A case of car buyer segementation based on price


Budget car segment

It is the largest segment of the Indian market, accounting for over 60 percent of the market and expected to maintain a decent growth in volume, but decline in terms of the share of the total market. An entry-level car is what this segment looks for.

Preferred price range: below Rs. 2.2 lakh.

Maruti 800 and Omni are the dominant offers and it is extremely difficult for competitors to enter because of the competitive advantage enjoyed by Maruti in cost/price.

This segment is sometimes referred to as the small car segment. But, in the Indian context, it may be more apt to refer to it as the budget car segment. This segment actually wants a low price car and not necessarily a small car. In developed countries, a small car means a compact maneuverable, city car, with high comfort, and top quality. In India a majority of the small car buyers are not particular to have a top quality compact car, or are that willing to pay the price required for such a car. So, a high priced car, though it may be compact, rules itself out of this segment. And, that is why Volkswagen decided not to enter the Indian market. It knew that its Polo would not fit the segment that is loosely termed as the small car segment in India.

Compact car segment

It lays between the budget car and family car segments. As mentioned earlier, in developed countries, this segment is referred to as the small car segment.

Preferred price range: between 3 lakh and Rs. 4.5 lakh.

Zen, Santro, Matiz, Fiat Uno, and Indica are the main players in the segment. Forms a reasonably sizeable segment of the market, commanding around 15 percent share, but cannot come near the budget car segment in size. It is expected to grow at a steady pace in volume as well as in market share.

Family car segment

Forms a reasonably sizeable segment of the market (around 10 percent) and it is expected to maintain a decent growth rate in the next few years but cannot come near the compact segment (certainly not the budget segment) in size, for many years to come.

Preferred price range: Rs 4 lakh and Rs. 5 lakh.

An easy to enter segment, relatively crowded already.

Maruti Esteem, Daewoo Cielo, and HM Contessa belong to the segment; and Maruti Esteem is the reference point.

The purchasing capacity of buyers in this segment is somewhat higher than that of the budget and compact car segments. But, this segment too, by and large, prefers a less expensive car. It is only because the cars that re sold in India as ‘budget car’ and ‘compact car’ do not meet their purpose, especially in terms of space, that they turn to ‘the family car’. They however, find world-class cars (the premium cars), which provide space as well as other benefits, ‘high priced’. The ‘family car’ is their compromise choice.

Premium car segment

This segment represents buyers who need a real world-class car and are willing to pay the due price.

Preferred price range: They are flexible in this matter. Around Rs. 6 lakh is okay with them.

This forms a relatively sizeable segment of the market for the present. This is mainly because of pent up demand. Likely to saturate soon; then, the share will start dipping. It is easy to enter relatively. Crowded already and is expected to get even more crowded.
Opel Astra, Ford Escort, Fiat Siena, Ford Ikon, Honda City, Mitsubishi lancer, and Audi 1800 belong to the segment.

Super luxury saloon

Buyers in this segment look for a real super premium car.
Mercedes Benz E 229, E-250, Rover Montego, Audi 6, BMW, are the players here.

Obviously, this is a tiny segment in the Indian context. To quote BMW, ‘At the moment there is no significant market in India for a car like ours. We will have to develop a market.’