ii.

Technology: With all sort of products available in the small cars market, technology can act as
a differentiator for consumer. New technologies such as MPFI (multi point fuel injection), turbo charging, electronic traction control, anti locking braking systems, and catalytical convertors.

iii.Fuel Economy: People do look for better fuel economy in terms of mileage given by the car.
Preferred Fuel: With the rise in petrol prices, people have been looking for alternatives such as diesel, CNG, LPG. Many car buyers in India prefer the diesel variant whatever may be the choice of car, because of the favourable cost differential diesel. iv.Low operational cost: For some of the users, operational cost is a major factor in deciding the buying decision. Operational cost includes Maintenance cost, insurance cost, spare parts, cost of service. v.Space and comfort: Buyer does look for spacious and comfortable ride. Various factors in deciding comfortable ride are leg room, head room, driving position, adjustable steering. vi.Safety: the most important factor for family buyers is the safety feature of a car. A car must follow safety norms, various safety features which people look in car are ABS, airbags. vii.Styling: To certain buyers, functionality was not everything, looks were also important. They wanted styling, and contemporary looks. d.User Status: The kind of buyer can be classified into non-buyer, first time buyers, and repeat buyers. The major of the buyers in the small car are a first time buyer, thats why this market is often referred as entry level car market. While going for car replacement, 50 percent of small car owners in India are again going for small cars and are reluctant to experiment with luxury cars.

e.Usage Rate: On the basis of the frequency of travel, people decide on the car to buy. In case a person
needs a family car only for family outing, they may look for a one time investment in a spacious car. On the other hand, if a person has huge amount of daily travel, he would prefer a good mileage car with less operational cost as well.

4.Psychographic Segmentation a.Social Class Social class plays a major role in segmentation for the automobile industry. With more
than 40% of the population of Indian lying in the middle class bracket, it becomes all the more important segment for the marketers to consider. Working class and upper lowers constitute the other prime target in the small car manufacturers.

b.Life-style life style is an important psychographic segmentation composed of a combination of factors

such as activities, interest and opinions. Ex: As part of its rebranding exercise, Fiat India is rolling out a number of products to cater to the lifestyle segment in the auto market.(economic times) c.Personality The customers are further segmented on their personality traits like sports oriented person, easy going. People are also segmented on their value system.

The awareness about the new technologies, latest trends in the car market is a direct attribute of the level of education of the consumer. This is evident from the fact that 2/3rd of the car buyer are graduate or above. 5. Behavioural Segmentation a.Decision Roles: When it comes to car, where huge investment is involved, people generally tend to take reference from other users. They go for test rides, get it checked from some experienced people who are much more comfortable about cars. b.Occasions: In India, people do buy cars in the festival season, and during the marriage seasons. c.Benefits: Consumer looks for the following benefits from a car. i.Power: People do look for power from power. According to their need they look for cars in their respective power basket (i.e. 600cc 1300cc). A higher power is related to give higher speed, acceleration by the consumers.

ii.Technology: With all sort of products available in the small cars market, technology can act as
a differentiator for consumer. New technologies such as MPFI (multi point fuel injection), turbo charging, electronic traction control, anti locking braking systems, and catalytical convertors.

iii.Fuel Economy: People do look for better fuel economy in terms of mileage given by the car.
Preferred Fuel: With the rise in petrol prices, people have been looking for alternatives such as diesel, CNG, LPG. Many car buyers in India prefer the diesel variant whatever may be the choice of car, because of the favourable cost differential diesel.

iv.Low operational cost: For some of the users, operational cost is a major factor in deciding
the buying decision. Operational cost includes Maintenance cost, insurance cost, spare parts, cost of service. v.Space and comfort: Buyer does look for spacious and comfortable ride. Various factors in deciding comfortable ride are leg room, head room, driving position, adjustable steering. vi.Safety: the most important factor for family buyers is the safety feature of a car. A car must follow safety norms, various safety features which people look in car are ABS, airbags. vii.Styling: To certain buyers, functionality was not everything, looks were also important. They wanted styling, and contemporary looks. d.User Status: The kind of buyer can be classified into non-buyer, first time buyers, and repeat buyers. The major of the buyers in the small car are a first time buyer, thats why this market is often referred as entry level car market. While going for car replacement, 50 percent of small car owners in India are again going for small cars and are reluctant to experiment with luxury cars.

e.Usage Rate: On the basis of the frequency of travel, people decide on the car to buy. In case a person
needs a family car only for family outing, they may look for a one time investment in a spacious car. On the other hand, if a person has huge amount of daily travel, he would prefer a good mileage car with less operational cost as well.

6.Psychographic Segmentation a.Social Class Social class plays a major role in segmentation for the automobile industry. With more
than 40% of the population of Indian lying in the middle class bracket, it becomes all the more important segment for the marketers to consider. Working class and upper lowers constitute the other prime target in the small car manufacturers.

b.Life-style life style is an important psychographic segmentation composed of a combination of factors

such as activities, interest and opinions. Ex: As part of its rebranding exercise, Fiat India is rolling out a number of products to cater to the lifestyle segment in the auto market.(economic times) c.Personality The customers are further segmented on their personality traits like sports oriented person, easy going. People are also segmented on their value system.

Segment Targeting
Single Segment concentration: In this type of segmentation

targeting, the company identifies a specific segment and fully concentrate its marketing energies to reap the maximum from the segment. A typical example in the Indian small car market is - Reva, an electric car. The car manufacturers have identified electric car user target segment and works on updating the same model with the market demand. Petrol Cars Electric Cars Diesel /CNG

/ LPG Maruti Reva Hyundai Selective Specialization: With the growing market and tougher competition in the small car industry, there is a need for the marketers to cater to the needs to different market segments. Here the marketer approaches more than 1 market segment, and designs its strategies accordingly. For example, Maruti which primarily targeted the middle men through Maruti 800 and Maruti Alto have now moved to new segment which comprises of youth and the member of the upper middle class by launching premium range of hatchbacks like Swift and Ritz. Dual Fuel Price sensitivity

Style WagonR Alto Swift Deep Segmentation: The purpose of deep segmentation is to create a deep differentiation among the products in the market. There are distinct group of car buyers with widely varying and clearly distinguishable needs. Hence marketers to target these kinds of buyers created sub-segments. They enlarged the number of segments in three ways:

They discovered new segments: Whenever marketers discovered a new segment and decided to incorporate it into their target markets, they had to necessarily bring in a new offer. Ex: When they hit upon the lifestyle segment, they had to, for those specific buyers, make available lifestyle oriented vehicles.

They propped up sub-segments within a given segment: There were sub segments that preferred different versions of the same vehicle. The difference between the two versions was substantial. Also almost all the players had brought in many versions/models in each of their offers.

They located very small niches with special requirements and served them-even though they were not sizeable. Downside of Deep segmentation: 1) Cannibalisation among ones own offers 2)Price slots in a narrow range blur distinction between segments/offers 3)Lowering of EMI accentuates the blurring. How Maruti have created deep segmentation within its small car offering The above chart shows how different products in the same segment/sub segment have been offered by the same company targeting different needs of the buyers. For ex: Maruti offers a car, Alto which low on price, maintenance cost, style but is high on fuel efficiency. When you compare this with Maruti swift, it is higher in price (in the small car), technology, style, space and comfort, but lower in fuel economy. Maruti has a gamut of cars in the small car market, as it has off late focused on creating new sub-segment or creates deep segmentation within a segment.

Segment invasion plan Maruti Udyog limited

Dark colour indicates competition existed at the time when Maruti targeted the segment

1. M-800 had dominated the Indian car market since it was launched in 1984. 2.Maruti introduced Maruti Zen into the market (in 1993) which catered as an entry level car for the people who can afford to spend more (as compared to M-800), with better features available. Maruti enjoyed being the only small car manufacturer till year 1996, when Hyundai launched Santro. 3.In the mean while Tata also launched Indica, and there was a gradual decrease in sales of M800. The introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over a decade. Hence Maruti launched Alto in the year 2000, trying to recover the lost market. Alto was once again targeting the entry level low cost

segment, but it gave features of a good car. Within 18 months of the launch, the Maruti was able to regain its market share and was once again in a position to hold entry level A-segment in its pocket.

4.Watching the dominance of Maruti in the A-segment, competitors focused on other segments, Maruti also
followed and launched its first Duo car, Wagon R duo in the year 2004. This car could be run on LPG along with petrol. 5.In an effort to move beyond the value for money or the basic utilitarian function of a car, Maruti launched Swift in the year in 2004, to target the high end customers, who are willing to pay more for a better styled, safe, sporty car.

Suzuki

buyer looking for the best affordable car in the market

good fuel economy. Good in price as well as quality

with access to the largest service network and commanding the highest resale value selling car. Your Sachha Hamsafar. Alto. Lets go. Nano, Tata

A middle class family that needs a car

but cannot afford one Affordable price, very high fuel efficiency

An engineering marvel in terms of cost , fuel and space efficiency The Peoples Car Positioning Hyundai Santro Case The table below represents the changes in the positioning strategy of Santro car by Hyundai Motors. It shows that a company has repositioned its product about 5 times in past ten years. The main factors were either competitors activities or changes in the mindset of consumers. Each time the company has repositioned itself, they have changed their Target customers and has done a deeper penetration in segmenting its market. Year Positioning Strategy Forces Target Consumers 1998 Family Car A car in competition with the best selling Maruti 800 and Zen. A 35-45 year family person 2003 A smart car for young people

The average age of a car owner had declined from around 35-40 three years ago, at that time, to 25-30, primarily because of changing lifestyles, cheap and easily available finance, etc

Age group of 25-30 years and First time buyers. 2004

Focused on pride that consumers will derive on buying the car. The tagline was Santro wale hain Changes in strategy and positioning by rival competitors like Maruti and Fiat. Anyone for

whom buying a car was a status symbol 2005-06 Changed the tagline to First Car, First Choice

Income of middle class during that period as economy was growing rapidly and they focused on new buyers. First Time Buyers 2008 Environment friendly car Santro Eco Idea of Going Green and saving environment was spreading and at the same time demand for a cheaper fuel was at maximum.

Environment Conscious and people looking for cheaper fuel Positioning of Various Small Car players based on POD (Point of Difference) & POP (Point of Parity) The figure below shows that majority of the cars fall in all the POP, as its the important characteristic of that segment. In case of small cars, low price, fuel efficiency, low maintenance cost and space. Whereas companies do target special buyers by offering innovation like new style, features, or may be the car itself is environment friendly, it is considered as a POD for that car. POD acts as a stimulating factor for a buyer to get attracted toward a car, whereas absence of POP will make the buyer uninterested in that car.

Perceptual Map Maruti Udyog Limited The above map shows the perceptions of the customers or potential customers. The map shows the change in the perception of the various models of the cars based on the price and benefits perceived by the consumer.

The observation from the map shows that, most of the cars which have low cost are being perceived to have lower benefits as well, exception being Santro Xing, and Zen Estilo which are believed to give more benefits compared to the cost incurred in buying those cars. Same thing also applies to cars which are perceived to be higher on the cost side are having higher benefits, exception being Hyundai Getz ,which despite being high on cost , still is perceived to have lower benefits. Positioning Strategy of MUL : The line drawing from Maruti 800 to Maruti Swift shows that Maruti has positioned its products across all range from low cost-low benefit perception to high cost-high benefit perception. This shows the change in the positioning strategy of Maruti, where it has moved away from the only low cost low benefit (Maruti 800) model to other models as well.
PO PO