Research Article: 2021 Vol: 24 Issue: 5
Amina Mohsin Ali, Central Institute of Business Management, Research and Development
Ravindra Gharpure, Central Institute of Business Management, Research and Development
Citation Information: Ali, A. M., & Gharpure, R. (2021). Impact assessment of customer motivation on market behaviour of twowheeler automobile industry. Journal of Management Information and Decision Sciences, 24(5), 1-10.
A study of the two-wheelers automotive market of India is presented to highlight the impact of market factors on the two-wheelers industry. Marketing strategies of different companies, the technical upgradations, advancements in design s to face the market competition are reviewed. The study intends to lay a foundation for the researchers in the marketing area to identify the key factors to holding a steady position in the market. The entry of new players in the Indian market changed the trend so that the existing companies facing a big challenge. The sales statistics of automotive companies are analyzed in the study to find a way to stand in the market. The impact of consumers' expectations and the recent amendments in the government norms to take the emissions, design, and road accidents are useful to discuss in the paper.
Vehicle-brands; Customer satisfaction; Manufacture; Two-wheeler industry.
The two-wheeler company entered the Indian market in the year 1948 when Bajaj Auto Ltd. tied up with Piaggo Ltd., Italy to import scooters under the brand name Vespa. In the year 1949, Automobile Products of India in collaboration with Innocenti Ltd. Italy started manufacturing the moped Lambretta. Till the year 2018, this industry has seen constant growth with several Indian as well as foreign two-wheeler companies entering the Indian market.
The shift in the preferences of the consumers from geared scooters and mopeds to motorcycles and gearless scooters which were more fuel-efficient had better technology as well as the aesthetic appeal had a major impact on the two-wheeler companies in the Indian market. The companies which were successful earlier either phased out or lost their market share to the increasing competition. The major players today are Hero Motocorp, Bajaj Auto Ltd., TVS Motor Company, Honda Motorcycle, Royal Enfield, Suzuki Motorcycle, Yamaha Motors, Piaggio Vehicles, Mahindra Two Wheelers, UM Motors, KTM Industries, and Kawasaki Motors.
The role of customers is indeed one of the most important factors for any industry to soar or dive. To be able to understand the customers, authors in the marketing area put forth many relevant definitions for the researchers, marketers, and for that matter all stakeholders right from manufacturers, buyers, and sellers for strategic management. Some of these definitions of customer perception, motivation, behavior, and satisfaction are listed in subsequent sections (Homburg et al., 2009).
Consumer Perception
Basically, perception is the process by which physical sensations such as sights, sounds, and smells are selected, organized, and interpreted (Solomon & Panda, 2004). The consumer perception as a “marketing concept that encompasses a customer’s impression, awareness or consciousness about a company or its offerings” (Homburg et al., 2009). The entire process by which an individual becomes aware of the environment and interprets it so that it will fit into his or her frame of reference. Perception includes all those processes by which an individual receives information about his environment - seeing, hearing, feeling, tasting and smelling. The study of these perpetual processes shows that their functioning is affected by three classes of variables - the objects or events being perceived, the environment in which perception occurs, and the individual doing the perceiving (Kashyap, 2016; Avesh & Srivastava, 2020).
Perception refers to the interpretation of sensory data. In other words, sensation involves detecting the presence of a stimulus whereas perception involves understanding what the stimulus means. For example, when we see something, the visual stimulus is the light energy reflected from the external world and the eye becomes the sensor. This visual image of the external thing becomes perception when it is interpreted in the visual cortex of the brain. Thus, visual perception refers to interpreting the image of the external world projected on the retina of the eye and constructing a model of the three-dimensional world (Kashyap, 2016).
Consumer Motivation
Motivation refers to the process that leads people to behave as they do. It occurs when a need that the consumer wishes to satisfy is aroused (Solomon & Panda, 2004).
Consumer Behaviour
Consumer behaviour is the study of how individuals, groups, and organisations select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. According to Engel, Blackwell, and Mansard, ‘consumer behaviour is the actions and decision processes of people who purchase goods and services for personal consumption. Bitta states that, ‘consumer behaviour is the decision process and physical activity, which individuals engage in when evaluating, acquiring, using or disposing of goods and services.
Solomon and Panda (2004) ‘consumer behaviour is the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires. The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs” (Schiffman & Kanuk, 2007)
Consumer Satisfaction
Customer satisfaction as the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services exceeds specified satisfaction goals. Actually satisfaction is a ‘person’s feeling of pleasure or disappointment, which resulted from comparing a product’s perceived performance or outcome against his/her expectations’ (Kotler, 1994).
Oliver (1980) defines that “Customer satisfaction is a summary psychological state. When the emotions surrounding disconfirmed expectations are coupled with the. Consumer’s prior feelings about consumption experience” (Anderson, 1994). Further, the consumer's fulfillment response is a judgment that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment, including levels of under-or-over fulfillment.
Qualitative analysis from the theoretical conceptualization of the factors on consumer perception, motivation, behaviour, and satisfaction were drawn to study the impact of these key factors and the market behaviour of the two-wheeler automobile industry, secondary data was collected from the authentic company websites and published business stories from reputed publications. For each company the business developments were chronologically recorded in a tabular form focusing on the main areas like Year of Inception, Year of Phase out, Collaboration, Segment, Brand Name, and Manufactured/Assembled/Imported. The statistics of brand and company-wise data is presented in subsequent headings (Mohd & Srivastava, 2018; 2021).
Automobile Products of India
In 1949 API in collaboration with Innocenti Ltd., Italy started manufacturing mopeds under the brand name Lambretta 48 cc moped and Lambretta D and LD series of scooters. After Scooters India Ltd. acquired exclusive rights to Lambretta in the year 1972, API sold its scooters under the brand name MAC. With the rise in competition the scooter Lamby failed to sell, thus its production was stopped (Table 1). The company faced a downfall from the year 1986 onwards due to increased competition as well as the recession and finally, in the year it stopped the production of the two-wheeler (Maheshwari & Ahlstrom, 2004).
Royal Enfield- Enfield India
The entry of Royal Enfield into India was in the year 1954 when the government of India imported 800 units of Royal Enfield Bullet 350 cc motorcycles for border patrolling and police requirements. In 1990 Eicher Group, India tied up with Enfield Ltd. U.K. to manufacture motorcycles under the brand names Classic 350, Thunderbird, Interceptor, Continental GT and Himalayan. The Royal Enfield Bullet 350 cc was discontinued in March 2020 as it could not comply with the BS6 emission norms (Table 2). Thunderbird 350 cc and 500cc are to be replaced by a new model Meteor (Muthiah & Karmakar, 2021).
BAJAJ Auto Ltd.
Bajaj Auto started in the year 1945 under the name M/s Bachraj Trading Corporation Pvt. Ltd. In 1948 it collaborated with Piaggio Ltd., Italy and imported the Vespa scooter. Manufacturing of Vespa in India was initiated in 1959. The Piaggio license expired in the 1971 and could not be renewed because of Indira Gandhi’s privatization policy. Bajaj Auto partnered with Kawasaki, Japan in the year 2009 and started manufacturing the 100cc motorcycle Kawasaki Bajaj. In 2000, the production of KB 100cc was ceased as the Indian government introduced stringent emission regulations (Table 3). The Partnership with Kawasaki ended in the year 2017 because of conflicting interests as Bajaj had developed close relationship with KTM, Austria. Following this breakup, Bajaj tied up with Triumph Motorcycles Ltd, UK and started manufacturing mid capacity motorcycles in 2017 (Swalih et al., 2021).
TVS Motor Company
The company started manufacturing mopeds TVS 50 in the year 1979. In 1984 it collaborated with Suzuki Motor Co., Japan for the purpose of transfer of technology for design and manufacture of two wheelers for the Indian market. The company which had been incorporated as the Indian Motorcycle Pvt. Ltd was renamed as Indo Suzuki Motorcycles Pvt. Ltd. The product that was manufactured was Ind-Suzuki 100 cc motorcycle. It acquired the assets of the moped division of Sundaram Clayton Ltd. in 1986 and its name was changed to TVS Suzuki Ltd. Scooters were also added to the production line in the early 90’s. The collaboration with Suzuki Motor Co. came to an end 2001 due to differences between the managements of both the companies (Table 4). Today TVS is one of the largest scooter manufacturers (Shah, 2011).
Hero MotoCorp. Ltd. (Earlier Hero Honda Motors Ltd.)
Hero Motorcorp Ltd. was started in 1984 as Hero Honda as a joint venture between Hero Cycles, India and Honda Motor Co., Japan (Table 5). The product that was manufactured was CD 100 motorcycle. In 2006 the company introduced a 100cc scooter, Pleasure. The technology tie-up which was to end in the year 2014 was called off in 2011 because of differences between the two parties (Choudhury, 2018).
Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI)
HMSI which is a 100% owned subsidiary of Honda Motor Co. Ltd., Japan was established in the year 2001. At the onset it manufactured the popular Activa brand scooter (Table 6). At present it is India’s 2nd largest manufacturer of two wheeler’s (scooters and motorcycles) and at present is gearing up to launch the e-scooter for Indian market (Saini, 2005).
Suzuki Motorcycle India Pvt. Ltd.
Suzuki Motor Co., Japan entered India in 1984 as a result of a collaboration with TVS, India to provide technical assistance to TVS. The Ind-Suzuki 100cc motorcycle was manufactured. The agreement ended in the year 2001 due to management differences and Suzuki re – entered India as Suzuki Motorcycle India Pvt. Ltd (Table 7). In the year 2006, it imported the high-capacity motorcycles Hayabusa and Bandit and started manufacturing Gixxer 1000 (Ahmed, 2019).
Yamaha Motors India Ltd. (100% Subsidiary of Yamaha Motor Company, Japan)
Yamaha Motors India Ltd. entered India as Yamaha Motor Company in the year 1985. It was a 100% Subsidiary of Yamaha Motor Company, Japan. CKD’s of the motorcycle RX100 were imported and assembled in India. After collaboration with Mitsui & Co. Ltd., Japan it ventured into manufacture of motorcycles and scooters whereas the higher end models were still brought in as CKDs (Table 8). It has a 10% share in the market in the premium sports motorcycle segment currently (Kumar & Singh, 2016).
Piaggio Vehicles
Piaggo Vehicles that earlier had its presence in India from 1948 till the year 1971 when its collaboration with Bajaj Auto Ltd. ended, came back to India in 2012 with the import of scooters Vespa and Aprilia. Manufacturing of the Aprilia SR 150 was started in 2016 (Table 9). It is basically a pioneer of 3 wheelers for the transportation of goods (Rath & Kar, 2014).
Mahindra Two Wheelers Ltd.
The Mahindra two-wheeler division was established in collaboration with Sanyang Motor Company, Taiwan, in the year 2008 after it acquired the business assets of Kinetic Motor Company Ltd. Initially it started with the manufacture of the scooters Rodeo and Duro (Table 10). At present it manufactures scooters as well as motorcycles (Ramamoorthy et al., 2017).
UM Motors (United Motors)-UM Lohia Two Wheelers Pvt. Ltd
UM Motors an US based company entered into a 50:50 Joint Venture with Lohia Auto, India to manufacture 280 cc cruiser motorcycles (Table 11). In 2019 it halted its production abruptly. The venture halted as it had partnered with Lohia that had no experience in the field of motorcycles and it was also supplying low quality parts that were imported from china and assembled in India (Ramamoorthy et al., 2017).
KTM Industry
KTM an Austrian based company partnered with Bajaj Auto in 2007 to manufacture sports bikes, KTM 125 cc and 200cc which were developed for European and Far East market. In the year 2012 it introduced the premium bike model Duke 200 in India (Table 12). At present it holds an 80% market share in India of premium motorcycles (Krishnan & Jha, 2011).
India Kawasaki Motors Private Limited (IKM)
In 2010 in collaboration with Kawasaki Heavy Industries Motorcycle & Engine, Japan Ltd. it entered the Indian super bike market. The Ninja 650 and Ninja 250 were launched during that year (Table 13). The company started assembling the various models of its motorcycles from the year 2013 (Krishnan & Jha, 2011).
Harley-Davidson India
Harley-Davidson a wholly owned subsidiary of Harley-Davidson, US entered the Indian premium bike market in 2009. It introduced 12 models of five motorcycle families, namely Sportster, Dyna, VRSC, Softail and CVO. These motorcycles are all CBU’s and are imported thereby attracting high taxes (Table 14). In 2014 it started manufacturing the Street 750 and Street 500, the rest of the bikes are still being got in as CBU’’s (Das & Ara, 2014).
Businesses operate with an aim of earning profits, but this can be achieved only when the customer is satisfied. India has always been a lucrative market for two wheelers because of urbanization, increasing number of working women, ease of travel that two wheelers offer as well as affordability. From the late 1940’s onwards the Indian market saw an influx of a number of two-wheeler companies, both local as well as global. The growing competition in the two-wheeler industry demanded that the companies pay extra attention not only to the demands of the customer but also to the rules and regulations laid down by the government of India. Those companies which failed to do so eventually phased out.
Motorcycles like Classic 350 from Royal Enfield and Kawasaki Bajaj 100 cc had to be discontinued as they could not meet the stringent emission norms set by the Indian Government. The foreign collaborations that the various companies had entered into were not always successful. Some of the ended before time due to differences between the managements for e.g. the technology tie-up between TVS Motor Company and Suzuki, Japan came to an end for this reason. The case with Hero Motor Corp and Honda, Japan was similar.
The increasing income levels has raised the standard of living. This has opened up gateways for high bikes of which a few like Gixxer 1000 by Suzuki are manufactured here. The rest are brought in either as CBU’s (Completely Built Units), CKD’s (Completely Knocked Units) or SKD’s (Semi Knocked Down Units). The CBU’s which earlier attracted import duties of 65-75% has now been slashed to 50%. The custom duties for CKD’s have been raised from 10% to 15%, whereas for SKD’s it has come down from 30% to 25%.
Thus, to stay abreast with the competition the manufacturers have to ensure that they are giving the best in technology, fuel efficiency as well as aesthetics for the price that the customer is paying. Availability of spare parts and after sales service are also important factors that help the manufacturer hold a steady position in the market.