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Market share of two wheeler automobile
sector
5.60% 27.50%
16%
7%4%9.50%
Hero Honda
Bajaj Motors
TVS Motors
YamahaMotorsHonda Motors
Others
CHAPTER 1
INTRODUCTION TO THE INDUSTRY
Automobile is one of the largest industries in global market. Being the
leader in product and process technologies in the manufacturing
sector, it has been recognized as one of the drivers of economic
growth. During the last decade, well directed efforts have been made
to provide a new look to the automobile policy for realizing the
sector's full potential for the economy. Aggressive marketing by the
auto finance companies have also played a significant role in boosting
automobile demand, especially from the population in the middle
income group.
A Nations economy is well known from its transport system. For instant and
rapid growth in economy, a well-developed and well-networked transportation
system is essential. As India's transport network is developing at a fast pace,
Indian Automobile Industry is growing too. Also, the Automobile industry has
strong backward and forward linkages and hence provides employment to a
large section of the population. Thus the role of Automobile Industry is very
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essential in Indian economy. Various types of vehicles are manufactured by the
Automobile Industry. Indian Automobile Industry includes the manufacturing
of trucks, buses, passenger cars, defence vehicles, two-wheelers.
The two-wheeler manufacturing is dominated by companies like TVS, Honda
Motorcycle & Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc.
The automobile industry in the country is one of the key sectors of the economy
in terms of the employment opportunities that it offers. The industry directly
employs close to around 0.2 million people and indirectly employs around 10
million people. The prospects of the industry also has a bearing on the auto-
component industry which is also a major sector in the Indian economy directly
employing 0.25 million people.
All is not well with the automobile industry the world over currently with the
slowdown that has gripped most of the major economies of the world. The gap
between the manufacturing capacity volume and the assembly volume is
growing by the day and has worried the manufacturers. This state of affairs has
triggered a lot of cutthroat competition and consolidation in the industry. Cost
reduction initiatives have come to be the in thing in the global industry today.
Towards this direction, many automobile factories are being closed down.
The Indian automobile industry is a stark contrast to the global industry
due to many of the characteristics, which are peculiar to India. The
Indian automobile industry is very small in comparison to the global
industry. Except for two wheelers and tractors segments, the Indian
industry cannot boast of big volumes vis--vis global numbers
OVERVIEW OF TWO WHEELER SECTOR
Two Wheeler Industry
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The Indian two wheeler contributes the largest volumes amongst all the
segments in automobile industry. Though the segment can be broadly
categorized into 3 sub-segments viz.; scooters, motorcycles and mopeds; some
categories introduced in the market are a combination of two or more segments
e.g. scooterettes and step-thru's. In the last four to five years, the two-wheeler
market has witnessed a marked shift towards motorcycles at the expense of
scooters. In the rural areas, consumers have come to prefer sturdier bikes to
withstand the bad road conditions. In the process the share of motorcycle
segment has grown from 48% to 58%, the share of scooters declined drastically
from 33% to 25% , while that of mopeds declined by 2% from 19% to 17%
during the year 2000-01. The Euro emission norms effective from April 2000
led to the existing players in the two- stroke segment to install catalytic
converters. All the new models are now being replaced by 4-stroke
motorcycles. Excise duty on motorcycles has been reduced from 32% to 24%,
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resulting in price reduction, which has aided in propelling the demand for
motorcycles.
Within the two-wheeler industry, motorcycle segment grew at a phenomenally
high rate of 35% as against a deceleration of 3% for scooters and 27% for
mopeds. In fact, motorcycle has been taking away the share of scooters and
mopeds in a 4.3 million two-wheeler market and surging ahead with its market
share of 68%. The increasing demand from semi-urban and rural segments may
have caused this positive shift towards motorcycles. Also, easy credit coupled
with low interest rate regime, constrained personal transport, increasing income
levels in middle class and higher aspirations of young people all seem to be the
factors responsible for such high growth in two-wheelers. The growth in two-
wheelers has been robust enough to counter the slow down and other factors
constraining the overall business activity in the country. Also, rationalization of
excise duty in the Union Budget 2002-03 had a positive impact on the demand
for motorcycles. We also expect the motorcycles to continue to lead the two-
wheeler segment like in all other Asian countries. Available forecasts suggest
that this trend would continue for another couple of years and the industry
would record nearly double-digit average annual growth up to 2006.
During the year, there have been important developments in two-wheeler
industry. The competition has strengthened though there are hardly any new
entrants into the industry. There is an increasing emphasis on price and this has
led to cost cutting efforts all across the industry, thereby, making the customer
an ultimate beneficiary. The trend also saw introduction of new motorcycles
with capacity ranging from 100 to 180cc bikes. We anticipate that many more
new models will be launched during the year and provide customers plenty of
choice at competitive prices.
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Businesses cannot consistently grow at 25-30 per cent. Each business has a
tendency to taper and plateau after attaining a particular size. An annual growth
rate of 10-12 per cent over a period of time is extremely healthy.
The TCS study rankings are conducted at the motorcycle segment-level to
provide comparisons among similar groups of motorcycles. Motorcycles
ranking highest in their respective segments for TCS are: Hero Honda CD100
SS (best standard motorcycle segment); Hero Honda Splendor (best executive
motorcycle segment); Bajaj Pulsar (best premium motorcycle segment); and
Royal Enfield Bullet Electra (best cruiser motorcycle segment). "The relatively
low score for the premium segment indicates that most manufacturers have
fallen short of meeting the high expectations of these buyers," states Mr.
Lochan." Bajaj Pulsar is one exception with segment-leading ratings across all
aspects of ownership experience, particularly on areas related to vehicle
styling."
The feeling of freedom and being one with the Nature comes only from riding a
two wheeler. Indians prefer the two wheelers because of their small manageable
size, low maintenance, and pricing and easy loan repayments. Indian streets are
full of people of all age groups riding a two wheeler. Motorized two wheelers
are seen as a symbol of status by the populace. Two wheelers in India are the
second largest producer and manufacturer of two-wheelers in the world. It
stands next only to Japan and China in terms of the number of two-wheelers
produced and domestic sales respectively. Indian two-wheeler industry has got
spectacular growth in the last few years. Indian two-wheeler industry had a
small beginning in the early 50's. The Automobile Products of India (API)
started manufacturing scooters in the country.
Bikes are a major segment of Indian two wheeler industry, the other two being
scooters and mopeds. Indian companies are among the largest two-wheeler
manufacturers in the world. In the initial stages, the scooter segment was
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dominated by API; it was later overtaken by Bajaj Auto. Although various
government and private enterprises entered the fray for scooters, the only new
player that has lasted till today is LML.
The motorcycle segment was initially dominated by Enfield 350cc bikes and
Escorts 175cc bike. The two-wheeler market was opened to foreign competition
in the mid-80s. And the then market leaders - Escorts and Enfield - were caught
unaware by the onslaught of the 100cc bikes of the four Indo-Japanese joint
ventures. With the availability of fuel efficient low power bikes, demand
swelled, resulting in Hero Honda - then the only producer of four stroke bikes
(100cc category), gaining a top slot. The first Japanese motorcycles were
introduced in the early eighties. TVS Suzuki and Hero Honda brought in the
first two-stroke and four-stroke engine motorcycles respectively. These two
players initially started with assembly of CKD kits, and later on progressed to
indigenous manufacturing. In the 90s the major growth for motorcycle segment
was brought in by Japanese motorcycles, which grew at a rate of nearly 25%
CAGR in the last five years.
The industry had a smooth ride in the 50s, 60s and 70s when the Government
prohibited new entries and strictly controlled capacity expansion. The industry
saw a sudden growth in the 80s. The industry witnessed a steady growth of 14%
leading to a peak volume of 1.9mn vehicles in 1990.
In 1990, the entire automobile industry saw a drastic fall in demand. This
resulted in a decline of 15% in 1991 and 8% in 1992, resulting in a productionloss of 0.4mn vehicles. Barring Hero Honda, all the major producers suffered
from recession in FY93 and FY94. Hero Honda showed a marginal decline in
1992.
The reasons for recession in the sector were the incessant rise in fuel prices,
high input costs and reduced purchasing power due to significant rise in general
price level and credit crunch in consumer financing. Factors like increased
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production in 1992, due to new entrants coupled with the recession in the
industry resulted in company either reporting losses or a fall in profits.
Evolution of Two-wheeler Industry in India:
Two-wheeler segment is one of the most important components of the
automobile sector that has undergone significant changes due to shift in policy
environment. The two-wheeler industry has been in existence in the country
since 1955. It consists of three segments viz. scooters, motorcycles and
mopeds.
India is on every major global automobile players roadmap because of the
following reasons:
1.India is the second largest two-wheeler market in the world
The auto component industry has come of age and now forms an important
component of the Indian economy. In recent years, it has grown more
impressively, fetch double-digit growth. More interestingly, it has captured
attention as well as business from leading auto makers of the world. The
industry plays a crucial role in the automobile sector. Manufacturing vehicles
typically involve assembling a large number of components out-sourced from
number of ancillaries or component manufacturers. Competitiveness with
quality as a theme has been the watchword for the Indian industry and
especially the auto component industry ever since the Indian economy was
opened up to the world in the early 1990s. While economic revival, lower
interest rates and better road infrastructure are driving domestic demand forautomobiles and, therefore, components, increasing outsourcing by global
automobile majors is creating a huge export opportunity for Indian component
manufacturers.
2. Growth Prospects and Key Drivers of the Indian Two Wheelers Industry
The growth witnessed by the Indian two wheeler industry indicates the growing
demand for low cost personal transportation solutions amongst the 300 millionIndian middle class consumers. Despite this spectacular growth rate, the two
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wheeler penetration (number of two wheelers per 1000 inhabitants) in India
remains lower than other Asian countries. This fact provides an opportunity for
continued growth in the market. India has the lowest Penetration of two
wheelers as compared to countries like Taiwan, Thailand, Malaysia, Vietnam,
Indonesia and China. In the present scenario, growth in the two wheeler
industry will be driven by several factors:
3. Rise in Indias Young Working Population
With the rising levels of per capita income of people, the Indian two wheeler
market offers a huge potential for Growth. This growth is relevant in the light
of the fact that 70 per cent of Indias population is below the age of 35 Years
and 150 million people will be added to the working Population in the next five
years. The number of women in the urban work force is also increasing; this
will lead to the Growth of gearless scooters.
4. Rise of Indias Rural Economy and Growth in Middle Income
Households
The growth prospects of the Indian rural economy offer a significant
opportunity for the motorcycle industry in India. The penetration of
motorcycles amongst rural households with income levels greater than US$
2,200 per annum has already increased to over 50 per cent. The current target
Segment for two wheelers, i.e., households belonging to the Income category of
US$ 2,20012,000 is expected to grow at a CAGR of 10 per cent.
5. Greater Affordability of VehiclesThe growth in two-wheeler sales in India has been driven by an increase in
affordability of these vehicles. An analysis of the price trends indicates that
prices have more or less stagnated in the past. This has been part of the
marketing strategy adopted by the manufacturers to gain volume, as well as
conscious efforts adopted to bring down costs. The operating expenses of
leading manufacturers have declined by around 15 per cent in the last five
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years. With greater avenues of financing, the customers capacity to own a two
wheeler has improved.
6. Rapid Product Introduction and Shorter Product Life Cycle
The last five years have witnessed a sharp increase in new product launches in
the two-wheeler industry. It is estimated that close to 50 new products have
been launched by manufacturers during this period, filling up all price points
and targeted at various consumer segments.
7. Inadequate Public Transport Systems in most Urban Areas
The economic boom witnessed in the country and the increased migration to
urban areas have increased the traffic congestion in Indian cities and worsened
the existing infrastructure bottlenecks. Inadequate urban planning has meant
that transport systems have not kept pace with the economic boom and the
growing urban population. This has increased the dependence on personal
modes of transport and the two wheelers market has benefited from this
infrastructure gap.
8. Challenges faced by the industry
Despite the high growth achieved in the past and the high potential in the
future, the two-wheelers market faces some challenges.
9. Rising Customer Expectations
The growth witnessed by the Indian two wheeler industry has attracted a
number of new entrants to the market and it is expected that the Indian industry
will become more competitive in the future. The plethora of products
introduced in the past has also raised customer expectations with respect to
reliability, styling, performance and economy.
10. Environmental and Safety Concerns
The increasing demand for two wheelers will need to be managed to address
issues relating to overcrowding of roads. Another problem is the insufficient
infrastructure for inspection to ensure adherence to emission norms. As the
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industry grows, it is important to regulate the sale of used two wheelers in a
more organised manner for which a mechanism needs to be evolved.
Unregulated sale of two wheelers, especially in the rural areas, are likely to
create issues related to emissions and safety of vehicles.
11. Creation of Distribution Infrastructure
Leading companies need to ensure that on one hand they build adequate
infrastructure in terms of dealerships andservicing stations in the urban areas
and on the other ensure that their distribution infrastructure also reaches the
rural areas.
OVERVIEW OF LEADING BRANDS:
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Market share of two wheeler automobile
sector
35.60% 27.50%
16%
7%4%9.50%
Hero Honda
Bajaj Motors
TVS Motors
YamahaMotors
Honda Motors
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1.HERO HONDA
Desh ki Dhadkan"Hero Honda Motors Limited, based in Delhi, India is a joint venture between
the Hero Group of India and Honda of Japan It has been referred to as the
world's biggest manufacturer of2-wheeled motorized vehicles since 2001,
when it produced 1.3 million motorbikes in a single year. Hero is the brand
name used by the Munjal brothers for their flagship company Hero Cycles Ltd.
A joint venture between the Hero Group and Honda Motor Company was
established in 1984 as the Hero Honda company, India.
During the 1980s, the company introduced motorcycles that were popular in
India for their fuel economy and low cost. A popular advertising campaign
based on the slogan 'Fill it - Shut it - Forget it' that emphasized the motorcycle's
fuel efficiency helped the company grow at a double-digit pace since inception.
Hero Honda has three manufacturing facilities based at Dharuhera and Gurgaon
in Haryana and at Haridwarin Uttarakhand. These plants together are capable
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of churning out 3.9 million bikes per year. Hero Honda's has a large sales and
service network with over 3,000 dealerships and service points across India.
Hero Honda's customer loyalty program, the Hero Honda Passport Program,
claims to be one of the largest programs of its kind in the world with over 3
million members.
The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors
ranked at 108.
FounderMunjal Brothers: Mr. Satyanand Munjal, Mr. Brijmohan Lall
Munjal and Mr. O. P. Munjal.
Year ofEstablishment
1984 (The Hero Group was established in 1956)
Mission "Its our mission to strive for synergy between technology,
systems and human resources, to produce products and
services that meet the quality, performance and price
aspirations of our customers. While doing so, we maintain the
highest standards of ethics and societal responsibilities."
- Mr Brijmohan Lall Munjal, Chairman & MD
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Foundational
Work
Before the establishment of the Hero Group in 1956, Munjal
Brothers use to manufacture bicycle components in the early
1940's.
Industry Automotive - Two Wheelers
Business
GroupThe Hero Group
Capitalization
Ratio
Hero Group - 26%
Honda Motor Co., Ltd. - 26%
Others - 48% (listing)
No. of Sales
Outlets1500+
Joint Venture The Hero Group (India) with Honda Motor Co., Ltd. (Japan)
Website www.herohonda.com
www.herogroup.com
Segment and Brands
Products Brands
Two-Wheelers Achiever CBZ CBZ Xtreme
CD100SS CD DAWN Glamour
Karizma Passion Plus* Pleasure
Splendor+* Super Splendor*
2. BAJAJ AUTO
"Inspiring Confidence"
Bajaj Auto Ltd. is the largest exporter of two and three wheelers. With
Kawasaki Heavy Industries of Japan, Bajaj manufactures state-of-the-art range
of two-wheelers. The brand, Pulsar is continually dominating the Indian
motorcycle market in the premium segment. Its Discover DTSi is also a
successful bike on Indian roads.
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Founder Jamnalal Bajaj
Year of Establishment 1926
Industry Automotive - Two & Three Wheelers
Business Group The Bajaj GroupListings & its codes BSE - Code: 500490; NSE - Code: BAJAJAUTO
Presence Distribution network covers 50 countries.
Dominant presence in Sri Lanka, Bangladesh,
Columbia, Guatemala, Peru, Egypt, Iran and
Indonesia.
Joint Venture Kawasaki Heavy Industries of Japan
Works Akurdi, Pune 411035
Bajaj Nagar, Waluj Aurangabad 431136
Chakan Industrial Area, Chakan, Pune 411501
E-mail [email protected]
Website www.bajajauto.com
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Segment and Brands
Products Brands
Motorcycles 4S 4S Champion Bajaj Avenger
Bajaj CT 100 Bajaj Discover Bajaj Platina
Bajaj PulsarBajaj Pulsar
DTSi
BAJAJ PULSAR DTS
FI 220
Bajaj Sonic Bajaj Wind 125 Bajaj XCD 125
Boxer Caliber Caliber115
Kawasaki Bajaj
Eliminator KB RTZ KB100
KB125
Scooters Bajaj Chetak Bajaj Kristal Dtsi
3. TVS MOTOR COMPANY
"Inspiration in Motion"
TVS Motor is the third largest two-wheeler manufacturer in India and ranks
among the top ten globally. It is the first company in the world to be honoured
with The Deming Prize for Total Quality Management. The company was the
first in India to launch 2-seater 50cc moped and 100cc Indo-Japanese
motorcycles. At present TVS Apache, TVS Victor, TVS Scooty, TVS Centra
and TVS Fiero are the popular bikes in Indian market.
Founder T V Sundaram Iyengar
Country India
Year of Establishment August 1980 (TVS Group in 1911)
Industry Manufacturing of two-wheelers and auto components
Business Group TVS Group
Website www.tvsmotor.in
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Segments and brands
TVS Apache
TVS Apache RTR FI 160
TVS Centra
TVS Fiero FX TVS Flame
TVS Scooty
Scooty pep plus
TVS Star
TVS Victor
TVS Victor GLX 125
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TVS XL Super
TVS 180 RTR Menace
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CHAPTER II
LITERATURE REVIEW
CONSUMER BEHAVIOUR
Referring to Solomon (2006, p.27) consumer behaviour is the study of the
processes involved when individuals or groups select, purchase, use or dispose
of products, services, idea or experiences. Consumer behaviour focuses on how
individuals make decisions to spend their available resources on consumption
related items. That includes what they buy, why they buy, when they buy, where
they buy it, how often they buy it how often they use it, how they evaluate it
after they purchase and the impact of such evaluations on future purchases, and
how they dispose it. [Schiffman and Kanuk (2004, p.8)]
Belch and Belch define consumer behaviour as 'the process and activities
people engage in when searching for, selecting, purchasing, using, evaluating,
and disposing of products and services so as to satisfy their needs and desires.
CONSUMER ATTITUDES
According to Ajzen (1998) the attitudes are the first determinant of behaviour
intention. In consumer behaviour context attitude is a learned predisposition to
behave in a consistently favourable or unfavourable way with respect of a given
object. There is a general agreement that attitudes are learned. This means that
attitudes relevant to purchase behaviour are formed as a result of direct
experience with the product, word-of-mouth information acquired from others,
or exposure to mass media advertising. Internet etc. (Schiffman and Kanuk,
2004, p.253) As learned predispositions, attitudes may propel consumer
towards particular behaviour or repel the consumeraway from particular
behaviour. . (Schiffman and Kanuk, 2004, p.253)
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The following literature review will critically analyse the theories associated
with the research topic. Firstly, it looks at the issues ofconsumer behaviour;
hence it highlights the factors, which influence the consumer decision-making
process, predominantly the consumer attitudes. Other articles examine more
generally models of consumer attitude formation, which might be useful
applied to the research question in this dissertation.
While the first section focuses on the aspects of consumer behaviour, the
second part of the review, as already outlined in the introduction section of
dissertation, observes the marketing issues, particularly the marketing
communication strategy within the marketing mix.
Therefore the following theories from consumer behaviour and marketing have
been outlined:
Consumer decision-making process
Consumer attitude formation and change
The marketing mix
CONSUMER DECISION-MAKING PROCESS
The consumer decision to purchase or not to purchase the product is crucial for
marketers. It can signify whether the marketing strategy has been wise,
insightful, and effective, or whether was poorly planned and missed the mark.
Hence marketers are particularly interested in such process. (Schiffman and
Kanuk, 2004, p.581)
Verbeke (2005) recognizes that at any point in time throughout the decision-
making process, judgements and choices are affected by a variety of stimuli
from environment as well as by internal process and characteristics form the
consumers themselves. Jobbers (1995) identifies the concept of influences on
consumer purchasing behaviour among which he points out the level of
purchase involvement as one of the factors that influences the consumer
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decision-making process. Referring to Kim (2005) who was investigating how
product involvement and values interact with consumers, more current research
examines consumer involvement under working assumptions that different
types of product involvement trigger different behaviour.
Lye et al. (2005), in their study of consumer decision models, advocate that the
complexity of consumer decisions is increasing. We have limited
understanding of the decision process and the models are inadequate at
predicting decision outcomes. Hence the current models, they argue, are out of
date and insufficient in providing the desired outcome.
Nevertheless, the decision-making process model will provide the author and
the reader with general overview and understanding of factors influencing on
consumers purchasing behaviour.
MODELS OF CONSUMER BEHAVIOUR
The black box model shows the interaction of stimuli, consumer characteristics,
and decision process and consumer responses. It can be distinguished between
interpersonal stimuli (between people) or intrapersonal stimuli (within people).
The black box model is related to the black box theory of behaviourism, where
the focus is not set on the processes inside a consumer, but the relation between
the stimuli and the response of the consumer. The marketing stimuli are planned
and processed by the companies, whereas the environmental stimulus is given
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by social factors, based on the economical, political and cultural circumstances
of a society. The buyers black box contains the buyer characteristics and the
decision process, which determines the buyers response.
The black box model considers the buyers response as a result of a conscious,
rational decision process, in which it is assumed that the buyer has recognized
the problem. However, in reality many decisions are not made in awareness of a
determined problem by the consumer.
BUYING DECISION PROCESS
The buying decision process follows a logical sequence of five steps
a. Need recognition : When a buyer recognizes a gap between his desired state
and the actual state, buying process starts. Such recognition may be caused
by stimuli either internal or external. At this stage, marketer should help
consumers identify their current and future problems and felt or latent needs.
To do this, marketers have to research on consumer problems and needs.
b. Information search: Assuming consumers are motivated to satisfy his or
her need, they will next undertake a search for information on possible
solutions. The sources used to acquire this information may be as simple as
remembering information from past experience (i.e., memory) or the
consumer may expend considerable effort to locate information from outside
sources (e.g., Internet search, talk with others, etc.). How much effort the
consumer directs toward searching depends on such factors as: the
importance of satisfying the need, familiarity with available solutions, and
the amount of time available to search.
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c. Evaluate Options
Consumers search efforts may result in a set of options from which a choice
can be made. It should be noted that there may be two levels to this stage. At
level one the consumer may create a set of possible solutions to their needs
(i.e., product types) while at level two the consumer may be evaluating
particular products (i.e., brands) within each solution. For example, a
consumer who needs to replace a television has multiple solutions to choose
from such as plasma, LCD and CRT television.
d. Purchase Decision
In many cases the solution chosen by the consumer is the same as the
product whose evaluation is the highest. However, this may change when it
is actually time to make the purchase. The intended purchase may be
altered at the time of purchase for many reasons such as: the product is out-
of-stock, a competitor offers an incentive at the point of- purchase (e.g.,
store salesperson mentions a competitors offer), the customer lacks the
necessary funds (e.g., credit card not working), or members of the
consumers reference group take a negative view of the purchase (e.g.,
friend is critical of purchase).
e. Post purchase Behaviour
Once the consumer has made the purchase they are faced with an evaluationof the decision. If the product performs below the consumers expectation
then he/she will re-evaluate satisfaction with the decision, which at its
extreme may result in the consumer returning the product while in less
extreme situations the consumer will retain the purchased item but may take
a negative view of the product. Such evaluations are more likely to occur in
cases of expensive or highly important purchases. To help ease the concerns
consumers have with their purchase evaluation, marketers need to be
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receptive and even encourage consumer contact. Customer service centers
and follow-up market research are useful tools in helping to address
purchasers concerns.
BUYER BEHAVIOUR PATTERNS
Classification is of 2 types
a. Degree of Involvement: Different patterns of behaviour on purchasing
different types of products and services. They buy from nearby shops and not
deliberate much on the characteristics of products. Individual decisions are
made. In case of durables they visit different shops and opinions of others and
evaluate product characteristics and benefits, their financial position, payment
scheme and then decide. The difference in the pattern of the behaviour is
because of perceived risk (higher the perceived risk higher the involvement)
and vice versa.
According to Assael, there are 4 types of behaviour based on 2 parameters.
1. Degree of buyer involvement (High/Low)
2. Degree of differences among brands.
High Involvement Low Involvement
Significant differences
among brands
Complex buying
behaviour
Variety seeking buying
behaviour
Few differences among
brands
Dissonance reducing
behaviour
Habitual buying
behaviour
Complex buying behaviour Seen in the case of purchasing Computers,
refrigerators, automobiles etc. Marketers should
Help consumers learn about the product, attributes, uses and benefits etc.
Make comparative analysis of features and benefits of products in print
media.
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Train and motivate sales personnel.
Generate WOM Advertising.
Dissonance reduces behaviour Products like carpets and furniture are
expensive but have few differences. Customers go for appearances and
performance of these products.
Markets should be intelligent in knowing probable arguments in favour and of
against the product. On what grounds product may be appreciated or
discounted, the marketers must know.
Habitual buying behaviour: Products like salt, wheat, cigarettes, paan masala
are low involvement items and low cost and are frequently purchased. Brand is
not bothered about. Customers dont postpone the purchase. Marketers need to
make consumers brand conscious. Differentiated marketing helps.
Rational and Emotional attacks
Rational make rational appeal and raise consciousness levels.
Ex: Horlicks with calcium, Pepsodent 2-in-1 action, Medimix ayurvedic beauty
soap with all ingredients.
Emotional Associate with individual emotions like love, fear, jealousy and
wisdom.
Ex: Saffola husbands health, Wills Made for each other.
Variety seeking behaviour There are a good number of brands with different
attributes and benefits. Purchasing is less expensive and frequent. Ex:
Confectionery items, ice creams etc.The consumer buys different items of same
brand or different to experience different sight, smell, sound, touch, and taste.
Brand switching occurs to try a good variety of products not because of
dissatisfaction.
THE MARKETING MIX
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The concept of the marketing mix as the combination of the major tools of
marketing was first developed by Borden in the 1950s. The idea of 4Ps
(Product, Place, Price and Promotion) was later formulated by McCarthy in
1975. The marketing mix creates an offering for the customer. Marketers need
to ensure that the marketing mix meets their customers needs and wants in
addition to that all of its components need to be consistent with each other. If
not costumers will turn away to its competitors. (Brassington, 2006)
Vignali (2001) acknowledges that for many years 4Ps have been used as the
principal foundation on which a marketing plan is based. However, with
particular attention being paid to services marketing in recent years, theorists
have identified additional variables, which could be added to the 4Ps. Fifield
and Gilligan (1996, cited by Vignali 2001) recognized the following variables
as an integral part of the marketing mix- process, physical and people. Vignali
(2001) applied 7Ps analysing the marketing mix of McDonalds in the
following way:
1. Product features, quality, quantity.
2. Place location, number of outlets.
3. Price strategy, determinants, levels.
4. Promotion advertising, sales promotion, public relations.
5. People quantity, quality, training, promotion.
6. Process blueprinting, automation, control procedures.
7. Physical cleanliness, decor, ambience of the service.Further into the promotion part of the marketing mix, the promotional mix is
a direct way in which an organization attempts to communicate with various
target audiences. It consists of five main elements:
Advertising
Public relations
Sales promotion
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Direct marketing
Personal selling(Brassington, 2006)
Laurent and Kapferer(1985) recognize that the degree of consumer
involvement in a product category has become a major factor relevant to
advertisingand promoting strategies. Solomon et al. (2006) suggests that this
might be involvement paradox; the less important is the product to consumers,
the more important are many of the marketing stimuli (e.g. packages, jingles)
that must be devised to sell it.
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CHAPTER III
RESEARCH METHODOLOGY
Research can be defined as the search for knowledge or any systematic
investigation to establish facts. Research methodology refers to the way how a
research is conducted.
RESEARCH OBJECTIVE
The objective of the research was to study the consumer behaviour towards
two-wheeler bikes. The two main objectives of the project are:
1) To study the behavioural factors of consumers in motor bikes.
2) To analyze the impact of behavioural factors of consumers on choosing
particular brand of motor bike.
PRIMARY RESEARCH
The primary data was collected through direct interviews and well structured
questionnaire.SECONDARY RESEARCH
Secondary data are the data that are collected by others and is to be "re-used"
by the researcher. The secondary data that was collected were the various books
on marketing research including Marketing Management by Philip and Kotler,
Marketing research by Naresh K Kotla and internet sites including
www.autoindia.org.
RESEARCH DESIGN
The research design used for this study is descriptive research. The main
purpose of descriptive research is description of the state of affairs as it exists at
present. The activities were performed in the following order:
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Activity PerformedA Basic Understanding of the Project.
Collecting Data Relating to Project.
Identifying target market.
Constructing the questionnaire to study consumer behaviour of target customers.
Administration of the questionnaire to the sample.
Data analysis of the questionnaire.
Analysis of the customer behaviour and suggesting possible marketing strategy foreach of the three brands.
SAMPLING PLAN
Sampling plan consists of sample design; sample size, sample unit and sample
procedure as follows:
Sample design
Sample design is a definite plan determined before any data are actually
collected for obtaining a sample from a given population. The sample design to
be used must be decided by the researcher, taking into consideration the nature
of the inquiry and other related factors.
Sample size
Sample size refers to the number of items to be selected from the universe to
constitute the sample. As suggested by the company, a sample of 100 customers
in Delhi was surveyed.
Sample unit
The sample unit is usually the people to be surveyed. The respondents were
selected from the Delhi city only.
Sample Procedure
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Sampling procedure explains about how the survey has to be conducted.
Convenience sampling technique was undertaken for this research. Sample was
classified on the basis of location of the customers having two wheeler bikes.
South Delhi
North Delhi
West Delhi
East Delhi
QUESTIONNAIRE DESIGN
Questionnaire was used as a tool for data collection as the number of
respondents and strata are huge and the time available is comparatively less.
The questionnaire designed to survey the sample included both open ended and
close ended questions.
1. Open ended questions: In this type of questions there are no pre-
existing response categories and the respondents are permitted to answer as
they feel. They are mainly used in exploratory and qualitative research.
The open ended question helps in getting the inputs from the heads of
editorial department and in identifying any unknown variable.
2.Close ended questions: A closed-ended question is a form of question
which can normally be answered using a simple "yes" or "no", a specific
simple piece of information, or a selection from multiple choices.
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respondents are of 10,000- 15,000, 7% of respondents are of 15,000-20,000 and
remain 3% of respondents above 20,000 of income level
CLASSIFICATION BY OCCUPATION
Occupation No. of respondents Percentage (%)
Servicemen 47 47
Student 30 30
Business 12 12
Others 11 11
Interpretation
Above Chart Shows that 47% respondent are belonging Servicemen out of 100
and 30% are the students. 12% respondents are businessman.
RESPONSE TOWARDS MOTOR BIKES IN TERMS OF AGE OF THE
CONSUMER
S.No Name of thebrand
Below 30years
% Between 30-50years
%
1 Hero Honda 40 40% 45 45%
2 Bajaj 45 45% 30 30%
3 TVS 35 35% 45 45%
Interpretation:
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Regarding the age of respondents, most of the respondents are below 30 years
of age and chosen for Bajaj bikes, whereas 40 chosen for Hero Honda, but
whereas in the age group of 30-50, 45 respondents chosen for Hero Honda, For
Bajaj it is only 30 respondents Respondents above 50 years of age prefer Bajaj
bikes. The least is Hero Honda with 15 respondents.
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MEDIUM OF SOURCE OF INFORMATION
Sources No. of respondents Percentage (%)
News Paper 12 12
T.V.Advertisement 14 14Friends 26 26
Others 48 48
Interpretation:
Above graph shows that 48 % respondents are come to know from the other
sources. Then 26 % respondents are come to know from friends, 14 % & 12 %
respondents are come to know from the T.V. Advertisement & news paper.
RESPONSE REGARDING AWARENESS TOWARDS MOTOR BIKESBrand Advertisement
s
(%) Family
Members
(%
)
Friend
s
(
%
)
Hero
Honda
45 45 10 10 3 3
Bajaj 30 30 5 5 4 4
TVS 25 25 25 25 3 3
Interpretation:
Regarding awareness of the brand motor bikes, that awareness is highest
because of advertisements. It can be seen that from the above graph that, the
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awareness through advertisements is highest for Hero Honda, followed by Bajaj
and TVS. Family members are seen to be creating maximum awareness about
Hero Honda followed by TVS and Bajaj.
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VIEW OF CUSTOMERS ABOUT ADVERTISEMENTS CREATE
MORE AWARENESS OF SHOWROOM:
Response No. of respondents Percentage (%)
Yes 65 65No 15 15
Cant Say 10 10
Interpretation:
Above graph shows that the majority of customers are agreed on the
advertisement creates more awareness of showroom and very few of customers
are disagreed.
WEIGHTAGE GIVEN TO ATTRIBUTES:
Attributes Weight age
Price 381
Less maintenance 358
Style 355Durability 335
Mileage 426
Easy Driving 367
Brand Reputation 362
Color 406
Pick up 382
Total 3370
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RESPONSE REGARDING THE PREFERENCE FOR LOOKS/DESIGN
IN BIKES
Name of the brand YES (%) NO (%)
Hero Honda 35 35 65 65
Bajaj 60 60 40 40
TVS 30 30 70 70
Interpretation:
35% respondents purchase the Hero Honda Bike due to acceptance of
design/style/model, whereas 60% respondents do so for Bajaj and only 30
respondents opted for TVS Bike following acceptance of the bikes design, etc.
followed by Hero Honda and TVS. This shows that the sales of Bajaj motor
bike are more by way of its design/style/model.
RESPONSE REGARDING THE PREFERENCE FOR SPEED IN BIKES
Name of the
brand
YES (%) NO (%)
Hero honda 35 35 65 65
Bajaj 50 50 50 50
TVS 25 25 75 75
Interpretation:
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As far as speed is concerned, Bajaj is ruling the market and finding favour with
the consumers. Hero Honda and TVS are far below the expectations of the
consumers based on mileage per litre of petrol.
SALES BY PRICE OF BIKES:
Name of the Brand High (%) Medium (%)
Hero Honda 15 15 45 45Bajaj 55 55 35 35
TVS 15 15 40 40
Interpretation:
Regarding sales by price of bikes, highest is 55% respondents opined that the
price is high for Bajaj bikes, medium is 45% respondents opined for Hero
Honda bikes. 45% respondents have stated that TVS bikes are averagely priced.
SALES BY TECHNOLOGY:
Name of the
Brand
High (%) Medium (%)
Hero Honda 55 55 40 40
Bajaj 65 65 25 25
TVS Nil Nil 40 40
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Interpretation:
45% respondents have voted for Bajaj based on its superior technology
compared to Hero Honda for which 40% respondents voted favourably based
on its technology. This shows that Bajaj technology is marginally superior
compared to Hero Honda. TVS is a poorest with 15% respondents voting for it,
as far as technology feature is concerned
RATING OF SHOW ROOM ATTRIBUTES
Attributes Excellent Very
Good
Good Average Poor
Availability 30 24 18 16 12
After Sales
response
16 35 24 15 10
Knowledge
Of Salesman
20 21 23 20 16
Service 25 18 27 19 11
Infrastructu
re
12 29 20 17 22
Total 103 127 112 87 71
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Interpretation:
Above chart shows that 30% respondents out of 100 give Weight age on
availability is excellent and second 35% respondents out of 100 give weight age
on after sales response is Very Good, 23% respondents give weight age on
Knowledge of salesman is good, 27% respondents give Weight age on services
is good, 29 %respondents give weight age on Infrastructure is Very Good.
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RESPONSE REGARDING AFTER SALES SERVICES FOR MOTOR
BIKES
NAME OF
THE BRAND
Good (%) Very good (%)
Hero Honda 30 30 50 50
Bajaj 45 45 35 35
TVS 25 25 15 15
Interpretation:
Regarding after sales service of motor bikes, 50% respondents have responded
very good for service, followed by Bajaj with 45% respondents stating good.
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RESPONSE REGARDING THE SATISFACTION TOWARDS MOTOR
BIKES
Name Of the
Brand
YES (%) NO (%)
Hero Honda 80 80 20 20
Bajaj 85 85 15 15
TVS 65 65 35 35
Interpretation:
Regarding satisfaction of motor bikes 85% respondents have stated that Bajaj
satisfaction is highest and the lowest is for TVS bikes i.e. 65%.
AVAILABILITY OF SPARE PARTS OF BIKES
Availiability
of spare
parts
HERO
HONDA
% TVS % BAJAJ %
Easilyavailable
100 100% 75 75% 70 70%
HardlyAvailable
0 0% 25 25% 30 30%
NotAvailable
0 0% 0 0% 0 0%
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Analysis:
The Hero Honda customers are satisfied about the availability of its spare parts.
All the respondents said that the Hero Honda spares are easily available.
CHAPTER V
CONSTRAINTS FACED
Study is restricted to state of Delhi only.
The time span of the survey was short and hence only major aspects
were considered.
Availability of the respondents amidst their busy schedule did not permit
detailed study.
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of design/style/model, whereas 45 respondents do so for Bajaj and only
20 respondents opted for TVS
Bike following acceptance of the bikes design, etc. followed by Hero
Honda and TVS. This shows that the sales of Bajaj motor bike are more
by way of its design/style/model. As far as mileage per liter of petrol is
concerned, Hero Honda is ruling the market and finding favor with the
consumers. Bajaj and TVS are far below the expectations of the
consumers based on mileage per liter of petrol. This is also due to
constant advertisements through newspapers, TV, Cable TV, hoardings,
road shows, etc. Hero Honda attained supremacy due to mileage factor.
In these hard days of price increases and poor incomes, every one is
concerned with economic use of vehicles. Naturally Hero Honda has
become favorite of the masses.
As we can see, 60% of the purchasers of Hero Honda are the students,
while 40% of the purchasers of TVS are the employees. That means Hero
Honda bike is more popular with the students, TVS is more popular with
the employees. Whereas Businessmen are opting for Bajaj as the above
data shows 45% of the purchasers of Yamaha are the Businessmen
Out of 100 respondents, 50 respondents have stated that sales of bajaj is
due to its speed followed by Hero Honda for which 35 respondents spoke
in favour based on its speed feature. 45 respondents have voted for Bajaj
based on its superior technology compared to Hero Honda for which 40
respondents voted favourably based on its technology. This shows that
Bajaj technology is marginally superior compared to Hero Honda. TVS is
a poor third with 15 respondents voting for it, as far as technology feature
is concerned.
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The study shows that 51 respondents are already user of Hero Honda
motorcycle. So Hero Honda is popular automobile company in study
region.
In current market scenario, respondents give maximum no. of weight age
to price then after they consider mileage and colors respectively.
Customers are satisfied about Hero Honda bike because of easy
availability of spares parts of their bike.
In terms of Looks, Bajaj ranks the first position followed by Hero Hondaand in terms of speed, Bajaj is again holding the highest rank.
In terms of sales by Price and technology, Bajaj is the market leader.
The study show that 48 respondents are come to know from others and
26 respondents are come to know from friends about bikes.
Most of the respondents rely on advertisements as a source of awareness
for all the three bikes, primarily in the case of Hero Honda Bike.
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CHAPTER VII
CONCLUSION
Predictable marketing requires an understanding of the circumstances in which
customers buy or use things. Their thought processes originate with an
awareness of needing to get something done, and then they set out to hire
something or someone to do the job as effectively, conveniently, and
inexpensively as possible. The functional, emotional, and social dimensions of
the jobs that customers need to get done constitute the circumstances in which
they buy. Companies target their products at the circumstances in which
customers find themselves, rather than at the customers themselves, are those
that can launch predictably successful products. One of the challenges
organizations face is how to strike the balance between, on the one hand,
thinking big, and on the other hand charting a path to market and then growth
that is appropriately focused and likely to succeed. Therefore, it is not only that
company manufactures its product for consumers but it is also important for thecompany to maintain the satisfaction of the customers.
Therefore, the companies should not only pay attention to promote the product
but positioning of the product according to customer needs is also important. It
is also important to pay attention to 4Ps of marketing where each P has its own
role to play and therefore, each P should be given equal importance while
marketing a product.
CHAPTER VIII
SUGGESTIONS AND RECOMMENDATIONS
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1. Focus on the price reduction: Most of the customers are of the view that the
price tag of HERO HONDA bikes as compared to other similar bikes is a bit
higher. Hence the price of the bikes especially the power range bikes like CD
DELUXE, CBZ XTREME, and KARIZMA could be reduced.
2. The customers should be provided with enough information regarding
effective maintenance of the bike so that the consumers get the best from the
bike.
3. Hero Honda has to identify those dealers who are facing the problem with
sales and take adequate measures to keep up the so far created brand image.
4. Hero Honda has to use more promotional techniques to improve the sales in
future. It has to conduct more road shows/public display by which the
consumer is given with much detailed information about the product and more
public awareness is created.
a) For organising road shows, the company can plan to stage road shows, to
display vehicles in the pavilions during various college festivals and exhibition
for product promotion.
b) Daily advertisements in leading newspapers and magazines can used to
promote the product. Leaflets at the initial stage should be distributed at railway
stations, malls, college areas and various other locations.
c) Workshops and seminars can be organized in big corporate to make people
aware about the companies past performance and product features, its
affordability and usage, vast distribution network.
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d) Hoardings, banners, neon signs are displayed at clubs, discs, outside
theatres, highways and shops to promote its brand car. Billboards
are large structures located in public places which display
advertisements to passing pedestrians and motorists. Most often,
they are located on main roads with a large amount of passing motor
and pedestrian traffic; however, they can be placed in any location
with large amounts of viewers, such as on mass transit vehicles and
in stations, in shopping malls or office buildings, and in stadiums.
e) Booklets can be distributed at showrooms, retail battery outlets, etc for the
customer to read. These booklets provide information about its company; the
products offered which suit the customers need accordingly.
f) Demo of the product should be made available to Customers, since most of
the purchase decisions are based on it.
f) Hero Honda has offered just one model (Hero Honda pleasure) for women
whereas its competitors are offering more than two so they should concentrate
on that aspect.
5. Companies should employ customer relationship management especially
Bajaj and Tvs. In this, customer care team can be established which is
accountable for the sales satisfaction index of the dealership. The customer care
team ensures that every customer is properly followed up and feedback is
recorded. Also the customer complaints are recorded and resolved as soon as
possible to the level of satisfaction. The customer care executives report to thecustomer care manager.
6. Besides these companies should employ the method of Direct Marketing to
reach put to its direct customers.
In the case of Direct Marketing the Company Officials directly contact the
Prospective buyers with the information available through various sources. For
example in case of Road Shows, Trade Fairs, Auto shows etc. Sometimes theexisting customers also provide references of prospective buyers such as their
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friends or relatives. Direct marketing is attractive to many marketers, because in
many cases its positive effect (but not negative results) can be measured
directly.
Channels through which direct marketing can be carried out:
Direct mail: The most common form of direct marketing is direct mail,
sometimes called junk mail, used by advertisers who send paper mail to
all postal customers in an area or to all customers on a list.
Telemarketing
The second most common form of direct marketing is telemarketing in
which marketers contact consumers by phone. This process may be
outsourced to specialist call centres.
Email Marketing
Email Marketing may have passed telemarketing in frequency at this
point, and is a third type of direct marketing. There are a range of e-mail
service providers that provide services for legitimate opt-in emailers to
avoid being classified as spam.
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REFERENCES
Jim Blythe, Phil Megicks(2006) Marketing Planning(1stEdition) New
Delhi: Pearson Prentice Hall
Kotler; Philip(2009) Marketing Management (13th Edition) New Delhi:
Pearson Prentice Hall
Hawkins D.I. Best, R.J. and Convey, K.A (2001) Consumer Behaviour:
Implications for Marketing Strategy,(Revised)Texas: Business
Publications, Inc.
Karsarjian H.H. and Robertson T.S. (2001). Perspectives in Consumer
Behaviour (12th Edition) Illinois SCOH Forman & Company.
Schiffman G.Leon(2001), Consumer Behaviour, New Delhi Prentice Hall
of India Pvt. Ltd
Howard John H., and Sheth, Jagdish N(2000) The Theory of Buyers
Behaviour, New York,John Wiley and Sons Inc.
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