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International Conference on Technology and Business Management March 18-20, 2013

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Buying Behavior and Customer Satisfaction of Hyundai Cars in

Hyderabad City

Farhat Anjum

[email protected]

Osmania University

Automobile units play a vital role in the industrial development of a nation. By considering the facts, the author

has chosen the topic as pertinent to the current situation in car market. Hence an in-depth study of satisfaction

of customers of Hyundai cars has been undertaken. The main objective of the study is to identify the factors

influencing the customers to purchase Hyundai cars and analyze the factors influencing their satisfaction. The

study was confined to Hyderabad city and size of the sample is 300 customers of Hyundai car by adopting

simple random sampling technique for data collection.

Key words: Buying behavior, MNCs, Customer satisfaction

IntroductionThe automobile industry occupies a vital place in the industrial sector of any nation irrespective of the level of

economic development. In India, after independence, the government has shown keen interest in the

establishment of a powerful automobile manufacturing industry in the country.Before 1991, there were strict regulations on trade and they caused adverse balance of payments. To correct

this, the government liberalized its fiscal policies and resorted to liberalization, globalization and Privatization.

Liberalization means relaxation of tariff rates on import and export of goods. Globalization means adopting or

imparting foreign technologies to bring about revolution in methods of production and reduce costs of

production. Liberalization, Globalization and Privatization has had a telling impact on the standard of living of

the Indian people.

Liberalization and Globalization have reduced the cost of production. Due to the reduction of cost of

production, individual incomes have raised. This provides a better standard of living to individuals.

Consequently amenities considered luxuries once have become necessities today. This explains the high demand

of cars.

The liberalization of economic policies started in real terms during 1991. India opened its gates to foreign

investors who were seriously looking for newer markets to prop up the sagging global passenger-car market.

The automotive industry in India is one of the larger markets in the world and had previously been one of the

fastest growing globally, but is now seeing flat or negative growth rates. India's passenger car and commercialvehicle manufacturing industry is the sixth largest in the world, with an annual production of more than 3.9

million units in 2011. According to recent reports, India overtook Brazil and became the sixth largest passenger

vehicle producer in the world (beating such old and new auto makers as Belgium, United Kingdom, Italy,

Canada, Mexico, Russia, Spain, France, Brazil), grew 16 to 18 per cent to sell around three million units in the

course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan,

South Korea, and Thailand. In 2010, India beat Thailand to become Asia's third largest exporter of passenger

cars.

As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were

produced in India in 2010 (an increase of 33.9%), making the country the second (after China) fastest growing

automobile market in the world in that year. According to the Society of Indian Automobile Manufacturers,

annual vehicle sales are projected to increase to 4 million by 2015, no longer 5 million as previously projected.

The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly, but in very small

numbers.The industry is one of the key drivers of economic growth of the nation. Since the delicensing of the sector in

1991 and the subsequent opening up of 100 percent FDI through automatic route, Indian automobile sector has

come a long way. Today, almost every global auto major has set up facilities in the country.

The auto sector reported a robust growth rate of 26 percent in the last two years (2010-2012). The BSE AUTO

Index outperformed the benchmark Nifty by 79%, 12% and 19% in FY10, FY11 and FY12, respectively.

However, the sector has shown a sluggish growth of 12 percent in 2012. The trend is likely to stay with a 10

percent growth outlined for 2013 citing high ownership costs (fuel costs, cost of registration, excise duty, road

tax) and slow rural income growth. Solid but cautious growth is expected over the next few years. However,

from a long-term perspective, rising incomes, improved affordability and untapped markets present promising

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opportunities for automobile manufactures in India. According to Macquaire equities research, sale of passenger

vehicles is expected to double in the next four years and growth anticipated is higher than the 16 percent

achieved in the past 10 years. Two-wheeler vehicle segment is expected to show slow growth of 10 percent

CAGR over the period of 2012-2016, suggests the report.

The Government recognizes the impact of the sector on the nations economy, and consequently, the

Automotive Mission Plan 2016 launched by it seeks to grow the industry to a size of US $145bn by 2016 and

make it contribute 10 percent to the nations GDP.

Factors that will drive growth in the sector

Rising incomes among Indian population will lead to increased affordability, increasing domesticdemand for vehicles, especially in the small car segment.

Fuel economy and demand for greater fuel efficiency is a major factor that affects consumer purchasedecision that will bring leading companies across two-wheeler and four-wheeler segment to focus on

delivering performance-oriented products. Product innovation and market segmentation will channelize growth. Vehicles based on alternative

fuels will be an area of interest for both consumers and auto makers. Focus on establishing India as auto-manufacturing hub is reigning in policy support in form of

Governments technology modernization fund. Industry will seek to augment sales by tapping into rural markets, youth, women and luxury segments.

Hyundai Motor India Limited is a wholly owned subsidiary of the Hyundai Motor Company in India. It is the

2nd largest automobile manufacturer in India. Hyundai Motor India Limited was formed in 6 May 1996 by the

Hyundai Motor Company of South Korea. When Hyundai Motor Company entered the Indian Automobile

Market in 1996 the Hyundai brand was almost unknown throughout India. During the entry of Hyundai in 1996,

there were only five major automobile manufacturers in India, i.e. MUL, HM, PAL, TELCO and M&M.

Daewoo had entered the Indian automobile market with Cielo just three years back while Ford, Opel and Honda

had entered less than a year back.

For more than a decade till Hyundai arrived, Maruti Suzuki had a complete dominance and monopoly over the

Passenger Cars segment because TELCO and M&M were solely Utility and Commercial Vehicle

Manufacturers.

HMIL's first car, the Hyundai Santro was launched in 23 September 1998 and was a runaway success. Within

a few months of its inception HMIL became the second largest automobile manufacturer and the largest

automobile exporter in India.Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai

Motor Company (HMC), South Korea and is the largest passenger car exporter and the second largest car

manufacturer in India. HMIL presently markets 6 models of passenger cars across segments. The A2 segmentincludes the Santro, i10 and the i20, the A3 segment includes the Accent and the Verna, the A5 segment

includes the Sonata Transform and the SUV segment includes the Santa Fe.

HMILs manufacturing plant near Chennai claims to have the most advanced production, quality and testing

capabilities in the country.To cater to rising demand, HMIL commissioned its second plant in February 2008,

which produces an additional 300,000 units per annum, raising HMILs total production capacity to 600,000

units per annum.

HMIL has set up a research and development facility in the cyber city of Hyderabad.

As HMCs global export hub for compact cars, HMIL is the first automotive company in India to achieve the

export of 10 lakh cars in just over a decade. HMIL currently exports cars to more than 120 countries across EU,

Africa, Middle East, Latin America, Asia and Australia. It has been the number one exporter of passenger cars

of the country for the sixth year in a row.

To support its growth and expansion plans, HMIL currently has a 307 strong dealer network and 627 strong

service points across India, which will see further expansion in 2010. In July 2012, Arvind Saxena, the Director

of Marketing and Sales stepped down from the position after serving the company for 7 long years. HMIL has

two manufacturing plants in Sriperumbudur, Tamil Nadu capable of producing 630,000 vehicles annually.

HMIL currently exports vehicles to more than 110 countries across Europe, Africa, Middle East, Latin America

and Asia. It has been the number one exporter of passenger cars for the sixth year in a row in India.

Established in 1947 by Chung Ju-yung in South Korea, Hyundai was founded as a construction company.

Later in 1967, the company established its motor company under the brand name of Hyundai. Hyundai ranked

as world's fifth largest automaker, is the largest passenger car exporter and second largest car manufacturer of

India, presenting its Indian customers with pice de rsistance models like Santro, i10, Getz, Accent, Sonata,

Tucson etc.

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Hyundai Sales up by 4.3%

Domestic sales grew 1.2 %, Exports up 10.8 %

Hyundai Motor India Ltd (HMIL), the countrys second largest car manufacturer and the largest passenger car

exporter, registered 4.25% growth in cumulative sales for the month of January 2013. The domestic sales

accounted for 34302 units compared to 33,900 units and the exports stood at 17,722 units compared to 16,001

units for the same month last year.Hyundai Motor Company (HMC), the fastest-growing automaker by brand, is the official partner for

International Cricket Council (ICC) tournaments. Hyundai Motor India Limited (HMIL), a subsidiary of HMC,

handed over the keys of Hyundai fleet of cars for the ICC Womens World Cup India 2013 in Mumbai.

A fleet of 12 Hyundai cars were delivered by HMIL officials at the handing over ceremony held at the Cricket

Club of India, J. N. Tata Pavillion, Brabourne Stadium in Mumbai. The fleet including the new Sonata, award

winning Elantra and the Verna, will be used for the entire duration of the tournament by ICC officials and the

womens World Cup teams from participating nations.

Statement of the problem

The Indian automobile industry is facing tough competition with the entry of MNCs. All companies are

constantly engaged in gaining the attention of consumers by introducing updated versions of existing vehicles,

changing the design and model. Sometimes new car models with a varying price structure to suit the different

classes of customers are also launched. A company introduces many models under its brand name. In this study,

the researcher has chosen a sample of users of Hyundai cars to study

1. Customers buying Behavior2. The variables that influence such buying behavior and3. The level of satisfaction of the customers

Objectives of the Study

1. To know the demographic profile of the sample of Hyundai car customers2. To identify the factors influencing their purchase.3. To analyze the factors influencing the satisfaction of the customers.

Scope of the Study

The present study aims at assessing the customer behavior and satisfaction while using Hyundai cars. It also

tries to identify the factors influencing the choice of different models. It covers only the users of Hyundai cars

within Hyderabad city.

Methodology

The area of the study is confined to Hyderabad city. The size of the sample selected for the study is 300

customers, selected at random.

Sources of the Data

The study is based on both primary and secondary data. For primary data, the researcher constructed a detailed

questionnaire to obtain information from the users of Hyundai cars. The researcher had collected secondary data

from various books, journals and magazines.

Tools of Analysis

The data collected was tabulated for analysis and interpretation. Statistical tools like simple percentage analysis

and chi-square tests were used in the analysis.

Hypothesis

The quantity chi-square is described as the magnitude of discrepancy between the theoretical and observed

values. In the present study, the following null hypothesis has been set and tested.

There is no significant relationship between the level of satisfaction of users of Hyundai cars and the

following factors.

1. Gender2. Education3. Occupation

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4. Monthly income5. Size of Family6. Model of car

Limitations of the Study

This study is confined to customers of Hyderabad city only.

Results and DiscussionProfile of the Sample Respondents

Table 1: Profile of the Sample CustomersS.No Factors Classification No. of Respondents Percentage

1. Age

Young 92 31

Middle 160 53

Old 48 16

Total 300 100

2. Gender

Male 264 88

Female 36 12

Total 300 100

3.Education

Under Graduates 28 9

Graduates 108 36

Post Graduates 74 25

Professionals 90 30

Total 300 100

4. Occupation

Private Employment 60 20

Govt.Employment 38 13

Business 114 38

Professional 52 17

Agriculture 36 12

Total 300 100

5. Income

Low 26 9

Middle 188 63

High 86 28

Total 300 100

6. Size of the family

Small 152 51Medium 105 35

Large 43 14

Total 300 100

Age plays a crucial role in deciding the buying behaviors. In this study, the age factor is considered in three

brackets, namely young (below 30 years) middle aged (31-45years) and old age (above 50 years), The

distribution of customer age-wise is shown in table 1. Out of 300, 92 (31 percent) respondent belong to the

young category, 160(53 percent) of the respondent belong middle age and 48 (16 percent) are old.

The gender- wise distribution of respondents is also shown in table 1. Out of 300, 269 (89 per cent)

respondents are Males and the rest 26 (12 per cent) Females.

Education is one of the significant determinants of buying behavior and customer satisfaction./ Education

wise respondents have been classified into four categories- namely Under Graduates, Graduates, Post-

Graduation and Professionals. It is revealed from Table 1 that out of 300 respondents 28 (9 per cent) are UG,

108 (36 per cent) were Graduates, 74 (25 per cent) were PG and the remaining 90 (30 per cent) were

professionally qualified.

The occupation of consumers has a direct bearing on buying behavior and customer satisfaction. Occupation-

use respondents have been classified into five categories. It is understood from table 1 that out of 300

respondents, 60(20 per cent) were privately employed, 38 (13 per cent) were Government employees, 114(38

per cent) were Businessmen, 52 (17 per cent) were Professionals, 36(12 per cent) were Agriculturist.

Income is a major determinant of ones socio-economic status in society. Income influences buying behavior.

For the purpose of the study, the monthly income of the respondents was considered in three brackets, namely

low income (below 25,000 Rupees) Middle income (25,000-50,000 Rupees) and high income (Above 50,000

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Rupees).It is seen from the Table 1 that out of 300 respondents, 26(9 per cent) belongs to low income category,

188(63 per cent) belongs to middle income group and 86 (28 per cent) respondents were of the high income

category.

The number of members in a family is one of the factors influencing buying behavior. For the study, the

family size of the sample consumers was classified into three categories, namely small (3 members), medium

(3-5 members) and large (above 5 members). It is learnt from the Table 1 that out of 300 sample customers, 152

(51 per cent) respondents are of small family bracket, 105( 35 per cent) respondents were from the medium

family category and 43 (14 per cent) respondents belongs to the large family category.

Brand preference of customers in the sample

Table 2: Brand Preference of Hyundai Car CustomersModels No. of Respondents Percentage

Santro 92 31

Eon 20 6.67

I10 67 22

I20 36 12

Accent 24 8

Verna 38 13

Getz 22 7

Tucson 01 0.33

Total 300 100

Socio-economic factors play an important role in brand preference. Hyundai has introduced various models in

the car market. Table 2 exhibits the brand preference of customers of Hyundai cars. Out of the 300 customers in

the sample 92 (31 per cent) respondents preferred Santro, 20 (7 per cent) preferred Eon, 67 (per cent)

respondents preferred i10, 36 (12 per cent) preferred i20,

24 (8 per cent) respondents preferred Accent, 22 (7 per cent) respondents preferred Getz, and only 1 (0.33 per

cent) preferred Tucson.

Table 3: Source of Information about Hyundai CarsSources No. of Respondents Percentage

Advertisement 120 40

Friends and Relatives 50 17

E-Media 82 27Print Media 48 16

Total 300 100

Table 3 reveals that various sources through which the customer have obtained the information about the

Hyundai cars. Out of the 300 sample respondents, 120 (40 per cent) knew about Hyundai cars through

Advertisements. Friends and relatives influenced 50(17 per cent) respondents, 82 (27 per cent) gained

knowledge about Hyundai cars through the electronic media, 48 (16 per cent) respondents got information about

Hyundai cars through the print media.

It is understood from the Table 4 that, out of 300 customers in the sample 197 (66 per cent) prefer to use petrol

for their cars, 18 (6 per cent) respondents prefer diesel for their cars and only 85 (28 per cent) preferred gas as

fuel.

Table 4: Preference of Fuel UsageFuel No. of Respondents Percentage

Petrol 197 66

Diesel 18 6

Gas 85 28

Total 300 100

Factors influencing Customers Satisfaction

Customers satisfaction is the basis of all sound marketing strategies. Customer form judgments about the value

of marketing offers and make their own buying decisions.

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In a free market economy, the customer is the king who decides the value of the product through the

payment made for the product. Therefore, every producer should produce and supply the product depending on

the market signal that directs the value of the product as a measure of satisfaction of a customer.

Customer satisfaction with regard to products depends upon product performance in relation to user

expectations. A customer might experience various degrees of satisfaction. If the products performance fails to

meet his expectations, the customer satisfaction is at low level. If the performance matches his expectations, the

customer satisfaction is of a medium level. If the performance exceeds his expectations, the customer has a high

level of satisfaction.

Table 5: Satisfaction Level of Customers of Hyundai CarsLevel No. of Respondents Percentage

High 187 62

Medium 95 32

Low 18 6

Total 300 100

It is clear from the Table 5 that out of 300 customers in the sample 187 (62 per cent) are in the high satisfaction

category. 95 (32 per cent) respondents have recorded medium levels of satisfaction and 18 (6 per cent) only

have low level of satisfaction.

Customers Satisfaction with Hyundai cars is influenced by many factors. The researcher has identified six

factors for measuring the level of satisfaction of users of Hyundai cars. There are a number of socio-economicvariables related to the satisfaction of the customers with Hyundai cars. The following variables have been

identified for analysis with a chi-square test.

1. Gender2. Education3. Occupation4. Monthly income5. Size of the family6. Car models

It is inferred from the Table 6 that the major socio-economic variables that influence customer satisfaction are

education, occupation and monthly income. The other three variables namely, gender, family size and car

models do not significantly influence the satisfaction of customers with Hyundai cars.

Table 6: Socio-Economic Factors and Satisfaction Level Chi-Square Test Results

No. Factor Calculated Value Table Value Degree of Freedom Remarks (at 5% level)1. Gender 4.9682 5.991 2 Not Significant

2. Education 34.0295 12.592 6 Significant

3. Occupation 36.9221 15.507 8 Significant

4. Monthly Income 22.6452 9.488 4 Significant

5. Size of the family 6.7227 9.488 4 Not Significant

6 Models of cars 16.3685 23.685 14 Not Significant

References1. Anderson J, Durston B and Poole M (1991). Thesis and Assignment writing, New Delhi: Wiley Eastern

Limited.

2. Automobile Manufacturer Association of India-Bulletin.3. Green, Tull, Albaum (2009) Research for Marketing Decisions, Prentice Hall of India.4. Gupta S.P (1997) Statistical Methods, New Delhi: Sultan Chand and Sons.5. Kothari C R (2011) Research Methodology Methods and Techniques, New Age International

Publishers.

6. Leon G Schiff man, Leslie Lazar Kanuk (2010) Consumer Behavior, Prentice Hall of India.7. Loudon D L and Bitta A J D (2008) Consumer Behavior, Tata McGraw Hill.8. Natarajan L (2007). Marketing, Chennai, Margham Publications.9. Philip Kotler (2010) Marketing Management, Pearson Education.10. Philip Kotler, Gary Armstrong (2008) Principles of Marketing, Prentice Hall of India.11. Www. Hyundai Motors India Limited.in12. The Hindu-Survey of Indian Industries-2011.

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