Market Research Result Sep 2014

MARKET RESEARCH SEPTEMBER 2014

BACKGROUND

In order to support the plan and strategies require for Hero launching in Colombia market, its necessary to have a proper understanding and a close knowledge of Colombian user, in accordance with that objective a research trough personal interviews were done across the country.

OBJECTIVES

To have a clear understanding of Colombian users in terms of perception, preferences, habits and expectations in order to support the strategy definition for Hero launching in Colombian market.

GENERAL

SPECIFIC

To define a demographic profile for the motorcycle user To define which is the general perception of each competitor brand, in order to secure a clear brand

differentiation for Hero.

To understand what Colombian users consider important to take a purchasing decision.

To have a clear understanding about media require to catch motorcycle users attention.

To understand which is the expectation of users regarding to a new brand of motorcycles.

1. EXPECTED RESULTS BY OBJECTIVE

Demographic profile

Competitors brand perception

Decision making Media Preferences New brand

expectations

User descripcion Brand

differenciation

Critical factors to push decision

making Media plan

Critical factors for brand launching

OB

JE

CT

IVE

R

ES

ULT

1 2 3 4 5

METHODOLOGY

TECHNIC

TARGET

Individual questionnaires

Mens between 21 and 45 years with sport motorcycles of maximum 2010 model.

SAMPLE

CITY CALI BOGOTA MEDELLIN B/MANGA PASTO MONTERIA B/QUILLA PEREIRA NEIVA

SAMPLE 25 27 23 19 13 20 24 27 16

TOTAL SAMPLE: 194 Interviews

1. DEMOGRAPHIC PROFILE

GEN

DER

MARKET RESEARCH

USER

92%

8%

E.2* 41%

E.3* 43%

5%

20%

20%

24%

15%

9%

7%

0% 5% 10% 15% 20% 25% 30%

Menor 21

21-25

26-30

31-35

36-40

41-45

mayor 45

58% 30%

SOC

IOEC

ON

. LEV

EL

EMPLOYEE / INDEPENDENT

*People in Colombia is divided in socioeconomic levels depending of their house's location and infrastructure. People who lives in E.1 have the worst houses conditions and are located in neighborhoods with a poor quality of life and absence of the main public services (water and energy). People who live in E.6 are the ones with the highest incomes, their houses are located in neighborhoods where the quality of life is high and the public services are the better ones.

In Colombia, the distribution of motorcycle users are 71% of men and 28% women. However, men's are primarily users of sport category. Women look for easy driving motorcycles like scooters.

The top concentration of users are on socioeconomic levels E.2 and E.3, these are the people that uses more the public transportation and have the conditions to access to credit. People on E.1 is very poor and they dont have options to access to a credit or save to buy a motorcycle. People on E.4 to E.6 are looking for a car.

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COLOMBIAN MARKET

OC

UPA

TIO

N

AG

E

DEMOGRAPHIC PROFILE - ACCORDING RESEARCH RESULTS

MARKET RESEARCH CURRENT MOTORCYCLE EXPERIENCE

Use Users in Colombia are looking primarily motorcycles for work. This is very coherent with the

growths presented by Sport I segment during the last years.

In the work segment exist two type of users: o Rational: The user that takes its decision based on the premise that its motorcycle is

its business. o Emotional: The user that needs his motorcycle for work, but take in consideration

features like design and additional specifications.

According to the feedback received during the questionnaires, the people in low income cities (Monteria, Neiva, Barranquilla, Pereira, Cali) prefer 100CC's motorcycles. In Cities with highest per capita incomes (Bogot, Medellin) people prefer 150CC's motorcycles.

The sport users generally had experience as motorcycle users. This fact made them more critical about their decisions and opinions. During the interviews most of them tried to demonstrate their knowledge.

First users are not very familiarized with motorcycles, some of them bought their motorcycles because of the endorsement of the Brand, and the others, because of the features and technologies of the products. According to their comments the unequal prices between displacements made them entry to the category, with motorcycles over 100cc. The premium segment of 100 cc is not anymore the only entry segment for users looking for a motorcycle to commute. 61%

32%

8%

41%

1% 2%

50%

8%

0%

10%

20%

30%

40%

50%

60%

Commute Have Fun Travel Work Mototaxi

Type of user

Not first

First

Additional

First: Those who buy a motorcycle for first time. Not first: Those who already have a motorcycle and are looking for a new one to replace it. Additional: Those who already have a motorcycle and buy another one as an additional

In accordance with the feedback received during interviews the user of motorcycle can be divided in the following segments according to its ages, experience and on socioeconomic level :

Design buyers: These are the users between 21-30 years old that are looking for a motorcycle with a good design regardless is going to be used for

working or commuting. For these users the way they are perceived by its social group is very important. Indifferently the socioeconomic level, they want a motorcycle with a nice design which can help them to express their personality. They also can be first or current users.

Functional buyers: These are the users between 31-35 years that are looking for a motorcycle to fulfill all their needs. They need a vehicle that can be use for work, commute, pleasure, etc. The higher socioeconomic prefers options with this specs, and are willing to pay for options with better design. This type of users is mostly not first buyer.

Status Buyers: These are the users between 31-35 years that buys a motorcycle expecting to exalt a positive moment of life. The motorcycle is the way to show people the goals they have achieved during its life. Belong to socioeconomic level 3. Not first users.

Workers: These are the users between 36-40 years that buy a motorcycle as a working tool. They think in their primary need (to have a tool for work) and the way to generate an income to their houses. Belong to socioeconomic level 2. Mostly are not first buyers.

MARKET RESEARCH

USER

USER DESCRIPTION - FINDINGS

MARKET RESEARCH

USER F

UN

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ION

AL

BU

YE

RS

ST

AT

US

BU

YE

RS

WO

RK

ER

BU

YE

RS

DE

SIG

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UY

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S

2. COMPETITORS BRAND PERCEPTION

MARKET RESEARCH MARKET PERCEPTION

Top of Mind In Colombia the traditional brands still have the highest remembrance between users.

There is not a direct relation between sales and brand remembrance, which show us an important opportunity to Hero as a new brand.

Despite the high remembrance of traditional brands as Honda and Suzuki, the absence of innovative products don't allow them to have a higher sales level. Yamaha is a positive sample , because its a strong brand in terms of remembrance, it's the only one between traditional ones with a permanent innovation and as a consequence it have a high sales level.

Despite Bajaj is the most selling brand, it isn't one the most remembered, due to the work done by Auteco, positioning it self as a brand, not just as assembler.

Users in an spontaneous way easily can identify many brands , which is positive because show us that market is open and there is not a unique domain of one or two brands.

Another important fact, is that currently Bajaj's brands are easily recognized by users as additional brands from Auteco: Pulsar and Boxer are the most strongest.

Despite AKT is one of the most selling brands, it is not one of the most remembered, probably because its price strategy is critical in the final decision but it is not an aspirational brand, that people desire to buy as the first option.

Helped remember

33%

27%

15%

8% 6% 6%

3%

1% 1% 0% 0%

5%

10%

15%

20%

25%

30%

35%

Yamaha Honda Suzuki Auteco Bajaj Others AKT TVS Hero Kymco

22% 20%

19% 17%

6% 5% 3%

2% 2% 1% 1% 1% 1% 0% 0% 0%

5%

10%

15%

20%

25%

0%

10%

20%

30%

40%

50%

60%

Honda Bajaj Yamaha Suzuki Kymco AKT TVS

MARKET RESEARCH CURRENT BRANDS POSITIONING

Quality Boring Price/quality

Innovative Endorsement Design Modern For you Showrooms Popular Technology Resale Mileage


Most Second most Less

Quality Honda Yamaha AKT

Boring AKT Suzuki Yamaha

Price/Quality Yamaha Bajaj TVS

Innovative Yamaha Bajaj TVS

Endorsement Yamaha Honda AKT

Design Yamaha Honda TVS

Modern Yamaha Bajaj TVS

For you Yamaha Honda TVS

Showrooms Yamaha Bajaj TVS

Popular Yamaha Honda AKT

Technology Yamaha Honda AKT

Resale Yamaha Honda TVS

Mileage Bajaj Honda TVS

The most strong image: YAMAHA The most weak image: AKT TVS is a new brand which is in process to be recognized, due to this its image is not too strong.

Honda is a very strong brand. Users recognize the quality of their motorcycles that gives them a strong image of endorsement. This facts and the stable Price policy of Fanalca helps the motorcycles to maintain its value through time. Users also recognize Honda as a good mileage brand, this fact is attributable to the Eco Deluxe from Hero.

Yamaha is the brand with the most positive image. The strong image of a good quality traditional brand has been complemented with good design product's and innovation in their most representative models. This combination has helped them to become an aspirational brand that every user dreams to have. Yamaha is more focused on the commuting segment.

Suzuki is one of the top remembered brands. Despite this, its current image is not positive. Most of the people recognized the quality of the motorcycles but perceive the current moment of the brand as bored. The absence of novelties caused a deterioration of the brand that has been obliged to defend it self with price / promotion strategies.

AKT is a very curious case. Most of the users thinks the brand is boring, non technological, with bad endorsement, bad quality , etc. However, despite all this bad qualifications, users has understood that buying an AKT means getting a low quality product for a fair Price, and they feel comfortable with this.

Recently Auteco has worked to position individual brands as part of the assembler, however most of the people is not aware of the existence of Bajaj. However its important to mention that people links the Boxer CT 100 and its superior mileage with Bajaj. Bajaj with its Pulsar 200 NS and Discover 125 ST also has created a strong image as an innovative and modern brand.


3. DECISION MAKING

Low costMake me

look betterReliable Easy Improve life Rugged Accessories Pleasant Leader Different Grand Savings Economic

C. Agree 92% 81% 99% 85% 81% 40% 57% 93% 63% 76% 63% 88% 91%

S. Agree 4% 7% 1% 10% 9% 10% 11% 1% 11% 8% 9% 7% 5%

Neither Agr. or Dis. 2% 5% 0% 2% 3% 7% 7% 1% 3% 4% 7% 2% 1%

S. Disagree 1% 2% 0% 2% 2% 6% 5% 1% 3% 1% 4% 0% 1%

C. Disagree 1% 6% 0% 1% 5% 38% 20% 3% 20% 10% 16% 3% 3%

MARKET RESEARCH DECISION MAKING

Despite security is not a very profitable approach for a brand, users unconsciously prefer a motorcycle that make them feel

safe. Due to that, associations with quality, endorsement and reliability are critical for the decision making process.

People are looking for a better quality of life by the buying of a motorcycle, in line with that, brands should offer options with affordable prices, easier and pleasant to drive and with a high perception of save in consumption and maintenance

Despite the market trend for customized motorcycles, this is something that should be an user choice, because according to research results not all the potential users want a striking bike, which look costly or rugged.

Another important fact, critical for the decision making process, is that motorcycle should make user feel like they look better, which evidence the importance of design for Colombia market.

27% 28%

29%

16%

0% 0% 0%

5%

10%

15%

20%

25%

30%

35%

Auteco Honda Yamaha Suzuki AKT Others

Users in Colombia compare several brands before taking their purchase decision.

Most of the users during the interviews manifest they quoted motorcycles above their Budget. That means that good design motorcycle's generates traffic to the show rooms.

The fact that users compare motorcycle through visits to the showrooms, demonstrate the need to be located on the motorcycles clusters in each city.

The user consider the show rooms as a place that talks about the brand endorsement. For them a well structured distribution network means that the brand is solid and had the Budget to produce good quality products.

For users, their friend's opinions are really valuable, however, aspects like warranty, distribution network and strong media presence, had a big influence on their purchase decision.

Lots of users arrive to the show room with no idea of the type of motorcycle that they want, the salesman must be very well trained in how to identify the real need of the customer in order to close as much deals as they can.

Visited ShowRooms


Design Displacement Power Milleage Price Brand Aftersales Financiation Resale Durability

1 28% 17% 15% 19% 26% 20% 14% 31% 5% 18%

2 17% 20% 31% 27% 17% 22% 14% 31% 5% 10%

3 23% 20% 12% 33% 16% 15% 27% 8% 18% 16%

4 19% 27% 17% 16% 18% 18% 14% 0% 45% 22%

5 13% 17% 25% 6% 23% 26% 32% 31% 27% 34%

16% 16% 16% 14%

13%

9% 8%

3% 2% 2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Key Aspects on a motorcycle

Key Aspects on a motorcycle (1-very important . 5- less important)

For Colombian user, design is one of its main considerations at the moment of buying a motorcycle.

At the end, the rational evaluation of mileage and price are the main facts that every motorcycle user considers for the final decision.

The user of motorcycles is divided in two, the one who is looking for a motorcycle that fits to his Budget, and the one who is looking for some specifications and design and then try to adjust it in his budget.

In Colombia as we saw in a previous slide, the traditional brands are very important, however, there is a big portion that is willing to prove new brands if they feel they are receiving a good offer in terms of design, price and specifications.


87%

13%

Important

Not important

83%

17% Attractive

Not Attractive

Most of Colombian users recognize the important to have an alternative of funding plan for purchase process.

Lots of Colombians has bought its motorcycle through funding plans, however, the understanding of the interest rate has made that users prefer short periods of financing.

Users wants funding options with easier process , less requirements and low rates.

Each user requires an special funding plan according to its credit profile, due to this is important to have different alternatives of financing to offer in the moment of the purchase.

People find that financing with a grace period is very attractive due to the possibility of save for the first payment.

Launching funding plan: Buy now, pay later (2 months grace period)


Funding plan importance

58%

18%

15%

6% 3%

1%

No barrier

Lack of financing

Any other

Family support

Lack of information

Lack of Show rooms

Barriers

The most negative barrier is the financing process, its crucial for the final decision making.

Most of the users that experience problems with their credits, decide to buy an other brand of motorcycle, which offers them an easy credit option.

The sales process in most of the brands and showrooms is still

unsatisfactory for an important part of the potential buyers.

Adequate showrooms location and proper training sales force is critical to secure the positive purchase closing.


4. MEDIA PREFERENCES

32%

30%

18%

8%

5% 5%

Friend

Show room

TV

Internet

Newspaper

Member of family

Colombians still believing in TV as the main media, what they see on

TV must be good, because is very expensive to be there.

For users, their friend's opinions are really valuable and is the most reliability source for start and to finish the decision making process.

As was already mentioned, the proper showrooms in terms of location and image are crucial to be included as part of the alternatives for decision making process.

In terms of media, all the channels related to internet access are becoming in the second most important to be in direct contact with users. Web site, social networks , SEO and SEM strategy are definitive for the proper understanding and communication with potential users.

Newspaper should be understood as a regional tool to communicate relevant news for local context. Showroom opening, special promotions or special activities.

Source of information


5. NEW BRAND EXPECTATIONS GENERAL CONCLUSIONS

MARKET RESEARCH NEW BRAND EXPECTATIONS

Colombian users are willing to consider a new brand for the purchase decision process, if the new brand:

Understand and offer options according to their requirements in terms of usage, price, design and specifications

Offers a image of quality and endorsement equal to traditional brands Present novelties in terms of design and technology Offer low fuel consumption and low cost maintenance Located showrooms in the motorcycle areas of their own cities. Gives the proper attention / information on showrooms Offers easier credit options Show their brand and motorcycles on national TV Information trough on line media is available Respect users knowledge and experience and talk them accordingly

MARKET RESEARCH GENERAL CONCLUSIONS

USER BRANDS MARKET

The Colombian user already know about motorcycles, they have learned for previous experiences with Chinese brands the importance of support. Thats why they are so critical at the moment of deciding which motorcycle to buy.

Users are proud of their knowledge of motorcycles.

By brand support user understand the summation of: Distribution network, after sales network, presence in massive media and positive word of mouth.

For users, warranty means confidence. Design is fundamental to convince users of

proving a new brand. Colombian user needs financing to buy a

motorcycle, according to their credit needs and cash flow expectations.

Colombians still believing in TV. They link the presence in TV with good quality.

Each day Colombians have more information of motorcycles thanks to the Internet.

Traditional brands are passing through a hard time. The absence of novelties of Honda and Suzuki has obliged the user to consider other brands as options to buy a motorcycle

The brands had had a big issue in terms of sales process. Users are not 100% comfortable by the way they have been treated.

Yamaha is the only brand that is taking advantage of their position as traditional brand. Is the most aspirational brand in the market.

The user has understood that AKT is a low quality brand that offers good design products at a fair Price.

Auteco has done an excellent job building a strong assembler brand, but its brand are not strong for themself, due to this, and in line with Bajaj strategy, they are starting the process to build brands like Pulsar and Boxer.

Auteco with its promotional pricing strategy has created a bad image of resale.

Users are looking for 100cc displacement motorcycles due to the fuel consumption, low maintenance cost and low taxes.

The current low prices of some 125cc's and 150cc's motorcycles, transformed these segments on the entry of first users.

The 150cc segment represent a big opportunity due to the knowledge and experience of Colombian market.

The financing is becoming each day in one of the most important tools of the sales process.

Each zone of Colombia have different behaviors in terms of sales, but users thinks in a very similar way about brands and purchasing process.

THANK YOU!

Market Research Result Sep 2014

Documents

Transcript of Market Research Result Sep 2014