Professional Documents
Culture Documents
A PROJECT REPORT ON CUSTOMER RETENTION AND BRAND IDENTITY OF CARS AT HONDA SIEL CARS INDIA LTD Submitted in partial fulfilment for the award of degreee of BACHELORS OF BUSINESS ADMINISTRATION
CONTENTS
S.No Particulars Page no. 1. 1.1 1.2 1.3 1.4 2. Introduction of the company 1.1Introduction 1.2Background 1.3Objectives 1.4Executive summary Research Methodology 2.1 Methodology 2.2 scope and limitations 3. Analysis of the data 3.1 economic industry analysis 3.2 company analysis 3.3 project specific analysis 3.4 Theoretical framework 3.5 Data anaysis
4.
5.
Contribution/Outcome
6.
Annextures 6.1 Books 6.2 Research 6.3 Newspaper and reports 6.5 Webliography
Acknowledgement
At once end completion of this project report has served me with much knowledge and great experience and on the other end it has filled me with a deep sense of gratitude towards persons who made this project possible. It gives me immense pleasure to express my deep sense of gratitude to Asst. Professor Bachelor Of Business Administration, International College For Girls, Jaipur for her valuable guidance, motivation and providing such an opportunity. A deep sense of gratitude is owed to Swati Rathore who extended her supervision and assistance through the project duration. Needless to say their knowledge and experience has served as a continuous source of encouragement and motivation. Without their invaluable support and guidance the project would not have been possible. Last but not the least, I owe thanks to my parents and friends for their constant support and strongest motivation, which has been a source of inspiration at every step of my life. Without the cooperation of the above persons it was not possible to complete the project successfully.
PREFACE
Project work is something that every Management student should carry out seriously at any organization irrespective of their topic they choose to do. This is a part of complete management study and carrying out such a project work is required by the examination and evaluation of IIS University, International College for Girls necessary for the partial fulfillment of B.B.A. course.
As a part of BBA curriculum and in order to gain practical knowledge in the field of management, I was required to make a report on Customer retention & Brand identity of Honda seil cars The basic objective behind preparation of this project was to get knowledge about different tools of marketing especially marketing.
In this project report, I have included various concepts, effects and implications regarding various forms of customer intention towards cars at Honda seil car India ltd.
Creating this project report helped me to enhance my knowledge regarding the attitude of consumers towards customer retention & brand identity. Through this project I realized the importance of research, primary data and role of devotion towards the work.
CERTIFICATE
This is to certify that the project entitled Customer retention & brand identity of cars at Honda cars India ltd is a bona fide work carried out by Miss Akshita Darda, student of BBA III year of International College For Girls in the academic session 2013-14. To the best of my knowledge, this work has not been submitted for the award of any other diploma or degree. This is his original work which has not been submitted to any other institute/organization for any degree/diploma program The study was carried out under my supervision and guidance.
DECLARATION
I hereby declare that project report entitled Customerretention and brand identity of cars at Honda Seil cars India ltd, is a bonafide record of work done by me during the project work and that it has not previously formed the basis for the award to me for any degree/diploma, associate ship, fellowship or other similar title of any other institute/society.
Date
Akshita Darda
Chapter 1
Chapter -1
INTRODUCTION
1.1 BACKGROUND
Competition in Indian Automobile Industry is high and increasing. This competitiveness in turn depends on the capacity and the speed of the industry to innovate and upgrade. To survive and grow in this industry, Automobile companies need to find innovative and successful ways to retain the customers increase the sales/profits and increase the market share. Honda Siel, which has a market share of fewer than 2% despite being in the country for over 15 years, has been overtaken by rivals like Volkswagen who came in much later.
1.2 OBJECTIVE
The objective of the project is whether to initiate customer retention in Honda Cars India Ltd. by starting a loyalty card program, to what extent it is being implemented by other companies who are using it as their retention tool. Some companies which have loyalty card programs are Honda, Maruti Suzuki, and Ford etc. Other project objective is to find out the brand identity and personality of lower segment sedan cars. .It will help Honda understanding the chosen segment better and also to position their brand rightly in future and also the advertisement can be made accordingly by showing the brand personality. It will help Honda to know which segment is untapped. (according to Need Scope Model) Brand identity is more of a qualitative research which involves knowing the physique, personality, relationship, self-image, reflection and culture of four brands Toyota Etios, Honda Accent, Swift Dzire and Tata Manza (price range between 4.5 to 6.5 lakhs) (based on Kapferer model).
EXECUTIVE SUMMARY
Honda Siel Cars India Ltd. Is a leading manufacturer of passenger cars in India was established in December 1995 as a joint venture between Honda Motor Co. Ltd (Japan) and Siel Limited with a commitment to provide Hondas latest passenger car models and technologies, to the Indian customers. Honda was founded by Soichiro Honda. Honda was the seventh largest automobile manufacturer in the world behind Toyota, General Motors, Volkswagen AG, Honda Motor Group, Ford, and Nissan in 2010. Customer retention is one of the biggest challenges in the automobile sector and to tackle it HSCIL has been carrying out several CRM activities but looking at thecompetition we are still lagging behind in retaining our customers. Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers. Customer retention helps an organization grow bigger, earn huge profits, flourish, expand and capturing a greater market share than its competitors. Thus, the need crops up to reform the retention program and look into the pros and cons of developing a loyalty program for Honda.
Brand identity
A brand is a "Name, term, design, symbol, or any other feature that identifies one seller'sgood or service as distinct from those of other sellers." How you want the consumer toperceive your product or your brand. The outward expression of a brand including itsname, trademark, communications, and visual appearance is brand identity. Becausethe identity is assembled by the brand owner, it reflects how the owner wants theconsumer to perceive the brand and by extension the branded company, organization,product or service. This is in contrast to the brand image, which is a customer's mentalpicture of a brand. Companies try to bridge the gap between the brand image and the brand identity. By understanding the LC segment cars (BI), Honda can strategies while launching a new car in that segment and how to position it, how to make the advertisements so that it can send a clear brand identity picture to the customers.
Chapter - 2
2.1 METHODOLOGY
The project was started with an intensive secondary research which involved studying about the various loyalty programs offered in different industries like aviation, apparels and durables and to find out the reasons behind their success or failures. Then I studied about the automobile industry and what has been done by competitors in this regard and how they have fared. An appointment was taken from the marketing manager of the automobile company that has implemented the program (Maruti Suzuki &Hero Honda in this case) and their view point were taken into account about loyalty programs and the thought process behind designing and implementing such programs would be analyzed. A meeting was arranged with the back end company to know how the data is processed and the front end AutoCard executives to know how they are pitching it to the customers. From the discussion, parameters were assessed and a questionnaire was prepared for Maruti Suzuki owners. The main focus of this questionnaire was to understand the awareness of loyalty programs, expectations from such programs, how frequently they use and suggestions, if any. Also, the factors affecting buying behavior were analyzed and their relation with the loyalty card was established coding & analysiswas done with the help of MS-Excel & SPSS and on the basis of that analysisrecommendations were presented at Honda Siel Cars Ltd Secondary Sources Internet, books, articles Primary Sources 1. Associate Manager (Marketing), Hero Honda 2. Deputy Manager (Loyalty Department), Maruti Suzuki 3. AutoCard Executive 4. Maruti Suzuki Dealer 5. Customers Also study was done about the brand identity and brand personality and the use of it for marketing managers. Brand identity represents how the brand wants to be perceived, it leads brand image and is situated on the sender's side. The way a brand is perceived by its customers is the key to its success.
Brand Identity Prismis often used by marketers to gauge the identity for any brand.4
cars were taken for the study Toyota Etios, Tata Manza, Honda Accent, Swift Dzire. Secondary Research was done by studying in deep about the brand attributes and the physical attributes of these cars.
Primary research was done with the help of questionnaires and personal interviews of the customers (owners and non-owners both).Snowballing Technique (chain sampling, chainreferral sampling, referral sampling) was used for sampling. Also magazines were used to show different pictures of people in it and to link the driver of that car so that its easy for that person to link their imagination. (Collage making was also used in some interviews).People including dealers were interviewed for approximately 30 minutes asking questions and getting their perception about the four cars and brands overall. An excel sheet was made dividing all the words under 6 heads of Kapferer Model 1. Physique 2. Personality 3. Relationship 4. Culture 5. Self-image 6. Reflection
Common words said for a particular car were grouped together and analysis was doneusing the Need Scope Model, which helps seeing which area of LC segment is untapped.
Scope
The project focuses mainly on Indian automobile industry scenario where competition is very high, competitors include both Indian and Foreign automobile companies. In such a competition companies have to be very careful while taking up anything new be it customer retention program or new product development etc. The Project will help Honda in looking into the positive and negative points of starting a customer retention program by Loyalty Cards. This will help Honda implement a successful Program and to expand their customer base and market share in the industry. Also studying the LC segment players in the market will give an edge to Honda to launch, advertise, position their new car in the most appropriate way and also to cater to the needs of the untapped LC area by seeing the need scope model.
Chapter - 3
3.1ECONOMY-INDUSTRY ANALYSIS
History
The Automobile Industry finally came of age with Henry Ford in 1914 for the bulk production of cars. This lead to the development of the industry and it first began in the assembly lines of his car factory. The several methods adopted by Ford, made the new invention (that is, the car) popular amongst the rich as well as the masses. US dominated the automobile markets around the globe with no notable competitors. However, after the end of the Second World War in 1945, the Automobile Industry of other technologically advanced nations such as Japan and certain European nations gained momentum and within a very short period, beginning in the early 1980s, the U.SA automobile Industry was flooded with foreign automobile companies, especially those of Japan and Germany. The current trends of the Global Automobile Industry reveal that in the developed countries the Automobile Industries are stagnating as a result of the drooping car markets, whereas the Automobile Industry in the developing nations, such as, India and Brazil, have been consistently registering higher growth rates every passing year for their flourishing domestic automobile markets.
passenger cars, behind Japan, South Korea, and Thailand. In 2010, India reached as Asia's third largest exporter of passenger cars, behind Japan and South Korea beating Thailand. As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automobile vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020.By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. The Indian Automobile Industry manufactures over 11 million vehicles and exports about 1.5 million each year. The dominant products of the industry are two-wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three-wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has a turnover of more than USD $35 billion and provides direct and indirect employment to over 13 million people. The production of automobiles has greatly increased in the last decade. It passed the 1 million mark during 2003-2004 and has more than doubled since 1998.
As per the 2010-11 data released by the Society of Indian Automobile Manufacturers (SIAM), domestic vehicle market is dominated by two-wheelers segment with 76 per cent of the pie. Passenger vehicles, commercial vehicles and three-wheelers account for 16.25 per cent, 4.36 per cent and 3.39 per cent of the market, respectively. The majority of India's car manufacturing industry is based around three clusters in the south, west and north. The southern cluster near Chennai is the biggest with 40% of the revenue share. The western hub near Maharashtra is 33% of the market. The northern cluster is primarily Haryana with 32%.Chennai accounts for 60% of the country'sautomotive. Indian automobile sector has huge demands from its own country. This demand also attracts the giant automobile suppliers throughout the world to come and invest in the Indian automotive industry. The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea and Thailand, in 2009, India emerged as the fourth largest exporter of automobiles. Several Indian automobile manufacturers have spread their operations globally as well, asking for more investments in the Indian automobile sector by the MNCs.
Automobile Production
Type Vehicle
of
20052006
20062007
2007-2008
2008-2009
2009-2010
1,209,87 6 353,703
1,309,300
1,545,223
1,777,583
1,838,697
391,083
519,982
549,006
417,126
374,445
434,423
556,126
500,660
501,030
Two Wheelers
6,529,82 9
7,608,697
8,466,666
8,026,681
8,418,626
Total.
8,467,85 3
9,743,503
11,087,997
10,853,93 0
11,175,47 9
Automobile sales
Type Vehicle Passenger Vehicles Commercial 318,430 Vehicles Three Wheelers Two Wheelers Total 7,897,629 8,906,428 10,123,988 9,654,435 9,723,391 6,209,765 7,052,391 7,872,334 7,249,278 7,437,670 307,862 359,920 403,910 364,781 349,719 351,041 467,765 490,494 384,122 of 20042005 1,061,572 20052006 1,143,076 1,379,979 2006-2007 20072008 1,549,882 20082009 1,551,880
S
STRENGHTS WEAKNESSES 1. Infrastructural setbacks 1.Domestic Market is large 2.Government provides monetary assistance for manufacturing units 3.Reduced Labour cost 2.Low productivity 3.Too many taxes levied by government increase the cost of production 4.Low investments in Research and Development
W O T A N A L
THREATS 1.Increasing rates of interest 2.Too much competition 3.Rising cost of raw materials
OPPORTUNITIES 1.Reduction in Excise duty 2.Rural demand is rising 3.Income level is at a constant increase
Y S I S
Demand drivers
Determinants of demand for this industry include vehicle prices and exchange rates, preferences, the running cost of a vehicle, income, interest rates, scrapping rates, and product innovation.
1. Exchange Rate: Movement in the value of Rupee determines the attractiveness of Indian products overseas and the price of import for domestic consumption.
2. Affordability: Movement in income determine the affordability of new motor vehicles. Allowing unrestricted Foreign Direct Investment (FDI) led to increase in competition in the domestic market hence, making better vehicles available at affordable prices.
3. Product Innovationis an important determinant as it allows better models to be available each year and also encourages manufacturing of environmental friendly cars. 4. Demographics: It is evident that high population of India has been one of the major reasons for large size of automobile industry in India. Factors that may be augment demand include rising population and an increasing proportion of young persons in the population that will be more inclined to use and replace cars. Alsoincrease in people with lesser dependency on traditional single family incomestructure is likely to add value to vehicle demand. 5. Infrastructure: Longer-term determinants of demand include development in Indian's infrastructure. India's banking giant State Bank of India and Australia's Macquarie Group has launched an infrastructure fund to rise up to USD 3 billion for infrastructure improvements. India needs about $500 billion to repair its been made with an aim to generate long-term cash flow from automobile, power, and telecom industries. (Source: Silicon India) 6. Price of Petrol: Movement in oil prices also have an impact on demand for large cars in India. During periods of high fuel cost as experienced in 2007 and the first half of 2008, demand for large cars declined in favour of smaller, more fuelefficient vehicles. The
changing patterns in customer preferences for smaller, more fuel-efficient vehicles led to the launch of Tata Motor's Nano one of theworld's smallest and cheapest cars.
five years, the price of petrol has been influenced thebuying decision of motorists, who are switching more to fuel efficient options These include cars that run on liquefied petroleum gas (LPG), diesel and smallcars that achieve better mileage.
2. Distribution Network
A more practical critical success factor for any automotive company is a strong network for distribution. Because cars and trucks are not sold directly to customers, auto manufacturers rely on franchised dealerships to provide local showrooms. These dealers must be knowledgeable and reputable to sell cars, which is essential for the automaker. Like auto corporations, dealers are reliant on a positive image that may be influenced by, or influence in turn, the image of the automaker.
3. Cash Flow
A healthy cash flow is another practical critical success factor. When an automaker provides incentives or lowers prices, it almost always sells more cars, but the profit margin may not be a healthy one.
4. Compliance
Automakers must also ensure that the vehicles they sell are in compliance with various federal and local regulations. These include emissions standards, fuel efficiency and safety standards.
5. Flexibility
An elusive critical success factor for the automotive industry is the ability to be flexible.
American car buyers may change their buying habits quickly in response to factors like the state of the economy, the price of fuel and new automotive technologies. It is essential that automakers remain attentive to these trends and keep in place a system.
Tax).Subsequently, MODVAT scheme was restructured into CENVAT (Central Value Added Tax) scheme under the CENVAT Scheme, a of duty of excise as well as of service tax paid on any input received in the factory or any input service received by manufacturer of final product. Inputs include goods used in the Manufacture of capital goods which are further used in the factory of the manufacturer.
Customs Duty
Customs Duty (Import duty and Export tax) is a type of indirect tax levied on goods imported into India as well as on goods exported from India. It provides for levy and collection of duty on imports and exports, import/export procedures, prohibitions on importation and exportation of goods, penalties, offences, etc. Export duties are levied occasionally to mop up excess profitability in international prices of goods in respect ofwhich domestic prices may be low at the given time. But the sweep of import duties is quite wide
Service Tax
Service tax is a tax levied on services the rendered by a person and the responsibility of payment of the tax is cast on the service provider. It is an indirect tax as it can be recovered from the service receiver by the service provider in course of his business transactions.
Auto Financing
A personal loan to purchase an automobile, a loan that establishes consumer credit that is granted for personal use; usually unsecured and based on the borrower's integrity and ability to pay There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer An indirect auto loan is where a car dealership acts as an intermediary between financial organization and the customer. Interest rates on unsecured loans are nearly always higher than for secured loan. Most of the financial institutions provide Max funding: upto 80% of car price. Processing fees: upto 0.75% of loan.Prevailing interest rates in the market is 11.5 to 14.75 approx. (differs according to term of the loan) for a new car and 16.50% - 18.50% for used cars.
represented 77% of global production in 1997 but this had declined to around 50% by 2009 whilst production in China had risen from 3% of the total in 1997 to over 22% in 2009 It is a time of economic restructuring in the world's car industry and the implication for individual nations and regions is profound. In the rapidly expanding markets of Brazil, India and China, there is expansion of capacity with new plants being opened as local markets grow on the back of rising domestic incomes. The pattern in the traditional markets of the West is the reverse, with significant contraction and even plant closures by the traditional volume producers. The earthquake, tsunami and the nuclear crisis in Japan in March last year have thrown the global automotive industry out of gear. The auto parts supply chains have paralyzed, triggering production shutdowns, work shift reductions and cancellation of orders. Japan accounts for about 13% of the worldwide automobile production, with U.S. being its largest market. Production of about 40 auto-parts manufacturers in the country has been jeopardized due to plant outages and power shortages following the earthquake.
Since inception in 1983, Maruti Suzuki India has produced and sold over 10 million Vehicles in India and exported over 500,000 units to Europe and other countries. The Companys revenue for the fiscal 2010-2011 stood over Rs 375,224 million and Profits after Tax at over Rs. 22,886 million
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 USD $35.8 billion, (INR 165,000 crores) and an investment of USD 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 GDP of India. India's current GDP is about $1.4 trillion and is expected to grow to $3.75 trillion by 2020. The projected size in 2016 of the Indian
Regulatory Issues
SIAM stands for Society of Indian automobiles manufacturers
In order to have a planned approach to introduction of advanced safety features, SIAM drew up a Road Map for Automobile Safety Standards. The Roadmap was prepared by the CMVR, Safety & Regulations Committee.
The current traffic conditions, driving habits, traffic density and road user behavior necessitate that maximum safety be built into the vehicles. Progressive tightening of safety standards taking into account unique India requirements has been addressed by the Road Map with a view to reducing the impact of accidents and thereby improving safety of the vehicle occupants and vulnerable road users.
Economic Affairs
In the first section we have given the Auto Policies of Government of India to facilitate sustainable development of Indian Automobile industry. In the second section we have given the current rates of major duties and taxes applicable to vehicles in India. Excise Duty is essentially a manufacturing tax imposed on all vehicles manufactured in India. The same rate is applicable to imported vehicles in the form of Counter Vailing Duty (CVD). Custom Duty is essentially an import duty applicable on all imports.
Porters Model
The automobile manufacturing sector is characterised by a high cyclical growth patterns, high fixed cost and break-even point levels, and an excessive gain access to technology of major operators, as the present incumbents include some of the largest multinationals that have considerable claims to new technology. The relative large size of domestic market, together with high competition, has already seen significant rationalisation of this industry.
Porters
five
forces
passenger cars in India, a SiddharthShriram Group company, with a commitment to providing Hondas latest passenger car models and technologies, to the Indian customers. It began operations in December 1995.
It operates production facilities at Greater Noida in Uttar Pradesh and at Bhiwadi inRajasthan. The company's total investment in its production facilities in India as of 2010 was over 16.2 billion HSCI's first manufacturing unit at Greater Noida commenced operations in 1997. Setup at an initial investment of over 4.5 billion, the plant is spread over 150 acres (0.61 km2). The initial capacity of the plant was 30,000 cars per annum, which was thereafter increased to 50,000 cars on a two-shift basis. The capacity has further been enhanced to 100,000 units annually as of 2008. This expansion led to an increase in the covered area in the plant from 107,000 m to over 130,000 m The company invested 7.8 billion in Bhiwadi for its second production plant with anannual production capacity of 50,000 units. It operates under the ISO 9001 standard for quality management and ISO 14001 for environment management. Honda Siel Cars India Ltd. launched its much-awaited small car, the Honda
Brio(pronounced as Br-ee-o and means energetic and cheerful in Italian), in the Indian market. The car, offered as the perfect package for a new era, embodies the best of Hondas technologies to deliver fun and agile driving, fuel-efficiency, spaciousness & safety. The companys product range includes Honda Brio, Honda Jazz, Honda City, Honda Civic and Honda Accord which are produced at the Greater Noida facility with an indigenization level of 80%, 77%, 76%, 74% and 28% respectively. The CR-V is imported from Japan as Completely Built Units. Hondas models are strongly associated with advanced design and technology, apart from its established qualities of durability, reliability andfuel-efficiency.
Present CEO - Mr. Hironori Kanayamais the new President and CEO of the company. Mr. Kanayama has replaced Mr. Takashi Nagai who has taken up the post of President and Representative Director for Honda Logistics Inc.( April1, 2012.)Mr. JnaneswarSen HSCI is the Senior Vice-President (Sales andMarketing)
Models
HSCI produces the following vehicles in India for local and export markets: 1. Honda City (Launched 1998) 2. Honda Accord (Launched 2001) 3. Honda Civic (Launched 2006) 4. Honda Jazz (Launched 2009) 5. Honda Brio (Launched 2011) It also imports the Honda CR-V for sale in the local market.
Sales
HSCI has 127 dealerships across 79 cities in 20 states and 3 Union Territories of India. It sold 55,884 units during the period April '09 - February '10 as against 45,052 units during the same period a year ago, recording an increase of over 24%. Honda jazz is known as Honda fit in other countries.
Awards 2006
Best Indian Company (unlisted) by Business Standard Group Manufacturer of the Year by NDTV Profit-Car India Manufacturer of the Year by CNBC-TV 18 Auto car India No 1 Mid-Size Car (Honda City); No 1 Entry Luxury Car (Honda Accord) and No 1 Premium SUV (Honda CR-V) by TNS Best Mid-size Car in Initial Quality (Honda City) and Most Appealing Mid-size car (Honda City) by JD Power CNBC Autocar CAR of the year 2004 - Honda City ICICI Overdrive SUV of the Year 2004 - Honda CR-V ICICI Overdrive Car of the Year 2004 - Honda City Business Standard Motoring Car of the Year 2004 - Honda City
Business lifecycle
The life cycle stage is growth Life Cycle ReasonsThe market for manufacturing The
products manufactured by this industry are profitable. Companies have been consistently opening new plants and employing over the past five years. Japanese and European
manufacturers of motor vehicles have entered the market. Industry value added has been rising, along with the rise in GDP. LifeCycle Analysis.
General improvement in availability of trained manpower and good infrastructure is required for sustainable growth of the industry.
HONDA lies in the early stage where sales continue to increase and profits are maximum. So HONDA tries its level best to maintain this present situation.
It is common view that consumes view a brand name as an important part of the product and no doubt branding ads to the value of the product.
Honda recognizes Life Cycle Assessment (LCA) as a critical tool for understanding the impact of its products and operations on the environment. Using the LCA framework, the company is working to minimize that impact in virtually every aspect of its business.
The Honda brand is built around several key pillars, two of which are fuel economy and environmental awareness. Honda says that environmental technology has and will continue to be at top, Honda was actually first to the market with a hybrid, the Honda Insight. Now they are introducing the electric Honda Fit EV.
While Honda has never been flashy, always conservative; you know what you are going to get from a Honda.
Brand decision of HONDA is based on the fact that it is most popular perceived by the customer as luxurious vehicle. HONDA brand name has strong consumer loyalty but only in a specific target segment of the whole society.
HONDA has struggled a lot to keep its brand being remain in minds of consumers. Under this regard the main strategy is to add the valuable features to vehicles to keep the brand loyalty. Every brand of HONDA has its own branding strategy
Honda Cars are a premium brand. It provides versatility, style and sporty drive etc. in its vehicles. Honda highlights new-age body line, quiet-smoother handling, cutting edge i-VTEC engine technology, plush interiors and high-end security system. Thus Honda brand name also adds as a USP to its products, coz brand name adds the factor of trust its customers have in Honda cars. Honda believes fuel efficiency as a brand attribute.
Honda spent billions (along with their dealer network) to create brand consistent facilities, showrooms, and shops. These investments are required to show multiplebrand car shoppers the superior experience that they will receive from Honda and Honda Dealers. True Cars intent of excluding the dealerships showroom, and other brand investments during the pre-sale experience, will only lead to brand defection for Honda.
In order for brand loyalty to occur, Honda drivers must be comfortable with the entire customer experience. This includes recognizing the value they receive on their
new Honda from the same local dealership that will service it. If customers are not purchasing from their local Honda dealerships but instead the dealership with the cheapest True Car price (that could be a distance away), the entire dealer/market model is severely weakened, leading to brand defection for Honda .The Top 20 World Brands from "The Interbrand/Business Week Rankings For2009"
Brand Name
Coca-Cola IBM Microsoft GE Nokia McDonald's Google Toyota Intel Disney Hewlett-Packard Mercedes-Benz Gillette Cisco BMW Louis Vuitton Marlboro Honda Samsung Apple
Honda Earns 2012 Kelley Blue Book Brand Image Awards for Best Value Brand and Most Trusted Brand
Promotional Practices
Honda has long been committed to spreading mobility throughout society while promoting traffic safety for everyone. On a global basis, Honda is directly involved in real-life safety training that expands safe driving practices one person at a time. HONDA promotes its product through Adds, Billboards, and TV. Sponsoring sports event, Customer service, Environment friendly automobiles.
CALL CENTER SERVICE: HSCIL has its own call center service cell. Any information on nearest authorised dealers, service centres, on call problems etc. are provided by the call center officials. Personal selling Sales Promotion Public Relations Direct Mail Trade Fairs and Exhibitions Advertisement &Sponsorship
Considering the advertisement, Honda has been very careful and precise in their advertisements. Honda always projected their image as most reliable brand, advanced technology, eco-friendly cars. Even considering the television commercials, Honda promoted their hybrid car that runs without gasoline and emits water as the bye product rather than advertising the specific brands existing in the market. The ad was more concentrated to the companys technological advancements and eco-friendly image which differentiated. Honda promoted their products in majority through print media compared to others. Majority advertisements come in magazines and national newspapers through that they could educate the target customers in a better way. The customers were always aware of the company policies of providing latest technology and upgrading whenever necessary and also remodelling the entire model after certain period of time. Considering the pilot model in India, Honda City the company had remodelled it thrice till the inception. Honda always tried to create a surprise element during the launch of every model.
The company plans to stage road shows, to display vehicles in the pavilions duringvarious college festivals and exhibition.
If we consider the television commercial of the new Honda City shows the car driving through a picture-perfect landscape. The driver drives through a waterfall only to realize he was seeing his own reflection. The car zooms past the reflection and stops. When the driver steps out he realizes that he was only imagining the landscape projecting thesmoothness of the car.
12 January 2009 Honda Motors emerged a winner at the second edition of the India Best Brand Survey Awards, bagging eight prizes three in the four wheeler segment including Very Reliable Brand, Good Advertising and
Environment Friendly
Customer Relationship
Increasingly, what were considered 'value-added services' a few years ago, are fast becoming hygiene services something that we are expected to provide as routine. Loaner cars and cashless transactions for insurance-based repairs are just some of the demands that today's savvy customers expect as the norm.
Customer handling, throughout the entire ownership experience, from the first test drive, through the regular service check-ups, and finally to the trade-in process on the next vehicle purchase, is extremely critical to upholding our brand image. As we all know, it takes years of continuous and consistent focus on customer satisfaction to build our reputations and one misstep destroys its dealers have the extremely important responsibility to uphold the brand image of theHonda. As manufacturers, the only touch points they have with the customers are through them- be it on the sales floor or in your service workshops.
the quality of the relationships that we maintain, between manufacturers and dealers, which decides how we survive in this extremely competitive environment. Here again, it takes honest and open communication to build the mutual trust that is necessary for such a critical association, and it takes only one misplaced action or word to destroy a relationship that may have taken years to establish. Customers can visit Web Sites without sharing personally identifiable information. They can visit Web sites without telling us who they are and without revealing any personally identifiable information to learn about Honda, our product and service information, special offers and promotions. Honda Revs Up Relationships With Dealers, Customers. Consumers get price quotes and pre-approved financing online; dealers get lead. Honda says Cambridge Technology and his IT department worked to integrate the online site with Honda's customer-relationship management database to better track all the leads generated at the site. The automaker also integrated the site with its financing department's credit-assessing system, letting online consumers receive information on whether they are pre-approved for financing within a minute or so. Under Honda's plan, the only steps the customer has to complete at the dealer are signing the final paperwork--and handing over the check. Honda dealership personnel are trained professionals. They are able to answer all your questions. If you encounter a problem that your dealership does not solve to your satisfaction, please discuss it with the dealerships management. The Service Manager or General Manager can help. Almost all problems are solved in this way. When the customers call or write to Honda they have to give following info. Vehicle Identification Number Name and address of the dealer who services your car Date of purchase Mileage on your car Your name, address, and telephone number A detailed description of the problem Name of the dealer who sold the car to you If you are dissatisfied with the decision made by the dealerships management, contact your Honda Customer Relations Office
Competitor analysis
Main competitors are Toyota and Maruti. Every car of Honda has a different completion and different competitors in different segments of cars.
The competitors for Brio- are Maruti Ritz, Toyota EtiosLiva, and Honda i10. The Honda City has Volkswagen Vento, Ford Fiesta, Honda Verna, Maruti SX4, FiatLinea and Chevrolet Aveo The main challenger is the Volkswagen Vento, which ever since its launch in the later half of last year, has slowly started making inroads. The Volkswagen brand which carries with it as much credibility if not more as that of a Honda, novelty, great qualityand stylish looks and most importantly terrific diesel engine is helping Ventos cause. Civic is well behind its competitors such as Toyota Altis and Chevrolet Cruze. In the premium segment category, Honda Accord has lost pole position to Skoda Auto India
Pvt. Ltd s Superb. In the SUV category, Hondas CR-V has competition with Mitsubishi Outlander, Honda Santa Fe, Grand Vitara, Honda Tucson and FordEndeavour.
Market Dynamics
The pricing signals are created as a result of changing supply and demand levels in a given market. Market dynamics describes the dynamic, or changing, price signals that result from the continual changes in both supply and demand of any particular product or group of products. Market dynamics is a fundamental concept in supply, demand and pricing economic models. The Indian automobile industry is experiencing an exponential rise in demand, but its sustainability is an issue due to the dynamic nature of the market and environmental conditions As per the 2010-11 data released by the Society of Indian Automobile Manufacturers (SIAM), domestic vehicle market is dominated by two-wheelers segment with 76 per cent of the pie. Passenger vehicles, commercial vehicles and threewheelers account for 16.25 per cent, 4.36 per cent and 3.39 per cent of the market, respectively.
Demand factors
Financing options Advertisement & Marketing Price of the car Increase In Affordability Demographic Drivers Availability Of Easy Financing Options New Offerings Exports
Supply Factors
Presence Across Segments Efficient Operations Wide Dealer Network And Availability Of Finance Access To Latest Technologies Price Of The Car Factors Of Production Government Policies And Taxes
The demand for cars in the past was supply driven as demand did not match supply. This led to high premium and long waiting periods for the cars. But change in government policies coupled with aggressive capacity additions and upgradation of models by MUL in the early nineties led to increase in supply and subsequently reduced the waiting periods for economy cars. The automotive industry, increasingly characterized by global mergers and relocation of production centers to emerging developing economies, is in the grips of a global pricewar. The industry is subject to imperfect competition which has resulted in too much of everything too much capacity, too many competitors and too much redundancy and overlap. Honda Siel Cars India (HSCI) has announced a second price hike of Rs 8,000-Rs 10,000 on its flagship sedan car model Honda City with effect from April 1, 2012. The company has already increased prices across all car models in its portfolio with a hike of Rs 5,000- Rs 10,500 on the Honda City in response to the increment in the excise duty in theBudget 2012-13.
According to Mr. JnaneswarSen Honda Siel Cars India (HSCI) Senior Vice President (Sales and Marketing), the company is compelled to transfer the additional costs to the customers. The earlier hike was a partial cost being passed on to customers. With the implementation of the new hike, the company will pass on the total effect of the excise duty hike.
Business segmentation
Grouping customers according to homogeneous attributes. For example, an automobile manufacturer with a full line of vehicles uses segmentation by income level in planning the marketing of its products. Small, entry-level vehicles are marketed to individuals and families with modest incomes, while wealthy individuals are market targets for the firm's luxury vehicles. Segmentation allows a business to focus its marketing where it will be most productive
HONDA has segmented its market in a way that its ACCORD &CR-V is for elite class HONDA CIVIC for upper middle class .HONDA CITY, JAZZ & BRIO for middle class. In general always upper class groups, upper middle class, and middle class& have been very successful in maintaining its target market and providing with the products of their needs.
CAR MODELS
Honda Accord The large triangular headlamps make the front end look daunting but the heavy-looking behind is incongruous with the bold front. The Accord is a car that can achieve speeds close to 200kmph with ease
8 variants available
Honda Brio
Rs. 3, 95,000 - 5, 44,707 4 variants available The Brio is the new entry-level hatchback from Hondas stable which is placed a segment below the premium hatchback Jazz also gets the same 1.2-litre Jazz engine. The Brio has been designed smartly which doesnt just look funky but is also a practical Hatchback.
Honda City
7 variants available The Honda City which is produced in seven countries and enjoyed by customers in 39 Nations around the world have been given a new lease of life. the third-generation City is a hot favorite as the luxurious sedan offers a lot to its potential buyers - new engine, new design, more grandeur, increased cabin space, and of course, top-notch performance. Honda City has been regarded a prestigious brand in India since its launch in 1998. It maintains a significant market share in its class and the latest model has taken it popularity to a much higher level.
Honda Civic
5 variants available The cab-forward design has been carried on to the Civic too which partly helps it achieve an aerodynamic shape. The V-shaped hood and fenders merge perfectly while at the rear you get a good dose of style. The double-barreled tail pipe looks stunning and adds to the style quotient. Equating the dashboard with a cockpit will not be an exaggeration; such is its look. The 1.8-litre, 130bhp engine is rev-happy and comes equipped with the famed VTEC badge
Honda CR-V
Rs. 22, 51,554 - 25, 85,842 3 variants available The 2007 Honda CR-V has very bold looks and is the most compact crossover SUV available. It is very evident that Honda has attempted to make it more car-like and has succeeded. What this has done is made the new CRV sportier. The engine choices on offers are the 2.0l and 2.4l. The 2.4l version also comes with an automatic. . A fine cruiser for long drives wherein you can expect 12kpl and around 9kpl within city limits. The 2.0l version could give you a tad bit more on the mileage front
Honda Jazz
3 variants available
After achieving success on most of its models in India, Honda has launched its first ever hatchback called the Jazz for the Indian car market. The Jazz is a costliest premium hatchback available in the Indian market and is powered by a 1.2-litre petrol engine producing 90bhp.
Thus, the need crops up to reform the retention program and look into developing a loyalty program. Other one is whether Honda should go for loyalty card programs to retain their present customers (done by Maruti Suzuki & Ford), whether it will be beneficial for them and to what extent it will it work. Other project objective is to find out the brand identity of lower segment sedan cars.
Brand identity is more of a qualitative research which involves knowing the physique, personality, relationship, self-image, reflection and culture of four brands Toyota Etios, Honda Accent, Swift Dzire and Tata Manza (based on Kapferer model).It will help Honda understanding the chosen segment better.
Both the topics have almost the same sample and can go hand in hand.
Primary and secondary data were collected for the better understanding of the project and for the analysis. Primary data is collected through questionnaires and personal interview. Also focus group discussions were held from time to time. Brand identity is more of a qualitative research and involves less numbers.
in the relationship building process. It is common knowledge that a dissatisfied and unhappy customer will share his unfortunate experience more than a satisfied customer. It is also observed that a fraction of unhappy customers choose to complain while others simply switch their loyalty to others service providers. Loss of customer is loss of business along with the opportunity for business growth and profitability. Feedback collection from the customer is essential for the supplier to ascertain customer satisfaction and scope for improvisation. Having a CRM software installed does not ensure a successful customer relationship. For this to happen business processes and company culture have to be redesigned to focus on the customer. CRM software can be only a tool to implement a customer strategy. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make a new purchase. Improving customer retention rates increases the size of the customer base. Thus, customer retention is essential.
Loyalty Programs :We define loyalty programs as long-term-oriented programs that allow consumers to accumulate some form of program currency, which can be redeemed later for free rewards. An airlines frequent-flier program represents a typical loyalty program. By focusing on long-term programs, we exclude promotional programs that offer only one-shot, immediate benefits, such as instant-win scratch cards and grocery stores discount card programs. Program-related factors include both program design and management. From the design perspective, a loyalty program needs three key specifications: (1) participation requirements, (2) point structure, and (3) rewards .The effectiveness of a loyalty program is likely to depend on its design. Loyalty programs provide members with benefits such as discounts and saving rewards, which make these programs popular among consumers. Many retailers have introduced loyalty programs to enhance customer loyalty .This evidence may relate at least partly to the fact, expenditure differences between members and non-members may be partly driven by the most loyal customers into the loyalty program .Further, consumers are often regular buyers at different companies. The relevant issue is that in a model with customer loyalty as the dependent variable and loyalty program content as an independent variable .We must identify variables that influence the customer loyalty factors. Loyalty programs enhance customer loyalty through several economic, psychological and sociological mechanisms .Loyalty Program such as the ones introduced by Ford is also important strategies forretaining customers. We offer FordCarGainz and Ford's Total Maintenance Plan (TMP) to our owners.
Our Total Maintenance Plan (TMP) is an innovative programme that offers total maintenance at a price starting as low as Re. 0.39 per km. The plan ensures that the customer gets scheduled maintenance or unplanned repairs completed at any authorized Ford dealership for a fixed price.
FordCarGainz is the first customer loyalty program introduced by an automobile manufacturer, and rewards customers who maintain their routine service schedules at Ford dealerships. FordCarGainz rewards owners with loyalty points, which can be cashed in to purchase accessories and even to pay for service charges. Above all, regular maintenance at authorised service centres generates better vehicle residual values.
Economic Benefit
From an economic perspective, loyalty programs provide members with rewards as economic benefit. The key economic design elements of the loyalty program are its discount and saving features. The program with a discount feature gives price discounts on certain items of the assortment for loyalty program members only. In this way, a discount feature supplies member customers with immediate rewards for their purchases. A program with a saving feature gives loyalty program members saving points, dependent on the monetary amount spent at the company. A program member can redeem these points for a reward, such as a free product, after reached a saving threshold. Further, a saving feature creates switching costs if a consumer stops purchasing s/he loses the accumulated saving points. A saving feature stimulates purchases of the entire assortment and not only of specific items (as the discount feature does). Obtaining saving rewards requires considerable consumer effort, so that we expect stronger feelings of uniqueness and pride. On the other hand, customers prefer to obtain a reward immediately instead of getting it sometime in the future. Regarding the issuing of reward points, and find that though point threshold stays the same, the way points are issued over each purchase (ascending points versus same points per purchase) affects consumerschoices. This suggests that point issuance is not a nuisance to consumers and should not be determined arbitrarily. Point threshold isanother important aspect of point structure, and it has been tied in to program relevance. If the point threshold for a freereward is too high, it will be considered unobtainable for the average consumers and thus will be dismissed as irrelevant.
Psychological Benefit
Several psychological drivers enhance customer loyalty. First of all, consumers appreciate rewards -- not only in an absolute sense, but also relative to other consumers knowing that you are provided with better value than others creates feelings of being a preferred or special customer, and thereby further stimulates loyal behaviour. Second, Loyalty program incentives can induce smart shopper feelings and pride about being economical. The effort to obtain the reward may even justify luxury consumption.Third, existing research shows that customers overvalue the rewards they obtain, as they tendto maximize the value offered by the medium (the loyalty program), rather than the final outcome. This implies that customers aim to maximize discounts and saving points, whereas it would be rational to assess the utility of the final products and rewards minus the disutility of their costs.
Sociological Benefit
Loyalty programs can also have sociological effects. The need to belong to groups is a fundamental human motivation, and identification with commercial organizations is intensifying due to the growing centrality of consumption and materialistic desires in society. Strategies to develop customer identification are especially beneficial in industries where consumers purchase frequently, and differentiation between suppliers is low. In addition, customers who become members of the loyalty program are likely to identify more strongly with the company, because the membership relates them to a group of privileged customers hence, loyalty programs can create affective commitment; loyalty programs not only buy, but also earn, customer loyalty
Benefits of CRM Quality and efficiency Decrease in overall costs Decision support Enterprise agility Customer Attention
Relationship Marketing
Relationship Marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions. As a practice, Relationship Marketing differs from other forms of marketing in that it recognizes the long term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages.
Decile Analysis-Decile analysis method helps in determining profitability and product sales aspects of segmented customers. This type of analysis identifies themost prominent percentage of customers who are responsible for incurring the actualprofit. Deciles are nothing but the top grouping of customers which are ranked highaccording to the purchases they have made in a given period of time. The decilespercentage is normally 10% or 5% or even 1%, sometimes depending upon theorganizational strategies. These deciles alone are responsible for 60 % to 80% ofsales and profit. Hence, after determining this range of customers it becomes easy forthe organization to determine which customers are profitable and which are not. Afterthis, retaining strategies could be implemented to retain valuable customer.
RFM Analysis- RFM technique is the one of the best tool to predict future valuablecustomers. RFM stands for Recency Frequency Monetary value. Recency means customer purchase in recent time, Frequency means what is the frequency of purchase and Monetary value means how much the customer is ready to spend. These three aspects are determined by creating an RFM matrix and putting all analyzed data and information inside this matrix. This technique is very important to characterize customers according to their buying habits so that according strategiescould be implemented to retain them.
Targeting Defectors- It is painful for a manufacturer to lose loyal customers as these are the ones who are responsible for the real profit to the organization. If the organizations identify potential defectors before they defect, then retaining becomesfeasible. For this, recency sales (RS) matrix is created which is a simple but powerfulmethod to target defectors. This process includes all the customers who have at least bought products for three times. For each of these customers the following three statistics are computed:
1. Total time taken by the customer since last purchase. This is called recency. 2. Sales per period which the time taken by the customer since first purchase divided by the total number of times he did purchase. 3. Total number of periods gone until the customer is supposed to purchase again. According to the above statistics, if the customer recency is more than the first statistic, then the customer is more likely to divert. Hence after identifying this possibility of defection it becomes easy to retain the customers
One should remember that Happy customers are Active customers- Happy customers are retained customers. If your keep your customers involved, they develop a sense of contentment from the fact that they are in control. Marketers will take advantage of this by offering promotions that allow these customers to exercise this feeling of control. The most common means of achieving this kind of relationship with your customers is to offer promotions such as discount cards, discounts, sweepstakes, coupons, and customer points that can be converted to prizes. Remember, if the marketing is not active, then the customer
is not active as well. Many companies focus on rewarding customers who have repeat purchases. Such reward programs have their place in assuring customer loyalty. However, if the product or service doesn't meet customer needs, no reward program will keep them returning. For success in the long run, an organization must: Continuously improve. Quickly identify and resolve problems to the customer's satisfaction. Structured, comprehensive research programs are necessary to provide the data upon which to develop projects and initiatives to improve customer loyalty. The first step incustomer loyaltyresearch programs is formulating the objectives. The second step is the current state of customer loyalty needs to be documented. That is, what is the satisfaction level and the defection rate? Depending on the state of the company's data bases, the latter figure may be difficult to ascertain. The third step is data collection such as survey questionnaires and other research tools must be developed. The goal in these tools is to find out customers' satisfaction level and how many customers are defecting. Follow-on detailed research should help determine why customers are defecting.
The final step after the feedback is captured and analyzed is to communicate the findings to the root source where improvement is needed.
A loyalty program as an integrated system of marketing actions that aims to makemember customers more loyal. Customer loyalty is an important strategic objective ofmanagers around the world. A worldwide survey of chief executive officers conducted by the Conference Board found that customer loyalty and retention was the most important challenge that chief executive officers believed they faced. Loyalty programs are important tools for driving customer retention in many industries including airlines, credit card companies, retail and hotel chains. Loyal customers are reported to have higher customer retention rates, commit a higher share of their category spending to the firm, and are more likely to recommend others to become customers of the firm. According to the 80/20 principle, an enterprise's total sales volume probably some 80% comes from its top 20% customers. Therefore the enterprise should focus the limited resources reasonably to this 20% customer to obtain maximum sales.
Company
Program Name
Kingfisher airline
King Club
Apparels
Shopper Stop
First Citizen
Hospitality
ITC
Welcome Award
Automobile
Hero Honda
Passport
Automobile
Maruti Suzuki
Auto Card
The Types of Loyalty Program According to research Berman (2006) identify four types of loyalty program Type 1: Member receive additional discount at register
Characteristics of Program
Example
Membership open to all Supermarket programs customers Clerk will swipe discount card if member forgets or does not have card Each member receives the same discount regardless of purchase history Firm has no information base on customer name, demographics, history There is no targeted or purchase
communications directed at members Type 2: Members receive 1 free when they purchase n units Membership open to all Local car wash, nail customers salon, Supercuts, Firm does not maintain a Airport Fast Park, customer database linking PETCO
purchases to specific customers Type 3: Members receive rebates or points based on cumulative purchases Seeks to get members to Airlines, hotels, credit spend enough to receive qualifying discount card programs, Staples, Office Depot
Members are divided into Tesco, Dorothy Lane segments based history on their Markets, Wake ferns purchase ShopRite, Giant Eagle Supermarkets, Harris
HERO HONDA PASSPORT PROGRAM It started in 2000 as Passport program to cater to the aspiration value of customer of having a Passport thus named it as Passport program. The card was also designed as an ATM card. Over time the program started to lose momentum and interest among the customers and thus it was restructured as a Good Life program in 2008 with more customer touch points. This time the card came with a price whereas, earlier it was given for free. The reason behind this given by NeerajTiwari, Associate Manager (Marketing) of Hero Honda is that when you charge customers for something then the usage of that charged product increases. Card given for free was seldom used by the customer which was one of the major constraints of the Passport program.
The objectives of the Passport program were: 1. To create a loyalty program for Hero Honda customers. 2. 2. To have a structured database.
Features
Covered for one year Accident Insurance Rs. 1 lakh. Entitlement for special rewards and discounts at any of the authorized Hero Honda dealerships / service centers. Invitations to exclusive local events, such as movie shows, musical nights and carnivals
Benefits
Discount on Spares First Transaction Benefit Winner of the month Activity Referral System Go Green- Get 50 Green Rewards points for every Pollution under Control check of your vehicle. Present the Pollution Check certificate to the dealer and earn your points.
1 Re. spent = 1 Re. earned Regular Free Service. Regular Paid Service. Referring anyone to buy a Hero Honda two-wheeler. For upgrading your Hero Honda two-wheeler. Making transactions on your birthday. For getting PUC done on your two-wheeler
How to enroll?
Enrollment is free without any annual charge. Filling application form at the ford dealership. Not applicable to Ford Escort owners. Bonus Points - Earned every time the prescribed Periodic Maintenance Service is availed. Service Points - When the Ford vehicle is serviced at an authorized Ford Dealership. 1 Service point is earned for every Rs.100 spent on
Rewards
Spares/Labour/Ford Gear. Loyalty Points - Loyalty points are earned on continued ownership and availing of the prescribed Periodic maintenance services at authorized Ford Dealerships
The Bonus points and Service points can be accumulated and subsequently redeemed for
How to redeem?
Spares/Labour/Ford
Gear/Extended
Warranty/Trade in for a new Ford vehicle, whichever the membermay choose. Loyalty Points can be redeemed only on Trade in for a new Ford vehicle Failure to create the desired customer base.
Incentive system was not appealing as Ford did not have enough service centers at that time and maintenance was regarded as expensive. Insufficient product line.
MARUTI SUZUKI LOYALTY PROGRAM Maruti Suzuki Auto Card Maruti Suzukistarted their loyalty program in collaboration with Citibank which was known as theCitibank Auto Card. But, the program was terminated in a year as people didnt have faith on Citibank and many complaints were reported due to banking issues and fraudulent credit card practices on part of the bank. After 2 years Maruti renewed their loyalty program with two types of card
Maruti Suzuki Auto Card SBI Maruti Credit Card This way those who dont want to opt for a credit card can also reap the benefits of the Loyalty program.
Objective:
To sell more cars through the loyalty program. To keep the customer within the Maruti Suzuki network According to AmitKaushik, Assistant Manager (Loyalty Program) Maruti Suzuki, the diagram below explains the whole ideology of Maruti behind the loyalty program. Maruti Suzuki SBI Card Joining bonus of 200 Auto Points Maruti Suzuki Auto Card 3 Auto Points Rs. 100 spend at Maruti network. 1 Auto Point per Rs. 125 for all retail Spends 3,000 Auto Points as additional discount on exchange of Maruti Car with a new one. 3,000 Auto Points as additional discount on exchange of Maruti Car with a new one. 1,000 Auto Points on referring a friend or relative to buy a new Maruti car.
CAR CLASSIFICATION
There are many ways to classify the cars; Honda classifies the cars in the following way according to the size and price of the car. A- Tata Nano, Maruti 800 B- Estilo, Wagon R, Spark, Alto, Eon, i10,A-Star B+ - i20, Swift, Polo, Brio, Ritz, Beat, Pulse, Micra, Liva, Fabia LC- Dzire, Manza, Accent, Indigo, Fiesta classic, Verito UC- City, Verna, Vento, Sunny, New Fiesta, Rapid, Linea LD- Civic, Corolla, Cruze, Jetta, Fluence, Elantra UD- Superb, Accord, Passat, BMW X1, Sonata SUV- CR-V, Fortuner, Scorpio, Innova, XUV500, Captiva, Xylo MUV- Ertiga, Ario
BRAND IDENTITY
Brand identity provides strategic direction, purpose and meaning for a brand. For that the brand identity is one of the main drivers for brand equity. Aaker defines brandidentity as: "...a unique set of brand associations that the brand strategist aspires to create or maintain. These associations represent what the brand stands for and imply a promise to customers from the organization members. Brand identity should help establish a relationship between the brand and the customer by generating a value proposition involving functional, emotional, or self-expressive benefits." (Aaker, 1996:68) The outward expression of a brand including its name, trademark, communications, and visual appearance is brand identity. Because the identity is assembled by the brand owner, it reflects how the owner wants the consumer to perceive the brand andby extension the branded company, organization, product or service. This is in contrast to the brand image, which is a customer's mental picture of a 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 personalityas it isperceived by the target audience and the actual product/service. The brand name should be conceptually on target with the product/service (whatthe company stands for). Furthermore, the brand name to remember, transcend trends and have positive connotations.Brand identity isshould be ontarget with the brand demographic.
communicate to its potential consumers. However, over time, a product's brand identity may acquire (evolve), 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 realcharacteristics of the value and brand promise being provided and sustained byorganizational and/or production characteristics. Brand identityrepresents how thebrand wants to be perceived, it leads brand image and is situated on the sender's side. The way a brand is perceived by its customers is the key to its success. To drive positive brand associationthat customers know and trust requires recognizable brandassociations in the mind of customers, without a discrepancy in the brand elements. The brand perception, or in other words the brand image, is therefore always on the receiver's side (Kapferer, 2007:99).
It is necessary to have a clear and objective self-image of the brand identity in order to influence the desired set of brand awareness, perceived value and brand image. According to Van Gelder brand identity declares; its background, its principles, its purpose and its ambitions. For that reason brands need to be managed for consistency and vitality (Gelder, 2005:35). Hence the identity concept, the promise to a customer, plays a crucial role within the brand management process as a brand needs to be durable. The brand must deliver coherent signs and products and it needs to be realistic (Kapferer, 2007:106). Brand imagecan easily change over time where brand identityrepresents long lasting values of the brand. From that perspective brand image is more a tactical asset, whereas brand identity fulfills a strategic asset role (Kotler&Pfoertsch,2006:94).
Kapferer has developed a brand identity prismwhere he distinguishes a sender and recipient side, plus an externalization and internalization side. The 6 identity facets express the tangible and intangible characteristics of the brand and give it a unique authority and legitimacy of values and benefits (Kapferer, 2007:105-107).
The six facets of the identity prism define the brand identity from different perspectives and a set the boundaries within it is free to change or to develop in time (Kapferer, 2007:107112). The six facets of the identity prism can be described as;
1. Physique: An exterior tangible facet communicating physical specificities, color, form and brandqualities. Physique is the starting point of branding and therefore it forms the brands backbone.
2. Personality: An internal intangible facet which forms the character, soul and brand personality whichare relevant for brands
3. Culture Aninternalintangible facettointegrate the brand into the organization which is essential in differentiating brands.
4. Relationship: An exterior facet with tangible and intangible areas, and defines the behaviour thatidentifiesthe brand - the way the brand connect to its customers.5. Reflection: An external intangible facet reflecting the customer as he or she wishes to be seen as a result of using a brand. So called: the target outward's mirror.6. Self-image:An external intangible facet reflecting the customerattitude towards the brand. Theseinner thoughts connect personal inner relationship with the brand. So called: the targetinternal mirror.
NeedScope helps marketers systematically integrate emotion into brand planning and new product development to build more powerful brands The NeedScope System helps brand marketers understand, measure and manage emotion in a way traditional research cannot. The
NeedScope System uses unique tools to explore measure and analyses emotion together with more functional drivers and perceptions. These can be applied in different ways depending on client objectives, marketing issues, timing, budget etc.
Interpretation There was sufficient number of respondents from all age groups. A combine of 105 respondents from the age group of 25-45 years old were surveyed.Whereas, the maximum respondents were from the age group of 25- 35years that is almost 40% of the respondents.
Interpretation 39% of the respondents are from the income group 10-15 lakhs. The majority of respondents are either self-employed or service professionals. Maximum representation of respondents is service professionals from the age group 10- 15 lakhs constituting 21% of the respondents. Overall there are 86 service professionals, 52 self-employed in the sample of 150
Interpretation- According to the survey 54% respondents are post graduate and 46% graduate. Out of the total post graduate almost 50% are in the income group bracket of 10 -15 lakhs whereas, out of the total graduate 30% are in the income group bracket of 5-10 lakhs.
Interpretation 71% of the respondents were aware about the AutoCard which showsthat the marketing efforts initiated by Maruti Suzuki to promote the AutoCardprogram have been quite successful
Interpretation Out of the aware respondents, 52% are owners of AutoCard. This can be interpreted as a good result but the marketing efforts put in by Maruti Suzuki aims at least 75% owners out of the aware respondents as a part to broaden its base of loyal customers
Interpretation 65% of the aware respondents came to know about the program through the dealerships. This high percentage of awareness through dealership can be attributed tothe fact that each and every Maruti Suzuki dealer has appointed anAutoCard executive to aggressively promote the program and sell AutoCard. Their
incentive scheme is directly linked to number of AutoCard sold which motivates them further to carry on the program. The incentive as told by an AutoCard Executive is Rs 70 per S BI Credit Card and Rs. 40 per Maruti Suzuki AutoCard. There is also an internal competition run by Maruti Suzuki to reward AutoCardexecutives who have the maximum conversion rate in terms of percentage. This conversion rate is calculated as: (The number of cars sold/N umber of AutoCard Sold)* 100
Interpretation The above graph demarcates the aware respondents into ownersofAutoCard and the corresponding source of awareness. This graph can reflect upon theefficiency of sources of awareness as we can see that out of 70 aware respondents through dealer, 40 are owners of AutoCard which is like 57% conversion of aware toowners. Similarly, we can see advertisements and mailers have not been efficient in converting the aware respondents to owners of AutoCard as majority of the aware respondents are non-owners of AutoCard (67% in case of advertisements and 64% in case of mailers.) This graph again stresses upon the efforts put in by the AutoCard executives and shows how highly motivated they are. Most of the AutoCard executives have a conversion rate of more than 100% which indicates more number of AutoCard sold than the number f cars sold through the showroom. They are making it possible through promoting the AutoCard at the service station to the old users of Maruti Suzuki.
Interpretation AutoCard can primarily be used within the Maruti Suzuki network to earn points. Thus, service, spare part, accessories and referral are the sources to earn points. An AutoCard owner can earn 5000 referral points which is equal to Rs. 5000 by referring a friend or relative to purchase a Maruti Suzuki car.Here, we can see that 50% of AutoCard owners use the AutoCard once in 6 months and other 40% use it once in 3 months
Ranking of Features
Objective The respondents were asked to rank service/spares, referral and accessories on the basis of usage i.e. which feature they use the most. This would help us understand how the customers are earning points.
Interpretation Over 70% respondents have given Rank 1 to service and spares as the most used feature to earn points. 40% respondents have ranked referral as the second most used feature. Moreover, 25% have also said it is the most used feature. This is a very healthy sign for the company and speaks about the success of the loyalty program. For each referral, the cost of acquiring a customer goes to 0 and thats why the company doesnt mind giving a Rs. 5000 discount to the AutoCard owner for bringing a new customer in the Maruti Suzuki network. The third rank has been given to Accessories by 64% of the respondents. Purchase of accessories is done mostly when a new car is purchased or when it has to be replaced with a new one so it is not commonly used as per the survey.
Interpretation Like other credit cards Maruti SBI Credit Card can be used for making purchases and earn points through those purchases also apart from the purchases on the Maruti Suzuki network. But, the customer can redeem those points only within the Maruti Suzuki network. As we can see from the above pie chart that the credit card is used more often than the AutoCard due to more sources to earn points. Here, 46% of the respondents use it once a month, 23% use it once a week and another 23% use it more than once a week. Objective The respondents were asked to rank service/spares, referral, accessories, retail purchases and petrol purchases to ascertain where the customersare using thecard to earn points
Interpretation As it is a credit card it gives more options to customers to purchase and earn points. We can see from the chart above that retail purchases have been ranked 1 by more than 50% of the S BI card owners and petrol purchase being ranked 2 by almost 70% of the card owners. Both of these features are outside the Maruti Suzuki network and were missing from the AutoCard which caters those customers who are apprehensive about keeping a credit card. Rank3, 4, 5 are occupied by Service/spares, referral and accessories respectively in terms of usage of credit card.
Interpretation The above chart demarcates the respondents in 3 categories: owners of AutoCard, S BI Credit Card and those who dont own any of these but are aware of the card features and its charges. We can see that 90% of AutoCard owners, 92% of SBI card owners and 50% of respondents who dont own a card believe that the price charged for the card is justified. Those who dont feel the price is justified want the card for free. But, the loyalty program department was very clear about it that they wont give the card for free. It was observed that a card given for free is seldom used which the loyalty program department certainly dint want as they wanted the customers to use it as often as they can.
Quality of Service vis --vis card owners Objective The chart below helps us to find out how the respondents rate the quality of service at service station
Interpretation The chart demarcates respondents in 3 categories i.e. those who own a Maruti Suzuki AutoCard, those who dont own and the others who are notaware of the AutoCard. Overall the quality of service has been rated as good by 50% of the respondents. But, an interesting correlation which comes out from this chart is that maximum respondents who have rated the service as very good are owners of AutoCard. Through this we can interpret that customers who are satisfied with the quality of service will buy an AutoCard. Thus, for a successful loyalty program like this due care should be paid on the quality of service at service centers and quick handling of customer complaints.
Exploratory factor analysis (EF A) attempts to discover the nature of the constructs influencing a set of responses. Confirmatory factor analysis (CFA) tests whether a specified set of constructs is influencing responses in a predicted way.
To perform an EFA, we first identify a set of variables that we want to analyze. SPSS then examines the correlation matrix between those variables to identify those that tend to vary together. Each of these groups is associated with a factor (although it is possible that a single variable could be part of several groups and several factors). We also receive a set of factor loadings, which tells us how strongly each variable is related to each factor. They also allow us to calculate factor scores for each participant by multiplying the response on each variable by the corresponding factor load in. Once we identify the construct underlying a factor, we can use the factor scores to determine how much of that construct is possessed by each participant.
Communalities
SPSS Output shows the table of communalities before and after extraction. Principal component analysis works on the initial assumption that all variance is common; therefore, before extraction the communalities are all 1. The communalities in the column labeled Extraction reflect the common variance in the data structure. Another way to look at these communalities is in terms of the proportion of variance explained by the underlying factors. After extraction some of the factors are discarded and so some information is lost. The amount of variance in each variable that can be explained by the retained factors is represented by the communalities after extraction. Communalities
Initial Looks Price Brand Name Fuel Economy Safety Features. After Sales Service Resale Value
1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Extraction
.209 .530 .537 .404 .473 636 .685 .667
Scree Plot
It is a graphical representation of the initial Eigen values. We looked for sharp breaks and sizes of Eigen values which result in a change in the slope of the plot from steep to hallow. From the initial Eigen values, total variance explained table and the Scree n plot.
S.No
1
Major Factor
Value for Money
Sub Factor
1. Looks 2. Price 3. Brand Name 4. Fuel Economy 1. Safety 2. Features 3. Resale Value After sale service
Technical Factors
Quality of Service
Objective The respondents were asked to rate the following factors which they consider before buying a car as not important, not so important, somewhat important, important, very important. Loyalty card was not taken as a factor due to low loading which was giving a wrong output. So, to determine the importance of loading a chart of the following factors is given below
Interpretation - More than 70% of the respondents have rated looks as very important, 44% of the respondents have also rated fuel economy as very important. With increasing fuel prices, importance of fuel economy while purchasing a car is surely going to be there. Majority of the respondents feel that price, brand name safety, features, after sale service and resale value is also important before buying a car. However, having a loyalty card
doesntplay a significant role in determining purchase decision as per data here as the majority of respondents lie from not so important to somewhat important.
Objective In the above chart we found a mixed result for importance of loyalty while making a purchase decision. Thus in the chart below we analyze the relation between card owners and how ownership of card affects the importance of loyalty card
Interpretation In the above chart, the respondents who own a loyalty card rate itas an important and very important factor (60% of owners) while making a purchase decisionwhereas, majority of respondents who dont own it or are not aware of itfeel it to be not important or not so important.This, we can interpret those who have a loyalty card feel more connected to thecompany over time and if satisfied with the product and quality received then they willlook forward to buy another car from the same company which is the core objectiveof the loyalty program.
Swift dzire
Physique Spacious, light car, smooth, powerful, good mileage, Maruti brand, value for money, boot space, interiors, sporty look, leg space ,stylish dash board, irresistible looks, diesel & petrol models, decent & sober looks, low maintenance Relationship Trust Maruti like a father, supports in good &bad mood, younger sister(care), girlfriend(spend time with her) Personality Elegant, sober, association with beach, ice cream, Massage chair(comfortable),colorful(available in many colors)
Culture England, Christianity, Switzerland, Sikhism, Australia, India, Punjabi, Jainism(look calm but are powerful)
Reflection belongs to same family, same values, brother from another mother, outgoing,extrovert,smart,competitor, comparison, racing , achiever in life, middle class, govt official, home maker, middle class, job in MNC, working person, outgoing, party animal, jealousy
Self-Image Sophisticated, down to earth, Not calm and composed, Aspiring, want to achieve more, free bird, free mind, confident, smart
Personality
Compared with Salman khan, steady and strong, handsome Professional, trusted brand Toyota, Ethical Good and not that glamorous
Relationship
Servant(no relation just get work done)time pass friend, not very strong bond, ditcher, not trustworthy
Culture
Islamism(Indians have problem with them since the partition) Japan(Japanese brand, good engineering of cars, automobiles, workaholic, not very friendly, professionalism
Reflection Nice, simple, plain, introvert, show off, like minded, like me
Self-Image practical, professional, new starter, did not make a good decision in life, still struggling
Honda Accent
Physique Company fitted skirting, stylish, looks, sleek, classy, beautiful looks, elegant, sophisticated, tried and tested, Korean make, rims of accent very good, wheel base good, heavy built, pick up good, interiors Personality Stylish, perfume, smart, elegant, chocolate(smooth and can have it in my own way.) smart choice, ,style, decent, good looks, adorable, UK British accent, classy, old, Reliable car, spares available, low total cost of ownership
Relationship best friend(choosy about friends, all are classy), boss-personal assistant(professionalism &friendship both is there)
Culture Britain(beautiful country, has an aura, sophisticated people live, polite with manners &etiquettes) Christian(suttle, elegant yet simple) Switzerland(Swiss chocolates)
Reflection Sophisticated, upper middle class, nothing jazzy about ,achiever in an early stage of life, smart if a girl driver, has attitude, working person
Self-Image Happy confident, achiever, new success, has long way to go, technological person
Contribution:
Through the study conducted by me I was able to give suggestions andrecommendations to Honda for starting a retention program through loyaltyprograms and avoid the glitches that were faced by other companies in theimplementation. The loyalty program by Maruti Suzuki and Hero Honda wasstudied to know the intricacies involved in designing and running a successful loyalty program and customer feedback was taken for the awareness of loyalty programs and what more they expect out of it. These points can be added to the loyalty program by Honda so that it leads to the successful implementation. In the present competition in the automobile industry of India, it is important to retain the customers and also to expand the customer base and gain more market share. To gain more market share it was suggested through the need scope model, that the status space is empty and not captured by any of the LC segment cars, while a new car from Honda can own this space and cater to the need of people and also that Honda should try bridge the gap between Brand identity and Image, by positioning the car rightly, naming it correctly etc
Chapter 6
Annexure
References:
Books
What customers really want Scott Mackain Customer Satisfaction Research Management Derek R. Allen Marketing Research NareshMalhotra Strategic Brand management by Kevin Lane Keller
Webliography
http://www.informationweek.com http://world.honda.com www.hondacarindia.com/ www.automaxhonda.com www.honda.com/ http://www.zigwheels.com http://www.ibef.org http ://www. Hero Honda.com/htpp/nav.asp ?na v= membersection http ://www. Incentive central.org/pdf/incentives and auto_ ind.pdf http ://epub l. ltu.se/1 404-5508/2004/074/LTU-SHU-EX-04074-SE.pdf http ://e n. wikipedia.org/wik i/Loyalty program http ://e n. wikipedia.org/wik i/Auto motive_ industry in India http ://www.sia mind ia.co m/scrip ts/market-share.asp x. http ://loyalty and customers.com/2010/07 /six-steps-to-improve-customer-retention/ http ://www. Management studyguide.com/methods-tools-for-customer-retention http://www.bharatonline.com/ Media Reports, Press Releases, Society of Indian Automobile Manufacturers(SIAM) publications http://www.indianchild.com http://www.nhtsa.gov www.siamindia.com http://www.unescap.org http://www.surfindia.com http://business.mapsofindia.com http://cjres.oxfordjournals.org http://www.zacks.com http://www.b2binternational.com http://retailbrains.blogspot.in http://www.driveinside.com www.thecorecompany.se/archtypes/the-needscope-model/ www.tnsglobal.com/what-we-do/brand-communication
Very Important
Important
Not so Important
Not Important
Looks/Style Price Brand Name Fuel Economy Safety Features Loyalty card After Service Resale Value Sale
Personal Details Gender :- ( ) Male ( ) Female Age:( ) 18-25 years ( ) 25-35 years ( ) 35-45 years ( ) above 45 years Educational Qualification:( ) Intermediary School ( ) Graduation ( ) High School ( ) Post Graduation Occupation :( ) Self Employed ( ) Student ( ) Service ( ) Others Annual Income (per annum):( ) 3-5 lakhs ( ) 5-10 lakhs ( ) 10- 15 lakhs ( ) More than 15 lakhs Number of cars owned? (1) (2) (3) more
I appreciate your cooperation in sparing your valuable time and filling this questionnaire. Thank you!
QUESTIONNAIRE/Interview
The purpose of this research is to find the brand identity of LC segment. We assure that your personal details will not be disclosed to anyone.
1) What type of car do you prefer? a) Small car/hatchback b) Sedans c) SUV 2) Which car do you own? a) Tata b) Ford c) Honda d) Hyundai e) Maruti Suzuki f) Any other
4) Which car are you planning to buy in next 6 months? (If any) Why this particular car only? Ans. _____________________________________________________________
5) Why do you think you need a new car? (Reason) How did you get to know about the car? (Friends, family, ad etc.) Ans. _____________________________________________________________
Q5.What is the first word(s) that come to your mind when you hear the following Names : a) Dzire b) Etios c) Micra d) Accent e) Brio f) Amaze 6) Any unique things about these car: ___________________________________
7) What is your perception about Honda automobiles product? a) very good b) Good c) Average d) Bad 8) If you are going to be a customer of M&M cars in future, what will be your expectation? a) More variety of cars b) More value for money c) Improved quality of car d) Better after-sales service 9) Which brand according to you is giving the most competition to Honda Automobiles in India? a) Tata b) Ford c) Honda d) Hyundai e) Maruti Suzuki f) Any other 10) What do you think about the Price of Honda cars? a) Highly priced b) Moderate/Avg price c) Low price 11) Do you think that the cars of Honda are capable to attract todays generations? a) Yes b) No c) Cant Say 12) What is the best thing in Honda cars? a) Quality b) Style n design c) Service d) Price 13) Do you like the Honda Amaze? a) Very much b) Average c) Not so much
14) What do you think about the design & style of Honda Amaze? a) Very good b) Good c) Average d) Bad 15) What do u think about the space available in Amaze? a) Extremely spacious b) Average c) Less space 16) Honda Amaze has got the first petrol car in its segment, what do you think about it? a) Very good b) Good c) Average 17) Finally if you want to have a car of mid level sedan , will you go for Amaze? a) Yes b) No c) Cant say