DISSERTATION On A COMPARATIVE STUDY ON THE LEVEL OF CUSTOMER SATISFACTION OF MARUTI SUZUKI VIS--VIS HYUNDAI CAR OWNERS

By Akhil Suneja A0101910346 MBA Class of 2012

Under the Supervision of Ms. Bandana Chadha Assistant Professor Department of Marketing

In Partial Fulfillment of Award of Master of Business Administration AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH

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AMITY BUSINESS SCHOOL DECLARATION

I, Akhil Suneja student of Masters of Business Administration from Amity Business School, Amity University Uttar Pradesh hereby declare that I have completed Dissertation on A comparative study on the level of customer satisfaction of Maruti Suzuki vis--vis Hyundai car owners as part of the course requirement.

I further declare that the information presented in this project is true and original to the best of my knowledge.

Date:

Akhil Suneja Enroll. No: A0101910346

Place: Noida

MBA Class of 2012

AMITY UNIVERSITY UTTAR PRADESH

AMITY BUSINESS SCHOOL

CERTIFICATE Dissertation: Progress Review Stage 1

I, Ms. Bandana Chadha hereby certify that Akhil Suneja student of Masters of Business Administration at Amity Business School, Amity University Uttar Pradesh has completed first two chapters of dissertation on A comparative study on the level of customer satisfaction of Maruti Suzuki vis--vis Hyundai car customers, under my guidance.

Bandana Chadha Assistant Professor Department of Marketing

List of Figures
S. NO. Topic Page no

1.1 Product and service segmentation .8 1.2 Major players in passenger vehicle ..9 1.3 Gap Model 17

List of Tables
S. NO. Topic Page no

1.1 The cars offered by Maruti Suzuki and its price .....10 1.2 Sales of Maruti Suzuki .11 1.3 The cars offered by Hyundai and its price ...14 1.4 Sales of Hyundai India .14

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION7-19 1.1 Automobile Industry7 1.2 Company Profile...........................................................................10 1.3 Introduction to Servqual Model..15 1.4 The Gap Model17 CHAPTER 2: REVIEW OF LITERATURE20

REFERENCES.23

CHAPTER 1: INRODUCTION

1.1 AUTOMOBILE INDUSTRY

The Global automobile industry has an annual production of 77,857,705 units in 2010. The Indian Automobile Industry is manufacturing over 3,536,783 vehicles and exporting about 10% of it every year. The Indian automobile industry in 7th largest in the world and comes on 4th number in Asia. 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 attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people. It is true fact that if you are satisfied you recommended to others. Word of mouth and customer satisfaction play a very important role in determining market perception about an automobile. It is the market perception that determines the success of a company and so it is very important for the car manufacturers to measure the willingness of existing users of a product to recommend it to others. The same is a lot of interest to customers as well for it helps them make the purchase decision. A car is one of the most significant purchases that an Indian household makes. In other words, from the spread of choices offered by various manufacturers under various segments, of which one the customer will finally turn the ignition on and drive.

Product and service segmentation

5% 4% Commercial vehicles 16% 75% Three wheelers Passenger vehicles Two wheelers

Figure 1.1 Product and service segmentation Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high and increasing and the life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. The level of technology change in the Motor vehicle industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more competitive. Over the past few years, the industry has been volatile. Currently, Indias increasing per capita disposable income which is expected to rise by 106% by 2015 and growth in exports is playing a major role in the rise and competitiveness of the industry. Tata Motors is leading the commercial vehicle segment with a market share of about 64%. Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing

26% of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheeler market. CAR SEGMENT (PASSENGER VEHICLES) The main manufacturers of passenger vehicles, which are considered, are as follows:

Maruti Suzuki Tata Motors Ltd. Hyundai Motors India Ltd. Toyota Motors Corporation Honda Motors General Motors Ford Motors Mahindra & Mahindra Skoda Auto India Force Motars

Major players in passenger vehicles

1% 3% 3% 1% 1% 0% 0% 4% 4% 7% 14% Maruti Suzuki India Tata Motors Hyundai Motors Mahindra & Mahindra Honda Siel Cars India Toyota Kirloskar Motor Ford India General Motors Hindustan Motors Skoda Auto India Force Motors

46%

16%

Figure 1.2 Major players in passenger vehicles

1.2 COMPANY PROFILE

Maruti Udyog Limited (MUL) was established in Feb 1981 though an Act of Parliament, to meet the growing demand of personal mode of transport caused by lack of efficient public transport. Maruti Suzuki India Limited (MSIL, formerly known as Maruti Udyog Limited) is a subsidiary of Suzuki Motor Corporation, Japan. MSIL has been the leader of the Indian car market over two and a half decade. The company has two manufacturing facilities located at Gurgoan and Manesar. Both the facilities have a combined capacity to produce over a 1.2 million vehicles annually.

The Cars Offered by the Maruti Suzuki and its Price Range
Car Maruti Suzuki 800 Maruti Suzuki Omni Maruti Suzuki Eeco Maruti Suzuki Alto Maruti Suzuki A-star Maruti Suzuki WagonR Maruti Suzuki Swift Maruti Suzuki Ritz Maruti Suzuki Estilo Maruti Suzuki Gypsy Maruti Suzuki Grand Vitara Maruti Suzuki SX4 Maruti Suzuki Swift DZire Maruti Suzuki Kazashi Price range Rs 1.99- 2.42 lakhs Rs 2.14- 2.51 lakhs Rs 2.95- 3.94 lakhs Rs 2.39- 3.37 lakhs Rs 3.68- 4.47 lakhs Rs 3.45- 4.3 lakhs Rs 4.35- 6.45 lakhs Rs 4.14- 5.5 lakhs Rs 3.37- 4.23 lakhs Rs 5.32- 5.63 lakhs Rs 17.34- 18.67 lakhs Rs 7.19- 9.22 lakhs Rs 5.05- 7.31 lakhs Rs 16.86- 17.88 lakhs

Table 1.1 The cars offered by Maruti Suzuki and its price range 10

Sales of the Maruti Suzuki

Year 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Table 1.2 Sales of Maruti Suzuki Net Sales (in million Rs) 1,20,034 1,45,922 1,78,603 2,03,583 3,01,198 3,61,282

Sales and Service Network As of 31 march 2011 Maruti Suzuki has 933 dealerships across 666 towns and cities in all states and union territories of India. It has 2,946 Service Stations ( inclusive of dealer workshops and Maruti Authorized Service Stations) in 1,395 towns and cities throughout India. It has 30 Express Service Stations on 30 National Highways across 1,314 cities in India. Service is a major revenue generator of the company. Most of the service stations are managed on franchise basis, where Maruti Suzuki trains the local staff. Other automobile companies have not been able to match this benchmark set by Maruti Suzuki. The Express Service stations help many stranded vehicles on the highways by sending across their repair man to the vehicle.

Other Value Added Services Offered by Maruti Suzuki Maruti Suzuki Insurance: Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the help of the National Insurance Company, Bajaj

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Allianz, New India Assurance and Royal Sundaram. The service was set up by the company with the inception of two subsidiaries Maruti Insurance Distributors Service Pvt. Ltd and Maruti Insurance Brokers Pvt. Limited Maruti Finance: To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in January 2002. Prior to the start of this service Maruti Suzuki had started two joint ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide respectively to assist its client in securing loan. Maruti Suzuki tied up with ABN Amro Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram to start this venture including its strategic partners in car finance. Maruti TrueValue: Maruti True service offered by Maruti Suzuki to its customers. It is a market place for used Maruti Suzuki Vehicles. One can buy, sell or exchange used Maruti Suzuki vehicles with the help of this service in India. As of 31 March 2010 there are 341 Maruti True Value outlets.

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Hyundai Motor India Limited (HHIL) is a wholly owned subsidiary of Hyunai Motor Company (HMC), South Korea and is the largest passenger car exporter and the second largest car manufacturer in India. HMIL presently markets 7 models of passenger cars across segment. The A2 segment includes the Santro, i10 and the i20, the A3 segment includes the Accent and the Verna, the A5 segment includes the Sonata Transform and the SUV segment includes the Santa Fe. HMILs fully intergrated state-of-the-art manufacturing plant near Chennai boasts of the most advance production, quality and testing capabilities in the country. To cater rising demand, HMIL commissioned its second plant in February 2008, which produces an additional 300,000 units per annum, raising HMILs total production capacity to 600,000 units per annum. In continuation with its commitment to proving Indian customers with cutting-edge global technology, HMIL has set up a modern multi-million dollar research and development facility in the cyber city of Hyderabad. It aims to become a center of excellence for automobile engineering and ensure quick turnaround time to changing consumer needs. At HMCs global export hub for compact cars, HMIL is first automotive company in india to achieve the export of 10 lakh cars in just over a decade. HMIL currently exports car to more than 115 countries acreoos EU, Africa, Middle East, Latin America and Asia Pacific. It has been the number 1 exporter of passenger car of the country for the sixth year in a row.

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The Cars Offered by the Hyundai and its Price Range.

Car Hyundai Eon Hyundai Santro Xing Hyundai Accent Hyundai I 10 Hyundai I 20 Hyundai Verna Hyundai Sonata Hyundai Santa fe Price range Rs 2.71- 3.76 lakhs Rs 2.84- 3.96 lakhs Rs 5.08- 5.46 lakhs Rs 3.59- 6.03 lakhs Rs 4.65- 8.25 lakhs Rs 6.42- 11.03 lakhs Rs 14.79- 17.32 lakhs Rs 21.74- 24.64 lakhs

Table 1.3 The cars offered by Hyundai and its price

Sales of the Hyundai India

Year 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Table 1.4 sales of Hyundai cars in India Net Sales (in units) 1,56,291 1,86,174 2,00,412 2,45,397 2,89,863 3,56,717

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1.3 INTRODUCTION TO SERVQUAL MODEL The methodology adopted to conduct the study for measuring the quality of services in automobile industry is Servqual Methodology. The design of this method for the research undertaken was applied to align the examination of customer views of service quality. The Servqual instrument has been identified as being a broad based instrument of quality evaluation that can be applied across range of service industries. Full application of the Servqual instrument is not implemented. Gaps are studied on the basis of expected and perceived scores, and then the servqual scores for the five dimensions were calculated and studied. The instrument measures customer views on quality specifically via questioning on the five variables of tangibles, responsiveness, assurance, reliability and empathy. What is Servqual Methodology? Servqual provides management with feedback about the organizations ability to provide quality services. As Marketing is very product oriented, therefore marketing mix is applicable more to manufacture and marketing of physical products. But this cannot help in finding answer to the question whether product marketing can be overlaid on service businesses. For e.g. Maruti cannot market its after sales services according to the basis of success factor responsible for making a product a success. So it is wrong on our part to assume that services are products except for the intangibility. Leading customer satisfaction researchers A. Parasuraman, Leonard Berry and Valarie Zeithaml, originally developed it. The results of service quality analysis help management to identify service strengths and weaknesses. These weaknesses are also known as GAPS. The benefit of this quality analysis to the organization is that the marketing and HR departments are able to focus on customers expectations for planning for the business initiatives. This can be done by continuously listening to the customer-

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using a service quality information system and making needed changes to the five key drivers that influence customers perceptions of service quality.

THE 5 SERVQUAL DIMENSIONS 1. Tangibility: The physical factors like appearance of physical facilities, equipment, personnel and communication material. 2. Reliability: Ability to perform the promised service dependably and accurately. 3. Responsiveness: Willingness to help customers and act on their queries to provide prompt service. 4. Assurance: Knowledge and courtesy of employees. Their ability to inspire trust and confidence in the service they provide. 5. Empathy: Care and individual attention the firm provides to its customers.

Servqual provides a benchmark based on customer opinions of their perception of a company, on the importance ranking of key attributes, and comparative analysis of what your employees believe customers feel. It also provides information on: Customer perceptions about service. Benchmark established by the customers for the services they expect. Impressions from employees about the customers expectations from them. Customer suggestions and views. Performance levels about the service as perceived by customers.

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1.4 THE GAP MODEL The figure below is the diagram which shows various gaps as per the GAP model of service quality from A. Parasuraman , Leonard Berry and Valarie Zeithaml. This model provides an integrated view of the consumer-company relationship. It is based on substantial research amongst a number of service providers. As per the model, expected service is a function of word of mouth communication, personal need and past experience, and perceived service is a product of service delivery and external communications to consumers.
WORD OF MOUTH COMMUNICATION PERSONAL NEEDS PAST EXPERIENCE

EXPECTED SERVICE

GAP 5 PERCEIVED SERVICE

GAP 1 GAP 4 SERVICE DELIVERY EXTERNAL COMMUNICATIONS

GAP 3 SERVICE QUALITY SPECIFICATION GAP 2 MANAGEMENTS PERCEPTION OF CUSTOMERSS EXPECTATION

Figure 1.3 Gap Model

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DIFFERENT TYPES OF GAPS GAP 1 It is the difference between what customers expect and management perceptions of customer expectations. Reasons for occurrence this GAP: Failure of management to identify consumer expectations. Communication gap with customers Misleading results by market research Lack of upward and downward organization communication Many layers of management

GAP 2 (The Standards Gap) Difference between management perceptions of customer expectations and service quality specifications Causes Strategies Reasons for occurrence this GAP: Resource constraints Prevailing Market conditions Management indifferences Lack of management commitment Invalid goals Lack of Standardization of tasks

GAP 3 (The Delivery Gap) Difference between service quality specifications and delivery of specifications. Failure to ensure that service performance matches specifications. Reasons for occurrence this GAP: Employees unaware of specifications Employees do not have skills Employees unwilling to perform work Lack of teamwork 18

Employee-job misfit Technology-job misfit Lack of Employee control Lack of Supervisory systems Role conflicts Role ambiguity

GAP 4 (The Communication Gap) Difference between service delivered and external communications. Not living up to the levels of service performance that are promised or implied. Reasons for occurrence this GAP: Poor or lack of communication by management Over-promising by management

GAP 5: It is the difference between the perceived services and the expected services received by the customers. If the value of P-E is positive, then it indicates that the customer is satisfied else he is unsatisfied.

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CHAPTER 2: REVIEW OF LITERATURE

A. Wang, Jianling & Liu, Sifeng & Wang , Yuangi & Xie, Naiming (2008).

Summary This paper talks about on what basis customer satisfaction can be evaluated in Automobile After sales service The author describes the characteristics of after sales such as convenience, responsiveness, waiting time, maintenance quality etc. It tell us that the ideal after sales service is benchmark during the strategy making. It also influences customer expectations. The result of this paper shows that customers are highly satisfied with the after sales service of Volkswagens and least satisfied with Peugeot. It was useful as I got the basic characteristics of after sales service for my research. This paper tells us that as a result of globalization, companies are earning very low profits. It says that as the car industry matures marketing & after sales service will be the only sources of increasing profits. The results show that in order to increase the profits companies must look after the marketing and after sales service aspect

B. Herrmann, Andreas & Xia, Lan & Monroe B, Kent & Huller, Frank (2007).

Summary This paper links conceptually the concept of price fairness and customer satisfaction and empirically demonstrate the influence of perceived price fairness on satisfaction

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judgment. Further, it seeks to examine specific factors that influence fairness perceptions including price perceptions and customer vulnerability. The effect of consumer vulnerability implies that sellers should not only avoid exploiting their customers but should also anticipate consumers potential feelings of being exploited. Being sensitive to the buyers psychological state and assuring buyers of fair treatment will enhance perceptions of price fairness without changing the price offers. The result of this research shows that price perceptions directly influence satisfaction judgments as well as indirectly through perceptions of price fairness. Results also indicated that consumers vulnerability, which is induced by a perceived demand-supply relationship and the urgency of need from the consumers side, had a negative effect on perceived price offer fairness.

C. Ackel, Philipp (2005).

Summary This paper helps to identify the factors which affect the sales of the automobile industry. This paper is based on Europe automobile industry. In this case 3 big European markets that are France, Germany and the UK has been taken. By looking at the past trends in the market sales factor would be determined. According to the results there can be two factors which affect the sales. These factors are be internal factors i.e. the 4 Ps of marketing mix namely price, product, place and promotion and the external factors which are also beyond the control of the company. According to this research, external factors play a very crucial role as companies have to deal with the environment factors in order to gain sales again.

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D. Chen, Yubo & Xie, Jinhong (2004).

Summary Online consumer product review is an emerging market phenomenon that is playing an increasingly important role in consumers purchase decision. This paper examines a fundamental issue concerning online customer review, i.e. the functions such review have for an online marketer. We argue that online consumer reviews, a type of product information created by users based on personal usage experience, can serve as a new element of marketing communications mix and work as free sales assistants to help consumers identify the products that best match their idiosyncratic usage conditions. For many products, this marketing function is impossible or very costly for traditional marketing communications to achieve. However, this new communication mode does not come without cost because it eliminates a sellers control over the content of product information accessible to consumers, and because consumer reviews may not be fully informative. Result show that supplying online customer review can benefit or hurt an online seller depending on product characteristics, the informative ness of the review, the sellers product assortment strategy, the sellers product value for the partially matched consumers, and consumer heterogeneity in product consumption expertise. We also show that the sellers decision to provide consumer reviews will increase its incentive to offer more complete product information to consumers through its traditional marketing communications. Finally, we discover that offering consumer review information too early leads to a lower profit This paper also relates to the word-of-mouth (WOM) literature. There are two major distinctions between online consumer reviews and traditional WOM. First, the influence of traditional WOM is typically limited to a local social network. In contrast, the impact of online consumer reviews can reach far beyond the local community since any consumer all over the world can access a consumer review via the Internet. Second, traditional WOM is not a decision variable for the seller. 22

REFERENCES CITED A. Wang, Jianling & Liu, Sifeng & Wang , Yuangi & Xie, Naiming (2008). Evaluation Of Customer Satisfaction In Automobile After Sales Service Based On Grey Incidence Analysis. Economics and Management College, Nainjing University of Aeronautics and Astronautics. B. Herrmann, Andreas & Xia, Lan & Monroe B, Kent & Huller, Frank (2007). The Influence Of Price Fairness On Customer Satisfaction: An Empirical Test In The Context Of Automobile Purchases. Journal of Product & Brand

Management 16/1, 49-58. C. Ackel, Philipp (2005). Factors Affecting Sales Of Automobile Industry In Europe. Munich, GRIN Publishing GmbH. D. Chen, Yubo & Xie, Jinhong (2004). Online consumer review: Word of mouth a new element of marketing communication mix. Management Science, Vol. 54, No. 3, pp. 477-491 E. www.wikipedia.com F. www.marutisuzuki.com G. www.hyundai.com/in

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