Consumer Behaviour case study

The marketer has to learn about the needs and changing of the consumer
behaviour and practice the Marketing Concept. Levi Strauss & Co. were
selling jeans to mass market and did not bother about segmenting the market
till their sales went down. The study into consumer behaviour showed their
greatest market of the baby boomers had outgrown and their needs had
changed. They therefore came out with Khaki or dockers to different segments
and comfortable action stocks for the consumers in the 50 age group. Thus,
by separating the market and targetting various groups and fulfilling their
needs, they not only made up for the lost sales but far exceeded the previous
sales. They also targeted the women consumers for jeans and both men and
women started wearing jeans in greater numbers. The offering given by the
company must be enlarged to suit various segments.

For example Tata Motors Ltd. has come out with many models. Micro car,
Mini car, Compact car, super compact, Executive and premium cars, Luxury
and sub-segment cars, SUV, MUV and other models. For successful
marketing,one should:
1. Find consumer needs of various segments.
2. Position products (new and existing) to these segments.
3. Develop marketing mix for all products.

Solutions :
1 and 2 : Customer Behaviors of various Passenger Car segments are as
described below:
Micro Car Segment (Length < 3.2 Meter) - It is the lowest cost segment with
only one Tata Nano Car. Despite being the cheapest car, had serious initial
quality issues which damaged its brand image and customer faith. As a
product this segment will get preference for city drive over congested road
conditions wherein safety on road will be better than two wheeler.
Mini Car Segment (3.2 < L < 3.6 Meter) - It is the 2nd largest sub-segment
in the passenger car market is highly consolidated with 2~3 significant
players having 7 products. The reason for presence of relatively few players
in this segment is because of highly price sensitive consumer. To enable
competitive low cost manufacturing, high volumes and thus a large network
is required. Consumers of these segment cars are 1st time car buyers with
product price as deciding factor.
Compact car segment (3.6 < L < 4.0 Meter) – It is the most crowded segment
with about 13 players and 20 product offerings as it is the largest sub-
segment (~45% share) in passenger cars. Yet, the ability to manufacture low
cost good quality cars has resulted in the market being relatively
consolidated.
Super Compact (4.0 < L < 4.25 Meter) and Mid size Segment (4.25 < L < 4.5
Meter) - “Super
Compact”, the largest sub-segment, is comprised of sedans and marks the
beginning of 3 box cars in the segment.
“Mid-size” is the 4th largest sub-segment in passenger car market. It is also
the relative more
fragmented sub-segment with 11 players offering 14 products. Most players
in this segment either offer a product which shares platform with it offering
in the Compact subsegment or a global product.
Hyundai is the dominant player in this segment due to competitively priced
feature-rich product with option of both gasoline and diesel powered
engines.
The choice of car in this segment is driven by income. In this segment
customers first preference is for safety, driving & Seating comfort and brand,
second most preference is for after sales service, price, power and pickup,
mileage whereas maximum speed is of lowest preference. Also this segment
requires value for money, best features, and customer friendly vehicle.
Executive (4.5 < L < 4.7 Meter) and Premium class segment (4.7 < L < 5.0
Meter) - Due to low sub-segment volumes, most players offer global products
which are manufactured using CKDs (Completely Knocked Down kits). This
is an executive and premium class segment customer; most of these owners
tend to have purchased a car previously, the customer has potentially
developed an attitude towards car. In this segment attitude becomes an
evaluating judgment based on prior or present experience. These customers
preference is for attractive styling, brand image, best product performance
in terms of acceleration, max speed and higher horse power. These
customers seek to show personality, leadership from brand of car as most of
the customers prefer this segment for business purpose. Car price, fuel
efficiency, spares cost are of secondary importance. Car interiors styling
such as IP shape & finish, all customer touch points, seat, steering door
handle etc. are of high importance. Also exterior styling, overall look, paint
finish and safety & driving comforts are of prime importance
.
Luxury and Coupe sub-segment: These are relatively marginal segments
with less than 1%
combined share of the passenger car market. Almost all products in these
sub-segments are offered through the CBU route (Completely Built Unit) due
to miniscule volumes which neither justify neither localization nor local
assembly. This segment is of high end luxury cars. Average car price of this
segment cars is more than Rs. 35 Lakh and is growing at an average rate of
20% Y-O-Y.
According to the Report of World Wealth by Capegemini and Merrill Lynch
Wealth Management, most countries in the world have increased their HNI
(High Net-worth Individuals) count. While, India has more than doubled it –
maximum compared to any other country in the world. HNI customers are
celebrities, business leaders, and corporate honchos, politicians from urban
and rural India. Their attitudes are “Got it? Flaunt it”, “Power Show”, “Image
and Uniqueness”. High social status from perceived brand image is the
common driving factor of this segment. Superior functionality, best in class
quality and high end & customized features are the most preferred
parameters of this segment.
SUV & MUV Segment: This segment is actually utility segment further
segmented into UV1,
UV2, UV3 and UV4 based on length and price parameter. Economy segment
UV’s. Customers of economy and high end SUV shows difference mainly in
terms of affordability of vehicle price, spares cost and serviceability. Whereas
the main driving factor of this segment is fun, road presence,egocentric
relationship. In India economy class SUV’s found to be of better choice in
rural area as product image is rugged, muscular, rough& tough, worthiness
to bad roads. High end SUV customers are celebrities, business tycoons,
politicians those want to use car as indulgence. These segment cars are
having high perceived safety by customers because of looks, overall
structure and exterior styling of vehicle.
3.Marketing Mix
Tata motors is a leading automobile brand. It is most widely known for its
commercial vehicles such as buses and trucks. However, TATA motors have
also started an excellent expansion in passenger cars and it is rapidly
gaining market share. The Marketing mix of Tata Motors talks about the 4P
of the brand which has helped the brand rise in the automobile empire.
Product: Tata Motors is involved in manufacturing of vehicles in categories
that include cars Hatchback, Sedan and utility vehicles, Trucks, Buses,
Municipal Solutions, and Defence and homeland security. The product
portfolio in the marketing mix of Tata Motors also covers brands like Jaguar
and Land Rover. The consumers perceive the Tata Motors brand that
produces vehicles that provides reliability, high quality, and efficiency. Tata
Motors ranks in top four passenger vehicle brands in India. It focuses on
innovation and due its vast industrial experience, they continuously work
on developing new vehicles with robust technical specifications. In addition,
Tata Motors follow stringent Quality norms and abides by the rules laid down
by the regulatory agencies. In its focused developed on innovation, Tata
Motors had unveiled electric versions of Tata Indica car and Tata Ace
commercial vehicle that runs on lithium batteries. During Commonwealth
games, Tata Motors presented CNG – electric hybrid buses to Delhi
Transport Corporation that were part of environment friendly buses. The
Tata 407, of the Light commercial vehicle category has sold over 5,00,000
units since its initial launch.
Price: Tata Motors has a diverse portfolio, which means a diverse pricing
strategy. In 2008, Tata Motors launched Tata Nano the cheapest passenger
car in the world. It followed penetration-pricing strategy and vehicles
manufactured by Tata Motors are comparatively cheaper than its
competitors are. Due to its low price, it attracted media attention and the
vehicle reported an increase in sales figure within short time during the
initial days of the launch. The lower pricing of Tata Nano also resulted in
consumers perceiving it as a cheap product. The penetration pricing strategy
can act as entry barrier for new players in the segment targeting lower
income group. The pricing strategy in the marketing mix of Tata Motors
caters to the lower class as well as the affluent upper class. Tata Motors’
international acquisition Jaguar Land Rover targets niche customers
providing high quality features.
Place: Tata Motors has the third largest service and sales network in India.
To distribute its vehicles, it has partnered with various distributors across
India and the service centres are well equipped with the spare parts and
accessories. Tata Motors has extensive distribution network set up across
India, also major launches are displayed in showrooms to experience the
product. To purchase defence vehicles, Tata Motors has set up regional
offices in the states of West Bengal, Maharashtra, Delhi and Karnataka. It is
also involved in the sales of Pre – Owned Cars and provides features such as
extended warranty. Hence, this analyses the marketing mix of Tata Motors.
Promotion: Tata Motors has been known to having an aggressive marketing
strategy. To endorse its passenger vehicles globally, Tata Motors declared
Lionel Messi as their brand Ambassador. It also signed film celebrities as
brand ambassador for its commercial vehicle business. Tata Motors is the
prime sponsor of many events and it helped in creating awareness about its
new product Tata Tiago in the minds of the consumers. The company offers
discount to its customers as part of festival offers in India hence developing
interest among consumers. The promotional strategy in the marketing mix
of Tata Motors is carried out in the form of TV, Newspapers, and electronic
media. Tata Motors leverages upon Social media marketing to target
customers based on the search results. The Tata brand is considered a
trusted brand hence it uses the same to tap on the customers.

Conclusion :
Consumer behavior is a blend of Economic, Technological, Political,
Cultural, Demographic and natural factors as well as his own characteristics
which is reflected by his attitude, motivation, perception, personality,
knowledge and lifestyle. Marketers can rationalize their existence only when
they are able to understand consumer behavior. From study it was envisaged
to classify these behavior parameters under broad categories – Economic,
Social, Demographic, Geographic, Psychological, Product & Technology.
Based on the analysis it is evident that, increase in disposable income seems
to be the most important reason for buying a car. This trend is reflected in
the growth of the per capita income and consequently the growth of the
Indian automobile Industry. Similarly, the growing family needs like working
partners, increasing family size, status, etc. add to the motives of buying a
car. At the same time affordability of car price is the most important factors
for purchasing a particular segment car.