Positioning - Small Cars

India shall witness a boom in the small car segment with major car makers making their foray in India and India will have small cars from General Motors. But with the recent market hits. implying that the market for high-end products and services should increase substantially. south. The new breed of young executives with fatter paychecks has led to more purchase power. there has been an increase in the number of younger people buying cars in India during 1999-2003EMI: a factor affecting the most of the buyers. By 2013. So marketers need to identify when to market a product according to the region in which the consumer lies. Young Married. Because of the growth in dual-income households. Hence Small cars are the most obvious and affordable choice available for the Indian middle class. Although the percentage of people buying cars between 31 and 40 years of age has remained stagnant at 31 per cent (1999-03). Ford. Income: Higher income households tend to be less price-sensitive. The most auspicious moths in the south. A combination of key reasons such as technical expertise. However. and west.Small Car The small car is one of the largest car segments in India. Distribution of households (owning a car) by income 2. the marketers have laid more focus on Urban/semi urban market and their products are primarily catering to the needs of the urban segment. Fiat. laterally lap up cars from the showrooms. there has been a 9 percentage point increase in the number of car buyers in the 25-30 age groups. Ex: Tata Magic which is priced @ 2. India will produce about 31 per cent of the world's Asegment cars.6lacs is primarily targeted to the rural India. Single working. it becomes all the more important to cater to this segment. This explains the reason for high contribution from salaried and self employed people in buying small cars 1 8 17 38 Regular salary/wages Self employed (non-agriculture) Self employed (agriculture) 37 . By the year 2010. Geographic a. up from 3. The average age profile of a car buyer is 25-46 years. large and integrated supplier base. Occupation Occupation of the consumer affects the buying power. India will become the world's largest producer of A-segment small cars by 2013. placing a higher value on buying higher-quality merchandise. b. Ex: Maruti Suzuki India said that by the end of 2009 calendar year as much as 8 per cent of sales will come from rural areas. a recent study by US-based market global intelligence firm Global Insight reveals. when buyers. Honda. and competence in diesel power train manufacturing will propel India as a major small car manufacturer. Segmentation 1. Age & life cycle stage: Student. Region: The major regions for small car market in India are north.8 per cent last year. whereas a self employed consumer will opt for full down payment option. there has been a dramatic growth in the proportion of total spending in the economy coming from such households. 3 out of the 4 cars sold in the country are funded by a loan. Demographic a. c. often turn out to be the lean season in the north or west. This car segment has grown by 15% CAGR over last 5 yrs. Toyota. For ex: A Regular salaried employee will easily get finance done for buying a car . b. VW. etc. Rural/Urban: Since more than 60% of the total population is living in interiors. The number of older people (51 to 60 plus) buying cars has gone down. It comprises of nearly two-third of the sales in the country. so far. Family Size: Average Indian household size is 5 people. stable economy. Thanks to the easy availability of cheap financing options. the companies are trying to pay more attention the rural market segment to gain profits. and government policies favouring small cars. low costs. d.

The major of the buyers in the small car are a first time buyer. Psychographic Segmentation a. Technology: With all sort of products available in the small cars market. they may look for a one time investment in a spacious car. people generally tend to take reference from other users. vii. 4. i. Literacy The awareness about the new technologies. A higher power is related to give higher speed. it becomes all the more important segment for the marketers to consider. b. Occasions: In India.(economic times) c. User Status: The kind of buyer can be classified into non-buyer. In case a person needs a family car only for family outing. because of the favourable cost differential diesel. acceleration by the consumers. interest and opinions. Distribution of household (owning a car) by literacy% 3 31 66 Upto higher secondary Graduation + Others 3. With more than 40% of the population of Indian lying in the middle class bracket. insurance cost. cost of service. Many car buyers in India prefer the diesel variant whatever may be the choice of car. technology can act as a differentiator for consumer. They go for test rides. Safety: the most important factor for family buyers is the safety feature of a car. where huge investment is involved. anti locking braking systems. LPG. and contemporary looks. 50 percent of small car owners in India are again going for small cars and are reluctant to experiment with luxury cars. Social Class – Social class plays a major role in segmentation for the automobile industry. Behavioural Segmentation a. if a person has huge amount of daily travel. c. iv. first time buyers. Operational cost includes Maintenance cost. that‟s why this market is often referred as entry level car market. driving position. On the other hand. They wanted styling. Fuel Economy: People do look for better fuel economy in terms of mileage given by the car. 600cc – 1300cc). ii. people have been looking for alternatives such as diesel. CNG. electronic traction control. According to their need they look for cars in their respective power basket (i. Benefits: Consumer looks for the following benefits from a car. This is evident from the fact that 2/3rd of the car buyer are graduate or above. Various factors in deciding comfortable ride are leg room. Power: People do look for power from power. Ex: As part of its rebranding exercise. people do buy cars in the festival season. Decision Roles: When it comes to car. adjustable steering. head room. spare parts. looks were also important. turbo charging. Preferred Fuel: With the rise in petrol prices.e. Fiat India is rolling out a number of products to cater to the lifestyle segment in the auto market. get it checked from some experienced people who are much more comfortable about cars.e. vi. Styling: To certain buyers. Low operational cost: For some of the users. and repeat buyers. various safety features which people look in car are ABS. operational cost is a major factor in deciding the buying decision. he would prefer a good mileage car with less operational cost as well. While going for car replacement. d. e. Usage Rate: On the basis of the frequency of travel. . and catalytical convertors. Working class and upper lowers constitute the other prime target in the small car manufacturers. easy going. New technologies such as MPFI (multi point fuel injection). and during the marriage seasons. A car must follow safety norms. People are also segmented on their value system. iii. v. people decide on the car to buy. b. Personality – The customers are further segmented on their personality traits like sports oriented person. airbags. latest trends in the car market is a direct attribute of the level of education of the consumer. Space and comfort: Buyer does look for spacious and comfortable ride. Life-style – life style is an important psychographic segmentation composed of a combination of factors such as activities. functionality was not everything.

Reva. Selective Specialization: With the growing market and tougher competition in the small car industry. . Maruti has a gamut of cars in the small car market. Ex: When they hit upon the lifestyle segment. style but is high on fuel efficiency. There are distinct group of car buyers with widely varying and clearly distinguishable needs. For ex: Maruti offers a car. Hence marketers to target these kinds of buyers created sub-segments. Also almost all the players had brought in many versions/models in each of their offers. for those specific buyers. The difference between the two versions was substantial. Maruti which primarily targeted the middle men through Maruti 800 and Maruti Alto have now moved to new segment which comprises of youth and the member of the upper middle class by launching premium range of hatchbacks like Swift and Ritz. technology. it is higher in price (in the small car). maintenance cost. Alto which low on price. the company identifies a specific segment and fully concentrate its marketing energies to reap the maximum from the segment. an electric car. style. and designs its strategies accordingly. they had to necessarily bring in a new offer. but lower in fuel economy. A typical example in the Indian small car market is . When you compare this with Maruti swift. space and comfort. there is a need for the marketers to cater to the needs to different market segments. They propped up sub-segments within a given segment: There were sub segments that preferred different versions of the same vehicle. Here the marketer approaches more than 1 market segment. For example. as it has off late focused on creating new sub-segment or creates deep segmentation within a segment. How Maruti have created deep segmentation within its small car offering m800 alto a-star wagon r swift price technology maintenance fuel economy cost style space/comfort The above chart shows how different products in the same segment/sub segment have been offered by the same company targeting different needs of the buyers. The car manufacturers have identified electric car user target segment and works on updating the same model with the market demand. They located very small niches with special requirements and served them-even though they were not sizeable.   Downside of Deep segmentation: 1) Cannibalisation among one‟s own offers 2)Price slots in a narrow range blur distinction between segments/offers 3)Lowering of EMI accentuates the blurring. They enlarged the number of segments in three ways:  They discovered new segments: Whenever marketers discovered a new segment and decided to incorporate it into their target markets. Petrol Cars Maruti Reva Hyundai Electric Cars Diesel /CNG / LPG Dual Fuel WagonR Alto Swift Price sensitivity Style Deep Segmentation: The purpose of deep segmentation is to create a deep differentiation among the products in the market. make available lifestyle oriented vehicles.Segment Targeting Single Segment concentration: In this type of segmentation targeting. they had to.

2. safe. but it gave features of a good car. trying to recover the lost market. Maruti strengthened its position in the small car market by launching Ritz in the year 2009 . 3. 6. the Maruti was able to regain its market share and was once again in a position to hold entry level A-segment in its pocket. Maruti introduced Maruti Zen into the market (in 1993) which catered as an entry level car for the people who can afford to spend more (as compared to M-800). Wagon R duo in the year 2004. . Maruti enjoyed being the only small car manufacturer till year 1996. with better features available. sporty car. The introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over a decade. In the mean while Tata also launched Indica. 5. Watching the dominance of Maruti in the A-segment. Maruti launched Swift in the year in 2004. Maruti also followed and launched its first Duo car. Hence Maruti launched Alto in the year 2000. Alto was once again targeting the entry level low cost segment. In an effort to move beyond the value for money or the basic utilitarian function of a car. globally renowned car. Within 18 months of the launch. when Hyundai launched Santro.Segment invasion plan – Maruti Udyog limited Dark colour indicates competition existed at the time when Maruti targeted the segment 1. which was targeting upper middle income group . M-800 had dominated the Indian car market since it was launched in 1984. to target the high end customers.who were looking for exciting looking . and there was a gradual decrease in sales of M800. This car could be run on LPG along with petrol. 4. competitors focused on other segments. who are willing to pay more for a better styled.

Skoda Smallcar consumers who want a more spacious car Customers seeking a luxurious small car World-class styling. Better performance on city roads. Hyundai Target Customer Environmentally conscious consumers who want an economic and a safe small car Customer seeking a stylish. “Alto. Maruti Suzuki A first-time car buyer looking for the best affordable car in the market Good performance. High end Features Spaciousness Value Proposition (Point of difference) Economical and environment friendly small car Positioning Image Santro Eco – An environment friendly car Swift. The table below shows customer focused value proposition.Positioning Small cars have been positioned in India as city cars. Chevrolet A vehicle that provide comfort . Advanced features Low Maintenance cost. Good mileage. Brand and Company Santro Eco . showcasing the reason why the target market should buy their product. new technology giving discounts & offers. power and luxury in small package A vehicle that provides good mileage and extra features at competitive prices A small spacious car with no extra cost Style. Extended warranty of spare parts. less maintenance costs. good fuel economy. The People‟s Car Nano. luxury and safety features Alto. Dynamic looks. better than the rest. better financing options. first-in-its class features and exemplary performance A trusted and reliable car with access to the largest service network and commanding the highest resale value An engineering marvel in terms of cost . with low operational cost and low price. various global car manufacturers are entering this market and thus leading to growing competition. several versions. This has further led to each manufacturer positioning it. “Your Sachha Hamsafar”. give high mileage. which are easy to drive. Because of the tremendous growth in the small car market. by upgrading products. modern looks and young attitude “Big car luxury at a Small car price” “More Car per Car” India‟s Super-hatch #1 Indica . spacious interiors and more headroom Powerful. Maruti Suzuki Spark. Styling and Handling. technology. powerful and a premium car for City driving “Value for Money” consumer Benefits Better power and fuel efficiency. Tata A middle class family that needs a car but cannot afford one Affordable price. Good in price as well as quality A vehicle in the upperend of the B-segment and lower end of the Csegment. fuel and space efficiency India‟s largest selling car. very high fuel efficiency . Tata Motors Fabia. compact yet roomy. Let‟s go”.

First Choice” Environment friendly car – Santro Eco Anyone for whom buying a car was a status symbol 2008 Income of middle class during that period as economy was growing rapidly and they focused on new buyers. POD POP . they have changed their „Target customers‟ and has done a deeper penetration in segmenting its market. cheap and easily available finance. etc Changes in strategy and positioning by rival competitors like Maruti and Fiat. as it‟s the important characteristic of that segment. Target Consumers A 35-45 year family person Age group of 25-30 years and First time buyers.Positioning – Hyundai Santro Case The table below represents the changes in the positioning strategy of Santro car by Hyundai Motors. Year 1998 2003 Positioning Strategy Family Car A smart car for young people Forces A car in competition with the best selling Maruti 800 and Zen. fuel efficiency. Whereas companies do target special buyers by offering innovation like new style. Idea of “Going Green” and saving environment was spreading and at the same time demand for a cheaper fuel was at maximum. 2004 2005-06 Focused on pride that consumers will derive on buying the car. whereas absence of POP will make the buyer uninterested in that car. First Time Buyers Environment Conscious and people looking for cheaper fuel Positioning of Various Small Car players based on POD (Point of Difference) & POP (Point of Parity) The figure below shows that majority of the cars fall in all the POP. features. low price. POD acts as a stimulating factor for a buyer to get attracted toward a car. low maintenance cost and space. primarily because of changing lifestyles. The average age of a car owner had declined from around 35-40 three years ago. The main factors were either competitors‟ activities or changes in the mindset of consumers. or may be the car itself is environment friendly. it is considered as a POD for that car. to 25-30. In case of small cars. It shows that a company has repositioned its product about 5 times in past ten years. Each time the company has repositioned itself. at that time. The tagline was “Santro wale hain” Changed the tagline to “ First Car.

Marketing Management. The observation from the map shows that. http://en.wikipedia. Positioning Strategy of MUL : The line drawing from Maruti 800 to Maruti Swift shows that Maruti has positioned its products across all range from low cost-low benefit perception to high cost-high benefit perception. 4.org/wiki/Suzuki_Wagon_R b. This shows the change in the positioning strategy of Maruti. still is perceived to have lower benefits. Fiat India drives into lifestyle segment.com : a.wikipedia.Perceptual Map – Maruti Udyog Limited The above map shows the perceptions of the customers or potential customers. References: 1. Tapan Panda Lifestyle Market Segment. Dennis J. 2. July 2009 . Cahill Wikipedia.org/wiki/Suzuki_Swift c. most of the cars which have low cost are being perceived to have lower benefits as well. and Zen Estilo which are believed to give more benefits compared to the cost incurred in buying those cars. 2007 Contemporary Market. 3. Economic Times. 5.which despite being high on cost . S Namakumari KPMG Automobile Industry Analysis. http://en.org/wiki/Perceptual_mapping 6. VS Ramaswamy. exception being Hyundai Getz .wikipedia. exception being Santro Xing. where it has moved away from the only low cost –low benefit (Maruti 800) model to other models as well. http://en. 28-08-2008 7. The map shows the change in the perception of the various models of the cars based on the price and benefits perceived by the consumer. Magazine: Autocar. Same thing also applies to cars which are perceived to be higher on the cost side are having higher benefits.

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