I express my sincerest thanks to Mr. Rakesh Maru and Mr. Ravi Manocha, of

Mahindra Navistar Automotives Ltd. for giving me this opportunity to do my

summer project in their esteemed organization. I extend special gratitude to Mr

Ravi Manocha who is my industry mentor for helping me through out the project

and guiding me in its execution. I am obliged by the support extended by every

one at the Mahindra Dealership, Indraprastha Automobiles.

I express my heartiest thanks to my academic mentor Prof. A.K. Biswas for his

valuable suggestions and guidance at various stages of the project.

I would also like to pay acknowledgements to my professors, Dr. A. K. Dey for

his guidance in the research involved in the project and Mr. R. J. Masilamani for

his guidance regarding the flow of the project.

Aparna Kishen,

08DM014

ii

Certificate

iii

Summer Project Certificate

This is to certify that Mr. / Ms. ______________________Roll No.

______________ a student of PGDM has worked on summer project titled

Developing a Marketing plan for the Sub 6 Ton Category Buses At Mahindra

Navistar Automotives Ltd. after trimester-III in partial fulfilment of the

requirement for the programme. This is his/her original work to the best of my

knowledge.

Date: __________

Signature ___________ Name of Faculty________

Seal:

Executive Summary

iv

The project is performed at one of the most renowned Indian organizations, Mahindra & Mahindra’s automotive sector, Mahindra Navistar Automobiles Ltd., MNAL, having office in Delhi at Bikhaji Cama Place. Mahindra Navistar Automotives Ltd is a 51:49 Joint Venture between Mahindra & Mahindra Ltd. (M&M) and Navistar Inc. USA. Mahindra Navistar will manufacture the entire spectrum of commercial vehicles ranging from 3.5 – 49 tons GVW/GCW. These products are developed to suit Indian conditions and MNAL aspires to set new levels of reliability, efficiency and customer experience unseen & unheard of in the commercial vehicle industry.

The management objective is to develop a marketing plan for buses up to 6 ton, which means the buses in the LCV or Light Commercial Vehicle category. The segment includes both school and non school buses as those used for tours and travels and buses owned by organizations as corporate houses and IT firms.

Currently, Mahindra has its Tourister range of buses in Delhi catering to customers as varied as schools, tours and travels and co-corporate. It comes third however in terms of school bus segment, the other competitor being Swaraj Mazda, the leader in school bus segment with TATA finishing a close second. However, in the tours & travels segment, Mahindra’ presence is very minimal with TATA being the leader, followed by Eicher with its JV with Volvo, Ashok Leyland and Swaraj Mazda.

Given these parameters, the project aims at gauging the customer behaviour by broadly dividing the Delhi Bus Industry into school and non school segments. It must be kept in mind that government DTDC buses do not come in the scope of this survey. Methodologies used are Cluster analysis to segment the customers based on their buying behaviour taking the benefits they seek; this being followed by generating a Perceptual Map of M&M vs. TATA and Swaraj Mazda.

v

The Indian bus industry has shown rapid growth over the last two years and currently over 25,000 buses and coaches are produced annually, at par with Western Europe. With still a largely untapped market, the industry is expected to see even better days in the future. Hence, we did a segmentation exercise that revealed three prominent segments where in segments with higher proportion of light user (ones with below 5 buses) gave importance to price competitiveness, over and above other factors. But heavy users (above 5 buses), especially esteemed schools and almost all tours & travels gave importance to the Brand recognition and spares & serviceability factor. Surveys revealed that brand recognition is a term used for the cumulative effect of a long history of servicing, easy financing, resale value, credibility and life time of the bus.

Technically, Mahindra buses are better than its competitors, both TATA and Swaraj Mazda as they both give a mileage of around 7 to 7.5km/kg; however, the Tourister gives a good mileage of as much as 8km/kg. Despite the above mentioned edge, it has been seen that this feature is appealing to customers in the school segment, but for those in the non school segment, the factor of primary concern is that the bus should run well, if and when problems arise, service centres should be available at the nearest possible distance and the spare part availability should be high.

MNAL should carry a regular check on their customer satisfaction indices by visiting their existing customer base. Some customers had complained about the salesman that he hasn’t seen him since the deal was closed. There is a good percentage who said they are satisfied, but even 2 out of 33 customers would make the percentage about 6 which in a narrow customer base of built buses (for private organizations) is significant. The database of Hari Bhari buses that had been sold by M&M prior to the 2008 Tourister range is significant as in it can be used to push sales of the new Tourister range. It is always easy to maintain an

vi

existing customer base than to make a TATA or Swaraj customer switch to M&M (which is possible in due course of time with the right kind of strategies). The visibility of Mahindra buses can be increased amongst potential customers by participating as sponsors for school and college events. They can propose to bear the transportation charges and transport students to the venue, thereby imparting the experience of Mahindra buses. This can be further supported by banners and standees advertising Mahindra buses (staying within the financial viability limits).

If we look at the penetration of buses per 1000 people in India, it stands out to be very less in comparison to other developing countries. The reason can be traced back to government regulations which were stringent more than a decade ago. However, times have seen a steady change. It is most appropriate for MNAL to steadily build their brand value in terms of brand recognition, financing feasibility, spare part availability, proximity of service centres and last but never the least, technology. They say, you strike iron when hot and this is precisely the time to do so.

Table of Contents

vii

Chapter 1Introduction

1.1 Company Overview

1.1.1 Brief History

1.1.2 Mahindra & Mahindra

1.1.3 The Future Ahead

1.1.4 Mahindra Navistar Automotives Ltd.

1.1.4a Navistar Inc.

1.1.4b Navistar’s Entry into India

1.1.4c The Joint Venture

1

1

2

3

4

5

6

7

Chapter2The Project Objective

2.1The Management Objective

2.2 The Research Objective

2.3 Significance of the Study

8

8

9

viii

2.4 Scope of the Study 10

Chapter 3Methodology

3.1 Secondary Data Collection3.2 Primary Data Collection

3.2.1 Population 3.2.2 Sampling 3.2.3 Justification For Sample Size

3.3 Instrumentation

3.3.1 Questionnaire for Study of Bus Preference

3.4 Software Used

1111

121213

13

13

16

Chapter 4Industry Review

4.1 An Overview of the Indian Bus Industry

4.1.1 Etymology

4.1.2 A Brief History

17

17

ix

4.1.3 Classifications of Buses in India Bus Industry

4.1.4 Major Players in Indian bus Industry

17

20

21

Chapter 5Product Review

5.1 The LCV Range

5.2 Product Review

5.5 Communication Strategy Used

2526

34

Chapter 6Results

6.1 Result of Study

6.1.1 Cluster Analysis

6.1.2 Attribute Based Perceptual Mapping

3737

45

Chapter 7Analysis

7.1 Segmentation4956

x

7.2 Competitor Analysis

7.2.1 Competitive Rivalry

7.2.2 New Entrants

7.2.3 Threat of Substitutes

7.2.4 Bargaining Power of Suppliers

7.2.5 Bargaining Power of Customers

7.3 Reference Scheme

7.4 The Future Ahead

5762

6264

65

68

70

Chapter 8Conclusions & Recommendations

8.1 Conclusions

8.2 Recommendations

8.3 Limitations & Caveats

72

75

79

Bibliography

xi

List of Tables

3.1 Likert Scale 16

3.2 Customer Satisfaction 17

4.1 Financial Comparison of the competitors

25

5.1 Technical Comparison of M&M 25 Seater with Competitors

34

6.1 Agglomeration Schedule 39

6.2 Dendrogram Using Average Linkage 44

6.3 Cluster Membership 45

6.4 Final Cluster Centres 47

6.5 Standardized Canonical Discriminant Function Coefficients

48

xii

6.6 Functions at Group Centroids 51

7.1 Cluster Characteristics

List of Graphs

1.1 Business and Financial Metrics 4

7.1 Swing In Prices of Raw Material, Steel

64

7.2 Swing In Prices of Raw Material, Rubber

65

7.3 Present And Expected Demand In

Buses

66

7.4 The Surging Population of India 67

8.1 The Relation between Surging

Urban Population and Buses

69

8.2 The Current Penetration of Buses in 70

xiii

India

List of Figures

5.1 The Mahindra Tourister i CRDe Bus 29

5.2 Additional Features Provided By Tourister i CRDe Bus

31

5.3 TATA Buses 32

5.4 Swaraj Mazda Buses 32

5.5 The Leaflet Mailed to Customers 35

5.6 The Ads That Appears On Magazine Covers

36

6.1 Dendrogram Using Average Linkage 41

6.1 Plot of the Three Brands on Discriminant Functions 1 and 2

46

xiv

7.1 Porter’s 5 Force Model57

7.2 Perceptual Map of Buses and Their Attributes: Drawn Using Excel From SPSS Output

59

7.3 The Cycle Bus Used By Delhi Schools

63

List of Appendices

1 Questionnaire for Study of Bus Preference

81

2 SPSS Output for Cluster Analysis 83

xv

Test

3 SPSS Output for Attribute Based Perceptual Mapping

93

xvi

Chapter 1

Introduction

The project is performed at one of the most renowned Indian organizations, Mahindra & Mahindra’s automotive sector, Mahindra Navistar Automobiles Ltd., MNAL having office in Delhi at Bikhaji Cama Place. We move for a comprehensive view of what the company has achieved and where it stands today.

1.1 Company Overview

1.1.1 Brief History

The birth of Mahindra & Mahindra began when K.C. Mahindra visited the United States of America as Chairman of the India Supply Mission. He met Barney Roos, inventor of the rugged 'general purpose vehicle' or Jeep and had a flash of inspiration: wouldn't a vehicle that had proved its invincibility on the battlefields of World War II be ideal for India's rugged terrain and its kutcha rural roads?

Swift action followed thought. The Mahindra brothers joined hands with a distinguished gentleman called Ghulam Mohammed. And, on October 2nd, 1945, Mahindra & Mohammed was set up as a franchise for assembling jeeps from Willys, USA. Two years later, India became an independent nation and Mahindra & Mohammed changed its name to Mahindra & Mahindra, Ghulam Mohammed having migrated to Pakistan post-partition becoming the first Finance Minister of Pakistan. Since then, Mahindra & Mahindra has grown steadily in size and stature and evolved into a Group that occupies a premier

1

position in almost all key sectors of the economy. Today, its total turnover is about 6.7 billion dollars3.

1.1.2 Mahindra & Mahindra

Mahindra & Mahindra Limited is part of the US $6.7 billion Mahindra Group, an automotive, farm equipment, financial services, trade and logistics, automotive components, after-market, IT and infrastructure conglomerate. Initially set up to manufacture general-purpose utility vehicles, Mahindra & Mahindra (M&M) was first known for assembly under licence of the iconic Willys Jeep in India. The company later branched out into manufacture of light commercial vehicles (LCVs) and agricultural tractors, rapidly growing from being a manufacturer of army vehicles and tractors to an automobile major with a growing global market. At present, M&M is the leader in the utility vehicle (UV) segment in India with its flagship UV, the Scorpio (known as the Mahindra Goa in Italy). Mahindra & Mahindra grew from being a maker of army vehicles to a major automobile and tractor manufacturer. It has acquired plants in China and the United Kingdom, and has three assembly plants in the USA. M&M has partnerships with international companies like Renault SA, France and International Truck and Engine Corporation, USA.

M&M has a global presence and its products are exported to several countries. Its global subsidiaries include Mahindra Europe Srl. based in Italy, Mahindra USA Inc., Mahindra South Africa and Mahindra (China) Tractor Co. Ltd. M&M is the third largest tractor company in the world. It is also the largest manufacturer of tractors in India with sustained market leadership of around 25 years. It designs, develops, manufactures and markets tractors as well as farm implements. Mahindra (China) Tractor Co. Ltd. manufactures tractors for the

2

growing Chinese market and is a hub for tractor exports to the USA and other western nations. M&M has a 100% subsidiary, Mahindra USA, which assembles products for the American market. In the mid 90's Mahindra sold vehicles to Kenya police which are said to have performed very poorly. Within only two years of service all the over 100 jeeps were written off.

M&M made its entry into the passenger car segment with the Logan in April 2007 under the Mahindra Renault joint venture. M&M will make its maiden entry into the heavy trucks segment with Mahindra International, the joint venture with International Truck, USA. M&M's automotive division makes a wide range of vehicles including MUVs, LCVs and three wheelers. It offers over 20 models including new generation multi-utility vehicles like the Scorpio and the Bolero3.

1.1.3 The Future Ahead

At the Delhi Auto Show, Mahindra executives said the company is pursuing an aggressive product expansion program that will see the launch of several new platforms and vehicles over the next three years, including an entry-level SUV designed to seat five passengers and powered by a small turbo-diesel engine. It has plans to unveil the all-new Ingenio SUV, which will be joined in 2009 by a pickup derivative. In early 2008, Mahindra commenced its first overseas CKD operations with the launch of the Mahindra Scorpio in Egypt, in partnership with the Bavarian Auto Group. This was soon followed by assembly facilities in Brazil. Vehicles assembled at the Plant in Bramont, Manaus, include Scorpio Pick Ups in single and double cab pick-up body styles as well as sports utility.The US based Reputation Institute recently ranked Mahindra among the top 10 Indian companies in its 'Global 200: The World's Best Corporate Reputations' list.

3

Mahindra is also gearing up to sell the Scorpio SUV and pickup starting in the Fall of 2009 in North America, through an independent distributor, Global Vehicles USA, based in Alpharetta, Georgia5.

Graph 1.1: Business and Financial Metrics6

1.1.4 Mahindra Navistar Automotives Ltd.

Mahindra Navistar Automotives Ltd is a 51:49 Joint Venture between Mahindra & Mahindra Ltd. (M&M) and Navistar Inc. USA. Mahindra Navistar will manufacture the entire spectrum of commercial vehicles ranging from 3.5 – 49 tons GVW/GCW. These products are developed to suit Indian conditions and will set new levels of reliability, efficiency and customer experience unseen &

4

unheard of in the commercial vehicle industry. Huge investments are being made in product development and in setting up of a Greenfield manufacturing facility at Chakan near Pune. The products of MNAL are currently sold under the trademark of Cabking, Loadking and Tourister3.

1.1.4a Navistar Inc.

Navistar’s roots go back to 1831, with the invention of the reaper, an implement that cleared the way for agricultural development across the North American continent. In 1902, the company teamed with several other makers of agricultural implements to form International Harvester, which became one of the largest companies in the world. The company produced its first trucks in 1907, and began manufacturing diesel engines in 1933. In 1963, International Harvester formed a joint venture with Mahindra & Mahindra, Ltd. for the manufacturing of tractors for the Indian market. In 1986, International Harvester sold its agricultural business and, under the new name Navistar International Corporation, refocused its business model to concentrate on trucks, buses and engines.

Today, Navistar is North America’s largest combined commercial truck, school bus and mid-range diesel engine producer distributing products via a dealer network of more than 1000 dealers in over 90 countries. It has established a threefold strategy for continued success – great products, a competitive cost structure and profitable growth – and has achieved its objectives in all three areas. In 2004, Navistar established growth goals of nearly doubling its size to $15 billion by 2009, with 10 percent manufacturing profit in each segment, and is on track to reach both goals.A key element of Navistar’s success is its leadership in developing innovative, aerodynamic and environmentally responsible products

5

Its International® ProStar® vehicle is the most fuel-efficient long-haul truck in the industry, using 7 percent less fuel than its closet competitor.

The boldly styled International® LoneStar® created an entirely new category of Advanced Classic trucks to meet the requirements of the independent trucker, while also delivering 18 percent less wind resistance than its premium truck competition.

The company’s new MaxxForce™ engines, which employ a compacted-graphite iron cylinder block like those used in professional racing vehicles, have a 400-pound weight advantage over competitive engines, providing increased payload and improved fuel-efficiency.

Navistar also was the first company in North America to introduce energy-saving hybrid vehicles in both the commercial truck and school bus segments. For example, the plug-in hybrid and conventional diesel-hybrid school buses produced by Navistar affiliate IC Bus improve fuel efficiency by more than 70 percent and reduce emissions of carbon dioxide (CO2) by 90 percent3.

1.1.4b Navistar’s Entry into India

As part of its growth strategy, Navistar made the decision to enter India and the broader regional export market for trucks and engines. “We were strongly impressed with the enormous economic potential of India, and its proximity to other key markets in Asia, South Africa, the Middle East and Australia,” states Deepak T. (Dee) Kapur, president of the Navistar Truck Group. “We made the determination that, with the right joint venture partner, the entire region offered tremendous growth potential for both commercial vehicles and diesel power trains.”Apart from joint venture to manufacture trucks and buses, in November 2007, Navistar signed a second joint venture agreement with Mahindra & Mahindra,

6

Ltd., this one focused on producing diesel engines for M&HCV in India. The joint venture, named Mahindra Navistar Engines Ltd. (MNEL), is also 51 percent owned by Mahindra and 49 percent owned by Navistar. The JV today is known by the name, Mahindra Navistar Automotives Ltd (MNAL)3.

1.1.4c The Joint Venture

From 2009, MNAL’s advanced diesel engines have started to power the full line of trucks and buses produced by MNAL. Engine components will largely be sourced locally. The engines will be produced at the same Chakan facility as MNAL’s truck production, which will be operated in an integrated manner to facilitate production efficiencies and other synergies. Production of the new engines is targeted for April 2009. The first production engine will be a 7.2-liter, in-line design that has already proven to be very successful in commercial truck and bus applications in both South America and Mexico.

Ultimately, the Mahindra Navistar joint ventures will deliver a full line-up of engines and trucks to the Indian marketplace, while also exporting from India to other parts of the world. Given the promising market climate and the strong technology and product development credentials of both partners, both are confident that the ventures will enable them to expand their global presence while achieving business success.

Chapter 2

7

The Project Objective

2.1 The Management Objective

The management objective is to develop a marketing plan for buses up to 6 ton, which means the buses in the LCV or Light Commercial Vehicle category. The segment includes both school and non school buses as those used for tours and travels and buses owned by organizations as corporate houses and IT firms. However, M&M buses have not yet entered the arena of state transport (which is a huge segment) due to legal obligations and permits. This project does not include the study of the Mahindra range of Hari Bhari buses which had been abandoned post 2004; instead the study revolves around making a business plan for the Tourister Range of buses, both ‘e- tech’ and the new ‘i-tech’ which entered the market in early 2008.

Yet another phase of the project involves participating in the ‘reference scheme’ which is under development wherein a scheme is being devised to enhance the saleability prospects of M&M range of vehicles, the current scheme being operative for LCV segment alone.

2.2 The Research Objective

Mahindra & Mahindra have had a moderately successful 2007-08 school bus season and have an equally potential but competitive year ahead of them. The research involved in the project aims at:

A thorough market study of CNG buses in Delhi, both school and non school.

8

To study as to how to sustain and improve upon Mahindra’s holds in the school bus segment in Delhi.

To gauge the non school bus segment; this is a comparatively weaker link in their market history to date.

To develop clear segments in the market in order to know how to position oneself in each segment.

To know the nature of the decision making unit involved in purchase of a bus.

To conduct a study of the market in terms of customer survey, competitor analysis and other means required to be well informed about the current trends and market position of the bus industry in India thereby culminating in a marketing plan.

2.3 Significance of the Study

The study should culminate in synthesising a marketing plan for Mahindra buses- ‘The 25 seater Tourister’ range of buses. The survey results should mirror the actual market sentiments with regard to purchase of buses by different organizations thereby revealing the probable factors overlooked by M&M in positioning their product. A good study of customer base is instrumental in making a good sales pitch for the product as well as a marketing strategy which aims at greater market share for the product. It may be noted that some collateral outputs of the project are worth mention as, increasing the awareness of M&M range given their late entry in to market with old and strong players as well as looking for a probable lead for pursuing sale of a bus (es). The reference scheme which features as a separate phase is a live project wherein the company is going to establish a

9

stronger relationship with existing customer base leveraging upon which they would try to attain more customers. Apart from this, the project being live in nature gives its participants to be a part of the reference scheme endeavour taken by the company’s sales department in order to expand the brand and leverage existing customers to bring in new customers.

2.4 Scope of the Study

The study of the bus market is going to be restricted to Delhi alone and not applicable for the Delhi Transport Corp. buses as M&M doesn’t compete in this area.

Chapter 3

10

Methodology

3.1 Secondary Data Collection

The web has been a major source of collection of secondary data where from data regarding the Indian Bus Industry has collected with regards to a brief history, government regulations. The data collected gives us a view of the major players in the industry and their current competitive position in the market.

The secondary data required for the research was collected from the Dealership showroom of Mahindra. For LCVs, M&M has only one dealership showroom in Delhi which is Indraprasth Automobiles which was my source of database of respondents who are present, as well as potential customers of buses. This data base was further enhanced by adding a couple of schools tracked down online and some tours

3.2 Primary Data Collection

The basic research paradigm is followed: 1) Define the population 2) Draw a representative sample from the population 3) Do the research on the sample 4) Infer results from the sample back to the population

3.2.1 Population

11

The population consists of all customers and potential customers of Mahindra buses maintaining the fact that the sample frame is restricted to Delhi alone. It includes two broad segments:

Schools Non- schools

The non school segment includes sections as tours & travels, full fledged enterprises as well as small contractors leasing buses for various purposes as for schools, as route buses, for corporate houses and IT firms, etc.

There are a total of 340 schools worth mention as per documented secondary data collected from the company sales office; this count being stated after excluding schools which do not avail school buses due to low disposable income, children come on their own, have only cab service, are government aided or have DTC buses. These schools include customers and non customers, the customer base including only 20 of the schools. However, there are many tours and travel agencies, small and big scattered across the city, the count for which exactly wasn’t available. A data of 50 cases is however available.

3.2.2 Sampling

The sampling method adopted is Convenient Sampling, a Non Probability sampling method wherein as the name implies, the sample is selected because they are convenient. This non-probability method is often used during preliminary research efforts to get a gross estimate of the results. A sample size of 41 was taken after straining out partially filled questionnaires.3.2.3 Justification for Sample Size

12

The samples are collected by randomly picking names from a secondary data base of customers and potential customers and trying an approach given the fact that always one’s luck is not good enough to get a meeting with them. During the tenure of project the transport in-charges of schools were barely available as through the month of April, some of them who were teachers also were busy correcting the board papers while come the month of May, they were having irregular timings to come to schools given the fact that summer vacations had commenced. As for tours & travels firms, squeezing time out of their schedules was a task of a kind. Given these hurdles, I have come to the sample size of 41.

3.3 Instrumentation

In order to perform the survey, a questionnaire is designed keeping in mind the study of the market through secondary data sources as documented in Chapter 4, Industry Review.

3.3.1 Questionnaire for Study of Bus Preference

The questionnaire prepared must aid in gathering primary data from the customers, i.e. from the market. it must be precise and well spaced and printed in order to appear comprehensive to the respondents. The target customer wasn’t very keen on giving an elaborate survey and hence over the period, the questions were reduced and made as concise as possible so as to not to irritate people hard pressed for time.

The major purpose of the questionnaire is:

13

To know the buying behaviour of customers.

To gauge any possible relations between buying behaviour and demographics of customers.

To know which factors are of primary importance in purchase of the bus, so that the company can concentrate on them mainly while designing the offer or sales pitch.

To know the position of the various competing brands in the market from a customer perspective.

The questionnaire designing is done in basically three segments, each giving us an insight into each of the concerns stated above.

Demographic Information

This section of the questionnaire determines the type of organization, broadly classified as school and non school.

It consists of some basic customer details as address and telephone number.

It gives an account of how many buses the organization has and what make and size of buses. This brings us two kinds of users:

- Light Users: Having 5 or less than 5 buses- Heavy Users: Having more than 5 buses.

Psychographics Information

14

This section of the questionnaire attempts to understand the buying behaviour of the customers.

The survey was done with 6 main factors: brand, price, comfort, spares and serviceability, mileage and resale value.

A Likert Scale was used in the survey. A Likert scale is a psychometric scale commonly used in questionnaires, and is the most widely used scale in survey research. When responding to a Likert questionnaire item, respondents specify their level of agreement to a statement.

Here a scale of 1 to 5 was used as follows:

15

LEAST IMPORT

ANT(1)

SOMEWHAT

IMPORTANT(2)

DOESN’T

MATTER(3)

IMPORTANT

(4)

MOST IMPORTAN

T(5)

Brand

Price

Comfort

Spares & Serviceability

ResaleValue

Mileage

Table 3.1: Likert Scale

The next level was to judge the acceptance of the customer of the brand he was using for which he was asked to score the make of buses he had on a scale of 1 to 5 as follows:

SCORE/5

16

Brand

Price

Comfort

Mileage

Resale Value

Table 3.2: Customer Satisfaction

3.4 Software Used

A survey was done through various school and non school organizations across Delhi after which straining was done to remove responses which were incomplete and we come to the figure of 41 which is our sample size. SPSS test is run on the sample wherein we use Cluster Analysis is used. Cluster analysis or clustering is the assignment of a set of observations into subsets (called clusters) so that observations in the same cluster are similar in some sense. We have used Hierarchical clustering under which we have used Agglomerative clustering where we start by treating each object as a separate cluster, then grouping them into bigger and bigger clusters. We have followed it up with Discriminant analysis which has been used to produce a attribute based perception map of the main competing brands in Delhi vis-à-vis M&M.

Chapter 4

17

Industry Review

4.1 An Overview of the Indian Bus Industry

4.1.1 Etymology

Bus is a derivation of Omnibus Vehicle meaning "vehicle for all", where omnibus means "for all" in Latin (omnes meaning "all"), reflecting its early usage for public transport. When motorized transport replaced horse-drawn transport starting around 1905, a motorized omnibus was for a time sometimes called an auto bus, a term still used in French and other languages, and in some varieties of English2.

4.1.2 A Brief History

The automobile industry in India is the tenth largest in the world1 with an annual production of approximately 2 million units and is expected to become one of the major global automotive industries in the coming years. A number of domestic companies produce automobiles in India and the growing presence of multinational investment too, has led to an increase in overall growth. Following the economic reforms of 1991 the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. The monthly sales of passenger cars in India exceed 100,000 units. In 1953, the government of India and the Indian private sector initiated manufacturing processes to help develop the automobile industry, which had emerged by the 1940s in a nascent form. Between 1970 to the economic liberalization of 1991, the automobile industry continued to grow at a slow pace due to the many government restrictions. A number of Indian

18

manufactures appeared between1970-1980. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog.

A number of foreign firms initiated joint ventures with Indian companies. Following the economic reforms of 1991, the automobile section underwent delicensing and opened up for 100 percent Foreign Direct Investment. A surge in economic growth rate and purchasing power led to growth in the Indian automobile industry, which grew at a rate of 17% on an average since the economic reforms of 1991. The industry provided employment to a total of 13.1 million people as of 2006-07, which includes direct and indirect employment. The export sector grew at a rate of 30% per year during early 21st century. However, the overall contribution of automobile industry in India to the world remains low as of 2007. Increased presence of multiple automobile manufacturers has led to market competitiveness and availability of options at competitive costs. India was one of the largest manufacturers of tractors in the world in 2005-06, when it produced 2,93,000 units. India is also largely self-sufficient in tyre production, which it also exports to over 60 other countries.

India produced 6.5crore tyres in 2005-06. According to McKinsey, the auto sector’s drive to lower costs will push outsourcing. The auto sector could be worth $375 billion by 2015, up from $65 billion in 2002. McKinsey thinks India could capture $25 billion of this amount. Out of 400 Indian suppliers, 80 percent have the ISO 9000 certificate—the international standard for quality management. The production of automobiles in India is largely aimed at local consumers. Several Indian manufacturers also export a diverse variety of auto components. Predictions are of sales to touch 42 lakh mark in four wheeler automobile section in India by 2015. Indian passenger vehicle exports are also expected to rise from 1,70,000 in 2006 to 5,00,000 in 2010. 4.1.3 Classifications of Buses in India Bus Industry

19

Buses occupy a special position in any country on account of their capacity to accommodate large quantities of passengers at economic rates. The Indian bus industry boasts of a wide variety of buses for public utility purpose such as:

Commuter Bus Electric Buses School Buses Cruiser LHD Bus Mini Bus Deluxe Buses Tourister Buses

However, that the Indian government has neglected buses is commonly known. How the country’s powerful automobile industry, gearing up to become an international business hub, has treated buses as its step-child is not discussed. India crossed the mark of one million cars produced in a year in 2007. In the celebrations, nobody asked the question as to what about buses?

In 1951, one of every 10 vehicles sold in India was a bus. Of the 300,000 vehicles registered in the country in that year, 34,000 were buses. Today, this ratio is comical with buses having lost a zero that has gone over to the cars; 1 of every 100 vehicles is a bus. In 2004, of the 73 million vehicles registered, only 768,000 were buses. This, despite the fact that buses as surveys show, account for about 50 per cent of all journeys performed on road. Bus sale figures tell it all. In 2007-08 only 38,655 buses were sold against 1.5 million cars. Result, private vehicles have taken over the road. Congestion has peaked. Despite city governments adding road width and flyovers, the time it takes to drive has increased. Bangalore has over 2.5 million private vehicles but city buses number only about 4,185. Since 2003, more than 400,000 private vehicles are added to

20

its roads every year, while the number of city buses increased by only about 300. This means urban commuters do not have the choice of buses7.

The market is growing, defying the slowdown in the auto sector. In 2006-07, the industry sold some 30,000 buses. In 2007-08, the market had grown to 40,000. In cities crowded with private vehicles, buses can get a much bigger piece of the transport pie. But automakers standing behind their cars and pushing their wares do little to promote the vehicle that could drive millions in the country. It is as though, the bus is the poor person’s vehicle and nobody seems to want any truck with it.

4.1.4 Major Players in Indian bus Industry

The Indian bus industry has shown rapid growth over the last two years and currently over 25,000 buses and coaches are produced annually, at par with Western Europe. With still a largely untapped market, the industry is expected to see even better days in the future. Indian bus industry boasts of the major players in this sector, who are involved in the production of huge quantities of buses. The names of the prominent players require the mention of:

Ashok Leyland Volvo Hindustan Motors Swaraj Enterprise Mahindra & Mahindra Eicher Tata Motors Force Motors

21

Swaraj Mazda

With revenues of Rs763.33crore, Swaraj Mazda (NSE:SWARAJMAZD) is the smallest player by volume in the medium and heavy commercial vehicle market (M&HCV) and light commercial vehicle market (LCV). It has a market share of 5.41% in passenger carriers market and 1.58% in goods carrier market of M&HCV. In case of LCV market it has a market share of 8.07% in case of passenger carriers and 1.39% in case of goods carriers. Over the past five years the revenues and net profit have grown at average annual growth rate of 10% and 5% respectively. The Raw material costs fluctuations affect the net profit and operating margin of Swaraj Mazda as the Raw material costs comprises of about 84.46% of the price of the finished products as compared to the industry average of 70% to 74%. In the passenger segment, the Company's products include ambulances, dumper placers, water tankers and troop carriers. It had also developed four wheel drive and compressed natural gas (CNG) vehicles plus airbrake versions. The company operates through its associates Punjab Tractors Limited, Swaraj Engines Limited, Swaraj Automotives Limited, Mazda Motor Corporation and Sumitomo Corporation. The company exports its products to various countries like Bangladesh, Kenya, Tanzania, Nepal, Zambia, Ghana, Ivory Coast, Rwanda, Seychelles Syria and Jordan. Its plant is located at village Asron, Nawanshahar district in the state of Punjab.

In case of light commercial vehicles passenger carriers, Swaraj Mazda sales dropped by 10% taking the vehicles produced in FY2008 to 2,234 as compared to 2,492 in FY2007. The market share decreased from 10.5% to 8.07% within the year in this category. Since inception, Swaraj Mazda has sold a total of 42,300 passenger vehicles6.Eicher

22

Eicher Motors (EICHERMOT.EQ-IN) -Headquartered in New Delhi, Eicher Motors Limited manufactures and markets trucks, buses, motorcycles, automotive gears, and components in India. It operates in four segments: Commercial Vehicles, Two Wheelers, Components, and Others. The Commercial Vehicles segment offers CNG trucks, cruiser buses, buses on HCB platform, and tippers. The Two Wheelers segment provides motorcycles and bikes. The Components segment offers gears, gear boxes, construction and earthmoving equipment, and forklifts. The Others segment provides engineering products to automotive, aerospace, heavy engineering, consumer durables, power generation, and other segments. Eicher Motors has a joint venture agreement with Volvo AB.

Eicher is engaged in the production of 2 varieties of buses under the name Skyline Buses - it produces school buses as well as Cruisers. It has also begun manufacturing CNG buses following the new pollution control rules and is giving tough competition to its market rivals6.

Hindustan Motors

Hindustan Motors Ltd. produces RTV buses comprising school buses, custom-made buses, and passenger buses.

Ashok Leyland

Ashok Leyland is among the most prominent players in the manufacture of public utility as well as special purpose buses. It fulfils a large chunk of the demand for buses in India bus industry and the list of its range of buses includes: Vestibule Bus, Cheetah BS-III, Panther BS-IIs, Viking BS-II, Stag-BS II, Lynx BS-II, Viking CNG BS-III Ashok Leyland is also engaged in the production of some special purpose buses as the Airport Tarmac Coaches, Double deckers

23

with immense capacity for the accommodation of passengers. The other categories include 12 M Bus-II, only 12-M Bus and Viking SLF BS-III and so on6.

Force Motors

Force Motors (FORCEMOT-BY) -The Group's principal activity is to manufacture and market utility and light commercial vehicles, agricultural tractors and diesel engines. Its plants are located at Bombay Pune road, Akurdi, Pune and Pithampur, District Dhar, Madhya Pradesh. With technical collaboration of MAN AG, Germany, Force Motors has a range of heavy commercial vehicles with a payload capacity ranging from 16 to 50 tonnes6.

Tata Motors

Tata Motors is based in Mumbai, India. Tata Motors Limited is a part of Tata Group. It manufactures commercial and passenger vehicles primarily in India. It offers passenger cars, multi-utility vehicles, and pick-ups; medium and heavy commercial vehicles, such as rigid trucks, tractor trailers, and tippers; intermediate, light, and small commercial trucks; buses; and defence related vehicles. The company, through its subsidiaries, also provide engineering and automotive products; manufacture of construction equipment; automotive vehicle components manufacturing and supply chain activities; and provision of machine tools and factory automation products, as well as offers high-precision tooling, and plastic and electronic components for automotive and computer applications. In addition, it provides automotive retailing and services, as well as financing for the vehicles sold by the company. The company markets its products in Europe, Africa, the Middle East, south Asia, south East Asia, and Australia.

24

Tata Motors also ranks high among the major players in the India bus industry, engaged in the production of buses of the category of Starbus as well as Globus buses. The Starbus range includes Starbus Standard, Starbus School, Starbus Deluxe and Starbus Low Floor and the other buses include SFC 407 Turbo Mini-Bus, LPO 1616 TC Luxury Bharat Stage-II Bus, LPO 1510 Bharat stage II Bus, where as the Globus range variety includes Globus 13, 20 and so on6.

Financial metrics FY2008

Name Revenue in Rs Crore

Net Profit Margin

Operating Margin

Tata Motors 28,738 6.96% 10.44%

Ashok Leyland 7,729 5.83% 10.09%

Eicher Motors 2,218 2.81% 5.85%

Mahindra & Mahindra Ltd

30,150 10.34% 11.45%

Force Motors 930 -8.02% -5.04%

Table 4.1: Financial Comparison of the competitors6

Chapter 5

Product Review

25

http://www.wikinvest.com/wiki/Tata_Motors

http://www.wikinvest.com/wiki/Force_Motors

http://www.wikinvest.com/wiki/Mahindra_%26_Mahindra_Ltd

http://www.wikinvest.com/wiki/Mahindra_%26_Mahindra_Ltd

http://www.wikinvest.com/wiki/Eicher_Motors

http://www.wikinvest.com/wiki/Ashok_Leyland

The project is focused on buses below 6 ton GVW which features in the LCV or the light commercial vehicle segment of MNAL. Hence, we throw a fleeting glance at the LCV segment products and then move ahead. This knowledge helps us to notice that the LCV segment is a struggling segment with a range of products which are technically competitive but have to face tough competition vis a vis a much older player in this segment, TATA. Apart from this, in case of school buses, Swaraj Mazda is a very popular name while we come back to TATA again as a formidable adversary in the non school bus segment.

5.1 The LCV Segment

Hence, a look at the LCV segment shows us the following product range3:

Mahindra DI 3200 Mahindra Loadking Pride Mahindra Loadking Long Wheel Base Mahindra Loadking CRDe Mahindra Loadking LCV Tipper Mahindra Tourister i Regular Bus Mahindra Tourister i School Bus Mahindra Tourister i CRDe Bus

5.2 Product Review

26

Below we discuss the two main ranges of buses that M&M runs, however, during the course of discussion, it may be noted that the Hari Bhari range, the production of which has been discontinued hasn’t been included and the project being region specific is limited to Delhi alone where Tourister range is available in 25 seaters only. The product ranges of buses are:

Mahindra Tourister i School Bus

Available in 16, 25, 32 & 40 seating capacity

The Mahindra Tourister school bus enjoys the faith of hundreds of schools, parents, kids and bus owners across India. And it is this faith that has made Tourister the No. 1 school bus, in its segment.

Over the years, the brand Tourister has consistently delivered incredible value to its customers. Coming from the Mahindra stable, each school bus is engineered to deliver on its promise of total safety, but without any compromise on comfort and efficiency. In keeping with the customer centric philosophy of the organisation, the Tourister range has been upgraded several times over the years to meet the ever-changing customer requirements.

This year Mahindra has introduced an improved version of the existing Tourister range, Tourister i. The ‘i’ signifies the 32 improvements which have been incorporated in the existing bus to further enhance safety, comfort and aesthetics. With the launch of Tourister i, all school buses henceforth will be sold under the Tourister i brand.

Features

Greater Safety for a worry free drive

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•Fire Extinguisher•Emergency exit•Specially designed tooth and chin guards•STOP sign indicator at the door•First-aid kit•Anti skid vinyl flooring•Double bar rail on windows

Superior Comfort for unmatched convenience•Bright airy interiors•Large cushioned seats•Water bottle holders•Special rack for school bags

Economical for bigger savings•Superior mileage•Powerful pickup•Low operating costs•Higher torque

Contemporary Styling for better looks•Attractive front façade•Modern front Grille•Swanky notice board

Mahindra Tourister i CRDe Bus Available in 25 seater capacity

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The 25-seater Mahindra Tourister i is with the revolutionary CRDe technology. It’s the first in its category and it’s designed to make every journey really smooth. It is very efficient in terms of NVH standards, i.e. Noise, Vibration & Harshness.

Available in school and regular variants•Powerful pickup•Remarkably low N.V.H•Greater mileage•Conforms to BS III norms

Fig 5.1: The Mahindra Tourister i CRDe Bus

Look at the additional features offered by the latest Mahindra Bus Tourister i CRDe Bus currently available in 25 seaters only in Delhi.

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Three Piece Window with4 mm glass Speaker Provision (non FRP Type) & Mobile charger

JK door lock Bottle holder for driver

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Three guard rails on Notice boardWindows for safety

Space for keeping the sports gear of children (Such as Bat, Hockey Etc)

Fig 5.2: Additional Features Provided By Tourister i CRDe Bus

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TATA Starbus Skool TATA Globus Luxury

Fig 5.3: TATA Buses

Swaraj Mazda School Bus-CNG Bus- Prestige for Tours & Travels

Fig 5.4: Swaraj Mazda Buses

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Specifications Mahindra Tata city ride

Force City line

Seating capacity

25+D 24+D 25+D

Engine NEF TCI 2.6 ltr

497SPTC 35

TD-2650FTI

Displacement 2609 2956 2596 At parMax engine

output53.5+/-2% KW @ 3200

rpm

55.2 KW(74 HP) @

2800 rpm

75 HP@3200

rpm

Optimum Power for better Fuel Efficiency

Max torque 195 Nm @ 1900 -

2000 rpm

225 Nm @1250 -

1800 rpm

195 Nm @1800-

2000 rpm

Optimum Torque for better Performance

No. Of Gears 5 forward 1 reverse with OD

in 5th

5 forward and

1 reverse

5forward and

1 reverse

At par

Tyre size 7.00x16-12 PR

7.00x16-12 PR

7.00x15-14 PR

At par

Fuel tank Capacity Lts

75 Lts 60 Lts 70 Lts At par

Length 6245 5375 6670 At parWidth 2150 2100 2060 Easy ManeuverabilityHeight 2720 2500 2510 Comfort for Standees

Wheel Base 3320 3100 3420 At parMin Ground

clearance190 219 223 At par

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Turning Circle Dia

14100 12000 13000 At par

Max GVW kg

5440 5560 5850 At par

Table 5.1 Technical Comparison of M&M 25 Seater with Competitors

5.5 Communication Strategy Used

MNAL uses a variety of communication strategy wherein it uses leaflets mailed to prospective school and non school organizations as a part of Direct Selling agenda. They have also come with the concept of ‘School Fest’, one unique in its appeal wherein they exhibit the technical features of the bus as well as present the benefits and ease of acquisitions. The Mahindra school bus, Tourister features on the magazine cover of auto magazine, Motorindia. Its content is attractive with the use of glossy colours and a boy with his finger pressed to his lips signifying how smooth and quite a ride a Mahindra bus gives.

34

Fig 5.5: The Leaflet Mailed to Customers

35

Fig 5.6: The Ads That Appears On Magazine Covers

Chapter 6

36

Results

6.1 Result of Study

The questionnaire was duly filled by 41 respondents on a scale of 1 to 5 & the corresponding results are interpreted. The Likert scale used was:

1----------2----------3----------4----------5

Where 1 stood for not at all important factor while 5 is for most important factor, 3 representing a neutral response.

6.1.1 Cluster Analysis Using SPSS

We tabulate the valid responses and proceed for cluster analysis with a purpose

of market segmentation. Cluster analysis or clustering is the assignment of a set

of observations into subsets (called clusters) so that observations in the same

cluster are similar in some sense. Cluster analysis is widely used in market

research when working with multivariate data from surveys and test panels.

Market researchers use cluster analysis to partition the

general population of consumers into market segments and to better understand

the relationships between different groups of consumers/potential customers.

Segmenting the market and determining target markets

37

http://en.wikipedia.org/wiki/Target_market

http://en.wikipedia.org/wiki/Customers

http://en.wikipedia.org/wiki/Consumers

http://en.wikipedia.org/wiki/Population

http://en.wikipedia.org/wiki/Statistical_survey

http://en.wikipedia.org/wiki/Market_research

http://en.wikipedia.org/wiki/Market_research

Product positioning

New product development

Selecting test markets

SERIAL NO.

BRAND

PRICE COMFORT

SPARES & SERVICEABILITY

RESALE VALUE

MILEAGE

1 4 5 3 4 3 32 5 4 4 5 3 33 5 5 4 4 4 34 4 5 4 4 4 35 4 5 4 5 5 36 4 5 3 4 4 37 4 5 3 4 4 38 4 5 3 4 2 39 4 5 3 4 2 310 4 5 3 5 3 311 4 5 3 5 4 312 4 5 4 3 3 313 4 5 3 4 3 314 4 4 3 3 3 315 5 4 3 5 3 316 4 5 3 3 3 317 5 3 4 3 3 218 5 2 5 3 2 3

38

http://en.wikipedia.org/wiki/New_product_development

http://en.wikipedia.org/wiki/Positioning_(marketing)

19 5 4 4 3 3 320 5 4 5 3 2 321 4 4 4 3 3 322 4 5 3 3 3 323 5 3 4 3 3 324 4 5 3 3 3 325 5 5 4 3 3 326 5 4 4 3 3 327 5 5 4 4 3 328 4 5 3 3 3 329 5 5 4 3 3 330 5 5 4 4 3 331 4 5 3 3 3 332 5 4 4 3 3 333 4 5 3 3 3 334 5 4 4 3 3 335 4 5 3 3 3 336 5 4 4 3 3 337 4 5 3 4 3 338 5 4 4 3 3 339 5 3 4 3 3 340 4 5 3 3 3 341 5 3 4 3 3 3

Table 6.1: Tabulated Response of 41 Respondents

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Cluster Analysis is Done in Two Stages:

STAGE 1

The Agglomeration schedule helps us to identify differences in the co-efficient. The Agglomeration schedule from top to bottom, i.e. stage 1 to 40 indicates the sequence in which cases get combined with others, i.e. one cluster combines with the other until all 41 cases are combined together in one cluster at the last stage (40th). Hence stage 40 represents a one cluster solution, stage 39 represents a two cluster solution, and stage 38 represents a three cluster solution and so on.

Aim: To identify how many clusters are there in the data.

The Dendrogram Plot reveals the 3 clusters clearly. This plot signifies the members in each cluster and how far apart they are, meaning, what is the difference in preference between customers in the same segment.

The number of cases in the following clusters is:Cluster 1: Cases# 39, 41, 17, 23, 36, 38, 19, 32, 34, 26, 14, 21, 20 Cluster 2: Cases# 27, 30, 3, 25, 29, 12, 8, 9, 35, 40, 16, 31, 33, 24, 28, 22, 13, 37, 1Cluster 3: Cases# 10, 11, 6, 7, 4, 5, 2, 15However, Case# 18 is excluded from the 3 clusters.

40

Fig 6.1: Dendrogram Using Average Linkage

41

STAGE 2

Now we proceed to do K- means or quick clustering. This procedure generally gives more stable clusters and it’s an interactive procedure compared with the single pass hierarchical methods. The prior stage is used to achieve a pre specified number of starting points to get an initial position.

The result of K- Means / Quick Clustering is as follows:

This method gives a more clearer and comprehensive view of which cases fall in which cluster (of the 3 that we are making) and which case to what extent is a true representative of that cluster. For example, we see that case 2 is in cluster 3, but the distance is comparatively longer (1.47) than case 6 which is having a distance of only .846. Thus, we cluster each of the 41 respondents in 3 broad clusters.

Cluster MembershipCase Number Cluster Distance

1 2 .7252 3 1.4703 3 1.0774 3 .9095 3 1.4706 3 .8467 3 .8468 2 1.1479 2 1.147

42

10 3 1.07711 3 .77812 2 .85813 2 .72514 2 1.07615 3 1.43216 2 .51317 1 .58618 1 1.95119 1 .51620 1 1.28521 1 1.05522 2 .51323 1 .58624 2 .51325 2 1.14726 1 .51627 2 1.25728 2 .51329 2 1.14730 2 1.25731 2 .51332 1 .51633 2 .51334 1 .51635 2 .51336 1 .516

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37 2 .72538 1 .51639 1 .58640 2 .51341 1 .586

Table 6.2: Cluster Membership

Once, we get which case falls in which, we analyse the importance of the 5 variables:

Variable 00001: BrandVariable 00002: PriceVariable 00003: ComfortVariable 00004: Spares & ServiceabilityVariable 00005: Resale ValueThe variable Mileage hasn’t been taken into consideration because all organizations have maintained similar importance for mileage. The survey revealed that mileage is not of much importance when a customer purchases a bus, they were saying, “Dili main mileage kya hota hai” (what significance does mileage have in Delhi)

Final Cluster Centres

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Cluster

1 2 3VAR00001 4.92 4.21 4.33

VAR00002 3.54 4.95 4.78

VAR00003 4.15 3.26 3.44

VAR00004 3.00 3.37 4.56

VAR00005 2.85 2.89 3.78

Table 6.3: Final Cluster Centres

The final cluster centres described the mean value of each variable for each of the 3 clusters as in for cluster 1 the mean values are: for variable1-4.92, var2-3.54, var3-4.15, var4-3.00 and var5- 2.85. Similarly, it follows for other clusters too. Here, for variable 00001, a value of 4.92 in cluster 1 shows importance level where 5 stands for very important; hence, 4.92 means, most people in this cluster give importance to Brand name.

Observation: We interpret the Final Cluster Centre table to know the common opinion of the cases in each of the 3 clusters.

6.1.2 Attribute Based Perceptual Mapping

We use discriminant analysis to do attribute based perceptual mapping in which we use the primary data collected in the second half of the questionnaire, where in we had asked individual respondents as to how they rate the make of their bus on five primary factors: Brand, Price, Comfort, Spares & Serviceability, and Resale Value. However, while tabulating we took only 3 factors into consideration, Brand, Price and Spares & Serviceability.

45

Discriminant Analysis

Fig 6.2: Plot of the Three Brands on Discriminant Functions 1 and 2

The figure above is a part of the SPSS output, the entire result being a part of appendix 4 attached at the end.

Var00001 stands for the 3 brands which we are comparing. These are code named as 01, 02, and 03:

46

Mahindra------------- 01TATA----------------- 02Swaraj Mazda-------- 03

Aim: To position the brand with respect to the current competitors

Method: To plot the attributes on the map, we use standard co- efficient of the original variables in the discriminant functions. We use the standardized co-efficient from table 6.5 as for Variable 2, Brand, we use the values .102 and .817 as the x and y co- ordinates respectively to plot in an excel sheet. We locate these points on the map and draw an arrow specifying the dimensions.

Variable 02: BrandVariable 03: Price Variable 04: Spares & Serviceability

Standardized Canonical Discriminant Function Coefficients

Function1 2

VAR00002 .102 .817VAR00003 -.861 .990VAR00004 1.382 -.693

Table 6.4: Standardized Canonical Discriminant Function Coefficients

47

Now, we plot these values of standardized discriminant function co-efficient of each attribute on each function vis-à-vis the centroids for each brand as evident from table 6.6 below.

Table 6.5: Functions at Group Centroids

Observation: The excel sheet is produced wherein we have the different dimensions with their respective factors. As in this case we have Price and Brand in one dimension 2, both having significantly higher values along function 2, while spares and serviceability is along dimension 1. An analysis of this result is used in interpreting competitor positioning while doing Poter’s Five Force Model.

Chapter 7

48

Functions at Group Centroids

VAR00

001

Function

1 2

1 -1.407 .173

2 1.081 .396

3 .326 -.569

Unstandardized canonical

discriminant functions evaluated at

group means

Analysis

7.1 Segmentation

Segmentation is a market segmentation of people or organizations sharing one or more characteristics that cause them to have similar product and/or service needs. The overall intent is to:

- Identify groups of similar customers and potential customers- to prioritize the groups to address- to understand their behaviour- to respond with appropriate marketing strategies that satisfy the different

preferences of each chosen segment.

All of this culminates in improved revenues and larger market share.

An analysis is done of the result of cluster analysis by which we have 3 distinct clusters. Based on the mean value of each variable we can interpret the characteristics as follows:

CLUSTER #

VARIABLE #

MEAN NATURE OF BUYING

1 (1) Brand 4.92 The brand stands a lot of importance

(2) Price 3.54 Customers in this cluster may attach a little importance to price while purchasing the buses.

(3) Comfort 4.15 Customers do attach importance to

49

comfort & the Noise Vibration & Harshness buffering ability of the bus.

(4) Spares & Serviceability

3.00 Customers in this cluster are mostly neutral in their response to availability of spares & serviceability and it is definitely not amongst their top priorities.

(5) Resale Value

2.85 Not much importance attached to resale value of the bus.

2 (1) Brand 4.21 They attach importance to brand while buying and it may be one of their top most priorities.

(2) Price 4.95 They attach a lot of importance to price while going for a purchase and price does make it to the top of their priority list

(3) Comfort 3.26 It’s a factor they have remained neutral to though some may attach a little more importance to it.


3.27 They don’t attach a lot of importance to spares & serviceability though some may attach a little more importance.

(5) Resale Value

2.89 They attach no importance to this factor

3 (1) Brand 4.33 They have graded brand as an important factor.

(2) Price 4.78 For them price comes out as the

50

factor of most importance(3) Comfort 3.44 Comfort is not the top of the priority

list but they some customers in this segment may attach considerable importance to this factor


4.56 This is also one of the most important factors on the list with some customers grading important to very important as the nature of priority

(5) Resale Value

3.78 This is a considerably important factor to most customers in this segment though some may have a neutral attitude towards it

Table 7.1: Cluster Characteristics

Cluster 1

Members in Cluster 1 are: 17, 18, 19, 20, 21, 23, 26, 32, 34, 36, 38, 39, and 41.

Of these 13 cases, it may be noted that 9 cases are heavy users of buses.

This would mean that it’s a segment with 70% heavy users.

This segment has all schools except for a tour & travel agency and a bus used for official purpose.

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The customers in this section had reported to buy the best brand available in market and often the definition of best brand is not just the best product available but the brand perceived to be the best.

One of the respondents in this segment is Panicker Travels who had said that they would prefer going for the brand that stands out in the market to attract their customers, the tourists as in the case of giving customers the experience of a Volvo at a price.

Comfort also tops the list of this segment with the transport in-charge of ASN School having expressed that comfort factor is very important for them as against the price of the vehicle. The school boasts of a good number of students and take a high fees from students in lieu of which they are obliged to give students good comfort.

Customer satisfaction being the aim of a large tours & travels, comfort & space figured on their list too as one of the top priorities. They were concerned that a 25 seater bus wouldn’t be sufficient to accommodate a tour group of around 20 tourists as these buses have usually push back seats.

Price was mostly on basis of the most satisfying quotations and ease of financing.

Respondents hadn’t given much of an importance to spare part availability or resale value. Most of the users were heavy users and for them while maintaining a large fleet

As Mr Panicker of Panicker Travels had said that if resale value was ever considered as one of the main factors, then they would never have gone for a Volvo which has the least resale value; however Volvo is what is

52

most preferred amongst his fleet of 80+ buses as it is his customers’ choice.

Cluster 2

Members in Cluster 2 are: 1, 8, 9, 12, 13, 14, 16, 22, 24, 25, 27, 28, 29, 30, 31, 33, 35, 37, and 40.

Of the 19 cases, 17 of them are light users while the remaining 2 are but heavy users.

That makes almost 90% of the cluster light users

5 of them are individual customers who however lease their buses for schools as well as for private organizations occasionally.

Price factor is of primary importance in this segment is undoubtedly but brand is second on their list.

These light users are mostly schools which rank average to above average in popularity ranking and hence have mostly students from residential areas nearby enrolling in.

Schools wouldn’t prefer indulging in unnecessary fleet of buses as routes

covered will not be very elaborate. A closer look at the members in this segment shows that some of them

have limited number of students.

53

These demographic details lead us to the benefits this segment seeks. In case of schools, the economical outlook makes them scrutinize the price quotations more keenly than members in cluster 1, over and above the credibility and popularity of brand. However, since a 25 seater bus almost come at similar price of 9.5lacs including all taxes, the ease of finance and other such clauses bear importance in driving towards closing a deal.

Schools such as Guru Nanak PS, Aster or Rishabh PS are ones which lesser disposable incomes or narrow operating margins.

This list consists of Mahindra customers too of which Aster Public school was one of them having 4 buses of the Mahindra make, which is indeed a cost effective choice.

N. C. Jindal however is one amongst the two heavy users who have 1 M&M bus amongst their fleet of 14 buses. He hadn’t expressed high satisfaction and was doubtful when asked for going for a repurchase of M&M. His problems mainly dealt with the serviceability and part availability which has been discussed in the customer analysis chapter of this project.

In case of non school organizations who lease their buses, it may be noted that they all have a fleet of 2-3 buses and operate on a low scale and hence the price factor comes in very handy. Price should not be interpreted as the price of the vehicle alone but in broader perspective in terms of ease of finance and loan rates.

The cases in this cluster include ones like Mr Dinesh and Mr Kasturi Lal Dutta who have their own small fleet of buses used on contracts and are

54

satisfied Mahindra customers. They have found M&M buses to be economical and hassle free.

Cluster 3

Members in Cluster 3 are: 2, 3, 4, 5, 6, 7, 10, 11, 15

They have 3 heavy users which makes it a decent percentage of 67 of them as light users and the remaining 33% being heavy users.

Of the members, interestingly all of them are travel agents or contractors who lease buses to schools or IT firms.

The demographics are mixed in here with a lot more heavy users in comparison to the past two clusters. However, the low percentage of heavy users shouldn’t be taken to be misleading as the net number of heavy users featuring amongst the respondents is less given the fact that most heavy users were either not available or were less entertaining. Taking this slip in the survey into account we can consider this cluster to have a fair share of heavy users.

Price and spares and serviceability rank prime on their list with a good importance being given to resale value too.

While doing the survey I have noticed the fact that most of the tours and travels and contractors attach a value for resale value of their buses unlike the schools.

Their buses travel longer distances on a per month basis which is why they do go for a new one after every 3-4 years. A one Mr Sharma of

55

Sharma Travels whom I had interviewed and who appears as one of the cases in cluster 3 has 15 buses, all TATA.

He had Ashok Leyland buses before; however, because its resale value is low, he gradually shifted to being an out and out TATA customer. He does admit that he found Leyland bodies to be better than TATA’s but Leyland has fewer service centres than TATA in North India and the brand has a stronger presence in South which is from where the customers come for resale, hence paying a lesser price.

This cluster was emphasising on availability of spare parts & serviceability as they have long routes to cover and problems as CNG leakage, wiring problems and temperature related problems are ones which can be a bumper for the flow of their business (meaning a financial bump).

Surveys revealed that brand recognition, it is a term used for the cumulative effect of a long history of servicing, easy financing, resale value, credibility and life time of the bus.

7.2 Competitor Analysis

Based on Porter’s Five Force Model, one can analyse the competitive positioning of M&M buses in the Indian market. The five forces have been displayed comprehensively in the figure below.

56

Fig: 7.1 Porter’s 5 Force Model

7.2.1 Competitive Rivalry

The figure below gives a graphical representation of customer perception of the three brands, M&M, TATA, Swaraj Mazda(SM) in terms of Brand and Price.It’s necessary to take note of the fact that:

The variable Brand stands for the trust and credibility that a brand name has garnered in the market.

57

The variable Price stands for not just the initial price, but the operating price of the bus, the maintenance and servicing having a major role to play in it.

The graph below is a result of the Discriminant Analysis procedure explained in the prior chapter from where; the data produced as a result of running SPSS is presented in a comprehensible manner on an excel sheet.

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-1.407, 0.173

1.081, 0.396

0.326, -0.569

0.102, 0.817

-0.861, 0.99

1.382, -0.693-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

1.2

-2 -1.5 -1 -0.5 0 0.5 1 1.5 2

Series1

Fig 7.2: Perceptual Map of Buses and Their Attributes: Drawn Using Excel From SPSS Output

The perception map reveals that:

59

TATA brand of buses are closer to both the dimensions, of Price and Brand recognition on dimension 1 as well as towards spares & service availability too; however more towards Brand recognition.

Swaraj Mazda(SM) is a known as a popular brand amongst school buses which is why we find it not very far as compared to M&M to the dimension 2, Brand but as it doesn’t have a strong preference in tourist section; it isn’t very close to the brand parameter either. However, when prices are compared, it falls behind M&M as there is a section which has said that SM spares and maintenance is a costly affair. However, Swaraj Mazda, like TATA has no issues with availability of spares or with the number of service centres.

Mahindra buses, being a comparatively new player fall below TATA in terms of brand recognition, however, a good section of its customers have rated it as cost effective as it has lower maintenance costs attached. As against Swaraj, M&M buses have decent brand recognition, especially, a brand loyalty amongst its customers wherein of about 72 sales made in the past two years that Mahindra buses have been actively in market since 2008, about 33 of them are prior customers.

TATA

TATA buses have been in the market for a really long time and hence have established a position which would be hard to challenge or penetrate. When you say 25 seater, M&M stands out indeed but though TATA buses aren’t available in 25 seaters, they have a wide range from 16-67 seaters. The Starbus Skool range of 17, 32, and 52 is most popular. It has a Starbus Deluxe range for

60

medium range of tours & travel agencies as well as the Globus Luxury Range which is huge and smart. A customer analysis shows:

TATA buses have been old players and had enjoyed monopoly, hence currently they have strong foothold despite challenges by other competitors.

Customers have shown trust in TATA saying that it is hassle free and hence maintenance cost is less and business moves smooth.

Tours & travel agents have maintained that Resale Value of TATA is highest and hence they prefer TATA over Ashok Leyland which has a better build.

TATA chassis is available in market and Telco provides custom made bus bodies on chassis.

TATA is available in a variety of styles and sizes.

Swaraj Mazda

Swaraj Mazda has an enviable position in Delhi with a lot of schools going for a Swaraj as they believe the brand to be ideal for schools. Customers have said that because they have been in the industry for a long time, they regard it as a name to be trusted.

Swaraj is not having a very good hold in the tours & travels industry, one mainly dominated by Volvos, TATAs and to an extent, Ashok Leyland.

It has the biggest market share in the school bus arena in Delhi.

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Some customers have said that its maintenance cost is high.

It comes in a variety of sizes and styles

It tops comfort and style scale which is why some schools said they prefer Swaraj.

7.2.2 New Entrants Mercedes-Benz will invest about US$ 64.21 million in its plant at Chakan near Pune, which was formally inaugurated recently. The plant will have a production capacity of 2,500 trucks and buses and 10,000 cars over two shifts per year.Turkish commercial vehicle maker, Temsa Global is looking to enter the Indian bus market and has undertaken a feasibility study on the commercial potential to set-up an integrated bus making facility in India4.

7.2.3 Threat of Substitutes

There are a host of schools all over India which are decent in disposition and have pupils from middle class families coming in who do not run their own buses. Given that our region of survey happens to be Delhi alone, it may be noted that in many schools the students often avail the public transport after reaching a certain age as of 3rd or 4th standard thereby incurring a monthly travel expense of around Rs200, where on the other hand, availing the school’s transport system might come up to Rs500 a month.

The picture below shows an alternate mode of transport used by schools which proves to be economical for the school as well as for the students. It may be noted here that such issues do become a concern for M&M buses as they are in

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the market with 25 seater buses which are mostly targeted at small schools with limited number of students clustered along certain residential areas. A lot of schools who were contacted as Pratibha Vikas Vidyalaya of Surajmal Vihar or Lions Public School, Ashok Vihar and some other schools who were contacted have mentioned that students come on their own. And again, since these aren’t top notch schools, its very unlikely that people living at a considerable distance would have send their wards. When contacted, the transport in-charge did agree that most students come from nearby areas; hence no pressing need for installing a school bus facility has risen yet.

Fig 7.3: The Cycle Bus Used By Delhi Schools7.2.4 Bargaining Power of Suppliers

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Raw material price fluctuations directly affect the operating margin and net profit margin. Raw material costs comprises of about 84.46% of the price of the finished products. Any price increase of the raw materials has a direct bearing on the overall operating margin.

In August 2008 steel prices peaked to over 1100$/tonne 40% higher then the steel price in January 2008. Whereas, on the other hand, in March 2009 the steel prices have fallen to 4 year low of $473/tonne. Tyres are also an important part of the raw material required for manufacturing. Tyre prices are correlated to the rubber prices. The chart below shows the volatility present in the rubber market. The rubber volatility also affects the operating margin and consequently the net profit margin.

Graph 7.1: Swing in Prices of Raw Material, Steel

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Graph 7.2: Swing In Prices of Raw Material, Rubber

7.2.5 Bargaining Power of Customers

Indian Automobile sector is high on growth trajectory. And is expected to touch 10 million marks of which Commercial Vehicle Segment will contribute maximum. The figure below shows the demand projection of the bus requirement in India taking into consideration the revamped road transport projections by the Government as well as the probable requirement in schools, tours & travels and other public and private transports. Note: The graph has been generated after taking into account the industrial phase post recession.

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Graph 7.3: The Present and Expected Demand in Buses

The figure below depicts the driving forces behind the change in the bus industry wherein the increased disposable income vis-à-vis the fast changing spending habits of the country has been graphically depicted.

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Graph 7.4: The Surging Population of India

It’s evident that with a steadily bulging population, the number of buses on Indian roads isn’t going to be decreasing in near future for school, non school and public transports. Consolidate this issue of rising demand, it has been seen that in its bid to give a major boost to the bus segment, the Centre has expanded the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme to provide support to State Governments for replacing their fleet of buses where Delhi will get 1,500 buses, while Mumbai will have 1,050, Bangalore 700, Kolkata 1,200, Hyderabad 700 and Chennai with 800 buses involving an investment of around Rs. 7,000crores, of which the Centre’s share will be around Rs.4,000 crores.

Despite these sanctions and huge demands it has been seen that due to lag in scale up of production by the two companies who have bagged this project, TATA (65%) and Ashok Leyland (35%) these buses haven’t and are not coming

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on time on the city streets. It may be noted that in Delhi, buses continue to be the most popular means of transportation for intra-city travel, as they cater to about 60% of the total commuting requirements.

Hence, one may conclude that bargaining power of one section (government) of the customers is not very high given the fact that only 2 companies had bided in the first place for the project and TATA having bided the lowest got 65% of the project, the remaining going to the only other bidder, Ashok Leyland.

In case of tours & travels, the larger ones dealing with a large client base who prefer luxury travels go for Volvo which is the only player at present in this arena; hence a minimal customer bargaining power is noticed. There are many others who go for chassis and get the body build on it.

As for schools and other segments as contractors, there are various buying behaviours noticed where some customers blindly go for brand names as TATA or Swaraj Mazda who have been in the market for a quite a while some go for the most financially competitive quotation exhibiting high bargaining power.

7.3 Reference Scheme

Reference Scheme is a project undertaken by the management to boost the sales of Mahindra buses in Delhi. It is already in use for the pick ups as Load King and now the same is being readied to be implemented for buses. The upper management and dealers have been convinced of the viability of the scheme and the final format of these reference scheme notes have been made during the tenure of the project. It has been my good fortune that since it was done during

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the tenure of the project, I have been part of it and I could analyse the applicability of it. The reference scheme involves generating a coupon for customers of Mahindra Tourister which is given to new customers at the time of purchase, while it is mailed to or given personally to old customers. A team of salesmen have been employed to visit customers and make this scheme more comprehensible.

If an existing Mahindra customer refers another potential customer to the Mahindra dealership, then, on closure of the deal, the existing customer would get servicing worth Rs3000/- absolutely free. The caveat involved in this scheme is that it is only redeemable at the Indraprastha dealership situated at Kirti Nagar in Delhi which is the sole dealership of Mahindra for LCVs in Delhi. The coupon is not applicable for cold calls.

The reference scheme paper is in three parts:

- A part concerning customer’s details as address and phone and details of purchase with the date and model number. This is kept with the dealership.

- The second part is of a coupon of Rs3000/- which the customer can get reimbursed for the servicing of his vehicle.

- The third part concerns the main soul of the reference scheme wherein the customer fills in the details of the potential customer whom he is referring.

Observation

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The scheme appears to be a viable one. However, the scheme doesn’t involve varying discount amounts with respect to the size of customer referred to. This means, that if customer ‘A’ gives the lead to a major customer who is likely to buy 2 or 3 buses and customer ‘B’ leads to a customer who has a need for a single bus alone, yet, on closure of the loan, both customers are getting the same amount of service coupon. Probably, this arrangement can be taken care of by varying the service amount to Rs3000/- for leading to a sale of 1 or 2 buses, while for more than 2, a coupon of Rs5000/- will be made available.

7.4 The Future Ahead

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Graph 7.5: The Relation between Surging Urban Population and Buses

The graph above shows how the bus industry through out the world has developed with respect to the increasing urban population. Definitely, a major part of this would be the route transport buses, the area in which there is a duopoly of TATA and Ashok Leyland, however, it also includes the increasing number of schools, offices and other institutions. With spaces in cities reducing at an alarming rate, people move further far to settle in comfort; however, travelling expenses surge and who would think of availing a train or other medium(apart from car) to travel inter city.

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Graph 7.6: The Current Penetration of Buses in India

As shown in the graph above, if we look at the penetration of buses per 1000 people in India, it stands out to be very less in comparison to other developing countries(expect US which is also in the list). The reason can be traced back to government regulations which were stringent more than a decade ago. However, times have seen a steady change.

It is most appropriate for MNAL to steadily build their brand value in terms of brand recognition, financing feasibility, spare part availability, proximity of

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service centres and last but never the least, technology. They say, you strike iron when hot and this is precisely the time to do so.

Chapter 8

Conclusions & Recommendations

8.1 Conclusions

The survey result and based on both secondary and primary data, an elaborate analysis has been drawn. Here, we discussed the competitive position of M&M buses across Porter’s Model. An understanding of customer behaviour was also done wherein three different segments of customers emerged according to the

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benefits seeked by each segment. Reviewing these data we come to the following conclusions:

The Mahindra brand name has gravity and does attract customers but attracting customers is not enough, a sale has to be closed and a bus needs to be sold.

Being late in entering the industry, they have to face established players as TATA and Swaraj Mazda. Whereas TATA reigns in the tours & travels industry, Swaraj Mazda is prominent in Delhi’s schools.

The single product limitation (a 25 seater Tourister) in Delhi fails to provide a wide variety of choices to customers.

However, despite this limitation, the sales group has pitched the project well by approaching institutes with their product and convincing them that rather than having two 50 seaters and let one of them go under utilized, its better to replace one of them with a 25 seater for a more economical and fuel efficient approach.

Technically, Mahindra buses are at par or better than some of its competitors, both TATA and Swaraj Mazda as they both give a mileage of around 7 to 7.5km/kg; however, the Tourister gives a good mileage of as much as 8km/kg.

However, despite the above mentioned edge, it has been seen that this feature is appealing to customers in the school segment, but for those in the non school segment, the factor of primary concern is that the bus should run well and if and when problems arise, service centres should be available at the nearest possible distance and the spare part availability should be high.

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Mahindra spare part availability is said to be low by customers; however, the company has come up with solutions for this problem, but these solutions haven’t reached all customers.

The company offers a hotline number 97187575 which can be accessed any time from any where and the nearest service centre would be asked to contact the customer and solve his problem. However, this information is communicated only to customers who come for servicing or to new customers. There is a block of customers who are unaware of this facility. This hotline also connects a caller to the nearest dealer of any spare part required.

The market perception that TATA spare parts are available even at the ‘pan dukaan’ (i.e. at every nook and corner) makes those customers who give importance to spares and serviceability, go for a TATA.

The M&M buses are indeed price competitive.

They have a well developed reference scheme is existent for pick ups and has been operating well. This scheme is being implemented for buses for which the road has already been laid.

8.2 Recommendations

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The project has culminated in a comprehensive view of the Indian bus industry as well as in an understanding of where MNAL stands in the bus industry and its market position. The recommendations worth applying are:

The demand of the tours and travel industry was for buses which would be a little larger than that available, i.e. 25 seater. Big agencies as Raos, Panickers, Southern transport smaller groups of tourists as of 17-25 at the most. However, a 25 seater is barely sufficient for 17 as these buses are usually push backs and have more leg space. Coming to smaller players, they don’t go in groups less than 25 as its economical; but for a 25+ tourist group, the MNAL bus comes small. Hence, for Mahindra to establish in the tourist segment, it requires to come up with a larger bus.

Of the three segments that we have got as a result of customer analysis, it may be noted that the segment easiest to penetrate would be the 2 nd

segment where we have 90% light users. These are mainly schools and small enterprises which run buses on contract basis. Though each customer would have 5 or less buses, the segment is a wide segment which can be tapped easily as price has been found out to be a factor of prime importance amongst them. Price includes not just the purchase price but also the operating price whereby the customer should incur low maintenance cost and the spare parts should be available when required at a reasonable price.

There are many schools along East Delhi which fall in this segment, but because the company hasn’t got their service network spread across East Delhi, they haven’t been able to tap this market. Haste must be made in this regard as brand factor comes second on the list of this segment and this brand name signifies the experience of the brand in the market as well as its service centre network.

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It’s only after establishing firmly in what can be called a mass segment can the company enter the other segments. However, Mahindra being a strong name in automotive industry wouldn’t require much time to bridge the gaps. Segment 1 is of customers who buy the best brand available in market in terms of gravity of brand name as well as the Comfort factor. These customers serve clients who demand a good service and are willing to pay for it. To tap this segment, Mahindra buses need to come with a wider range of models which are competitive on parameters of style and comfort, not just technically, but look appealing too.

The 3rd segment is relying on resale value of buses and serviceability and spare availability. Though resale value of a bus is built over a time as trust in a brand name increases, both these factors are interrelated. They are connected by the common thread of wide spread service centres and easy availability of spare parts.

MNAL should carry a regular check on their customer satisfaction indices by visiting their existing customer base. Some customers had complained about the salesman that he hasn’t seen him since the deal was closed. There is a good percentage who said they are satisfied, but even 2 out of 33 customers would make it about 6% which in a narrow customer base of built buses (for private organizations) is significant.

The database of Hari Bhari buses that had been sold by M&M prior to the 2008 Tourister range is significant as it can be used to push sales of the new Tourister range. It is always easy to maintain an existing customer base than to make a TATA or Swaraj customer switch to

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M&M (which is possible in due course of time with the right kind of strategies).

M&M has a 24/7 help line to help with service and spares related problem, but a batch of old customers are unaware of it. Hence, sales men should take upon themselves to visit old customers to know their concerns and distribute pamphlets and stickers (to stick in the bus in visibility of driver) with the help line number: 97187575 displayed. This would increase their strength in sales & serviceability factor and to help combat the unavailability of spares.

Spare parts have a major margin and M&M should harness this opportunity to distribute their spares through competent dealers. This would help to combat the common perception in market that spares of M&M aren’t widely available as TATA or Swaraj Mazda.

Despite the Government norms as Introduction and Implementation of Bus Code for all OEM’s in 2008 and Accreditation of all Unorganized Bus Body builders distributed across India, the tours & travel industry insists on build buses. TATA & Leyland do provide bus chassis and build tailor made cabins on them. Hence, to get a firm foothold in this arena, M&M should release chassis in market and tap the custom made demands of customers. After all, unorganised way of Body Building converted into organized sector will improve the overall quality of the product and people.

The visibility of Mahindra buses can be increased amongst potential customers by participating as sponsors for school and college events. They can propose to bear the transportation charges and transport students to the venue, thereby imparting the experience of Mahindra

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buses. This can be further supported by banners and standees advertising Mahindra buses (staying within the financial viability limits).

M&M should come up with technologically competent buses, given the fact that they have one of the best R&Ds in the country and are in to a JV with the very competent American brand, Navistar. They should promptly address concerns as:

- Complained about problems with Gear & Temperature trouble- No proper wiring, high maintenances- Parts availability is very low- Trouble with bus leakage & wiring issues- Parts are very costly & no distributor found for parts- Complained about problem in leakage & speed problems

Note: The above mentioned complains are genuine customer complaints collected during survey, a detailed report of which (along with customer specifics which can not be displayed in the report) has been send to the company.

8.3 Limitations & Caveats

The project has been performed for Mahindra Tourister buses only and the survey has not been done with respect to the other models of Mahindra as Hari Bhari, the production of which has been abandoned. The project is done only in Delhi and the observations, conclusions and recommendations may not be applicable for developing a marketing plan for Mahindra Sub 6 ton buses in any other place. The marketing plan developed is exclusively for Mahindra buses which are in the Sub 6 Ton Category, i.e. buses in the Light Commercial Vehicle segment and hence may not be applicable for Heavy Commercial Vehicle

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segment, a segment wherein Mahindra Navistar is on the verge of making a foray. The current scenario has only 25 seater Mahindra buses operating in Delhi, however, the other ranges of buses are found in other states and a complete range of Tourister is slated for release in Delhi by 2010. Hence, some recommendations are made considering this venture. Financially viability of recommendations is to the best of the knowledge as possible with the data on hand but can not be claimed absolutely indisputable.

----------------------------------------End----------------------------------------------------

Bibliography

International Herald Tribune. Retrieved on 2009-01-12. (1)

http://www.statpac.com/research-papers/research-proposal.htm#layout

Wikipedia (2)

www.mahindra.com (3)

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http://www.tatamotors.com/

www.swarajmazda.net/

http://www.ibef.org (4)

Motor India Online Edition (5)

http://www.wikinvest.com/stock/ (6)

www.indiaenvironmentportal.org.in (7)

Marketing Research by Rajendra Nargundkar, Edition 2, Pages 334-340

and 441- 464

Down To Earth, Issue # Oct 31, 2008

Ward’s World Motor Vehicle, 2006.

Appendix 1

Questionnaire for Study of Bus Preference

Dear Sir/Mam,I am doing a survey on the market for buses with regards to customer preferences, market share & mind share and would like you to spare a few minutes to fill up this questionnaire. Thank you for your co-operation.

Type of Organization: School [ ] Non School [ ]

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Name of Organization:

Name of Contact:

Number of Buses:Make of Buses:For purchasing a bus for your school which factors out of the following do you consider most important and which factors the least important?

LEAST IMPORTAN

T(1)

SOMEWHAT

IMPORTANT

(2)

DOESN’T

MATTER(3)

IMPORTANT

(4)

MOST IMPORTAN

T(5)

Brand

Price

Comfort

Spares & Serviceabili

tyResaleValue

Mileage

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How do you rate your present range of bus:Make:

Very Dissatisfied

Dissatisfied Somewhat Satisfied

Satisfied Very Satisfied

1 2 3 4 5

SCORE/5

Brand

Price

Comfort

Mileage

Resale Value

Would you go for the same brand when considering a repurchase?Appendix 2

SPSS Output for Cluster Analysis Test

Method: We use the difference between rows in a measure called co-efficient to identify the number of clusters in the data. To have lowest possible number of clusters regarding ease of interpretation & economic feasibility, we analyse the table last row up. We see a difference of (12.050 -5.026)/7.024 between coefficients of 1 and 2 cluster solutions. The next difference is of (5.026-4.932)/.094 between coefficients of 2 and 3 cluster solutions. The next one after

83

that is (4.932-3.956)/.976 of difference. The difference reduces to .956 between stage 37 and 36, .25 between 36 and 35 from stage 28 onwards the difference reduces to zero till stage 21 which shows a difference of 1 from where onwards the coefficient remains zero.

Observation: The point of ‘elbow’ is observed to be at stage 38 at co-efficient 4.932 where we see a change in the graph, hence, the number of clusters considered for segmentation are 3 (40-27).

Cluster

Case Processing Summarya,b

CasesValid Missing Total

N Percent N Percent N Percent41 100.0 0 .0 41 100.0

a. Squared Euclidean Distance usedb. Average Linkage (Between Groups)

AVERAGE LINKAGE BETWEEN GROUPS

Agglomeration ScheduleStag

eCluster Combined Coefficien

tsStage Cluster First

AppearsNext Stage

Cluster 1

Cluster 2

Cluster 1 Cluster 2

1 39 41 .000 0 0 3

84

2 35 40 .000 0 0 73 17 39 .000 0 1 174 36 38 .000 0 0 65 13 37 .000 0 0 196 19 36 .000 0 4 107 16 35 .000 0 2 118 32 34 .000 0 0 109 31 33 .000 0 0 1110 19 32 .000 6 8 1511 16 31 .000 7 9 1612 27 30 .000 0 0 2213 25 29 .000 0 0 2314 24 28 .000 0 0 1615 19 26 .000 10 0 2516 16 24 .000 11 14 1817 17 23 .000 3 0 2518 16 22 .000 16 0 2619 1 13 .000 0 5 2620 8 9 .000 0 0 3121 6 7 .000 0 0 2922 3 27 1.000 0 12 3023 12 25 1.000 0 13 3024 14 21 1.000 0 0 3325 17 19 1.000 17 15 3326 1 16 1.000 19 18 3127 2 15 1.000 0 0 3928 10 11 1.000 0 0 3229 4 6 1.000 0 21 32

85

30 3 12 1.667 22 23 3431 1 8 1.727 26 20 3432 4 10 1.833 29 28 3633 14 17 1.900 24 25 3534 1 3 2.705 31 30 3735 14 20 2.750 33 0 3836 4 5 3.000 32 0 3737 1 4 3.956 34 36 3838 1 14 4.932 37 35 3939 1 2 5.026 38 27 4040 1 18 12.050 39 0 0

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Initial Cluster CentresCluster

1 2 3VAR000

015.00 4.00 4.00

VAR00002

2.00 5.00 5.00

VAR00003

5.00 3.00 4.00

VAR00004

3.00 3.00 5.00

VAR00005

2.00 3.00 5.00

Iteration Historya

Iteration

Change in Cluster Centres

1 2 31 1.374 .756 1.1832 .553 .308 .427

3 .088 .064 .000

4 .000 .000 .000

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a. Convergence achieved due to no or small change in cluster centres. The

maximum absolute coordinate change for any centres is .000. The current iteration is 4. The minimum distance between initial

centres is 3.000.

Cluster MembershipCase Number Cluster Distance

1 2 .7252 3 1.4703 3 1.0774 3 .9095 3 1.4706 3 .8467 3 .8468 2 1.1479 2 1.14710 3 1.07711 3 .77812 2 .85813 2 .72514 2 1.07615 3 1.432

90

16 2 .51317 1 .58618 1 1.95119 1 .51620 1 1.28521 1 1.05522 2 .51323 1 .58624 2 .51325 2 1.14726 1 .51627 2 1.25728 2 .51329 2 1.14730 2 1.25731 2 .51332 1 .51633 2 .51334 1 .51635 2 .51336 1 .51637 2 .72538 1 .51639 1 .58640 2 .51341 1 .586

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Final Cluster CentresCluster

1 2 3VAR00001 4.92 4.21 4.33

VAR00002 3.54 4.95 4.78

VAR00003 4.15 3.26 3.44

VAR00004 3.00 3.37 4.56

VAR00005 2.85 2.89 3.78

Distances between Final Cluster CentresCluster 1 2 3

1 1.850 2.382

2 1.850 1.505

3 2.382 1.505

ANOVA

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Cluster Error F Sig.Mean

Squaredf Mean

Squaredf

VAR00001

2.057 2 .160 38 12.855 .000

VAR00002

8.231 2 .204 38 40.442 .000

VAR00003

3.176 2 .200 38 15.884 .000

VAR00004

6.800 2 .175 38 38.898 .000

VAR00005

2.872 2 .185 38 15.506 .000

The F tests should be used only for descriptive purposes because the clusters have been chosen to maximize the differences among cases in different clusters.

The observed significance levels are not corrected for this and thus cannot be interpreted as tests of the hypothesis that the cluster means are equal.

Number of Cases in each Cluster

Cluster

1 13.0002 19.0003 9.000

Valid 41.000Missing .000

Appendix 3

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SPSS Output for Attribute Based Perceptual Mapping

Discriminant

Analysis Case Processing Summary

Unweighted Cases N Percent

Valid 21 100.0

Excluded Missing or out-of-range group

codes

0 .0

At least one missing

discriminating variable

0 .0

Both missing or out-of-range

group codes and at least one

missing discriminating variable

0 .0

Total 0 .0

Total 21 100.0

Analysis 1

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Summary of Canonical Discriminant Functions

Eigenvalues

Functio

n

Eigenvalue % of Variance Cumulative % Canonical

Correlation

1 1.266a 86.5 86.5 .747

2 .198a 13.5 100.0 .407

a. First 2 canonical discriminant functions were used in the analysis.

Wilks' Lambda

Test of

Function(s)

Wilks' Lambda Chi-square df Sig.

1 through 2 .368 16.983 6 .009

2 .834 3.077 2 .215

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Standardized Canonical Discriminant

Function Coefficients

Function

1 2

VAR00002 .102 .817

VAR00003 -.861 .990

VAR00004 1.382 -.693

Structure Matrix

Function

1 2

VAR00004 .793* .346

VAR00002 .471 .740*

VAR00003 .167 .642*

Pooled within-groups correlations between

discriminating variables and standardized

canonical discriminant functions

Variables ordered by absolute size of

correlation within function.

*. Largest absolute correlation between

each variable and any discriminant function

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Canonical Discriminant Function

Coefficients

Function

1 2

VAR00002 .191 1.528

VAR00003 -1.124 1.291

VAR00004 1.803 -.904

(Constant) -2.951 -8.793

Unstandardized coefficients

Functions at Group Centroids

VAR00

001

Function

1 2

1 -1.407 .173

2 1.081 .396

3 .326 -.569

Unstandardized canonical

discriminant functions evaluated at

group means

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Classification Statistics

Classification Processing Summary

Processed 21

Excluded Missing or out-of-range group

codes

0

At least one missing

discriminating variable

0

Used in Output 21

Prior Probabilities for Groups

VAR00

001

Prior Cases Used in Analysis

Unweighted Weighted

1 .333 7 7.000

2 .333 7 7.000

3 .333 7 7.000

Total 1.000 21 21.000

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Classification Resultsa

VAR00

001

Predicted Group Membership Total

1 2 3

Original Count 1 6 1 0 7

2 1 5 1 7

3 1 2 4 7

% 1 85.7 14.3 .0 100.0

2 14.3 71.4 14.3 100.0

3 14.3 28.6 57.1 100.0

a. 71.4% of original grouped cases correctly classified.

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A Marketing Plan For Sub 6 Ton Category Buses For M&M

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