Chapter - 1 Abstract

Transcription

1 Chapter - 1 Abstract Introduction The research on A Study of CRM in the Automobile Industry with special reference to Two-wheeler Market focuses in understanding the role of customer relationship management in the automobile industry with reference to Two-wheeler after sales service market in the region of Mumbai. Automobile is to be considered as the leading industries in global market and is considered as the industry of industries. In the present competitive scenario the automobile sector, especially the Two-wheeler sector is growing exponentially, this results a huge market for maintenance of Two-wheeler. Today the companies have realised the importance of having the authorised after sales service network and moreover the automobile companies do not consider after sales service as a cost anymore. Indications are that the unorganised segment (road side mechanics) is favoured for servicing as opposed to company authorised segment of the after sales service sector. The research tries to acquire understanding on the current use and role of customer relationship management in the two wheeler industry with specific regards to the after sales service area and also tries to find the reasons as to why customers prefer to choose the unorganised players and organised ones for the after sales service of their two wheelers. Also the research has formulated and suggested customer relationship management strategies to be followed by the two wheeler companies, which would allow the two wheeler companies to capture the untapped customers for after sales service Utility of the study The utility of the study is as followed: A) This study throws light in understanding the attitudes & perceptions of the two wheeler owners towards After Sales Service, by eliciting their opinion on company authorised service centers v/s nonauthorised service outlets (road side mechanics). 1

2 B) It focuses specifically on the factors influencing the Customer Relationship Management. C) Through this study, it has made inroads into developing the variables of the Customer Relationship Management for after sales service industry and its impact on consumers purchase decision. D) The awareness level of the two wheeler customers in terms of customer relationship management can be measured. It also helps to know the extent to which customer relationship management is used by the authorised after sales service business. E) It highlights the improvements that can be made into the existing use of customer relationship management which can help to get more customers at company authorised service outlets. F) The performance and effectiveness of existing company authorised after sales service centers in terms of warranty, guarantee availability of original parts, peace of mind, special offers, availability of latest equipment s, trust, annual maintenance contract and near to residence can be evaluated to initiate a new framework for designing new strategy for high foot falls of customers in the authorised service centers. G) It also helps in designing the best customer relationship management strategies that enhance the knowledge of the two wheeler owners regarding the benefits and use of authorised service centers for their two wheelers after sales service needs Problem Statement Automobile is the largest industry in India and is also known as the industry of industries. It has been observed that two wheeler segment in India has registered significant growth during the last two decades. An extension of this growth has been that there has been an enormous growth in demand for the sector that offers after sales service to this segment. As per the data of automobile industry, authorised service outlets account a maximum of 40 percent of the after sales and service business market share. The vehicle servicing industry is estimated to be worth at Indian rupees twenty thousand crore, this could rise to 2

3 twenty seven thousand crore rupees by the year This results a huge market for servicing of Two-wheeler. About fifty six million two-wheelers are there on Indian roads. Accordingly on the basis of this, two-wheeler after sales business should have generated revenue amounting to rupees one lakh million per year, but has not realised. The researcher strongly believes that Indian two-wheeler manufacturers has not considered after sales service as a mainline of business and providing conveniently reliable after sales maintenance services is crucial in two-wheeler market in India to have a grip of the market, which allows the company to have a strong position. Indications are that the unorganised segment of this sector is favored for servicing as opposed to organised segment of the service sector. Hence the attempt is made by the researcher to study the role of customer relation management and its efficacy in the Metropolitan region of Mumbai. Due to this reason the current topic on Customer relation management is selected, to explore the effectiveness of company authorised service centers over nonauthorised (road side mechanics) Review of Literature The literature has been reviewed from the reputed National & International Journals pertaining to Marketing, Service Standards and their related issues. In addition to journals, the literature has also been reviewed from Reference Books, Magazines and Websites Objectives of the Study The present study has following objectives: 1. To study the role of customer relationship management in post sales maintenance needs of two wheeler industry. 2. To assess the impact of existing practices of customer relationship management used by two wheeler companies on tapping customers for post sales service. 3. To study what impact customer relationship management has on the satisfaction of two wheeler users. 4. To understand the attitudes & perceptions of the two wheeler owners towards After Sales Service, by eliciting their opinion on company authorised service centers v/s nonauthorised service outlets (road side mechanics). 3

4 5. To know the satisfaction level of consumers with respect to after sales service in authorised and nonauthorised service outlets. 6. To assess the impact of availability of after sales service on the company s sales and on the repeat purchase. 7. To recommend customer relationship management strategies for the company in influencing the customers for after sales service Hypotheses The following alternative hypotheses have been tested in relation to research variables: H1: There is an internal consistency and reliability among the variables selected in the study for conducting factor analysis. H2: Use of customer relationship management has an impact on getting the new customers for after sales service. H3: Use of customer relationship management is highly significant in enhancing the satisfaction level of customers H4: Availability of company authorised after sales service is significant to increase the company sales. H5: Availability of company authorised after sales service network has a positive impact on the repeat purchase of same company product Methodology of the Study It consists of Sources of data, Research design, Sampling Plan, Research Area & Statistical tools Sources of Data The sources of data involves both Primary & Secondary Data Primary data Survey & Schedule using structured questionnaire to Two-wheeler user Secondary Data Literature from Text Books, articles published in National & International Journals, Magazines and Websites 4

5 Research Design Descriptive Cross-sectional design: The research aims to quantify the opinions of two wheeler owners towards after sales service availability. It would be descriptive in nature because it measures the impact of customer relationship management and post sales maintenance availability on the satisfaction level. The data has been collected from the two wheeler users and their responses have been analysed by using appropriate statistical tools. Thus the research design adopted for the study is Quantitative Descriptive Cross-sectional design, to design the strategies for effective customer relationship management Sampling method: It refers how sampling units are selected. Types of sampling Non Probability Sampling. Method of Non Probability Sampling Convenience Sampling This method attempts to obtain a sample of convenient two wheeler users who are ready to give information. The sampling elements or two wheeler users are identified as follows: Firstly, through the known sources, dealers and unorganised service centers are identified. Secondly, based on the convenience and accessibility, the information has been collected from the two wheeler users. This method provided an opportunity to identify and interact with the two wheeler users having the right knowledge of company authorised service centers, unorganised service centers or both Sample Size: The Sample Size is 300 two wheeler users. The samples are also drawn from two wheeler users using both company authorised service centers and nonauthorised service outlets (road side mechanics). 5

6 Research Area City of Mumbai Scope of Study The study investigates the role of CRM and its implication on the after sales services (maintenance) business of two wheeler companies. An effort has been made to understand the key factors that impact customer s decision making in selecting authorised or unauthorized service center for the maintenance of its two wheeler and which have a direct bearing on Two- wheeler company s technological development and introduction of improved products and services. The study of the knowledge and insights gained about likes and dislikes of the consumers, in maintenance decision making, may make it easier for the company to capture the untapped after sales service market, by developing certain effective motivating environment, that promotes customers loyalty towards the two- wheeler company, there by developing customers, who are more happy and satisfied, there by generating higher growth and profits for company. The study examines the information about the extent, to which certain factors of customers decision making are present in market and as well as the importance which is attributed to these factors by the two-wheeler company and may offer veritable cues to the field of Customer Relationship Management research. The detail study may bring to develop factors that impact the consumer s decision making. In this study, the consumer decision making will be examined by studying the critical factors like role of Trust, Warranty & Guarantee which influence the consumer s decision making process. Moreover consumer behavior will also be examined by studying the demographic factors of consumer, like, their social status, economic status, the age, their occupation, the interval in which they get their two wheeler serviced and so on. 6

7 Tests of Hypothesis The hypothesis is tested by using the following statistical tools: Non Parametric tests Chi Square test In addition to the above hypothetical tests, the statistical tools like Simple Percentage Method and Factor Analysis have been used for analyzing the data Data Analysis & Interpretation The collected data has been tabulated in both the forms like Simple Tabulation with one variable and Cross Tabulation having two variables. The tabulated data has been analysed by using SPSS 17.0 consisting of the following statistical techniques: Univariate Analysis It has involved only one variable for analysis and the methods related to this analysis include Simple Percentage Method, Chi-Square test. Bivariate Analysis It has involved only two variables and the methods related to this analysis include Pearson Correlation and Chi-Square test of two variables. Multivariate Analysis It has involved more than two variables at a time. It has explained the associations among more than two variables simultaneously. The methods include both Factor Analysis and Cluster analysis. 7

8 Summary of Findings & Conclusions Findings The study clearly determines that only 7 company s offer free toll number service for its customers. It is apparent from the study that only 2, two wheeler companies offer online booking for after sales. It is apparent from the study that majority of the two-wheeler users belong to the age group The study reveals that majority of the two wheeler users belong to the income level above Rs Three Lakh per annum. The study clearly determines that most of the two wheeler users have service as their occupation. It is evident from the study that two wheeler users understand the need and importance of two wheeler service The study shows that the people prefer two wheelers of Honda Motorcycle Scooter India. It is evident from the study maximum number of two wheeler users, i.e. thirty five percent get their two wheelers serviced once in 2 months. The study reveals that majority of the people use more of unauthorized service station for the after sales service needs of their two wheelers. From the opinions of the two-wheeler users, the study reflects the positive attitude of the two wheeler users towards the free company maintenance service. Majority of the two wheeler users agree that price is an important factor to be considered while buying a two wheeler. Majority of the two wheeler users are of the opinion that they get their two-wheeler serviced from company authorised service station because it is near to their residence. It is observed that the value of Alpha (α) 0.794, shows that the variables are having an internal consistency and reliability and henceforth it is suitable for conducting factor 8

9 analysis. From the Factor analysis it states that Trust, Annual Maintenance Contract & Warranty & Guarantee factors are highly influential in designing the strategies for twowheeler companies. From the hypothetical observations, it clearly indicates that use of customer relationship management is highly significant to enhance the satisfaction level of customers. Through the hypothetical observation, it is observed that there is a strong association between the Availability of company authorised after sales service and the company sales. The hypothetical observation also reveals that use of customer relationship management has an impact on getting the new customers for after sales service. The study inferred that there is a strong correlation between that availability of company authorised after sales service network and repeat purchase of same company product. Conclusions It can be concluded that the majority of the two wheeler users belong to the age group It can be concluded from the study that majority of the two wheeler users are belonging to the income level above Rs per annum and has the spending power. It is clearly concluded that most of the two wheeler users have service as their occupation. The study reveals that two wheeler users understand the need and importance of two wheeler service thus the companies have a huge opportunity to tap. The study also highlights that thirty five percent of two wheeler users, get their two wheelers serviced once in two months. So it can be concluded that authorised service stations have a huge opportunity The study also highlights that forty seven percent of respondents, get their two wheelers serviced from unauthorized service station for the service needs of their two wheelers. So it is concluded that authorised service stations have a huge opportunity to tap. It can be understood from the opinions of the respondents; that maximum numbers of them have used the free company maintenance service. It is concluded that they have positive attitude towards the free company service. 9

10 The study shows that out of three hundred respondents surveyed two hundred and three two wheeler users never received sms / from the company as reminders for the two-wheeler service. The present study indicates that majority of the two wheeler users considers brand name as an important factor while buying a two wheeler. Thus it is concluded that the brand name plays a vital role in the selection of two-wheeler. From the opinion of the two-wheeler users it is concluded that the two wheeler users do not prefer to buy the annual maintenance contract of company authorised service station. The study observes that majority of two wheeler users who have bought the annual maintenance contract are satisfied with the service and had good experience. The study clearly indicates that the majority of two wheeler users who have got their twowheeler serviced from non-authorised service station, are satisfied with the service and had good experience. The present study observes that warranty and guarantee are important factor because of which two wheeler users get their two-wheeler serviced from company authorised service station. The present survey shows that majority of the two wheeler users are of the opinion that they have received free vehicle wash as an offer from company authorised service station. The study also highlights that use of customer relationship management is highly significant to enhance the satisfaction level of customers From the opinions of the two wheeler users it also reveals that there is a strong association between the availability of company authorised after sales service and the company sales. It can be been concluded that all the variables included in the study are proved valid and consistent through the reliability analysis for conducting the factor analysis. Factor 1 Trust, Factor 2 - Annual Maintenance Contract & Factor 3 Warranty & Guarantee which are to be significant components in designing the strategy for the after sales service. 10

11 From the hypothetical observations, the present study observes the use of Customer relationship management has an impact on getting the new customers for after sales service. The study also concludes that the availability of company authorised after sales service network has a positive impact on the repeat purchase of same company product Summary of Suggestions & Recommendations Suggestions The customer relationship effort adopted by two wheeler companies need to be very simple, customer friendly and realistic as the automobile industry is very competitive. It is suggested that all two-wheeler companies should offer toll free number service to its customers. The two-wheeler companies should offers online booking for after sales of twowheelers. It is suggested that irrespective of the income, the two-wheeler users should be convinced in using the company authorised service centre for the after sales maintenance requirement of their two-wheelers. Since maximum number of the two-wheeler users surveyed has service as their occupation, thus it is suggested that two-wheeler companies should focus more on customer relationship strategies such as having a toll free number service and the option to book the after sales maintenance service of the two-wheeler from the company website. The two-wheeler users should be encouraged by the way of rewards for using the company website to locate the dealers for after sales service. The study reveals that the frequency of usage of free company maintenance service is very low; it shows that the company needs to put in efforts to educate the two-wheeler users about the importance of free company maintenance service. Majority of the two wheeler users agree that they have not received reminders from the company regarding two-wheeler maintenance service, it is suggested that the two wheeler company to work on the same. 11

12 The advantages of having an annual maintenance contract should be communicated to those two-wheeler users who have used the free company maintenance service, in order to persuade the two-wheeler users in using the extended services of company authorised service center It is suggested that by proving the benefits of getting the two-wheeler serviced at the company authorised service center the usage rate of the company authorised service center can be increased. From the survey, it is found that most of the two wheeler users have expressed their experience as good towards the annual maintenance contract service; two wheeler companies can use the testimonial of the satisfied customers to convince others. From the study it is found that customer relationship management is highly significant to enhance the satisfaction level of customers, thus it is suggested that the two-wheeler companies to focus on customer relationship as top 3 priorities. The study highlights that Internet is being used as a major source of information about the company products, thus two wheeler companies need to tie up with the major search engines to get the data of the people looking for company products. It is proved statistically that the variables used in the study are having high internal consistency and hence it is suggested that the variables should be incorporated by the two wheeler company while developing strategies. The present study observes that, the use of Customer relationship management has serious implication on getting the new customers for after sales service. It is suggested that the company should increase the use of customer relationship strategy for the after sales service education Recommendations From the study it is found that customer relationship management is highly significant to enhance the satisfaction level of customers, thus it is recommended that the two-wheeler companies need to have customer relationship management on top priority. 12

13 It is recommended that two wheeler companies need to have customer relationship effort very realistic as the automobile industry is very competitive. Thus it is recommended that two wheeler companies must offer toll free number service 24 x 7 for its customers. It is highly recommended that two wheeler companies to offer online booking of after sales service because majority of the two wheeler users have service as their profession and it gives them convenience to book after sales service online. The current study shows that two wheeler companies have underutilized the power of websites and since the current era is of e-commerce and the websites of the company acts as a major tool which says a lot about the company, thus it is recommended that two wheeler companies need to use internet and extranet as a tool for customer interaction. It has been found during the course of this study that two wheeler companies have no definite strategy implemented in terms of CRM, thus it recommends a definite strategy such as appointing relationship managers at the service stations to attend and educate the two wheeler users about the technical know- how would further strengthen the trust, confidence and relationship among the two wheeler users and the company. Studies have proved that more than fifty percent of the two wheeler users use the search engines such as google.com to know about the company products, it is highly recommended that the two wheeler companies to have a tie up with such search engines for getting the data of such people who could be prospective customers of the company. It is recommended that the two wheeler company must have its presence on the social networking websites and the service managers at the service outlets should have the clients added to his friend list, this gesture would help to give a personal touch to the relationship. 13

14 When hiring the employees for the service centers the two wheeler companies to make sure that the new employees have the understanding about customer satisfaction, as it is a key for survival. Since the study revealed that majority of the company authorised service centre users get peace of mind in getting their two wheeler service at company authorised service centre, it is recommended that the two wheeler companies need to incorporate two changes i.e. firstly the company need to have a policy to ask the customer whether he wants any specific part to be fitted or replaced in his presence and secondly the two wheeler company need to have cameras installed at every rack on the shop floor where two wheelers are serviced and if the customers prefer to view the recording video of his two wheeler the same to be provided to the customer. These changes recommended will be fruitful in winning the confidence of the customers and will also increase their peace of mind. The factors like trust, peace of mind, availability of latest equipments, special offers, warranty, guarantee and original parts are highly influential in attracting the two wheeler users in using the company authorised service centers. It is recommended that the two wheeler companies should motivate the two wheeler users in using the company authorised service centers by specifying their utility in terms of trust, peace of mind, availability of latest equipments, special offers, warranty, guarantee and original parts The hypothetical study observes that use of customer relationship management is highly significant to enhance the satisfaction level of the customers, thus it is recommended that two wheeler companies to apply the above mentioned strategies and have a separate department for customer relationship which would measure the effectiveness of the above strategies and amend the same from time to time. The concern about the environment should be used in the communication program of the company to promote the use of company authorised service centers. 14

15 Limitations of the Study: 1) Area covered is only Mumbai region and hence the other areas which are also progressive, could not be covered due to geographic constraint. 2) There are several dimensions of two wheeler industry; this study is focused only on the after sales service of the two-wheelers and CRM. 3) The concept of CRM and after sales service may not be clearly understood by the customers. 4) Since the market is vast and scattered, this shall create some problem Scope for further studies The present research work on CRM in the Automobile Industry with special reference to Two-wheeler after sales service market has an opportunity to explore further in the following areas: Foundation is necessary by way of legislation, policy framing at different levels to popularize the usage of company authorised service centers and replacement or reduction in the usage of unauthorized service centers. It is observed that, many two-wheeler users still use the services of unauthorized service centers. It will be an uphill task in motivating these two-wheelers users due to lack of awareness, lack of skilled professionals. If the two-wheeler companies train their professionals in terms of creating awareness, providing information about product such as annual maintenance contract and benefits related to use of company authorised service centers, then it will help the company in promoting the company authorised service centers. Lack of interest in government professions/ machinery without any clear cut policy on the use company authorised service center. Due to this constraint, the government with the association of automobile companies and other research agencies can formulate long term strategies for the development and promotion of company authorised service center. Proper education to two wheeler users will help them to minimize their maintenance expenses by timely getting two-wheelers serviced from company authorised service centers. 15

16 Non availability of scientific data on the usage and the benefits of the company authorised service center have restricted the scope of the study. A serious effort has to be made to capture the available data at the local, state and national level to enhance the scope of such study. Due to this there is a tremendous scope to do research in company authorised service center in both scientific and marketing dimensions. It gives the ample scope for the Government to study the unaccounted money in the unauthorized service sector accounted. Those two-wheeler users who use only the company authorised service centers must appreciate that their two-wheelers life and resale value can be increased only by use of company authorised service centers and not by use of unauthorised service centers. Till this concept takes a firm root in the policy framework of the government, preservation of the environment and accounting of the unaccounted money will be at peril. So far efforts made by the two-wheeler companies and two-wheeler dealers had yielded limited success. The awareness level has to be created at different levels some of which could be as follows: Incentive schemes to two-wheeler users only using company authorised service centers Implementation of customer relationship strategy at the grass root level. 16

17 Chapter 1.2. Introduction to Automobile and Two-wheeler Industry. Contributors to the field of management, such as Drucker have termed industry of automobile as "the industry of industries". Automobile being the biggest industry in the world is the leading when it comes to the use about latest technologies for manufacturing of vehicles and is known as a largest contributor to economic growth. In previous ten years the tools of production which is used for manufacturing along with tools of systems and their management have been revolutionized worldwide and stern hard work have been put in to come up with a fresh look towards policy in the automobile sector, this will be of help to the economy s growth and will allow the automobile sector to operate in full potential. Hard work is on with a dual goal about decreasing limitations and achieving policy coordination with WTO requirements, this has resulted in a positive way. Changes in the environment with the Elimination of the restrictive policy had lead to reformation in positive way and enabled industry to use modern and updated Technologies, which can lead to coordination with competition in the world and realise its benefits in India. With the Indian economy opening its doors to the world in 1991 have created the environment of rivalry within the companies, which has impacted positively on modernization but have reacted negatively by shrink in prices. As per estimates the total production is approximately eleven million vehicles every year. India is the second largest manufacturer of motorcycles. Factors such as government stimulus packages, and decline in interest rates, the automobile industry has reported a whopping 26.41% increase in sales for the financial year In the domestic market, the sales were driven by car and the two-wheelers. While the car segment posted a percent growth in , the two-wheeler witnessed a 26 percent surge. The bulging size of the India two wheeler markets is opportunity for global players and it is believed that the Indian two wheeler industry is all ready to evolve with many new players have shown their interest to explore the Indian market. The researcher is of the opinion that this trend will further intensify competition. As it is the competition was very high, it has further 17

18 intensified with the entry of automobile giants like Mahindra Two wheelers Ltd, Suzuki Motorcycle India Private Ltd and many more entering the two wheeler market. At present automotive industry is going through persistent tests. With world becoming one market, advancement in technology used and growing rivalry have resulted in altering industry dynamics, for instance cases has been reported to Competition Commission of India where in Indian automobile companies have been found guilty of charging exorbitant greater prices to its customers. Almost every carmaker has been charged by Competition Commission of India for suspected performance which is anticompetitive where they have raised profits by circumventing ways to deceive their customers in every possible way. Automobile companies have left customers with fewer alternatives in regards to the availability of the spare parts. The Car companies in order to make huge profits have stopped the supply of the spare parts to market and at the same time have stopped the producers of spare parts to supply it to the local retail shops. This current trend has left no space for the retail shops to survive, thus making the authorised dealer the only option for customers after sale service. The practice followed in the Indian markets is that the car companies do not allow their existing dealer network to take the dealership of their competitors. Competition Commission of India convicted many automobile companies of having profit margins up to one thousand percent for their spares. This trend will have an adverse effect on genuine need of Right to Repair ; Competition Commission of India has proposed that there is a need for strong laws to curtail the current practices of Indian car companies. It has been observed that there are very different policy followed and implemented in United States and Europe, but the irony if that the same is missing in the country like India. A proposal has been given by Competition Commission of India that the makers of car needs to give out the data to the consumers, which includes technical data and the repair instruction cost, this practice will benefit the vehicle owners and will reduce their dependency on authorised workshops and they have an option left to go to the individual retail shops. Indian car companies are busy making profits from different business verticals. The estimates released by Competition Commission of India shows that every car company earns about half of its revenue from its spare part and this proportion is when compared to the core business of any car manufacturing business which is of car manufacturing. 18

19 The last decade has been very dynamic in the Indian two wheeler industry where in the year 2009 Mr. Rajiv Bajaj, MD, Bajaj Auto made the decision to stop the production of the scooter sand entering the bike segments. This was the era where in companies started focusing on making alterations in their products to make it look fresh at all times. Moreover companies also focused more on joint ventures and picking up stakes in other foreign companies where in they could get the technology advantage, for instance Bajaj Auto Ltd started by picking up minority stake in Austrian bike maker KTM and gradually raising it to forty seven percent as a result of this today Bajaj and KTM are sharing product platforms. The other major event was in December 2010 where Hero s break from its past as Hero Honda Motor Ltd, a twenty six year partnership with the Japanese company. The impact of this break up lead Hero to replace all Honda products, not brand names, for which Hero Moto Corp Ltd has sought out technology partners and distributors in overseas markets, major among them were with US based sports bike maker Eric Buell Racing (EBR) which would help the company to develop high end bikes, second with Austria's AVL Group for engine development and third with Italian two-wheeler design firm Engines Engineering a leading two wheeler maker in Europe which is expert in internal combustion engine, hybrid and electric vehicles, this will help Hero Moto Corp Ltd to bring in next-generation product line up. With more priority given to the aspects of safety and environment, this has led to major changes. Due to advancement in the type of technology used in the vehicles, it has created an effect on the after sales service requirement which has today become more technology dependent and leaving no scope for the unskilled worker. The effect for this has shooted up the demand of skilled workers. Thus with the overall increase in the demand for the organized after sales service business, there is a rise in the number of professional groups who are entering into this emerging area to best use this business opportunity by setting up multibrand service outlets, to name a few First Choice by Mahindra & Mahindra and Servoxpress by Indian Oil and many more. Insistent marketing by the automobile companies have increased the demand of automobile. The major increase for demand has been reported from the people of middle income group. Thus focusing on the customer service along with building of relation with customers is the need of the hour. Escalating competition along with the developments in 19

20 the technology used has made businesses to find options to increase their effectiveness by cutting down the costs. Various researches have proved that with the use of latest technology there is a decline in the manufacturing and management costs But with the change of customer profile which today has been very knowledgeable, there has been a rise in the marketing costs from twenty percent to fifty five percent. There has been a new trend of the use of relationship marketing as it has reported higher marketing productivity and has high effectiveness. It has been observed that two wheeler segment has registered significant growth during the last two decades. An extension of this growth has been that there has been an enormous growth in demand for the sector that offers after sales service to this segment. Indications are that the unorganised segment of this sector is favored for servicing as opposed to organised segment of the service sector. Hence the attempt is made by the researcher to present a short impression about the present automotive industry and the challenges encountered by the industry in after sales service. Based on this perspective a study of the CRM and its efficacy in the Metropolitan region of Mumbai, is done which will enable two wheeler companies to transform into competitive Enterprises. 20

21 Chapter Two-wheeler Industry s Progression in India In India the being of two-wheeler industry is almost sixty years old and has been divided into segments such scooters, motorcycles, and mopeds. As per the history since existence there has been a steady increase in the sector. There has been a record increase in the production of the two wheelers which was almost four million by end of nineties. It was the outcome of the Industrial Policy that the two-wheeler industry in India started operations. Due to the Industrial Policy resolution of 1956 the entire industry sector was divided into three category out of which the first type of industries were the one which were only to be controlled by the state and the second category was of the industries which were in joint participation of state and private players, but the crux to the policy was the third category of the industry which was a pyre private venture and the same was allowed on the guidelines laid out by five year plans. The state has a tap on the investments made by the private sector. Moreover other factors such as increase in the production capacity the technology used were also controlled by the state. Outcome of the control nature of the policies in seventies 1. Operations of the firm was at minimum scale of efficiency 2. Capacity under utilised. 3. Use outdated technology. 21

22 The above outcome led to the reforms in 1975 with much wide scope and as a part of these reforms, many industries were delicensed and firms were allowed to manufacture products connected to ones they were presently making not including the need for a separate license. Controls over capacity expansion were relaxed a n d foreign investment was allowed As a result of the above changes there was growth seen in the GDP. In order to curb the recession in the Indian economy new reforms were introduced in early nineties. The effect of this was that some industries were deregulated, the Indian rupee was devalued and made convertible. In country like India it was the industrial policy of the country which had shaped its two-wheeler industry. The growth of the two wheeler industry was standstill with the regulatory policies like FERA and MRTP. It was only when the investment was allowed by foreign companies in the year 1981 that boosted the growth of this sector. The foreign players made investments in India and with them they brought new advanced technology in India, this technology were not present in India prior to this period. The evolution of two wheeler industry has been very complex and has been described in five periods of ten years each. Every period had witnessed some changes in the policy decision making. Foreign collaboration was allowed in during the as a result there was a growth seen in the two-wheeler industry. The control implemented by different states was a phase witnessed during the period Important reforms were introduced during the period of In the period from there was more focus on to deepen the reforms process in different areas. The period starting from 2000 and ending at 2012 has witnessed an increase in the premium segment of bikes and has also witnessed couple of foreign companies entering the Indian market. 22

23 Discussed below are some happening of the five periods of ten year each. A) This phase had classified automobile industry of most importance and there was a ban on the imports. Production of automobiles was licensed, which meant that production was determined by the Government. During this period, collaborations with foreign firms were encouraged. B) Two-wheeler industry achieved growth of fifteen percent. This was achieved on the basis of the sharp increase of the oil prices which made people understand that two wheeler is a cheap and best mode of transport as compared to four wheelers. Thus there was an increase of two wheeler sales by sixty percent and reducing the sales of cars by twenty one percent. MRTP was introduced which has limited impact on Bajaj Auto Ltd. FERA was also introduced during this period which has two setbacks for the motorcycles that is low fuel-efficiency and high weight. The only solution to these drawbacks was to allow foreign collaboration.the scooter and moped segments were technologically much self-sufficient and thus there were two new entrants in the scooter segment and three in the moped segment. C) The reforms in early eighties were on the basis that India was lacking on technological grounds. As a result India has to allow foreign collaborations which could give access to Indian companies on the technology front. India witnessed new companies entering the country, which brought along with them new technology, which helped them to have. more efficient production processes and products. These reforms had two major effects 23

24 on the industry: First, licensed capacities went up and second, several weaker players exited the market. D) The reforms that began in the late seventies underwent their most significant change in 1991 during the liberalization of the economy. The two-wheeler sector was entirely deregulated. In the area of trade, several reforms were introduced with the goal of making Indian exports competitive. In the nineties there was seen an increase in the availability of brand launches done by companies, this era focused on competition between the firms on the basis of the different features in the products. For example companies such as Bajaj Auto Ltd. and Kinetic Motors Ltd. introduced scooterettes in 1998 and The model of Bajaj Auto Ltd had a different feature which was two-speed transmission system while on the other hand the different feature offered by kinetic was the separate oil and fuel tank. In the category of bikes segment the models offered by, Hero Honda always focused on the fuel efficiency and making it cost effective for the consumers, where in on the other side the companies like Yamaha focused on the pickup i.e. output power. Prior to late nineties the scooters available in India were the two stroke scooters, by the late nineties scooters with four stroke were introduced and these set of scooters were proven to fulfill the emission norms laid by the regulatory bodies. During this era a new trend was seen in the sales of motorcycles which showed increases in the sales and this was due to number of factors such as the motorcycles had better fuel efficiency as compared to scooters and were more durable and all this was possible due to the use of technology in the product design. 24

25 E) March 2002 the Indian Government permitted a new complete automotive policy, with two proposals. a) FDI: where in automatic sanction is projected to be given to foreign equity deal up to hundred percent for manufacture of automobiles and components. b) Import tariff: are planned to set at a stage that they smooth the progress of the growth of manufacturing units as opposite to only assembly. c) Incentives for R&D: It has been proposed that weighted average tax deduction for automotive companies to be increased from present level of one hundred and twenty five percent (The weighted average deduction for R&D was increased to 150% in the Union Budget ). Further, the policy proposes to include vehicle manufacturers for a rebate on the applicable excise duty for every one percent of the gross turnover of the company expended during the year on R&D. The impact of this was that companies like Bajaj Auto Ltd started focusing on R&D and making regular alterations to make the motorbikes, making it to look fresh at all times. d) Environmental aspects: In order to promote the use of low-emission auto fuel technology, it has been proposed to give Tolerable fiscal incentives which are in sync to Auto Fuel Policy. There have been initiatives taken by the government to get the national policy in sync with trends in western countries, which is of applying greater taxes on the ancient cars and two wheelers in order to dispirit its use. The bulging size of the India two wheeler markets is opportunity for global players and it is believed that the scenery of the Indian two wheeler market is set to develop as numerous new players such as Mahindra Two wheelers Ltd, Suzuki Motorcycle India Private Ltd have entered the market and others are eager to come into the Indian market which will have the effect of increase in competition. The two wheeler companies are feeling difficult to sell the annual maintenance contracts to the existing customers. The last decade has been very dynamic in the Indian two wheeler industries where in the year 2009 Mr. Rajiv Bajaj, MD, Bajaj Auto made a historical decision to stop the production of scooters and enter the bike segments. This was the era where in companies started focusing on making alterations in their products to make it look fresh at all times. Moreover companies also focused more on joint ventures and picking up stakes in other foreign companies where in they could 25

26 get the technology advantage, for instance Bajaj Auto Ltd started by picking up minority stake in Austrian bike maker KTM and gradually raising it to 47% as a result of this today Bajaj and KTM are sharing product platforms. The other major event was in December 2010 where Hero s break from its past as Hero Honda Motor Ltd, a 26 year partnership with the Japanese company. The impact of this break up lead Hero to replace all Honda products, not brand names, for which Hero Moto Corp Ltd has sought out technology partners and distributors in overseas markets, major among them were with US based sports bike maker Eric Buell Racing (EBR) which would help the company to develop high end bikes, second with Austria's AVL Group for engine development and third with Italian two-wheeler design firm Engines Engineering a leading two wheeler make in Europe which is expert in internal combustion engine, hybrid and electric vehicles, this will help Hero Moto Corp Ltd to bring in next-generation product line-up. 26

27 Conclusion The researcher is of the opinion that there has been huge transformation taking place in the two wheeler space and the same will continue in the coming time. The Two wheeler industry is now facing new challenges. Globalization and a rise in competition have altered the face of the industry. Today the size of the organization has nothing to do with the success. All this brings an important question for the companies, as to how to be ready and fit in the face of the turbulent revolution happening in the industry. Only those companies which could manage to create value for the customers will prosper in the future. One such way is to focus on the after sales service availability and have connect with the customers with the use of customer relationship management, which is missing at present. Companies need to understand that customers give a lot weightage to the availability of after sales service. Thus the two wheeler companies need to focus on after sales service. 27

28 Table1.1 Details of Indian firms with foreign collaboration Entrance Year Indian Company Overseas Category Brands Name coworker, if Enfield India Ltd. Enfield Ltd., U.K. motorcycle Royal Enfield 350 cc Automobile Products of India Innocenti Ltd., Italy scooter Lambretta Bajaj Auto Ltd. Piaggio Ltd., Italy Vespa Ideal Jawa Pvt. Ltd. Jawa Ltd., Czechoslovakia motorcycle Yezdi, 250 cc Escorts Ltd. CEKOP, Poland Rajdoot, 175cc Kinetic Engineering - moped Luna Ltd. Scooters India Ltd. - scooter Vijai Maharashtra Scoters Ltd. - Priya Majestic Auto Ltd. - moped Hero Majestic Sundaram Clayton Ltd. - TVS 50 cc TVS Suzuki, Japan motorcycle Ind-Suzuki 100 cc Bajaj Auto Ltd. Kawasaki, Japan Kawasaki Bajaj 100 cc Escorts Ltd. Yamaha, Japan Yamaha RX 100 cc Hero Majestic Ltd. Honda, Japan Hero Honda 100 cc Kinetic Engineering Ltd. Lohia Machinery Ltd. Enfield India Source: Compiled from questionnaire. scooter NH 100 cc Piaggio, Italy Vespa XE Zundapp-Werke GmBH moped motorcycle 50cc - 100cc Bajaj Auto Ltd. - moped - scooterette Sunny TVS - scooter - scooterette Scooty Kinetic Honda Marvel TVS - scooter Spectra Kinetic Motors** - scooterette Style Bajaj Auto Ltd. KTM, Austria. motorcycle KTM Nuke Hero Moto Corp Ltd EDR Racing, US. High End motorcycle - AVL, Austria. motorcycle - EE, Italy. - 28