they should do in the several decision making phases in the e-world and really should try to work meticulously with motor vehicle Internet companies and increase its finances on Internet advertising and marketing.

In the needs reputation stage, car manufacturers may use banner advertising, sponsorships and interstitials which could expose customers to products and services.

In addition, car manufacturers and traders may design some internet surveys to get to know what customers really need/want for the autos;

In the info search period, car manufacturers and sellers might provide some online queries which could answer consumers' questions and provide useful information for consumers' decision making;

In the evaluation of alternatives level, consumers could use community marketing, customer feedback, community forums, customer reviews and blogs/MSN places to help customers though the analysis process toward their final purchasing goal. In the purchase phase, car manufacturers might use gift registries, e-mail marketing and online dialogue functionality to help consumers make last purchase or even additional buys.

In the post-purchase period, auto manufacturers and retailers may regularly check the positive or negative comments and feedbacks uploaded on some websites' discussion boards by some users.

5. 2 The Conclusions

On the foundation of analysing supplementary and primary data, the next recommendations are created with regards to the consumer behaviour of traveler car section in SAS Nagar:

As this group 20-30 years includes the major chunk in the test size, it is firmly recommended to focus on this portion and design advertising strategy to attract this portion. The best option model because of this segment would be Mini-size car, considering the quantum of personal savings and purchasing electricity.

As the almost all of customers dropping in the incomes of less than Rs. 25, 000 per month, it is strongly recommended to give attention to financing techniques to get this segment. It really is detected that the accelerating development of Hundai models, viz. Santro and Accent is because of enhancements in technology and design coupled with aggressive advertising. It includes damaged the recalling of Maruti models. It is recommended that Maruti should give attention to creativity in design.

As for as advertising can be involved, customer knows ˜Maruti' brand, but he/she is searching for a change in design. The other brands like Fiat, Honda, still concentrating on premium positioning as soon as the brand is set up they may turn out with competitive pricing with various models.

For any car company, it is becoming essential to focus on boosting brand image. Almost 50% of the clients feel Brand as an important parameter.

As mentioned before, Invention in Design should be parallel emphasis as brand is recognized by the style and design of the model.

Considering the income degrees of midsection and higher middles section, customer is very much considered the mileage facet of the car. Much R &D is preferred to provide gasoline efficiency in the model, which is often projected as edge over competitors.

Cosmetic guidelines color, space should be included in the developing of the model.

It is noticed that customer is more eager to buy a fresh car than going for seconds. So Car manufacturers may unveiling exchange schemes and will be offering to motivate the new models on the market.

We can also conclude that the internationality of the brands does have an effect on the purchase decision of the car in the intellects of the consumers.

As we had already seen that the overseas brands like Hyundai, Honda, Fiat, are doing really well due to their excellence in the merchandise quality, technology, features, price etc. All these attributes does indeed play an essential role in comparison with the neighborhood brands like Maruti Suzuki, Tata Motors etc. whose show on the market is declining daily.

Car market in ----- is growing regularly and the overflow of new models, extreme advertising, in conjunction with competitive pricing and various finance options, customer is very much positive to possess a four-wheeler.

Observing the tips, it might be concluded that car manufacturers already moving the gear to motivate customer with attractive advertising and setting, and inventions in scheme designing, tie-ups with various car finance providers has ignited the expansion petrol and the prices game has were only available in the marketplace.

So the client has more alternatives at competitive prices. So with more car brands arranged to enter the united states, and existing players likely to launch new models, the options open to the possible buyer are going to increase. However, going for a decision which model to buy is also heading to obtain additional challenging. For the Indian car buyer it's perhaps time to obtain additional market savvy.

For the potential clients of the Indian Car market, the intro of inexpensive cars is crucial. While using low-priced cars it is possible that the growth of the marketplace will speed up, as the drop in the automobile prices could make cars more affordable and improve the number of first-time buyers. In addition, low-priced cars may gratify demand for the next cars for homes in the wealthy and top middle classes.

5. 3 Ideas for future research

The current analysis uses the "convenience test, so probably it is not representative from a statistical perspective, so for future research, if with more time and budget, future analysts may take random sampling that each member of that population comes with an equal possibility of being selected

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