“A STUDY ON CONSUMER BEHAVIOUR IN LUXURY CAR SEGMENT”

Dissertation Submitted to the

D.Y. Patil Deemed to be University School of Management

In partial fulfillment of the requirements for the award of the

Degree of

BACHELORS OF BUSINESS ADMINISTRATION

Submitted by:

Akash Awasthi

(Roll No. BBA0150103)

Submitted To

Mrs.Jyoti Pawar
Assistant Professor
D.Y. Patil University
School of Management
CBD Belapur, Navi Mumbai
March 2018

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 DECLARATION

I hereby declare that the dissertation “CONSUMER BEHAVIOUR IN LUXURY CAR

SEGMENT”submitted for the BBA Degree at D.Y. Patil University School of
Management is my original work and the dissertation has not formed the basis for the
award of any degree, associate ship, fellowship or any other similar titles.

Place: Navi Mumbai Akash Awasthi

Date: (signature of the student)

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 CERTIFICATE

This is to certify that the dissertation entitled “CONSUMER BEHAVIOUR IN

LUXURY CAR SEGMENT”” is the bona fide research work carried out by Akash

Awasthi, student of Full Time BBA, at D.Y. Patil University School of

Management during the year 2015- 2018, in partial fulfillment of the requirements
for the award of the Degree of Bachelors in Business Management and that the
dissertation has not formed the basis for the award previously of any degree,
diploma, associate ship, fellowship or any other similar title.

Mrs Jyoti Pawar Dr. R. Gopal

Assistant Professor Director & HOD
D.Y.Patil University
School of
Management

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 ACKNOWLEGMENT

Behind every achievement lies an unfathomable sea of gratitude to those who have
extended their support and without whom it would ever have come into existence. To
them I say my words of gratitude.

With regards to my project with “CONSUMER BEHAVIOUR IN LUXURY CAR

SEGMENT” I would like to thank each and every one who offered help guideline and
support whenever needed

First and foremost, I would like to express gratitude to my project supervisor, Mrs.Jyoti
Pawar for her esteemed guidance during the course of the project work. I am great full
to her for giving me insight into the realm of my project.

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 TABLE OF CONTENT

SR.NO TOPIC PG.NO.

A LIST OF TABLES 6

B LIST OF ABBREVIATIONS 7

EXECUTIVE SUMMARY 8

1 INTRODUCTION 10

2 OBJECTIVE OF STUDY 11

3 SCOPE OF THE STUDY 12

4 LIMITATION OF STUDY 13

5 LITERATURE OVERVIEW 14

6 RESEARCH METHODOLOGY 52

6.1 DATA COLLECTION METHODS 53

6.2 SAMPLING METHOD 54

7 DATA ANALYSIS AND INTERPRETATION 56

8 CONCLUSION 60

9 ANNEXURE 61

9.1 QUESTIONNAIRE 65

9.2 BIBLIOGRAPHY (APA

(APA Format)
Format) 84

10 PLAGIARISM REPORT 85

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 LIST OF TABLES/CHARTS
Table/ Chart Table Explanation Page Number
No

1 Customer surveys 65

CHART 1 TO 18

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 LIST OF ABBREVIATIONS

GDP Gross Domestic Product

BMW Bayerische Motoren Werke

AMA American Marketing Association

CDI Capacitor Discharge Ignition

DKW Drampt Kraft Wagen

CBU’s Completely Build Up

SUV Sport Utility Vehicle

NSU Next Syntactic Unit

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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 5 passengers. The luxury cars in the
Indian market are very expensive, with price tags that start from Rs.30 lakhs.
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 mind set 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.

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 Chapter 1

Introduction

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 INTRODUCTION
Growth 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, favorable
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 of equity 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.

Luxury vehicle is a marketing term for a vehicle that provides luxury pleasant or desirable features beyond strict necessity at increased expense.

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The term suggests a vehicle with higher quality equipment, better performance, more precise

construction, comfort, higher design, technologically innovative modern, or features that convey

an image, brand, status, or prestige, or any other 'discretionary' feature or combination of them.

The term is also broad, highly variable and relative. It is a perceptual, conditional and subjective

attribute that may be comprehended differently by different people; "What is a luxury car to

some... may be 'ordinary' to others."

In contemporary usage, the term may be applied to any vehicle type

including sedan, coupe, hatchback, station wagon, and convertible body styles, as well as

to minivans, crossovers, or sport utility vehicles and to any size vehicle, from small to large—in

any price range. Moreover, there is a convergence in the markets and a resulting confusion of

luxury with high price: where there may have been a clear difference in price between luxury and

others, there is no longer an absolute separation between premium and luxury, with what may be

premium brands now more expensive than the equivalent so-called luxury ones.

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Premium compact segment

The premium compact class relatively new, having been initiated by several European brands in the mid-2000s, and have displaced their compact executive cars to

constitute the least expensive offerings in their lineups. The classification varies, for instance Consumer Guide Automotive in the U.S. considers the Audi

A3 and Mercedes-Benz CLA-Class as part of the premium compact segment due to similar size and MSRP, though these are known in Europe as a small family car and

a compact executive car, respectively. Adding to some confusion, General Motors has positioned Buick as a "premium" nameplate to compete with Lincoln (whereas it

formerly competed with Mercury) and front-wheel drive Acura and Lexus models, while Cadillac is aimed at the "luxury" segment which generally encompasses the

performance-oriented BMW and Mercedes-Benz marques.

The Audi A3 is an example of a premium compact car.

The premium compact segment is targeted at a niche market of consumers who found the
existing entry-level luxury offerings (mostly consisting of compact executive cars - see below) to
be too expensive. By offering a smaller, lighter, more fuel-efficient, and less expensive vehicle,
premium compacts introduces younger buyers to the luxury marque, in hopes of retaining the
coveted customer loyalty. This includes the Audi A3, Buick Verano, BMW 1 Series, , Infiniti
Q30, Mercedes-Benz A-Class, Mercedes-Benz B-Class. Premium compacts compete with well-
equipped midsize (non-luxury) cars, and with options they overlap much with compact executive
cars (entry-level luxury cars).

Global references

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Italian Isotta Fraschini Tipo 8A S LeBaron Boattail Roadster, a 1930s luxury car

According to the European Commission, the "luxury vehicle" segment is classified as F-segment.

H o w e v e r, t h e b o u n d a r i e s b e t w e e n t h e t r a d i t i o n a l s e g m e n t s a r e i n c r e a s i n g l y b e c o m i n g b l u r r e d a n d d i l u t e d

as features once exclusive to luxury vehicles become standard equipment on even small cars.

 ACRISS is a code system used by many car rental companies in the US for classifying
vehicles (but not brands or marques). The system includes "Luxury" and "Premium"
categories.
 Australia: In Australia, for taxation purposes a luxury car is defined as a passenger car whose
value exceeds a certain threshold, (see: Luxury Car Tax).
 France: In France the term "voiture deluxe" is used.
 Germany: In Germany the term "Upper class" (German: Oberklasse) is used.
 Japan: In Japan the term applies to vehicles in the top exterior dimension bracket with an
engine displacement exceeding 2000cc, which incurs an elevated road tax obligation
 Russia: Russian markets use the term "representative class vehicle" also translated as "luxury
vehicle".
 United States: The Consumer Guide publication uses a categorization that sorts luxury
vehicles by size and it acknowledges that there can be considerable price variations within a
class; for instance the Lincoln Town Car has a relatively low MSRP (Manufacturer's
Suggested Retail Price) compared to the Jaguar XJ, BMW 7 Series, Lexus LS, or Mercedes-
Benz S-Class

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 Chapter 2
Objective of the Study

OBJECTIVES OF STUDY

 To study and understand the consumer behaviour towards luxury cars segment.

 To understand the level of operations over the different segments of luxury cars.

 To study and assessment and client fulfilled by the administrations gave by automobile

industry over the review time frame.

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 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 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

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Nowadays, car has become a necessity and forms a part of life. Therefore, there is a significant
scope to examine the perception and purchase behavior of the consumers of cars. Knowledge of
the buying behavior 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.

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 LIMITATIONS OF THE STUDY

 Time has been a major constraint throughout the study.

 As this survey was restricted to Navi Mumbai this cannot be stated as an in depth
research on this subject.
 Enough care is taken in formulating the questionnaire, still some errors may
creep in.
 The consumer behaviour varies according to different products.
 Quality versus price was not taken into the consideration.
 The study was conducted under of assumption that the information given by the
respondents is authentic.
 The respondents were reluctant to answer due to their busy schedule.
 Many respondents were biased in their responses.
 This project only focused on mobile phones.

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 Chapter 3
LITERATURE REVIEW

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 LITERATURE OVERVIEW

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 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.

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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 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:

 Define the target audience

 Find out what they need, want and like

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  Build a consumer personality profile
 Create the product personality to match that profile

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?

A car, in India, helps build up show off, social esteem value. The advertising would also
vary according to the segment which one is targeting,” he says. For instance, the
Chevrolet Optra ad 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 out-dated. 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

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relevance of brand among the more expensive market segments. 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.”

Marketing

Marketing is the process by which companies create customer interest in products or

services. It generates the strategy that underlies sales techniques, business
communication, and business development. It is an integrated process through which
companies build strong customer and create value for their customers and for
themselves.

Marketing is used to identify the customer, to keep the customer, and to satisfy the
customer. With the customer as the focus of its activities, it can be concluded
that marketing management is one of the major components of business management.
Marketing evolved to meet the stasis in developing new markets caused by mature
markets and overcapacities in the last 2-3 centuries. The adoption of marketing
strategies requires businesses to shift their focus from production to the perceived
needs and wants of their customers as the means of staying profitable.

Various Definitions

Marketing is defined by the American Marketing Association (AMA) as "the activity, set
of institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large."

Sales process engineering views marketing as "a set of processes that are
interconnected and interdependent with other functions, whose methods can be
improved using a variety of relatively new approaches."

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The Chartered Institute of Marketing defines marketing as "the management process
responsible for identifying, anticipating and satisfying customer requirements
profitably."

The overall process starts with marketing research and goes through market
segmentation, business planning and execution, ending with pre and post-sales
promotional activities. It is also related to many of the creative arts. The marketing
literature is adept at re-inventing itself and its vocabulary according to the times and the
culture.

Brand

A brand is the identity of a specific product, service, or business. A brand can take
many forms, including a name, sign, symbol, colour combination or slogan. The word
brand began simply as a way to tell one person's cattle from another by means of a hot
iron stamp. A legally protected brand name is called a trademark. The word brand has
continued to evolve to encompass identity - it affects the personality of a product,
company or service.

A brand is the personality that identifies a product, service or company (name, term,
sign, symbol, or design, or combination of them) and how it relates to key
constituencies: Customers, Staff, Partners, and Investors etc.

People engaged in branding seek to develop or align the expectations behind the brand
experience, creating the impression that a brand associated with a product or service
has certain qualities or characteristics that make it special or unique. A brand is
therefore one of the most valuable elements in an advertising theme, as it demonstrates
what the brand owner is able to offer in the marketplace.

The art of creating and maintaining a brand is called brand management. Orientation of
the whole organization towards its brand is called brand orientation.

Careful brand management seeks to make the product or services relevant to the target
audience. Brands should be seen as more than the difference between the actual cost
of a product and its selling price - they represent the sum of all valuable qualities of a
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product to the consumer. There are many intangibles involved in business, intangibles
left wholly from the income statement and balance sheet which determine how a
business is perceived.

Consumers may look on branding as an important value added aspect of products or

services, as it often serves to denote a certain attractive quality or characteristic.

Brand Awareness

Brand awareness refers to customers' ability to recall and recognize the brand under
different conditions and link to the brand name, logo, and jingles and so on to certain
associations in memory. It helps the customers to understand to which product or
service category the particular brand belongs to and what products and services are
sold under the brand name. It also ensures that customers know which of their needs
are satisfied by the brand through its products.

Brand love levels are measured through social media posts about a brand, or tweets of
a brand on sites such as Twitter. Becoming a Facebook fan of a particular brand is also
a measurement of the level of 'brand love'.

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Brand Promise

The marketer and owner of the brand have a vision of what the brand must be and do
for the consumers. It refers to the trust that the brand builds in the consumers on the
basis of its usage and added values.

Brand Name

The act of associating a product or service with a brand has become part of pop culture.
Most products have some kind of brand identity, from common table salt to designer
jeans.

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A brand nomer is a brand name that has colloquially become a generic term for a
product or service, such as Band-Aid or Kleenex, which are often used to describe any
kind of adhesive bandage or any kind of facial tissue respectively.

Brand Identity

A product identity, or brand image are typically the attributes one associates with a
brand, how the brand owner wants the consumer to perceive the brand. The brand
owner will seek to bridge the gap between the brand image and the brand identity.
Effective brand names build a connection between the brand personalities as it is
perceived by the target audience and the actual product/service. The brand name
should be conceptually on target with the product/service. Typically, sustainable brand
names are easy to remember and have positive connotations. Brand identity is
fundamental to consumer recognition and symbolizes the brand's differentiation from
competitors.

Brand identity is what the owner wants to communicate to its potential consumers.
However, over time, a product's brand identity may acquire, gaining new attributes from
consumer perspective but not necessarily from the marketing communications an owner
percolates to targeted consumers. Therefore, brand associations become handy to
check the consumer's perception of the brand.

Brand identity needs to focus on authentic qualities - real characteristics of the value
and brand promise being provided and sustained by organizational and/or production
characteristics.

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Branding Approaches

1. Individual branding

Each brand has a separate name (such as Porsche, Bmw, Mercedes), and in these
specific brands there are various sub brands that are created. (E.g. Mercedes s-class,
e-class)

2.Attitude branding

It is the choice to represent a larger feeling, which is not necessarily connected with the
product or consumption of the product at all. Marketing labeled as attitude branding
include that of Nike, Starbucks. Attitude branding is described as a "fetish strategy".

"A great brand raises the bar -- it adds a greater sense of purpose to the experience,
whether it's the challenge to do your best in sports and fitness, or the affirmation that the
cup of coffee you're drinking really matters."

3.Iconic branding

They are defined as having aspects that contribute to consumer's self-expression and
personal identity. Brands whose value to consumers comes primarily from having
identity value comes are said to be "identity brands". Some of these brands have such a
strong identity that they become more or less "cultural icons" which makes them iconic
brands.

There are four key elements to creating iconic brands:

1. "Necessary conditions" - The performance of the product must at least be ok

preferably with a reputation of having good quality.
2. "Myth-making" - A meaningful story-telling fabricated by cultural "insiders". These
must be seen as legitimate and respected by consumers for stories to be
accepted.

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 3. "Cultural contradictions" - Some kind of mismatch between prevailing ideology
and emergent undercurrents in society. In other words a difference with the way
consumers are and how they some times wish they were.

4. "The cultural brand management process" - Actively engaging in the myth-

making process making sure the brand maintains its position as an icon.

“No-brand" branding

Recently a number of companies have successfully pursued "No-Brand" strategies by

creating packaging that imitates brand simplicity. This no-brand strategy means that little
is spent on advertisement or classical marketing and success is attributed to the word-
of-mouth, a simple shopping experience and the anti-brand movement. "No brand"
branding may be construed as a type of branding as the product is made conspicuous
through the absence of a brand name.

Characteristics of the luxury industry

 Luxury means different things to different people

Luxury has no certified origins. But luxury branding is said to have taken birth in
the west with the appearance of high-end brands. To get an insight into what luxury
today means to different people, we have to study the Indian Demographics, to
understand how to develop target strategies for various segments.

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  Luxury is a product category in itself

This can be best explained by the fact that both an expensive car and an
artwork can be considered to be luxury items. Therefore, all luxury marketers are not
just competing in their ‘technically defined’ product categories (like manufacturers of
cars compete amongst themselves) but for the wallet share of luxury goods in total.

 The meaning of luxury had changed

Luxury has moved from its ‘old’ meaning of ownership also known as
conspicuous consumption. Conspicuous consumption is a term used to describe the
lavish spending on goods and services that are acquired mainly for the purpose of
displaying income or wealth rather than to satisfy a real need of the consumer.

In the mind of a conspicuous consumer, such display serves as a means of attaining or

maintaining social status. Invidious consumption, a necessary corollary, is the term
applied to consumption of goods and services for the deliberate purpose of inspiring
envy in others of objects to the ‘new’ meaning of the experience / fulfillment derived
from possessing a certain object.

 Aura is more important than exclusivity

Exclusivity is something that cannot be ensured to a great extent and neither is it the
prime requirement of a luxury consumer. The consumer bases his decisions on the
relevance of the aura of the brand to his fulfillment or actualization needs.

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Classification of luxury consumers

Consumers are placed in 3 groups according to what luxury means to them:

 Luxury is Functional

These consumers tend to buy luxury products for their superior functionality and quality.
Consumers in this segment, the largest of the three, tend to be older and wealthier and
are willing to spend more money to buy things that will last and have enduring value.
They buy a wide array of luxury goods, from artwork to vacations, and conduct
extensive pre-purchase research, making logical decisions rather than emotional or
impulsive. Messages that highlight product quality and are information-intensive are
powerful with this group.

 Luxury is Reward

These consumers tend to be younger than the first group but older than the third. They
use luxury goods as a status symbol to say “I’ve made it!” They are motivated by their
desire to be successful and demonstrate this to others. Luxury brands that have
widespread recognition are popular; however they don’t wish to appear lavish or
hedonistic in their appearance. They want to purchase “smart” luxury that demonstrates
importance while not leaving them open to criticism. Marketing messages that
communicate acceptable exclusivity resonate with this group.

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  Luxury is Indulgence

This group is the smallest of the three and tends to include younger consumers and
slightly more males than the other two groups. Their purpose for luxury goods is to
lavish themselves in self-indulgence. They are willing to pay a premium for goods that
express their individuality and make others take notice and are not overly concerned
with product longevity or possible criticism. They enjoy luxury for the way it makes them
feel, therefore have a more emotional approach to purchases. They respond well to
messages that highlight the unique and emotional of a product qualities.

Luxury in India

To be successful in India, it is both necessary to gauge the financial potential as well as

the mindset of the Indian luxury consumer. This will help in bringing forth the right
product offerings to the Indian consumer as well as targeting them better.

Qualitative Insights

 According to a study by American Express, ‘Inside the Affluent Space’, the

mindset of the Indian consumer is a desire to prove that “I’ve made it”. This can
be related to the luxury categorization which is based on the fact that luxury is
seen as a reward, both for achievements in life as well as showcasing these
achievements to others.
 The Luxury Marketing Council Worldwide has established a chapter in India, with
the aim of promoting luxury in India. Their task will also be to build synergy
between various luxury brands interested in India by way of sharing of consumer
insights as well as best practices.

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  Even the Asian region is not uniform in its preference for luxury in terms of need
fulfillment. Therefore, it becomes important to delineate the needs of the Indian
consumer from the other Asian regions to target them better. This agenda gains
importance because many Indians look at acquiring luxury from places such as
Hong Kong, Tokyo, China etc.

E.g. it is interesting to note that Singapore consumers are more of connoisseurs

compared to Hong Kong consumers who want Talk-Value from their luxury goods.

 Hindustan Times has been at the forefront of driving the luxury revolution in India
by organizing two Indian Luxury Conferences in the last 4 years. To add to it, it
also brings out a monthly supplement of luxury goods available in India, thereby
creating awareness for the luxury brands.
 As far as quantitative estimates are concerned, there will be 140,000 millionaires
(in US dollar terms) in India by 2010.
 The affluent market is set to grow at a rate of 14% in India, and by 2010, there
will be approximately 1.2 million affluent here.
 The wealth potential of India’s affluent was to the tune of US$ 203 billion as of
2005.

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Strategies for Luxury Marketing in India

There are conventional foundations for ensuring success of a brand and they are listed
below in brief:

 The brand must be “expansive”.

Which means it should be full of innovation opportunities for the marketer and in
terms of satisfying the divergent needs of the luxury consumer.

 The brand must tell a story.

It is this story, of either heritage or performance or other aspects that goes on to

build the aura of a brand over time. The story always accentuates the identity of the
brand.

 The brand must be relevant to the consumers’ needs.

Depending upon the mindset of the luxury class, it is imperative for a brand to satisfy
those needs, whether they are for recognition or functional use etc.

 The brand must align with consumers’ values

A brand that does not concur with the basic values of a consumer’s society has a
small chance of succeeding because luxury items are forms of expression or
identification for a luxury consumer. This makes it difficult for the consumer to adopt the
brand in such cases.

 The brand must perform

Irrespective of which category the brand belongs to, a performance assurance is a

must for the brand if it wishes to be in the evoked set of luxury consumers, considering
the price being paid for luxury.

Based on the inputs given as well as an understanding of the decision making process
of the luxury consumer, I recommend the following paths for luxury marketers based on

33
what Indian consumers really desire from their luxury brands, i.e. product brand,
dealer/store brand and price/value relationship.

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.

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 "analyses the luxury car phenomenon
itself.”

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.

34
  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 known as
sort.
 New safety technologies and comfort amenities, such as anti-lock brakes,
electronic stability control and 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.

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 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

BMW 3 SERIES

35
 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.

Prices of BMW 3 series

BMW 3 Series Car Price List – luxury car from BMW

Variants Price range

36
BMW 3 series 320d corporate edition Rs 34,90,000

BMW 3 series 320i Rs 36,80,000

BMW 3 series 330i Rs 42,95,000

BMW 3 series 320d highline Rs 38,50,000

Mercedes Benz

MercedesBenz cars officially came to India in 1994 in collaboration with Telco.Traditiona

lly, 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.
37
Mercedes Benz presence in India

Mercedes-Benz has been associated with India for more than 50 years. Presently,
Mercedes-Benz India’s engagement in India covers several domains:

 Local production of Mercedes-Benz cars

 Making available imported Mercedes-Benz cars
 Commercial Vehicle operations
 Global sourcing of auto components
 Social Involvement of Mercedes-Benz
 Mercedes-Benz is also involved with social-oriented programs across India like:
 Biofuel from Jatropha’
 Road safety project for children
 Automotive education, etc.

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 May Bach.

38
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.

Pricing of Mercedes Benz

39
 Variants Price range

C 200 Avantgarde Rs. 40,90,000

C 220 CDI Style Rs. 37,93,000

C 220 CDI Avantgarde Rs. 42,90,000

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 prestige for Audi consumers worldwide, and for Audi consumers,
Audi Cars are more works-of-art than simple super efficient machines. An Audi
car is a statement of who-you-are .Audicare regarded as a symbol of class, elegance
and luxury. Audi India began operations in 2007 as a division of Volkswagen Group
Sales India Pvt Ltd. based in 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 with their current range of Audi A4, Audi A6, Audi A8, and
Audi A3 sedan cars. Audi India is expanding the network of Audi dealerships across
Indian metros. Popular Audi models range in on-road price from below rupees thirty-
five lakhs to a bit above rupees one-Crore.

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

40
 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.

Pricing of Audi

Variants Prices

Audi A4 1.8 TFSI Rs 32,65,000

New Audi A4 2.0 TDI multitronic Rs 36,65,000

Audi A4 2.0 TFSI Rs 35,66,400

New Audi A4 3.2 TFSI tiptronic Quattro Rs 40,00,000

Audi A4 3.0 TDI Quattro Rs 42,72,000

41
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.

42
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 decade. But, market
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 38%,
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 Indian luxury car
market is favourable for new entrants who are capable of grabbing the 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.

BMW and Mercedes-Benz

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Mercedes-Benz India Limited was established in November 1994 as a joint venture
between Daimler-Benz AG and erstwhile Telco (presently, Tata Motors). It has
traversed a long journey starting with the launch of one of the most successful models
worldwide – the 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, ML-Class, GL-Class, GLA-Class A-Class, B-Class CLS-
Class CLA-Class, SLK-Class, and the May Bach.

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

44
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, 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 has introduced BMW Financial
Services India, which provides 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.

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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 speed racing car Audi R8 are imported as CBUs. Audi invested significantly
in brand 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.

46
The local production provides Audi, ability to cater customer needs in a cost effective
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.

47
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 Company. The company
was established in 1913 and based in Munich, Germany. It started out as an aero
engine manufacturer, hence the company logo. The logo comprised of four quadrants of
alternating white and blue color. It is a stylized representation of an airplane 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.

48
The Mercedes-Benz logo is one of the most famous brands in otherworld. The Benz
logo is a simplistic three-pointed star that represents its domination of the land, the sea,
and the air. The famous three- 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 ground breaking technologies and high-quality products.

49
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.

50
CONSUMER BEHAVIOUR TRENDS

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.

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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 designed 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.

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 for the demand for these cars for
‘special occasions’ will penetrate the middle income categories in the country.

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“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.

Trends

Product

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 %.

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

53
sales per year where the consumers import the car. This has prompted companies like
Rolls Royce and May Bach to enter India.

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.

Promotion

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:

Studio BMW in the corporate heart of National Capital Region with a purpose of
capturing share of heart

Participation in fashion weeks and photo exhibits e.g. -Audi W12 Quattro presented in
Lakme India Fashion Week

Product placement in Bollywood movies, with the recent BMW placement in “Rock On!”

Association with lifestyle sports e.g:- Audi organizing the Audi Quattro cup in India,
associating with golf and motorsports.

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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, athere-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:

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.

Segment: Acknowledge luxury consumer subsets. Luxury brands need to identify,

differentiate and prioritize the most profitable subsets for targeted strategies.

Insight: Identify what is important to the defined target. Motivations could bebased on
personal and non-personal factors.

Connect: Assess which brand interactions really matter. For example, friends and
family are an important influence on luxury consumption in India.

Experience Establish emotional connectivity. Deep and meaningful relationships need

to be developed in order to win the ‘soul’ of the luxury consumer.

Indian-ness: Embrace and celebrate the ‘Indian-ness’ brand. India has a very powerful
and unique identity, and this needs to be leveraged within a luxury brand context.

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,

55
socioeconomic, personal and psychological. The socio-economic determinants of
consumer behaviour consist of age, marital status, occupation, education, income,
family size etc.

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 Chapter 4
RESEARCH METHODOLOGY

57
 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 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:

Formulation of problem

Collection of data

Making sampling plan

Research limitation

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.

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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:

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.

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.

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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 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.

 Sample size

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

40.

 Area of sampling

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

 Sampling technique

A Simple random sample is a group of subjects (a sample) chosen from a large group
(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.

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.

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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 5

DATA ANALYSIS AND INTERPRETATION

62
 DATA ANALYSIS AND INTERPRETATION

Primary data collection

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

Secondary data collection

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 luxury car segment grew at
23% to 6,671 vehicles according to the Society of Indian 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 shown growth of
automotive sector up by 25% to 15.26 lakh vehicles.

This indicates optimistic sign of recovery of sector. While the Indian auto industry is
expected to grow at 17% to 19% on an average, sales of luxury and super-luxury cars
are expected to grow 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

63
desire of individuals to join the millionaire-club by flaunting their wealth. Growth of
Indian economy has been faster than other 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 (Merrill Lynch Cap
Gemini Report).

However, during recession, the country noticed 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.

64
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-club by flaunting their wealth. Growth of Indian economy has been faster
than other 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 to 2007, taking total figure to around 123,000 millionaires; wealth
as measured in US Dollars (Merrill Lynch Cap Gemini Report). However, during
recession, the country noticed 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 city wise 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.

65
These cities have a luxury car sales pattern which is still higher compare to rest of the
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 behavioral patterns observed in luxury brand consumers.

66
67
Chapter 6
Conclusion

68
 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
mind set 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 7
Annexure

70
 Annexure

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

 18-24
 25-34
 35-44
 Above 55

Q2) Rank the following parameters on your purchase preference?

 Price
 Quality
 Availability
 Involvement
 Recommendation

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

 Yes
 No

Q4) Why does one person purchase a Luxury Brand?

 Quality
 Flaunt value
 Interested in art

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

 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly disagree

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Q6) What are the services provided by luxury brands is better than others ?

 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly disagree

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

 Engine power
 Shape
 Acceleration time
 Looks
 Brand

Q8) What is the purchasing pattern of luxury cars?

 Yes
 No

Q9) What are the sources of information?

 Television
 Newspaper
 Personnel sources
 Product demos
 Sales representatives
 Experienced users

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

 Style
 Comfort
 Mileage

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  Price Colour

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

 Highly influenced
 Influenced
 Less influenced

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

 Highly influenced
 Influenced
 Not influenced

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

 Highly influenced
 Influenced
 Not influenced

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

 Highly influenced
 Influenced
 Not influenced

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

 Highly influenced
 Influenced
 Not influenced

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

 Yes
 No

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

 Official
 Personal

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

 Highly influenced
 Influenced
 Neutral
 Less influenced
 Not influenced

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 QUESTIONNAIRE

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

Age No of respondents

18-24 6

25-34 14

35-44 11

45-54 7

55 and more 2

Total 40

INTERPRETATION

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.

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

Answers No of respondents

Yes 37

No 3

INTERPRETATION

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%.

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Q3) Rank the following parameters on your purchase preference?

Answers No of respondents

Price 10

Quality 15

Availability 7

Involvement 5

Recommendation 3

Total 40

INTERPRETATION

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

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Q4) Why does one person purchase a Luxury Brand?

Value No of respondents

Quality 3

Flaunt value 20

Interested in art 7

Exclusivity 10

INTERPRETATION

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 a taste of
art and exclusiveness of the luxury that is around 30%

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

INTERPRETATION

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

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

INTERPRETATION

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

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

INTERPRETATION

The graph indicates that majorly people tend to see as brand of the car as the major
factor
thataffects the buying decision of a customer and other factors that are to taken intocon
siderations are engine power, shape, looks, etc.

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

Types of job No of respondents Percentage

Professionals 24 48%

Government employees 6 12%

Nri’s 11 22%

Businessman 9 18%

Total 50 100%

INTERPRETATION

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

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Q9) What is the purchasing pattern of luxury cars?

INTERPRETATION

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

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

SOURCES NO. OF PERCENTAGE

RESPONDENTS

Television 22 44%

Newspaper 3 6%

Personnel sources 6 12%

Product demos 2 4%

sales representatives 5 10%

Experienced users 12 24%

TOTAL 50 100%

INTERPRETATION

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?

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INTERPRETATION

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.

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

INTERPRETATION

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.

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Q13) What is the customers opinion about comfort?

INTERPRETATION

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

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Q14) What is customer’s opinion about price?

INTERPRETATION

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.

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

INTERPRETATION

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.

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

Level of influence No of respondents Percentage

Highly influenced 14 28%

Influenced 33 66%

Not influenced 3 6%

Total 50 100%

Chart 16.1

INTERPRETATION

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.

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

INTERPRETATION

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

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Q18) What is the purpose of customers buying decision?

INTERPRETATION

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

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

LEVEL OF NO OF PERCENTAGE
INFLUENCE RESPONDENTS

Highly influenced 16 32%

Influenced 13 26%

Neutral 14 28%

Less influenced 6 12%

Not influenced 1 2%

Total 50 100%

INTERPRETATION

His 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.

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 BIBLIOGRAPHY

Books

Consumer Behavior- LeonG. SchiffmanandLeslieLazarKanuk, Ninth Edition, Pearson

Education

Consumer Behavior- Hawkins, BestandConey,EighthEdition,Tata McGraw-Hill.

Magzines

Overdrive- October 2013.

Auto car- September 2013.

Websites

www.wikipedia.com.

www.bmw.com/india.

www.mercedes.com/India.

www.audi.com/india.

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Plagiarism Report

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