Assessment Of Market Potential For Electric Scooters Marketing Essay

The auto industry is all set to see dawn of a new era in two wheeler industry after the invention of fuel efficient four stroke engine technology a new technology came in to existence. It’s not petrol or diesel or any other fuel, but its electricity that have initiated a revolution in two wheeler industry in India. In the developed countries like America, Japan and China e-bikes and Scooters are very popular mode of personal transport. Indian two wheeler industries has embraced with this new concept of e-bikes and geared bicycles, due to its popularity in many countries. With the rising cost of fuel at International and national level, increasing levels of pollution and congestion in transport system specially in Urban areas, higher running and maintenance cost of vehicle, the electrically charged bikes or scooters have very bright future in area of personal transportation. Riding the crest of rapid growth of e-bikes, automobile companies are entering into the business of manufacturing e-bikes trying to tap the nascent electric two wheeler segment. The electric vehicle industry is in its infancy in India and has experienced substantial growth and change in the last few years.

The electric two wheeler segment has potential to grow as already seven conventional two wheelers are sold for every one car sold in India. The market forecasters are taking a positive look in the e-bike segment. Indian manufacturers of electric bikes are gearing up for what they call a second wave of growth for these ‘plug and ride’ bikes.

To the total sales of automobile, 75% constitute of two wheelers. According to SIAM [1] report the cumulative annual growth is 21.8% in two wheelers segment in the last three years. As per ICRA [2] rating agency there will be 8-9% growth in the two wheelers segment in coming year. The demand for scooters is increasing from the previous quarter reports. Though there is 70% decrease in sales of electric two-wheelers but the rising prices of the petrol will lead the growth of the electric two wheelers. There is a big platform and a huge market for the hybrid and electric two-wheelers in India. As the electric bikes are very cost effective as compared to normal petrol bikes, the sales figures are expected to grow very high and also the government supports’ the growth of this industry.

The problem

Hero electric was founded in 1956; Hero is a trusted and credible household name in two wheelers globally. The company’s corporate headquarters is located in London. With European design expertise, Hero Eco-Tech Ltd continues to produce world class product and brings together a wide range of passionate individuals dedicated to produce smart transportation solutions. The Hero Eco-Tech Ltd team develops personal mobility solutions based on innovative design and proprietary technologies, the products allow consumers to experience a new kind of freedom whilst reducing their impact on the environment along the way. Hero Eco-Tech Ltd focuses on utilizing new technologies, currently partnering with Ultra Motor which produces world class propulsion systems and energy management technologies. This enables Hero Eco-Tech Ltd to deliver a range of reliable, high-performance personal transportation solutions in the form of electric bicycles and electric scooters.

Hero Electric a pioneer in the Indian Electric Vehicle Industry that is a 100% subsidiary of the Hero Group and has a background of extensive research in the Electric Vehicle segment, Hero Electric entered the Electric Vehicle segment with the single minded objective of providing eco friendly, cost effective mode of personalized transportation with its range of Electric Two wheeler PHOTON, MAXI and OPTIMA PLUS. Over a short period of time, Hero Electric has been quick in establishing itself as an undisputed leader in the Electric Two wheeler segment. Hero Eco-Tech Ltd Ludhiana manufactures electric scooters and electric hybrid bicycles; mainly for exporting purpose they export their electric scooters and electric hybrid bicycles in countries like Italy, Spain, Canada, Japan, Greece, Germany and UK.

Hero Eco-Tech Ltd Ludhiana is now wanted to launch their products in the domestic market. With regard to Consultancy Project with Lovely Professional University, Research team had a preliminary constructive discussion with the senior management of Hero Eco-Tech Ltd Ludhiana. In this discussion, the research team tried to find out the management problems regarding the market potential of electric scooters and electric hybrid bicycles in Punjab Region. The management wants to analyze the potential customers, customer attitude and perception towards electric scooters and electric hybrid bicycles in Punjab. Moreover the management wants research team to suggest them segmentation, targeting and positioning strategy for the identified potential market and market potential will help the management to forecast the demand of electric scooters and electric hybrid bicycles in Punjab.

Need and Scope of the Study

As the world goes green and nations are depleting fossil fuels, the electric bike is making a strong come back as the transport mode of choice in many countries, today the electric bike is gaining strong popularity in various parts of world where wide roads, traffic discipline and a serious concern for Mother Nature have sprouted several friendly e-bike manufacturing companies. The ease, convenience and zero emission charges are the need of world today. The resultant of this study may be drawn that promoting the use of electric-bikes may positively affect the mobility, health and the environment. If the people will cycle more often and longer, this will not only lead to less congestion, but will also result in better accessibility as the traffic density on the roads of India are getting high day by day. Usage of electric-bikes will also contribute to the petroleum economy as an improvement which helps in reducing the overall petroleum consumption. This may results to clean environment, healthy livelihoods & cost effective generation. As the number of electric-bike trips increase; the usage of car will slightly decrease. The effect is however too small to reduce congestion but will affect most. Even short car trips can be replaced by electric-bikes. To improve the accessibility of moving within the towns.

Each kilometer driven by electric bicycle instead of car or public transport helps to reduce in carbon dioxide (CO2) emissions. Increase in number of bicycle trips means per kilometer approximately 70 grams less CO2 emission will be there. In the given areas this may lead at best to a reduction of approximately 110 to 280 kilotons of CO2 emissions. Although this will help to reduce a fraction of overall emissions but still able to make impact as every number counts.

It should be remarked that with the wide availability of electric bikes attention also needs to be paid to traffic safety, as higher speeds may cause more accidents. The number of electric bikes in traffic may have implications for infrastructure (including construction of more routes, an increased need of guarded parking facilities and battery charging stations). This will need the intervention of government; Indian government is supporting the usage of electric bikes and providing subsidy to the manufacturing companies. The companies need to design electric bikes according to the need of customer, bikes that are efficient, cost effective and safe.

Literature Review

There has been a lot of research regarding the market potential of electric bikes. The preference of the customers towards these electric bikes is affected by several factors that are explained by various researchers.(Saxena, 2008) Studied that green marketing concept emerges from social marketing, in report the he characterize a product as being environment friendly. The consumer’s attitude towards green marketing was measured in the study by using T-Test, Z-test, One way ANOVA and Two way ANOVA and concluded that the Attitude of consumers towards green products is becoming positive.(Marian Beise, Thomus Cleft, 2008) Concluded that there is huge potential for the innovative projects in the developing and developed countries. Researcher also explained about the techniques of assessing the market potential of the various countries for Innovative designs. (Jacob Cherian, Jolly Jacob, 2012) Studied the consumer’s attitude towards the green lifecycle and discussed about the concept of green marketing and looks in to various ways in which the different consumers attributes are related to the concept of green marketing and concluded that the attitude towards eco products changed, consumers are taking interest in eco friendly products. (Ravindra P. Saxena, Pradeep K. Khandelwal, 2011) Studied the demographics of customer like age, Gender, Income Spending Pattern, Attitude towards Green Products and concluded that there is huge market potential in India for the eco-friendly products.(Chanchai Petchprapunkal, 2011) Studied the Consumer’s Attitude and behavior with the application of SEM and AMOS, the overall model can be explained in the form of dependent, independent, intervening, and moderating variables and the study tries to propose a more convenient level of using theory by practitioners to provide advantages and benefits to the marketing discipline.(Mrinal Kranti Das, Swati Pal, 2011) Studied about some interesting features about e-bikes that give strong prospects to buyers as well as highlights the future market of e-bikes also the unique features like (fuel consumption, carbon emission and ease of use) there is a potential of e-bikes in comparison to other two wheelers run by petrol in future. It gives us the advantage to fight with the problem of global warming and concluded that India and China has a huge market potential for the e-Bikes (Cherry, 2007) Studied that electric bikes provide cost effective, convenient, and relatively energy efficient mode of transportation in china and they are quickly becoming one of the dominant transport mode among the Chinese people. This report examines the environmental performance of e-bikes relative to other competing modes, their market potential, and the viability of alternative battery technologies and concluded that in China the market is in growing stage, there is a lot of opportunity for the Electric Vehicles market in China, There is a big opportunity of exporting also.(Gan, 2003) Studied the transportation management and the state of automobile industry and in China. The researcher focuses on the response of automobile industry to challenges like dynamics and barriers resulting from technological change, economic development and environmental and concluded that Industry is welcoming the green products and there is huge potential for the electric vehicles in the devolving as well as developed countries.

Objectives of the Study

In the light of above given management problem of Hero Eco-Tech Ltd the researcher proposes the following objectives:

To profile the customer according to the preference towards the electric scooters in Punjab.

To study the customer attitude towards electric scooters in Punjab.

To find out the market potential for electric scooters in Punjab.

To develop the segmentation, targeting and positioning strategy for electric scooters in Punjab.

Research Design

Type of Research:

For this proposed study, both descriptive research and exploratory design shall be adopted. Exploratory research helps in determining the best research design, data collection method and selection of variables. Exploratory research relies on secondary research such as review of literature or certain data. Descriptive research is the exploration of certain existing phenomena and to obtain information concerning the current status of the phenomena in order to describe “What Exists?” with respect to variables or conditions in a situation. The idea behind this research is to study the market potential, customer’s attitude towards electric scooters & segmenting, targeting and positioning strategies. This study would identify and evaluate the market potential of electric scooters and develop the profile of the customers based on their demographics like age, gender, income level and qualification level. Factors affecting consumers’ attitude towards usage of electric scooters across identified segments will also be examined along with detailed analysis.

Sampling Design

Target population:

Male and Female from 15 years to 65 years of age who uses two wheelers in Punjab.

Sampling technique:

Here, researcher is proposing to adopt ‘convenience sampling’ method which will be performed purposefully. It is a type of non-probability sampling technique. Non-probability sampling focuses on sampling techniques where the units that are investigated are based on the judgment of the researcher. As this proposed study in broadly on “Finding out the market potential of the electric scooters”. A large share of population still does not find convenience to use electric scooters; So, researcher has chosen this sampling design due to convenience and with the purpose of fulfilling the objectives of this proposed study.

Sample size [3] :

Researcher is proposing to collect data from 900 respondents of Amritsar, Chandigarh, Jalandhar & Ludhiana (India). According to the corresponding population of mentioned areas given below the researcher has decided to take a particular sample from the whole population. Here, researcher is proposing to divide each city into four parts for sampling purpose on the basis of population density and from each part equal number of respondents will be surveyed.

Sr. No.

Name of City

Total Population

Sample Size

1

Amritsar

24,90,891

250

2

Chandigarh [4] 

10,54,686

100

3

Jalandhar

21,81,753

200

4

Ludhiana

34,87,882

350

Total

92,15,212

900

Type of Data:

For this proposed study, researcher will use both the primary and secondary data. Primary data will be collected from defined target population with the help of structured questionnaire and secondary data will be collected from different sources like Internet, books, journals and periodicals etc.

Data collection tool and source of Data:

Major data for proposed study will be collected by means of structured questionnaire. To fulfill the objectives of proposed study a ‘Likert scale’ of five points will be used in survey instrument to record customer’s attitude towards electric scooters. Few dichotomous questions will also be put into the questionnaire for measuring usage pattern of electric scooters across demographic. The secondary data will be collected from the company’s annual reports, various magazines, newspapers, internet, journals and periodicals etc.

Time period of Data:

Researcher is proposing to collect the data in two months (Between Oct-Nov 2012) from Amritsar, Chandigarh, Jalandhar & Ludhiana (Punjab).

Planning of data analysis

Researcher shall divide population into optimum segments and profiling of each segment based on demographic variables like Income, age etc. shall be done with respect to electric scooters usage pattern & market potential. As the number of variables used in this research will be quite extensive; Factor analysis will be used to simplify the interpretation of the variables. Researcher will use Factor analysis to identify factors affecting consumer’s attitude toward the electric scooters. ANOVA test will be conducted to identify the inter segment difference attitude towards the electric scooters being offered by the bike manufacturers. Researcher will use Regression analysis for accessing the market potential of electric scooters in Punjab. These factors then will be used as inputs in later analyses of segmentation, targeting and positioning strategy making. This will give a general idea to marketer, what are the features marketers should include as part of product/ service offerings.

Brief Summary of proposed tools

Descriptive Statistics: For profiling of customers of electric scooters in the given areas.

Factor Analysis: To identify important factors affecting customer’s attitude towards electric scooters in the given areas.

ANOVA: To check the difference in the perception of customers regarding electric scooters belongs to various proposed segments in the given areas.

Regression Analysis: To determine the Market potential of electric scooters.

Perceptual Map: To understand the positioning of electric scooters among customers in the given areas.

Expected Outcome

The research would be an effort to do the profiling of the customers on the basis of demographic profiles of customers. The research would bring forward the factors affecting customer’s attitude and preference towards electric scooters. These findings will help Hero Eco-Tech Ltd while making all decisions related to marketing mix. The research will also point out some specific list of strategic suggestions for Hero Eco-Tech Ltd for segmentation, targeting and positioning of the new product. The research will help Hero Eco-Tech Ltd to determine the market potential of electric scooters in Punjab region. For targeting, research will discover customer’s preferences for usage of Hero Eco-Tech across segments classified earlier and assist thereby, in drafting market coverage strategy. On the basis of facts & findings throughout the research; researcher will help the decision makers in determining, evaluating and selecting the best course of actions in any situation. This study will enable Hero Eco-Tech Ltd in selecting the right competitive advantage in the present times. This study will also explore the reasons of less usage of electric scooters, which will help the company in making the strategy to attain higher market growth. The result of this research will provide the current scenario of electric scooters in Punjab and the researcher will be able to forecast the demand of the electric scooters of Hero Eco-Tech Ltd in four cities of Punjab which are Chandigarh, Amritsar, Ludhiana and Jalandhar.