Research paper Impact Of Brand Knowledge On Consumers Perception Of Product Attributes And Brand Loyalty: An Application in the Auto Industry A Project Presented to University Business School, Punjab university, Changing. In partial fulfillment Of the requirements for the Master in Business Administration On April 4, 2012 Submitted By- S Toasting Oakum MBA 2010-2012 Acknowledgement First of all, am very lucky to have Dry.
Purer Kansas as my project guide, and am very thankful to her for providing me an opportunity to work on this project and for her constant support and encouragement without which this reject would never have seen the light of completion. My special thanks to Dry. Unapt Baa and Dry. Mean Sahara who has helped me to understand and take forward the project in the way it should be through their continuous support and constructive feedback.
I am also grateful to all the people who directly or indirectly supported me during the course of the project and provided value addition to it through their constructive feedback. They all were a source of inspiration and have continuously motivated me to put my best efforts in the project. Last but not the least my heartfelt thanks to my leagues who have been the guiding light all through. MBA-2012 LESS, Changing CERTIFICATE This is to certify that Mr..
Currently, there are approximately 13 manufacturers of passenger cars and utility vehicle, nine manufacturers of commercial icicles, 16 manufacturers of two-wheelers and three-wheelers and 14 manufacturers of tractors (Reviving up-Indian Automotive Industry, 2009). 1. 1. 1 Why Automobile Industry The automobile industry in the country is one of the key sectors of the economy in terms of the employment opportunities that it offers. The industry directly employs close to around 0. 2 million people and indirectly employs around 10 million people.
The prospects Of the industry also have a bearing on the auto-component industry which is also a major sector in the Indian economy directly employing 0. Million people. All is not well with the automobile industry the world over currently with the slowdown that has gripped most of the major economies of the world. The gap between the manufacturing capacity volume and the assembly volume is growing by the day and has worried the manufacturers. This state of affairs has triggered a lot of cutthroat competition and consolidation in the industry. Cost reduction initiatives have come to be the in thing in the global industry today.
Towards this direction, many automobile factories are being shut downed. The Indian automobile industry is a stark contrast to the global industry due to many of he characteristics, which are peculiar to India. The Indian automobile industry is very small in comparison to the global industry. Except for two wheelers and tractors segment, the Indian industry cannot boast of big volumes visit-;-visit global numbers. 1. 1. 2 Major manufacturers Table 1 shows the list Of major automotive manufacturer in various segments in India. Both domestic and foreign manufacturers have been mentioned.
The list has been prepared on the basis of market research done by Ernst & Young (report: Revving Up-Indian automotive industry, 2009) Table 1 Automotive Manufacturer source: Revving up-Indian Automotive industry, 2009) Passenger car Commercial vehicles Two wheelers Three wheelers Marti Suzuki Shoo Leland Hero-Honda Bassos Au Hounded India Data Motors Baja Pigging Chicer Motors TV’S Maidenhair Honda Swards Mazda Royal Enfield Maidenhair & Maidenhair Volvo Kinetic Motors General Motors Man ELM India Force Motors Hindustan Motors ETC Suzuki Toyota Shania Yamaha Volkswagen Mercedes Benz Ford Audio Soda Auto 1. . 3 Market size and structure The Indian Automotive Industry after De-licensing in July 1991 has grown at a spectacular rate on an average of 17% for last few years. The industry has attained a turnover of USED $35. Billion, (INNER 1 65,000 scores) and an investment of USED 10. 9 billion. The industry has provided direct and indirect employment to 13. 1 million people. Automobile industry is currently contributing about 5% of the total GAP of India. Indian’s current GAP is about $1. 4 trillion and is expected to grow to $3. 75 trillion by 2020.
The projected size in 2016 of the Indian automotive industry varies between $122 billion and 3159 billion including USED 35 billion in exports. This translates into a contribution of 10% to 1 1% towards Indian’s GAP by 2016, which is more than double the current contribution. Move. Economically. Com). According to the Indian Brand Equity Foundation (BEEF), India is envisaged to be the third largest automobile market in the world by 2030 only behind USA and China. According to the UNDID International yearbook of Industrial Statistics 2008, India ranks 12th among the world’s top 15 automotive nations. Http:// www. Beef. Org) Given below are some of the key features of the automotive industry in India that indicate the size of the Indian automotive industry (Source:Revving up-Indian automotive Industry, 2009): 1 . Fourth largest market for passenger cars in Asia. 2. Second largest manufacturer Of Two-wheelers worldwide. 3. Fifth largest manufacturer of commercial vehicles worldwide. 4. Alleges manufacturer of tractors and three-wheelers worldwide. 1. 1. 4 Growth pattern The automotive industry is growing in clusters.
There are four major clusters in the automotive industry in India as depicted in Figure 1. They are in and around New Delhi, Surgeon and Amnesia in North India; Pun, Nanas, Hallo and Arranged in West India; Achaean, Bangor and Hussar in south India and Jackhammers and Kola in East India. Figure 1: Manufacturing Location source: Rural sandal (2008) . 1. 5 Passenger Car Segment Previous years have been exceptionally good for the car industry wherein sales grew at a CARR of 1 1 domestically during the period IFFY-09, while exports grew at a CARR of 21% during the same period.
For years, India has primarily been a small-car market, mainly due to the high demand for a cost- effective mode of transportation. However, there has been an upward movement by the consumers, driven by the increased personal disposable incomes, changing consumer preferences and desire to upgrade. While the nominal prices of the passenger vehicle have remained same or declined in he last few years, there has been an increase in the per capita income in India signaling increase in the vehicle affordability.
The launch of the Data Anna (a IIS$2,250 car) revolutionized the industry not just in India but internationally, by creating a new LLC segment. Looking at the growth opportunity this segment offers, a number of foreign players are considering developing their offerings in this segment. The used car segment market is estimated to be almost equal to the new car market. With a car population of 11 million cars, only 10% of this total market is organized. The used car not only facilitates new cars sales but also adds to the bottoming of the dealerships.
Marti Suzuki has been the first mover in this segment through its Triumvirate network, but lately other Moms have also made their into this segment (Source: Rewiring up-Indian automobile industry, 2009). EXPORTS Driven by Indian’s low cost base and growing market, global players are setting up their manufacturing facilities in the country to cater to domestic demand and also tap export markets. During IFFY, exports accounted for 17. 8% of the total passenger vehicles sold, compared to 9. 3% in IFFY, with small cars imprisoning around 90% of total passenger vehicle exports in IFFY.
Hounded is the largest exporter with an export volume of 253,345 units for IFFY, compared to 144,439 in IFFY. Major export destinations for passenger vehicles, which accounted for more than 50% of Indian’s exports. Included Algeria, Italy, Mexico, South Africa and Sir Lankan (Revving up-Indian automobile industry) 1. 1. 6 Competition Competition in this industry is high. Competition in this industry is increasing. Automotive industry is a volume-driven industry, and certain critical mass is a pre-requisite for attracting the much-needed investment in research and placement and new product design and development.
Research and development investment is needed for innovations which is the lifeline for achieving and retaining competitiveness in the industry’. This competitiveness in turn depends on the capacity and the speed of the industry to innovate and upgrade. The most important indices of competitiveness are productivity of both labor and capital. The concept of attaining competitiveness on the basis of low cost and abundant labor, favorable exchange rates, low interest rates and confessional duty structure is becoming inadequate and therefore, not sustainable.
A greater emphasis is required on the development of the factors like innovation which can ensure competitiveness on a long-term basis. India, with a rapidly growing middle class (450 million in 2007 as per NCAR Report), market oriented stable economy, availability of trained manpower at competitive cost, fairly well developed credit and financing facilities and local availability of almost all the raw materials at a competitive cost, has emerged as one of the favorite investment destinations for the automotive manufacturers.
These advantages need to be leveraged in a manner to attain the twin objective Of ensuring availability Of est. quality product at lower cost to the consumers on the one hand and developing and assimilating the latest technology in the industry on the other hand. As per Automotive Mission Plan 2006-?2016 (2008), the Indian Government recon sees its role as a catalyst and facilitator to encourage the companies to move to higher level of competitive performance. The Indian Government wants to create a policy environment to help companies gain competitive advantage.
The government aims that with its policies its encourage growth, promote domestic competition and stimulate innovation. 1. 1. 7 Challenges in the Indian automobile industry Costs, infrastructure and human resources development are the underlying concern in the automotive industry and manufacturers are being challenged on these counts. Labor cost are rising and economies of infrastructure improvements are not being realized efficiently. Companies are searching for technological advancements that can help contain costs of production and help in using resources efficiently to increase overall productivity. 1. 2 Brand WHAT IS BRAND KNOWLEDGE?
In order to answer this, we first need to define what a brand is. This apparently innocent question has a variety of answers, depending on what our perspective is. Our preference is to take the familiar view of a brand as part of our lives, where its personality represents a promise and a set of values that are supported by benefits, features and functions that deliver that promise. Brands like Located, Kellogg, Coca-Cola, Pepsi, Holiday Inn, Virgin, BMW and Tests all evoke clear meanings, images and associations, each with an identity that separates it from its direct competition and make it more or less attractive to the potential user.
Brands have relationships with their users, often throughout the lives of the individuals and their families. The obvious value of brands is their ability to translate reputation and loyalty among their users into long-lived and reliable profit streams. Thus, the importance of these brands and the power of their equity make it vital to understand how they work, what makes them tick, and what you can and cannot do with them.
As Geoffrey Randall puts it: “Brands are so fundamental to the survival or success of many firms that we need to understand them in all their subtleties and complexities so that we can manage them correctly. ” Our experience of running brands, both big and small, shows the enormous value of deep, insightful brand knowledge. This is founded on a continuous dialogue with users, leading to real understanding of the product or service, and a refusal to accept received wisdom as state-of- the-art knowledge.
Even in the apparently mundane categories in which brands like Andrea and Domestic compete, deep brand knowledge and understanding is critical to their continued market leadership. In fact, the more mundane the category, arguably the more dependent the brand is on this. Our view relates not only to the explicit knowledge that arises from data interpretation, internal systems and processes, but more especially to the cacti knowledge about a brand that is tucked away and usually not shared, because it is so hard to communicate.
Knowledge, then, is the essence of what a brand represents, how it can achieve competitive advantage and ultimately significant value to a business. Brands are, quintessentially, knowledge. 1. 2. 1 Importance of Brand Knowledge Brand equity has become a hot topic for chief executives, accountants and academics as it is tipped to join other critical measures of long-term business performance. At the same time, the ‘knowledge economy’ is becoming an accepted framework for management thinking, planning and organization.
It is perhaps surprising, therefore, that the designated marketing function in so many companies has done so little to advance the management of one of their most value-adding activities – brand knowledge Indeed, it is nearly 40 years since Theodore Levity pointed out the unique perspective of marketing: “The difference between marketing and selling is more than semantic. Selling focuses on the needs of the seller, marketing on the needs of the buyer.
Selling is preoccupied with the seller’s need to convert the product into cash, marketing with the idea of satisfying the needs of the customer by means of he product and the whole cluster of things associated with creating, delivering, and finally consuming it. ” During those four decades, marketing departments have grown as substantially as their budgets, huge quantities of data swamp the brand teams and yet the evidence suggests they have not strengthened their grip on knowing and understanding their users better. Over the same period the reputation of the marketing function has declined in many companies.
This paper proposes a manifesto for brand marketing that re-focuses its activities and challenges the roles, structures and behavior of its management. Above all, it provides a new framework for developing, exploiting and managing brand knowledge. 1. 2. 2 Importance of consumer in Brand Equity Bliss and Wildfire (2005) said that there are three steps in brand building, “identify a point of view’, “develop a pitch”, and “identify your target platform” . According to Bliss and Wildfire, brand building seems to be based on the identification and analysis of consumers; this, analysis of consumers should be done on the flirts stage.
A car has many attributes and these attributes can contribute to building brand equity and their contributions can be differentiated by consumers’ knowledge. This study suggests better way to interact with and attract consumers to the product brand with knowledge of delicate choice among representative car attributes and their contribution towards brand equity. 1. 3 Consumer Perception perception In general psychological terms, perception is our ability to make some kind of sense Of reality from the external sensory stimuli to which we are exposed.
Several factors can influence our perception, causing it to change in certain ways. For example, repeated exposure to one kind of stimuli can either make us oversensitive or desensitizing to it. Additionally, the amount of attention we Ochs on something can cause a change in our perception of it. Branding A brand, or a brand name, is the attempt to impose some kind of identifying feature on a product or service so that it is easily recognized by the general public. A brand is oftentimes associated with an image, a set of expectations or recognizable logo.
The goal of a brand is to set a product or service apart from others of its kind, and influence the consumers to choose the product over similar products simply because of its associations. Positioning, Repositioning or Depositing Positioning is the process whereby marketers attempt to build a brand. Marketers actively try to create an image which is both recognizable and appeals to a certain group of people or target market. Repositioning is the process of altering this image, usually in order to influence a larger target market and thereby influence the behavior of a greater number of consumers.
Depositing is the practice of trying to devalue alternative, competing brands in the perceptions of a shared target market. Value and Quality Value refers to the perceptions a consumer has of a product’s benefits when weighed against its cost. Value can be measured both qualitatively-?the motional or psychological pleasure a consumer derives from a product or service–and quantitatively, in terms of the actual financial gain it wins them. Quality can be related to value, and may be taken into account when measuring the value of a product or service.
More formally, it refers to the way in which a product or service relates to its competitors, or else conforms to a set of measurable standards. Buyer’s remorse Buyers remorse is a strong feeling of regret which occurs after a purchase has been made. It is a specific case of cognitive dissonance, or the psychological state of worry or unease which comes about when attempting o come to terms with conflicting ideas, perceptions or motives. Buyers remorse usually occurs after a consumer has made a purchase he or she has come to regret.