A

PROJECT REPORT ON
“THE LUXURY CAR SEGMENT”

Submitted By:-

Aafreen Tinwala
TYBMS (Semester 6)

Project Guide:-

Mr Moiz Lakdawalla

Year of submission
2011-2012

JAI HIND COLLEGE

BASANTSING INSTITUTE OF SCIENCE &

J. T. LALVANI COLLEGE OF COMMERCE

23-24, Backbay Reclamation, “A” Road, Churchgate, Mumbai – 400 020

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 Certificate

I, ____________________________________________________ Hereby
certify that Aafreen Tinwala of Jai Hind College of T.Y.B.M.S.
(Semester V) has completed the project on “THE LUXURY CAR
SEGMENT” the Academic year 2011-2012. The information
submitted is true and origin all to the best of my knowledge.

Signature of guide
Signature of

College principal

Signature of course
Signature of

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 coordinator

external examiner

Declaration

I declare that the project entitled “THE LUXURY CAR SEGMENT” under
the guidance of Mr. Moiz Lakdawalla submitted in partial fulfilment of
the requirement for the award of the degree of Bachelors of
Management studies to Mumbai University, Mumbai, is my original
work – carried out during The year 2011-2012, and not submitted for
the award of any other degree, diploma, fellowship or other similar or
prize to any other institute, organization or university by any other person.

Signa
ture of the Student

Aafreen Tinwala

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 Acknowledgement

In preparation of this report by me, I feel great pleasure because it gives

me extensive practical knowledge in my career. I get idea about The
Luxury Market by this project.

I am thankful to Mr. Moiz Lakdawalla for his valuable inspiration and

guidance provided me throughout the course of this project.

His patience and critically gone through the subject matter. I would like to
take opportunity to express my gratitude towards all of them who have
contributed directly or indirectly in my project work.

At last I would like to extend my deep sense of gratitude to my friends,

colleagues and each individual who directly or indirectly help me during
the project work.

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 EXECUTIVE SUMMARY

The luxury car market in India has registered a fair amount of growth in the last few years
and is growing at the rate of 25% per year. A luxury car is a luxuriously styled
automobile which is designed to give satisfaction and comfort to its owner . A
luxury car typically has carrying capacity of 6 passengers. The luxury cars in the Indian
market are very expensive, with price tags that start from Rs. 20 lakh. Hence,
luxury cars can only be afforded by the people who belong to the high income group and
there are a lot of such takers in the Indian automobile market. Almost every sector is eying
India as a potential investing hub, and automobile sector is no exception. Besides being still a
developing country, it shouldn’t be a surprising fact that Indian ranks world number 3 in
terms of the number of millionaires. This era of development in India has been at its best,
despite recession, strong fundamentals of Indian economy have managed to post a decent
GDP growth last year.

Increase in disposable income of the people has led to a different lifestyle. Now, the mindset
of Indian consumer is a lot different. Previously, Indian consumers used to check the prices
of everything they bought. Now, the consumer looks at the experience of the company during
the buying process. More than price, Quality matters. This paradigm shift has also changed
the way companies look at India. Slowly and steadily the luxury car market which was in a
very nascent condition in India, is now counting on big revenues from the country’s
customers.

Of late, there had been a steep increase in the luxury car market. Year 2009 recorded a
whopping 25% growth in the luxury car market. It would be news for many of us that India
ranks number 1 in exporting automobile components. The German machines which have
fame all over the world use components which are imported from India.New entrants like
Volkswagen are going to heat up the competition even more. Currently the fight is in between
BMW and Merc. Despite being a late entrant in the Market, BMW has been successful in
capturing a considerable amount of market share. But, this fight between just two companies
is not going to stay for long as new players are entering the Indian market.

This increased demand for luxury cars, is not something that spurt all of a sudden. The
gradual development of the Indian economy and the increased disposable income has

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influenced people to make a status symbol with respect to their cars. Luxury sedans are
available from the price range of Rs. 20 lakhs – 30 lakhs which are mostly preferred by the
first time buyers in this segment. The achievers, who adapt to the latest happening and like to
be dominant, are always quick in buying the heavy priced sedans.

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Contents
1. Introduction…………………………………………………………………………………7
1.1. Growth of luxury automobile sector..............................................................................7
1.2. Objectives of study…………………………………………………………………….8
1.3. Scope of study…………………………………………………………………………9
1.4. Research methodology………………………………………………………………...10
1.5. Research limitations……………………………………………………………………
12
2. The three competing luxury car brands in India…………………………………………....13
2.1. BMW vs. Mercedes Benz……………………………………………………………...14
2.2. Latest and fastest- Audi…………………………………………………………….....16
3. History of the 3 luxury car brands………………………………………………………….18
3.1. BMW…………………………………………………………………………………..18
3.2. Mercedes Benz…………………………………………………………………………
19
3.3. Audi…………………………………………………………………………………....20
4. Review of
literature………………………………………………………………………....21
4.1. Brand personality……………………………………………………………………....21
4.2. Creation of brand
personality…………………………………………………………..22
4.3. Brand personality of
cars…………………………………………………………….....23
5. Luxury car
segment……………………………………………………………………….....25
5.1. Characteristics………………………………………………………………………......2
5
6. Luxury cars in
India………………………………………………………………………….26
6.1. BMW…………………………………………………………………………………....2
6
6.2. Mercedes
Benz………………………………………………………………………….28
6.3. Audi……………………………………………………………………………………..3
1
7. Consumer behaviour
trends………………………………………………………………….33
7.1. Cognition to
emotion………………………………………………………………........33
7.2. Splurge for special………………………………………………………………………
33
7.3. Its mine concept…………………………………………………………………………
33
7.4. 4p trends…………………………………………………………………………………
33
7.5. Moving forward…………………………………………………………………………
35
8. Data analysis and
interpretation……………………………………………………………...37
8.1. Primary
data…………………………………………………………………………......37
8.2. Secondary
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CHAPTER 1: INTRODUCTION
1.1Growth of the luxury automobile sector
India, the world's second-fastest growing auto market, is in top-gear growth. The country is a
hot destination for automobile manufacturers due to its robust economic growth, favourable
demographics, higher disposable income, changing lifestyle and positive industrial eco-
system. India is expected to become the third biggest automaker in the world within next
decade.

The various reasons for the growth of luxury cars in India are:

• The economy is rising in the country which has given the people more
disposable income which they are spending in buying luxury cars.

• Various loan schemes have been launched by the automobile manufacturers and the
financial institutions. This has made it very easy for the people to buy luxury cars and this has
boosted the luxury car market in India.

• With the IT boom in the country many youngsters are earning high pay
packages which enable them to buy luxury cars. And this have further given boost to the
market of luxury car in India.

• The government have formulated many polices such as the relaxation

o f e q u i t y regulations and the reduction of import tariffs pertaining to the automobile
industry. These have helped to reduce the prices of the luxury cars, which in turn
have led to the growth of the luxury car market in India.

The various automobile companies manufacturing luxury cars for India are:

• BMW manufacturers the BMW 530i and BMW 760li models

• Rolls Royce manufactures the Rolls Royce Phantom V 12 model

• Porsche manufactures the 911 Carrera, 911 Carrera S, and Cayman S models

• Daimler Chrysler manufactures the Mercedes Benz C and E class models

• Bentley manufactures the Bentley Range and Bentley Continental models

Luxury car market in India has grown over the last few years. That it continues to grow more
efforts must be made by the Indian automobile industry and the government of India. And
only then the luxury car market in India will be able to reach its heights.

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1.2Objectives of study
The research objective is a statement, in a precise terminology as possible of what
information is needed. The research objectives should be framed so that obtaining the
information will ensure that the research purpose is satisfied. In India, the sky is bright for the
luxury car makers. . The Indian consumers’ inclination for owning a luxury car shots up the
demand for such cars for the past few months. Many car companies are now introducing cars
in the luxury car segment to attract new customers.

The various objectives of the studies are as follows:

• To determine the scope of luxury cars in India.

• Growth opportunities of luxury cars in India.

• To identify and analyze the factors influencing the purchase of cars

• To determine the demographic variables of the customers of different brands of cars

1.1 Scope of study

Defining the scope of the research or research boundaries ensures the desired
precision or accuracy of the result .It is aimed to study the luxury car market and its scope

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 in India. The main focus of the project is to study the growth of cars like BMW,
MERCEDES BENZ and AUDI. It also leads to identify and understand the scope and
growth opportunities of luxury car brands in India

Nowadays, car has become a necessity and forms a part of life. Therefore, there is a
significant scope to examine the perception and purchase behaviour of the consumers of cars.
Knowledge of the buying behaviour of the different market segments helps a seller to select
their target segment and evolve marketing strategies to increase the sales. The scope of this
research has a very good future.

1.2 Research methodology

A research process consists of stages or steps that guide the project from its conception
through the final analysis, recommendations and ultimate actions. The research process
provides a systematic planned approach to the research projects and ensures that all aspect of

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the research projects is consistent with each other. This chapter aims to understand the
research methodology establishing a framework of evaluation and revaluation of primary and
secondary research. The techniques and concepts used during primary and secondary
research. The techniques and concepts used during primary research in order to arrive at
findings which are also dealt with and lead to a logical deduction towered the analysis and
results.

The research process has 4 distinct yet interested steps for research analysis:

1. Formulation of problem
2. Collection of data
3. Making sampling plan
4. Research limitation
1.4.1 Formulation of problem

I propose to first conduct intensive primary research and secondary research to understand
the full impact and implication of the luxury car industry, to review and critique the industry
norms and reports on which certain issues shall be selected which I feel remain unanswered
or liable to change this shall be further taken up in the next stage of exploratory research.

Each step is viewed as a separate process that includes a combination of task, step, and
specific procedure. The steps undertaken are logical, objective, systematic, reliable, valid,
impersonal and ongoing.

1.4.2 Collection of data

The collection of data is done by exploratory research

Exploratory research

The methods I used for exploratory research are as follows:

1) Primary data-The primary data was collected by getting some questionnaires filled by
the customers.
New data gathered to help solve the problem at hand. As compared to secondary data which
is previously gathered data. An example is information gathered by a questionnaire.
Qualitative and quantitative data are the newly collected in the course of research. Consist of
original information that comes from people and includes information gathered from surveys,
focus groups, independent observation and test results. Data collection took place with the
help of filing questionnaires. The questionnaire method has come to the more widely used
and economical means of data collection. The common factor in all varieties of the
questionnaire method is the reliance on verbal responses to questions, written or oral. I found
it essential to make sure the questionnaire was easy to read and understand to all spectrums of
people in the sample. The questionnaire administration would not take more than 4-5
minutes. The data was collected by interacting with 40 respondents who filled the
questionnaires and gave me the required necessary information. The respondents consisted of
housewives, students, businessman, young executives, professionals etc. The required
information was collected by directly interacting with these respondents.

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 2) Secondary data- Secondary data is being collected by through internet, various
websites.

Some articles on the research topic were also taken into consideration. There are two
types of secondary data: internal and external secondary data. A secondary source of
data used consists of books and websites.
1.4.3 Making sampling plan

It is a description of the characteristics of that group of people from whom a course is

intended. It attempts to describe them as they are rather than as the describer would like them
to be. Also called the audience the audience to be served by our projects includes key
demographic information ( ie age, sex,etc). The target population is the population I want to
make conclusions about.

1.4.3.a Sample size

This involves figuring out how many samples one need. The sample size in this research is
40.

1.4.3. b Area of sampling

The area of sampling of this research was Mumbai , India.

1.4.3.c Sampling technique

A Simple random sample is a group of subjects ( a sample) chosen from a large group (a
population). Each subject from the population is chosen randomly and entirely by chance
such that each subject has same probability of being chosen at any stage during the sampling
process. This process and technique is known as simple random sampling and should not be
confused with random sampling.

1.1 Research limitations

This study conducted has the following limitations:

• The scope of the research study is Mumbai.

• So the population considered may not be the actual representative of the population of
the nation.
• The information given by the respondents can be biased.
• Frequency of usage, in the question that asks for highly consumed brand.

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 CHAPTER 2: THE THREE COMPETING LUXURY
CAR BRANDS IN INDIA
Major luxury cars in India- Mercedes-Benz, BMW and Audi put together have around
85%market share.

Fig 2

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The German car brand Mercedes-Benz had first mover advantage as it had started
operations in India in 1995 and there was no direct competition in this category. So, it
remained ‘Numero Uno’ luxury car brand in India for more than a
d e c a d e . B u t , m a r k e t dynamics have changed significantly after the entry of
BMW in 2006 followed by Audi in2007.The overall market share of luxury cars has
been reorganized due to the new entrants. This has resulted in new equations being
forged amongst the various players, driven primarily by a rapidly swelling
millionaire-club having diversified choices and preferences. In 2006, BMW had 9% market
share which has now grown to 42%, catapulting BMW as the number one luxury
brand in terms of sales. Audi which started its operations in 2007 has had the fastest growth-
rate amongst the three and has now captured 20% of the luxury car market. So, the I n d i a n
luxury car market is favourable for new entrants who are capable of
g r a b b i n g t h e untapped opportunities by following the customer-oriented
approach and having ability to induce demand by innovation at each level of marketing
mix. To get a deeper understanding of the scenario we need to develop into the competitive
strategies of these three brands.

2.1 BMW and Mercedes-Benz

Mercedes-Benz India Limited was established in November 1994 as a join venture between
Daimler-Benz AG and erstwhile Telco (presently, Tata Motors). It has traversed
a long j o u r n e y s t a r t i n g w i t h t h e l a u n c h o f o n e o f t h e m o s t s u c c e s s f u l
m o d e l s w o r l d w i d e – t h e Mercedes-Benz E Class (W124) in March 1995.Mercedes
India, now known as DaimlerChrysler India Private Ltd., has a state-of-the-
artfully-equipped manufacturing unit in Pune. Mercedes-Benz is known for providing the
Indian customers, latest models and technology following strict quality standards. The
company considers India as one of its most promising markets. The Mercedes-
Benz C Class and Mercedes-Benz E Class cars are locally manufactured while the
Mercedes-Benz SL-Class cars are imported as completely built units (CBUs). The company
offers S-Class, E-Class, C-Class, M Class, CLS-Class, SLK-Class, CL-Class and the
Maybach.

Fig 2.1

European Major BMW entered in India in 2006. The company with headquarters in Gurgaon
and production unit in Chennai had initial investment of 1.1 billion rupees. It has
swiftly developed both infrastructure and dealership network. The production
plant at Chennai, established in 2007, has an annual capacity of 3000 units in a
single shift and it produces BMW 3 series and BMW 5 series sedans. The rest of models-
BMW 7 series, X3 and X5 are imported as CBUs. BMW 3 and 5 series account for
80% of the total sales of company in India, of which BMW 5 series has highest
sales.BMW India, with its aggressive marketing, fast expansion of product
profiles, strategic dealership location selection and supplementary financial service
offering, has managed to wrest biggest market share from Mercedes-Benz. BMW and Audi,

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both focus on sportier features and new launches to encourage young buyers. Decrease in the
average age of luxury car buyers is a favourable condition for this kind of selling strategy.
In the Indian scenario, where 75% of passenger cars and 60% of luxury cars are purchased
through financing, financial supplementary support is critical to success of the
car makers. Taking this into account, BMW Group is planning to introduce BMW
Financial Services India, which will provide services to BMW customers, providing
financing facilities to fleet-owners and commercial-financing to their dealers.
Discounting older models is another successful strategy applied by the company.
It is also planning to launch ‘Pre-Owned Car Sales Program’ in 2010. BMW’s 5-
year coverage (after sales) is another attractive factor compared to the 2-year
warranty provided by Mercedes-Benz. In the Indian scenario, the luxury cars are
generally chauffeur-driven. This trend has been well-imbibed by BMW as it has focused
more on back-seat facilities during designing and marketing. The company
has b e e n f o c u s i n g o n s o m e o t h e r t e c h n o l o g i e s l i k e I n t e g r a l A c t i v e -
S t e e r i n g , P a r k D i s t a n c e Control (PDC) and Head-up Display (X5) for providing
enhanced features for comfort in the Indian driving conditions.BMW has been acting very
swiftly in identifying its dealership locations so as to achieve maximum sales volume aligned.
BMW with 15 dealership locations (two locations in Delhi and Mumbai) competes with
Mercedes-Benz having 32 dealership locations because it has strategically expanded its
dealership network to higher demand luxury car markets. In next phase BMW is planning
to target emerging tier 1 and 2 cities like Jaipur and Lucknow to compete with
Mercedes whose 25-30% sales revenue comes from tier 2 cities.

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2.2 Latest and Fastest- Audi AG
Audi India started operating in 2007 by establishing its own sales company in Mumbai. The
company started production of Audi A4 in November 2007, followed by Audi A6 in 2008 in
its Aurangabad plant. Rest of the models - Audi A8, Audi Q5 and Q7, Audi TT
and super s p e e d r a c i n g c a r A u d i R 8 a r e i m p o r t e d a s C B U s . A u d i i n v e s t e d
s i g n i f i c a n t l y i n b r a n d building, marketing the product qualities and improving
after sales services in India. Audi offers technology with composure and agility
to current techno affluent Indian youth. Known for its technology, luxury and style, this
German car maker has received five different awards by Indian auto media. Audi’s
commitment to innovative and sophisticated design is widely endorsed by car buyers. One of
the reasons of Audi’s global success is its ability to identify potential markets for
expansion. The company selected India as its second production site after China.

Fig 2.2
The local production provides Audi, ability to cater customer needs in a
c o s t e f f e c t i v e manner. Audi is always a first choice of techno-geeks who want to get
more involved during the drive. Besides being the fastest growing luxury brand in India, Audi
regularly brings new models and variants of existing models to surprise the car lovers. Audi
Q5 is the most endorsed imported sports utility vehicle (SUV) in India. The company
followed the same dealership location strategy as BMW by selecting similar sales regions
of high demand (four dealership locations in northern and central regions Delhi,
Gurgaon, Chandigarh and Ludhiana) at 13 locations country-wide. Due to these efforts,
Audi has rapidly captured market in India and has exerted considerable pressure on the other
dominant players. The company noticed a 65% jump in sales (200 cars) in May 2010
compared to May2009 (121 cars). Both Audi and BMW have focused in the world class
music system facility and ultra luxury looks in their models. Luxury car segment is going to
change as there are many new cars lined-up for launch during the period 2010-2012 with
approximately 50 to 60 new models from major global brands. The market
futures will not only be driven by product itself but also services associated with it. So it
would be a war of biggies, competing on diverse parameters. Automobile market will be
noticing a great shift but as the previous pattern of market shows, the only mantra of
success will be a holistic approach aligned to the company’s brand image and customer
oriented vision.

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CHAPTER 3: HISTORY OF THE 3 LUXURY CAR
BRANDS (BMW, MERCEDES BENZ, and AUDI)
3.1 BMW

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Although BMWs current fame and reputation as one of the greatest automobile
manufacturers can be mostly linked to models produced in the last two decades, the history of
the marquee stretches back almost 90 years and contains numerous achievements that have
established it as a benchmark.

BMW stands for Bayerische Motoren Werke or Bavarian Motor C

ompany. The company was established in 1913 and based in Munich, G e r m a n y . I t
s t a r t e d o u t a s a n a e r o e n g i n e m a n u f a c t u r e r , h e n c e t h e company logo. The
logo comprised of four quadrants of alternating w h i t e a n d b l u e c o l o r . I t i s a
s t y l i z e d r e p r e s e n t a t i o n o f a n a i r p l a n e propeller spinning against the clear
blue sky. The logo represents a white propeller blade against a blue sky. It reflects the
origins of BMW as a maker of military aircraft engines during WWI. Also, white
and blue are the traditional colours of Bavaria.

3.2 MERCEDES –BENZ

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T h e M e r c e d e s - B e n z l o g o i s o n e o f t h e m o s t f a m o u s b r a n d s i n o t h erworld.
The Benz logo is a simplistic three-pointed star that represents i t s d o m i n a t i o n o f t h e
l a n d , t h e s e a , a n d t h e a i r . T h e f a m o u s t h r e e - pointed star was designed by
Gottlieb Daimler to show the ability of his motors for land, air and sea-usage. It was
first seen on a Daimler in1909, and was combined with the Benz laurel wreath in 1926 to
signify the union of the two firms. Mercedes- Benz is the world’s oldest automobile
manufacturer.

The company’s founders, Gottlieb Daimler and Carl Benz, continued to make automotive
history following their invention of the automobile in 1886. As an automotive pioneer,
Daimler and its employees are committed to excellence and act responsibly towards society
and the environment, to shape the future of safe and sustainable mobility with
groundbreaking technologies and high-quality products.

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3.3 AUDI

The Audi badge the 'Four Rings' is the emblem of one of the oldest car manufacturers in
Germany. It symbolises the 1932 merger of the four independent motor-vehicle
manufacturers: Audi, DKW, Horch and Wanderer. Together with the NSU brand, which
joined in 1969, these companies are the roots of the present-day AUDI AG. After the war the
Audi name - which is Latin for "Hear!" - disappeared, but was revived in 1965, using the four
rings as a logo. Also, the name is sort of a pun on 'hoerch', German for 'hear', name of one of
the founders. The company itself is more than a century old. The four rings in the logo have
nothing to do with the Olympic rings.

CHAPTER 4: REVIEW OF LITERATURE

4.1 Brand Personality

A brand is “a set of expectation and association evoked from a company or product. A brand
is how your key constituents- customers, employees, shareholders etc. experience what you

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do.” Some brands are of such great importance to people, that we speak of them as a part
of one’s life and identity, being used to express one. Some would say that these
brands have their own personality, the brand personality, which can be defined as
“the set of human characteristics associated with a given brand”. Thus, it
includes such characteristics as gender, age and socioeconomic class, as well as
such classic human personality is both distinctive and enduring. Based on the premise
that brand can have the personalities in much the same way as humans, brand personality
describe brands in terms of human characteristics. Brand personality is seen as valuable
factor in increasing brand engagement and brand attachment, in much the same way as
people relate and bid to other people. Much of the working the area of brand personality is
based on translated theories of human personality and using similar measure of personality
attributes and factors. Brand personality refers to the set of human characteristics we
associated with the brand. A common way of determining this is to reply on the metaphor:
“If the brand was a person, what would he/she be like?” we then list and group the
traits to describe the brand as, for example: caring, approachable and trustworthy.

4.2 Creation of brand personality

Brand personality traits are formed and influenced by any direct or indirect contact that the
consumer has with a brand. A brand, unlike a person, cannot think, feel or act. A brand has
no objective existence at all its simply a collection of perception on the minds of the
consumer. Consumers accept the marketing actions to humanize brands. Indirectly, the brand
personality is created by all the elements of the marketing mix. Betra, Lehman and Singh
suggest that the personality of a brand is created over time, by the entire marketing mix of the

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brand- its price ( high or low, odd or even), retail store location( imaginary association),and
product form( solid/liquid.etc) benefits), packaging details (colour, size, material, shape),
symbol; used an all phases of the brand communication, sales promotion, and media
advertising”

One of the advantage of the brand personality is that based on their distinctive personalities,
consumers are able to differentiate between brands. Another advantage is that the consumer
can interpret the brands image in such a way that it is personally more meaningful. Thus the
consumer put more efforts in creating and using the brand personality. A further advantage
of brand personality is that life is given to a brand. By vitalizing a brand, another perspective
of brand personality can be examined, namely the role of a brand as relationship
partner in a consumer brand relationship. Next we will concentrate on these consumer brand
relationships, Whether the brand is a product or a company, the company has to
decide what personality traits the brand is to have. There are various ways of creating
brand personality. One way is to match the brand personality as closely as possible to that of
consumers or to the personality that they like. The process will be:

a) Define the target audience

b) Find out what they need, want and like
c) Build a consumer personality profile
d) Create the product personality to match that profile

4.3 Brand personality of cars

Are you what you drive? That is what are companies seem to be asking and in the
same breath trying to convince you about. In other words, are you the Hyundai accent owner
who commands immediate respect wherever she goes (including fro the potential father-in-
law) or are you the suave executive from the Chevrolet ad who is ever ready to share a
moment with loved one? With a plethora of new models in the market, and generic benefits
(such as space or fuel efficiency) of a particular car segment hardly a
distinguishing factor between car models, marketer are increasingly

22
differentiating on the emotional pay-off a particular car model/brand provides to the
customer. This, of course, varies from the segment to segment and also on how long a
particular model has been in the market. For instance, while advertising for entry level
or smaller cars tends to focus more on the rational or functional benefits of the
vehicles, the differentiations is increasingly on the emotional benefits when it comes
to high end cars.“Generally, it has been seen as one move up the value chain, the
differentiation is more on the emotional pay-off. People buy car as an extension of
their personality rather than just features. A car, in India, helps build up show off, social
esteem value. The advertising would a l s o v a r y a c c o r d i n g t o t h e s e g m e n t w h i c h
o n e i s t a r g e t i n g , ” h e s a y s . F o r i n s t a n c e , t h e Chevrolet Optra ad (which depicts a
young husband driving his wife to see the moon on the occasion of Karvachauth) shows
an Optra consumer as someone who believes in family values and indulging loves
ones.“We find that typically profile of an Optra consumer is someone who is in the age group
of 35-45years and has a chauffeur. He buys a car not only for himself but also for the family
and tries to make up, for not being able to spend enough time, by indulging love ones,” points
outdated. The positioning goes well with the companies catch lines of “for a
special journey called life”. High end car maker Skoda auto too, through its
advertising, attempts to connect with its consumer on emotional level. “Car is
the extension of the personality and our advertising shows the consumer to be
youthful, image-conscious and even bit a macho. The campaign jointly made by
Skoda’s marketing department and ad agency IB&W not only communicates the quality of
the brand but an appreciation for the finer things in life. The target Skoda consumer is a SEC
A1, primarily male, businessman or someone in the senior management, “says Shashank
vaid, manger (marketing), Skoda Auto India. Surely, image building does come higher in the
consumer’s scheme of priorities when buying a new car than ever before.

The importance of brand image has risen sharply in the last few years. At the segment level,
the increase in importance is greater for the mid-size cars, indicating the relevance of brand
among the more expensive market segments. The manufacturer need to focus
more o how c o n s u m e r s p e r c e i v e t h e m a s o f f e r i n g e x c i t i n g c a r s a n d b e i n g
c o m m i t t e d t o w a r d s t h e m . Contemporariness of model has a big impact on purchase
decision. The perception of the car in terms of its performance and design, quality,
sales, after sales, cost of ownership, apart from brand image, all impact upon the
purchase decision.”

Brand image is not driven by good advertising alone but is significantly impacted upon by the
cars performance and design, quality, and the cost of ownership. Among the three, product
quality has the highest correlation with brand image. Small car buyer seeks
capability in advertising, and fuel efficiency is relatively more important to them.
Technology, innovation, and good influence premium mid-size buyers. One reality for us in
India is that the market is extremely price/value conscious. While making purchases based on
above, there is rationalised, which does have an impact on the decision on a particular make
and model of car. Be it rational or an emotional decision, consumers would have to think as a
bevy of new models flood the Indian market.

23
CHAPTER 5: LUXURY CAR SEGMENT
Luxury vehicle is a marketing term for a vehicle that provides luxury- pleasant and
decent desirable features beyond strict necessity at increased expense. The term suggest a
vehicle with greater equipment, performance , construction precision, comfort, design
ingenuity technological innovation or features that convey brand image, cachet, status, or
prestige or any other feature or combination of features. Automobile manufacturers market
specific makes and models that are targeted at particular socio-economic classes, and thus
"social status came to be associated more with a particular vehicle than ownership of a car
per se”. Therefore, automakers differentiate among their product lines in “collusion” with the
car buying public.

24
 While a high price is the most frequent factor, it is "styling, engineering, and even public
opinion which cars had the highest and lowest status associated with them."Every era in
automobile history has had "a group of car marquees and models that have been expensive to
purchase, due to their alleged superiority of their design and engineering”. Aimed at wealth
buyers, such automobiles might be generically being termed luxury cars. "This term is
also used for unique vehicles produced during "an era when luxury was individualistic
consideration and coachwork could be tailored to an owner like a bespoke suit." Although
there is considerable literature about specific marquees, there is a lack of systematic and
scholarly work that "analyzes the luxury car phenomenon itself.”

Though widely used, the term luxury is broad and highly variable. It is
a p e r c e p t u a l , conditional and subjective attribute and may be understood differently by
different people:"What is a luxury car to some... may be 'ordinary' to others."

5.1 Characteristics

Luxury cars tend to offer a higher degree of comfort than their mainstream
counterpart.

The various characteristics of luxury cars are:

• The important characteristics include genuine leather upholstery

and polished wood grain look dashboards.
• The luxury cars now a day have traditionally emphasized more on comfort
and safety.
• Luxury vehicles are also a status symbol for consumption. Contemporary luxury cars
also offer higher performance and better handling, which is often k n o w n a s sort.
• New safety technologies and comfort amenities, such as anti-lock brakes,
electronic stability control and DVD entertainment systems, before they trickle
down to mass market cars. Numerous "smart car" features are largely only found
on luxury cars as of 2009.
European marquees like Mercedes BMW, and Jaguar have almost never adopted front-wheel
drive and retained a line-up mostly or entirely made up.

CHAPTER 6: LUXURY CARS IN INDIA

6.1 BMW
BMW, the manufacturer of world-famous Rolls-Royce cars, has officially entered the Indian
car market.

BMW , India was set up as a sales subsidiary in Gurgaon in 2006 to spearhead the formation
of its dealer network, and followed it closely by setting up a state-of-the-art assembly plant in
Chennai in January 2007.BMW AG, or Bayerische Motoren Werke AG, was initially
a German aircraft engine manufacturing company. In 1919, they turned to land vehicle
engines, and in 1927 built their first BMW car christened BMW 3/15. For the greater part of
the past century. BMW Car hassled the world in creating cars for the rich. Exceptional

25
design concept and elegance has always been a part of the BMW cars.BMW Cars in India put
innovation, intelligence and technology to ensure the safety and driving comfort of its proud
owners. BMW India competes with its rivals by exhibiting powerfully performing vehicles
and having a slight edge over the others.

BMW CARS FALLING IN THE LUXURY CAR SEGMENT

6.1.1 BMW 3 SERIES

The smallest of the BMWs in India, the 3 Series is a highly competent entry-level luxury
sedan. As is the case with all cars from the Bavarian marquee the 3 Series is a car that packs
in superb performance with high-end features. With uniquely BMW design, the 3 Series
comes with four engine options - the inline 4 320i, inline 6 325i, the inline 6 330i and the
inline 4 320d. Equipped with iDrive multimedia technology, perfect handling-steering
precision and power-packed performance, the 3 Series is to be experienced to be believed.
The 3 series in an exquisite sports sedan available both in petrol and diesel. It falls in the
luxury segment. The exterior exudes confidence and a powerful flow of expression. The
individual exterior details display elegance that reveals themselves subtly to the eyes. The 3
series with its petrol and diesel variants targets the upper middle class and the rich Indian
consumer with BMW cars having a price range between rupees twenty five and thirty lakhs.

6.1.2 Prices of BMW 3 series

BMW 3 Series Car Price List – luxury car from BMW

Variants Price range

BMW 3 series 320d corporate edition Rs 24,40,000
BMW 3 series 320i Rs 27,80,000
BMW 3 series 330i Rs 33,95,000
BMW 3 series 320d highline Rs 31,50,000
BMW 3 series 328i Rs 32,00,000

26
6.2 Mercedes Benz
MercedesBenz cars officially came to India in 1994 in collaboration w
i t h T e l c o . Traditionally, MercedesBenz cars have consistently catered to wealthy
, rich,and super-rich consumers. The manufacturer's name keeps on changing, but
Mercedes-Benz cars remain Mercedes-Benz, for the Mercedes-Benz name has a
greater brand relationship with world consumers than their manufacturer’s current
corporate name - Daimler-Benz, Daimler-Chrysler, or Daimler AG. Popular Mercedes Benz
sedan car prices range between around rupees twenty-nine lakhs to Mercedes-Benzes at a bit
above one crore thirty lakhs rupees.

Mercedes Benz presence in India

27
Mercedes-Benz has been associated with India for more than 50 years. Presently, Mercedes-
Benz India’s engagement in India covers several domains:
a) Local production of Mercedes-Benz cars
b) Making available imported Mercedes-Benz cars
c) Commercial Vehicle operations
d) Global sourcing of auto components

Social Involvement of Mercedes-Benz

Mercedes-Benz is also involved with social-oriented programs across India like:
a) Biofuel from Jatropha’
b) Road safety project for children
c) Automotive education, etc.
d) Captive automotive technology research and development

Mercedes-Benz India has been delighting customers with strong brands and a wide range of
products equipped with the latest in automotive technology. The company has been the
pioneer of the luxury car segment in India with its inception way back in 1995. It is the only
luxury car maker in India to have such a wide range of cars. The different ranges available
today are the C-Class, CL-Class, CLS-Class, E-Class Saloon, E-Class Coupe, E-Class
Cabriolet, GL-Class, M-Class, R-Class, S-Class, SL-Class, SLK-Class, and the Maybach.
6.2.1 Mercedes Benz C -Class (Sedan)
Mercedes Benz (Sedan) The C Class Sedan is the entry level sedan in the
luxury segment. The C class is a signature statement of the refined and
the upwardly mobile. The Mercedes Benz C-Class with its petrol and diesel
variants targets the upper middle class consumer with Mercedes-Benz car
prices between rupees twenty five and thirty lakhs.

The Mercedes-Benz C-Class is an entry level luxury car in the Indian market.
Direct competition to the BMW 3 Series and Audi A4, the C-Class has remained
as the elegant choice amongst the cars. Solid built, classic good looks and well
appointed interiors are synonymous with the brand and this is what drives
customers to this car. Available in a choice of trim levels and petrol and diesel
engine options, the C-Class is a definite way to announce that you have indeed
arrived in life. Adding to this, The C-Class now comes in with a panoramic sun
roof, Attention Assist and a host of other features.

28
6.2.2 Pricing of Mercedes Benz

Variants Price range

C 200 CGI Elegance Rs. 28,30,000

C 200 CGI Avantgarde Rs. 29,53,000

C 200 CGI Elegance Blue EFFICIENCY Rs. 28,58,000

C 200 CGI Avantgarde Rs. 29,79,970

BLueEFFICIENCY

C 250 CDI Elegance Rs. 32,03,500

C 250 CDI Avantgarde Rs. 32,81,500

C 250 CDI Elegance BLueEFFICIENCY Rs. 32,03,000

C 250 CDI Avantgarde Rs. 32,30,000

29
 BLueEFFICIENCY

6.3 Audi

The famous 'Four Rings' - of Audi are symbolized on its badge. It has ruled European roads
since 1932, though Audi began manufacturing in 1899. The four rings of the
Audi badge symbolize four pioneer car manufacturers of Germany: Audi,
DKW, Horch and Wanderer. Audi AG came from amalgamating these companies in
1932. Audi cars symbolize status and p r e s t i g e f o r A u d i c o n s u m e r s w o r l d w i d e ,
a n d f o r A u d i c o n s u m e r s , Audi Cars a r e m o r e works-of-art than simple super
efficient machines. An Audi car is a statement of who-you-are. Audi are regarded as

30
a symbol of class, elegance and luxury. Audi India began o p e r a t i o n s i n 2 0 0 7 a s a
d i v i s i o n o f V o l k s w a g e n G r o u p S a l e s I n d i a P v t . L t d . b a s e d i n Mumbai.
Audi cars now in India are fully imported or assembled at the Aurangabad plant of Skoda
Auto. Audi India is projecting its cars to the Indian elite as the best luxury cars
to match their status. Audi cars are starting to fire the fancy of the rich Indian consumer and
the upper middle class w i t h t h e i r c u r r e n t r a n g e o f A u d i A 4 , A u d i A 6 , A u d i
A 8 , a n d A u d i Q 7 s e d a n c a r s . Audi India is expanding the network of Audi
dealerships across Indian metros. Popular Audi models range in on-road price from below
rupees thirty-two lakhs to a bit above rupees one-Crore.

6.3.1 Audi A4

The 2012 Audi A4 ranks 3 out of 21 Upscale Midsize Cars. This ranking is based on our
analysis of 29 published reviews and test drives of the Audi A4. With its sharp interior and
exterior styling, available all-wheel drive and good fuel economy, the 2012 Audi A4 is a
viable alternative to more costly rivals. Frequent comparisons are drawn to rivals such as
the BMW 3-Series, which test drivers often consider to be the benchmark for performance
within the class. Many say that the Audi A4 may ultimately suit drivers better in the real
world. “The A4 may be best in class, period,” writes Automobile Magazine. “Purists and
weekend racers will rightfully stand behind the better-balanced BMW 3-series, but for the
majority of buyers looking for German driving dynamics, great design, and good fuel
economy, this may be the best bet.

31
6.3.2 Pricing of Audi

Variants Prices

Audi A4 1.8 TFSI Rs 29,71,400

New Audi A4 2.0 TDI multitronic Rs 29,00,000

Audi A4 2.0 TFSI Rs 31,66,400

New Audi A4 3.2 FSI tiptronic Quattro Rs 36,00,000

Audi A4 3.0 TDI Quattro Rs 37,72,000

CHAPTER 7: CONSUMER BEHAVIOUR TRENDS

32
In the past, prestige was due to real financial distance. At heart, luxury is about exclusivity.
Today, given the rise in purchasing power, luxury consumption is no longer reserved for the
few. This is a time in history when the affluent masses are no longer at a financial distance
from luxury. But prestige and exclusivity has to be driven by distance – except this distance
is no longer financial, but intellectual and cultural. A better way to look at the trends that
exist in this market is to segregate them into categories, namely the marketing mix trends
(product, price, place, promotion) and consumer behaviour trends.

7.1 Cognition to emotion

The Indian consumer, today, is influenced more by the affective components than
by the cognitive elements. In the case of Mercedes Benz, the company
communicates the strong relationship of the car with status, snob value and
image. In the case of Audi, the company communicates sleek design and so on.
However, it is no longer necessarily true that customers will take the cognitive route while
purchasing a luxury car. Customers may view Mercedes Benz, Audi and BMW as parity cars
(equivalents) based on cognition, and make the final choice based on the affective route. This
is where the trend takes us. The luxury brands have taken this affective route and try to evoke
emotion through style and design. A report says that Mercedes Benz sold 3000 cars in India
in 2007, but is expecting a drop in sales this year because Audi and BMW have
entered the Indian market with more stylish cars and the consumers’ feelings towards these
cars are extremely positive.

7.2 Splurge for ‘special’

The most important day for an Indian is his/her marriage, a ceremony which has for long
seen people spending for the special day without hesitation. Given that the day belongs to the
bride and the groom, people are increasingly demanding the most -splurge able item that
there can be; a term now synonymous with luxury cars. That is why; increasingly rental
companies are purchasing Mercedes and its likes - because there is an increasing demand for
the same from the “marriage market”. This trend shall continue with enhanced demand, as the
demand f o r t h e d e m a n d f o r t h e s e c a r s f o r ‘ s p e c i a l o c c a s i o n s ’ w i l l
p e n e t r a t e t h e m i d d l e i n c o m e categories in the country.

7.3 “Its mine” concept

For a consumer who chooses his house and his workplace, the car (which is probably his
most prized possession) will not remain something he can’t choose for long. The future
trends would witness customized luxury cars entering the Indian market.

7.4 4P Trends

7.4.1 Product

33
Each of the companies started off in India with only 1-2 cars. Audi started with A4, BMW
with BMW 3 series and Mercedes with C220 and D250. Mercedes started its operation in
India in 1996 and then slowly BMW and Audi came in. The cars were imported as
completely built units. And the indigenisation was initially very less to the tune of 2.5 to 3
%.At present; the range of cars which a company provides in India is almost equal to its full
global portfolio. Also, companies started their production units in the country. Audi started its
production in Aurangabad and Mercedes has started it long ago in Pune. The company bring
in the cars as knocked down units and assemble them in India, thus saving substantially on
the cost of the 110 % import duty of import of luxury cars. Also the indigenization of the cars
has increased from 2-3 % to more than 60-70 %.

7.4.2 Price

The cars launched by Mercedes, BMW and Audi were in the range of 20-30 lakhs in the mid
90s, a price range which was synonymous with extreme luxury. Today, not only has the range
expanded to approximate the global portfolios, there has been a massive play with the floor
and ceiling prices of luxury cars which is now 20 lakhs to almost a crore. The ultra luxury
segment hasn’t made an inroad in India, but there have been a few sales per year where the
consumers import the car. This has prompted companies like Rolls Royce and Maybach to
enter India.

7.4.3 Place

In the past, the luxury car companies only had 1-2 dealers in the metros, majorly Mumbai and
Delhi. Now with the demand coming in, not only from the metros but also the smaller Tier 2
cities, the numbers of dealerships have gone up substantially and the companies are trying to
expand as fast as possible. Also, since the cars were imported, the spare parts delivery wasn’t
so good. The lead time required to get a spare part was quite high. Today companies
understand that the luxury consumer is a very demanding customer and is very particular
about taking care of the car. With the expansion of the dealership network in the country, the
problem of the spare part delivery gets better. Now the companies have a chance to build
customer loyalty through total customer satisfaction.

7.4.4 Promotion

34
 From what used to be a minimal level of presence in Indian Auto Expos, luxury
automobile companies are increasingly moving towards melding with the suave
consumers:
a) Studio BMW in the corporate heart of National Capital Region with a purpose of
capturing share of heart
b) Participation in fashion weeks and photo exhibits e.g. -Audi W12 Quattro
presented in Lakme India Fashion Week
c) Product placement in Bollywood movies, with the recent BMW placement in “Rock
On!”
d) Association with lifestyle sports e.g.– Audi organizing the Audi Quattro cup in India,
associating with golf and motorsports.

7.5 Moving forward

Although the growth in the luxury automobile segment is compared to the recent Chinese
markets, the forces shaping the development are quite different in India and China. If China’s
starting point was a slate wiped clean by Mao, India’s is a chalkboard covered with myriad
traditions, religious beliefs, colourful festivals, a there-but not-there caste system – all sewn
together into a vocal democracy. If the task in China was to fill a near vacuum, in India
luxury brand have to find a way to blend in with the milieu of local traditions. For the same,
we develop a 7-point framework for seamlessly capturing India’s growing fascination with
luxury consumption:

a) Respect: Connect with luxury consumers as a selective target. Luxury brands need
to respect this point of difference in all interactions between the brand and the
consumer.
b) Segment: Acknowledge luxury consumer subsets. Luxury brands need to identify,
differentiate and prioritize the most profitable subsets for targeted strategies.
c) Insight: Identify what is important to the defined target. Motivations could be based
on personal and non-personal factors.
d) Connect: Assess which brand interactions really matter. For example, friends and
family are an important influence on luxury consumption in India.
e) Experience: Establish emotional connectivity. Deep and meaningful relationships
need to be developed in order to win the ‘soul’ of the luxury consumer.

35
 f) Indianness: Embrace and celebrate the ‘Indianness’ brand. India has a very powerful
and unique identity, and this needs to be leveraged within a luxury brand context.
g) Consistency: Adopt a truly holistic approach, to ensure that all brand interactions,
whether advertising or customer service, are consistent with the brand positioning.

Consumer Behaviour consists of all human behaviour that goes in making purchase
decisions. An understanding of the consumer behaviour enables a marketer to take marketing
decisions which are compatible with its consumer needs. There are four major classes of
consumer behaviour determinants and expectations, namely, cultural, socioeconomic,
personal and psychological. The socio-economic determinants of consumer behaviour consist
of age, marital status, occupation, education, income, family size etc .Realizing the
importance of passenger car industry in the present economic situation, the researcher has
analyzed the perceptions, and behaviour of consumers related to this product. It is rightly
said; yesterday’s luxuries are today’s necessities. Hence in this digital world, car is no longer
a luxury. From the discussions made in the previous chapters, there are certain product
attributes which are identified in the study as influencing the purchase decision and satisfying
the consumers. The growth in the population of India and the increasing number of middle
class consumers has attracted the attention of car manufacturers and marketers. The
manufacturers and marketers who study the behaviour of consumers and cater to their needs
will be successful. It may be concluded that consumer behaviour has a greater role to play in
the LPG era of economic activities for which a necessary survey and research should be
conducted in an efficient manner.

CHAPTER 8: DATA ANALYSIS AND INTERPRETATION

8.1 Primary data collection

The data was collected through questionnaires from 40 customers. The collected data are
going to get analyzed here by using tables and charts like pie charts and bar diagrams.
Further, the inferences are been made from the collected data.

36
QUESTIONNAIRE

Q1) Which age group is most interested in buying luxury cars?

Table 1.1

Age No of respondents

18-24 6

25-34 14

35-44 11

45-54 7

55 and more 2

Total 40

Analysis:
According to the respondents, Age group of 25-34 is most interested in
buying Luxury cars that is around 34% followed by Age Group of 35-44.

Q2) Does purchase of Luxury is car directly related to income level?

Table 2.1

Answers No of respondents

Yes 37

No 3

Analysis:
The result was totally skewed to one side and respondents agree that Purchase of
Luxury cars is totally related to the Income level of an Individual which is 92%.
Q3) Rank the following parameters on your purchase preference?

37
 Table 3.1

Answers No of respondents
Price 10
Quality 15
Availability 7
Involvement 5
Recommendation 3
Total 40

Analysis:

Most of the respondents prefer quality followed by price and availability. This
response shows that customers are ready to pay of quality.

Q4) Why does one person purchase a Luxury Brand?

Table 4.1
Value No of respondents
Quality 3
Flaunt value 20
Interested in art 7
Exclusivity 10

Analysis:

In opinion of respondents, majority of people buy luxury cars because they want to
flaunt their superiority over others. Followed by those people who really
have taste of art and exclusiveness of the luxury that is around 30%.

Q5) Is the quality of Luxury brands are more superior then others?

Chart 5.1

Analysis:

38
 Our assumption is correct, about 73% of the respondents believe in the
superior quality of luxury cars.

Q6) Are services provided by luxury brands is better than others?

Chart 6.1

Analysis:
About 72% of the respondents are of the view that service quality in luxury car
brands is more superior then other brands.

Q7) What is the factor the effect most while purchasing a car?

Chart 7.1

Analysis:
The graph indicates that majorly people tend to see as brand of the car as the major factor
thata f f e c t s t h e b u y i n g d e c i s i o n o f a c u s t o m e r a n d o t h e r f a c t o r s t h
a t a r e t o o t a k e n i n t o considerations are engine power, shape, looks, etc.

Q8) What are the factors that influence the occupations in buying decision?

Table 8.1

Types of job No of respondents Percentage

Professionals 24 48%

Government employees 6 12%

Nri’s 11 22%

Businessman 9 18%

39
 Total 50 100%

Analysis:
From the above chart it can be found that the 48% customers are professionals, 22%
were NRI‘s.

Q9) What is the purchasing pattern of luxury cars?

Chart 9.1

Analysis:
From the above chart it can be found that 88% of the customers have no previous
experience with buying luxury cars.

Q10) What are the sources of information to get to know about the luxury cars?

Table 10.1

SOURCES NO. OF RESPONDENTS PERCENTAGE

Television 22 44%

Newspaper 3 6%

Personnel sources 6 12%

Product demos 2 4%

sales representatives 5 10%

Experienced users 12 24%

40
 TOTAL 50 100%

Analysis:

From the above chart it can be found that 44% were influenced by the TV advertisement. 24
% influenced by experienced users, 12% were influenced by Personal sources and 10% were
influenced by sales representatives. News paper and product demos were influenced by 6%
and 4% respectively.

Q11) What are the general factors that influence a customer purchase decision?

Chart 11.1

Analysis:

The above table shows that most of the customers rates comfort as the most important factor
for purchasing a car, then comes mileage, style and price respectively. Colour is not having
that much influence on buying decision.

Q12) What are the customers opinion on style for purchasing a luxury car?

Chart 12.1

41
 Analysis:
From the above table we can see that, 34% customers were highly influenced and 64
% were influenced by the style of the luxury cars while making their purchase
decision. The rest 2% were not influenced by the style.

Q13) What is the customers opinion about comfort?

Chart 13.1

Analysis:

42
 The above chart shows that 70 % customers were highly influenced and 30% were
influenced by the comfort and convenience while making purchase decision.

Q14) What is customer’s opinion about price?

Chart 14.1

Analysis:

The chart above shows that 48 % customers were influenced and 42% were highly
influenced by the price. The remaining 10% were not influenced by the price.

Q15) What is customer opinion about price of luxury cars?

Chart 15.1

43
Analysis:

From the above table we can see that 82% customers were influenced and 14% were highly
influenced by the product features of luxury cars. 4% was not influenced by the product
features.

Q16) What is customer opinion about technology while purchasing a luxury car?

Table 16.1

Level of influence No of respondents Percentage

Highly influenced 14 28%

Influenced 33 66%

Not influenced 3 6%

Total 50 100%

Chart 16.1

44
Analysis:

The above table shows that 14% customers were highly influenced and 33% customers
highly influenced by the technology. Remaining 3% was not influenced by the technology.

Q17) What is customer’s opinion about brand image of luxury cars?

Chart 17.1

Analysis:

45
 The chart above shows that 62% of customers were influenced by the brand image while making
their buying decision whereas 38% respondents were not influenced by the brand image.

Q18) What is the purpose of customers buying decision?

Chart 18.1

Analysis:

The chart shows that 96% customers using their car for personal purposes. The remaining
4% were using it for official purposes.

Q19) What is the opinion of customer about after sales service?

Table 19.1

LEVEL OF INFLUENCE NO OF RESPONDENTS PERCENTAGE

Highly influenced 16 32%

Influenced 13 26%

Neutral 14 28%

Less influenced 6 12%

46
Not influenced 1 2%

Total 50 100%

Analysis

This shows that 32% customers are highly influenced with the after sales service of the
companies where as there is a mere 2% customers who aren’t satisfied with the after sales

8.2 Secondary data collection

47
Secondary data is data collected by someone other than the user. Common sources of
secondary data include censuses, surveys, organizational records and data collected through
qualitative methodologies or qualitative research.

The recent growth in the luxury car market in India is much more than mere market dynamics
in a particular car segment. It is a reflection of the changing lifestyle of the affluent class in
the country. In India, the luxury car segment (Average Price 25-30 Lakh) has been growing at
an average rate of 20% or above during recent years; it seems to be least affected
by the global financial crisis. During worst recession period when world was facing
low market demand trends, Indian l u x u r y c a r s e g m e n t g r e w a t 2 3 % t o 6 , 6 7 1
v e h i c l e s a c c o r d i n g t o t h e S o c i e t y o f I n d i a n Automobile Manufacturers
(SIAM) despite a 0.5% decline in passenger car sales, to 11.04lakh vehicles
(April-December 2008 Report). But financial year ended March 2010 has s h o w n
growth of automotive sector up by 25% to 15.26 lakh vehicles. This
i n d i c a t e s optimistic sign of recovery of sector. While the Indian auto industry is
expected to grow at 1 7 % t o 1 9 % o n a n a v e r a g e , s a l e s o f l u x u r y a n d s u p e r -
l u x u r y c a r s a r e e x p e c t e d t o g r o w exponentially. Luxury car segment
accounts only for 3-4% of total car sales in India. But what lures the international
majors is the fact that this segment is growing at 25%-plus (2009sales), much higher than 15-
17% growth registered by the small passenger car segment over the past few years. This
growth of luxury car sales is driven majorly by increased wealth-creation within
average Indian population and the desire of individuals to join the millionaire-c l u b b y
flaunting their wealth. Growth of Indian economy has been faster than
o t h e r emerging economies during recent times. Globally, India had the highest growth-rate
(22.7%) of millionaire population during the year 2007. India added 23,000 millionaires from
2006 to2007, taking total figure to around 123,000 millionaires; wealth as measured in US
Dollars ( M e r r i l l L y n c h C a p G e m i n i R e p o r t ) . H o w e v e r , d u r i n g r e c e s s i o n ,
t h e c o u n t r y n o t i c e d a decline of 31.6% in number of millionaires. But post-recession
recovery was much faster compared to other economies. These numbers are expected
to grow up to 1,40,000 by the year 2010. This robust growth in the number
of millionaires in the country, being one of the highest globally, paves the way
for further growth of the luxury car market.

Graph 8.2.1

Graph 8.2.2

In the past few years this growth of luxury car sales is driven majorly by
increased wealth-creation within average Indian population and the desire of individuals to
join the millionaire-c l u b b y f l a u n t i n g t h e i r w e a l t h . G r o w t h o f I n d i a n
e c o n o m y h a s b e e n f a s t e r t h a n o t h e r emerging economies during recent times.

48
Globally, India had the highest growth-rate (22.7%) of millionaire population during the year
2007. India added 23,000 millionaires from 2006 to2007, taking total figure to around
123,000 millionaires; wealth as measured in US Dollars ( M e r r i l l L y n c h C a p G e m i n i
R e p o r t ) . H o w e v e r , d u r i n g r e c e s s i o n , t h e c o u n t r y n o t i c e d a decline of 31.6%
in number of millionaires. But post-recession recovery was much faster compared to other
economies. These numbers are expected to grow up to 1,40,000 by the year 2010.
This robust growth in the number of millionaires in the country, being one of the
highest globally, paves the way for further growth of the luxury car market. In
addition, the average age of an Indian millionaire has come down to 35-40 years from the
earlier average of 50 years. An increasing number of young entrepreneurs and professionals
from various fields are buying luxury cars and this affluent segment has been boosting sales
volumes. If we look into citywise wealth distribution, the northern region in
India( comprising of cities like Delhi, Chandigarh, Ludhiana, Shimla, and Jalandhar)
comprises higher density of millionaire population than rest of the parts. This region
therefore has the highest luxury car sales. After this come, Greater Mumbai, Ahmedabad,
Pune, and Chennai.

These cities have a luxury car sales pattern which is still higher
c o m p a r e t o r e s t o f t h e country. The historical regional sales data of luxury cars sold in
India, shows that 32-35% of the total are sold in Delhi region only. This is possibly
due to the psychological preference shift among the North Indian population to show
off their wealth. Delhi is followed in this list by Mumbai, and Punjab state, where Ludhiana
and Jalandhar are at the top two slots. Delhi also happens to be the biggest market for
Mercedes-Benz, Mumbai ranks second followed by the states of Gujarat,
Karnataka, Tamil Nadu and Punjab. This geographically distributed population
could be clustered into classes on the basis of overall behavioural patterns
observed in luxury brand consumers.

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CHAPTER 9: CONCLUSION

The advancing demand of luxury cars across the globe represents a promising
trend to the growth of the automobile industry. The rising demand of luxury cars in India is
a sign of people getting richer day by day as well as their desires are also increasing
and there is also increase in the spending power of the customer which shows that
economy of India is also developing at a fast rate. There has been a 200 % growth in the
automobile industry in India especially in the luxury segment and the sports car segment. Due
to which European luxury car makers are introducing most of their sports cars models in
India due to the rising demand and interest of the people.

Increase in disposable income of the people has led to a different lifestyle. Now, the mindset
of Indian consumer is a lot different. Previously, Indian consumers used to check the prices
of everything they bought. Now, the consumer looks at the experience of the company during
the buying process. More than price, Quality matters. This paradigm shift has also changed
the way companies look at India. Slowly and steadily the luxury car market which was in a
very nascent condition in India, is now counting on big revenues from the country’s
customers. Of late, there had been a steep increase in the luxury car market. Year 2009
recorded a whopping 25% growth in the luxury car market. It would be news for many of us
that India ranks number 1 in exporting automobile components. The German machines which
have fame all over the world use components which are imported from India. New entrants
like Volkswagen are going to heat up the competition even more. Currently the fight is in
between BMW and Merc. Despite being a late entrant in the Market, BMW has been
successful in capturing a considerable amount of market share. But, this fight between just
two companies is not going to stay for long as new players are entering the Indian market.

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CHAPTER 10: BIBLIOGRAPHY

10.1 Bibliography books

1. Marketing management – Philip Kotler, Tenth Edition, Prentice Hall India

2. Methodology of research in social sciences – Dr. O.R. Krishnaswami & Dr. M.

Ranganatham, First Edition, Himalaya Publishing House.

3. Consumer Behavior- Leon G. Schiffman and Leslie Lazar Kanuk, Ninth Edition,
Pearson Education.

4. Consumer Behavior- Hawkins, Best and Coney, Eighth Edition, Tata McGraw-Hill.

5. Overdrive- October 2011 edition pg no, 98-100.

6. Auto car- September 2011 edition pg no 138-141.

10.2 Websites

1. Gathered information related to the growth of luxury car segment in India from
www.wikipedia.com.

2. www.bmw.com/india.

3. www.mercedes.com/ India.

4. www.audi.com/india.

10.3 Annexure

A set of questionnaire

Q1) Which Age group is most interested in buying Luxury cars?

a) 18-24

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 b) 25-34
c) 35-44
d) Above 55

Q2) Rank the following parameters on your purchase preference?

a) Price
b) Quality
c) Availability
d) Involvement
e) Recommendation

Q3) Does purchase of Luxury is car directly related to income level?

a) Yes
b) No

Q4) Why does one person purchase a Luxury Brand?

a) Quality
b) Flaunt value
c) Interested in art
d) Exclusivity

Q5) What quality of Luxury cars is more superior then others?

a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree
Q6) What are the services provided by luxury brands is better than others ?

a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

Q7) What is the factor the effect most while purchasing a car?

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 a) Engine power
b) Shape
c) Acceleration time
d) Looks
e) Brand

Q8) What is the purchasing pattern of luxury cars?

a) Yes
b) No

Q9) What are the sources of information?

a) Television
b) Newspaper
c) Personnel sources
d) Product demos
e) Sales representatives
f) Experienced users

Q10) What are the general factors influencing purchase decision of the customers?

a) Style
b) Comfort
c) Mileage
d) Price Colour

Q11) What is the customer’s opinion on style for purchasing luxury cars?

a) Highly influenced
b) Influenced
c) Less influenced

Q12) What are customer’s opinions about comfort for purchasing luxury cars?

a) Highly influenced
b) Influenced
c) Not influenced

Q13) What are customer’s opinions about price for luxury cars?

a) Highly influenced

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 b) Influenced
c) Not influenced

Q14) What are customer opinions about product features for luxury cars?

a) Highly influenced
b) Influenced
c) Not influenced

Q15) What are customer’s opinions about technology for luxury cars?

a) Highly influenced
b) Influenced
c) Not influenced

Q16) What are customer’s opinions about brand image for luxury cars?

a) Yes
b) No

Q17) What is the purpose of buying decision of customers for luxury cars?

a) Official
b) Personal

Q18) What is the opinion of customers about after sales service for luxury cars?

a) Highly influenced
b) Influenced
c) Neutral
d) Less influenced
e) Not influenced

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