MENDEL UNIVERSITY, BRNO FACULTY OF BUSINESS AND ECONOMICS Department of Marketing and Trade
ENTITLED: Effectiveness of Marketing Strategies of Automobiles Car in Nepal
Diploma Thesis
Supervisor
Author
Ing. Aleš Peprný, Ph.D.
Nabin Dhoju
Brno 2010
Affirmation
I declare this diploma thesis is my own work, which was written individually on the base of the sources stated in the bibliography.
Brno, 20 December 2010
………………… Nabin Dhoju
Affirmation
I declare this diploma thesis is my own work, which was written individually on the base of the sources stated in the bibliography.
Brno, 20 December 2010
………………… Nabin Dhoju
Acknowledgements
I really would like to extent my grateful thanks to the whole marketing department of Laxmi Intercontinental P. Ltd and more particularly Mr. Bikram Kc. They provided me documents, explanations, practical comments and generosity that helped me a lot during elaborating my thesis. I would like to thank my supervisor Ing. Aleš Peprný, Ph.D for his professional leading, worthy advises and patience. Finally I would also like to show my gratitude for friends, family and others who helped me indirectly for my thesis.
ABSTRACT
To be successful in markets where there exist many competitors following the marketing concept, a well developed marketing strategy is required. So it should be considered that customer satisfaction is the key concept to be successful in the market. Marketing strategies for automobiles car have a high significance so every possible facility is being offered to the market. This research proceeded with descriptive and exploratory methods in combined form. Internal sources of Hyundai motors in Nepal, office records of Nepal government. Questionnaires, inquiry through calls and emails were used in gathering primary informations. The findings are that the automobile company should focus on promotional activities, financial schemes, personal services, on time delivery of products and services, social responsibility etc. to acquire the market of Nepal.
KEY WORDS: Strategy, Automobile, Hyundai, Promotion.
Tables of Contents 1 INTRODUCTION ................................................................................................................................. 8
1.1 Background of the Study: ........................................................................................................ 8 2 OBJECTIVES OF THE STUDY ......................................................................................................... 10 3 LITERATURE REVIEW......................................................................................................................11
3.1 Definations of Marketing .......................................................................................................11 3.2 Marketing Concepts ................................................................................................................ 12 3.3 Marketing Mix ......................................................................................................................... 15 3.4 Marketing Environment ......................................................................................................... 18 3.4.1 Micro Environment ......................................................................................................... 18 3.4.2 Macro Environment ........................................................................................................ 20 3.5 Swot Anlysis ............................................................................................................................. 25 3.6 International Marketing ......................................................................................................... 28 3.7 Review of Previous Research Articles, Books and Thesis: .......................................... 29 3.7.1 Mukesh Batagoo's Study ................................................................................................ 29 3.7.2 A Research Article on the topic “AN EXPLORATORY STUDY OF BRANDING STRATEGIES FOR COMPETITIVE ADVANTAGE IN THE AUTOMOBILE INDUSTRY IN GHANA” ....................................................................... 31 4 RESEARCH METHODOLOGY......................................................................................................... 34
4.1 Research Design: ..................................................................................................................... 34 4.2 Data Collection Procedure: ................................................................................................... 34 4.3 Population and Sample: ......................................................................................................... 35 4.4 Tools for Analysis: .................................................................................................................. 36
5 DATA PRESENTATION AND ANALYSIS ........................................................................................ 38
5.1 Introduction to Hyundai ......................................................................................................... 38 5.1.1 Company Profile of Hyundai Motor: .......................................................................... 38 5.1.2 Hyundai Motors India Limited ..................................................................................... 39 5.1.3 Introduction of Hyundai Car in Nepal ........................................................................ 42 5.2 Marketing Mix for Hyundai ................................................................................................ 50 5.3 Environment Analysis ............................................................................................................ 56 5.3.1 SWOT ANALYSIS FOR HYUNDAI MOTORS .................................................... 56 5.3.2 PEST ANALYSIS FOR HYUNDAI CARS ............................................................. 61 5.4 Problems Faced by Automobiles Industry ........................................................................ 67 5.5 Analysis of Questionnaires Respondents .......................................................................... 69 6 RECOMMENDATIONS ..................................................................................................................... 75 7 DISCUSSION ...................................................................................................................................... 77 8 CONCLUSIONS.................................................................................................................................. 80 9 BIBLIOGRAPHY................................................................................................................................ 81
1 INTRODUCTION
1.1 Background of the Study:
With the civilization of human being, there came every possible facility in their lives by themselves for more and more convenient life. Today we can find every Corner of this world as very cozy place due to the development and advancement of more and more improved and latest technologies. Most of such inventions have undoubtedly made lives faster and easier. Amongst these inventions for people's lives, automobile was also invented in 1886 AD which was really significant event. Such then, every possible effort is being employed for the better features and specification of automobile. Now with this constantly being modified and better featured man made object, man is really attaining better lives. Every line of automobiles is regularly rendering services to the people according to their respective features and objective of their production and development whether it is Truck, Tractor, Bus, Van, Jeep, or Car. Automobile has two active dimensions which are contributing to the development of the economy. One dimension is the business of automobile itself and another is the transportation and carriage of people and goods from one place another in a very safe, reliable and convenient way. Thus, it has become an important part of the society and the world. In the very contest of automobile, car has become a necessary part of today's busy lives. With the rapid growth of life style, Nepalese people are also being very eager to have private family car. Exploring and watching all these demand of the Nepalese people, its neighboring countries and third countries are more eager to produce and export cars which are suitable to our country's road and family status. So, we can see the very fact is happening here in Nepal. Nepalese roads are getting busy with public and private cars. So, we can see that the cars for today's business as well as social lives are getting a necessity. It has made the day to day lives easier and faster. In Nepali market, with price competitiveness on one side and competitive technical 8
features on the other, Korean automobiles are also gradually claiming their stake in the Nepali automobile market. Laxmi Intercontinental Pvt. Ltd. the sole distributor of HYUNDAI motors from South incorporates advance safety engineering and is said to be powered by the new advanced Hyundai engine.
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2 OBJECTIVES OF THE STUDY Product marketing in Nepal has become very important in recent years. Without marketing, it has become almost impossible to sale product in the Nepalese market. In this study, I have analyzed the marketing of Hyundai cars and the importance of transportation in Nepal.
The objectives of the study are as follows: follows: 1.
The main objective of the study is to suggest recomendation for company foccussed on improvemnt of marketing practices, sales and standing of a firm in general.
Others 2.
To evaluate the trend of vehicle sales in Nepal.
3.
To describe the pricing strategies of vehicles in Nepal.
4.
To examine the market situation of Hyundai cars in Nepal and to assess effectiveness of marketing strategy. strategy.
5.
To describe market potentiality of Hyundai cars in Nepal.
6.
To see consumer attributes towards purchase of automobile cars.
7.
To recommend the organization on the basis of study findings.
8.
To describe the problems and prospects of transport system in Nepal.
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LITERATURE LITERATURE REVIEW
3.1 Definations of Marketing
It is not easy to define marketing, in literature exits many definitions which try to describe marketing or process of marketing. Here are some definitions of marketing by some famous marketing philosophers. Marketing is the process of planning, implementation, pricing, promotion and distribution of ideas, products and services with the objective to reach such exchange, which will satisfy requirements of individuals and organisations (American Marketing Association, 1985) Marketing is the managerial process responsible for identifying, anticipating and satisfying consumer‘s requirements profitably (UK Chartered Institute of Marketing) The societal marketing concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors, in a way that preserves or enhances the consumer's and the society's well-being. (Kotler, Philip. Marketing management: analysis, planning, implementation and control 8th ed. Prentice-Hall, 1994) "The process of planning and executing conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives." [Dictionary of Marketing Terms, 2nd edition, edited by Peter D. Bennett, published by the American Marketing Association, c1995. Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer (P.Tailor 7/00)' Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, cus tomers, clients, partners, and 11
society at large. (AMA October 2007) Marketing is concerned not only that attracting customers, but also with retaining customers by winning their loyalty. it is carried on long after the customer has bought the product. It aims to develop long term mutually satisfying relationship with the customer. Many experts are there in the marketing world. According to them marketing is more than we thought because marketing not only attracting customers it is also demand management. It stimulates demand for products. It helps organization to find out what their customers need and want. It also helps to decide what product should offer to satisfy their needs and wants. Marketing is a total system of business activities design to plan, price, promotion, and distribute want- satisfying products to target markets to achieve organizational objectives. In general, the term concept refers to the theory or philosophy. The marketing concept is a customer orientation backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying organization goals. The marketing concept is a philosophy of business. It is also an attitude and course of business thinking which emphasizes to the success of organization through product, market, production, distribution and satisfying human needs. Business organization, perform their activities under different marketing concept.
3.2 Marketing Concepts
Source: Kotler, Philip. Philip. (2000) Marketing Management. Management. Upper Saddle River, River, New Jersey: Prentice Hall.
Marketing has many different concepts. A company can focus on different things in marketing and those focuses are called concepts. Here are some important concepts of marketing which are widely used by companies.
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a) The Production Concept
This concept is the oldest of the concepts in business It holds that consumers will prefer products that are widely available and inexpensive. Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features.
b) The Product Concept This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise quality and performance. However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Management might commit the “bettermousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door.
c) The Selling Concept This is another common business orientation. It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. 13
d) The Marketing Concept This is a business philosophy that challenges the above three business orientations. Its central tenets crystallized in the 1950s. It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability.
Distinctions between the Sales Concept and the Marketing Concept:
1. The Sales Concept focuses on the needs of the seller. The Marketing Concept focuses on the needs of the buyer. 2. The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash. The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs). The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage. This philosophy is the foundation of consultative selling. The Marketing Concept has evolved into a fifth and more refined company orientation: The Societal Marketing Concept. This concept is more theoretical and will undoubtedly influence future forms of marketing and selling approaches.
e) The Societal Marketing Concept This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept). Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being.
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3.3 Marketing Mix
Marketing mix is an imperative concept in modern marketing and academically it is referred to as the set of controllable tools that the firm blends to produce the response it wants in the target market, so it consists of everything the firm can do to influence the demand for its product (Kotler and Armstrong, 2004). It is important to realize that marketing mix strategy of any company can have one major function, that is, strategic communication of the organization with its customers (Proctor, 2000). It was further argued that marketing mix provides multiple paths as such communication can be achieved either in spoken form and written communications (advertising, selling, etc.) or in more symbolic forms of communication (the image conveyed in the quality of the product, its price and the type of distribution outlet chosen). However, the key element is that the main aspects of marketing mix that will be discussed below "should not be seen as individual entities, but as a set of interrelated entities which have to be set in conjunction with one another" (Proctor, 2000: 212).
Elements of the marketing mix are often referred to as 'the following Ps':
a) PRODUCT In simpler terms, product includes all features and combination of goods and related services that a company offers to its customers. So the Airbus product includes its body parts such as the engine, nut bolts, seats, etc along with its after-sales services and all are included in the product development strategy of the Airbus. However, a serious criticism can be raised here in terms of how marketing mix analysis will cater for companies such as ABN Amro Bank,Natwest Bank, British Airways and Fedex Corporation as they don't possess tangible products. It was argued that is it feasible to omit service-oriented companies with the logic that the term "services" does not start with a "P", however, it was asserted that these companies can use the terminology of "service products" under marketing mix strategy making (Kotler & Armstrong, 2004). Lazer (1971) argued that product is the most important aspect of marketing mix for two main reasons. First, for manufacturers, products are the market expression of the 15
company's productive capabilities and determine its ability to link with consumers. So product policy and strategy are of prime importance to an enterprise, and product decisions dictate the scope and direction of company activity. Moreover, the market indicators such as profits, sales, image, market share, reputation and stature are also dependent on them. Secondly, it is imperative to realise that the product of any organization is both a component and a determinant of the marketing mix as it has a great influence on the other elements of the mix: advertising, personal selling, channels of distribution, physical distribution and pricing. So without proper product policy, a company can not pursue for further elements of marketing mix.
b) PRICE Pricing is basically setting a specific price for a product or service offered. In a simplistic way, Kotler and Armstrong (2004) refer to the concept of price as the amount of money that customers have to pay to obtain the product. Setting a price is not something simple. Normally it has been taken as a general law that a low price will attract more customers. It is not a valid argument as customers do not respond to price alone; they respond to value so a lower price does not necessarily mean expanded sales if the product is not fulfilling the expectation of the customers (Lazer, 1971). Generally pricing strategy under marketing mix analysis is divided into two parts: price determination and price administration (ibid). Price determination is referred to as the processes and activities employed to arrive at a price for a product including consideration of relative prices of products within the same line, and differences in price for similar products of differing grades and qualities. Price administration is referred to as the activities involved in fitting basic prices to particular sales situations such as geographic locale, functions performed by customers, position of distribution channel members, or special sales situations. An example of this is special discounted prices at, for instance, GAP, NEXT etc or Coca Cola and Pepsi where different prices are set in different geographical areas considering the difference in patterns of usage as well as varying advertisement costs.
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c) PLACE Place under marketing mix involves all company activities that make the product available to the targeted customer (Kotler and Armstrong, 2004). Based on various factors such as sales, communications and contractual considerations, various ways of making products available to customers can be used (Lazer, 1971). Companies such as Ford, Ferrari, Toyota, and Nissan use specific dealers to make their products available, whereas companies such as Nestle involve a whole chain of wholesaler retailers to reach its customers. On a general note, while planning placement strategy under marketing mix analysis, companies consider six different channel decisions including choosing between direct access to customers or involving middlemen, choosing single or multiple channels of distributions, the length of the distribution channel, the types of intermediaries, the numbers of distributors, and which intermediary to use based on the quality and reputation (Proctor, 2000)
d) PROMOTION Promotional strategies include all means through which a company communicates the benefits and values of its products and persuades targeted customers to buy them (Kotler and Armstrong, 2004). The best way to understand promotion is through the concept of the marketing communication process. Promotion is the company strategy to cater for the marketing communication process that requires interaction between two or more people or groups, encompassing senders, messages, media and receivers (Lazer, 1971). Taking the example of Nokia, the sender of the communication in this case is Nokia, the advertising agency, or both; the media used in the process can be salesmen, newspapers, magazines, radio, billboards, television and the like. The actual message is the advertisement or sales presentation and the destination is the potential consumer or customer, in this case mobile phone users. http://university-essays.tripod.com/marketing_mix.html
e) PEOPLE People decisions are those related to customer service. How do you want your workers to appear to your customers? There are a range of service profiles from service with a 17
smile - McDonald's, to classier Nordstroms, to plain rude - Ed Debevic's. The function of people to present an appearance, an attitude, etc. http://facweb.eths.k12.il.us/feeleyd/smart%20lab%20support/ads&mktg/marketing_mix. htm
3.4 Marketing Environment
Shrestha, P.,(2006), A Hand Book of “Marketing Management”
The business firm does not live in a vacuum. The business firm must operate within the framework of forces which constitute the marketing environment. The environment factors must be duly considered in planning any marketing program. Marketing environment can be micro as well as macro. Here we will discuss about micro and micro environment.
3.4.1 Micro Environment The forces which are close to the firm is called micro environment. These forces affect the firm’s ability to serve its customers. In other words micro environment is located within the firm. It surrounds the both the firm and marketing mix. This variable affects a firm’s ability to facilitate and expediteThe micro environment component includes suppliers, intermediaries, and competitors and pubic:
a) Customer: Customers are the king in marketing. Every activity should be done in order to satisfy customer needs and wants. Customers are the major components of micro environment of marketing. Customers include consumer market, business market, retailer market, 18
government market and international market. Marketing management should formulate and implement the plans and policies as per customer’s needs and wants.
b) Supplier: Suppliers are also one of the important components of micro environment of marketing. They are an important link in the firm’s overall customer value delivery system. They provide the resources needed to the firm. The firm’s suppliers include raw material supplier, machine supplier, human resources supplier, technology supplier, capital supplier etc. They play an important role to get success in marketing.
c) Intermediaries: Marketing intermediaries are also a major component of the micro environment of marketing .They help the firm to promote, sell and distribute its goods and services to the customers. Reseller, physical distribution firms, marketing services agencies, financial intermediaries are the examples of marketing intermediaries. Marketing management should take care while choosing marketing intermediaries.
d) Competitors: A competitor is one who sells a product or service in the same market at similar price. They are also major components of micro environment of marketing. This is the age of tough competition. So marketing management must carefully identify and analyze its currents and potential competitors. It must try to do better than other competitors or to win over some of its customers. It must gain strategic advantage by positioning their offering strongly against competitors, offering in the minds of consumer.
e) Public: The micro environment of marketing also includes various public. A public may be any group of persons that has an actual or potential interest in or impact on the firm’s ability to objectives. Publics include financial public, government public, local government, 19
media public; general public etc marketing management should maintain the good relationship with them.
3.4.2 Macro Environment The firm has interaction and interdependence with economic, social, political, legal technological and culture forces. These are called macro environmental forces. These environmental forces define the resource, opportunities and threats available to and facing the firm. These forces affect life style, standards of living and preference and needs for the product. Since a marketing management tries to develop and adjust the marketing mix components to satisfy consumers, the effects of macro environment on consumers also have an impact on the marketing mix component. Thus the environments which affect the firm externally is called macro environment. Macro environment is located outside the firm. It is uncontrollable. The uncontrollable forces are shaping and influencing the nature and character of customer demand. As these forces continue to develop and change, they determine the new requirements for efficient and effective marketing plans and policies.
http://www.learnmarketing.net/pestanalysis.htm
a) Political and Legal Environment: The first element of a PEST analysis is a study of political factors. Political factors influence organisations in many ways. Political factors can create advantages and opportunities for organisations. Conversely they can place obligations and duties on organisations. Political factors include the following types of instrument: - Legislation such as the minimum wage or anti discrimination laws. -Voluntary codes and practices -Market regulations 20
-Trade agreements, tariffs or restrictions -Tax levices and tax breaks -Type of government regime eg. communist, democratic, dictatorship Non conformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments introducing legislation to regulate the activities covered by the codes and practices.
Political and legal forces are gaining considerable importance in marketing activities and operations of business firms. The actions of political and legal forces strongly influence the economic and political stability of country which also affect the marketing. Marketing management cannot ignore the legislation regulation competition and protecting consumers. Marketing policy making is influenced by government policies. Political and legal environment offers the environment on which the first have to operate their marketing activities. A good political and legal environment analysis consist the following components:-
Government policies
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Government agencies
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Pressure groups
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Laws, etc
b) Economic Environment: The second element of a PEST analysis involves a study of economic factors. All businesses are affected by national and global economic factors. National and global interest rate and fiscal policy will be set around economic conditions. The climate of the economy dictates how consumers, suppliers and other organisational stakeholders such as suppliers and creditors behave within society. An economy undergoing recession will have high unemployment, low spending power and low stakeholder confidence. Conversely a “booming” or growing 21
economy will have low unemployment, high spending power and high stakeholder confidence. A successful organisation will respond to economic conditions and stakeholder behavior. Furthermore organisations will need to review the impact economic conditions are having on their competitors and respond accordingly. In this global business world organisations are affected by economies throughout the world and not just the countries in which they are based or operate from. For example: a global credit crunch originating in the USA contributed towards the credit crunch in the UK in 2007/08. Cheaper labor in developing countries affects the competitiveness of products from developed countries. An increase in interest rates in the USA will affect the share price of UK stocks or adverse weather conditions in India may affect the price of tea bought in an English cafe. A truly global player has to be aware of economic conditions across all borders and needs to ensure that it employs strategies that protect and promote its business through economic conditions throughout the world.
Economic environment plays a significant role in the marketing system. High economic growth assures higher level of employment and income, high purchasing power and willingness to spend, and this leads to marketing boom in many industries. Marketing plans and programmed are also influenced by many other economic items such as interest rates, money supply, price level, consumer credit, etc. A good economic environment analysis consist several components such as:-
Natural resources
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Income distribution
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Economic health
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Inflation
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Fiscal policies
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Competition, etc. 22
c) Socio-Cultural Environment: The third aspect of PEST focuses its attention on forces within society such as family, friends, colleagues, neighbors and the media. Social forces affect our attitudes, interests and opinions. These forces shape who we are as people, the way we behave and ultimately what we purchase. For example within the UK peoples attitudes are changing towards their diet and health. As a result the UK is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic food. Products such as Wii Fit attempt to deal with society’s concern, about children’s lack of exercise. Population changes also have a direct impact on organisations. Changes in the structure of a population will affect the supply and demand of goods and services within an economy. Falling birth rates will result in decreased demand and greater competition as the number of consumers fall. Conversely an increase in the global population and world food shortage predictions are currently leading to calls for greater investment in food production. Due to food shortages African countries such as Uganda are now reconsidering their rejection of genetically modified foods. In summary organisations must be able to offer products and services that aim to complement and benefit people’s lifestyle and behavior. If organisations do not respond to changes in society they will lose market share and demand for their product or service. The socio-cultural environment is made up of institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors, socio-cultural forces usually influence the welfare of a business firm in the long-run. We have ever-changing society. New demands are created and old ones are lost in due course. Marketing management must make necessary adjustments in marketing plans in order to fulfill new social demands. It must analyze how the socio-cultural environment analysis combines the following components:-
Demographic
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Life style
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Social forces
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Cultural forces, etc. 23
d) Technological Environment:
Unsurprisingly the fourth element of PEST is technology, as you are probably aware technological advances have greatly changed the manner in which businesses operate. Organisations use technology in many ways, they have i.
Technology infrastructure such as the internet and other information exchange system including telephone.
ii.
Technology systems incorporating a multitude of software which help them manage their business.
iii.
Technology hardware such as mobile phones, Blackberrys, laptops, desktops, bluetooth devices, photocopiers and fax machines which transmit and record information.
Technology has created a society which expects instant results. This technological revolution has increased the rate at which information is exchanged between stakeholders. A faster exchange of information can benefit businesses as they are able to react quickly to changes within their operating environment. However an ability to react quickly also creates extra pressure as businesses are expected to deliver on their promises within ever decreasing timescales.. For example the Internet is having a profound impact on the marketing mix strategy of organisations. Consumers can now shop 24 hours a day from their homes, work, Internet cafe’s and via 3G phones and 3G cards. Some employees have instant access to e-mails through Blackberrys but this can be a double edged sword, as studies have shown that this access can cause work to encroach on their personal time outside work. The pace of technological change is so fast that the average life of a computer chip is approximately 6 months. Technology is utilised by all age groups, children are exposed to technology from birth and a new generation of technology savvy pensioners known as “silver surfers” have emerged. Technology will continue to evolve and impact on consumer habits and expectations, organisations that ignore this fact face extinction.
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Modern marketing has been shaped by technology. It’s a major component of macro environment of the marketing. New technologies offer a main source of economic growth. Many businesses are earning handsome profits from products that did not exist few decades ago. Electronic industry is the best example of exploiting new marketing style of living of consumers. Marketing management can create and deliver standards and styles of life with the help of technology. A good technology environment analysis combines the following components:-
Level of technology
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Place of technology change
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Research and development budget, etc.
3.5 Swot Anlysis
SWOT analysis is a basic, straightforward model that provides direction and serves as a basis for the development of marketing plans. It accomplishes this by assessing an organizations strengths (what an organization can do) and weaknesses (what an organization cannot do) in addition to opportunities (potential favorable conditions for an organization) and threats (potential unfavorable conditions for an organization). SWOT analysis is an important step in planning and its value is often underestimated despite the simplicity in creation. The role of SWOT analysis is to take the information from the environmental analysis and separate it into internal issues (strengths and weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT analysis determines if the information indicates something that will assist the firm in accomplishing its objectives (a strength or opportunity), or if it indicates an obstacle that must be overcome or minimized to achieve desired results (weakness or threat) (Marketing Strategy, 1998).
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a) Strengths and Weaknesses Relative to market needs and competitors’ characteristics, a manager must begin to think in terms of what the firm can do well and where it may have deficiencies. Strengths and weaknesses exist internally within a firm, or in key relationships between the firm and its customers. SWOT analysis must be customer focused to gain maximum benefit, a strength is really meaningful only when it is useful in satisfying the needs of a customer. At this point, the strength becomes a capability (Marketing Strategy, 1998). When writing down strengths, it is imperative that they be considered from both the view of the firm as well as from the customers that are dealt with. These strengths should be realistic and not modest. A well-developed listing of strengths should be able to answer a couple of questions. What are the firm’s advantages? What does the firm do well ? A customer-focused SWOT may also uncover a firm’s potential weaknesses. Although some weaknesses may be harmless, those that relate to specific customer needs should be minimized if at all possible. In addition, a focus on a firm’s strengths in advertising is promotion is important to increase awareness in areas that a firm excels in. This method not only evokes a positive response within the minds of the consumer, but pushes the weaknesses further from the decision making process (Marketing Strategy, 1998). Weaknesses should also be considered from an internal and external viewpoint. It is important that listing of a firm’s weaknesses is truthful so that they may be overcome as quickly as possible. Delaying the discovery of weaknesses that already exist within a company will only further hurt the firm. A well-developed listing of weaknesses should be able to answer a few questions. What can be improved? What is done poorly? What should be avoided ? The role of the internal portion of SWOT is to determine where resources are available or lacking so that strengths and weaknesses can be identified. From this, the marketing manager can then develop marketing strategies that match these strengths with opportunities and thereby create new capabilities, which will then be part of subsequent SWOT analysis. At the same time, the manager can develop strategies to overcome the firm’s weaknesses, or find ways to minimize the negative effects of these weaknesses (Marketing Strategy, 1998).
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Strengths • Do we have a unique competitive advantage? • Do we have sufficient financial resources? • Can we do something better than our competitors? • Do buyers think well of us? • Are we known as the market leader? • Do we have most modern technologies? • Can we produce at market at lower costs? • Does our management team have a good track record? Weaknesses • • • • • • •
Do we have lack of a clear strategic direction? Are our facilities obsolete? Is our profitability lesser than others? Do we have lack of management depth and talent? Do we have internal operating problems? So we have short of cash to fund current and future business efforts? Do we have a weak image in the market?
http://www.scribd.com/doc/18752435/Principle-of-Marketing-Philip-Kotler-notes-
b) Opportunities and Threats
Managers who are caught up in developing strengths and capabilities may ignore the external environment. A mistake of this magnitude could lead to an efficient organization that is no longer effective when changes in the external environment prohibit the firm’s ability to deliver value to its targeted customer segments. These changes can occur in the rate of overall market growth and in the competitive, economic, political/legal, technological, or sociocultural environments (Marketing Strategy, 1998).
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Opportunities • • •
Can we enter in new market? Can we expand our product line? Can we grow the Market size?
THREATS • • • • • •
Are we likely to get new competitors? Other products that may be substituted for our product? Will new government policies hold up our business? Are we defenseless to economic downturns? Will buyers’ tastes and preferences change? Will demographic shifts hurt us? http://www.scribd.com/doc/18752435/Principle-of-Marketing-Philip-Kotler-notes-
3.6 International Marketing
International marketing refers to marketing activities performed across national boundaries It is a managerial process, which consists of planning and implementation of business transactions beyond borders of individual countries with the aim to reach such an exchange that satisfies needs of individuals and organisations. TYPES OF INTERNATIONAL MARKETING
International marketing is simply the application of marketing principles to more than one country Transnational marketing means a simultaneous operation of a company in several countries. 28
Global marketing refers to marketing activities coordinated and integrated across multiple country markets regardless to regional and cultural differences. 3.7 Review of Previous Research Articles, Books and Thesis:
3.7.1 Mukesh Batagoo's Study Mukesh Batagoo Conducted a researched entitled "Consumers' Behavior Towards Buying Cars in Kathmandu Valley" the objected of study was analyze the consumer behavior to wards the car buying in Nepal. The researcher collected data from both primary and secondary data. Primary data collection involved usual instrument of survey like personal interview, Questionnaires and observation and secondary data collected from the authorized agency and reasonable resources. Researcher find out that consumer behavior is the most important psychological and physiological aspect, which influences their buying decision. The logic just mentioned defines the fact that the success and failure of any business firm entirely depends on consumers' reaction to its offerings of a product or services to that product. It is therefore essential for marketers or manufactures to understand the consumer buying behavior as far it is possible. Understanding consumer behavior itself is a complex task, it requires continuous efforts of investigation and exploration of consumer, customer's response and suggestion. However such practices are rare in Nepal. The study, therefore, focuses on market segmentation of car market, understanding the factors influencing the consumer's buying decision, buying process and their awareness level. The modern marketing theory is based on the satisfying the customer. To reach this assumption, the marketers should concentrate about the consumer behavior in decision making. The success and failure of business is depended upon the consumer's reaction on the firm's marketing mix. It is therefore marketers need to analyze behavior of consumer to make the best marketing Decision. According to researcher's conclusion, consumers in Kathmandu, valley show mixed behavior due to their economic states, education, professional life, brand awareness etc. The Kathmandu valley is growing rapidly, car market is growing rapidly. Consequently, 29
car selling has become complex, competitive and challenging. To survive in such a changing and intense competitive business environment, the marketers have no option rather than understanding buyer's behavior and implementing strategy as per requirement. Researcher has tried to find out the major market segmentation, factors influencing car buying decisions, buying process and brand awareness of customer's of Kathmandu valley. An interesting fact to note of the total vehicles registered throughout the country, over two thirds are in Bagmati Zone and more than 52 percent vehicles are in Kathmandu valley alone. This makes study relevant nationwide. Researcher also cleared that there are different customer groups of car buyers, they have different decision process, and they are influenced by different factors and features during car buying. The important market segments, important features of Kathmandu valley. They are now more informative and analytical in Kathmandu valley. They are brand aware and more or less satisfied. Researcher recommended that it could be helpful for developing: specific marketing campaign targeting specific market segment, identify popular features and factors that customers of Kathmandu valley for specific brand of vehicles. New exclusive study could be started to find out the level of: brand awareness, customer's satisfaction and effectiveness of promotional effects.
Batagoo, Mukesh, (2007), "Consumer's Behavior Towards Buying Cars in Kathmandu Valley", an unpublished Master's Degree, Thesis Nepal Commerce Campus, Min Bhaban T.U.
30
3.7.2 A Research Article on the topic “AN EXPLORATORY STUDY OF BRANDING STRATEGIES FOR COMPETITIVE ADVANTAGE IN THE AUTOMOBILE INDUSTRY IN GHANA” The objective of this study was to provide an understanding of the internal and external branding strategies used by automobile companies in Ghana. In this study, the qualitative research method was used in the collection and analysis of information. The focus of this research was to discover the truth as well as emphasize on explanation and description but not to look for cause-effect relationships. The aim was to collect detailed information through a variety of data collection procedures over a sustained period of time The researcher found that, at the heart of all brand management activities of automobile companies in Ghana are three main concepts. These are customer relations, corporate social responsibility and technological advancement. All the various branding activities revolve around these three main concepts. Companies strive to operate to become the most customer focused and environmentally friendly automobile company. Also, brand communication is an integral part of the car industry in Ghana. Automobile companies operating in the country have marketing and communication teams that have an integrated understanding of the brand and are in constant communication on brandrelated activities and issues to the general public. For example, Silver Star Auto Company has systems in place for carefully monitoring the appropriateness, timeliness, integration and consistency of branded communications. In the automobile market, all key stakeholders are involved in the brand creation process. Here the stakeholders include employees, management, customers, and the manufacturing headquarters. This means that the brand image promotion is not the responsibility of only the management but all the other relevant stakeholders. According to the marketing manager of Toyota Ghana limited “ it is the customer’s subjective evaluation of the brand that builds Brand Equity”. This happens in three main ways. Firstly, customers develop more favorable attitude toward the brand and therefore are more likely to purchase the brand. Secondly, customers have increased positive feelings for the brand and therefore are less likely to purchase the brand of a competitor. Thirdly, the customer’s positive attitude and feelings toward the brand also increase the likelihood that they will recommend the brand to others, thereby increasing the 31
probability that other people will purchase the brand. According to researcher, another important branding strategy that is prominent in the automobile market is what is commonly known as Vehicle Relationship Management (VRM). Vehicle Relationship Management is the application of Customer Relationship Management principles to vehicles. VRM works in conjunction with CRM to create an understanding of individual vehicles throughout their life cycles. Some automobile companies have, in addition to car sales, established a high standard state-of-art service center to ensure continues servicing of every car bought from most company. Aspects of the VRM include the provision of after sale service for vehicles throughout its existence; from repairs of minor, medium and major accident damages and to ensure that the right parts and the right quantity of parts are stocked at the right time to meet the needs of vehicle owners. Researcher find out that for a company to compete effectively in Ghana and other countries in Sub-Saharan Africa Corporate Social Responsibility should not just be a buzzword; rather, it should be a way of life. Corporate social responsibility (CSR) is an essential part of brand management strategies. In Ghana, Corporate Social Responsibility (CSR) is about managing a business to achieve both commercial and social benefit. In essence, it is about managing the firms’ social, community and environmental impacts to help improve results, reduce risks and enhance the reputation of the company. It is also about growing businesses in a way that has value for everyone connected to it. Automobile companies as part of their CSR, focus on environmental issues, traffic safety, and human resource development. They actively promote corporate social contribution activities and respond to societal needs in areas such as the arts and culture, education and health, all with the aim of promoting harmony in the society. This kind of branding is referred to as “Cause branding”. Cause branding is when a company’s brand is associated with a social need. Automobile companies as part of their CSR, focus on environmental issues, traffic safety, and human resource development. They actively promote corporate social contribution activities and respond to societal needs in areas such as the arts and culture, education and health, all with the aim of promoting harmony in the society. This kind of branding is referred to as “Cause branding”. Cause branding is when a company’s brand is associated with a social need. 32
The researcher concluded that in order to be successful in managing a brand, there is a need to understand the needs and wants of both current and prospective customers. At every point in time that the brand comes in contact with the public, it must be able to make a lasting impact. This will ensure that the brand gets imprinted in the minds and hearts of customers and will-be customers. It also means that marketing communication plans must be developed with the aim of creating a lasting effect of the brand image to the audience.
In this competitive business world, a strong brand is invaluable as the battle for the attention of consumers intensifies each passing day. For companies to be successful in managing their brands there is a need to invest a lot of time in brand building. It means that managers of companies must spend significant amount of time and resources to keep their brands fresh, relevant and competitive. Without this, the effort of the company in gaining competitive advantage will be in futility because the brand is a promise to customers about the quality of the product.
Furthermore, there must be a proper coordination of the customer service and brand management activities. It means that the customer should be the focus of all brand management strategies. In my opinion decisions on customer relationship management are primary, and decisions on brand management are secondary. However the two must go hand in hand, as the end results of proper managing of a brand contributes to giving customers the best value for their money
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4 RESEARCH METHODOLOGY
Research methodology is concerned with various methods and techniques which are the process of research studies. It includes wide range of the methods, including quantitative for data analysis and presentation.
4.1 Research Design:
The main objective of the study is to suggest recommendation for company focused on improvement of marketing practices, sales and standing of a firm in general. This research would proceed with descriptive and exploratory methods in combined form.
4.2 Data Collection Procedure:
Various data have been collected through the primary and secondary sources. Primarily, required theoretical information are collected through the secondary sources and information through various office records, published data, statements, interviews, questionnaires etc are gathered through the primary sources for data collection. Customers attitude and purchase behavior shown by potential buyer of car are also reflected in the questionnaire. a) Secondary sources: As for the data from secondary sources, i used various kinds of literature from university’s library and out of it, both academic and nonacademic. Moreover i exploited knowledge and materials from previous classes in Mendel University. Finally this work is as well based on deep internet research. And i would like to thank personally to Mr. Ing. Aleš Peprný, Ph.D.for providing me a lot of academic books, articles and previous researches. b) Primary sources: As for the primary data, i had to make several calls and send 34
emails to Mr. Bikram Kc, the Marketing representative of Jonchen Traders, Pokhara. The marketing department of Hyundai motors in Nepal furnished me with a lot of internal documents. Thanks to Mr. Bikram Kc for providing the internal documents. Finally, i would like to thank my friends and family who helped me indirectly to collect to sample respondents for the questionnaires.
4.3 Population and Sample:
In Nepal, different brands of vehicles are imported and sold. There are almost 24 brands of vehicles that are sold in Nepalese market. Among them, Toyota is the most sold Japanese luxury vehicles, where as Maruti & Tata are most sold middle class vehicles. The different brands of vehicles that are available in Nepalese market are as follows: Table 1 : Different Brands of Vehicles Available in Nepal So.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Brands Force Toyota Tata Maruti Proton Mitsubishi Ssayangang Mahendra Opel Honda Mazda Pedorua Suzuki KIA Chevrolet Nissan Fiat
Importer/ Authorized Dealer Nakasu Motors P.Ltd. United Traders Syndicate P.Ltd. Sipradi Trading P.Ltd. Arun International Traders Hansraj Hulaschand & Co. P.Ltd. Amatya Enterprises P. Ltd. Hansaraj Hulaschand & Co.P. Ltd. Agni Incorporated P.Ltd. Vijaya Motors P.Ltd. Syakar Company P. Ltd. Padma Shree P. Ltd. Nemlik International Traders P. Ltd. Arun International Traders Continental Trading Enterprises P.Ltd. Vijaya Motor P. Ltd. Dugar Brothers & Sons Bhajuratna Agency P. Ltd. 35
18 Ford Dugar Brother & Sons 19 Daewoo Hansaraj Hulaschand & co. P. Ltd. 20 Hulas Motor Hulas Motors P. Ltd. 21 Tata Leyland Asian Auto Traders 22 Isuzu Shankar Automobiles Agency 23 Mercedes Bench N/A Source: Internal data(created by author) The entire importer has provided competitive packages to the customers. They have their own showrooms and service center in the Kathmandu and in the other cities of the Nepal as well. All the importers sell their vehicles all over the Nepal. Among them, my research concentrates only on one brand as given below: Table 2: Research Concentrated Brand S. NO. 1
Brand Hyundai
Importer Laxmi Intercontinental P. Ltd.
4.4 Tools for Analysis:
The main purpose of analyzing the data is to change it from and unprocessed from to an understandable presentation. The analysis of data consists of organizing, tabulation, performing statistical analysis and drawing inferences. The data is presented in the following: a. Pictorial Presentation 1. 2. 3.
Bar charts Pi- charts Graphs
b.
Tabulation Presentation 36
c.
Statistical Presentation
1.
Measure of Central Tendency Arithmetic mean ( x) =
∑ x
N
A mathematical representation of the typical value of a series of numbers, computed as the sum of all the numbers in the series divided by the count of all numbers in the series.
2.
Measure of Dispersion Standard Deviation (σ ) =
∑( x − x)
2
N
A measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of variance.
37
5 DATA PRESENTATION AND ANALYSIS In this chapter, the data collected are tabulated, analyzed and presented in a reasonable and wise manner. The data presentation and analysis are based on the primary and secondary sources of information.
5.1 Introduction to Hyundai
5.1.1 Company Profile of Hyundai Motor:
Chung Ju-Yung founded the Hyundai Engineering and Construction Company in 1947. Hyundai Motor Company was later established in 1967. The company’s first model, the Cortina, was released in cooperation with Ford Motor Company in 1968. In 1975, the Pony, the first Korean car, was released, with styling by Giorgio Giugiaro of ItalDesign and power train technology provided by Japan’s Mitsubishi Motors. Exports began in the following year to Ecuador and soon thereafter to the Benelux countries. In 1991, the company succeeded in developing its first proprietary gasoline engine, the four-cylinder Alpha, and transmission, thus paving the way for technological independence. In 1983, Hyundai exported the Pony to Canada, but not to the United States because the Pony didn't pass emissions standards there. Canadian sales greatly exceeded expectations, and it was at one point the top-selling car on the Canadian market. The Pony afforded a much higher degree of quality and refinement in the lowest price auto segment than the Eastern-bloc imports of the period then available. In 1986, Hyundai began to sell cars in the United States, and the Excel was nominated as "Best Product #10" by Fortune magazine, largely because of its affordability. The company began to produce models with its own technology in 1988, beginning with the midsize Sonata.
38
In 1996, Hyundai Motors India Limited was established with a production plant in Irrungattukotai near Chennai, India. In 1998, Hyundai began to overhaul its image in an attempt to establish itself as a worldclass brand. Chung Ju Yung transferred leadership of Hyundai Motor to his son, Chung Mong Koo, in 1999. Hyundai's parent company, Hyundai Motor Group, invested heavily in the quality, design, manufacturing, and long-term research of its vehicles. It added a 10-year or 100,000-mile (160,000 km) warranty to cars sold in the United States and launched an aggressive marketing campaign.
5.1.2 Hyundai Motors India Limited
Hyundai Motor India Limited was established in 1996 as a 100% subsidiary of Hyundai Motor Company, South Korea. It has made an initial investment of US $ 614 million in a production plant near Chennai. This plant has the capacity of producing 150,000 vehicles annually. Its first cars - the Santro was launched in India in 1998 and met with immediate success. Within just 9 months Santro had captured 10% of the competitive Indian market with sales still rocketing upwards. The launch of Santro in India revolutionized the concept of driving, by introducing cars that brought the latest in automobile technology to the Indian roads. Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company (HMC), South Korea and is the largest passenger car exporter and the second largest car manufacturer in India. HMIL presently markets 6 models of passenger cars across segments. 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. HMIL’s fully integrated state-of-the-art manufacturing plant near Chennai boasts of the most advanced production, quality and testing capabilities in the country. To cater to 39
rising demand, HMIL commissioned its second plant in February 2008, which produces an additional 300,000 units per annum, raising HMIL’s total production capacity to 600,000 units per annum. In continuation with its commitment to providing Indian customers with cutting-edge global technology, HMIL has set up a modern multimillion 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. As HMC’s global export hub for compact cars, HMIL is the first automotive company in India to achieve the export of 1 million cars in just over a decade. HMIL currently exports cars to more than 110 countries across EU, Africa, Middle East, Latin America, Asia and Australia. It has been the number one exporter of passenger car of the country for the sixth year in a row. To support its growth and expansion plans, HMIL currently has a 301 strong dealer network and 613 strong service points across India, which will see further expansion in 2010.
40
Figure 1: Sales Trend of Indian Automobiles market http://www.hyundai.com/in/en/CompanyInfomation/AboutHMIL/Profile/HMILSales/H MILSales.aspx Since inception, HMIL has dominated the automobile market with the reputation of being the fastest growing automobile manufacturer in India. HMIL's growth has been driven by volume-oriented revenues coupled with technological soundness and superior designs. 41
A major force in the Indian automobile scenario, HMIL is the second largest manufacturer in India. Focusing on the latest technologies and innovative marketing strategies, HMIL has carved out a niche for itself in the market today with most of its models leading in their respective segments. It’s been a long journey from just 8,447 units in 1998, till today when HMIL has become a key player in driving the industry growth year after year.
HMIL, continuing its tradition of being the fastest growing passenger car manufacturer, registered a total sales of 559,870 vehicles in the calendar year (CY) 2009, an increase of 14.4 percent over CY 2008. In the domestic market it clocked a growth of 18.1 percent as compared to 2008 with 289,863 units, while overseas sales grew by 10.7 percent, with export of 270,007 units. 5.1.3 Introduction of Hyundai Car in Nepal Although Hyundai vehicles were imported officially to Nepal by AVCO International P. Ltd from 1999, Laxmi Intercontinental P. Ltd. started importing and selling Hyundai brands of vehicle in Nepal after the acquisition of distributorship in February 2009. So, Laxmi Intercontinental P. Ltd is the current sole distributor of Hyundai cars for Nepal. The company's main aim is not only the sales of Hyundai vehicles but also to provide quality after sales service to its valued Hyundai Customers. In order to achieve this aim, it is currently operating with two showrooms in the heart of Kathmandu (Thapathali & New Baneshwor) and two well equipped after sales service and spare parts, one in New Baneshwor and another in Basundhara, northern part of Kathmandu.
Company's showrooms have been opened with the intention of providing customers and improved service in terms of quality, space and ambiance. In these showrooms, customers would feel the different kind of buying experience. Company's After Sales Service and Parts facilities follows the Hyundai's Global Auto Servicing offering the full range of after sales service facilities through its high tech equipments and well trained technicians.
42
In order to capitalize the growing automobile market outside the Kathmandu valley, it has already established eight sub dealers in various places outside Kathmandu like Pokhara, Butwal, Bhairawa, Hetaunda, Birgunj, Damak and Birtamod and is planning to extend it to twelve in year 2010.
Various models of Hyundai cars in Nepal I. II.
Santro Xing; GL: GLS: I10
i. D-Lite:
ii. Era:
III.
I20Petrol
i. Magna:
ii. Asta:
IV.
I20 CRDI
i. Magna:
ii. Asta:
V.
iii. Magna: iv. Asta:
Getz:
VI.
Accent:
VII.
Sonata:
VIII.
Tucson:
IX.
Santafe:
Table 3: HYUNDAI SALES TREND IN NEPAL DURING LAST 5 YEARS
YEAR
2005
2006
2007
2008
2009
SALES APPROX.
1200
1500
1800
2300
3500
Source: Internal Data(Created by Author)
43
Table 4: Vehicles registered in Nepal
Fiscal
046/ 047/ 048/ 049/ 050/ 051/ 052/ 053/ 054/ 055/ 056/ 057/ 058/ 059/ 060/ 061/ 062/ 063/ 064/ 065/ 066/0 TOTA L
Bus
Mini Cren/Do
4,15 458 413 606 1,16 77 850 83 486 82 608 899 872 19 494 1,20 868 432 732 753 1,52 1 56 1,41 1,84 1,88 23,24 3
2,06 22 800 14 18
17 907 13 978 12 829 25 47 29 23 28 66 80 1,17 59 78 8,87 7
8 1 1 1 1 1 1
1 1 1 1 1 2 3 3 3 4 4 5
M Tempo Tracto
Car/Jeep/V
24,050 1,893 2,115 2,266 3,049 3,043 5,261 2,993 4,139 2,507 3,647 5,152 4,374 2,906 7,079 4 781 5,114 5 156 4,741 6,857 12,268
-
66 31
2,35 856 1,20 62 154 241 117 185 344 388 789 232 248 17 16 48 60 12 18 20 9
113,391
7,38 2
Oth
6,7 1 7 1,5 5 3 2 3 1,3 3 1,8 3 2,158 1,2 3 1,251 2,237 2,5 1 3,577 3,186 2,4 43 2,1 58 1 3 21 6 2 15 3,2 2 4,6 2 11, 31 56, 827
GrandTotal (Cumulative
76 378 89 527 106 994 121 249 139 858 159 272 179 680 203 445 223 870 248 009 276 289 317 284 364 444 402 054 441 753 482 464 537 439 626 174 710 914 813 484 1,015,271
5,9 74
Source: Internal data Note: 01/01/2010 AD = 17/09/2066 BS (Nepali Date)
44
Table 5: Hyundai sales trend and vehicles registered in Nepal from year 2005-2009 Year
2005
2006
2007
2008
2009
Total
Hyundai cars
1200
1500
1800
2300
3500
10300
Total Vehicles registered
5114
5156
4741
6857
12268
34136
Source: Internal Data(Created by Author)
The above table shows that in the year 2005, 1200 units of Hyundai vehicles were sold and it rise up to 3500 units in the year 2009 which is very encouraging. So Hyundai brand is a successful brand in the Nepal. Below we can see it graphically.
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����
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Figure 2: : Hyundai sales trend and vehicles registered in Nepal Source: Internal Data(Created by Author)
45
So, here we can see the sales trend of Hyundai cars and the vehicles registered in Nepal during the last 5 years which is in a increasing mode every year. Although the vehicles registrations has decreased little bit in the year 2007 compared to other years. the sales of Hyundai is always rising up.
Figure 3 : Market share of Hyundai vehicles Source: Internal Data(Created by Author) Here with the pie chart, we can see the market share of Hyundai cars from year 20052009. In the year 2005, Hyundai vehicles covered a market share of about 23% which rose up to 37% in the year 2007 and about 23 % in last year 2009.
46
Figure 4: Sales trend of Hyundai cars and Total vehicles registered Source:Internal Data(Created by Author)
Hyundai Statistical Presentation of Data
Measurement of central, tendency from data, Let the Hyundai vehicles sales be x and the fiscal year be the N. Then, Total Hyundai Car sold = 10300 No. of Year (N) = 5 We know, Arithmetic mean ( x) =
∑ x
N
= 10300/5 = 2060 47
Therefore, yearly average Sales of Hyundai is 2060
Measure of Dispersion Here, Let the Hyundai vehicles sales be x and the fiscal year be n from the data. Arithmetic mean = 2060 Table 6: Calculation of Standard Deviation of Hyundai Year (N)
Vehicles Sales (x)
( x − x )
( x − x ) 2
2005
1200
-860
739,600
2006
1500
-560
313,600
2007
1800
-260
67,600
2008
2300
240
57,600
2009
3500
1440
2,073,600
∑ x
=
10300
∑ ( x − x )
=
3,252,000
Now, Standard Deviation (σ ) = =
∑( x − x)
2
N
3,252,000 5
= 806.47
Therefore the standard deviation of Hyundai vehicles is 806.47
Again, Coefficient of variance (CV) is, 48
C.V. =
standard deviation ( ) mean ( x )
×
100%
= 806.47/2060 x 100 = 39.15% Therefore coefficient of Hyundai vehicles is 39.15% .
Figure 5: Organizational chart of Laxmi Intercontinental P. Ltd.
Source: Internal data (created by author) The organization is composed of 31 persons, divided between the various departments as shown on the above chart. The General Manager (1 person) is directly under the Board of Director’s(5 persons) responsibility. Then the staffs are dispatched among 5 main departments: Finance (3 persons), Sales (6 persons) which are further divided into 2 divisions, Spare parts (2 persons) and Automobiles car (4 persons) , Marketing (4 persons), and the Administration department (4 persons). Moreover, with its entire network Hyundai includes more than 300 people in Nepal. 49
5.2 Marketing Mix for Hyundai
Here, the marketing mix of Hyundai cars is analyzed. The marketing mix generally includes the following P’s. a)
Product/Hyundai cars
b)
Price of Hyundai cars
c)
Place/distribution of Hyundai cars
d)
Promotion of Hyundai cars
e)
People of Hyundai cars
a)
Product/Hyundai cars
The company Hyundai is coming with a ranges of models of cars meeting the requirements and demand of the Nepalese market. Its technical specification and features are developed to provide every possible satisfaction and comforts to the customers. Hyundai cars meets the requirement of the Nepalese Road as well. Varieties of cars in terms of color, style, power, comfort, warranty etc are offered to the customers. As for the services provided by the Hyundai cars in Nepal,
i.
Warranty
The warranty coverage period is 36 months or 60,000 kms, whichever comes first, from the date of the delivery to the first retail buyer. •
•
The normal warranty shall exist for a period of 24 months or 40,000kms, whichever comes first, from the date of delivery. The warranty for remaining 12 months or 20,000kms, whichever comes first, is limited to engine and gear box only.
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ii.
Free servicing
Hyundai offers its valued customers 12 Free Servicing for the period of 36 months or 55,000 Kilometers, whichever occurs earlier. iii.
Availability of spare parts
Spare Parts availability plays an important role in success of any automobile brand. Automobiles being the entity that are used continuously for a longer period of time, wear and tear of its components are unavoidable. Furthermore, looking at the road conditions of Nepal, damages occurring from the accidents is inevitable. So, Laxmi Intercontinental Pvt. Ltd. has maintained sufficient genuine spare parts in his inventory in order to facilitate customers in such kinds of inevitable situations and for the longer life of Hyundai vehicle.
b)
Price of Hyundai cars
Price is one of the important factor considered by the customers, so it must be reasonable to reach the standards of the general customers. Price of the Hyundai vehicles is competitive in the market. It is thus being able to compete with other brand in the market. The price of Hyundai vehicles are highlighted as under.
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Table 7: Models and Price of Hyundai cars MODELS Santro Xing: I. GL II. GLS
Rs 1,655,000 Rs 1,735,000
I10: I. II. III. IV.
Rs 1,705,000 Rs 1,835,000 Rs 1,935,000 Rs 2,250,000
D-Lite Era Magna Asta
PRICE
I20Petrol I. Magna II. Asta
Rs 2,350,000 Rs 2,665,000
I20 CRDI I. Magna II. Asta
Rs 2,850,000 Rs 3,165,000
Getz Accent Sonata
Rs 2,450,000 Rs 2,695,000 Rs 5,095,000
Tucson
Rs 4,295,000
Santafe
Rs 6,495,000
Source: Internal Data(Created by Author) Note: 1Euro = approx Rs 100 (Nepalese currency Rupees)
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The above prices include the VAT along with road tax, municipality tax, pollution tax and other registration expensive. Customers need not to worry about the ownership transfer and other government official duties. The running fiscal year’s tax is paid by the company itself.
c) Place/distribution channels of Hyundai cars Laxmi intercontinental Pvt. Ltd. is extensively using these tools of marketing mix for the great sales and distribution of Hyundai cars. It has built large channel of distribution. It has development considerably effective networking by appointing dealers, sub-dealers and agent within and outside of the Katmandu valley. Now these types of distribution channels are located through out the country. Thus, the Hyundai cars are running on the road of almost of all main cities of Nepal. These sub-dealers and agents are provided with certain amount of commission for each sale of the vehicle. Any customer is offered the same price whether he or she purchases Hyundai car from sole distributor or from the dealers. Generally the sub dealers buy the second hand car from the customers and make exchange offers with the new Hyundai cars. Below here is the map of Nepal with the location of dealer and sub dealers all over the country. Recently, two more sub dealers has been successfully added by the main dealer i.e in the cities Birtamode and Damak of Nepal.
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Table 8: Names of authorized dealer and sub dealers in Nepal DELEARS
CITY
AUTHORIZED DEALER: Laxmi Intercontinental P. Ltd
Kathmandu
Jonchhen Traders
Pokhara
Pinnacle Trading Concern
Butwal & Bhairahawa
Binayak Motors
Narayangargh
Auto wheels P. Ltd
Birgunj
New Trishakti Enterprises
Hetauda
Nau Durga Motors
Biratnagar
(Auto Plaza
Damak & Birtamod
Source: Internal Data(Created by author)
d)
Promotion of Hyundai cars
Laxmi Intercontinental Pvt .Ltd, the sole distributor of Hyundai cars, is pursuing varieties of the promotional programs to attain and retain its customer. Since launching of car, it has brought lots of promotion campaigns. The hard efforts of overall Laxmi Intercontinental Pvt. Ltd. and the promotional schemes applied by it have taken the car in a vary good track of the market. Promotional tools are used after a thorough study of the market and its customer’s demand. The competitors’ activities are equally being studied to fit the market’s need and wants. It is coming up with promotional programs according to the market situation and its trend. Sometimes, it follows normal promotional tools like advertising about the car to inform customers and to make them understand and remind about the product. At times it brings aggressive promotional campaign to achieve the sales and to prove that target is met. The Laxmi Intercontinental Pvt. Ltd has been using the media to inform and promote the Hyundai cars in Nepal. It has been making the press releases and giving advertisement 54
in different magazines and the daily news papers of the valley. Here are the sales promotional activities and tool used by Laxmi Intercontinental Pvt. Ltd. to promote and sell the Hyundai vehicles in Nepal. ·Launching and re-launching. ·Attending trade fair/ auto shows ·Discount: cash discount/ commission to sub-dealer. ·Exchange facilities/ test ride to old car owner and new customers. ·Insurance : Free insurance / partial free insurance ·Service benefit : Extra free servicing / Free accessories ·Extended warranty ·Extended loan period -10 year financing scheme. ·0% interest rate for big vehicles ·Low equal monthly installment ·On the spot financing. ·Bumper schemes- financing , accessories, cash discount ·FREE Himalayan Hyundai club membership ·Regular advertisement about Hyundai products and schemes ·Quarterly free service camps ·Sponsoring to different sports and programs.
e)
People
As consumers make judgments and deliver perceptions of the service based on the employees they interact with, the sole distributor firstly, tries to focus on the educated and experienced applicants on the related field and then once they are recruited they are trained accordingly. They are trying hard to satisfy their employees by giving incentives and benefits possible so that they will be loyal to the company. During the festivals,staffs are provided with some festive bonuses like giving double salary in that 55
month. And a sales target is given to the employees and if they meet that they are given some commissions on every product sold. Various bonuses and recreational trips are offered to them once a year. Occasional visits to India and Korea for various trainings are also practiced by the company.
5.3 Environment Analysis
5.3.1 SWOT ANALYSIS FOR HYUNDAI MOTORS Here, as an SWOT analysis for the Hyundai company, the strengths, weakness, opportunities and threats are studied briefly below.
A. STRENGTHS
Good quality According to Hyundai car owners, all Hyundai cars are nicely styled and designed with best quality materials. These cars are also backed by solid warranties that further enhance the credibility of Hyundai cars in the market. The car manufacturer took the first position in 2008 for offering the best resale value for its portfolio of cars. In the recent couple of years, Hyundai has also introduced a host of innovations like the kappa engine that have set new benchmarks in the industry. Hyundai cars like the i10 and i20 are the two significant additions in Hyundai’s portfolio. The i10 has won various awards and recognitions since it has been introduced in the market. It has also won the ‘Indian Car of the Year’ award in 2008. Hyundai Santro has also won an award by J.D. Power Asia for being the most reliable compact car in India. The Santro is one of the most popular car models . Its engine is unique , power efficient, reliable and has long life . Its engine heats up less as compared to the others which is an important factor for increasing the life of the engine. It is believed that all Hyundai cars are reasonably priced, reliable, and have high resale 56
value. Hyundai owners experience fewer problems with their vehicles than any other car manufacturer in India. Cheap labour costs: Most of high-profile car manufacturers in the world look upon India as the Mecca of manufacturing low-cost cars. In fact, no other country in the world can claim to produce cheaper cars like India. The automobile experts reveal that cost of labor for producing a car worth $ 5698 is around $213 in India, while the labor cost for producing the same car in Korea would be $1,068 and around $ 1,150 in Eastern Europe. So, labor cost in India is just 3.8% of the total car cost, while in Korea it is just 16% and 23% percent in East Europe. So manufacturing car in Korea will cost Hyundai around $854 more while producing car in India( Including the import duty of 6.5%) will cost around $370. Simply put, India unarguably has cost advantage over Korea and Europe- once you take into consideration the freight differential. It is almost 10% cheaper to produce in India and Export it to Europe. And about the empty talk of producing the cars in East Europe, this could never happen, as there is a difference of 20% or so between producing in India and there. Consequently, India had the opportunity to export more than a fifth of its total car production in India. So even when the domestic front was facing slow growth rate due to global meltdown, exports grew overwhelmingly by 45 percent.
A buying experience like no other Hyundai Motor Company offers a globally competitive and diverse product portfolio through its sales network; 6,000 of dealers and 24 overseas production and sales bases, in over 180 countries worldwide. Additionally, Hyundai continues to aggressively target overseas markets by establishing local production bases in key markets. Efforts to actively respond to and deal with the demands of each market include the operation of second plants in the emerging markets of India, China, and the Czech Republic. The Hyundai Motor Company network will further expand with the Russia Plant scheduled to commence mass production in January 2011. As the Hyundai company is one the established and renowned company with a good 57
sales network all over the world, it has also covered almost all the main cities of the Nepal, with a number of sales offices and workshops. The Hyundai cars are easily available in different parts of the country.
Strong brand name Hyundai already has become a huge brand name now so the dealers in Nepal don't need to effort much to push the sales of the Hyundai cars. The company Hyundai believes that technologically advanced product and the strong brand appeal are pulling the feet of the customers toward showroom.
B. WEAKNESSES
Delay in delivery As in Nepal, there is no production of cars and has to totally depend on the imports from India and Korea, so many problems with the imports like customs and duties, transportation time, various strikes etc may likely delay in the delivery of automobiles time to time.
Lack of experience Although Hyundai vehicles were imported officially to Nepal by AVCO International P. Ltd from 1999, Laxmi Intercontinental P. Ltd. started importing and selling Hyundai brands of vehicle in Nepal after the acquisition of distributorship in February 2009. So as for the new sole distributor, it has recently acquired the dealership and does not have enough experience compared to other automobile dealers in Nepal.
Lack of talented staffs Sales person and marketing executive are not well trained about the technical feature and specifications to have better product and customer behavior. As the customers of Hyundai are facing the problems with the sales staff, and even some of them don’t have the driving license and are not able to provide correct information about vehicles, it can 58
be considered as a serious weakness of the company Hyundai in Nepal.
Shortage of huge investment As we know that a vehicle industry needs a huge investment to keep a stock of vehicles and spares ready available whenever the customer needs and to equip the after sales maintenance service with modern technology. So the poor delears and sub dealers in Nepal are not able to meet the demand of the customers in time and are not providing the maintenance with latest technology available in the international market.
C. OPPORTUNITIES
Leading growth Hyundai, the second-biggest car maker in India behind Japan's Suzuki Motor Co's unit Maruti Suzuki, hopes to sell 340,000 vehicles in 2010 from 290,000 last year, H.W. Park, managing director of Hyundai India, told reporters. The latest sales figures from automotive industry body ACEA show that Hyundai is, once again, the leading volume brand for sales growth in Europe in 2009. Published in the last week of December, ACEA's report indicates a rise of 46.8 per cent in Hyundai sales in November (to 28,162 units), ahead of the market increase of 26.6 per cent. In the year-to-date, Hyundai has achieved growth of 26.1 per cent (to 315,655 units) while the market has declined by 2.8 percent of Hyundai India, told reporters. Sales of the i-models have made a significant contribution to the firm's performance. Over 100,000 of the A-segment i10 have been sold so far in 2009, representing an 88 per cent improvement over last year. The i20 has driven up Hyundai B-segment sales by 28 per cent.
As for Nepal,the sales of Hyundai cars are increasing every year. In the year 2009, Hyundai sales increased by 34% compared to the year 2008 and the Hyundai covered the market share of about 28.5% in the year 2009. Product line 59
The product line for Hyundai cars has improved considerably over the past few years. Hyundai cars provide a high level of content for an affordable price, and are currently backed by one of the industry's longest warranties.
D. THREATS
Challenging infra structure Nepal, a mountainous country with a lot of nature barriers where the roads don’t meet the international standard. So, this infra structure itself a great barrier for a automobile industry.
Small market Nepal is a small country with a very low per ca-pita income. Average people can not afford to buy a private car so only some people with high income are interested as a result the market for the automobiles car is small in Nepal.
Threats from Competitors The Indian local car producers like Maruti Udyog Limited and Tata Motors Limited, and the Japanese cars like Toyata and Nissan are a big threat to the Hyundai cars. On the basis as a price Maruti and Tata motors are offering cheap cars whereas concerning the durability and performance, Japanese cars are creating a tough competition. So there exists a highly competitive and concentrated market.
Commodity Price Risks Hyundai commodity price risks to higher costs due to changes in prices of inputs such as steel, aluminum, plastics and rubber, which go into the production of automobiles. In order to mitigate these risks, the company continues to attempts to enter into long term contracts based on its projections of prices. In a volatile commodity market, where your company gives top priority to ensuring smooth availability of inputs, long term contracts are helpful. They also help minimize the impact of growing input prices. Conversely, 60
long term contracts dilute the benefits, if any of a decline in input prices.
Exchange Rate Risk The company is exposed to the risks associated with fluctuations in foreign exchange rates mainly of import of components & raw materials and export of vehicles. The company has a well structured exchange risk management policy. The company manages the exchange risk by using appropriate hedge instruments depending on the prevailing market conditions and the view on the currency.
Risk Factors In the course of its business, Hyundai is exposed to a variety of market and other risks including the effects of demand dynamics, commodity prices, currency exchange rates, interest rates, as well as risk associated with financial issues, hazard events and specific assets risk. Whenever possible, they use the instrument of insurance to mitigate the risk.
5.3.2 PEST ANALYSIS FOR HYUNDAI CARS A. POLITICAL Political environment has a direct impact on any county’s business environment and when it comes to underdeveloped nations such as Nepal , whose economy has been seriously affected by the political conflict in recent years; its impact on business has been very lethal. Political situation in Nepal is one the major unstable component and a major problem to the automobiles industry as well. As political stability is very important to run a business smoothly, its instability is affecting negatively a lot to current companies and is conveying a negative message to the new business entrepreneurs as well.
As for the political environment, i would like to focus on the following basic points.
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Tax policy As customs and duties are a principle source of domestic revenue for any country and specially for a developing country like Nepal where there is zero production of automobiles car and have to totally depend on the imports, the government is charging a lot on such imports For importing vehicles following tax & Duty are applicable.
a.
Customs duty - 55%
b.
Excise Duty - 60%
c.
VAT - 13%
d.
Road improvement Charge - 5%
Trade restrictions and tariffs Generally , trade restrictions and tariffs are practiced by the countries who give priority to their domestic products or the cars produced at home country, to save and enhance the domestic market and balance the exchange rate by deducting the imports. And for a developing country like Nepal, which don’t have any local car companies, there is not much choice for the governmnet of Nepal to control or restrict the imports of cars which is very important as a means of transportation for the people except charging high tariffs rate. So as for the imports of vehicles, there are no such any restrictions and importers are allowed to import in any quantity according to the demand for the vehicles by the people.
There is no existing law for restriction to import any number of vehicles but No any second hand or reconditioned vehicle are allowed to import. Also the dealer or subdealer only can import vehicles for business and personal use.
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Environmental regulations The pollution control department allows importing vehicles as of the Nepal Mass Emission Act 2056 (As of Euro II) can only imported. Banning of the use of vehicles older than 20 years in capital Kathmandu Valley.
Employment laws As for the basic salary approved by Government of NepalUnder officer level NPR. 9000/Officer level NPR. 13000/Executive level NPR. +25000/-
B. ECONOMIC GROWTH RATE: Economic growth is important if businesses are to grow and prosper. It relates to growth in the output of the economy as a whole. Over time real economic growth leads to major improvements in living standards, expanding existing markets and opening new ones. The real economic growth of one country relative to another is an important indicator of business opportunity. Economic growth depends on productivity and investment: using existing resources more efficiently and investing in new resources. Success in this process generates increased incomes which then fuel demand and encourage further economic growth. This cycle can, however, work in the reverse direction, as falling demand may lead to under-used resources and investment cutbacks. When a business enterprise is setting objectives and strategy for the future, economic growth is a vital factor to consider. Firms with products that are necessities are much less affected by the upturns and downturns of economic growth. 63
But firms selling luxuries are much more sharply affected by changes in economic growth. Home furnishings, restaurants, holidays and cars are all types of product where economic growth is a critical factor when setting business plans.
Table 9: Real Growth and Inflation Rate of Nepal Year
Real growth rate
Inflation rate
2005
3.00%
2.90%
2006
2.70%
7.80%
2007
1.90%
8.60%
2008
3.20%
6.40%
2009
4.70%
7.70%
Source:http://www.indexmundi.com/nepal/
C. SOCIAL FACTORS: As for the social factors of the PEST analysis, we can consider various factors such as population growth rate of the country, age distribution, career attitude, health consciousness of people. As Nepal is a country with rich social cultures and values, any business firms must try to understand the perceptions, preferences and behaviors that usually influence the welfare of a business firm in the long run
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Table 10: Population Growth Rate Year
Population Growth Rate
2008
2.1%
2009
1.28%
2010
1.42%
Source: http://www.indexmundi.com/nepal/
Table 11: Size of Population and its distribution
Year
2009
Population
28.5 approx.
Age<15
36.6%
Age15-64
59.2%
Age >64
4.2%
Urban Population
17%
Life expectation at birth
65.46 years
Literacy rate
48.6%
million
Source:http://www.theodora.com/wfbcurrent/nepal/nepal_people.html
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D. TECHNOLOGICAL ENVIRONMENT : Technology plays a vital role in business. Almost all businesses and industries around the world are using computers ranging from the most basic to the most complex of operations. As for the technological environment, the importing firms in Nepal are updating with the available new featured models of cars in the international market and introducing them as soon as possible. So, here a a couple of examples concerning the advancement of Hyundai cars.
Low-pollution technology
At the heart of our environmental protection efforts is what's known as after treatment technology. Our catalytic converters help to prevent air pollution by converting harmful engine-out emissions to harmless substances.
Lightweight vehicles
The fuel consumption of a vehicle is proportional to its weight, so making cars lighter is crucial to improving fuel economy and reducing emissions. Lighter weight also leads to decreased rolling resistance, vibration and noise, which in turn result in improvements in steering stability and power performance. This is why we apply light materials such as aluminum, magnesium, plastics and composites to our components wherever possible.
Harmful substance reduction technology
Hyundai has introduced a lead-free fuel tank and lead-free protective coating by developing environmentally friendly materials. Also, lead-free wire coatings in electric equipment have been adopted, while lower lead content aluminium bearings and bushing have been developed too.
Fuel cell technology
Fuel cell technology similar to the systems powering NASA's space shuttles is bringing us closer to a future that's free from polluting vehicles. Our Tucson FCEV was the first 66
all weather Fuel Cell Electric Vehicle (FCEV) with ignition that can operate at sub-zero temperatures. And the Santa Fe Fuel Cell Vehicle was the first in the world to use a 350hPA high pressure hydrogen storage system. Both fuel cell vehicles are more efficient than conventional combustion engines and produce zero emissions.
5.4 Problems Faced by Automobiles Industry
In Nepal vehicles importers are facing tough competition. Most of the importers are launching ambitious marketing strategy in the market. In this ground, marketing of Hyundai cars in Nepal is tough and ambitious. Generally, Hyundai cars are categorized as middle class cars and has reasonable price. Transportation is needed to deliver the final products in the place of consumption. Transportation is needed for delivery of the product and even used by people to the reach the destination. For delivering the product large vehicles like truck, lorry, tanker, train, tractor, aeroplane, ship etc are used whereas ship, airplane, car, jeep, van, minibus, train, helicopter etc are used by people to reach the destination. Nepal is mountainous country due to which it is difficult to deliver the product to the place of destination in the right time. So the importance of the transportation is very high. Generally in Nepal, truck, lorry, and tankers are used to carry the goods from one place to another. Trucks are used to carry construction goods like iron rod, cement, brick, sand, stone, timber, daily consumable product like rice racks, wheat, vegetable, etc. Lorry is used to carry huge machinery equipment like generator, welding machine, drill machine, car, motor bike etc. Tankers are used to carry petroleum products. Due to mountainous country, it is difficult to build road, railway track and airport in Nepal. It is costly to construct road and railway track in the hills. Besides, Nepal hasn't enough budgets to construct the road and railway track in the hill.
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The major problems of vehicles and transportation are as follows:
1. Due to landlocked and mountainous country, it has become very difficult to supply goods from one place to another place. 2. Transportation of goods by carrying at the person’s back is not possible in the 21 st century; vehicles are needed for transportation of goods promptly and safely. 3. Due to landlocked country construction of road in mountainous country is very expensive and transporting of product in the mountainous roads is very dangerous as well. 4. Nepal is poor country and it has not yet manufactured vehicles that can carry goods and people as a result, importing of vehicles is increasing. 5. Nepalese people, due to expensive price cannot buy vehicles to transport product from one place to another. 6. Due to the import of vehicles, vehicles maintenance cost is also expensive as spare parts has to be imported as well. 7. International standard roads are not constructed in Nepal yet and even pitched roads are available in selected place due to this transporting of goods by vehicles is difficult. 8. Small and narrow road of Nepal has made difficult to drive vehicles as a result prompt delivery of goods has become impossible.
In Nepal, roads have not been constructed of international standard, narrow and graveled roads has made difficult for vehicles to run. Besides, due to graveled and narrow roads, vehicles accident rate has increased and quick delivery of goods to the place of consumption has made difficult. Vehicles are imported from other country; so vehicles are expensive to the Nepalese farmer. As Nepalese farmer cannot buy their own vehicles and use the public transportation as a result there is delay in the delivery of the products. Vehicles are imported to carry people from one place to another. Private and public vehicles are used to carry people from one place to another: bus, car, van etc are used for 68
prompt and safely arrival to the destination in the main objective of the cars and buses. It helps people to reach the destination safely and quickly. Under this ground, the study of the marketing of vehicles is relevant.
5.5 Analysis of Questionnaires Respondents
A. Market Segmentation Related:
Question 1. Sex? Out of the 200 customers who participated as respondents, it is realized that 63% of them are male and the rest 37% female are having automobiles car in Nepal.
Figure 6: Ratio of male and female customers Source: Survey of questionnaires(Created by Author)
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Question 2. Profession? Most of the respondents that is about 43.5% are business persons, 26.5% are the specialists like doctor, engineer, or professors, 27% are having other professions like middle level/corporate job holders and only a few are doing nothing so they are dependent on their parents and lastly only about 3% of students are having cars in Nepal. Question 3. Age? About 53.5% of the total customers having an automobile car fall between age 26-35, 40% between 36-45, 3% for both age between 18-25 and 46-55 and only 3.5% fall under the age more than 55 years. Question 4. Education level? Out of the total respondents about 63.5% are graduates, rest 36.5% are skilled whereas respondents with secondary level education are null.
Figure 7: Education ratio of customers Source: Survey of questionnaires(Created by Author)
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B. Feature and Factors Related:
Question 6. Who influenced your car buying decision? On the influencing personal factor for the buying decision, 56.5% were self motivated to make their own decisions to buy a car, 20% had a view of their parents, friends and relatives whereas the rest 23.5% went with the view of the sales representatives.
Question 7. Which factors influenced your car buying decision? When customers were asked what influenced their purchase of a vehicle, only 10% and 6.6% gave their priority as brand image and last experience respectively. Otherwise the rest considered the multiple factors. Like the majority 38.8% of customers agreed that their purchase of a car was a result of price, after sales service and financial schemes. For the other respondents sampled 26.6% of the people were of the view that brand image and after sales service were the major influence on their purchasing behavior. And the rest 20 % preferred price and financial schemes as their influencing factors.
Question 8. What features of car influenced your car buying decision? As a single feature of vehicles, 10% and 26.6% of the total sampled people preferred engine power and fuel efficiency respectively. Whereas the rest went for the multiple features again. Majority of the respondents that is about 30 % considered as safety and fuel efficiency as their motivating factors, 16.7% went with the features engine power and car size, 13.3% were of the view that safety, car size and fuel efficiency were the major influence on their purchasing behavior and only the rest respondent 3.4% gave their priority on engine power, safety and car size.
Question 9. Which media affected your car buying decision? The results showed that the majority of the customers that is 40% were affected by the media television, 26.5% by personal sales, 16.5% preferred through the internet, 10% went to the newspaper, only 7% to auto show and null to the media radio.
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Figure 8: Ratio of effectiveness of media Source: Survey of questionnaires(Created by Author)
C. Buying Process Related:
Question 10. What was the process of vehicles buying? As for the process of vehicles buying, an interesting result has been found that 100% percent of the customers surveyed visited various showrooms and ordered an interval of time. So, the percent of customers who visited a showroom and bought the same day and Directly ordered through phone calls/internet is null.
Question 11. Did you go for a test drive of the vehicles before buying? Out of the total customers surveyed, majority of respondents 76% went for a test drive before they bought the vehicle and whereas the rest 24% didn't go for any test drives before buying.
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Figure 9: Ratio of customers for test drive Source: Survey of questionnaires(Created by Author)
Question 12. When did you buy a car? Almost about half that is 46% of the total respondents waited for some special festive discounts or offers whereas the rest 54% bought the vehicles at the time needed.
Question 13. Did you use any financial institutions for vehicle financing? A dominating customers that is 86% of the total respondents used financial institutions to support themselves to buy the vehicle whereas only 14% of the respondents bought in cash without using any financial institutions.
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Figure 10: Ratio of customers for funding vehicles Source: Survey of questionnaires(Created by Author)
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6 RECOMMENDATIONS Nepalese market is basically seller–oriented market and the bargaining power of the people is weak. Therefore there is a lack of product and market specialization in the country. Here are some recommendations for Laxmi Intercontinental Pvt. Ltd. which would help them for the better sales and marketing performances.
•
•
•
•
•
After sales service support should be well maintained and upgraded since the satisfied customers are the best advertiser of the product. The company should try to give the maintenance service with the latest technology available in the international market. Sales person and marketing executive should be trained about the technical feature and specifications to have better product and customer behavior. So after this, the staffs will be able to give more accurate descriptions about the product and features and can help to satisfy the customers more. Company should reduce the interest rate from @7%-@9% to @5% and EMI scheme time should be increased. As people are more interested to invest in more high returning fields such as real state and companies shares so if the company Hyundai Make some special agreements with banks to decrease the interest rate and increase the installment time, more customers will be motivated to buy the brand Hyundai. As people like surprises and gifts, company can give some special surprise gifts on customer’s birthday or anniversary. So the company can keep some records of special dates like birthday and anniversary of its customers and deliver some special gifts. Surely it will help to maintain a customer relationship management(CRM). Companies are irritating to customers by giving frequent phone calls, so company should do this according finding the potential customer. So if the company avoids such practices, it will help to stop spreading negative impact of the company on customers’ mind. 75
•
•
•
•
•
As the automobiles industry in Nepal are not able to deliver the cars on time due to the lengthy process of customs and duties as a result customers are bothered by that, the company should focus on the delivery time of the vehicles and should not promise any which they can not do later. So its better to tell the fact when they actually can deliver the vehicles mentioning the circumstances around. Company should appoint more individual agents to increase sells so that when customers visit the showroom, they must be ready there for display and manage the test drive. So the company must consider the valuable time of customers and try to give services more effectively and efficiently. There should be some approaches to attract foreign joint venture automobile company in Nepal. So that it will help to minimize the cost of automobile in the country. Mobile service should be launched so that customers can fix their problems on mid way. As the country Nepal has so many rural areas and customers are having many problems on their way and are not able to find mechanics to fix the problems. Considering it, if the company provide some mobile service and be available in such hard situations, customers will be delighted and be more loyal to the brand. To enhance the customer relationship, company should do some social works such as blood donation, folk dance competitions, scholarship etc. So, if the company engage itself in such social activities, it will help in the brand awareness of Hyundai.
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7 DISCUSSION
Focusing on various marketing strategies practiced by the automobiles industry in Nepal, there is no majority against the importance of advertisement because it is true that advertisement plays a vital role in the field of marketing of any product and services. Majority of companies are making huge amount of expenses on the advertising of the product or services. A remarkable portion of marketing budget is devoted to advertising. Advertisement has become a means of very easy and prompt mass communication. Any organization can communicate its mission, object, service and product to its target market. Advertising is one of the most imperative promotional tools for companies to direct persuasive communications to desired buyers and public. Financial schemes are used as a strong marketing strategy by automobiles industry that is being facilitated to the customers. As in Nepal, most of the customers want to use financing scheme because they don’t want to freeze huge amount of investment in one product. They want to mobilize their money in earning parts such as real state and companies shares. By this scheme, they can pay in installments. Knowing these requirements of the customer, companies of the automobile are trying to reduce the interest rate. For this, they are trying to contract with different banks and finance company such as Hyundai company is contracted with Everest Bank Limited. On this period companies are offering interest @7%- @9 % on hire purchase. They are also offering 5-7 years installment time. Laxmi Intercontinental Pvt. Ltd. are getting aggressive to push the Hyundai cars in the market. The company is adapting every possible and available promotional tools to sell its product and services in the market. It wants to have the challenger attitude not the leader in the market. The company believe that technologically advanced product and the strong brand appeal are pulling the feet of the customers toward showroom. To capture the greater market share the companies is expanding its sub-dealers and personal sell agent. As there is a high demand of cars, nowadays people are practicing advance booking and payment for new models of car to be one of the first owners in the market. To capture more its market, automobiles companies are regularly doing social work such as blood donation, sport event, exchanging facility, mobile service etc. They always 77
trying to launch new model and new technology as soon as possible. And the company Hyundai is doing well with all these. Recently, with the sponsor of one the biggest sports event FIFA World cup, a cash discount up to 1000 euros were offered in the Hyundai cars. In Nepal buying car is very expensive because they are imported from the second and third country. Customs and duties charges on vehicles are very high. Importing of such costly vehicles has improved the living standard and social prestige but the huge amount is going out from the country Nepal since such vehicles are not manufactured in the country. Nepal also used to manufacture “HULAS” brand vehicles and it was c heap than other imported branded vehicles. It seemed very strong and was used in carrying goods. In spite of being cheap and strong , it failed to capture its market because it could not meet the international standard that customers are looking for in a car these days. Each year thousand of vehicles are imported in the country. Import of so many vehicles has made the road slow in the city. Vehicles are increasing day by day but the roads for those newly imported vehicles have not been constructed. So traffic has become slow in the pick hour 9am-11am and 4pm- 6pm. Too many traffic in the city has been making the pollution in the city. Sound and air pollution are the major problem in the city. Thus the government should take the necessary action and should check vehicles green sticker time to time. Laxmi Intercontinental Pvt. Ltd. has no good trained sales person even some showroom sales persons do not have driving licenses. They may provide wrong information to the customer about the product. Not only that in the promotion section, staff are not good and they do not fulfill what they had given commitment. It also flowing the bad impression on the public. The customers are supposed to get the vehicle delivered within one month from the day of booking but the customers do not get the vehicles delivered even the after the two/ three month from the booking. Because of this, most customer cancel the booking and buy the other cars. Today in the global market, customer does not want to waste their valuable time and inner desire.
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Limitation of the Study Due to small budget, I have not been able to market overall study of the brands available in the Nepalese market. Although, I have taken only one brand namely, HYUNDAI and but have studied in depth. I have assumed that the only brand HYUNDAI and ignored rest in this study. The data have maintained was provided by the showroom and some are downloaded from the internet, office records, annual reports and articles were taken while preparing the proposal. As I was not able to go to the field Nepal personally for survey of respondents for questionnaires but I still managed to collect the required quantity with the help of friends and family over there. Although I was having a distance problem, the marketing manager helped to provide me necessary required internal data and responses through mails and calls.
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8 CONCLUSIONS Today in this 21 st century, any business cannot sustain with out the marketing. Marketing starts even before the business concept emerges. The concept of business needs marketing to get the identity in the market and sustain in the global market competition. Marketing is most important thing in every stage of product life cycles Marketing strategies for automobiles car in Nepal have a high significance. Nepalese market of automobile has really become competitive as there are lots of automobile brands. There is no doubt that customers have many options to choose. They can move anywhere as they like. To become successful in such hard market situation, each every marketer is trying to provide as much facilities that can be offered. They are using varieties of promotional tools to attract potential customers toward showroom. Every automobile dealer in Nepal as a crucial strategy is offering competitive schemes to its customer. Every possible facility is being offered to the market.
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9 BIBLIOGRAPHY •
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KOTLER, P. -- ARMSTRONG, G. Principles of Marketing. 5. vyd. Englewood Cliffs: Prentice Hall, 1991. 3 s. ISBN 0-13-721614-9. KOTLER, P. -- KELLER, K. L. Marketing management . 1. vyd. Praha: Grada, 2007. 788 s. ISBN 978-80-247-1359-5. PELSMACKER, P. D. -- GEUENS, M. -- BERGH, J. V. D. Marketing communications : a european perspective. 2. vyd. Harlow: Prentice Hall/Financial Times, 2004. 578 s. ISBN 0-273-68500-7. STROH, M. B. A practical guide to transportation and logistics. 3. vyd. Dumont, NJ: Logistics Network, 2006. 284 s. ISBN 0-9708115-1-9.5. BALLOU, R. H. Business logistics, supply chain management : planning, organizing, and controlling the supply chain. vyd. Upper Saddle River, NJ: Pearson Prentice Hall, 2004. 799 s. Pearson education international. ISBN 0-13-123010-7. KOTLER, P. -- ARMSTRONG, G. Marketing. 1. vyd. Praha: Grada, 2004. 855 s. Expert. ISBN 80-247-0513-3. Kotler, Philip. (2000) Marketing Management. Upper Saddle River, New Jersey: Prentice Hall Batagoo, Mukesh, (2007), "Consumer's Behavior Towards Buying Cars in Kathmandu Valley", an unpublished Master's Degree, Thesis Nepal Commerce Campus, Min Bhaban T.U.
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