Market Segmentation Approach for Automotive Sector - Light Duty Trucks in India (Research Approach also applicable for Cars / Two Wheelers)

Market Segmentation Approach for Automotive Sector_Light Duty

Trucks_India

Research done by: Raman Dhiman For further details and any queries pl contact: [email protected] , [email protected]

For academic purpose only. Not for commercial use.

mailto:[email protected]


Contents

Approach

Definitions

Segmentation – LCV – Light Commercial Vehicles – (3.5T to 7.5T GVW)

Segmentation – ICV – Intermediate Commercial Vehicles – (7.5 to 16 T GVW)

For any queries pl contact: [email protected] , [email protected]




Objective

To better understand customer needs and develop products precisely

matching their needs. A comprehensive segmentation of customers by

dividing them based on similarities is necessary -

• This report provides an overview of the segmentation process

• Segmentation of LCV customers based on important usage parameters

• Segmentation of ICV customers based on important usage parameters

LCV: Light Commercial Vehicles – 3.5T to 7.5 T GVW ICV: Intermediate Commercial Vehicle - >7.5 T to <16 T GVW LDT: Light Duty Trucks = LCV+ICV





Content




• An overview of the segmentation process







KBF – Key Buying Factors

Extent of loading

Rated Load (= GVW)

Moderate Overload (upto 30% of GVW)

High Overload (upto 60% of GVW)

Extreme Overload (> 60% of GVW)

Haulage Distance (One way)

Very Short (upto 100 km)

Short (100-250 km)

Medium (250 - 700 km)

Long (> 700 km)

Driving Speed

Low Speed (upto 40 kmph)

Medium Speed (40-60 kmph)

High Speed (>60 kmph)

Fleet Size OD (1 vehicle)

OND (2-4 vehicles)

SFO (5-10 vehicles)

MFO (11-25 vehicles) and LFO (> 25 vehicles)

Business Sourcing

Market Load

Contract Captive

Captive = Owns vehicle and transportation is means for doing primary business Market Load = Stands in the market / stand / yard / Transport Nagar to get business (directly from single customer), transportation is primary business Contract = Transportation provided through long term service agreement, transportation primary business

Usage Characteristics User Characteristics

Definitions





• Approach for Segmentation

Usage Characteristics

• Distance Travelled, Km • Speed, Kmph • Payload Carried, Kg

Clustering (Using SPSS)

4 Clusters - LCV

LCV - 4 Customer Segments

Around 4000 Combinations

Customer Need (KBF)

32 KBFs • Running Cost • Reliability • Resale Value • Durability • Turnaround time • Etc.

User Characteristics

Fleet Size • OD • OND • SFO • MFO • LFO

5 Clusters - ICV

Bivariate Plot of Product related KBFs

Further Refinement of Clusters with team

assessment

4 Customer Segments

Economy Work Horse Progressive Performance

• Economy • Work Horse • Performance • Progressive

ICV - 4 Customer Segments

• Economy • Work Horse • Performance • Progressive

Customer Segment names are for reference only





Content











Clusters of LCV segments

SPSS Cluster

ID

Fleet Type 1

Fleet Type 2

One way Haulage

Distance 1

One way Haulage

Distance 2 Payload 1 Payload 2

Average Driving Speed 1

Average

Driving Speed 2

% n % Load

1 %

Load 2 Size 1 Size 2

SPSS 1

OD, OND, SFO

MFO Short Haul (21)

Long Haul (3)

Rated Load (15)

Moderate Overload (9)

Medium Speed (44 kmph)

17% 24 10% 6% 5208 3125

SPSS 2

OD, OND, SFO

MFO Medium Haul (24)

Short Haul (5)


High Overload (5)


20% 29 17% 3% 8333 1736

SPSS 3 OD, SFO

Medium Haul (36)

Long Haul (2)

Rated Load


High Speed

26% 38 26% 13194 0

SPSS 4 OND MFO Medium Haul

Rated Load (17)

High / Extreme overload (36)


37% 53 12% 25% 5903 12500

For Cluster Details: Pl refer annexure 1 For any queries pl contact: [email protected] , [email protected]




Bivariate Plot of Product Related KBFs through Multidimensional Scaling





(42%)

Customer Segments - LCV

Overload Rated Load

Industry Size: 45000 (CY 2011)

Segment Characteristics Future Outlook Segment

50%

Rated Load

Over Load

50%

Economy \Strider\ Price

Minimiser

Performance Seeker \ Zipper

Progressive


Minimiser

Work Horse \ Striver \ Load

Maximiser


(6%)

(2%)

(18%)

(2%)

(30%)

KBF's Usage Customer

Type Source of Business

Low Acquisition Price Medium Speed OD,OND, SFO,MFO

Market Load

More Fuel Economy Short, Medium Haul Captive




Market Load

More Fuel Economy Short, Medium Haul Captive



Overload Capacity Medium Speed OD,OND, SFO,MFO

Market Load

Sturdiness Short, Medium Haul

Reliability

Strong Engine (HP)



Turn around Time Medium, High Speed

MFO, LFO

Contract , Captive

Pick Up & Acceleration Medium, Long Haul

Ease of Driving



Turn around Time Medium, High Speed

MFO, LFO

Contract , Captive


Ease of Driving



Safety & Comfort Medium Speed MFO, LFO

Contract Captive Style Medium Haul

2016 2020 2025

(42%)

(17%)

(8%)

(3%)

(4%)

(26%)

54%

46%

(40%)

(12%)

(15%)

(4%)

(6%)

(23%)

61%

39%

(35%)

(7%)

(25%)

(6%)

(12%)

(15%)

72%

28% Upto 10% of Overload on GVW is not considered in Moderate Overload





(42%)

Customer Segments - LCV

Overload Rated Load


Needs Fulfilled / Unfulfilled Segment

50%

Rated Load

Over Load

50%


Minimiser


Progressive


Minimiser


Maximiser


(6%)

(2%)

(18%)

(2%)

(30%)

Upto 10% of Overload on GVW is not considered in Moderate Overload

SFC 407

LPT 407

10.50 SFC 709

SFC 407 10.50 LPT 709

SFC 407 10.50 SFC 709

LPT 709 10.59

10.59

10.59

SFC 709 10.50

LPT 709 10.59 SFC 709 10.50

LPT 709 10.50 10.59

Popular Models

Strengths – Fuel Economy / Low Price Weaknesses –

Strengths – Weaknesses – No special product for this segment

Strengths – Cabin strength as per AIS 029 Weaknesses – Not Stylish Cabins, No special Product for this segment

Strengths – Strong chassis Weaknesses – No special product for this segment







Content











Clusters of ICV segments

SPSS Cluster

ID

Fleet Type 1

Fleet Type 2

One way Haulage

Distance 1

One way Haulage

Distance 2 Payload 1 Payload 2

Average Driving Speed 1

Average

Driving Speed 2

% n % Load

1 %

Load 2 Size 1 Size 2

SPSS 1 OD MFO

Medium Haul

Rated Load


23% 39 23% 14912 0

SPSS 2

OD, OND, SFO

MFO, LFO

Long Haul

Short Haul

Rated Load (26)



High Speed (60 kmph)

19% 33 15% 4% 9941 2676

SPSS 3

OD, OND, SFO

MFO, LFO

Medium Haul

Moderate Overload


22% 38 22% 14529 0

SPSS 4 SFO LFO

Medium Haul

Rated Load (36)

High Overload (2)


22% 38 21% 1% 13765 765





Bivariate Plot of Product Related KBFs through Multidimensional Scaling





(40%)

Customer Segments - ICV


Segment Characteristics Future Outlook Segment

60%

Rated Load

Over Load

40%


Minimiser


Progressive


Minimiser


Maximiser


(15%)

(5%)

(10%)

(2%)

(28%)

2016 2020 2025

(40%)

(8%)

(17%)

(4%)

(7%)

(26%)

62%

38%

(37%)

(5%)

(22%)

(5%)

(11%)

(20%)

70%

30%

(32%)

(3%)

(28%)

(6%)

(20%)

(11%)

80%

20%




Market Load

More Fuel Economy Medium, Long Haul Contract




Market Load

More Fuel Economy Medium, Long Haul Contract



Turn around Time High Speed

MFO, LFO

Contract, Captive


Ease of Driving



Turn around Time High Speed

MFO, LFO

Contract, Captive


Ease of Driving



Overload Capacity Medium Speed OD,OND, SFO,MFO

Market Load

Sturdiness Medium Haul

Reliability

Strong Engine (HP)



Safety & Comfort Medium Speed MFO,LFO

Contract Captive Style Medium, Long Haul

Overload Rated Load






(40%)

Customer Segments - ICV


Needs Fulfilled / Unfilled Segment

60%

Rated Load

Over Load

40%


Minimiser


Progressive


Minimiser


Maximiser


(15%)

(5%)

(10%)

(2%)

(28%) Overload Rated Load


Popular Models

AL 1212

BB 914

10.95

LPT 909

LPT 1109

SML Super

TATA Y1

LPT 909 SML Super

LPT 909 11.10 AL 1212 BB 914

LPT 909 AL 1212

11.10

11.10

11.10

Strengths – Fuel Economy / Low Price Weaknesses –

Strengths – Higher HP products are available Weaknesses –

Strengths – Cabin strength as per AIS 029, Specific products for this segment, Higher HP Products are available Weaknesses –

Strengths – Strong chassis Weaknesses – No special product for this segment

Strengths – Weaknesses –

Strengths – Higher HP products are available Weaknesses –





Consolidated breakup of Segments: LDT





Targeting – Customer Segments

High Priority Medium Priority Low Priority

Key Requirements • No Frill Vehicle • Low Kerb Weight • Low Power

Engine

Key Requirements • No Frill Vehicle • Sturdy Vehicle • Strong Engine

(HP)

Key Requirements • All Frill Vehicle • Low Kerb Weight • Strong Engine

(HP)

Key Requirements • All Frill Vehicle • Low Kerb Weight • Strong Engine

(HP) • Safety Comfort &

Style

Key Buying Factors Economy Work Horse Performance Progressive

Low Acqisition Price High Medium Low Low

More Fuel Economy High Medium Medium Medium

Overload Capacity Low High Low Low

Sturdiness Low High Low Low

Reliability Medium High Medium Medium

Strong Engine (HP) Low High High High

Turnaround Time Low Low High High

Pick Up & Acceleration Low Medium High High

Ease of Driving Low Low High High

Safety & Comfort Low Low Medium High

Style Low Low Medium High

LCV - Year 2020 52% 23% 19% 6%

ICV - Year 2020 42% 20% 27% 11%





Sample LDT Clusters

Annexure 1




Details of Cluster 1

Annexure 1






Annexure 1






Annexure 1






Annexure 1





Thank You..


