Developing a Marketing plan for the Sub 6

Ton Category Buses for Mahindra Navistar

Automotives Ltd.

Industry Guide Academic Guide

Mr. Ravi Manocha
Deputy Manager – Sales
Mahindra Navistar Automotives Ltd.
Prof. A.K. Biswas
Senior Professor, Marketing
Birla Institute of
Management Technology

By

Aparna Kishen

PGDM 08DM014

i
 Acknowledgement

I express my sincerest thanks to Mr. Rakesh Maru and Mr. Ravi Manocha, of
Mahindra Navistar Automotives Ltd. for giving me this opportunity to do my
summer project in their esteemed organization. I extend special gratitude to Mr
Ravi Manocha who is my industry mentor for helping me through out the project
and guiding me in its execution. I am obliged by the support extended by every
one at the Mahindra Dealership, Indraprastha Automobiles.

I express my heartiest thanks to my academic mentor Prof. A.K. Biswas for his
valuable suggestions and guidance at various stages of the project.

I would also like to pay acknowledgements to my professors, Dr. A. K. Dey for

his guidance in the research involved in the project and Mr. R. J. Masilamani for
his guidance regarding the flow of the project.

Aparna Kishen,

ii
08DM014

iii
 Certificate

Summer Project Certificate

This is to certify that Mr. / Ms. ______________________Roll No.
______________ a student of PGDM has worked on summer project titled
Developing a Marketing plan for the Sub 6 Ton Category Buses At Mahindra
Navistar Automotives Ltd. after trimester-III in partial fulfilment of the
requirement for the programme. This is his/her original work to the best of my
knowledge.

Date: __________
Signature ___________ Name of Faculty________
Seal:

iv
 Executive Summary

The project is performed at one of the most renowned Indian organizations,

Mahindra & Mahindra’s automotive sector, Mahindra Navistar Automobiles
Ltd., MNAL, having office in Delhi at Bikhaji Cama Place. Mahindra Navistar
Automotives Ltd is a 51:49 Joint Venture between Mahindra & Mahindra Ltd.
(M&M) and Navistar Inc. USA. Mahindra Navistar will manufacture the entire
spectrum of commercial vehicles ranging from 3.5 – 49 tons GVW/GCW. These
products are developed to suit Indian conditions and MNAL aspires to set new
levels of reliability, efficiency and customer experience unseen & unheard of in
the commercial vehicle industry.

The management objective is to develop a marketing plan for buses up to 6 ton,

which means the buses in the LCV or Light Commercial Vehicle category. The
segment includes both school and non school buses as those used for tours and
travels and buses owned by organizations as corporate houses and IT firms.

Currently, Mahindra has its Tourister range of buses in Delhi catering to

customers as varied as schools, tours and travels and co-corporate. It comes third
however in terms of school bus segment, the other competitor being Swaraj
Mazda, the leader in school bus segment with TATA finishing a close second.
However, in the tours & travels segment, Mahindra’ presence is very minimal
with TATA being the leader, followed by Eicher with its JV with Volvo, Ashok
Leyland and Swaraj Mazda.

Given these parameters, the project aims at gauging the customer behaviour by
broadly dividing the Delhi Bus Industry into school and non school segments. It

v
must be kept in mind that government DTDC buses do not come in the scope of
this survey. Methodologies used are Cluster analysis to segment the customers
based on their buying behaviour taking the benefits they seek; this being
followed by generating a Perceptual Map of M&M vs. TATA and Swaraj
Mazda.

The Indian bus industry has shown rapid growth over the last two years and
currently over 25,000 buses and coaches are produced annually, at par with
Western Europe. With still a largely untapped market, the industry is expected to
see even better days in the future. Hence, we did a segmentation exercise that
revealed three prominent segments where in segments with higher proportion of
light user (ones with below 5 buses) gave importance to price competitiveness,
over and above other factors. But heavy users (above 5 buses), especially
esteemed schools and almost all tours & travels gave importance to the Brand
recognition and spares & serviceability factor. Surveys revealed that brand
recognition is a term used for the cumulative effect of a long history of
servicing, easy financing, resale value, credibility and life time of the bus.

Technically, Mahindra buses are better than its competitors, both TATA and
Swaraj Mazda as they both give a mileage of around 7 to 7.5km/kg; however,
the Tourister gives a good mileage of as much as 8km/kg. Despite the above
mentioned edge, it has been seen that this feature is appealing to customers in
the school segment, but for those in the non school segment, the factor of
primary concern is that the bus should run well, if and when problems arise,
service centres should be available at the nearest possible distance and the spare
part availability should be high.

vi
MNAL should carry a regular check on their customer satisfaction indices by
visiting their existing customer base. Some customers had complained about the
salesman that he hasn’t seen him since the deal was closed. There is a good
percentage who said they are satisfied, but even 2 out of 33 customers would
make the percentage about 6 which in a narrow customer base of built buses (for
private organizations) is significant. The database of Hari Bhari buses that had
been sold by M&M prior to the 2008 Tourister range is significant as in it can be
used to push sales of the new Tourister range. It is always easy to maintain an
existing customer base than to make a TATA or Swaraj customer switch to
M&M (which is possible in due course of time with the right kind of strategies).
The visibility of Mahindra buses can be increased amongst potential customers
by participating as sponsors for school and college events. They can propose to
bear the transportation charges and transport students to the venue, thereby
imparting the experience of Mahindra buses. This can be further supported by
banners and standees advertising Mahindra buses (staying within the financial
viability limits).

If we look at the penetration of buses per 1000 people in India, it stands out to
be very less in comparison to other developing countries. The reason can be
traced back to government regulations which were stringent more than a decade
ago. However, times have seen a steady change. It is most appropriate for
MNAL to steadily build their brand value in terms of brand recognition,
financing feasibility, spare part availability, proximity of service centres and last
but never the least, technology. They say, you strike iron when hot and this is
precisely the time to do so.

vii
 Table of Contents

Chapter 1
Introduction
1.1 Company Overview 1

1.1.1 Brief History 1

1.1.2 Mahindra & Mahindra 2
1.1.3 The Future Ahead 3
1.1.4 Mahindra Navistar Automotives Ltd. 4

1.1.4a Navistar Inc. 5

1.1.4b Navistar’s Entry into India 6
1.1.4c The Joint Venture 7

viii
 Chapter2
The Project Objective
2.1The Management Objective 8
2.2 The Research Objective
8

2.3 Significance of the Study 9

2.4 Scope of the Study 10

Chapter 3
Methodology

3.1 Secondary Data Collection 11

3.2 Primary Data Collection 11

3.2.1 Population 12
3.2.2 Sampling 12
3.2.3 Justification For Sample Size 13

13
3.3 Instrumentation

3.3.1 Questionnaire for Study of Bus Preference 13

ix
3.4 Software Used 16

Chapter 4
Industry Review

4.1 An Overview of the Indian Bus Industry 17

4.1.1 Etymology
17
4.1.2 A Brief History
17

4.1.3 Classifications of Buses in India Bus Industry 20

4.1.4 Major Players in Indian bus Industry
21

Chapter 5
Product Review

x
5.1 The LCV Range 25
26
5.2 Product Review
5.5 Communication Strategy Used 34

Chapter 6
Results

6.1 Result of Study 37

37
6.1.1 Cluster Analysis
6.1.2 Attribute Based Perceptual Mapping 45

Chapter 7
Analysis

49
7.1 Segmentation
56
7.2 Competitor Analysis

7.2.1 Competitive Rivalry 57

62
7.2.2 New Entrants
7.2.3 Threat of Substitutes 62
64
7.2.4 Bargaining Power of Suppliers

xi
 7.2.5 Bargaining Power of Customers 65

7.3 Reference Scheme 68

7.4 The Future Ahead 70

Chapter 8
Conclusions & Recommendations

8.1 Conclusions 72

8.2 Recommendations 75

8.3 Limitations & Caveats 79

Bibliography

List of Tables
3.1 Likert Scale 16

xii
3.2 Customer Satisfaction 17

4.1 Financial Comparison of the 25

competitors
5.1 Technical Comparison of M&M 25 34
Seater with Competitors

6.1 Agglomeration Schedule 39

6.2 Dendrogram Using Average Linkage 44

6.3 Cluster Membership 45

6.4 Final Cluster Centres 47

6.5 Standardized Canonical 48

Discriminant Function Coefficients

6.6 Functions at Group Centroids 51

7.1 Cluster Characteristics

xiii
 List of Graphs
1.1 Business and Financial Metrics 4

7.1 Swing In Prices of Raw Material, 64

Steel

7.2 Swing In Prices of Raw Material, 65

Rubber

7.3 Present And Expected Demand In 66

Buses

7.4 The Surging Population of India 67

8.1 The Relation between Surging 69

Urban Population and Buses
8.2 The Current Penetration of Buses in 70
India

List of Figures
5.1 The Mahindra Tourister i CRDe Bus 29

xiv
5.2 Additional Features Provided By 31
Tourister i CRDe Bus

5.3 TATA Buses 32

5.4 Swaraj Mazda Buses 32

5.5 The Leaflet Mailed to Customers 35

5.6 The Ads That Appears On Magazine 36

Covers

6.1 Dendrogram Using Average Linkage 41

6.1 Plot of the Three Brands on 46

Discriminant Functions 1 and 2

7.1 Porter’s 5 Force Model

57
7.2 Perceptual Map of Buses and Their 59
Attributes: Drawn Using Excel
From SPSS Output

xv
 7.3 The Cycle Bus Used By Delhi 63
Schools

List of Appendices
1 Questionnaire for Study of Bus 81
Preference

2 SPSS Output for Cluster Analysis 83

Test

3 SPSS Output for Attribute Based 93

xvi
Perceptual Mapping

xvii
 Chapter 1
Introduction
The project is performed at one of the most renowned Indian organizations,
Mahindra & Mahindra’s automotive sector, Mahindra Navistar Automobiles
Ltd., MNAL having office in Delhi at Bikhaji Cama Place. We move for a
comprehensive view of what the company has achieved and where it stands
today.

1.1 Company Overview

1.1.1 Brief History

The birth of Mahindra & Mahindra began when K.C. Mahindra visited the
United States of America as Chairman of the India Supply Mission. He met
Barney Roos, inventor of the rugged 'general purpose vehicle' or Jeep and had a
flash of inspiration: wouldn't a vehicle that had proved its invincibility on the
battlefields of World War II be ideal for India's rugged terrain and its kutcha
rural roads?

Swift action followed thought. The Mahindra brothers joined hands with a
distinguished gentleman called Ghulam Mohammed. And, on October 2nd,
1945, Mahindra & Mohammed was set up as a franchise for assembling jeeps
from Willys, USA. Two years later, India became an independent nation and
Mahindra & Mohammed changed its name to Mahindra & Mahindra, Ghulam
Mohammed having migrated to Pakistan post-partition becoming the first
Finance Minister of Pakistan. Since then, Mahindra & Mahindra has grown

1
steadily in size and stature and evolved into a Group that occupies a premier
position in almost all key sectors of the economy. Today, its total turnover is
about 6.7 billion dollars3.

1.1.2 Mahindra & Mahindra

Mahindra & Mahindra Limited is part of the US $6.7 billion Mahindra Group,
an automotive, farm equipment, financial services, trade and logistics,
automotive components, after-market, IT and infrastructure conglomerate.
Initially set up to manufacture general-purpose utility vehicles, Mahindra &
Mahindra (M&M) was first known for assembly under licence of the iconic
Willys Jeep in India. The company later branched out into manufacture of light
commercial vehicles (LCVs) and agricultural tractors, rapidly growing from
being a manufacturer of army vehicles and tractors to an automobile major with
a growing global market. At present, M&M is the leader in the utility vehicle
(UV) segment in India with its flagship UV, the Scorpio (known as the
Mahindra Goa in Italy). Mahindra & Mahindra grew from being a maker of
army vehicles to a major automobile and tractor manufacturer. It has acquired
plants in China and the United Kingdom, and has three assembly plants in the
USA. M&M has partnerships with international companies like Renault SA,
France and International Truck and Engine Corporation, USA.

M&M has a global presence and its products are exported to several countries.
Its global subsidiaries include Mahindra Europe Srl. based in Italy, Mahindra
USA Inc., Mahindra South Africa and Mahindra (China) Tractor Co. Ltd. M&M
is the third largest tractor company in the world. It is also the largest
manufacturer of tractors in India with sustained market leadership of around 25

2
years. It designs, develops, manufactures and markets tractors as well as farm
implements. Mahindra (China) Tractor Co. Ltd. manufactures tractors for the
growing Chinese market and is a hub for tractor exports to the USA and other
western nations. M&M has a 100% subsidiary, Mahindra USA, which assembles
products for the American market. In the mid 90's Mahindra sold vehicles to
Kenya police which are said to have performed very poorly. Within only two
years of service all the over 100 jeeps were written off.

M&M made its entry into the passenger car segment with the Logan in April
2007 under the Mahindra Renault joint venture. M&M will make its maiden
entry into the heavy trucks segment with Mahindra International, the joint
venture with International Truck, USA. M&M's automotive division makes a
wide range of vehicles including MUVs, LCVs and three wheelers. It offers over
20 models including new generation multi-utility vehicles like the Scorpio and
the Bolero3.

1.1.3 The Future Ahead

At the Delhi Auto Show, Mahindra executives said the company is pursuing an
aggressive product expansion program that will see the launch of several new
platforms and vehicles over the next three years, including an entry-level SUV
designed to seat five passengers and powered by a small turbo-diesel engine. It
has plans to unveil the all-new Ingenio SUV, which will be joined in 2009 by a
pickup derivative. In early 2008, Mahindra commenced its first overseas CKD
operations with the launch of the Mahindra Scorpio in Egypt, in partnership with
the Bavarian Auto Group. This was soon followed by assembly facilities in
Brazil. Vehicles assembled at the Plant in Bramont, Manaus, include Scorpio
Pick Ups in single and double cab pick-up body styles as well as sports utility.

3
The US based Reputation Institute recently ranked Mahindra among the top 10
Indian companies in its 'Global 200: The World's Best Corporate Reputations'
list.
Mahindra is also gearing up to sell the Scorpio SUV and pickup starting in the
Fall of 2009 in North America, through an independent distributor, Global
Vehicles USA, based in Alpharetta, Georgia5.

Graph 1.1: Business and Financial Metrics6

1.1.4 Mahindra Navistar Automotives Ltd.

4
Mahindra Navistar Automotives Ltd is a 51:49 Joint Venture between Mahindra
& Mahindra Ltd. (M&M) and Navistar Inc. USA. Mahindra Navistar will
manufacture the entire spectrum of commercial vehicles ranging from 3.5 – 49
tons GVW/GCW. These products are developed to suit Indian conditions and
will set new levels of reliability, efficiency and customer experience unseen &
unheard of in the commercial vehicle industry. Huge investments are being
made in product development and in setting up of a Greenfield manufacturing
facility at Chakan near Pune. The products of MNAL are currently sold under
the trademark of Cabking, Loadking and Tourister3.

1.1.4a Navistar Inc.

Navistar’s roots go back to 1831, with the invention of the reaper, an implement
that cleared the way for agricultural development across the North American
continent. In 1902, the company teamed with several other makers of
agricultural implements to form International Harvester, which became one of
the largest companies in the world. The company produced its first trucks in
1907, and began manufacturing diesel engines in 1933. In 1963, International
Harvester formed a joint venture with Mahindra & Mahindra, Ltd. for the
manufacturing of tractors for the Indian market. In 1986, International Harvester
sold its agricultural business and, under the new name Navistar International
Corporation, refocused its business model to concentrate on trucks, buses and
engines.

Today, Navistar is North America’s largest combined commercial truck, school

bus and mid-range diesel engine producer distributing products via a dealer

5
network of more than 1000 dealers in over 90 countries. It has established a
threefold strategy for continued success – great products, a competitive cost
structure and profitable growth – and has achieved its objectives in all three
areas. In 2004, Navistar established growth goals of nearly doubling its size to
$15 billion by 2009, with 10 percent manufacturing profit in each segment, and
is on track to reach both goals.
A key element of Navistar’s success is its leadership in developing innovative,
aerodynamic and environmentally responsible products

• Its International® ProStar® vehicle is the most fuel-efficient long-haul

truck in the industry, using 7 percent less fuel than its closet competitor.
• The boldly styled International® LoneStar® created an entirely new
category of Advanced Classic trucks to meet the requirements of the
independent trucker, while also delivering 18 percent less wind
resistance than its premium truck competition.
• The company’s new MaxxForce™ engines, which employ a compacted-
graphite iron cylinder block like those used in professional racing
vehicles, have a 400-pound weight advantage over competitive engines,
providing increased payload and improved fuel-efficiency.
• Navistar also was the first company in North America to introduce
energy-saving hybrid vehicles in both the commercial truck and school
bus segments. For example, the plug-in hybrid and conventional diesel-
hybrid school buses produced by Navistar affiliate IC Bus improve fuel
efficiency by more than 70 percent and reduce emissions of carbon
dioxide (CO2) by 90 percent3.

1.1.4b Navistar’s Entry into India

6
As part of its growth strategy, Navistar made the decision to enter India and the
broader regional export market for trucks and engines. “We were strongly
impressed with the enormous economic potential of India, and its proximity to
other key markets in Asia, South Africa, the Middle East and Australia,” states
Deepak T. (Dee) Kapur, president of the Navistar Truck Group. “We made the
determination that, with the right joint venture partner, the entire region offered
tremendous growth potential for both commercial vehicles and diesel power
trains.”
Apart from joint venture to manufacture trucks and buses, in November 2007,
Navistar signed a second joint venture agreement with Mahindra & Mahindra,
Ltd., this one focused on producing diesel engines for M&HCV in India. The
joint venture, named Mahindra Navistar Engines Ltd. (MNEL), is also 51
percent owned by Mahindra and 49 percent owned by Navistar. The JV today is
known by the name, Mahindra Navistar Automotives Ltd (MNAL)3.

1.1.4c The Joint Venture

From 2009, MNAL’s advanced diesel engines have started to power the full line
of trucks and buses produced by MNAL. Engine components will largely be
sourced locally. The engines will be produced at the same Chakan facility as
MNAL’s truck production, which will be operated in an integrated manner to
facilitate production efficiencies and other synergies. Production of the new
engines is targeted for April 2009. The first production engine will be a 7.2-liter,
in-line design that has already proven to be very successful in commercial truck
and bus applications in both South America and Mexico.

7
Ultimately, the Mahindra Navistar joint ventures will deliver a full line-up of
engines and trucks to the Indian marketplace, while also exporting from India to
other parts of the world. Given the promising market climate and the strong
technology and product development credentials of both partners, both are
confident that the ventures will enable them to expand their global presence
while achieving business success.

Chapter 2
The Project Objective

2.1 The Management Objective

The management objective is to develop a marketing plan for buses up to 6 ton,

which means the buses in the LCV or Light Commercial Vehicle category. The
segment includes both school and non school buses as those used for tours and
travels and buses owned by organizations as corporate houses and IT firms.
However, M&M buses have not yet entered the arena of state transport (which is
a huge segment) due to legal obligations and permits. This project does not
include the study of the Mahindra range of Hari Bhari buses which had been
abandoned post 2004; instead the study revolves around making a business plan
for the Tourister Range of buses, both ‘e- tech’ and the new ‘i-tech’ which
entered the market in early 2008.

8
Yet another phase of the project involves participating in the ‘reference scheme’
which is under development wherein a scheme is being devised to enhance the
saleability prospects of M&M range of vehicles, the current scheme being
operative for LCV segment alone.

2.2 The Research Objective

Mahindra & Mahindra have had a moderately successful 2007-08 school bus
season and have an equally potential but competitive year ahead of them. The
research involved in the project aims at:
• A thorough market study of CNG buses in Delhi, both school and non
school.
• To study as to how to sustain and improve upon Mahindra’s holds in the
school bus segment in Delhi.
• To gauge the non school bus segment; this is a comparatively weaker
link in their market history to date.
• To develop clear segments in the market in order to know how to
position oneself in each segment.
• To know the nature of the decision making unit involved in purchase of a
bus.
• To conduct a study of the market in terms of customer survey,
competitor analysis and other means required to be well informed about
the current trends and market position of the bus industry in India
thereby culminating in a marketing plan.

9
2.3 Significance of the Study

The study should culminate in synthesising a marketing plan for Mahindra

buses- ‘The 25 seater Tourister’ range of buses. The survey results should
mirror the actual market sentiments with regard to purchase of buses by
different organizations thereby revealing the probable factors overlooked by
M&M in positioning their product. A good study of customer base is
instrumental in making a good sales pitch for the product as well as a
marketing strategy which aims at greater market share for the product. It
may be noted that some collateral outputs of the project are worth mention
as, increasing the awareness of M&M range given their late entry in to
market with old and strong players as well as looking for a probable lead for
pursuing sale of a bus (es). The reference scheme which features as a
separate phase is a live project wherein the company is going to establish a
stronger relationship with existing customer base leveraging upon which
they would try to attain more customers.
Apart from this, the project being live in nature gives its participants to be a
part of the reference scheme endeavour taken by the company’s sales
department in order to expand the brand and leverage existing customers to
bring in new customers.

2.4 Scope of the Study

The study of the bus market is going to be restricted to Delhi alone and not
applicable for the Delhi Transport Corp. buses as M&M doesn’t compete in
this area.

10
 Chapter 3
Methodology
3.1 Secondary Data Collection
The web has been a major source of collection of secondary data where from
data regarding the Indian Bus Industry has collected with regards to a brief
history, government regulations. The data collected gives us a view of the major
players in the industry and their current competitive position in the market.

The secondary data required for the research was collected from the Dealership
showroom of Mahindra. For LCVs, M&M has only one dealership showroom in
Delhi which is Indraprasth Automobiles which was my source of database of

11
respondents who are present, as well as potential customers of buses. This data
base was further enhanced by adding a couple of schools tracked down online
and some tours

3.2 Primary Data Collection

The basic research paradigm is followed:
1) Define the population
2) Draw a representative sample from the population
3) Do the research on the sample
4) Infer results from the sample back to the population

3.2.1 Population

The population consists of all customers and potential customers of Mahindra

buses maintaining the fact that the sample frame is restricted to Delhi alone.
It includes two broad segments:

• Schools
• Non- schools

The non school segment includes sections as tours & travels, full fledged
enterprises as well as small contractors leasing buses for various purposes as for
schools, as route buses, for corporate houses and IT firms, etc.

12
There are a total of 340 schools worth mention as per documented secondary
data collected from the company sales office; this count being stated after
excluding schools which do not avail school buses due to low disposable
income, children come on their own, have only cab service, are government
aided or have DTC buses. These schools include customers and non customers,
the customer base including only 20 of the schools. However, there are many
tours and travel agencies, small and big scattered across the city, the count for
which exactly wasn’t available. A data of 50 cases is however available.

3.2.2 Sampling

The sampling method adopted is Convenient Sampling, a Non Probability

sampling method wherein as the name implies, the sample is selected because
they are convenient. This non-probability method is often used during
preliminary research efforts to get a gross estimate of the results. A sample size
of 41 was taken after straining out partially filled questionnaires.
3.2.3 Justification for Sample Size

The samples are collected by randomly picking names from a secondary data
base of customers and potential customers and trying an approach given the fact
that always one’s luck is not good enough to get a meeting with them. During
the tenure of project the transport in-charges of schools were barely available as
through the month of April, some of them who were teachers also were busy
correcting the board papers while come the month of May, they were having
irregular timings to come to schools given the fact that summer vacations had
commenced. As for tours & travels firms, squeezing time out of their schedules
was a task of a kind. Given these hurdles, I have come to the sample size of 41.

13
3.3 Instrumentation
In order to perform the survey, a questionnaire is designed keeping in mind the
study of the market through secondary data sources as documented in Chapter 4,
Industry Review.

3.3.1 Questionnaire for Study of Bus Preference

The questionnaire prepared must aid in gathering primary data from the
customers, i.e. from the market. it must be precise and well spaced and printed in
order to appear comprehensive to the respondents. The target customer wasn’t
very keen on giving an elaborate survey and hence over the period, the questions
were reduced and made as concise as possible so as to not to irritate people hard
pressed for time.

The major purpose of the questionnaire is:

• To know the buying behaviour of customers.

• To gauge any possible relations between buying behaviour and

demographics of customers.

• To know which factors are of primary importance in purchase of the bus,

so that the company can concentrate on them mainly while designing the
offer or sales pitch.

14
 • To know the position of the various competing brands in the market from
a customer perspective.

The questionnaire designing is done in basically three segments, each giving us

an insight into each of the concerns stated above.

Demographic Information

• This section of the questionnaire determines the type of organization,

broadly classified as school and non school.

• It consists of some basic customer details as address and telephone

number.

• It gives an account of how many buses the organization has and what
make and size of buses. This brings us two kinds of users:
- Light Users: Having 5 or less than 5 buses
- Heavy Users: Having more than 5 buses.
Psychographics Information

• This section of the questionnaire attempts to understand the buying

behaviour of the customers.

• The survey was done with 6 main factors: brand, price, comfort, spares
and serviceability, mileage and resale value.

15
 • A Likert Scale was used in the survey. A Likert scale is a psychometric
scale commonly used in questionnaires, and is the most widely used
scale in survey research. When responding to a Likert questionnaire item,
respondents specify their level of agreement to a statement.

Here a scale of 1 to 5 was used as follows:

LEAST SOMEWHA DOESN’ IMPORT MOST

IMPORT T T ANT IMPORTAN
ANT IMPORTA MATTE T
(1) NT R (4) (5)

16
 (2) (3)
Brand

Price

Comfort

Spares &
Serviceability
Resale
Value
Mileage

Table 3.1: Likert Scale

The next level was to judge the acceptance of the customer of the brand he was
using for which he was asked to score the make of buses he had on a scale of 1
to 5 as follows:

SCORE/5
Brand

17
 Price

Comfort

Mileage

Resale Value

Table 3.2: Customer Satisfaction

3.4 Software Used

A survey was done through various school and non school organizations across
Delhi after which straining was done to remove responses which were
incomplete and we come to the figure of 41 which is our sample size.
SPSS test is run on the sample wherein we use Cluster Analysis is used. Cluster
analysis or clustering is the assignment of a set of observations into subsets
(called clusters) so that observations in the same cluster are similar in some
sense. We have used Hierarchical clustering under which we have used
Agglomerative clustering where we start by treating each object as a separate
cluster, then grouping them into bigger and bigger clusters. We have followed it
up with Discriminant analysis which has been used to produce a attribute based
perception map of the main competing brands in Delhi vis-à-vis M&M.

Chapter 4

18
 Industry Review
4.1 An Overview of the Indian Bus Industry
4.1.1 Etymology

Bus is a derivation of Omnibus Vehicle meaning "vehicle for all", where

omnibus means "for all" in Latin (omnes meaning "all"), reflecting its early
usage for public transport. When motorized transport replaced horse-drawn
transport starting around 1905, a motorized omnibus was for a time sometimes
called an auto bus, a term still used in French and other languages, and in some
varieties of English2.

4.1.2 A Brief History

The automobile industry in India is the tenth largest in the world1 with an
annual production of approximately 2 million units and is expected to become
one of the major global automotive industries in the coming years. A number of
domestic companies produce automobiles in India and the growing presence of
multinational investment too, has led to an increase in overall
growth. Following the economic reforms of 1991 the Indian automotive industry
has demonstrated sustained growth as a result of increased competitiveness and
relaxed restrictions. The monthly sales of passenger cars in India exceed
100,000 units. In 1953, the government of India and the Indian private
sector initiated manufacturing processes to help develop the automobile
industry, which had emerged by the 1940s in a nascent form. Between 1970 to
the economic liberalization of 1991, the automobile industry continued to grow

19
at a slow pace due to the many government restrictions. A number of Indian
manufactures appeared between1970-1980. Japanese manufacturers entered the
Indian market ultimately leading to the establishment of Maruti Udyog.

A number of foreign firms initiated joint ventures with Indian companies.

Following the economic reforms of 1991, the automobile section underwent
delicensing and opened up for 100 percent Foreign Direct Investment. A surge
in economic growth rate and purchasing power led to growth in the Indian
automobile industry, which grew at a rate of 17% on an average since the
economic reforms of 1991. The industry provided employment to a total of 13.1
million people as of 2006-07, which includes direct and indirect
employment. The export sector grew at a rate of 30% per year during early 21st
century. However, the overall contribution of automobile industry in India to the
world remains low as of 2007. Increased presence of multiple automobile
manufacturers has led to market competitiveness and availability of options at
competitive costs. India was one of the largest manufacturers of tractors in the
world in 2005-06, when it produced 2,93,000 units. India is also largely self-
sufficient in tyre production, which it also exports to over 60 other countries.

India produced 6.5crore tyres in 2005-06. According to McKinsey, the auto

sector’s drive to lower costs will push outsourcing. The auto sector could be
worth $375 billion by 2015, up from $65 billion in 2002. McKinsey thinks India
could capture $25 billion of this amount. Out of 400 Indian suppliers, 80 percent
have the ISO 9000 certificate—the international standard for quality
management. The production of automobiles in India is largely aimed at local
consumers. Several Indian manufacturers also export a diverse variety of auto
components. Predictions are of sales to touch 42 lakh mark in four wheeler

20
automobile section in India by 2015. Indian passenger vehicle exports are also
expected to rise from 1,70,000 in 2006 to 5,00,000 in 2010.
4.1.3 Classifications of Buses in India Bus Industry

Buses occupy a special position in any country on account of their capacity to

accommodate large quantities of passengers at economic rates. The Indian bus
industry boasts of a wide variety of buses for public utility purpose such as:

• Commuter Bus
• Electric Buses
• School Buses
• Cruiser
• LHD Bus
• Mini Bus
• Deluxe Buses
• Tourister Buses

However, that the Indian government has neglected buses is commonly known.
How the country’s powerful automobile industry, gearing up to become an
international business hub, has treated buses as its step-child is not discussed.
India crossed the mark of one million cars produced in a year in 2007. In the
celebrations, nobody asked the question as to what about buses?

In 1951, one of every 10 vehicles sold in India was a bus. Of the 300,000
vehicles registered in the country in that year, 34,000 were buses. Today, this
ratio is comical with buses having lost a zero that has gone over to the cars; 1 of
every 100 vehicles is a bus. In 2004, of the 73 million vehicles registered, only
768,000 were buses. This, despite the fact that buses as surveys show, account

21
for about 50 per cent of all journeys performed on road. Bus sale figures tell it
all. In 2007-08 only 38,655 buses were sold against 1.5 million cars. Result,
private vehicles have taken over the road. Congestion has peaked. Despite city
governments adding road width and flyovers, the time it takes to drive has
increased. Bangalore has over 2.5 million private vehicles but city buses number
only about 4,185. Since 2003, more than 400,000 private vehicles are added to
its roads every year, while the number of city buses increased by only about 300.
This means urban commuters do not have the choice of buses7.

The market is growing, defying the slowdown in the auto sector. In 2006-07, the
industry sold some 30,000 buses. In 2007-08, the market had grown to 40,000.
In cities crowded with private vehicles, buses can get a much bigger piece of the
transport pie. But automakers standing behind their cars and pushing their wares
do little to promote the vehicle that could drive millions in the country. It is as
though, the bus is the poor person’s vehicle and nobody seems to want any truck
with it.

4.1.4 Major Players in Indian bus Industry

The Indian bus industry has shown rapid growth over the last two years and
currently over 25,000 buses and coaches are produced annually, at par with
Western Europe. With still a largely untapped market, the industry is expected to
see even better days in the future.
Indian bus industry boasts of the major players in this sector, who are involved
in the production of huge quantities of buses. The names of the prominent
players require the mention of:

• Ashok Leyland

22
 • Volvo
• Hindustan Motors
• Swaraj Enterprise
• Mahindra & Mahindra
• Eicher
• Tata Motors
• Force Motors

Swaraj Mazda

With revenues of Rs763.33crore, Swaraj Mazda (NSE:SWARAJMAZD) is the

smallest player by volume in the medium and heavy commercial vehicle market
(M&HCV) and light commercial vehicle market (LCV). It has a market share of
5.41% in passenger carriers market and 1.58% in goods carrier market of
M&HCV. In case of LCV market it has a market share of 8.07% in case of
passenger carriers and 1.39% in case of goods carriers. Over the past five years
the revenues and net profit have grown at average annual growth rate of 10%
and 5% respectively. The Raw material costs fluctuations affect the net profit
and operating margin of Swaraj Mazda as the Raw material costs comprises of
about 84.46% of the price of the finished products as compared to the industry
average of 70% to 74%. In the passenger segment, the Company's products
include ambulances, dumper placers, water tankers and troop carriers. It had also
developed four wheel drive and compressed natural gas (CNG) vehicles plus
airbrake versions. The company operates through its associates Punjab Tractors
Limited, Swaraj Engines Limited, Swaraj Automotives Limited, Mazda Motor
Corporation and Sumitomo Corporation. The company exports its products to
various countries like Bangladesh, Kenya, Tanzania, Nepal, Zambia, Ghana,

23
Ivory Coast, Rwanda, Seychelles Syria and Jordan. Its plant is located at village
Asron, Nawanshahar district in the state of Punjab.

In case of light commercial vehicles passenger carriers, Swaraj Mazda sales

dropped by 10% taking the vehicles produced in FY2008 to 2,234 as compared
to 2,492 in FY2007. The market share decreased from 10.5% to 8.07% within
the year in this category. Since inception, Swaraj Mazda has sold a total of
42,300 passenger vehicles6.
Eicher

Eicher Motors (EICHERMOT.EQ-IN) -Headquartered in New Delhi, Eicher

Motors Limited manufactures and markets trucks, buses, motorcycles,
automotive gears, and components in India. It operates in four segments:
Commercial Vehicles, Two Wheelers, Components, and Others. The
Commercial Vehicles segment offers CNG trucks, cruiser buses, buses on HCB
platform, and tippers. The Two Wheelers segment provides motorcycles and
bikes. The Components segment offers gears, gear boxes, construction and
earthmoving equipment, and forklifts. The Others segment provides engineering
products to automotive, aerospace, heavy engineering, consumer durables,
power generation, and other segments. Eicher Motors has a joint venture
agreement with Volvo AB.

Eicher is engaged in the production of 2 varieties of buses under the name

Skyline Buses - it produces school buses as well as Cruisers. It has also begun
manufacturing CNG buses following the new pollution control rules and is
giving tough competition to its market rivals6.

Hindustan Motors

24
Hindustan Motors Ltd. produces RTV buses comprising school buses, custom-
made buses, and passenger buses.

Ashok Leyland

Ashok Leyland is among the most prominent players in the manufacture of

public utility as well as special purpose buses. It fulfils a large chunk of the
demand for buses in India bus industry and the list of its range of buses includes:
Vestibule Bus, Cheetah BS-III, Panther BS-IIs, Viking BS-II, Stag-BS II, Lynx
BS-II, Viking CNG BS-III Ashok Leyland is also engaged in the production of
some special purpose buses as the Airport Tarmac Coaches, Double deckers
with immense capacity for the accommodation of passengers. The other
categories include 12 M Bus-II, only 12-M Bus and Viking SLF BS-III and so
on6.

Force Motors

Force Motors (FORCEMOT-BY) -The Group's principal activity is to

manufacture and market utility and light commercial vehicles, agricultural
tractors and diesel engines. Its plants are located at Bombay Pune road, Akurdi,
Pune and Pithampur, District Dhar, Madhya Pradesh. With technical
collaboration of MAN AG, Germany, Force Motors has a range of heavy
commercial vehicles with a payload capacity ranging from 16 to 50 tonnes6.

Tata Motors

25
Tata Motors is based in Mumbai, India. Tata Motors Limited is a part of Tata
Group. It manufactures commercial and passenger vehicles primarily in India. It
offers passenger cars, multi-utility vehicles, and pick-ups; medium and heavy
commercial vehicles, such as rigid trucks, tractor trailers, and tippers;
intermediate, light, and small commercial trucks; buses; and defence related
vehicles. The company, through its subsidiaries, also provide engineering and
automotive products; manufacture of construction equipment; automotive
vehicle components manufacturing and supply chain activities; and provision of
machine tools and factory automation products, as well as offers high-precision
tooling, and plastic and electronic components for automotive and computer
applications. In addition, it provides automotive retailing and services, as well as
financing for the vehicles sold by the company. The company markets its
products in Europe, Africa, the Middle East, south Asia, south East Asia, and
Australia.

Tata Motors also ranks high among the major players in the India bus industry,
engaged in the production of buses of the category of Starbus as well as Globus
buses. The Starbus range includes Starbus Standard, Starbus School, Starbus
Deluxe and Starbus Low Floor and the other buses include SFC 407 Turbo
Mini-Bus, LPO 1616 TC Luxury Bharat Stage-II Bus, LPO 1510 Bharat stage II
Bus, where as the Globus range variety includes Globus 13, 20 and so on6.

Financial metrics FY2008

Name Revenue in Rs Net Profit Operating

Crore Margin Margin

26
 Tata Motors 28,738 6.96% 10.44%

Ashok Leyland 7,729 5.83% 10.09%

Eicher Motors 2,218 2.81% 5.85%

Mahindra & 30,150 10.34% 11.45%

Mahindra Ltd

Force Motors 930 -8.02% -5.04%

Table 4.1: Financial Comparison of the competitors6

Chapter 5
Product Review
The project is focused on buses below 6 ton GVW which features in the LCV or
the light commercial vehicle segment of MNAL. Hence, we throw a fleeting
glance at the LCV segment products and then move ahead. This knowledge
helps us to notice that the LCV segment is a struggling segment with a range of
products which are technically competitive but have to face tough competition
vis a vis a much older player in this segment, TATA. Apart from this, in case of
school buses, Swaraj Mazda is a very popular name while we come back to
TATA again as a formidable adversary in the non school bus segment.

27
5.1 The LCV Segment

Hence, a look at the LCV segment shows us the following product range3:

• Mahindra DI 3200
• Mahindra Loadking Pride
• Mahindra Loadking Long Wheel Base
• Mahindra Loadking CRDe
• Mahindra Loadking LCV Tipper
• Mahindra Tourister i Regular Bus
• Mahindra Tourister i School Bus
• Mahindra Tourister i CRDe Bus

5.2 Product Review

Below we discuss the two main ranges of buses that M&M runs, however,
during the course of discussion, it may be noted that the Hari Bhari range, the
production of which has been discontinued hasn’t been included and the project
being region specific is limited to Delhi alone where Tourister range is available
in 25 seaters only. The product ranges of buses are:

Mahindra Tourister i School Bus

Available in 16, 25, 32 & 40 seating capacity

28
The Mahindra Tourister school bus enjoys the faith of hundreds of schools,
parents, kids and bus owners across India. And it is this faith that has made
Tourister the No. 1 school bus, in its segment.

Over the years, the brand Tourister has consistently delivered incredible value to
its customers. Coming from the Mahindra stable, each school bus is engineered
to deliver on its promise of total safety, but without any compromise on comfort
and efficiency. In keeping with the customer centric philosophy of the
organisation, the Tourister range has been upgraded several times over the years
to meet the ever-changing customer requirements.

This year Mahindra has introduced an improved version of the existing Tourister
range, Tourister i. The ‘i’ signifies the 32 improvements which have been
incorporated in the existing bus to further enhance safety, comfort and
aesthetics. With the launch of Tourister i, all school buses henceforth will be
sold under the Tourister i brand.

Features

Greater Safety for a worry free drive

•Fire Extinguisher
•Emergency exit
•Specially designed tooth and chin guards
•STOP sign indicator at the door
•First-aid kit
•Anti skid vinyl flooring
•Double bar rail on windows

29
Superior Comfort for unmatched convenience
•Bright airy interiors
•Large cushioned seats
•Water bottle holders
•Special rack for school bags

Economical for bigger savings

•Superior mileage
•Powerful pickup
•Low operating costs
•Higher torque

Contemporary Styling for better looks

•Attractive front façade
•Modern front Grille
•Swanky notice board

Mahindra Tourister i CRDe Bus

Available in 25 seater capacity

The 25-seater Mahindra Tourister i is with the revolutionary CRDe technology. It’s the first
in its category and it’s designed to make every journey really smooth. It is very efficient in
terms of NVH standards, i.e. Noise, Vibration & Harshness.

Available in school and regular variants

•Powerful pickup
•Remarkably low N.V.H

30
•Greater mileage
•Conforms to BS III norms

Fig 5.1: The Mahindra Tourister i CRDe Bus

Look at the additional features offered by the latest Mahindra Bus Tourister i
CRDe Bus currently available in 25 seaters only in Delhi.

31
Three Piece Window with
4 mm glass Speaker Provision (non FRP Type)
& Mobile charger

JK door lock Bottle holder for driver

32
Three guard rails on Notice board
Windows for safety

Space for keeping the sports

gear of children (Such as Bat, Hockey Etc)

Fig 5.2: Additional Features Provided By Tourister i CRDe Bus

33
TATA Starbus Skool TATA Globus Luxury

Fig 5.3: TATA Buses

Swaraj Mazda School Bus-CNG Bus- Prestige for Tours & Travels

Fig 5.4: Swaraj Mazda Buses

34
Specifications Mahindra Tata city Force
ride City line
Seating 25+D 24+D 25+D
capacity
Engine NEF TCI 497SPTC TD-
2.6 ltr 35 2650FTI
Displacement 2609 2956 2596 At par
Max engine 53.5+/- 55.2 75 Optimum Power for
output 2% KW KW(74 HP@3200 better Fuel Efficiency
@ 3200 HP) @ rpm
rpm 2800 rpm
Max torque 195 Nm 225 Nm 195 Nm Optimum Torque for
@ 1900 - @1250 - @1800- better Performance
2000 1800 rpm 2000 rpm
rpm
No. Of Gears 5 5 forward 5forward At par
forward and and
1 reverse 1 reverse 1 reverse
with OD
in 5th
Tyre size 7.00x16- 7.00x16- 7.00x15- At par
12 PR 12 PR 14 PR
Fuel tank 75 Lts 60 Lts 70 Lts At par
Capacity Lts
Length 6245 5375 6670 At par

35
 Width 2150 2100 2060 Easy Maneuverability
Height 2720 2500 2510 Comfort for Standees
Wheel Base 3320 3100 3420 At par
Min Ground 190 219 223 At par
clearance
Turning 14100 12000 13000 At par
Circle Dia
Max GVW 5440 5560 5850 At par
kg

Table 5.1 Technical Comparison of M&M 25 Seater with Competitors

5.5 Communication Strategy Used

MNAL uses a variety of communication strategy wherein it uses leaflets mailed
to prospective school and non school organizations as a part of Direct Selling
agenda. They have also come with the concept of ‘School Fest’, one unique in
its appeal wherein they exhibit the technical features of the bus as well as
present the benefits and ease of acquisitions. The Mahindra school bus, Tourister
features on the magazine cover of auto magazine, Motorindia. Its content is
attractive with the use of glossy colours and a boy with his finger pressed to his
lips signifying how smooth and quite a ride a Mahindra bus gives.

36
Fig 5.5: The Leaflet Mailed to Customers

37
Fig 5.6: The Ads That Appears On Magazine Covers

38
 Chapter 6
Results

6.1 Result of Study

The questionnaire was duly filled by 41 respondents on a scale of 1 to 5 & the
corresponding results are interpreted.
The Likert scale used was:
1----------2----------3----------4----------5

Where 1 stood for not at all important factor while 5 is for most important
factor, 3 representing a neutral response.

6.1.1 Cluster Analysis Using SPSS

We tabulate the valid responses and proceed for cluster analysis with a purpose
of market segmentation. Cluster analysis or clustering is the assignment of a set
of observations into subsets (called clusters) so that observations in the same
cluster are similar in some sense. Cluster analysis is widely used in market
research when working with multivariate data from surveys and test panels.

Market researchers use cluster analysis to partition the

general population of consumers into market segments and to better understand
the relationships between different groups of consumers/potential customers.

39
 Segmenting the market and determining target markets
 Product positioning
 New product development
 Selecting test markets

SERIA BRAN PRICE COMF SPARES & RESA MILEA

L NO. D ORT SERVICEA LE GE
BILITY VALU
E
1 4 5 3 4 3 3
2 5 4 4 5 3 3
3 5 5 4 4 4 3
4 4 5 4 4 4 3
5 4 5 4 5 5 3
6 4 5 3 4 4 3
7 4 5 3 4 4 3
8 4 5 3 4 2 3
9 4 5 3 4 2 3
10 4 5 3 5 3 3
11 4 5 3 5 4 3
12 4 5 4 3 3 3
13 4 5 3 4 3 3
14 4 4 3 3 3 3
15 5 4 3 5 3 3
16 4 5 3 3 3 3

40
 17 5 3 4 3 3 2
18 5 2 5 3 2 3
19 5 4 4 3 3 3
20 5 4 5 3 2 3
21 4 4 4 3 3 3
22 4 5 3 3 3 3
23 5 3 4 3 3 3
24 4 5 3 3 3 3
25 5 5 4 3 3 3
26 5 4 4 3 3 3
27 5 5 4 4 3 3
28 4 5 3 3 3 3
29 5 5 4 3 3 3
30 5 5 4 4 3 3
31 4 5 3 3 3 3
32 5 4 4 3 3 3
33 4 5 3 3 3 3
34 5 4 4 3 3 3
35 4 5 3 3 3 3
36 5 4 4 3 3 3
37 4 5 3 4 3 3
38 5 4 4 3 3 3
39 5 3 4 3 3 3
40 4 5 3 3 3 3
41 5 3 4 3 3 3

Table 6.1: Tabulated Response of 41 Respondents

41
Cluster Analysis is Done in Two Stages:

STAGE 1

The Agglomeration schedule helps us to identify differences in the co-efficient.

The Agglomeration schedule from top to bottom, i.e. stage 1 to 40 indicates the
sequence in which cases get combined with others, i.e. one cluster combines
with the other until all 41 cases are combined together in one cluster at the last
stage (40th). Hence stage 40 represents a one cluster solution, stage 39 represents
a two cluster solution, and stage 38 represents a three cluster solution and so on.

Aim: To identify how many clusters are there in the data.

The Dendrogram Plot reveals the 3 clusters clearly.

This plot signifies the members in each cluster and how far apart they are,
meaning, what is the difference in preference between customers in the same
segment.

The number of cases in the following clusters is:

Cluster 1: Cases# 39, 41, 17, 23, 36, 38, 19, 32, 34, 26, 14, 21, 20
Cluster 2: Cases# 27, 30, 3, 25, 29, 12, 8, 9, 35, 40, 16, 31, 33, 24, 28, 22, 13,
37, 1
Cluster 3: Cases# 10, 11, 6, 7, 4, 5, 2, 15
However, Case# 18 is excluded from the 3 clusters.

42
43
44
Fig 6.1: Dendrogram Using Average Linkage

STAGE 2

Now we proceed to do K- means or quick clustering. This procedure generally

gives more stable clusters and it’s an interactive procedure compared with the
single pass hierarchical methods. The prior stage is used to achieve a pre
specified number of starting points to get an initial position.

The result of K- Means / Quick Clustering is as follows:

This method gives a more clearer and comprehensive view of which cases fall in
which cluster (of the 3 that we are making) and which case to what extent is a
true representative of that cluster. For example, we see that case 2 is in cluster 3,
but the distance is comparatively longer (1.47) than case 6 which is having a
distance of only .846. Thus, we cluster each of the 41 respondents in 3 broad
clusters.

Cluster Membership
Case Number Cluster Distance
1 2 .725
2 3 1.470
3 3 1.077
4 3 .909
5 3 1.470
6 3 .846

45
 7 3 .846
8 2 1.147
9 2 1.147
10 3 1.077
11 3 .778
12 2 .858
13 2 .725
14 2 1.076
15 3 1.432
16 2 .513
17 1 .586
18 1 1.951
19 1 .516
20 1 1.285
21 1 1.055
22 2 .513
23 1 .586
24 2 .513
25 2 1.147
26 1 .516
27 2 1.257
28 2 .513
29 2 1.147
30 2 1.257
31 2 .513
32 1 .516

46
 33 2 .513
34 1 .516
35 2 .513
36 1 .516
37 2 .725
38 1 .516
39 1 .586
40 2 .513
41 1 .586

Table 6.2: Cluster Membership

Once, we get which case falls in which, we analyse the importance of the 5
variables:

Variable 00001: Brand

Variable 00002: Price
Variable 00003: Comfort
Variable 00004: Spares & Serviceability
Variable 00005: Resale Value
The variable Mileage hasn’t been taken into consideration because all
organizations have maintained similar importance for mileage. The survey
revealed that mileage is not of much importance when a customer purchases a
bus, they were saying, “Dili main mileage kya hota hai” (what significance does
mileage have in Delhi)

47
 Final Cluster Centres
Cluster
1 2 3
VAR00001 4.92 4.21 4.33
VAR00002 3.54 4.95 4.78
VAR00003 4.15 3.26 3.44
VAR00004 3.00 3.37 4.56
VAR00005 2.85 2.89 3.78

Table 6.3: Final Cluster Centres

The final cluster centres described the mean value of each variable for each of
the 3 clusters as in for cluster 1 the mean values are: for variable1-4.92, var2-
3.54, var3-4.15, var4-3.00 and var5- 2.85. Similarly, it follows for other clusters
too. Here, for variable 00001, a value of 4.92 in cluster 1 shows importance
level where 5 stands for very important; hence, 4.92 means, most people in this
cluster give importance to Brand name.

Observation: We interpret the Final Cluster Centre table to know the common
opinion of the cases in each of the 3 clusters.

6.1.2 Attribute Based Perceptual Mapping

48
We use discriminant analysis to do attribute based perceptual mapping in which
we use the primary data collected in the second half of the questionnaire, where
in we had asked individual respondents as to how they rate the make of their bus
on five primary factors: Brand, Price, Comfort, Spares & Serviceability, and
Resale Value. However, while tabulating we took only 3 factors into
consideration, Brand, Price and Spares & Serviceability.

Discriminant Analysis

49
Fig 6.2: Plot of the Three Brands on Discriminant Functions 1 and 2

The figure above is a part of the SPSS output, the entire result being a part of
appendix 4 attached at the end.

Var00001 stands for the 3 brands which we are comparing. These are code
named as 01, 02, and 03:

Mahindra------------- 01
TATA----------------- 02
Swaraj Mazda-------- 03

Aim: To position the brand with respect to the current competitors

Method: To plot the attributes on the map, we use standard co- efficient of the
original variables in the discriminant functions. We use the standardized co-
efficient from table 6.5 as for Variable 2, Brand, we use the values .102 and .817
as the x and y co- ordinates respectively to plot in an excel sheet. We locate
these points on the map and draw an arrow specifying the dimensions.

Variable 02: Brand

Variable 03: Price
Variable 04: Spares & Serviceability

Standardized Canonical
Discriminant Function
Coefficients

50
 Function
1 2
VAR00002 .102 .817
VAR00003 -.861 .990
VAR00004 1.382 -.693

Table 6.4: Standardized Canonical Discriminant Function Coefficients

Now, we plot these values of standardized discriminant function co-efficient of

each attribute on each function vis-à-vis the centroids for each brand as evident
from table 6.6 below.

Functions at Group Centroids

VAR00 Function
Table 6.5:
001 1 2
Functions at Group
Centroids 1 -1.407 .173
2 1.081 .396
Observation: The 3 .326 -.569
excel sheet is
Unstandardized canonical
produced wherein we
have the different discriminant functions evaluated at
dimensions with their group means
respective factors. As in this case we have Price and Brand in one dimension 2,
both having significantly higher values along function 2, while spares and
serviceability is along dimension 1. An analysis of this result is used in
interpreting competitor positioning while doing Poter’s Five Force Model.

51
 Chapter 7
Analysis
7.1 Segmentation
Segmentation is a market segmentation of people or organizations sharing one or
more characteristics that cause them to have similar product and/or service
needs. The overall intent is to:

- Identify groups of similar customers and potential customers

- to prioritize the groups to address
- to understand their behaviour
- to respond with appropriate marketing strategies that satisfy the different
preferences of each chosen segment.

All of this culminates in improved revenues and larger market share.

An analysis is done of the result of cluster analysis by which we have 3 distinct

clusters. Based on the mean value of each variable we can interpret the
characteristics as follows:

CLUSTE VARIABLE MEAN NATURE OF BUYING

R# #
1 (1) Brand 4.92 The brand stands a lot of importance

52
 (2) Price 3.54 Customers in this cluster may attach
a little importance to price while
purchasing the buses.

(3) Comfort 4.15 Customers do attach importance to

comfort & the Noise Vibration &
Harshness buffering ability of the
bus.
(4) Spares & 3.00 Customers in this cluster are mostly
Serviceability neutral in their response to
availability of spares & serviceability
and it is definitely not amongst their
top priorities.
(5) Resale 2.85 Not much importance attached to
Value resale value of the bus.
2 (1) Brand 4.21 They attach importance to brand
while buying and it may be one of
their top most priorities.
(2) Price 4.95 They attach a lot of importance to
price while going for a purchase and
price does make it to the top of their
priority list
(3) Comfort 3.26 It’s a factor they have remained
neutral to though some may attach a
little more importance to it.
(4) Spares & 3.27 They don’t attach a lot of importance
Serviceability to spares & serviceability though
some may attach a little more

53
 importance.
(5) Resale 2.89 They attach no importance to this
Value factor
3 (1) Brand 4.33 They have graded brand as an
important factor.
(2) Price 4.78 For them price comes out as the
factor of most importance
(3) Comfort 3.44 Comfort is not the top of the priority
list but they some customers in this
segment may attach considerable
importance to this factor
(4) Spares & 4.56 This is also one of the most
Serviceability important factors on the list with
some customers grading important to
very important as the nature of
priority
(5) Resale 3.78 This is a considerably important
Value factor to most customers in this
segment though some may have a
neutral attitude towards it

Table 7.1: Cluster Characteristics

Cluster 1

• Members in Cluster 1 are: 17, 18, 19, 20, 21, 23, 26, 32, 34, 36, 38, 39,
and 41.

54
• Of these 13 cases, it may be noted that 9 cases are heavy users of buses.

• This would mean that it’s a segment with 70% heavy users.

• This segment has all schools except for a tour & travel agency and a bus
used for official purpose.

• The customers in this section had reported to buy the best brand
available in market and often the definition of best brand is not just the
best product available but the brand perceived to be the best.

• One of the respondents in this segment is Panicker Travels who had said
that they would prefer going for the brand that stands out in the market to
attract their customers, the tourists as in the case of giving customers the
experience of a Volvo at a price.

• Comfort also tops the list of this segment with the transport in-charge of
ASN School having expressed that comfort factor is very important for
them as against the price of the vehicle. The school boasts of a good
number of students and take a high fees from students in lieu of which
they are obliged to give students good comfort.

• Customer satisfaction being the aim of a large tours & travels, comfort &
space figured on their list too as one of the top priorities. They were
concerned that a 25 seater bus wouldn’t be sufficient to accommodate a
tour group of around 20 tourists as these buses have usually push back
seats.

55
 • Price was mostly on basis of the most satisfying quotations and ease of
financing.

• Respondents hadn’t given much of an importance to spare part

availability or resale value. Most of the users were heavy users and for
them while maintaining a large fleet
• As Mr Panicker of Panicker Travels had said that if resale value was ever
considered as one of the main factors, then they would never have gone
for a Volvo which has the least resale value; however Volvo is what is
most preferred amongst his fleet of 80+ buses as it is his customers’
choice.

Cluster 2

• Members in Cluster 2 are: 1, 8, 9, 12, 13, 14, 16, 22, 24, 25, 27, 28, 29,
30, 31, 33, 35, 37, and 40.

• Of the 19 cases, 17 of them are light users while the remaining 2 are but
heavy users.

• That makes almost 90% of the cluster light users

• 5 of them are individual customers who however lease their buses for
schools as well as for private organizations occasionally.

• Price factor is of primary importance in this segment is undoubtedly but

brand is second on their list.

56
 • These light users are mostly schools which rank average to above
average in popularity ranking and hence have mostly students from
residential areas nearby enrolling in.

• Schools wouldn’t prefer indulging in unnecessary fleet of buses as routes

covered will not be very elaborate.
• A closer look at the members in this segment shows that some of them
have limited number of students.

These demographic details lead us to the benefits this segment seeks. In case of
schools, the economical outlook makes them scrutinize the price quotations
more keenly than members in cluster 1, over and above the credibility and
popularity of brand. However, since a 25 seater bus almost come at similar price
of 9.5lacs including all taxes, the ease of finance and other such clauses bear
importance in driving towards closing a deal.

• Schools such as Guru Nanak PS, Aster or Rishabh PS are ones which
lesser disposable incomes or narrow operating margins.

• This list consists of Mahindra customers too of which Aster Public

school was one of them having 4 buses of the Mahindra make, which is
indeed a cost effective choice.

• N. C. Jindal however is one amongst the two heavy users who have 1
M&M bus amongst their fleet of 14 buses. He hadn’t expressed high
satisfaction and was doubtful when asked for going for a repurchase of
M&M. His problems mainly dealt with the serviceability and part

57
 availability which has been discussed in the customer analysis chapter of
this project.

In case of non school organizations who lease their buses, it may be noted that
they all have a fleet of 2-3 buses and operate on a low scale and hence the price
factor comes in very handy. Price should not be interpreted as the price of the
vehicle alone but in broader perspective in terms of ease of finance and loan
rates.

• The cases in this cluster include ones like Mr Dinesh and Mr Kasturi Lal
Dutta who have their own small fleet of buses used on contracts and are
satisfied Mahindra customers. They have found M&M buses to be
economical and hassle free.

Cluster 3

• Members in Cluster 3 are: 2, 3, 4, 5, 6, 7, 10, 11, 15

• They have 3 heavy users which makes it a decent percentage of 67 of

them as light users and the remaining 33% being heavy users.

• Of the members, interestingly all of them are travel agents or contractors

who lease buses to schools or IT firms.

The demographics are mixed in here with a lot more heavy users in comparison
to the past two clusters. However, the low percentage of heavy users shouldn’t
be taken to be misleading as the net number of heavy users featuring amongst
the respondents is less given the fact that most heavy users were either not

58
available or were less entertaining. Taking this slip in the survey into account we
can consider this cluster to have a fair share of heavy users.

• Price and spares and serviceability rank prime on their list with a good
importance being given to resale value too.

• While doing the survey I have noticed the fact that most of the tours and
travels and contractors attach a value for resale value of their buses
unlike the schools.

• Their buses travel longer distances on a per month basis which is why
they do go for a new one after every 3-4 years. A one Mr Sharma of
Sharma Travels whom I had interviewed and who appears as one of the
cases in cluster 3 has 15 buses, all TATA.

• He had Ashok Leyland buses before; however, because its resale value is
low, he gradually shifted to being an out and out TATA customer. He
does admit that he found Leyland bodies to be better than TATA’s but
Leyland has fewer service centres than TATA in North India and the
brand has a stronger presence in South which is from where the
customers come for resale, hence paying a lesser price.

• This cluster was emphasising on availability of spare parts &

serviceability as they have long routes to cover and problems as CNG
leakage, wiring problems and temperature related problems are ones
which can be a bumper for the flow of their business (meaning a
financial bump).

59
 • Surveys revealed that brand recognition, it is a term used for the
cumulative effect of a long history of servicing, easy financing, resale
value, credibility and life time of the bus.

7.2 Competitor Analysis

Based on Porter’s Five Force Model, one can analyse the competitive
positioning of M&M buses in the Indian market. The five forces have been
displayed comprehensively in the figure below.

Fig: 7.1 Porter’s 5 Force Model

60
7.2.1 Competitive Rivalry

The figure below gives a graphical representation of customer perception of the

three brands, M&M, TATA, Swaraj Mazda(SM) in terms of Brand and Price.
It’s necessary to take note of the fact that:

• The variable Brand stands for the trust and credibility that a brand name
has garnered in the market.
• The variable Price stands for not just the initial price, but the operating
price of the bus, the maintenance and servicing having a major role to
play in it.

The graph below is a result of the Discriminant Analysis procedure explained in

the prior chapter from where; the data produced as a result of running SPSS is
presented in a comprehensible manner on an excel sheet.

61
 1 .2

-0 .8 6 1 , 10 .9 9

0 .8 0 .1 0 2 , 0 .8 1 7

0 .6

0 .4 1 .0 8 1 , 0 .3 9 6

-1 .4 0 7 , 0 .1 7 3 0 .2 S e rie s 1
0
-2 -1 .5 -1 -0 .5 0 0 .5 1 1 .5 2
-0 .2

-0 .4

-0 .6 0 .3 2 6 , -0 .5 6 9
1 .3 8 2 , -0 .6 9 3
-0 .8

Fig 7.2: Perceptual Map of Buses and Their Attributes: Drawn Using Excel
From SPSS Output

62
The perception map reveals that:

• TATA brand of buses are closer to both the dimensions, of Price and
Brand recognition on dimension 1 as well as towards spares & service
availability too; however more towards Brand recognition.

• Swaraj Mazda(SM) is a known as a popular brand amongst school buses

which is why we find it not very far as compared to M&M to the
dimension 2, Brand but as it doesn’t have a strong preference in tourist
section; it isn’t very close to the brand parameter either. However, when
prices are compared, it falls behind M&M as there is a section which has
said that SM spares and maintenance is a costly affair. However, Swaraj
Mazda, like TATA has no issues with availability of spares or with the
number of service centres.

• Mahindra buses, being a comparatively new player fall below TATA in

terms of brand recognition, however, a good section of its customers
have rated it as cost effective as it has lower maintenance costs attached.
As against Swaraj, M&M buses have decent brand recognition,
especially, a brand loyalty amongst its customers wherein of about 72
sales made in the past two years that Mahindra buses have been actively
in market since 2008, about 33 of them are prior customers.

TATA

TATA buses have been in the market for a really long time and hence have
established a position which would be hard to challenge or penetrate. When you

63
say 25 seater, M&M stands out indeed but though TATA buses aren’t available
in 25 seaters, they have a wide range from 16-67 seaters. The Starbus Skool
range of 17, 32, and 52 is most popular. It has a Starbus Deluxe range for
medium range of tours & travel agencies as well as the Globus Luxury Range
which is huge and smart. A customer analysis shows:

• TATA buses have been old players and had enjoyed monopoly, hence
currently they have strong foothold despite challenges by other
competitors.

• Customers have shown trust in TATA saying that it is hassle free and
hence maintenance cost is less and business moves smooth.

• Tours & travel agents have maintained that Resale Value of TATA is
highest and hence they prefer TATA over Ashok Leyland which has a
better build.

• TATA chassis is available in market and Telco provides custom made

bus bodies on chassis.

• TATA is available in a variety of styles and sizes.

Swaraj Mazda

Swaraj Mazda has an enviable position in Delhi with a lot of schools going for a
Swaraj as they believe the brand to be ideal for schools. Customers have said
that because they have been in the industry for a long time, they regard it as a
name to be trusted.

64
 • Swaraj is not having a very good hold in the tours & travels industry, one
mainly dominated by Volvos, TATAs and to an extent, Ashok Leyland.

• It has the biggest market share in the school bus arena in Delhi.
• Some customers have said that its maintenance cost is high.

• It comes in a variety of sizes and styles

• It tops comfort and style scale which is why some schools said they
prefer Swaraj.

7.2.2 New Entrants

Mercedes-Benz will invest about US$ 64.21 million in its plant at Chakan near
Pune, which was formally inaugurated recently. The plant will have a production
capacity of 2,500 trucks and buses and 10,000 cars over two shifts per year.
Turkish commercial vehicle maker, Temsa Global is looking to enter the Indian
bus market and has undertaken a feasibility study on the commercial potential to
set-up an integrated bus making facility in India4.

7.2.3 Threat of Substitutes

There are a host of schools all over India which are decent in disposition and
have pupils from middle class families coming in who do not run their own
buses. Given that our region of survey happens to be Delhi alone, it may be

65
noted that in many schools the students often avail the public transport after
reaching a certain age as of 3rd or 4th standard thereby incurring a monthly travel
expense of around Rs200, where on the other hand, availing the school’s
transport system might come up to Rs500 a month.

The picture below shows an alternate mode of transport used by schools which
proves to be economical for the school as well as for the students. It may be
noted here that such issues do become a concern for M&M buses as they are in
the market with 25 seater buses which are mostly targeted at small schools with
limited number of students clustered along certain residential areas. A lot of
schools who were contacted as Pratibha Vikas Vidyalaya of Surajmal Vihar or
Lions Public School, Ashok Vihar and some other schools who were contacted
have mentioned that students come on their own. And again, since these aren’t
top notch schools, its very unlikely that people living at a considerable distance
would have send their wards. When contacted, the transport in-charge did agree
that most students come from nearby areas; hence no pressing need for installing
a school bus facility has risen yet.

66
Fig 7.3: The Cycle Bus Used By Delhi Schools
7.2.4 Bargaining Power of Suppliers

Raw material price fluctuations directly affect the operating margin and net
profit margin. Raw material costs comprises of about 84.46% of the price of the
finished products. Any price increase of the raw materials has a direct bearing on
the overall operating margin.

In August 2008 steel prices peaked to over 1100$/tonne 40% higher then the
steel price in January 2008. Whereas, on the other hand, in March 2009 the steel
prices have fallen to 4 year low of $473/tonne. Tyres are also an important part

67
of the raw material required for manufacturing. Tyre prices are correlated to the
rubber prices. The chart below shows the volatility present in the rubber market.
The rubber volatility also affects the operating margin and consequently the net
profit margin.

Graph 7.1: Swing in Prices of Raw Material, Steel

68
Graph 7.2: Swing In Prices of Raw Material, Rubber

7.2.5 Bargaining Power of Customers

Indian Automobile sector is high on growth trajectory. And is expected to touch

10 million marks of which Commercial Vehicle Segment will contribute
maximum. The figure below shows the demand projection of the bus
requirement in India taking into consideration the revamped road transport
projections by the Government as well as the probable requirement in schools,
tours & travels and other public and private transports.
Note: The graph has been generated after taking into account the industrial phase
post recession.

69
Graph 7.3: The Present and Expected Demand in Buses

The figure below depicts the driving forces behind the change in the bus
industry wherein the increased disposable income vis-à-vis the fast changing
spending habits of the country has been graphically depicted.

70
Graph 7.4: The Surging Population of India

It’s evident that with a steadily bulging population, the number of buses on
Indian roads isn’t going to be decreasing in near future for school, non school
and public transports. Consolidate this issue of rising demand, it has been seen
that in its bid to give a major boost to the bus segment, the Centre has expanded
the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme to
provide support to State Governments for replacing their fleet of buses where
Delhi will get 1,500 buses, while Mumbai will have 1,050, Bangalore 700,
Kolkata 1,200, Hyderabad 700 and Chennai with 800 buses involving an
investment of around Rs. 7,000crores, of which the Centre’s share will be
around Rs.4,000 crores.

71
Despite these sanctions and huge demands it has been seen that due to lag in
scale up of production by the two companies who have bagged this project,
TATA (65%) and Ashok Leyland (35%) these buses haven’t and are not coming
on time on the city streets. It may be noted that in Delhi, buses continue to be the
most popular means of transportation for intra-city travel, as they cater to about
60% of the total commuting requirements.

Hence, one may conclude that bargaining power of one section (government) of
the customers is not very high given the fact that only 2 companies had bided in
the first place for the project and TATA having bided the lowest got 65% of the
project, the remaining going to the only other bidder, Ashok Leyland.

In case of tours & travels, the larger ones dealing with a large client base who
prefer luxury travels go for Volvo which is the only player at present in this
arena; hence a minimal customer bargaining power is noticed. There are many
others who go for chassis and get the body build on it.

As for schools and other segments as contractors, there are various buying
behaviours noticed where some customers blindly go for brand names as TATA
or Swaraj Mazda who have been in the market for a quite a while some go for
the most financially competitive quotation exhibiting high bargaining power.

7.3 Reference Scheme

Reference Scheme is a project undertaken by the management to boost the sales
of Mahindra buses in Delhi. It is already in use for the pick ups as Load King
and now the same is being readied to be implemented for buses. The upper

72
management and dealers have been convinced of the viability of the scheme and
the final format of these reference scheme notes have been made during the
tenure of the project. It has been my good fortune that since it was done during
the tenure of the project, I have been part of it and I could analyse the
applicability of it.
The reference scheme involves generating a coupon for customers of Mahindra
Tourister which is given to new customers at the time of purchase, while it is
mailed to or given personally to old customers. A team of salesmen have been
employed to visit customers and make this scheme more comprehensible.

If an existing Mahindra customer refers another potential customer to the

Mahindra dealership, then, on closure of the deal, the existing customer would
get servicing worth Rs3000/- absolutely free. The caveat involved in this scheme
is that it is only redeemable at the Indraprastha dealership situated at Kirti Nagar
in Delhi which is the sole dealership of Mahindra for LCVs in Delhi. The
coupon is not applicable for cold calls.

The reference scheme paper is in three parts:

- A part concerning customer’s details as address and phone and details of

purchase with the date and model number. This is kept with the
dealership.

- The second part is of a coupon of Rs3000/- which the customer can get
reimbursed for the servicing of his vehicle.

73
 - The third part concerns the main soul of the reference scheme wherein
the customer fills in the details of the potential customer whom he is
referring.

Observation

The scheme appears to be a viable one. However, the scheme doesn’t involve
varying discount amounts with respect to the size of customer referred to. This
means, that if customer ‘A’ gives the lead to a major customer who is likely to
buy 2 or 3 buses and customer ‘B’ leads to a customer who has a need for a
single bus alone, yet, on closure of the loan, both customers are getting the same
amount of service coupon. Probably, this arrangement can be taken care of by
varying the service amount to Rs3000/- for leading to a sale of 1 or 2 buses,
while for more than 2, a coupon of Rs5000/- will be made available.

7.4 The Future Ahead

74
Graph 7.5: The Relation between Surging Urban Population and Buses

The graph above shows how the bus industry through out the world has
developed with respect to the increasing urban population. Definitely, a major
part of this would be the route transport buses, the area in which there is a
duopoly of TATA and Ashok Leyland, however, it also includes the increasing
number of schools, offices and other institutions. With spaces in cities reducing
at an alarming rate, people move further far to settle in comfort; however,

75
travelling expenses surge and who would think of availing a train or other
medium(apart from car) to travel inter city.

Graph 7.6: The Current Penetration of Buses in India

As shown in the graph above, if we look at the penetration of buses per 1000
people in India, it stands out to be very less in comparison to other developing

76
countries(expect US which is also in the list). The reason can be traced back to
government regulations which were stringent more than a decade ago. However,
times have seen a steady change.

It is most appropriate for MNAL to steadily build their brand value in terms of
brand recognition, financing feasibility, spare part availability, proximity of
service centres and last but never the least, technology. They say, you strike iron
when hot and this is precisely the time to do so.

Chapter 8
Conclusions & Recommendations

77
8.1 Conclusions

The survey result and based on both secondary and primary data, an elaborate
analysis has been drawn. Here, we discussed the competitive position of M&M
buses across Porter’s Model. An understanding of customer behaviour was also
done wherein three different segments of customers emerged according to the
benefits seeked by each segment. Reviewing these data we come to the
following conclusions:

• The Mahindra brand name has gravity and does attract customers but
attracting customers is not enough, a sale has to be closed and a bus
needs to be sold.

• Being late in entering the industry, they have to face established players
as TATA and Swaraj Mazda. Whereas TATA reigns in the tours &
travels industry, Swaraj Mazda is prominent in Delhi’s schools.

• The single product limitation (a 25 seater Tourister) in Delhi fails to

provide a wide variety of choices to customers.

• However, despite this limitation, the sales group has pitched the project
well by approaching institutes with their product and convincing them
that rather than having two 50 seaters and let one of them go under
utilized, its better to replace one of them with a 25 seater for a more
economical and fuel efficient approach.

78
• Technically, Mahindra buses are at par or better than some of its
competitors, both TATA and Swaraj Mazda as they both give a mileage
of around 7 to 7.5km/kg; however, the Tourister gives a good mileage of
as much as 8km/kg.

• However, despite the above mentioned edge, it has been seen that this
feature is appealing to customers in the school segment, but for those in
the non school segment, the factor of primary concern is that the bus
should run well and if and when problems arise, service centres should
be available at the nearest possible distance and the spare part
availability should be high.

• Mahindra spare part availability is said to be low by customers; however,

the company has come up with solutions for this problem, but these
solutions haven’t reached all customers.

• The company offers a hotline number 97187575 which can be accessed

any time from any where and the nearest service centre would be asked
to contact the customer and solve his problem. However, this
information is communicated only to customers who come for servicing
or to new customers. There is a block of customers who are unaware of
this facility. This hotline also connects a caller to the nearest dealer of
any spare part required.

• The market perception that TATA spare parts are available even at the
‘pan dukaan’ (i.e. at every nook and corner) makes those customers who
give importance to spares and serviceability, go for a TATA.

79
 • The M&M buses are indeed price competitive.

• They have a well developed reference scheme is existent for pick ups and
has been operating well. This scheme is being implemented for buses for
which the road has already been laid.

8.2 Recommendations

The project has culminated in a comprehensive view of the Indian bus industry
as well as in an understanding of where MNAL stands in the bus industry and its
market position. The recommendations worth applying are:

• The demand of the tours and travel industry was for buses which would
be a little larger than that available, i.e. 25 seater. Big agencies as Raos,
Panickers, Southern transport smaller groups of tourists as of 17-25 at
the most. However, a 25 seater is barely sufficient for 17 as these buses
are usually push backs and have more leg space. Coming to smaller
players, they don’t go in groups less than 25 as its economical; but for a
25+ tourist group, the MNAL bus comes small. Hence, for Mahindra to
establish in the tourist segment, it requires to come up with a larger bus.

• Of the three segments that we have got as a result of customer analysis, it

may be noted that the segment easiest to penetrate would be the 2 nd
segment where we have 90% light users. These are mainly schools and

80
 small enterprises which run buses on contract basis. Though each
customer would have 5 or less buses, the segment is a wide segment
which can be tapped easily as price has been found out to be a factor of
prime importance amongst them. Price includes not just the purchase
price but also the operating price whereby the customer should incur low
maintenance cost and the spare parts should be available when required
at a reasonable price.

• There are many schools along East Delhi which fall in this segment, but
because the company hasn’t got their service network spread across East
Delhi, they haven’t been able to tap this market. Haste must be made in
this regard as brand factor comes second on the list of this segment and
this brand name signifies the experience of the brand in the market as
well as its service centre network.

• It’s only after establishing firmly in what can be called a mass segment
can the company enter the other segments. However, Mahindra being a
strong name in automotive industry wouldn’t require much time to
bridge the gaps. Segment 1 is of customers who buy the best brand
available in market in terms of gravity of brand name as well as the
Comfort factor. These customers serve clients who demand a good
service and are willing to pay for it. To tap this segment, Mahindra buses
need to come with a wider range of models which are competitive on
parameters of style and comfort, not just technically, but look appealing
too.

• The 3rd segment is relying on resale value of buses and serviceability and
spare availability. Though resale value of a bus is built over a time as

81
 trust in a brand name increases, both these factors are interrelated. They
are connected by the common thread of wide spread service centres and
easy availability of spare parts.

• MNAL should carry a regular check on their customer satisfaction

indices by visiting their existing customer base. Some customers had
complained about the salesman that he hasn’t seen him since the deal
was closed. There is a good percentage who said they are satisfied, but
even 2 out of 33 customers would make it about 6% which in a narrow
customer base of built buses (for private organizations) is significant.

• The database of Hari Bhari buses that had been sold by M&M prior to
the 2008 Tourister range is significant as it can be used to push sales of
the new Tourister range. It is always easy to maintain an existing
customer base than to make a TATA or Swaraj customer switch to
M&M (which is possible in due course of time with the right kind of
strategies).

• M&M has a 24/7 help line to help with service and spares related
problem, but a batch of old customers are unaware of it. Hence, sales
men should take upon themselves to visit old customers to know their
concerns and distribute pamphlets and stickers (to stick in the bus in
visibility of driver) with the help line number: 97187575 displayed. This
would increase their strength in sales & serviceability factor and to help
combat the unavailability of spares.

82
• Spare parts have a major margin and M&M should harness this
opportunity to distribute their spares through competent dealers. This
would help to combat the common perception in market that spares of
M&M aren’t widely available as TATA or Swaraj Mazda.

• Despite the Government norms as Introduction and Implementation of

Bus Code for all OEM’s in 2008 and Accreditation of all Unorganized
Bus Body builders distributed across India, the tours & travel industry
insists on build buses. TATA & Leyland do provide bus chassis and
build tailor made cabins on them. Hence, to get a firm foothold in this
arena, M&M should release chassis in market and tap the custom made
demands of customers. After all, unorganised way of Body Building
converted into organized sector will improve the overall quality of the
product and people.

• The visibility of Mahindra buses can be increased amongst potential

customers by participating as sponsors for school and college events.
They can propose to bear the transportation charges and transport
students to the venue, thereby imparting the experience of Mahindra
buses. This can be further supported by banners and standees advertising
Mahindra buses (staying within the financial viability limits).

• M&M should come up with technologically competent buses, given the

fact that they have one of the best R&Ds in the country and are in to a JV
with the very competent American brand, Navistar. They should
promptly address concerns as:

- Complained about problems with Gear & Temperature trouble

83
 - No proper wiring, high maintenances
- Parts availability is very low
- Trouble with bus leakage & wiring issues
- Parts are very costly & no distributor found for parts
- Complained about problem in leakage & speed problems

Note: The above mentioned complains are genuine customer complaints

collected during survey, a detailed report of which (along with customer
specifics which can not be displayed in the report) has been send to the
company.
8.3 Limitations & Caveats

The project has been performed for Mahindra Tourister buses only and the
survey has not been done with respect to the other models of Mahindra as Hari
Bhari, the production of which has been abandoned. The project is done only in
Delhi and the observations, conclusions and recommendations may not be
applicable for developing a marketing plan for Mahindra Sub 6 ton buses in any
other place. The marketing plan developed is exclusively for Mahindra buses
which are in the Sub 6 Ton Category, i.e. buses in the Light Commercial Vehicle
segment and hence may not be applicable for Heavy Commercial Vehicle
segment, a segment wherein Mahindra Navistar is on the verge of making a
foray. The current scenario has only 25 seater Mahindra buses operating in
Delhi, however, the other ranges of buses are found in other states and a
complete range of Tourister is slated for release in Delhi by 2010. Hence, some
recommendations are made considering this venture. Financially viability of
recommendations is to the best of the knowledge as possible with the data on
hand but can not be claimed absolutely indisputable.

84
----------------------------------------End----------------------------------------------------

Bibliography

• International Herald Tribune. Retrieved on 2009-01-12. (1)

• http://www.statpac.com/research-papers/research-proposal.htm#layout
• Wikipedia (2)
• www.mahindra.com (3)
• http://www.tatamotors.com/
• www.swarajmazda.net/
• http://www.ibef.org (4)
• Motor India Online Edition (5)

85
 • http://www.wikinvest.com/stock/ (6)
• www.indiaenvironmentportal.org.in (7)
• Marketing Research by Rajendra Nargundkar, Edition 2, Pages 334-340
and 441- 464
• Down To Earth, Issue # Oct 31, 2008
• Ward’s World Motor Vehicle, 2006.

Appendix 1
Questionnaire for Study of Bus Preference

Dear Sir/Mam,
I am doing a survey on the market for buses with regards to customer
preferences, market share & mind share and would like you to spare a few
minutes to fill up this questionnaire. Thank you for your co-operation.

Type of Organization: School [ ] Non School [ ]

Name of Organization:

Name of Contact:

86
Number of Buses:
Make of Buses:
For purchasing a bus for your school which factors out of the following do you
consider most important and which factors the least important?

LEAST SOMEWHA DOESN’ IMPORTA MOST

IMPORTAN T T NT IMPORTAN
T IMPORTAN MATTE T
(1) T R (4) (5)
(2) (3)
Brand

Price

Comfort

Spares &
Serviceabili
ty
Resale
Value
Mileage

How do you rate your present range of bus:

87
Make:

Very Dissatisfied Somewhat Satisfied Very Satisfied

Dissatisfied Satisfied
1 2 3 4 5

SCORE/5
Brand

Price

Comfort

Mileage

Resale Value

Would you go for the same brand when considering a repurchase?

Appendix 2
SPSS Output for Cluster Analysis Test
Method: We use the difference between rows in a measure called co-efficient to
identify the number of clusters in the data. To have lowest possible number of
clusters regarding ease of interpretation & economic feasibility, we analyse the
table last row up. We see a difference of (12.050 -5.026)/7.024 between
coefficients of 1 and 2 cluster solutions. The next difference is of (5.026-
4.932)/.094 between coefficients of 2 and 3 cluster solutions. The next one after

88
that is (4.932-3.956)/.976 of difference. The difference reduces to .956 between
stage 37 and 36, .25 between 36 and 35 from stage 28 onwards the difference
reduces to zero till stage 21 which shows a difference of 1 from where onwards
the coefficient remains zero.

Observation: The point of ‘elbow’ is observed to be at stage 38 at co-efficient

4.932 where we see a change in the graph, hence, the number of clusters
considered for segmentation are 3 (40-27).

Cluster

Case Processing Summarya,b

Cases
Valid Missing Total
N Percent N Percent N Percent
41 100.0 0 .0 41 100.0
a. Squared Euclidean Distance used
b. Average Linkage (Between Groups)

AVERAGE LINKAGE BETWEEN GROUPS

Agglomeration Schedule
Stag Cluster Combined Coefficien Stage Cluster First Next
e ts Appears Stage
Cluster Cluster Cluster 1 Cluster 2
1 2

89
 1 39 41 .000 0 0 3
2 35 40 .000 0 0 7
3 17 39 .000 0 1 17
4 36 38 .000 0 0 6
5 13 37 .000 0 0 19
6 19 36 .000 0 4 10
7 16 35 .000 0 2 11
8 32 34 .000 0 0 10
9 31 33 .000 0 0 11
10 19 32 .000 6 8 15
11 16 31 .000 7 9 16
12 27 30 .000 0 0 22
13 25 29 .000 0 0 23
14 24 28 .000 0 0 16
15 19 26 .000 10 0 25
16 16 24 .000 11 14 18
17 17 23 .000 3 0 25
18 16 22 .000 16 0 26
19 1 13 .000 0 5 26
20 8 9 .000 0 0 31
21 6 7 .000 0 0 29
22 3 27 1.000 0 12 30
23 12 25 1.000 0 13 30
24 14 21 1.000 0 0 33
25 17 19 1.000 17 15 33
26 1 16 1.000 19 18 31
27 2 15 1.000 0 0 39

90
28 10 11 1.000 0 0 32
29 4 6 1.000 0 21 32
30 3 12 1.667 22 23 34
31 1 8 1.727 26 20 34
32 4 10 1.833 29 28 36
33 14 17 1.900 24 25 35
34 1 3 2.705 31 30 37
35 14 20 2.750 33 0 38
36 4 5 3.000 32 0 37
37 1 4 3.956 34 36 38
38 1 14 4.932 37 35 39
39 1 2 5.026 38 27 40
40 1 18 12.050 39 0 0

91
92
93
 Initial Cluster Centres
Cluster
1 2 3
VAR000 5.00 4.00 4.00
01
VAR000 2.00 5.00 5.00
02
VAR000 5.00 3.00 4.00
03
VAR000 3.00 3.00 5.00
04
VAR000 2.00 3.00 5.00
05

Iteration Historya
Iterati Change in Cluster Centres
on 1 2 3
1 1.374 .756 1.183
2 .553 .308 .427
3 .088 .064 .000
4 .000 .000 .000

94
a. Convergence achieved due to no or small
change in cluster centres. The maximum
absolute coordinate change for any centres
is .000. The current iteration is 4. The
minimum distance between initial centres is
3.000.

Cluster Membership
Case Number Cluster Distance
1 2 .725
2 3 1.470
3 3 1.077
4 3 .909
5 3 1.470
6 3 .846
7 3 .846
8 2 1.147
9 2 1.147
10 3 1.077
11 3 .778
12 2 .858
13 2 .725
14 2 1.076

95
15 3 1.432
16 2 .513
17 1 .586
18 1 1.951
19 1 .516
20 1 1.285
21 1 1.055
22 2 .513
23 1 .586
24 2 .513
25 2 1.147
26 1 .516
27 2 1.257
28 2 .513
29 2 1.147
30 2 1.257
31 2 .513
32 1 .516
33 2 .513
34 1 .516
35 2 .513
36 1 .516
37 2 .725
38 1 .516
39 1 .586
40 2 .513
41 1 .586

96
 Final Cluster Centres
Cluster
1 2 3
VAR00001 4.92 4.21 4.33
VAR00002 3.54 4.95 4.78
VAR00003 4.15 3.26 3.44
VAR00004 3.00 3.37 4.56
VAR00005 2.85 2.89 3.78

Distances between Final Cluster Centres

Cluster 1 2 3
1 1.850 2.382
2 1.850 1.505
3 2.382 1.505

97
 ANOVA
Cluster Error F Sig.
Mean df Mean df
Square Square
VAR000 2.057 2 .160 38 12.855 .000
01
VAR000 8.231 2 .204 38 40.442 .000
02
VAR000 3.176 2 .200 38 15.884 .000
03
VAR000 6.800 2 .175 38 38.898 .000
04
VAR000 2.872 2 .185 38 15.506 .000
05
The F tests should be used only for descriptive purposes because the clusters have
been chosen to maximize the differences among cases in different clusters. The
observed significance levels are not corrected for this and thus cannot be
interpreted as tests of the hypothesis that the cluster means are equal.

Number of Cases in each

Cluster
Cluste 1 13.000
r 2 19.000
3 9.000

98
 Valid 41.000
Missing .000
Appendix 3
SPSS Output for Attribute Based Perceptual
Mapping
Discriminant

Analysis Case Processing Summary

Unweighted Cases N Percent
Valid 21 100.0
Excluded Missing or out-of-range group 0 .0
codes
At least one missing 0 .0
discriminating variable
Both missing or out-of-range 0 .0
group codes and at least one
missing discriminating variable
Total 0 .0
Total 21 100.0

99
Analysis 1

Summary of Canonical Discriminant Functions

Eigenvalues
Functio Eigenvalue % of Variance Cumulative % Canonical
n Correlation
1 1.266a 86.5 86.5 .747
2 .198a 13.5 100.0 .407
a. First 2 canonical discriminant functions were used in the analysis.

Wilks' Lambda
Test of Wilks' Lambda Chi-square df Sig.
Function(s)
1 through 2 .368 16.983 6 .009
2 .834 3.077 2 .215

100
 Standardized Canonical Discriminant
Function Coefficients
Function
1 2
VAR00002 .102 .817
VAR00003 -.861 .990
VAR00004 1.382 -.693

Structure Matrix
Function
1 2
*
VAR00004 .793 .346
VAR00002 .471 .740*
VAR00003 .167 .642*
Pooled within-groups correlations between
discriminating variables and standardized
canonical discriminant functions
Variables ordered by absolute size of

101
correlation within function.
*. Largest absolute correlation between
each variable and any discriminant function

Canonical Discriminant Function

Coefficients
Function
1 2
VAR00002 .191 1.528
VAR00003 -1.124 1.291
VAR00004 1.803 -.904
(Constant) -2.951 -8.793
Unstandardized coefficients

Functions at Group Centroids

VAR00 Function
001 1 2
1 -1.407 .173
2 1.081 .396
3 .326 -.569

102
 Unstandardized canonical
discriminant functions evaluated at
group means

Classification Statistics

Classification Processing Summary

Processed 21
Excluded Missing or out-of-range group 0
codes
At least one missing 0
discriminating variable
Used in Output 21

Prior Probabilities for Groups

VAR00 Prior Cases Used in Analysis
001 Unweighted Weighted
1 .333 7 7.000
2 .333 7 7.000

103
3 .333 7 7.000
Total 1.000 21 21.000

104
 Classification Resultsa
VAR00 Predicted Group Membership Total
001 1 2 3
Original Count 1 6 1 0 7
2 1 5 1 7
3 1 2 4 7
% 1 85.7 14.3 .0 100.0
2 14.3 71.4 14.3 100.0
3 14.3 28.6 57.1 100.0
a. 71.4% of original grouped cases correctly classified.

105