A STUDY ON THE FACTORS LEADING TO THE PURCHASE OF MOTORBIKES

Research and Compiled By:

Rizwan Aziz 2411106014
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FINAL PROJECT
A STUDY ON THE FACTORS LEADING TO THE PURCHASE OF MOTORBIKES
North Nazimabad Compus, Karachi.

Preston University,

Research and Compiled By: Rizwan Aziz 2411106014

Submitted To: Mr. Khalid Pahore
Date: 30th June 2009

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DECLARATION

I hereby declare that this project titled “A study on the factors leading to the purchase of motorbikes” submitted by me to Preston University, in partial fulfillment of requirements of BBA program is a bonafide work carried by me under the guidance of Mr. Khalid Pahore. This has not been submitted earlier to any other University or Institution for the award of any degree diploma/ certificate or published any time before.

Place: Karachi, Pakistan Pahore Date:

Mr. Khalid

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CERTIFICATE FROM GUIDE & HEAD OF THE INSTITUTION
Certified that this project entitled “A study on the factors leading to the purchase of motorbikes” submitted in partial fulfillment for BBA Degree of Preston University was carried out by Mr. Zubair Naikzad under the guidance of diploma/ certificate.

Mr. Khalid Pahore. This has

not been submitted to any other university or institution for the award of any degree/

GUIDE

SENIOR PROGRAMME DIRECTOR

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DEDICATION
I dedicate my project to my beloved mother and father who both supports and encourages me at every stage of my life and especially in this project and also my teachers and my friend Zubair Naikzad for their guidance and moral support in completion of this project.

“God Bless All of Them”

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ACKNOWLEDGEMENT
By grace of AL-Mighty Allah, I have completed my Final Project of BBA. I would like to thank my teachers in Preston University who gave us lots of help and suggestions. Special thanks to Sir Khalid Pahore for helping us a lot and providing valuable suggestions, guidelines and moral support. I would also like to thanks Professor Mr. Sibaty Amir, who guide me too much in my project. I also like to thank my friend Zubair Naikzad who helps me a lot whenever I needed especially in gathering the information.

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Table of Contents
Preface........................................................................................................................................9 APPENDICES

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Preface

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CHAPTER 1 INTRODUCTION

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1. INTRODUCTION
1.1 GENERAL INTRODUCTION TO THE STUDY Two-Wheeler industry is one of the largest industries in the automobile sector of 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. The liberalization policies have led to continuous increase in competition which has ultimately resulted in modernization in line with the global standards as well as in substantial cut in prices. 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. Presently many international brands like Honda, Suzuki, etc. are competing with Pakistani brands such as Hero, Star etc. to capture Pakistani markets. These aggressive marketing strategies have resulted in making the consumer the major key for success in the industry. Each product offering is now designed to meet and exceed the expectations of the consumer. But understanding consumer behaviour and knowing consumers is never simple. And it is more difficult that to understand what a consumer perceives about the product. Customers may say one thing but do another. They may not be in touch with their deeper motivations. They may respond to influences that change their minds at the last moment.

1.2 THEORETICAL BACKGROUND OF STUDY 1.2.1. Market The term market may be considered as a convenient meeting place where buyers and sellers gather together for the exchange of goods and services. Market means a group of people having unmet wants, purchasing power to make their demand effective and the will to spend their income to fulfill those wants. Today a market is equated with the total demand. The American marketing association defines a market, ‘as the aggregate demand of potential buyers for a product or service’. Under keen competition, a marketer wants to create or capture and retain the market i.e. customer demand through an appropriate marketing mix offered to a target market. The market offering i.e. supply must meet customer demand, which are unmet needs and desires. Page | 2

1.2.2. Marketing Marketing is a comprehensive term and it includes all resources and set of activities necessary to direct and facilitate the flow of goods and services form the producer to the consumer through the process of distribution. Businessmen regards marketing as a management function to plan promote and deliver products to the clients or customers. Human efforts, finance and management constitute the primary resources in marketing. We have twin activities, which are most significant in marketing: 1. Matching the product with demand i.e. customer needs and desires or the target market. 2. The transfer of ownership and possession at every stage in the flow of goods from the primary producer to the ultimate consumer. The American marketing association defines marketing as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. 1.2.3. Marketing Management Marketing management represents an important functional area of business management efforts for the flow of goods and services from the producer to the consumers. It looks after the marketing system of the enterprise. It has to plan and develop the product on the basis of known customer demand. Marketing management may be defined as, ‘a process of management of marketing programs for accomplishing organizational goals and objectives’. Marketing management has to build up appropriate marketing plan or marketing mix to fulfill the set goals of the business. It has to formulate sound marketing policies and programs. It looks after their implementation and control. It has to implement marketing strategies, programs and campaigns. It must evaluate the effectiveness of each part of marketing mix and introduce necessary modifications to remove discrepancies in the actual execution of plans, policies, strategies, procedures and programs. 1.2.4. Marketing Mix Marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market. There are four elements or variables that make a marketing mix, they are: 1. Decisions on product or service. 2. Decisions on promotion Page | 3

3. Decisions on price 4. Decisions on distribution. The four ingredients are closely interrelated. Under the systems approach the decision in one area affects action in the other. Marketing mix decisions constitute a large part of marketing management. According to Philip Kotler the term marketing mix is, ‘the set of controllable variables that the firm can use to influence the buyers response’. In the simplest manner, the basic marketing mix is the blending of four inputs or sub mixes, which form the core of the marketing system. Product mix decision refers to decisions on product variety, quality, design, features, brand image, packaging, sizes, services, warranties and returns. Price mix decision refers to decisions on the product list price, discounts, allowances, and payment period and credit terms available. Place mix decision refers to decisions on the channels, coverage, assortments, locations, inventory and transport of the market offering. Promotion mix decisions refer to decisions on the products advertising, sales promotion, sales force, public relations and direct marketing. Together they form the four P’s of marketing. 1.2.5. Marketing Planning A marketing plan lies down in writing the marketing objectives, programs and policies to be adopted to achieve the set marketing objectives. Even before an integrated marketing plan is prepared the company shall prepare functional plan for each component of marketing mix. To have a sound marketing plan, every operation is to be examined and the problems are to be identified. The overall marketing plan should be linked to the distribution channel of the company to have effective marketing operations. The marketing planning covers the preparation of functional plans, integration of this plan and the preparation of master marketing plan to serve the objective of the organization. Marketing planning is bound to get a better hold of environmental factor. 1.2.6. Marketing Research Marketing research is the systematic gathering, recording and analyzing of the data about problems connected to the marketing of goods and services i.e. problems relating to product, price, promotion and distribution of the 4p’s of the marketing mix. Marketing research is concerned with all those factors, which have a direct impact upon the marketing of products and services. Marketing research has grown along with the expanded role of marketing as the focus for the business decision-making. Page | 4

1.2.7 Need of marketing research Marketing research is conducted for different purposes. They are: 1. To estimate the potential market for a new product. 2. To know the reactions of consumers to a product already existing in the market. 3. To find out the general marketing condition and tendencies. 4. To know the types of consumer buying and their buying motives. 5. To know the reactions of failure of a product already in the market. 6. To assess the strength and weakness of competitors. 1.2.8 Consumer A person who purchase or has the capacity to purchase the goods of service often for sale by the marketing firm in order to satisfy personal need and desires. 1.2.9 Perception Perception is the sensing of stimuli external to the individual organism the act or process of comprehending the world in which the individual exists. Perception has been defined by social psychologists as the “Complex process” by which people select organize and interpret sensory stimulation in to a meaningful and coherent picture of the work. 1.2.10 Attitude Social psychologist defined attitude as an emotionalized predisposition to respond positively or negatively to an object. Predisposition can be thought of as categories of meaning stored in the memory of a person and are based on previous experience. Predisposing the person to have in specific manner towards a certain objects in the environment. 1.2.11 Brand A brand is a name, term, symbol, design or a combination of them which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. 1.2.12. Consumer Behavior The term consumer behavior can be defined, as, ‘the behavior that the consumer display in searching for, purchasing, using and evaluating products, services and ideas, which they expect, will satisfy their needs’. The study of consumer behavior enables marketers to understand and predict consumer behavior in the market place; it also promotes understanding of the role that consumption plays in the lives of individuals.

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Consumer behavior refers to all psychological social and physical behavior of potential consumers as they become aware of, evaluate, purchase and consume and tell others about products and services. It is the pattern of response of buyers to marketing offer of a firm. It refers to the process as how consumers make their purchase decisions. It is concerned with what, why, how much, when and from whom buyers make their purchases of goods and services. 1.2.13 Model of consumer behavior The starting point of understanding consumer behavior is the stimulus-response model. Marketing and environmental stimuli enter the buyer’s consciousness. The buyer’s characteristics and decision process lead to certain purchase decisions. The marketer’s task is to understand what happens in the buyer’s consciousness between the arrival of outside stimuli and the buyers purchase decisions. 1.2.14. Major Factors Influencing Consumer Behavior Consumers buying behavior is influenced by cultural, social, personal and psychological factors. Cultural Factors Cultural factors exert the broadest and deepest influence on consumer behavior. The roles played by the buyers culture, subculture and social class are particularly important. ○ Culture Culture refers to that complex whole which includes in it knowledge, beliefs, art or anything man acquires as a member of society. ○ Subculture Each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Sub cultures include nationalities, religions, racial groups and geographic regions. ○ Social Class Virtually all-human societies exhibit social stratification. Stratification sometimes takes the form of a caste system where the members of different castes are reared for certain roles and cannot change their caste membership more frequently; stratification takes the form of social class. Social Factors ○ Reference Groups Page | 6

A persons reference groups consists of all the groups that have a direct or indirect influence on the person’s attitudes or behavior. ○ Family The family is the most important consumer buying organization in the society and it constitutes the most influential primary reference group. ○ Roles and statuses A person participates in many groups, family, clubs, organizations etc. The person’s position in each group can be defined in terms of role and status. A role consists of the activities that a person is expected to perform. Each role carries a status. Personal Factors ○ Age and stage in the life cycle People buy different goods and services over their lifetime. Taste in clothes, furniture and recreation is all age related. Consumption is shaped by the family life cycle. Marketers often choose life-cycle groups as their target market. ○ Occupation and economic circumstances Occupation also influences a person’s consumption pattern. Product choice is greatly affected by economic circumstances; spendable income, savings and assets, debts, borrowing power and attitude toward spending versus saving. ○ Lifestyle People from the same subculture, social class, and occupation may lead quite different lifestyles. A lifestyle is the person’s pattern of living in the world expressed in activities, interests and opinions. Lifestyle portrays the world person interacting with his or her environment. ○ Personality and self concept Each person has a distinct personality that influences buying behavior. It is that distinguishing psychological characteristics that lead to relatively consistent and enduring responses to environment. Related to personality is self-concept or self image. Marketers try to develop brand images that match target markets self image. Psychological Factors ○ Motivation Page | 7

A person has many needs at a given time. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the person to act. ○ Perception Perception is the process by which an individual selects, organizes and interprets information inputs to create a meaningful picture of the world. How a, motivated person actually acts is influenced by his or her perceptions of the situation. ○ Learning When people act they learn. Learning involves changes in an individual’s behavior arising from experience. Learning theory teaches marketers that they can build up demand for a product by associating it with strong drives, using motivating cues and positive reinforcement. ○ Beliefs and attitudes Through doing and learning, people acquire beliefs and attitudes. These in turn influence buying behavior. A belief is a descriptive thought that a person holds about something. The beliefs make up product and brand images and people act on these images. An attitude is a person enduring favorable or unfavorable evaluations, emotion feelings and action tendencies toward some object or idea. Thus a company would be well advised to fit product into existing attitudes rather than try and change people’s attitudes.

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CHAPTER 2 RESEARCH DESIGN

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2. RESEARCH DESIGN
2.1 Introduction The two wheeler industry in Pakistan collectively produces 5 Lakh vehicles a year. Some players have managed to cut through consumer resistance with innovation, pricing and aggressive marketing. The competition level in the two wheeler industry is very high now. Many brands are fighting in the market for maximum share. They have to bring out a lot of differentiation among them. The major duty of the marketer is to know the reasons for preferring particular motor bike by the consumers. 2.2 Review of Literature The Customer Perception Report includes questions in four key areas, Expectations, Purchase Decisions, Customer Service, and Future Purchases. So the customer should be invited to participate in the survey. Setting realistic expectations during the sales process is a vital component of making happy customers. How a company sets and meets product and service expectations plays a pivotal role in fashioning customer opinions. How a company meets or exceeds expectations is measured in three important areas: product/service, support, and price. These three areas will be used to factor a score for the Expectations category. The results of the three questions will be used to factor an overall expectations perception score. The Purchase Decision category gives us a better understanding of how the customer perceives the purchase process. Two key areas for questions include an open ended question on why they purchased and a ratings question on their experience. The rating Question data will be used for the analysis of Purchase Decision category. The open ended responses from the “Why” questions will be used for product strengths analysis. The results of the purchase experience question will be used for the overall Purchase perception analysis. Customer service is one of the most important differentiations a company can have. For this report, customers will rate a company in three key areas: customer service, timeliness for problem resolution, and expertise. These three areas will be used to factor a score for the Customer Service category. 2.3 Purpose of Literature Review Literature review is one of the prime parts of every project. The very basic purpose of the literature review is to gain insight on the theoretical background of the research problem. It helps the researcher to gain strong theoretical basis of the problem under study and also help to explore whether any one has done research on the related issue. That’s why literature Page | 10

review helps one to find out the path of problem solving. In this regards the very basic purpose of the literature review in this dissertation is same as mentioned 2.4 Statement of the Problem We want to find out the main buying factor which influence towards the buying decision of motor cycle, choice of brand, budget limitation, mobility convince, parking problem, and maintenance at low cost. 2.5 Need of the study We observed that in a last two decades, peoples are mostly liken to acquire the motorbikes for daily usage, and we also observed due to this buying trend so many new companies arrive in Pakistan to introduce new brands in Pakistani Market. There is no doubt that the old companies market share is falling down. So this study will help to understand and identify what the consumer feels or perceives about motor bikes. This will help the marketer to identify which all are the factors that a consumer looks in to when he selects a particular bike. And also explains how a consumer selects and interprets the qualities of bike. 2.6 Objectives of the Study The research has been undertaken with following hypothesis: 1. To analysis people perception towards the motor cycle brands. 2. To get feedback what people expect from motor cycle. 3. To analyze people perception towards services offered by different makes performance of the motor cycle. 4. Analysis financial factor influence buy process of motor cycle

2.6 Methodology The research will be done through survey method. The collection of data will be done through questionnaire, interview and related websites The sample size taken for this research is 200 customers those who are having motor bikes. The area of this survey consists of Karachi city.

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The collection of data will be done with the help of a structured questionnaire. The designing of questionnaire needs precision and classification of the subject, so that the respondents can easily understand the question and can answer it sincerely and correctly. 2.7 Sources of Data Primary data:Primary data consists of original information for the specific purpose at hand. It is first hand information for the direct users of respondents. The tools used to collect the data may vary and can be collected through various methods like questionnaire, personal interview Secondary data:Secondary data is the data which is already been collected and assembled. This data is available with the companies or firms and it can be collected from newspapers, periodicals, magazines, websites etc. Sample Design Sample The sample size taken for this research is 200 customers having motorbikes. Sampling Technique Convenient Sampling technique is used for this project. Data Collection Tool Questionnaires will be used as the primary form of collecting data. Statistical techniques 1. Bar Diagrams 2. Pie-Chart Statistical tools

1. Statistical software like SPSS 17.0

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2.8 Scope of the study:The study helps in having an awareness of customer satisfaction towards motorbike usage. As the vehicle had a good convenient transportation in town of Karachi, this study will help to know that how motorcycle increase their grip in vehicle industry. It also helps us to increase our practical knowledge towards marketing of a motorbike. 2.9 Limitations of the study:a) In this study it is not possible to collect the opinion of all the customers owing to personal constraints. So the assumptions are drawn on the basis of the information given by the respondents. b) The study needs to be completed within a specified time of one month and in certain restricted areas. So the findings cannot be generalized as a whole. 2.10 CHAPTERIZATION 1. Introduction 2. Research Methodology

3. Profile of the Industry 4. Analysis of the Data Collected 5. Finding and Conclusion Bibliography Appendix

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CHAPTER 3 PROFILE OF THE INDUSTRY

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3. PROFILE OF INDUSTRY
3.1 ANALYSIS OF PAKISTANI INDUSTRY Auto market is one of the largest segments in world trade. Changing models, improving fuel efficiency, cutting costs and enhancing user comfort without compromising quality are the most important challenges of the auto industry in a fast globalizing world. The first phase of automotive assembling in Pakistan started in 1950 with Bed Ford truck followed by Ford Prefect, Ford Cortina and Dodge Dart. The indigenized parts in these vehicles did not exceed 20% with only exception of Bed Ford trucks with a deletion level of 80%. By the end of 70s practically all automobile assembling in Pakistan ceased. The 2nd phase of Automobile assembly started in 1983 with the introduction of FX 800 CC Suzuki Car. In 1989 Pak. Suzuki changed the Model of FX 800 CC with Mehran 800CC. Pak Suzuki thereafter in 1992 introduced Khyber 1000 CC and 1300 CC Margalla but the indigenization levels from 1983 to 1995 were not significant (i.e. Mehran 30%, Khyber 20%, and Margalla, 15%). In 1993, Indus Motors Company Ltd., Karachi introduced Toyota Corolla. Honda Atlas cars (Pak) Ltd Lahore in 1994 introduced Honda Civic having 1300CC engine capacity. Indus Motors, Dewan Farooq Motors and Pak Suzuki introduced smaller Cars i.e. Cuore, Cultus and Santro of engine capacities 850 cc, 1000 cc respectively in 2000. This was known as era of competitiveness. Up to 1995, the deletion cell of MOI&P was formulating and monitoring the deletion programs. The industry specific deletion programs were formulated to specify local content requirements for cars, motorcycles, Buses and Trucks Tractors etc. The deletion policy finalized in 1996 has the following features: • Industry Specific Deletion program. • No roll back from achieved Deletion Levels. • Even handled Tariff Protection at all levels of processing. The deletion levels were finalized by the sub-committees for cars, LCVs, Motorcycles and tractors etc., constituted by indigenization committee of EDB on the basis of technology levels prevalent in the engineering industry of Pakistan. The Industry specific deletion program (ISDP) books were published and distributed amongst the stakeholders, which resulted in a significant improvement in indigenization. Page | 15

3.2 Major Policies after year 2005 1. Tariff Based Systems (TBS) 2. Auto Industry Development Program (AIDP). FINAL REPORT July 1st 2006, the deletion programs for the Automotive Sector have been replaced by the Tariff Based System (TBS). The deletion programs have gradually been phased out under the WTO regime to become TRIMs compliant. The TBS is the outcome of a long drawn consultative dialogue between all stakeholders including OEMs and Vendors, belonging to different sub-sectors of the Automobile Industry. The TBS has been developed with the following overriding objectives: • Preservation & promotion of technologies that have been developed in the country • Protection to the present job structure in the auto sector. • Promote job creation • Protect the existing & planned investment by the OEMs & Vendors • Promote new investment • Expand the consumer base to create economies of scale The basic framework of Tariff Based System is as under: 1. Imports in CKD condition would be allowed only to assemblers having adequate assembly facilities and registered as such by the concerned Federal Government Agency. 2. Parts/ components indigenized by June 2004 have been placed at higher rate of Customs Duty. 3. Parts not indigenized would be allowed at CKD rate of Custom Duty. Introduction of Statutory Regulatory Order (SRO): 1. SRO 656 (I) / 2006 dated June 22, 2006 (For OEMs) 2. SRO 693 (I) / 2006 dated July 1, 2006 (For OEMs) 3. SRO 655(I) / 2006 dated June 22, 2006 (For Vendors) For the purpose to handle the switching from ISDP to TBS and to ensure stable policies the consultations on the development of AIDP kicked off from the 8 March, 2006 Workshop at Page | 16

Islamabad by clearly defining the objectives at a time when the industry was switching over from the deletion programs to a competitive tariff based system. There was realization that
the transition phase may affect the rapid growth and sustainable development of auto industry. A comprehensive development program with pre-announced tariffs to provide predictable and stable environment was therefore much needed and the finalization and approval of AIDP by the government was held on 13th November, 2007.

Policy Wise Growth of Auto Sector (PC + LCV):

The automobile industry in Pakistan can be broadly categorized into following segments: • Cars and Light Commercial Vehicles (LCVs) • Two and Three Wheelers • Tractors Page | 17

• Trucks and Buses • Vendor Industry. The industry operates under franchise and technical cooperation agreements with Japanese, European and Korean manufacturers. 3.3 Problems Faced By the Automobile Industry The automobile industry of Pakistan is an oligopoly with 22 automobile OEMs producing passenger cars, commercial vehicles, tractors and motor cycles in collaboration with Japanese and Korean manufacturers. The major assemblers/manufacturers are Pak Suzuki Motor Co. Ltd., Honda Atlas Cars (Pakistan) Ltd., Hinopak Motor Ltd., Indus Motor Co. Ltd., Ghandhara Nissan Ltd., Ghandhara Industries Ltd., Atlas Honda, Suzuki Motor Cycles Co. of Pakistan Ltd., Dewan Farooque Motors Ltd., World Korean Motors Ltd. (Pakistan), Allied Motors Ltd. and Fateh Motors Ltd, a lot of other Chinese companies have also entered the market like Cherry QQ . It faces a number of obstacles:

The Vendor industry plays a critical role in the growth of auto industry as all the component parts are not manufactured under one roof. Development of vendor industry would be able to expand the employment opportunities, reduce cost of production, pre-empt imports and help achieve deletion programmes. There are four sources of spare parts, namely imports ($70 million annually), smuggling, vendor industry in organized sector and unorganized sector. Organized sector consists of some 350 units such as Agriauto Industries Ltd., Allwin Engineering Industries, Bolan Castings Ltd., Exide Pakistan Ltd., Atlas Battery Ltd., Axle Products Ltd., Baluchistan Wheels Ltd., General Tyre and Rubber Company Ltd., Loads Ltd., Gandhi Engineering Works, Thai Engineering, Mali Auto and Agricultural Industries Ltd. Rae Engineering Ltd., Transmission Engineering Industries Ltd. and Sind Engineering (Put) Ltd., supplying different parts namely axle products, auto filter, wheel, tire, gasket, engine valve, shock absorber, automotive pump, piston radiator, radiator core, fly wheel, battery, etc.

In addition, there is a slew of small units in the unorganized sector located mostly in Karachi, Lahore and Gujranwala which fabricate smaller parts (without brands or names of manufacturer) such as ignition control system, micro touch button, dash board light indicator, built alarm system, door operating system, handle lock revolving warning light and horn. These are much cheaper than those produced under brand names or imported and, therefore, command a big market, as disclosed by a Page | 18

spare parts dealer. The unorganized vendor industry is producing quality products imitating foreign makes with extraordinary skill and expertise of the experienced but unqualified workers. The quality is improving with keen competition among the workers. The vendor market hasn’t developed to the extent that it can provide the same quality supplies as that of imports. Unabated smuggling of auto parts has hamstrung the development of vendor industry. It will take a few years to meet the entire demand of spare parts for expanding the automobile industry. • The total auto market exceeds $1 billion, of which half is serviced by local production. Motor vehicles worth $300 -$400 million are imported annually besides import of other transport equipment worth $150- $200 million forming 4 to 5 per cent of the total import bill. During 1999-2000, the production and import of cars stood at 62,500 (32,500 and 30,000 respectively) falling from 85,000 (39000 and 46000 respectively) due to rising value of Japanese Yen and slackness in the economy. • The market conditions for truck and bus industry have deteriorated during the past few years to a seemingly irreparable extent. The capital and operational cost of commercial vehicles has increased to an alarming limit while the revenue did not increase correspondingly. The manufacturing of medium and heavy transport equipment has become an unprofitable business. Therefore, the capacity utilization of truck and bus industry is less than 7 per cent as the production is 1000 compared to annual installed capacity of 15,000. One reason is the increased import of CBU buses in recent years.

The government has been urging the auto industry to explore ways and means for boosting exports and criticized the inexorable jump in prices of car in the short span of time, rendering it beyond the reach of middle class. It is observed that local car market, particularly of small brands is much bigger but it remained limited due to high prices. For example, 800 CC cars are 30 per cent dearer in Pakistan than in India.

Like other industries, automobile industry suffers from a high cost of production because of heavy import component as the plants are merely engaged in assembling rather than "manufacturing". Escalating input prices such as power and raw materials, mounting taxes, and high wages relative to productivity add to this cost.

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Our automobile industry does not enjoy economies of large-scale production, contrary to industrialized nations where output of cars runs into millions resulting in lower cost per unit.

The industry is far behind the schedule of deletion program as indicated by WTO. It is simply importing CKD kits to assemble vehicles locally, which means minimum inclusion of local components. The result is inflated profits for foreign-based manufactures, fewer employment opportunities for local engineering sector, little technology inflows and inflated market rates for the locally manufactured automobiles. The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) have been calling for an upward revision of deletion program. The automakers have been asked to indicate the deletion program and achieve an optimum within four years, coinciding with the period of the textile quota termination. This places considerable stress on the manufacturers, especially in times of rising costs.

Reduction in customs duty on automobiles and spare parts has caused erosion in the viability and competitiveness of the local industry. The industry's demand for immediate protection against imports may not be easy to accede. Under the existing covenants of WTO, import duties are required to be gradually reduced. The allimportant aspect in the local manufacturers is the need to improve the quality of goods to conform to international standards. At the same time, technological innovations should also be assiduously pursued which alone can ensure production of superior quality finished goods and high level of capacity utilization in local industry.

Transfer of the state-of-art technology from parent companies of Japan and Korea is one of the most important areas of automobile industry. Unfortunately, Pakistan has not been able to derive maximum benefits in terms of technical know-how, production technology, quality control, post-sale servicing, etc, to the mutual advantage of the manufacturer and consumer.

• •

Smuggling of cars from neighboring countries. The expansion of capacity and the distribution of volume of different models and makes within the auto industry prevent them from realizing economies of scale.

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The rise in new entrants is adding more capacity to the surplus pool threatening levels of the industry.

3.4 Current Investment, Contribution to GDP and Revenue to GOP: Description Total Investment Total Contribution to GDP Revenue to GOP Source: PAMA • • • 2007-2008 Rs. 100 Billion 3.5% Total 10%

In 2007-2008 total investment in auto sector is about Rs. 100 Billion. In 2007-2008 total contribution of large scale manufacturing is 15% out of which auto sector contributes 3.5% to GDP. In 2007-2008 the contribution of revenue to Government of Pakistan by auto sector in the form of taxes is recorded 10% which is approximately Rs. 65 billion.

3.5 Present situation of motorbike industry: Locally produced motorbikes have taken an unexpected drastic downturn to the extent of frustrating all future growth prospects and projections. According to the current figures, in due comparison with the figures of last year for September to December period, the sales of cars has gone down by 15 percent. As a result the production has also gone down culminating with its impact on supply schedule; both import and local. This downturn has come at a crucial time as most of the manufacturing had just increased their investment in the expansion projects and vending industry had made equally huge investment to complement the capacity expansion exercise. The local vendors have now to face the curtailed orders, which may most hit the smaller ones with closures. All this obviously has also adversely impacted the government revenues in substantial terms. The government has suffered a revenue loss of Rs. One billion (9%) when September to December data is compared with last year. In the budget 2007-08, government announced a withholding @ 5 percent on purchase of vehicles which was reduced to 2.5 percent and imposed from 1st September 2007. The intension was obviously to enhance government revenue. The current situation however, has proved a reversal in collection of the revenue. Last year, the ECC approved the five years policy (AIDP) for auto sector prior to announcement of budget. Levy of such tax is a deviation from the spirit of preannounced policy thus causing anxiety to the auto manufactures.

Table 3.1 Production of Motorbikes
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Motorbikes
Honda Yamaha Suzuki Sohrab Sohrab (Triwheeler) Qingqi(2 & 3 wheeler) Hero Ravi Sazgar (Triwheeler)

Total Motorbikes
Source: PAMA

2002- 03 115924 27427 13610 6801 1343 10064 175,169

2003- 04 190679 50407 27863 12396 3031 19007 303,383

2004- 05 28727 1 71560 26234 12065 3258 15801 416,189

2005- 06 360561 74423 16954 14804 2166 17198 34018 520,124

2006- 07 331621 56282 27309 7514 2817 15926 25798 467,267

2007- 08 329816 48633 23712 4578 1498 22135 1864 6 1776 3 7268 474,049

Table 3.2 Sales of Motorbikes
Motorbikes
Honda Yamaha Suzuki Sohrab Sohrab (Triwheeler) Qingqi(2 & 3 wheeler) Hero Ravi Sazgar (Triwheeler)

2002- 03 117201

2003- 04

2004- 05

2005- 06

2006- 07

2007- 08

27886 13788 2403 585
10010 171873

190424 50435 27435 12949 3013
17855 301656

287172 71498 26002 12127 3186
17081 417066

360110 74293 17183 13943 2218
15757 33136 516640

332068 56243 27424 7835 2839
15035 25909 467353

330122 47697 23184 4835 1510
23359 18833 17483 7268 474291

Total Motorbikes
Source: PAMA

Table 3.3 Market Share of Motorbikes
MOTORCYCLES Honda Yamaha Suzuki Hero Qingqi Sohrab Total Units Sold (nos.) 332,068 56,243 27,424 25,909 15,035 10,674 467,353 Market Share (%) 71% 12% 6% 6% 3% 2% 100

Chart 3.3 Market Shares of Motorbikes

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CHAPTER 4 ANALYSIS OF DATA COLLECTED

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4. Analysis of the Data Collected 4.1 Age of the Respondents AGE
15-20 20-25 25-30 30 and above Total
Source: survey data

Table No 4.1 NO. OF RESPONDENTS
62 92 25 21 200

% OF RESPONDENTS
31% 46% 12.5% 10.5% 100%

Chart No 4.1

30 and above

25-30

15-20

20-25

Analysis: 46% of the participants of the survey were between 20-25 age group and second most participants were between 15-20 age group. There were only 21 participants responded 30 and above age group.

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4.2 Occupation of the Respondents (Testing Hypothesis 4)
Table No 4. 2

Occupation
Businessman Employee student Others Total Source: survey data

No of Respondents
15 66 117 2 200

% of Respondents
7.5% 33% 58.5% 1% 100%

Chart No 4.2
Occupation
140 120 100 80 60 40 20 0 Bussinessm an E ployee m student Others

Frequency

Occupation

Analysis: The majority of respondents participated in the survey were students. There were 58.5% students and the 30% employees. And the Businessmen and others constitute only 8.5%. 4.3 What is your monthly Income? (Testing Hypothesis 4) Table No 4. 3 Monthly Income
10,000-20,000 20,000-30,000 30,000-40,000 Above 40,000 Total Source: survey data

No of Respondents
159 24 10 7 200

% of Respondents
79.5% 12% 5% 3.5% 100%

Chart No 4.3 Page | 26

What is your monthly Income?
Monthly income
100

80

60

40

20

Percent

0 10,000-20,000 20,000-30,000 30,000-40,000 Above 40,000

Monthly income

Analysis: This statistic reveals that greater part of respondents have monthly income between 10,000 and 20,000.

4.4 Which Bike do you have? Table No 4. 4 Bikes
Honda Super Power Yamaha Hero Suzuki Kawasaki Super Star Star Total

No of Respondents
101 28 13 18 8 7 14 11 200

% of Respondents
50.5 14.0 6.5 9.0 4.0 3.5 7.0 5.5 100%

Source: survey data

Page | 27

Chart No 4.4
Which Bike Do u Have?
60

50

40

30

20

Percent

10

0 Honda Yamaha Hero Suzuki Super Star Kaw asaki Star Super Pow er

Analysis: The statistic reveals that the about 50 percent of the respondent are using the Honda motorbike.

4.5 How did you come to know about this motorbike? (Testing Hypothesis 3) Table No 4. 5 No of Respondents
Newspaper Television Magazines Friends/Relatives Total Source: survey data. 17 43 11 129 200

% of Respondents
8.5% 21.5% 5.5% 64.55 100%

Page | 28

Chart No 4.5
How did you come to know about this motorbike?
70

60

50

40

30

20

Percent

10 0 New spaper Television Magazines Friends/Relatives

Analysis: The statistic reveals that maximum bikers influence to make acquiring decision from friends and relatives.

4.6 Does Advertisement Influence your decision in choosing a motorbike? (Testing Hypothesis 3) Table No 4. 6 No of Respondents
Yes No Can’t say Total Source: survey data. 89 65 46 200

% of Respondents
44.5% 32.5% 23% 100%

Page | 29

Chart No 4.6 Does Advertisement Influence your decision in choosing a motorbike?
D e A v ris mn In u n ey u o s det e e t fl e c o r d c io inc o s gamt r ik ? e is n h o in oob e
5 0

4 0

3 0

2 0

Percent

1 0

0 Ys e N o C n sa a ,t y

Analysis:
The study reveals that the consumers are mostly influenced by advertisements. 4.7 Do you have full knowledge about motorbike before buying? (Testing Hypothesis 3) Table No 4.7 No of Respondents
Yes No Total 122 78 200

% of Respondents
61% 39% 100%

Source: survey data Do you have full knowledge about motorbike before buying?
70

Chart No 4.7

60

50

40

30

20

Percent

10

0 Ye s N o

Page | 30

Analysis: The statistic indicates that the greater part of respondent have complete knowledge about motorbike before customer was buying the motorbike.

4.8 If new motorbike with good features comes in, then would you like to change your motorbike? (Testing Hypothesis 3) Table No 4.8 No of Respondents
Yes No Can’t say Total 89 65 46 200

% of Respondents
44.5% 32.5% 23% 100%

Source: survey data

Chart No 4.8
If new motorbike with good features comes in, then would you like to change your motorbike?
60

50

40

30

20

10

Percent

0 Yes No Can,t say

Analysis: The statistic indicates that the greater part of respondent would like to change the motorbike if the new motorbike comes with good feathers. Page | 31

4.9 For how long do you own a motorbike? (Testing Hypothesis 2)
Table No 4.9 Years No of Respondents
33 50 38 79 200

% of Respondents
16.5% 25% 19% 39.5% 100%

0-1 years 1-2 years 2-3 years Above 3 years Total Source: survey data.

Chart No 4.9
For how long do you own a motorbike?
50

40

30

20

10

Percent

0 0-1 years 1-2 years 2-3 years Above 3 years

Analysis:
The statistic indicates that majority of respondent are using bikes from more than three years that is about 395% of the total respondents. 4.10 For what purpose do you use your Motor Bike? (Testing Hypothesis 4) Table No 4.10 Purpose No of Respondents
39 110 31 20 200

% of Respondents
19.5% 55% 15.5% 10% 100%

Office Purpose Personal Purpose Joy Purpose Others Total

Source: survey data Page | 32

Chart No 4.10
For what purpose do you use your Motor Bike?
60

50

40

30

20

Percent

10

0 Of ff ice Purpose Personal Purpose Joy Purpose Others

Analysis: The statistic indicates that majority of respondent are using bikes for personal purpose that is about 55% of the total respondents.

4.11 What is your opinion on the performance of your own motorbike? (Testing
Hypothesis 2) Table No 4.11 Years No of Respondents
67 89 37 7 200

% of Respondents
33.5% 44.5% 18.5% 3.5% 100%

Excellent Good Satisfactory Poor Total

Source: survey data

Page | 33

Chart No 4.11 What is your opinion on the performance of your own motorbike?
50

40

30

20

10

Percent

0 Excellent Good Satisfactory Poor

Analysis: As per the above table the respondents feel that motorbikes performance is good revealed by their personal experience of using the bike. This shows that motorbike has very good market potential through its performance.

4.12 Rank the factors which have influenced you purchase of motorbike? (5- Most
influenced, Rank 1- Least influenced) (Testing Hypothesis 2) Table No 4. 12 No. of Respondents
Rank 5
Power Style Price reduction Free accessories Fuel Efficiency More colors 115 77 73 90 103 52

Rank 4
36 27 51 43 33 46

Rank 3
31 72 51 45 41 76

Rank 2
15 14 14 10 14 19

Rank 1
3 10 11 12 9 7

Source: survey data. Chart No 4.12 Page | 34

Rank the factors which have influenced you purchase of motorbike? (5- Most influenced, Rank 1- Least influenced) Analysis: Most of the consumers those who participated in the survey ranked Power as most attractive attribute of motorbikes. And the second most attribute which got ranked second is the fuel efficiency of bike. 4.13 How is the availability of spare parts of your motorbike? (Testing Hypothesis 4) Table No 4.13 No of Respondents
Easily available Hardly available Not available Total 163 32 5 200

% of Respondents
81.5% 16.0% 2.5% 100%

Source: survey data Chart No 4.13 How is the availability of spare parts of your motorbike?
10 0

8 0

6 0

4 0

Percent

2 0

0 E sily a ila le a va b H rd a lb a ly via le Nta b o vila le

Analysis: The motorbikes customers are satisfied about the availability of its spare parts. All the respondents said that those bikes which spares are easily available are preferable for purchase.

4.14 Which factor below influenced your decision? (Testing Hypothesis 1)
Table No 4.14 No of Respondents
Price Mileage 40 30

% of Respondents
20.0% 15.0%

Page | 35

Quality Resale Value Status Symbol Total

75 41 14 200

37.5% 20.5% 7.0% 100%

Source: survey data Chart No 4.14
Which factor below influenced your decision?
40

30

20

10

Percent

0 Price Mileage Quality Resale Value Status Symbol

Analysis: Most of the consumers those who participated in the survey ranked Quality as most attractive attribute of motorbikes. And the second most attribute which got ranked second is the resale value of bike.

4.15 How would you rate the following factors of bikes when you purchased the
motorbike? (5 for Highest, 1 for lowest). (Testing Hypothesis 1) Table No 4. 15 No. of Respondents
Rank 5 Rank 4
44 58 49 80 43 44 49 26

Rank 3
17 24 55 25 107 56 88 18

Rank 2
10 14 6 10 5 15 11 5

Rank 1
9 5 1 2 2 10 5 4

Mileage Price Pick up Maintenance Look/Shape Brand Image Style Performance

120 99 89 83 43 75 47 147

Page | 36

Comfort 48 Source: survey data.

65

73

10

4

Chart No 4.15 Analysis: From the study its revealed that the performance of motorbikes influenced customer to buying the bike.

4.16 Are you required to have description from sale representative about features of
different models when you purchase a motorbike? (Testing Hypothesis 3) Table No 4. 16 No of Respondents
Yes No Total 119 81 200

% of Respondents
59.5% 40.5% 100%

Source: survey data Chart No 4.16 Are you required to have description from sale representative about features of different models when you purchase a motorbike?
7 0

6 0

5 0

4 0

3 0

2 0

Percent

1 0

0 Ys e N o

Analysis: The survey reveals that the most customers preferred acquiring selected brands after receiving description about features from sales representatives.

4.17 Did you go for the test drive? (Testing Hypothesis 1)
Table No 4. 17 Page | 37

No of Respondents
Yes No Total 200 132 68

% of Respondents
66.0 34.0 100%

Source: survey data Chart No 4.17 Did you go for the test drive?
7 0 6 0

5 0

4 0

3 0

2 0

Percent

1 0

0 Ys e N o

Analysis: The most consumers prefer test drives before buying motorbikes.

4.18 Are you satisfied with the post sales services provided by your motorbike
company? (Testing Hypothesis 1) Table No 4. 18 No of Respondents
Yes No Total 118 82 200

% of Respondents
59.0 41.0 100%

Source: survey data Chart No 4.17
Are you satisfied with the post sales services provided by your motorbike company?

Page | 38

7 0

6 0

5 0

4 0

3 0

2 0

Percent

1 0

0 Ye s N o

Analysis: The survey reveals that the most customers are wants to that company should provide after sale service to the motorbikes.

4.19 Are the expert mechanics available to repair motorbike? (Testing Hypothesis 4)
Table No 4. 19 No of Respondents
Yes No Total 155 45 200

% of Respondents
77.5 22.5 100%

Source: survey data

Page | 39

Chart No 4.19 Are the expert mechanics easily available that are able to repair motorbike?

10 0

8 0

6 0

4 0

Percent

2 0

0 Yes N o

Analysis: The survey reveals that the most customers prefer that brands which experts mechanics are easily available.

4.20 When it comes to service the motorbike, where would you prefer? (Testing
Hypothesis 4) Table No 4. 20 No of Respondents
Service centre Authorized Dealer Local Mechanic Total 71 38 91 200

% of Respondents
35.5 19.0 45.5 100%

Source: survey data Chart No 4.20 When it comes to service the motorbike, where would you prefer?

Page | 40

5 0

4 0

3 0

2 0

Percent

1 0

0 S rv ec n e ic e tre A th rie Da r u o d e le L c l Mc a ic oa eh n

Analysis: The survey reveals that the most customers prefer that local mechanics for maintenance and service of their bikes.

4.21 Select one from given motorcycle brands which you would like to recommend to
others? (Testing Hypothesis 1) Bikes
Honda Super Power Yamaha Hero Suzuki Kawasaki Super Star Star Total

Table No 4. 21 No of Respondents
121 25 12 12 4 8 8 10 200

% of Respondents
60.5 12.5 6.0 6.0 2.0 4.0 4.0 5.0 100%

Source: survey data Chart No 4.21 Select one from given motorcycle brands which you would like to recommend to others?

Page | 41

70

60

50

40

30

20

Percent

10 0 H onda Super P ower Yam aha H ero Suzuki Kawasaki Super Star Star

Analysis: The consumers prefer Honda most other than Yamaha, star, super Star, Suzuki etc in the two wheeler industry. The 60.5% of the respondents prefer Honda other than motorbikes.

CHAPTER 5 FINDINGS AND CONCLUSION
Page | 42

5.1 FINDINGS The old prophecy that once a customer is a customer has become a myth in the present day competitive world. Brand image is no longer works a magic with the consumer. So to hold the customer to the brand and attract new consumers the company must produce products that are efficient and competent along with its marketing activities that help in sales of the product. After analyzing the response of the consumer interviewing through questionnaire and observation the following were found in the study. •
• •

Honda motor cycles are the market leader in the Two Wheeler segment.
Now days the main customers are students between 20-25 years of age and they like the bike because of its

Customer using motorbikes have almost monthly income between 10,000 and 20,000. Bikers are influence to make acquiring decision from friends and relatives. Advertisement plays a very impotent role in influencing the consumers. The greater part of customers has complete knowledge about motorbike before customer was buying the motorbike. Mostly, Customers would like to change the motorbike if the new motorbike comes with good feathers. The majority of customers are using bikes from more than three years. The majority of respondent are using bikes for personal purpose. Motorbikes performance is good revealed by their personal experience of using the bike. The motorbikes customers are satisfied about the availability of its spare parts. Most of the consumers those who participated in the survey ranked Quality and Power as most attractive attribute of motorbikes. The performance of motorbikes influenced customer to buying the bike. The customers preferred acquiring selected brands after receiving description about features from sales representatives. The consumers prefer test drives before buying motorbikes. The customer wants that company should provide after sale service to the motorbikes. The customer prefers that expert mechanics should be easily available. The customers prefer local mechanics for maintenance and service of their bikes as compared to service center of motorbikes. Page | 43


• • • • • •


• • •


• • •

5.2 CONCLUSION From our study, we find that motorbikes are highest buying trends in auto industry of Pakistan because it is convenient transportation mode in town of Karachi. We conclude the following factor: • • • • Low income families prefer acquiring motorbikes. Mostly age group 20 to 25 years and students wants to prefer purchase a bike. Most of people prefer Honda motor cycle because easy availability of mechanics, spare parts, resale value, millage, good performance, and pickup. Most of people influence to acquire motorbikes from getting information from friends and relatives, and sale representative.

Page | 44

BIBLIOGRAPHY

Page | 45

BIBLIOGRAPHY
TEXTBOOKS REFERRED

Marketing, 13th Edition Michael J. Etzel, Bruce J. Walker, William J. Staton Consumer Behavior, 4th Edition David L. Loudon & Albert J. Della Bitta WEB SITE REFERRED
• • • • • • • •

www.google.com www.yahoo.com www.scribd.com www.wikipedia.com www.pama.org.pk www.paapam.com www.dawn.com www.finance.gov.pk

Page | 46

APPENDICES

Page | 47

SURVEY
NAME ____________________________ CONTACT NO:-________________________ AGE ( ) 15-20 ( ) 20-25 ( ( ) 25-30 ( ) Above 30 ( ) Student OCCUPATION ( ) Businessman Others___________ What is your monthly Income? ( ) 10,000 – 20,000 ( ) 30,000-40,000 Q1: Which Bike do you have? ( ) Honda ( ) Super power ( ) Suzuki ( ) Kawasaki Others________________. ( ( ) Employee

( (

) 20,000-30,000 ) Above 40,000 ( ( ) Hero ) Star

) Yamaha ) Super Star

Q2: How did you come to know about this motorbike? ( ) Newspaper ( ) Television ( ) Magazines

(

) Friends/Relatives

Q3: Does Advertisement Influence your decision in choosing a motorbike? ( ) Yes ( ) No ( ) can’t say Q4: Do you have full knowledge about motorbike before buying? ( ) Yes ( ) No Q5: If new motorbike with good features comes in, then would you like to change your motorbike? ( ) Yes ( ) No ( ) can’t say Q6: For how long do you own a motorbike? ( ) 0-1 year ( ) 1-2 years ( ) 2-3 years ( ) above 3 years ( ( ) Others ) Poor

Q7: For what purpose do you use your Motor Bike? ( ) Office Purpose ( ) Personal Purpose ( ) Joy Purpose Q8: What is your opinion on the performance of your own motorbike? ( ) Excellent ( ) Good ( ) Satisfactory

Q9: Rank the factors which have influenced you purchase of motorbike? (5- Most influenced, Rank 1- Least influenced) ( ) Power ( ) Style ( ) Price reduction ( ) More colors ( ) Free accessories ( ) Fuel Efficiency Q10. How is the availability of spare parts of your motorbike? ( ) Easily available ( ) Hardly available ( ) Not available Q11. Which factor below influenced your decision? ( ) Price ( ) Mileage ( ) Quality Page | 48

(

) Resale Value

(

) Status Symbol

Q12. How would you rate the following factors of bikes when you purchased the motorbike? (5 for Highest, 1 for lowest). ( ) Mileage ( ) Price ( ) Pick up ( ) Maintenance ( ) Look/Shape ( ) Brand Image ( ) Style ( ) Performance ( ) Comfort Q13. Are you required to have description from sale representative about features of different models when you purchase a motorbike? ( ) Yes ( ) No Q14. Did you go for the test drive? ( ) Yes ( ) No Q15. Are you satisfied with the post sales services provided by your motorbike company? ( ) Yes ( ) No Q16. Are the expert mechanics easily available that are able to repair motorbike? ( ) Yes ( ) No Q17. When it comes to service the motorbike, where would you prefer? ( ) Service centre ( ) Authorized Dealer ( ) Local Mechanic Q18. Rank the Companies as per your preference, Rank1-Most, Rank-Least ( ) Honda ( ) Super power ( ) Yamaha ( ) Hero ( ) Suzuki ( ) Kawasaki ( ) Super Star ( ) Star Others ________________

Page | 49

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