ConsumerConsumer BehaviorBehavior Topic: Consumer Perception Consumer Behavior Final Project Executive summary: Pakistan’s two-wheeler industry has shown a continuous growth with its main target market being the rural population. This report reflects their attitudes towards the choices available to them and the main focus would be Pak Hero Company who has been a major player in the field being the local manufacturers of the motorbikes. Further it would include the comparisons of different companies running in Pakistan and forming the two-wheeler industry here. The main objective of the report is to study the consumer behavior and perception about the two-wheeler industry and what are the factors that form their buying behavior. INDUSTRY- A REVIEW INTRODUCTION: The Rs. 5500 crore Pakistani two wheeler segment is the second largest market in the world after China. Pakistan’s two wheeler production is the third largest in the world after Japan and China. Pakistan has a well- developed two wheeler market with around 25 million households owning two-wheeler. The Pakistan two wheeler industry made a modest beginning in the early 1950 when Automobile Product of Pakistan (API) started manufacturing scooter in Pakistan. Until 1958, API and Enfield (motorcycle) were the only two in production. In 1948, Bajaj auto began trading in imported Vespa scooter and the three – wheeler- finally, in 1960’s; it set up shop to manufacturer them in technical collaboration with Piggaio of Italy. The agreement expired in 1971. In the initial stages, the scooters segment was regulated regime; foreign company was not allowed to operate in Pakistan. While the Enfield bullet was a four strokes bike, the motorcycles industry was originally dominated by Enfield with 350 cc bikes. The motorcycles industry was cc segment. The two wheelers segment was opened up to foreign competition in the mid 1980’s which saw the entry of the Japanese manufacturers into the country. Superior University Page 2 Consumer Behavior Final Project CLASSIFICATION OF THE INDUSTRY The two-wheeler segment can be categorized into the scooter, mopeds, and motorcycles. Motorcycles: this segment has shown the best performance in the recent years. The market leaders in this section are Honda &Yamaha. Two Wheeler Industry: Two-wheeler segment is one of the most important components of the automobile sector that has undergone significant changes due to shift in policy environment. The two-wheeler industry has been in existence in Pakistan since 1955. It consists of three segments viz. scooters, motorcycles and mopeds. According to the figures published, the share of two-wheelers in automobile sector in terms of units sold was about 80 per cent during 2003- 04. This high figure itself is suggestive of the importance of the sector. This is the main reason for us to consider innovations in the two wheeler sector. Pakistan being a developing economy, two wheelers have become the predominant mode of transportation. Its plays a pivotal role in the day-to-day travel as it identifies with the economy and the infrastructure of the nation. The Pakistani two-wheeler industry has witnessed spectacular growth in the last few years. The market dynamics of the industry has substantially changed with a majority of the customers preferring bikes to scooters and mopeds. This is primarily due to better fuel efficiencies, dynamics, looks and longer product lives of motorcycles. Two-wheelers Purchase Trend: Growing working population Increased access to credit and lower interest loans Increased consumer embrace of financial products Upward migration of household income levels Fast paced urbanization to rise from 28% to 40% by 2020 Superior University Page 3 Consumer Behavior Final Project Middle class expanding by 30 - 40 million every year Theoretical explanation of the topic: Perception: Background: Our perception is an approximation of reality. Our brain attempts to make sense out of the stimuli to which we are exposed. This works well, for example, when we “see” a friend three hundred feet away at his or her correct height; however, our perception is sometimes “off”—for example, certain shapes of ice cream containers look like they contain more than rectangular ones with the same volume. Perception Process: Perception is a three phase process of selecting, organizing and interpreting information. You can understand interpersonal situations better if you appreciate how you and another person construct perceptions. Elements of perception include: • Sensation • Absolute threshold • Differential threshold • Subliminal perception When we relate perception with the two-wheeler industry in Pakistan, first we have to realize the potential consumers of this segment and how they perceive the product offered by the industry. This report further explains how the perception of the consumers has developed for two-wheelers to be the essential part of their lives as must have conveyance. Objective of the report: • The objective of this report is to understand the perception of the potential consumer about two-wheeler industry of Pakistan. • The behavior of the consumer is analyzed towards the Pak hero bikes. Superior University Page 4 Consumer Behavior Final Project • Another objective of this report is also to remove the weaknesses and to tackle the threats of the stimuli. Research methodology: A research design is the arrangement of condition for collection and analysis of data in a manner that to, combine relevance to research purpose with economy in procedure. The research methodology we adopted included collecting data from both primary and secondary sources. Primary sources included questionnaires filled up from some of the consumers and direct interview with the manager at Pak Hero Company. Secondary sources included company’s official website, internet, journals etc. Superior University Page 5 Consumer Behavior Final Project Pakistan is one of those countries of the world where Auto Rickshaws are extensively used as a public transport. Till 1996, Italian made Rickshaws were used in Pakistan having 90% market share. In 1996, a young Pakistani businessman and industrialist, Mr. Muhammad Javed Iqbal introduced “PAK HERO RICKSHAW” in Pakistani market. Produced within the limited resources this Rickshaw was a masterpiece of quality and performance which brought about a revolution in the auto industry. It gained extensive popularity and in a very short period of time, “PAK HERO” became a known name all over Pakistan. PAK HERO auto rickshaw having similar functions, shape and use as that of Italian made rickshaw, proved to be a very close substitute for it. It is amazing that Pak Hero became the market leader in a period of only three year and its demand has been on the rise ever since. Their product range now includes motorbikes, scooters and rickshaws. PAK HERO motorbikes are sold at affordable prices that allow their targeted consumers to be satisfied with what they buy. PAK HERO is a private limited company; its board of Directors comprise of the following members Mr. Javed Iqbal (Chairman/CEO) Mr. Abdul Hameed (Director Marketing & Superior University Page 6 Consumer Behavior Final Project Sales) Mr. Sabir Sharif (General Manager Production) Mr. Syed Shahid Mustafa (General Manager Finance) Company’s registered office is situated in Lahore, at Lytton Road and its factory is located at 10km, Raiwind Road, Lahore, Pakistan. Superior University Page 7 Consumer Behavior Final Project Product Range Although PAK HERO has entered into automobile market only a few years ago, even then it has snatched the major market share from its competitors. PAK Hero is now considered to be one of the major automobile industries because it has built a good reputation in quality and performance. PAK HERO manufactures its products in accordance with customer needs. Its product range includes: Atlas Honda - Atlas has undertaken to develop local manufacturing capabilities to the highest, economically feasible level. While a major role in localization has been assigned to vendor industries, Atlas has the country’s largest in-house manufacturing capability at its Karachi and Sheikhupura plants. Superior University Page 8 Consumer Behavior Final Project Pak Hero - Pak Hero Motorcycles -. Pak Hero Scooters are quicker and safer means of conveyance. They are said to be “Future Of Transport industry.” Super Asia - Now we have entered in automobile sector and producing and supply 70cc SA70 4 stroke motorcycle in market. Super Star - Memon Associate Foundry, currently as a leader in the Pakistan based Chinese motorcycle assembling / manufacturing companies, established in 1994 as a small manufacturing unit of auto rickshaw starting production from 20 units first month. In Pakistan, most of the people use motor cycle as a private conveyance. Motor cycles of different models and companies are available in the market such as: YAMAHA YB 100, KAWASAKI GTO 100, SOHRAB, HONDA CG 125, HONDA CD 70 In Pakistan, the ratio of the people using 70CC motor cycles is higher than the users of other motor cycles. PAK HERO introduced PH 70CC motor cycle to fulfill the demand of people who wish to have 70CC motor cycle. PH 70CC is cost effective and has capacity to travel 70 km per liter. The most prominent features of PH 70CC are as follows. 1) Low priced 2) Less petrol consuming 3) 4-Stroke engine 4) Tele scope Hydro spring Dampers are used as shock absorbers. SPECIFICATIONS 4- Stroke OHC Single cylinder cooled by air, less petrol ENGINE: consumption. Superior University Page 9 Consumer Behavior Final Project BORE & STROKE: 47.0 x 41.4 mm COMPRESSION RATIO: 8.8 = 1 HORSE POWER: 7.0 PS/8500 (RPM) TORQUE (MAX): 0.55 Kg-m/6500(R.P.M) TRANSMISSION: 4 – Speed permanent Mesh A.C.G: A.C.G Magneto IDEAL SPEED: 1800 (R.P.M) LUBRICATION: Lobe Pomp Power Splash IGNITION SYSTEM: C.D.I ASSEMBLY INFORMATION & PERFORMANCE FRAME BODY: Back Bone Truss Type SIZES: Length + Width + Height – 1800+750+995 mm WHEEL BASE: 1175 from rear axle to front axle WEIGHT Dry: 80kg FUEL TANK CAPACITY: 9 Litre FUEL CONSUMPTION: 70km per litre SHOCK ABSORBERS: Tele Scope Hydro Spring dimpers.