Final Project Auto Industry

Strategic Management of Marketing Final Project
The Exordium
“In The Name of Allah The Compassionate The Merciful”
Praise to Allah,
Lord of the creation,
The Compassionate,
The Merciful,
The King of the judgment day! You alone.
We pray, and to you alone.
We pray for help, guide us to straight path, the path
of those whom you have favored, not neither of those
who have incurred your wrath, nor of those who gone
astray.
2
Al-Quran.
Acknowledgement
One of the most pleasant parts of writing a report or any presentation is the
opportunity to thank those who have contributed to your efforts. Unfortunately, the list of
expressions of thanks – no matter how extensive – is always incomplete and inadequate.
This acknowledgment is no exceptions.
First of all we are thankful to Almighty Allah who gave us the courage to
complete this task and to our resource person Mr. Hassan Raza who stood behind us
whenever we need his guidance and support. His unflagging patience and outstanding
capacity work made this report possible.
We also admire the efforts of our other teachers and advisors and all other people
who help us in this report. And yes there are many others whom we are not able to
mention the names but we really appreciate the cooperation and help provided by them.
We will remember you all.
Thanks.
3
 An Introduction to Auto industry in Pakistan

No other industry enjoys more protection in Pakistan than the auto
industry, particularly the two-wheelers. For almost two decades the
import of two-wheelers is subjected to a high, 105 per cent duty to
discourage imports. In the early 1970s imports of motorcycles in
Completely Built-Up (CBU), Completely Knock-Down (CKD) and Semi
Knock-Down units were subjected to 10 per cent duty. Eight years later
many of the local distributors of Japanese motorcycles established their
plants to assemble the two-wheelers locally in collaboration with their
foreign principals and the duty was increased to an unaffordable rate
of 105 per cent to protect the nascent industry.
Today the bulk of the national market is dominated by three major
manufacturers— Honda, which enjoys the biggest share of the market,
followed by Yamaha and Suzuki. Others producers like Vespa and new
entrants such as Hero and Sohrab enjoy much smaller share. The three
major Japanese manufacturers have not only been able to take a
sizable share of the market but also to achieve a reasonable deletion
target of up to 70 per cent. However, the extensive protection for over
two decades has created a virtual absence of healthy competition
resulting in drastic increase in prices in particular and quality in
general.
Today, prices of the two-wheelers have reached a level where the
majority of middle income group, the main market of the two-wheelers,
can hardly afford to buy a new motorcycle whose prices start from over
Rs 60,000. The prices of locally assembled Chinese brands are
comparatively less but still run in excess of Rs 44,000.
For the first time the government announced to reduce the duty on
the import of motorcycles; in CKD, SKD or CBU form, to 10 per cent
when finance minister Ishaq Dar presented the Budget 1999-2000 in
the Parliament on June 12. However, a notification issued by the
ministry of finance dated June 14 but received on June 23 said that the
imports of motorcycles will be subjected to a regulatory duty of 95 per
cent. The registered local assemblers, which include all manufacturers,
will be exempted from regulatory duty on the import of CKDs which will
be subjected to import duty of 10 per cent, sales tax of 15 per cent,
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income tax of 5 per cent. No other import, including the automobiles, is

subjected to a higher regulatory duty than the two-wheelers.
Pakistan, with a population of 140 million, is the seventh most
populated country in the world but despite tremendous market for two-
wheeler its share in the global production of over 19 million remains
negligible. It produced a record 112,000 motorcycles in 1992-93 which
fell down to 90,000 in 1997-98. During the first nine months of 1998-
99, (July ‘98 to March ‘99), a total of 55,000 two wheelers were
produced as compared to over 68,000 in the comparative period the
previous year.
The declining sales had also worried the major producers who feel that the high
import tariff is hurting the industry.
Local manufacturers produce a handful of models with engine capacity of which is 70
cc, 100 cc, 125 cc and 150 cc. For the benefit of the people the government can reduce
the import tariff on the motorcycles which are not produced locally— bikes up to 50 cc
and over 200 cc. The reduced tariff will help encourage import of two-wheelers not
produced locally to keep providing protection to the manufacturers on one hand and a
much better price and product choice to the people on the other.
siness definition:
Our main line of business is commuters. We have started with motorcycle
“SPEEDO”. We intend to market our product in the major cities of Pakistan in the first
phase. We will export our product, of course subject to its success in Pakistan and cross-
cultural opportunities.
alysis
SWOT analysis is as follows:
Strengths:
• We have cost effect production processes.
• We have research lab that persistently put due efforts as to how we can improve
our product’s quality (quality is defined as conformance to customers’
requirements) in order to make it strongly competitive product in the market.
• We have strong conformity and control in our processes.
• Our production processes are based on prevention not inspection so as to
minimize the failure cost (failure may be internal or external).
Weakness:
• Top management cost is high
• As this is the commencing stage so, we will have to have a hefty advertising
budget.
• Training cost
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Threats:
In market we will have to face a stiff competition, as it is evident by the fact that there
are already very established brands e.g. Honda 70, Yamaha etc having great repute
accumulated over the years. And after WTO the imported motorcycles will be less
expensive in the absence of import duties, so countries like China, which have cheap
labor cost, are more likely to be posing threats for Pakistani Products, which of course
includes our brand as well.
Opportunities:
The face of the motorcycle industry has changed considerably over the last two years.
This is mainly because of the fact that motorcycles have now come in reach of the middle
class in terms of the price. We believe that our cost effective production process will
enable us to provide a motorcycle in the market at lower price as compared to the existing
companies. This is a sustainable opportunity that can be exploited.
Strategic Situation Summery For New Company

• Changing face of the market
The availability of increased numbers of locally produced and imported two-wheelers
have not provided buyers with choice but have also pushed sales for the benefit of all
those associated with the trade. Just a year ago retail outlets at the Akbar Road (Karachi)
used to sell just 600 units a month. Today some 2,500 units are sold a month and the
figure is expected to cross 3,000 units in August. The market has not witnessed such sales
activity for around a decade when Karachi used to be the biggest two-wheeler market in
the country.
Despite the expectations that total sales at the Akbar Road would cross 3,000 units
every month, Karachi is still lagging far behind Lahore, which houses half the Karachi's
population, with much higher sales of 4,000 units. In fact, despite an otherwise welcome
in sales, the expected increase in its volume would match sales figures twenty years ago
despite substantial population growth.
The competition has also transformed the Akbar Road in another way — there is
more new two-wheeler today although there has no change in the number of dealers. Two
years ago, there were a total of around 125 dealers at the market around 100 of whom
were engaged in buying and selling of used motorcycles due mainly to high volume of
trade in used two-wheelers. Today, the ratio has been reversed due to availability of
locally produced and imported products and buyers' willingness to buy new bikes which
are comparatively affordable. At present, 70 of the 125 outlets are engaged in new bike
business and around 50 are engaged in buying and selling of used ones.
The entrance of Chinese two-wheelers in the market has instilled a healthy
competition for the benefit of the buyers. An equitable valuation system can help bring
down the prices even lower to provide people with the most affordable choice. In light of
the above mentioned facts, we believe that we shall also exploit the opportunity available
in the market.
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Vision
Market leader in the motor cycle industry emerging as globally competitive center of
production and exports.
Mission
A dynamic profitable and growth oriented company through market leadership,
maximizing exports and excellence in quality and service to ensure attractive returns to
equity holders; reward employees according to their ability and performance; to foster a
network of researchers and engineers ensuing unique contribution to the development of
the industry; customer satisfaction and production of the environment by producing
emission friendly green products and to remain a good corporate citizen fulfilling its
social responsibility in all respect
Our Customer:
Our potential customers are people who want a better value product. Potential consumer
has age between 18 and 50. These are people who want better value for their money.
They generally belong to either lower class or middle class.
Target Market Description
Demographics
o Age of the target market is between 18 and 50
o Target market consists of only one gender i.e., males
o Target market is located in Pakistan.
o Target market belongs to lower and middle class (income wise).
Psychographics
Target market consists of people who want to buy a motor bike at a low price
and they want to endure a cheap maintenance cost. This is because of the fact that
they are people who cannot fulfill all their requirements subject to their limit
resources.
Personality Type
Target market has generally three personality types:
1) Strivers
2) Experiencers
3) Believers
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Strivers
Strivers are trendy and fun loving. Because they are motivated by achievement,
strivers are concerned about the opinions and approval of others. Money defines
success of strivers, who don’t have enough of it to meet their desires. They favor
stylish products that emulate the purchases of people with greater material wealth.
Many see themselves as having a job rather that a career, and a lack of skills and
focus often prevents them from moving ahead.
Experiencers
Experiencer is motivated by self-expression. As young enthusiastic and,
impulsive consumers. Experiencers quickly become enthusiastic about new
possibilities but are equally quick to cool. They seek variety and excitement,
savoring the new, the offbeat and the risky. Their energy finds an outlet in
exercise, sports, outdoor recreation and social activities.
Experiencers are avid consumers and spend a comparatively high proportion of
their income on fashion, entertainment and socializing. Their purchases reflect the
emphasis they place on looking good and having “cool” stuff.
Believers
Like thinkers, believers are motivated by ideals. They are conservative,
conventional people with concrete beliefs based on traditional, established codes:
family, religion, community, and the nation. Many believers express moral codes
that are deeply rooted and literally interpreted. They follow established routines,
organized in large part around home, family, community, and social or religious
organizations to which they belong.
As consumers, believers are predictable; they choose familiar products and
established brands. They favor national products and are generally loyal
customers.
Competitor
Number of competitors
Today the bulk of the national market is dominated by three major
manufacturers— Honda, which enjoys the biggest share of the market,
followed by Yamaha and Suzuki. Others producers like Vespa and new
entrants such as Hero, PakHero, Road Prince, Qhinqhi and Sohrab
enjoy much smaller share. Deeewan Farooq has also come up in the
market with a 70 cc motorbike with a brand name of Star.
Reality market share of each competitor
Production of automobiles
8
Market share of motor cycles
Current competitive position

Under the current scenario, we are challengers to all the other existing motorcycle
manufacturers in Pakistan. We have carefully studied their strategies and will outclass
them giving the potential consumer exactly what they want. We will provide a good
quality product and that too at a low price than our competitors.
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Distribution channel
We would go beyond the conventional horizon of distribution channels that is a
product is supplied to the distributor, then to the whole seller and finally to the retailer.
We would directly supply our motorcycle to the retailer so as to ensure that our potential
consumer gets the product in time and to minimize the costs for betterment of all.
Distribution strategy will be selective.
owth of market
Pakistan, with a population of 140 million, is the seventh most
populated country in the world but despite tremendous market for two-
wheeler its share in the global production of over 19 million remains
negligible. It produced a record 112,000 motorcycles in 1992-93, which
fell down to 90,000 in 1997-98. During the first nine months of 1998-
99, (July ‘98 to March ‘99), a total of 55,000 two wheelers were
produced. As the Chinese bikes and new low priced bikes have come
into the market, the sales of bikes have raised all the major cities of
Pakistan. For the last two years the industry all together has registered
a growth at growing rate and this upward trend is highly unlikely to
change in the coming years.
Objectives
Marketing (profit, market share)
Financial e.g. ROI ()to investment what will that be

Societal objectives
The carbonator of the motorcycle and the silencer is designed in such a way that it
emits very low level of carbon monoxide in the atmosphere. 10% of our net income will
be spent on homeless children anywhere in our country.
MPPS (Marketing Program Positioning Strategy)
Product strategy
Our motorcycle has the following attributes
 100cc
 100 km per liter petrol consumption
 4 stroke engine
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 Self start ignition system

 Front wheel disc brake
 Halogen front light
 Warranty of 5 thousand kilometers or 6 months (whichever comes
first)
 Anti theft system
Price
We are going to use super value pricing strategy that is high quality at a low price
when compared to other products in the market. The price of the motorcycle will
be around Rs. 38,000/= .pricing with respect to promotion will be low active
Promotion
Potential consumers’ form our target market seeks information from both on-
and off-line sources. Their online sources are radio and television. Amongst the
two, frequency and reach of radio is more regarding our target market. Off-line
sources are word of mouth, magazines, billboards, in-house advertisements and
shopkeeper. We are not going to advertise a product in the first phase. We will
advertise the product on radio, magazines, billboards and newspapers in the first
phase. As the conventional distribution channel (distributor, whole seller and
retailer) is not being used, it provides a healthy margin to the retailer so as to
encourage him to sale our product more. The promotional strategy will be a
combination of both Push and Pull.
Positioning strategy
Our positioning statement is “gives you a better value”. Another positioning
statement can be “gives you something extra”. Both these statements refer to the
special features of the motorcycle and that too at a low price comparatively. This
will be highlighted in our advertisement/promotional campaign.
Marketing Research
The contents of marketing research are as follows:
Research Objectives
• To find out the consumers preferences regarding different features of motorbikes.
• To find out the personality types of the respondents/ potential consumers.
• To find out the demographics of the potential consumers.
• To find out the psychographics of the potential consumers.
Research Methodology
We took a sample of 80 eighty males. We selected five key areas, they are: Iqbal
Town, Gulshan Ravi, Samanabad, Icchra, and Sanda. We selected the areas on the basis
11
of judgment and experience. We managed to take 80 face-to-face interviews and filled the
questionnaire within 12 days. Each interview took 10 to 15 minutes.
Questionnaire
Dear respondents,
We are students of Institute of Management & Technology. We are conducting a
research regarding consumer preferences; your cooperation in this regard will be highly
appreciated.
Q1 .You like a lot of variety in your life. (Achievers)
Strongly Disagreed Disagree Neither Agreed nor Disagreed Agreed Strongly Agree
1 2 3 4 5
Q2 .You are really interested in a few things. (Believers)
1 2 3 4 5
Q3. You like trying new things. (Experiencer)
1 2 3 4 5
Q4 .You want to be considered fashionable. (Striver)
1 2 3 4 5
Q5 .You want to learn about things even if they never were of any use to you.
(Thinkers)
1 2 3 4 5
Q6 .You like life pretty much the same weak to weak. (Believers)
1 2 3 4 5
Q7 .You follow the latest trends and fashions (innovators)
1 2 3 4 5
Q8. On the scale of 1 to 5 where do you rate the following features of a Motor Bike?
1, 2, 3, 4, 5
a) Durability _ _ _ _ _
b) Petrol Consumption/ Mileage Per Liter _ _ _ _ _
c) Out look/ Appearance _ _ _ _ _
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d) Acceleration _ _ _ _ _
e) Load Capacity _ _ _ _ _
f) Low Maintenance Cost _ _ _ _ _
g) Halogen Front Lights _ _ _ _ _
h) Easy Availability of Spare parts _ _ _ _ _
Q9. Which of the following features would you prefers most. (Please select one).
a) Durability
b) Acceleration
c) Mileage Per Liter
d) Low Maintenance Cost
e) Easy Availability of Spare Parts
f) Low Price of Motor Cycle
g) Others
Q10. Which of the following bikes would you prefers most. (Please select one).
Main Features
a) Bike 1. __ 70 Kilometers Per Liter, High Resale Value, Brand Image
b) Bike 2. __ 70 Kilometer Per Liter, Relatively Low Price
c) Bike 3. __ 100 Kilometer Per Liter, Durability, Low Price
d) Bike 4. __ High pay load, Durability, Resale Value
e) Bike 5. __ Good acceleration, Pay load
Q11. Would you be satisfied if motorcycles are delivered to you one month after you
make full payment? (Please select one).
Highly Satisfied Satisfied neither Satisfied nor Dissatisfied
Dissatisfied Highly Dissatisfied
Q12. On a scale of 1 to 5 where do you rate the motorcycle with following attributes?
Mileage 100 Kilometers per Liter
a) Durability
b) Warranty of 5,000 Kilometer or
6 months (which ever comes first)
c) Halogen Lights
d) Low cost maintenance
e) 100 cc
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f) Good acceleration rate

g) Good after sale service
h) Self start
i) Anti-theft system
Least preferred Most preferred
1 2 3 4 5
Q13. If a company charges rupees 40,000 for a brand new bike with the attributes
mention in Q.12 (Please select one).
Least preferred Most preferred
1 2 3 4 5
Respondent’s Profile:
Name Occupation
___________ ___________
Household income/ Income (per month)
5,000 to 10,000
10,001 to 15,000
15,001 to 20,000
More than 20,000 Thank You.
Sample Size
Sample size in this case is 80 respondents.
Analysis
The respondents filled questionnaires and that data was analyzed by using
software named SPSS. It required encoding, data entry, analysis and in depth
analysis of the data.
Results
The results of the analysis showed positive response of consumers and
potential consumers for our product. People have mainly emphasized on the petrol
consumption and durability the most. Results are further elaborated in analysis
and in in-depth analysis.
Analysis and In-Depth Analysis
Analysis and in In-Depth Analysis of our marketing research are as following:
14
30
20
10
Count
0
strongly disagree niether agree nor di stronlgly agree
disagree agree
Achivers
30
20
10
Count
0
disagree agree
Believers
15
40
30
20
10
Count
0
disagree agree
Experiencer
16
30
20
10
Count
0
disagree agree
Striver
40
30
20
10
Count
0
disagree agree
Thinkers
17
30
20
10
Count
0
disagree agree
Innovator
• Our marketing research concludes that the personality types of our target market
are:
Strivers
Believers
Experiencers
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• Customer’s preferences about different features of bikes:

o Durability of Motorbikes
neither preffered no
most preffered
prefferd
o Petrol Consumption of Motorbikes
prefferd
most preffered
19
o Appearance of Motorbike
most preffered
somew hat preffered
prefferd
o Speed of Motorbike
most preff ered
neither pref fered no
preff erd
20
o Load Capacity of Motorbike
most preffered
somew hat pref fered
pref ferd
neither pref fered no
o Halogen Lights
not preffered
most preffered
somew hat preffered
prefferd
21
o Easy Availability of Parts
neither preff ered no
most pref fered
prefferd
o Most Preferred Features
durabilty
low price
accelaration
mileage per liter
22
o Preference for Honda CD 70
yes
no
o Preference for Speedo 100
no
yes
23
o Preference for Yamaha 100
yes
no
o Preference for Honda 125
yes
no
24
• Income Bracket of Respondents
more than 20000

5000 to 1000
10001 to 15000
15001 to 20000
o Preference for Speedo with Respect to Customer’s Income

7
3 preference for speed
2
r rejected
1 prefferd
Count
0 most preffered
5000 to 1000 15001 to 20000
10001 to 15000 more than 20000
wht income bracket respondents fall
25
o Preferred Features of Speedo With Respect to Customer’s Income

6
3
most preffered featu
2 durabilty
accelaration
1
mileage per liter
Count
0 low price
5000 to 1000 15001 to 20000
10001 to 15000 more than 20000
wht income bracket respondents fall
Forecasts/budgets
Projected income statement, balance sheet, cash flow statement
 Contingency Plans
If the existing strategies regarding product, price and promotion do not succeed, we
can change them to survive in the market. Product strategy will more or less remain
the same. Price can be lowered, promotional strategy can be changed from selective
to extensive targeting, and aggressive advertisement campaign can be launched.
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Final Project Auto Industry

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Final Project Auto Industry

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Strategic Management of Marketing Final Project

“In The Name of Allah The Compassionate The Merciful”

 An Introduction to Auto industry in Pakistan

income tax of 5 per cent. No other import, including the automobiles, is

Strategic Situation Summery For New Company

Market share of motor cycles

Current competitive position

Financial e.g. ROI ()to investment what will that be

 Self start ignition system

f) Good acceleration rate

• Customer’s preferences about different features of bikes:

o Petrol Consumption of Motorbikes

most preff ered

neither pref fered no

o Load Capacity of Motorbike

somew hat pref fered

neither pref fered no

somew hat preffered

o Easy Availability of Parts

neither preff ered no

most pref fered

o Most Preferred Features

mileage per liter

o Preference for Honda CD 70

o Preference for Speedo 100

o Preference for Yamaha 100

o Preference for Honda 125

• Income Bracket of Respondents

more than 20000

o Preference for Speedo with Respect to Customer’s Income

3 preference for speed

wht income bracket respondents fall

o Preferred Features of Speedo With Respect to Customer’s Income

wht income bracket respondents fall

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