BUSINESS RESEARCH METHODS

RESEARCH REPORT

ON

PERCEPTION OF FIRST TIME BUYERS OF HATCHBACK CARS

BY: Group 11

Abhinav Pandey 13A1HP039

Animesh Raj 13A3HP040

Ravi Gupta 13A1HP105

Abhishek Guha Roy 13A2HP063

Akshat Sinha 13A3HP030

UNDER THE MENTORSHIP OF

Dr. Bhaskar Basu

2014

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EXECUTIVE SUMMARY: THE INDIAN HATCHBACK

A hatchback is an automobile such that the boot is integrated with the cabin space. In our research, we have taken three hatchback cars divided into three different segments according to the buying behavior of first time potential buyers.

A. Maruti Suzuki Wagon RB. Hyundai i10C. Ford Figo

THE B SEGMENT

We have placed Maruti Suzuki Wagon R and Hyundai i10 into the B segment as the B-segment covers above entry level hatchback cars like Alto and TATA nano. These cars perform best during city drives and afford most creature comforts deemed necessary by todays customer. They usually feature 1 to 1.2 liter engines and are priced between 3 to 5 lakh rupees

Hyundai i10: i10 has been a raging success, taking off from where the Santro left. It is the market benchmark for quality and practicality. It has really strengthened Hyundais position in India.

Maruti Suzuki Wagon R: The Wagon R has always been hugely popular in India. With its new avatar, a new engine, new interiorsit just got better.

What drives this segment?

Dominated by Maruti, with 4 offerings in the segment including the recently launched Celerio, the B segment is a lucrative market to tap. This segment has seen quite a bit of activity recently.

The keys to success remain the same as with the A segment, with fuel efficiency and reliability taking the crown.

Customers look for a few creature comforts as well, and good interiors coupled with a stylish design can pull in the younger buyer.

Mostly these cars find use in the city, hence ease of driving and good efficiency are a big advantage.

The general absence of diesels in this segment can be one of the ways to enter the market. The bottleneck remains the cost of development and deployment for small capacity diesels

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THE B+ SEGMENT

We have placed Ford Figo into the B+ segment as the B+ segment covers the entire range of premium hatchbacks. These cars are just at home on the highway as they are in the city. Most new hatchbacks are launched in this segment. They usually feature engines above 1.2 liter and are priced between 4 to 7 lakh rupees. Undoubtedly, with the Indian buyer getting richer, the B+ segment is where all the action is.

Ford Figo: Figo, Fords latest offering, has certainly created a blast in the market. The car is viewed as value for money and has been clocking more numbers than the rest of the Ford lineup combined.

What drives this segment?

The customer here is usually buying his second car, specifically for the city, or is an experienced buyer.

Important factors can range from exclusivity, premium image to practicality and reliability.

With a wide range of customer audience, positioning of the vehicle vis--vis the rightcustomer bucket is essential for success.

Pricing is a factor that must not be ignored.

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TABLE OF CONTENTS

Page. NO.BACKGROUND 05

PROBLEM DEFINITION 06A. Statement of Objective 06B. Hypothesis 06

RESEARCH AND DESIGN 07A. Secondary Data 07

Internet 07 Literature 07

B. Design of collection method 08 Questionnaire Design 08 Survey 08 Scaling Techniques 08

C. Sampling process 09 Target Population 09 Sample Size 09 Sampling Technique 10

D. Sample gathering 10

DATA PROCESSING, ANALYSIS & FINDINGS 11A. Data Analysis 11

Assimilation Using Pivot Table 11 Pie Charts 11

CONCLUSION 16A. Summary 16B. Recommendations 16C. Limitations 17D. Appendix 17E. References 22

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BACKGROUND

For the past couple of years, Indian automobile market has achieved a special consideration

among automobile manufacturers as it has been regarded as the most fruitful and rewarding

automobile marketplace, especially for hatchbacks. In India, hatchback cars are considered as an

average mans automobile, and it is also the segment where cars get a steady makeover, along

with newer versions constantly being added to the list.

Hatchback cars are those cars that have an access to the interiors once the rear door is open and

also the luggage space is integrated with the passenger cabin and the rear seat can be folded or

removed to increase the luggage space. The two row seater small compact cars are categorized as

Hatchback cars. Due to its low pricing, better mileage, low maintenance and most importantly

perfect for drive in city's heavy-traffic, it has become the most selling car segment.

Hatchbacks occupy less parking space and is suitable for the metros where parking space is a

major problem. Series of face lifted HATCHBACK CARS IN INDIA been launched and many

more are yet to be launched. It seems the car manufacturers are aiming to revamp the entire small

car or the hatchback segment. Comparing to last year, the new models of small cars has almost

doubled this year. Even the car manufacturer of the luxury segment are now entering the

hatchback segment.

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PROBLEM DEFINITION

The research is aimed to know the preference of first time buyers of hatchback cars based in

Hyderabad on different parameters.

The research carries the potential to analyze and determine the consumers perception and their

buying behavior on the basis of different parameters like design, comfort, safety, fuel efficiency,

brand preference, loyalty etc.

The research also aims to dig out following benefits:-

Based on the different ages of employability like newly employed (22-30 years), well settled (30-60years) and retired (60plus) people, what are their perception and

preferences as the first time buyers.

What are the differences in the preferences of people in urban areas of Hyderabad.

a. STATEMENT OF OBJECTIVE

The automobile industry in India is growing at the faster rate due to mushrooming middle class

with higher disposable income. This has resulted in increase in the purchase of four wheelers

particularly in the hatchback segments of automobiles. India represents a huge market in

hatchback cars and the propensity to purchase is increasing day by day.

The objective of this research is to analyze the preferences of middle class consumers, in the

hatchback segment (Maruti Suzuki Wagon R, Hyundai i10, Ford Figo).

b. HYPOTHESIS

A hypothesis is a hypothetical statement regarding the relation between two or more variables.

They must be statements of the relationship between variables and they must carry clear

implications for testing the stated relations.

A broad hypothesis is given below from which more focused hypothesis may be derived.

Buyers point of view in selecting for hatchback cars. By reducing the problem to a

hypothetical statement, the problem has become more focused and the hypothesis can be tested

through research methods.

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Research and Design

The scope of the research is limited to following three limitations:-

The research study is conducted in urban areas of Hyderabad.

The preferred consumer for the study is the middle class family, mostly first time buyer. Also the

preferred consumers are targeted on the basis of different ages of employability like newly

employed (22-30 years), well settled (30-60years) and retired (60plus) people.

The research is limited to only 3 brands of hatchback cars:-

Maruti Suzuki Wagon R Hyundai i10 Ford Figo

a. Secondary Data

- Internet

Data from previous projects was gathered from the internet such as car surveys from

auto magazines. The data may not be directly relevant to the topic under study but

was immense value for planning out the study.

- Literature

Collect literature and reviews to get a general overview of the car market in India.

Study the existing reports undertaken to get an idea of the various car models on offer

and also read articles on consumer buying behavior.

.

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b. Design of Collection method

- Questionnaire design

This involved the design of the questionnaire on the basis of potential attributes

identified as part of the car selection process, preferences of first time buyers of

hatchback cars in the various aspects such as price, mileage, color, family needs, after

sales etc. Research problems were listed and then the information needed was

identified. The questions were then prepared in order to fulfill the information

requirements as identified earlier. The questions were designed with language which

was easy to understand to the respondents. The questions were also designed keeping

in mind that use of statistical tools such as Factor Analysis should be possible to give

meaningful results and also for data reduction. Questions are given in appendix.

- Survey

Survey method was mainly by personal interviewing of the salesperson in the car

dealer showrooms of Maruti and Hyundai. Interview was conducted in campus and

we also did intercept at popular places like Info city.

- Scaling technique

Consideration should be given to the below points before attempting to formulate a

scaling technique. There is no point in collecting data which cannot be analysed

subsequently. Also of concern is the cost and limited time available for collecting and

analyzing data.

- Type of information required

- Time and cost constraints

- Literary level of target respondents (for easy communication)

- What type of statistical tools should be used?

- How each question will be analysed?

- Expected and desired response.

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Types of scaling used in our questionnaire design:

Nominal Scale

This is a very simple scale. It consists of assignment of choices to various alternative

categories which are usually exhaustive as well mutually exclusive. These scales are

just numerical and are the least restrictive of all the scales. It is simple and widely

used when relationship between two variables is to be studied. In a Nominal Scale

numbers are no more than labels and are used specifically to identify different

categories of responses. This questionnaire compromised mainly nominal type as they

were simple to distinguish relationship between more than one variable.

LIKERT Scale

A part of ordinal scale in which the respondents are asked to indicate a degree of

agreement and disagreement with each of a series of statement. Each scale item has 5

response categories ranging from Extremely important to Extremely unimportant.

Each degree of agreement is given a numerical score and the respondents total score

is computed by summing these scored. This total score of respondent reveals the

particular opinion of a person.

c. Sampling Process

- Target Population

The preferred consumer for the study is the middle class family, mostly first time

buyer. Also the preferred consumers are targeted on the basis of different ages of

employability like newly employed (22-30 years), well settled (30-60years) and

retired (60plus) people.

- Sample Size

It denotes the number of elements to be included in the study. Due to time constraints

the sample size chosen is 200.

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- Sampling technique

Convenience sampling was mostly done in our study as the respondents chosen were

closest and depending on their availability. It is a type of non-probability sampling

which involves the sample being drawn from that part of the population which is

close to hand. The researcher cannot generalize the results from this type of sampling

as the samples are confined to a specific location and not representative of the general

population.

Stratified sampling was also used in our study to obtain homogeneous sub groups

from the population. We have divided the respondents on the basis of different ages

of employability like newly employed (22-30 years), well settled (30-60years) and

retired (60plus) people. When populations vary, it is advantageous to sample each

subpopulation independently. Stratification is the process of dividing members of the

population into homogeneous subgroups before sampling. A stratified survey could

thus claim to be more representative of the population than a survey of simple random

sampling or systematic sampling.

We also used snowball sampling where existing subjects would guide us to new

respondents based on their recommendation.

d. Sample Gathering

A total of 150 respondents filled the questionnaire, out of 150 only 106 respondents are

considered for our research. Out of the 106 respondents the ratio of business class to

service class is 1:3.

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DATA PROCESSING, ANALYSIS & FINDINGS

a. STATEMENT OF OBJECTIVE

- Assimilate using pivot table

The data gathered from the respondents were input into MS excel. The data was

brought together and prepared from statistical analysis. Using pivot table function the

basic data was analyzed the results were represented in pie charts as shown below.

- Pie Charts

Q2. Below Chart shows that 63% of respondents belong to 22-30 age group

category i.e. newly employed. While only 5 % are above 60 and the rest belongs

to 30-60 age group. This shows that majority of people belonging to 22-30 age

group category are the first time potential buyers of hatchback cars.

.

Q3. Gender

22-30 63 59%

30-40 19 18%

40-60 20 19%

Above 60 5 5%

MALE 75 70%

FEMALE 32 30%

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Q4. Below Chart shows that 49% of people comes under the 500000-1000000

salary bracket i.e middle income class. These people are the target customers for

hatchback cars.

Q5. Profession

Q6. Below Chart shows that 64% of people already have a car and remaining

36% are without car. These remaining 36% people are the first time buyers for

hatchback cars

< 2,50,000 6 6%

2,50,000-5,00,000 22 21%

5,00,000-10,00,000 49 46%

Above 10,00,000 30 28%

Service 41 38%

Business 33 31%

Others 33 31%

Yes 68 64%

No 39 36%

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Q7. Majority of the people who owns a car have Mid-sized hatchback cars.

Remaining have their cars in other different segments.

Q8. 28% of respondents think that their car is better than car of other

companies in this segment.

Q9. Below pie chart shows that around 52% people are willing to purchase a car

in the next month or in a year.

Compact (eg.Alto) 16 24%

Mid-Sized hatchback (eg. Wagon R) 28 41%

Semi-Luxury Sedan (eg. Honda City) 14 21%

Luxury Sedan (eg. Honda Accord) 9 13%

Other 1 1%

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Q10. Below pie chart indicates that people who are willing to buy a car in the

next month or in year are more keen to purchase Hyundai i10 followed by Ford

Figo and Maruti Suzuki Wagon R.

Q11. Below chart shows that people perception of buying a new car will mainly

dependent on the recommendation given by others and quality.

Maruti Suzuki Wagon R 6 10%

Hyundai i10 19 33%

Ford figo 14 24%

Others 19 33%

Advertisements 9 13%

Recommended by others 29 40%

Location 2 3%

Quality product 26 36%

Others 6 8%

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Q12-15. Responses given in these questions are framed in an cross-tabular form.

Attributes(Features) Hyundai i10 Maruti Wagon R Ford Figo

Price of the car Medium Low High

Brand value of the company Low High Medium

Styling and design Medium Low High

Color/ Model Medium Low High

Functional specifications High Low Medium

Family needs Low High Medium

Fuel efficiency/mileage Medium High Low

After sales service Medium High Low

Availability of spare parts Medium High Medium

Resale value Medium High Low

Discounts and exchange offers Low High Medium

Interests rates on car loans Low High Medium

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CONCLUSION

a. Summary

Age Among the potential buyers of hatchback cars in Hyderabad, 62 out of 106 respondents belongs to age group of 22-30. So this age the likely to buy a new car among all the age segment.Income 49 out of 106 respondents belong to the income segment of 5-10 lakhs per annum. So this segment is likely to buy a new car.Profession in profession we had taken three categories business, services & others. The distribution of respondents among these three segments was almost equal. So we conclude that respondents from each of these segment are likely to buy a new car.

72 out of 106 respondents are willing to buy a new car in the next month or year.

Out of these 72 respondents 8 were willing to buy Marutis Wagon R, 20 were willing to buy Fords Figo & 22 each were willing to but Hyundais i10 And some other hatchback car.

Among these 72 respondents majority of them were either recommended by others or they had a perception that cars from these brands were of great quality.

b. Recommendations

Currently hatchbacks account for over 70% of all passenger cars sold and the segment is

growing at rate above 30% annually.

A Segment (TATA nano, MARUTI Alto)

Competitive pricing and providing the basic necessities are of key important. New launches should focus on keeping costs low, without compromising on-fuel

efficiency, space and safety.

B Segment (Hyundai i10, Maruti Suzuki Wagon R)

New launches can look to differentiate themselves on features, practicality and comfortable ownership, apart from maintaining competitive price points.

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B+ Segment (Ford Figo)

Higher than expected sales speak for the acceptability of the premium hatch. New launches must come across as viable alternatives to sedans. Suitability for city driving along with the advantages of sedan like space. More customers are looking for safety features. Focus should be on either premium or practicality. Good quality and performance at a reasonable high price is accepted by a niche

but ever-growing customer base.

Value-for-money and practicality will continue to be of prime importance to the majority of Indian buyers.

c. Limitations

Since this project was intended to elucidate the techniques of Business Research Methods. The scope of the project was limited to learning the concept of Research design.

There have been a number of limitations because of which the survey may not be truly representative as mentioned below.- The sample size used for the research was small.- The sample consisted of students/potential first time buyers.- The area was limited to college campus, car showrooms and the shopping places.- The responses obtained might be inaccurate or biased.- The sample of the respondents chosen for the study might not be representative.- Analysis of the data might differ depending on the statistical tools and techniques

used.

d. Appendix: Questionnaire

1. Your Age

22-30

30-40

40-60

Above 60

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2. Gender

MALE FEMALE

3. Total Family Income

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8. Do you think that your car is better than cars of others companies in this segment? (SKIP QUESTION NO.8 & 9)

Yes No May Be

9. Do you intend to buy a hatchback car in the next month or in a year. If YES please choose from the list which car do you want to buy?

YES NO

Maruti Suzuki Wagon RHyundai i10Ford figoOthers

10. What was that single most important reason for initially buying the car of this brand or from thisdealer?

Advertisements

Recommended by others

Location

Quality product

Others

11. Rate the factors you consider before buying a car according to their importance.(Hyundai i10)

Extremely unimportant

Not Important

Average Important Extremely Important

Price of the carBrand value of the companyStyling and designColor/ ModelFunctional specificationsFamily needsFuel efficiency/mileageAfter sales serviceAvailability of spare

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partsResale valueDiscounts and exchange offersInterests rates on car loans

12. Any other factor that you consider important ?

____________________________________________

13. Rate the factors you consider before buying a car according to their importance.(Maruti Wagon R)

Extremely unimportant

Not Important

Average Important Extremely Important

Price of the carBrand value of the companyStyling and designColor/ ModelFunctional specificationsFamily needsFuel efficiency/mileageAfter sales serviceAvailability of spare partsResale valueDiscounts and exchange offersInterests rates on car loans

14. Any other factor that you consider important ?

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15. Rate the factors you consider before buying a car according to their importance.(Ford figo)

Extremely unimportant

Not Important

Average Important Extremely Important

Price of the carBrand value of the companyStyling and designColor/ ModelFunctional specificationsFamily needsFuel efficiency/mileageAfter sales serviceAvailability of spare partsResale valueDiscounts and exchange offersInterests rates on car loans

16. Any other factor that you consider important ?

____________________________________________

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e. References

Questionnaires and instruments Page 361, Donald R Cooper Scaling Techniques Measurement Scales Page 331, Donald R Cooper Sampling -Sampling and Fieldwork, Page 418, Zikmund Hypothesis Testing Page 525, Zikmund http://www.zigwheels.com/newcars/Ford/Figo Varun Motors, Banjara Hills & Talwar Hyundai, Banjara Hills. http://www.india.ford.com/cars/figo/features/smart http://www.marutisuzuki.com/wagonr/ http://www.hyundai.com/in/en/Showroom/Cars/i10/PIP/index.html#contents_feat

ure

http://www.thehindubusinessline.com/features/smartbuy/automobiles/hyundai-i10-review/article5112440.ece

http://www.autocarindia.com/auto-reviews/ford-figo-facelift-review-test-drive-and-video-320369.aspx

http://www.autocarindia.com/auto-reviews/new-maruti-wagon-r-269286.aspx http://www.slideshare.net/RohitJadhav2/trends-in-automobile-industry-in-india http://www.oracle.com/us/corporate/profit/archives/opinion/102910-banks-

190918.html

http://businesstoday.intoday.in/story/2013-roundup-how-automakers-fare-new-launches/1/201682.html