India’s Luxury Car Market

(The Competition Hots Up)

Submitted to:- Submitted by:-Mrs Shailja Manocha Group No.:- 6

Case Overview Luxury Car as defined in case is car priced above $ 40,000.

In India, luxury car segment growing at 28% annually.

Profile:- Earlier cars were considered a luxury only meant for

Maharajahs (kings) and a few Wealthy traders. (cars were customized to please rich clients).

Two wheelers were more popular in the markets primarly due to lower income levels and poor road conditions .

Indian Luxury Car Market Between 1950 & 1990 way to import cars was

EOUs( Export Oriented Units) with huge turnover.

With liberlization , policies changed and so did consumer behavior.For many Indians car has beome more a lifestyle statement than a status symbol.

Fuel efficiency and price tags were no longer the main deciding factors for the buyer. Design and appeal in addition to a brand are the strongest drivers in the luxury segment.

Cars imported as CBUs against bookings only.

Carmakers usually adopt Three Fold Strategy:-

a) First create brand awareness about the product through

exhibitions and advertisements.

b) Established infrastructure with experienced dealer networks to further enhance their presence .

c) Finally introduced the product line for the market.

Themes adpoted by various companies to target the customer :-

Hyundai :- Royalty . Honda:- Intrinsic Value and Past performance. Daimler:- Comfort and Class .

Second importance was given to the choice and location of dealers.:-Showrooms in metros to serve the customer

directly.

Competition Hots Up

With the launch of more than 20 luxury models , the competition has become more intense but there are few challenges too for premium carmakers in India.

- High Customs Duty ranging from 98% to 100% nearly

doubles the price of the vehicle. -

-Waiting Period ( 2 to 7 months).

- Pot holes , traffic jammed roads of India.

But still favorable economic policies and vast population are encouraging the automakers to have a foothold in

India.

3 C’s

o Companyo Customero competitor

COMPANYGeneral motorsBMWMercedesRolls-RoyceLamborghiniPorscheAudi

BentleyNissanVolvoToyotaVolkswagenSkodaMitsubishi

CUSTOMER

Establish Industrialist,rich Businessmen

Chief Executives of Companies.

Upper Class ( salary >100 lac p.a)

CUSTOMER PERCEIVED VALUE

Product value

Services value

Personnel value

Image value

Monetary cost

Time cost

Energy cost

Psychic cost

CORE COMPETENCY

AUDI - TECHNOLOGYBMW - TECHNOLOGYNISSAN- OPERATIONSPORSCHE- R & DMERCEDES - LUXURY AND

TECHNOLOGY

SEGMENTATIONGEOGRAPHIC Region

City

Whole India

Class I cities, Metro Cities

DEMOGRAPHICAge

Family Size

Gender

Income

Above 18 yrs of age

Anyone(single,married,with or without children)

Male or Female

High(above Rs.100 lakhs p.a)

Psychographic SegmentationGrouping people according to attitudes,

values, and lifestyles

Ostentatious and ambitious lifestyle

BEHAVIORALOccasionsBenefits

User statusUser rateLoyalty statusReadiness scaleAttitude toward

product

RegularLifestyleStatement,Royality,FeaturesFirst time,Ex-userMedium to HeavyMediumInformedEnthusiastic

TARGETINGUpper class (>100 lakhs p.a)

Informed people with rich taste (Ex. Industrialists and youths)

POSITIONING

Image positioning

THE PRODUCT HIERARCHYNeed familyProduct classProduct lineProduct typeItem

TranspotAutomobileFour wheelerLuxury carsBMW,Mercedes,volv

o,Porsche etc

THE PRODUCT HEIRARCHYTRANSPORT Train

AeroplaneAutomobile

Two wheelerThree wheelerFour wheelerHeavy vehicles

Small

Medium sizedLuxury

VOLVO

FERRARIMERCEDES

ROLLS-ROYCE

VOLKSWAGEN

(Need family) (product family) (product line)

(product type)(Item or brand)

(product class)

FIVE PRODUCT LEVELCORE BENEFIT: TransportationBASIC PRODUCT: EngineEXPECTED PRODUCT: Comfort,LuxuryAUGMENTED PRODUCT: Advanced

security systemsPOTENTIAL PRODUCT: luxury with

high performance(average per litre)

PRICING STRATEGYLUXURY CARS COMPANIES FOLLOW

“PREMIUM PRICING STRATEGY”

AS THEY OFFER LUXURY AND COMFORT (VALUE) TO THE CUSTOMER AND CUSTOMER IS TODAY WILLING TO PAY FOR LUXURY.

PRODUCT-MIX PRICING

“OPTIONAL FEATURE PRICING”

MANY COMPANIES OFFER OPTIONAL PRODUCTS,FEATURES AND SERVICES ALONG WITH THEIR MAIN PRODUCT.

Ex. GPS System,sunroof and theft control

CONSUMER GOODS CLASSIFICATION

Speciality goods:Because speciality goods have

unique characteristics or brand identification for which consumers are willing to make a special purchasing effort.Luxury cars are speciality goods as interested buyer will travel far to buy one.

CONSUMER BUYING BEHAVIOUR

COMPLEX BUYING BEHAVIOR: AS THE LEVEL OF

INVOLVEMENT IS VERY HIGH

LEARN FEEL DO

PROMOTION ADVERTISEMENTS IN Print media Magazines News papers Rational appeal Direct Marketing Motion Pictures

CHANNEL DESIGN STRATEGY

PULL STRATEGY : As automobile(luxury cars)

companies invests money in creating a “Brand”.

DISTRIBUTION CHANNELFranchiseeDistributorDealer

CHANNEL LEVELS Zero level

ManufacturerCustomer

I level Manufacturer Dealer

Customer

General motorsGM cars and trucks were

produced globally under the following 12 brands: Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall.

ENVIRONMENTCar Industry and CAR

Market Early 1990‘s Recession

Late 1990‘s Depreciation of Asian

currencies GDP growth fell U.S. and East Asian

markets slowed European car sales

held up

Luxury segment Up-scale market Main competitors:

BMW,GM, Ford, Toyota, Chrysler, Mercedes, Volvo, Saab, Audi

Most companies operate with different brands

G. M. SWOT ANALYSIS

STRENGTHSTECHNOLOGY POTENTIAL

QUALITY IMPROVEMENT

MODEL ACCEPTANCE HAS IMPROVED

G. M. SWOT ANALYSISWEAKNESSES

Waiting period

Too Much Vertical Integration

G. M. SWOT ANALYSIS OPPORTUNITIES

FAVOURABLE ECONOMIC POLICIES.

RISE IN LIVING STANDARD.

INCREASE IN CUSTOMER CONFIDENCE.

CHANGING CONSUMER DEMAND FOR NEW MODEL TYPES AND STYLES - EXPANSION.

G. M. SWOT ANALYSIS THREATS

FOREIGN COMPETITION

HIGH TAXES FOR CBUs

INDIAN LEGISLATION AND REGULATION

POOR QUALITY OF THE INFASTRUCTURE IN THIS COUNTRY

G. M. SWOT ANALYSISINDUSTRY ANALYSIS

MEGADEALERS AND AUTO SUPERMARKETS

WORLDWIDE DEMAND - STAGNATION - DECLINE

MUST BE WORLD CLASS IN EVERY RESPECT - PRODUCT, MFG. OPERATIONS, FINANCING, AND DISTRIBUTION

THANK

YOU