Consumer Behaviour Case Study

Skoda had a monopoly in car manufacturing in Czechoslovakia until the 1989 ‘Velvet
Revolution’. During this time it had developed a fearful reputation as possibly the worse
built, worst designed car in the world. Jokes about its notoriety were ruthless, unremitting and
widespread. The only place it sold in any number was in the country of manufacturer. After
the fall of communism the Czech government started looking for a commercial partner in the
West to revitalise its Skoda factories. Most respected commentators felt strongly that there
would never be a business prepared to take on the acquisition because of the huge task of
trans- forming the name from risible rejection to amiable acceptance. In 1991, however,
Volkswagen took a 30 per cent stake in Skoda and started work in training and educating the
workforce to Western quality standards in the hope of completely turning the business
around, making the name of Skoda synonymous with quality and reliability. It invested over
billion in the plant, research, development and new models. It also undertook an advertising
campaign, of momentous proportions, that excited the admiration of all in the promotion
business. Ten years later, in 2001, VW took total control of the business and such was its
success, Skoda had become one of the fastest-growing car brands in the UK motor industry,
increasing sales in the first two years by over 60 per cent. Although sales in 2004 have fallen
slightly, in line with other car manufacturers, the story is one of remarkable success, not least
in being able to understand and alter and turn around such deeply ingrained consumer ridicule
and opposition.

Questions:

1. Discuss the part that an understanding of consumer behaviour played in the success of
Skoda.
2. What were the major problems that VW had to solve to overcome consumer antipathy
to Skoda?
Case Study:

Read the following situation and answer the following questions:

Maruti-Suzuki is a well known Automobile company in India. It is also enjoying the

status of having the largest share of Indian automobile market.

MUL's (Maruti Udyog Limited) Maruti-800 was ideally suitable for Indian customers
as it was reasonably priced, fuel efficient and was sleek and easy to drive when
compared to the other models available in market. With the success of its M-800,
MUL soon replaced Hindustan Motors as the leader in the passenger car market.

But then also, MUL come up with several strategies in the market recently to combat
other competitors in the segment—

The various strategies are—

 Launch of new variants and models

 Increasing dealer profitability-During 2003 and 2004, MUL visualized and
implemented a strategy for its dealers to increase their profitability levels in
view of increased competition. According to the strategy, the 300-odd dealers
of the company were asked to strengthen their manpower, increase the salaries
of their sales agents, and offer them better incentives...
 Promotional offers--MUL focused its promotions strategy on targeting two-
wheeler owners.
 'Change Your Life' campaign--MUL launched novel offers like "Change
Your Life" campaign and also offered vehicle insurance 'for Rupee One only',
to attract customers
 Television campaigns--In 2003, MUL came out with a toy car advertisement
that became popular for its simplicity and straightforward message. The
advertisement depicted a child playing with a toy car. When reprimanded by
his father the child replies, 'Kya karoon papa petrol khatam hi nahin hota'
(What should I do? The petrol never finishes)
 '2599' offer--In 2004, MUL introduced the '2599' offer under which a
consumer could buy an M-800 by paying an EMI of Rs 2,599 only, for a
period of seven years. The down payment was fixed at Rs 40,000. MUL
entered into an agreement with the State Bank of India (SBI), the largest bank
in India, to promote this scheme
 'Teacher Plus' scheme--To further penetrate into the market, MUL continued
to focus its efforts on the rural markets and specific target groups. In 2004, it
 introduced the 'Teacher plus' scheme, in a tie-up with SBI, aimed at teachers
who were interested in buying a new car.
 Maruti 'True Value'—A one stop solution outlet for exchange and buying-
selling old cars.
The question is-

a. Why MUL has to come up with these strategies even though it is enjoying a
comfortable market share in India?
b. What could be the relevance to study this case regarding consumer behaviour?

Multiple Choice Questions

Q.1. which of the following would be the best illustration of a subculture?
A) a religion
B) a group of close friends
C) your university
D) a fraternity or sorority

Q.2. The relatively homogeneous and enduring divisions in a society, which are
hierarchically ordered and whose members share similar values, interests, and behaviour
constitute
________.
A) a culture
B) a subculture
C) a social class
D) a family

Q.3. A person's ________ consist(s) of all the groups that have a direct (face-to-face) or
indirect influence on his/her attitudes or behaviour.
A) subculture
B) family
C) social class
D) reference groups

Q.4. Social classes differ in media preferences, with upper-class consumers often preferring
________ and lower-class consumers often preferring television.
A) movies
B) radio
C) video or computer games
D) magazines and books

Q.6. Purchasing family when Gary was a high school student, he enjoyed rock music and
regularly purchased hip clothing sported by his favorite rock band. However, five years
later, when Gary became an accountant, his preference shifted toward formal clothing.
Which of the following personal characteristics is likely to have had the most influence on
Gary's preferences during his high school days?
A) education
B) age
C) income
D) gender

Q.7. Marriage, childbirth, and divorce constitute the ________ that shape the consumption
pattern of individuals.
A) psychological life cycle
B) product life cycle
C) social status
D) critical life events

Q.8. Identify an economic circumstance that can greatly affect any product or brand choice.
A) retirement
B) values
C) lifestyle
D) borrowing power

Q.9. ________ refers to a set of distinguishing human psychological traits that lead to
relatively consistent and enduring responses to environmental stimuli.
A) Image
B) Personality
 C) Psychological transformation
D) Lifestyle

Q.12.Marketers who target consumers on the basis of their ________ believe that they can
influence purchase behavior by appealing to people's inner selves.
A) core values
B) sophistication
C) money constrain
D) social class

Q.13.At the top of Maslow's hierarchy of needs are

________ needs.
A) esteem
B) self-actualization
C) social
D) safety

Q.14.As Rita scans the yellow pages section of her phone book looking for a florist, she sees
several other products and services advertised. Though interesting on first glance, she
quickly returns to her primary task of finding a florist. The items that distracted her
from
her initial search were most likely stored in which of the following types of memory?
A) Short-term memory
B) Long-term memory
C) Middle memory
D) Subconscious memory

Q.17.Which of the following is a situation in which consumer behavior occurs?

A) communications situation
B) purchase situation
C) usage situation
D) All of the above

Q.18.Which of the following is NOT a situation in which consumer behavior occurs?

A) communications situation
B) purchase situation
C) usage situation
D) all of the above are situations in which consumer behaviour occurs

Q.19.The headline for the Rockport shoes ad reads, “I'm comfortable being the greatest that
ever was or will be. Be comfortable. Uncompromised. Start with your feet.” The ad
shows a picture of Muhammad Ali, world famous boxer. In terms of Maslow's
hierarchy, this ad was designed to appeal to the consumer's _______________.
A) Psychological needs
B) Need for esteem
C) Safety needs
D) Self-actualization needs

Q.20.Understanding of consumer needs and then develops a marketing mix to satisfy these
needs.
A) The marketing concept
B) The strategic plan
C) The product influences
D) The price influences

Q.21.________________ is one of the most basic influences on an individual’s needs,

wants,
and behavior.
A) Brand
B) Culture
C) Product
D) Price

Q.22.In terms of consumer behavior; culture, social class, and reference group
influences
have been related to purchase and _______________.
A) Economic situations
B) Situational influences
C) Consumption decisions
D) Physiological influences

Q.23.___________ develop on the basis of wealth, skills and power.

A) Economical classes
B) Purchasing communities
C) Competitors
D) Social classes

Q.24._____________ (is) are transmitted through three basic organizations: the family,
religious organizations, and educational institutions; and in today’s society,
educational institutions are playing an increasingly greater role in this regard.
A) Consumer feedback
B) Marketing information systems
C) Market share estimates
D) Cultural values

Q.25.In large nations, the population is bound to lose a lot of its homogeneity, and thus
_________________ arise.
A) Multilingual needs
B) Cultures
C) Subcultures
D) Product adaptation requirements