Analysis of Indias Automotive Industry

Analysis of Indias Automotive Industry INDIAN AUTOMOBILE INDUSTRY The automotive industry is one of the largest industries worldwide and in India as well. The automotive sector is a vital sector for any developed economy. It drives upstream industries like steel, iron, aluminum, rubber, plastics, glass and electronics, and downstream industries like advertising and marketing, transport and insurance. The automotive industry can be divided into five sectors:- Passenger Cars. Multi- Utility Vehicles (MUVs). Two- and Three- Vehicles. Commercial Vehicles Light Commercial Vehicles (LCVs) / Medium and Heavy Commercial Vehicles (MHCVs). Tractors. We will be looking at the Passenger car industry in India. Despite a head start, the passenger car industry in India has not quite matched up to the performance of its counterparts in other parts of the world. The primary reason has been the all-pervasive regulatory atmosphere prevailing till the opening up of the industry in the mid-1990s. The various layers of legislative Acts sheltered the industry from external competition for a long time. Moreover, the industry was considered low-priority as cars were thought of as unaffordable luxury. HISTORY OF INDIAN AUTOMOBILE INDUSTRY Initially, in the post-liberalization period, the automotive sector, especially the passenger car segment, saw a boom, derived primarily from economic vibrancy, changes in Government policies, increase in purchasing power, improvement in life styles, and availability of car finance. The passenger car industry was finally deregulated in 1993. However, the automobile industry, which contributed substantially to the industrial growth in FY1996 failed to maintain the same momentum between FY1997 and FY1999. The overall slowdown in the economy and the resultant slowdown in industrial production, political uncertainty and inadequate infrastructure development were some of the factors responsible for the slowdown experienced. In FY2000, the sector experienced a turnaround and witnessed the launch of many new models. Two things that stunted growth of this industry in the past have been low demand and lack of vision on the part of the original equipment manufacturers (QEMs). However, the demand picked up after the liberalization of the regulatory environment, and global QEMs- who enjoy scale economies both in terms of manufacturing and research and development (RD) entered the Indian market. This has resulted in a big shift in the way business is conducted by suppliers, assemblers and marketers. PASSENGER CAR INDUSTRY IN INDIA: HIGHLIGHTS Passenger car sales are expected to increase at a compound annual growth rate (CAGR) of 8% over the period FY2004-2007. The six broad segments in the car market today are- Mini, Compact, Midrange, Executive, Premium and Luxury. In the medium term, growth in the Indian passenger car industry is expected to be led largely by the Compact and Mid-range Segments. The critical success factor has changed from price to price value. In terms of engine capacity, the Indian passenger car market is moving towards cars of highest capacity. With the launch of new models from FY2000 onwards, the market for MUVs has been redefined in India, especially at the upper end. Currently, the higher-end MUVs, commonly known as Sports Utility Vehicles (SUVs), occupy a niche in the urban market. With the success of SUVs, the line of distinction between passenger cars and MUVs in the Indian market is getting increasingly blurred. Domestic car manufacturers are now venturing into areas such as car financing, leasing, and fleet management, and used-car reconditioning /sales, to complement their mainstay-business of selling new cars. During April August 2006, the passenger car sales in India at 332159 units, marked a growth of 5.3%over the previous year. The growth in the domestic sales of passenger cars was led by strong growth in volumes reported by compact and mid size segments. While the share of mini and executive segments declined in the period under study, the share of other segments increased. For instance, the share of compact segment in the domestic car sales increased from 59.7% in April August 2005 to 64.9% in April August 2006, mid size segment from 20.5% to 22%, and the share of Premium segment was stagnant at 0.7% in the same period. New variants launches, easy availability of finance at relatively lower interest rate and price discounts offered by the players have played an important role in driving the sales growth in the domestic passenger car industry. KEY DEMAND DRIVERS Traditionally, disposable income was perceived as the key factor driving passenger car demand. But over time, other factors that are known to have an impact on demand have emerged. These include the need for greater mobility, non- availability of public transport services, availability of cheap finance, development of the used-car market, introduction of new technologically superior models, increasing levels of urbanization and changing consumer profiles. The credit for growing the Indian Compact Segment, and in fact, the Indian Passenger car industry goes partly to the Korean manufacturers (HMIL and the erstwhile Daewoo) and the Indian player Tata Motors. The HMIL Santro was launched in September1998 and created a sensation on account of its aggressive pricing at Rs.2, 99,000. The Santro became successful as HMIL had got the price -value equation just right. While Daewoos Matiz picked up only seven months after its launch, the Santro was selling more than 3000units a month only 2 months after its launch. HMIL had infact, planned its entry into the Indian market with the 1495cc Accent but later opted in favour of the smaller car. At the time the Santro was launched, both the options available in the segment- Fiat Uno and the Zen-had been around in the Indian Market for quite some time and lacked novelty. Santro was not only cheaper but also incorporated a multi-point fuel injection (MPFI) system that offered superior fuel economy to Zens carburetor system. The Matiz was launched in November 1998. Its 800cc engine immediately encouraged comparisons with Maruti 800. The initial launch price of Matiz at Rs. 3, 55,000 was significantly higher than the Santros Rs, 2, 99,000. Given that the Matiz was smaller than the Zen and the Santro, the initial impact was not so strong. In May 1999, Daewoo launched stripped-down variants. The launch of the cheaper versions saw the sales of Matiz reaching almost 2000 units in May 1999 and recording an average monthly sale of 3123units in FY2000. However, the financial crisis faced by the parent, Daewoo Motor Corporation affected the performance of the Indian subsidiary (that was reporting net loss and had significant borrowings). Subsequently, the Indian subsidiary halted production. MUL now has 4 cars in the Compact Segment: the Swift, the Zen, the Alto and the Wagon R. In terms of market share, Zen steadily lost share in FY2000 to its competitors. Despite this, there is no denying that the Zen is one of the bigger success stories in the Indian car market. With 3 models, MUL is the market leader in the Compact segment. The Alto arrived in India when there was little room for man oeuvre in a crowded compact segment. It was launched in 2 versions, the LX and the VX. The base version is priced competitively with the deluxe version of the Maruti800, while the higher-end version competes with the based versions of the Zen and the Wagon R. The 1061cc Wagon R is available in four manual transmission variants (LX, LXi, VX and VXi) and one automatic transmission variant (AX). Since its introduction in February 2000, Wagon R has been selling in the 1500-3000units per month range as against 5000-8000units per month range for the Santro. The presence of the already well-established Matiz and the Santro meant that the novelty factor did not work too well for Wagon R. However 2005 has been a revolutionary year for Maruti since its new Launch Swift has been a huge success in the market and the most demanded car as well. The other cars in the compact segment to have made an immediate dent in the market with their launch are the Palio of Fiat India and the improved version Indica V2 of Tata Motors. Indica was the third largest selling car in FY2002 in this segment, after Santro and Zen. On the other hand, Palio was launched at the time when the passenger car industry was witnessing a slump but the model cut across the barriers and was able to create a market for itself. However, the success of this model was short-lived and the sales declined thereafter. Nevertheless, launches of new variants (such as the diesel version) helped sales recover marginally. The size of the compact segment has increased as a result of the high growth rate attained by the models in this segment. The changing price-value equation, coupled with the declining interest rates and easy availability of finance, has prompted consumers to move towards the compact car segment from the mini segment. The high rate of growth achieved by the compact segment has attracted the attention of other players also; including GM. GM has entered the compact segment with the launch of its Opel Corsa Sail in May2003. FUTURE OF CAR MARKET IN INDIA The Indian automotive market offers tremendous opportunities due to a strong GDP growth, increased urbanisation, an expanding middle class, an upward migration of disposable incomes and availability of easy financing options. The Indian automotive industry is dominated by two-wheelers, while cars account for about 10.7 percent of the total industry. The potential for growth is enormous. The Indian Governments Automotive Mission Plan 2006-2016 states that the Indian passenger car market is expected to reach 3 million by 2015, making India as one of the top 10 car markets in the world. India is also expected to remain as the second-largest two-wheeler manufacturer, the largest tractor and three-wheeler manufacturer and the fourth-largest truck manufacturer in the world by 20151. The main considerations driving customer preference are mainly reliability and economy. GOVERNMENT COMMITMENT AND SUPPORT STILL LIKELY IN THE FUTURE Post-liberalization, the government has made specific attempts to reduce barriers and controls, such as allowing 100 percent foreign direct investment in the automotive sector and reducing customs tariffs on automotive components. The government has also set an ambitious target of increasing the revenue turnover derived from the automotive sector from about 5 to 10 percent of the GDP by 2016. The emphasis in the future is expected to be on exports of small cars, multi-utility vehicles, two-wheelers and components. With regard to emission norms for passenger cars, the government has proposed the implementation of Euro-IV emission norms from 2010 onwards, which is likely to lead to an increase in car prices. According to Avik Chattopadhyay Deputy General Manager, Marketing, of Maruti the Indian government is expected to continue the process of reforms even in the future. The Indian passenger car industry is dominated by the small car segment, and more specifically the compact car segment, both in terms of growth rates as well as contribution to total passenger car sales. Due to the fact that India is a low-income market, the dominance of small cars is expected to continue even in the future. Tata Motors, a leading Indian OEM, has plans of launching a small car at USD 2,326 in 20083. This is expected to convert a lot of two-wheeler prospects into passenger car customers. This is also expected to lead to other OEMs launching similar products/reducing prices and the creation of a new segment (below even the mini-car segment). Rural customers are also expected to be likely target segments for this car. The four-wheeler market (including commercial vehicles) is dominated by Asian OEMs, with American OEMs occupying only about three percent of the market. Hence, resurgence from the American OEMs seems likely in the future. Recently, the American OEMs have a lso announced their plans for capacity expansions however, the main difficulty is their lack of expertise for making fuel-efficient, small cars. General Motors (GM), in order to circumvent this, has recently announced the launch of a Daewoo small car (known as the Spark) in India in 2007. The used-car market is also expected to grow in the future, especially considering the fact that the ratio of used-car sales to new-car sales is about 1:1 in India this is less than the global ratio of 2:1. The major OEMs, including Maruti, Hyundai, GM, etc., have already decided to enter this market as used car dealers. Increased market share for fuels other than petrol is expected in the passenger car segment, especially considering the rising prices for petrol. Diesel is expected to capture about 35 percent of the market share in 2010, the current share being 30 percent. Maruti and Hyundai, two major gasoline players, have announced their plans to enter the diesel market as well. LPG as a fuel is also gaining popularity as it is cheaper than petrol and requires less maintenance and conversion costs as compared to CNG. Research work on bio diesel as a fuel for the future is also underway. The Indian manufacturing may go through periods of overcapacity as the vehicle capacity estimations are about three million passenger cars in the next five years. A recent trend observed is the sharing of manufacturing facilities for example, a deal between Maruti and Nissan, wherein the former is expected to produce cars on its assembly lines labeling them as Nissan. The use of Aluminum in automotives is expected to increase especially since this helps in boosting fuel economy, performance and safety, while reducing emissions. The use of electronics in manufacturing is also expected to increase. INDIA: THE SOON TO BE SMALL-CAR HUB Small cars constitute about 78 percent of the domestic demand, making India the third-largest producer of small cars after Japan and Brazil. Therefore, the government has decided to launch a programme to make India a small car hub in the future a recent reduction in excise duties from 24 percent to 16 percent exclusively for small cars being an initiative in this direction. The major players not present in this segment have also drawn up plans for entering this segment in the near future. Players with expertise in small car, such as Maruti and Hyundai, have formulated plans for ramping up production capacities. It is likely that with the small car volume increase (both due to domestic volumes and exports) in the next decade, domestic players, such as Tata Motors, would become strong global players. COMMERCIAL VEHICLES TO CONTINUE STRONG GROWTH This segment has shown strong growth over the last 5 years (at CAGR of over 20 percent), and the growth is likely to continue in the future as well as this is mainly dependent on economic progress and road-network availability, both of which are growing at a fast pace in the country. According to the National Highway authority estimations, the growth of highways is expected to proceed at a CAGR of about 6 percent during 2006-2015, in contrast to a growth of about 1.2 percent during 1951-1995. The future is also expected to witness more product sophistication with increasing power to weight solutions especially for the truck segment. Multinationals have already made an entry in the segment with MAN, Daimler Chrysler and Volvo already present in the market. INDIA FIRMS VENTURING ABROAD Manufacturing occupies about 60 percent of the total direct overseas investments by Indian companies in various sectors. The Indian automotive companies, including both Indian OEMs and well as component manufacturers, have been investing mainly in the domains of forging and casting, particularly in European countries. So far, the industry has witnessed 16 acquisitions (five in 2005). The collapsing auto ancillary industry in these regions makes the deal extremely affordable for Indian companies, providing them market access and brand enhancement opportunities in a new region. Indian companies are also investing in emerging Asian economies such as China to establish a new sourcing base in the region. Global automotive players: sourcing parts outsourcing RD base to India The auto component exports sector is expected to show a strong growth with an estimated CAGR of 34 percent by 2014. All the leading OEMs in the world are already sourcing components from India, mainly in steering systems, casting products and electrical, such as motors and wiring, harnesses. The Indian automobile industry has four major segments commercial vehicles (CVs), passenger vehicles, three wheelers, and two wheelers. The market share for each of these segments of the Indian automobile industry, for the year 2003-04. According to the Society of Indian Automobile Manufacturers (SIAM) , the Indian passenger vehicle market has three categories passenger cars, multi-purpose vehicles (MPVs), and utility vehicles (UVs). The passenger car market is further divided into various segments based on the length of the car (Refer to Exhibit II for a detailed description of the lengthwise classification of passenger cars. The Indian automobile industry was a highly protected slow-growth industry with very few players till the opening up of the Indian economy in 1991. Low manufacturing costs, availability of skilled labor, an organized component industry, and the capability to supply in large volumes attracted global auto majors to set up their operations in India after the ope ning up of the sector. For example, Fiat and DaimlerChrysler started outsourcing their component requirements to India. 100 percent Indian subsidiaries of global players, like Delphi Automotive Systems and Visteon, exported components to other parts of the world. Macroeconomic factors like government regulations, low interest rates, and availability of retail finance played an important role in the rapid development of the automobile industry in India during the late nineties (Refer to Exhibit III for an understanding of the impact of the Union Budget on the Indian automobile industry over the years).. The leading Indian manufacturers are aggressively aspiring to become Tier-I suppliers the OEM: aftermarket ratio in exports has changed from 35:65 in the last decade to 75:25 at present. According to a Government of India estimate, there are 400 large firms in the organized sector and about 10,000 firms in the unorganized sector. The entry of more foreign companies in the sector is expected to lead to greater regulation, pruning of the spurious market and the unorganized players ceasing to be stand-alone companies, and entering into either contract manufacturing or becoming ancillary units. India is also showing an increasing prowess in automo tive design and development. Global MNCs, such as GM, Ford, Delphi, Visteon, etc., have already set up their RD centers in India. The main advantage of these centers is the low development costs it takes 1/5th of the costs to develop or engineer products in India as compared to global rates. RESEARCH OBJECTIVES The present study of the marketing strategy of the Maruti Suzuki (Pvt.) Limited revolves around the following broad objectives: To study the evolution and growth of the Maruti Suzuki (Pvt.) Limited in the context of the automobile revolution in India; To study the growth strategy of the Maruti Suzuki (Pvt.) Limited and the marketing methods followed by it in this regard. To study the small car revolution in India and the contribution of the Maruti Suzuki (Pvt.) Limited to it. RESEARCH METHODOLOGY RESEARCH DESIGN DATA SOURCES. Determining the sample size and the period of the required research. Designing the research tools. Defining the objectives of the research work. PRIMARY DATA Questionnaire. Survey. Personal Interview Discussion SECONDAY DATA Newspapers Journals Magazines QUESTIONNAIRE DESIGN Questions chosen are open ended as well as close ended; and objectives behind choosing such question is availability of data SAMPLE DESIGN Sample unit: DD Motors Wazirpur, Mayapuri, Okhla, Competent Motors Moti Nagar Extent: 8 Weeks Sample Size: 59 MARUTI SUZUKI Very often, there is an analogy drawn between the state of the great Indian roads and the pace of economic development in the country. Needless to say, its not a very pleasing comparison. So the average Indian customer who rides the roads of India is naturally extremely cautious when it comes to investing in a vehicle. Only those rough and tough enough to survive the potholes and nightmarish surfaces can pass muster. In such a scenario, a foreign company launching a car in the Indian market was bound to be looked upon with skepticism and suspicion, more so, if it had South Korean origins. South Korean companies were perceived not to be quality oriented. The failure of Korean companies like Lucky Gold star (later to be re-launched as LG, which is another marketing success) and the bad word of mouth for Daewoo led to this perception. MARKET PRESENCE In the late 1990s, car manufacturers like Ford, General Motors, and Fiat were faring miserably in the Indian market. Maruti had a market share of a whopping 79 per cent in the passenger car segment. Daewoo and Telco were creating hype over the impending launches of their cars Matiz and Indica, respectively. In such a scenario, the top management of Hyundai Motor India Ltd, which has South Korean origins, had a tough decision to make. It was a big gamble to go ahead with the launch of the small car -Santro. The Hyundai management stuck to a simple strategy launch a quality product in the most promising segment. With the latest technology and price it aggressively. In the pre-launch period in late 1997, the company commissioned market research project to understand the, Indian consumer psyche and specify a benchmark for the pricing policy. The results of this survey and the actions taken thereafter had a bearing upon the success of the product later on. The Indian consumers showed an immense dislike to the shape of Santro. One consumer even likened it to a funeral hearse. A second important result was that Hyundai is an unknown brand with almost zero brand equity amongst Indian consumers. The company immediately undertook the initiative of reshaping and customizing the car for the Indian customer. The tall rear end was reduced and made more aesthetically appealing. The Santro was all set for the Indian launch. MARUTI-MARKETING GENIUS Here came the most important aspect of the launch the marketing strategy. This was a factor that could make or mar the success of the Santro. Hyundai tied up with the advertising agency Saatchi and Saatchi, who hit upon a novel strategy. Bollywood star Shah Rukh Khan was roped in to be the brand ambassador. A three-pronged strategy was designed to attract the consumer: Educate Indian Consumers about Hyundai Create hype and expectations about the Santro Explain the virtues of the Santro The TV Press Campaign broke in June 1998. The initial TV spots and the press campaign showed Shah Rukh Khan being approached by a Hyundai official to advertise the Santro. Shah Rukh was not convinced about Hyundai and he was shown to ask all questions a normal Indian consumer is expected to ask. What is Hyundai? Why should I advertise for the Santro? Will it match customer service expectations? What about dealer networks? How can an international car meet the requirements of Indian roads? As the campaign went through all of these questions, the Hyundai official answered Shah Rukh Khan. By the time the car was actually launched, Shah Rukh Khan proclaims, he is convinced. He declares that he is now ready to advertise the Santro since he is certain that the Santro is the car for India. This high profile campaign backed by some very innovative media buying, which went for maximum coverage with the minimum budget, broke all grounds in terms of creating consumer expectations and hype in t he market. Along with the Advertising Campaign, the Sales Team worked burning midnight oil in creating the dealer network across the length and breadth of the country. The wide dealer network would prove to be invaluable in ensuring that the Santro would be available to anyone who wants to buy it. An important pre-requisite for the dealer network was a fully functional workshop area with imported international standard equipment and engineers trained in Hyundais parent training centre in South Korea and localized training provided in the Chennai Plant. RANGE OF PRODUCT SERVICES The race for Indias small-car market has begun. But only those among the big four who get all their strategies right will win this unforgiving contest. The prize: not just the largest automobile segment, but also survival in this market. Theyre lined up for the last lap. With Market India becoming a minefield for the worlds largest auto-makers, the Formula I have become brighter than the red lights that have stopped them in their tracks so faronly the small car will enable endurance. Bumper-to-bumper, therefore, the combatants are accelerating towards the small-car segment. Amounting to 60 per cent of the Rs 14,500-crore automobiles market, and hitherto monopolized by the Rs 8,454-crore Maruti Udyog with its Maruti 800 and Zen, its the final frontier between survival and extinction. So far, accustomed as they are to the priorities of the customer in the developed markets, the global auto-makers have taken many wrong turns in India. Only now, after many knocks, crashes, and repair job s, are they back on track, heading towards their destination. But neither the road nor the end-point of their journey is wide enough for all of them. At a projected 6-lakh unit by 2000, demand for cars is still 25 per cent less than the number of F-150 pick-up trucks sold by the $153.62-billion Ford Motor Co. in 1997. But the importance of India on the world auto map is strategic. With an estimated total capacity of 58 million units a year, the global auto industry is racing far a head of the demand of 45 million units. Markets in North America, Europe, and Japanwhich account for 74 per cent of the demandhave become saturated. Global car-manufacturers will need to plant their feet in a low-cost, young, stable market to sell their products to create a global supply-base for cars and components. The first wave of manufacturers simply failed to make a splash in India. They were revving up for a growth that never happened. Their entry reasoning: since India had been a small-car market for years, it was only a matter of time before it enlarged to ac commodate bigger, luxury cars. That the logic was flawed has now become evident. India is still a small-car market for anyone who wants both revenues and profits. Not surprisingly, Ford (which launched the 1,300-cc petrol and the 1,800-cc diesel Escort in 1996), the $178.17-billion General Motors (which entered with the 1,600-cc Opel Astra in 1996), and the $72-billion Daewoo Groups Rs 963.37-crore Daewoo Motors (which launched the 1,498-cc Cello in 1995) are limping at the starting-block. None of the 3 has managed to chalk up sales of more than 18,000 units a year. Even Maruti Udyoga joint venture between the $12.12-billion Suzuki Motor Corporation of Japan and the Government of Indiahas been unable to grow the luxury segment. At 18,000 units in 1997-98, its 1,300-cc Esteem luxury cars sales fell by 28 per cent. Explains B.V.R. Subbu, 43, Director (Sales Marketing), Hyundai Motor India: Traditional mid-car buyers are turning to small cars; they are waiting for new technologies. Within 8 months of the 1,468-cc Citys launch in January, 1998, the $48.87-billion Honda Motor has sold 4,180 cars in the Indian market, which is more than the combine d sales (3,317 units) of the Astra and the Escort. But despite Hondas initial success, the luxury-car segment has platitude, and there seems to be room for just one player. In the past 3 years, the segment has shrunk in value, dashing car-makers hopes of rebuilding their futures in India. Naturally, the only safe haven that remains is the small-car segment, which is 2.45 lakh units in size. And the only segment expected to grow at 15 per cent a year for the next 5 years. The new millennium cannot but belong to the small car. However, economics of upstream manufacture will only ensure survival. Sophisticated downstream skills are essential to make inroads into the tough Maruti Udyog territory. COMPANY POLICIES BUILDING STRATIGES But strategies, like cars, must feed on volumes. And how much is the sub-compact segment likely to yield in 1998-99? Maruti Udyog expects the sales of the Zen to cross the 1-lakh-unit mark. Assuming that at least a third of the small-car owning populationthis includes customers who have been using the Maruti 800, say, for at least 3 yearsgraduates to a sub-compact, which means a market for at least another 1 lakh car. Even if the 2-lakh mark is not breached in the next 5 months, 1999-2000 will be the Year of the Upgrade, the economy permitting. This is why the second wave is focused on the small segmentfrom the mini to the sub-compact to the small car. On that relatively stable bandwagon is perched the goliath, Maruti Udyog, 2 newcomersthe $28-billion Hyundai Motor of South Korea and the Rs 7,450.34-crore Telcoand one revitalized company, Daewoo Motors. By drawing on their intrinsic strengths, each is evolving a unique strategy to overtake competition. BT test-drives the strategic re sponses of the second wave and assesses their chances of survival. In less than two decades, India has ascended the ladder of global competitiveness and improved its business environment for investors through a consistent focus on economic reforms. Even more creditable is the fact that this growth comes on the back of an ever-strengthening social infrastructure supported by vibrant democracy. India today is the hotbed of entrepreneurial activity. Wealth creators and world-beaters are visible in sectors after sector. Indias economy has more than doubled in real terms since reform began in 1991. Consumer demand, increasing three to five times faster than the economy, reflects the aspirations of a vibrant, growing and young middle class; India is home to 20 per cent of the worlds population under the age of 24. With more than 200 television channels offering a window to the world, Indians are perhaps the most rapidly evolving consumers across the globe. Successful economic reforms, favorable media disposition and an overall positive economic scenario h ave placed a spotlight on the country. Indian companies are making overseas acquisitions, capital markets are booming, FIIs are pumping money in, FOREX reserves are a record high and the political economy has gained credibility in the global investor community and world media. Innovative products, innovative processes, innovative manufacturing methods are enticing foreign investors and multinationals to India. What is `India for the world? It is a millennia-old civilization. It is also the worlds premier IT services provider. The worlds back office a global R D hub. Emerging small-car hub. Repository, arguably, of the worlds largest number of engineers, doctors, accountants, and so on. To bring it all down to a single idea India is ready with vario

Patterns In Medicinal Advertising :: essays research papers

One of the most innovative trends in print advertising is medicine advertisement. The content of these particular advertisements (ads) are intriguing to me. I intend to analyze five medicinal ads to find the tools used by advertisers and to explore the positive and negative aspects of advertising medicine through print ads for the public. The people who develop ads to market prescription medicine products must have an inkling of what the reader wants to see. For instance, the ads in a parenting magazine most often target mothers. The ads in a sports magazine predominately target athletes. How do the advertisers know what the reader will respond to? Patterns are tools that help us to narrow our thinking down and put thoughts into categories that we identify with. Patterns allow us to store information in blocks so that we do not have to relearn information that has already been learned. Some patterns are universal and most people have some categories or patterns that other people have. An example of a universal human pattern is using language to communicate. Other patterns that we have, may be derived from our own experience and unlike those of others. Patterns are useful in advertising because advertisers can target their reader by tapping into specific categories. Perception is a person's understanding of the information they receive. Depending on their experience or their understanding they will categorize their perception and in turn it will become a thought pattern. For instance when a person talks to a priest their perception of him may be that he is perfect or does not sin. They may categorize all priests this way and not judge them in the way that they would any person who is not a priest. I feel that patterns and perception work hand in hand. Sometimes patterns are formed based on perception, sometimes perception is based on a pattern. What came first the chicken or the egg? I'm not quite sure, but I do know they affect each other. Ads are designed by using patterns that target a specific audience. The reader's perception of the product may form exclusively based on the ad. The patterns that I noticed specifically amongst the five medicine ads that I've chosen to analyze is the break through effect. In one ad there was a woman with her child and they were breaking through glass. Another ad featured a woman and her child with clear blue skies breaking through the clouds above.

Employee Recognition in Relation to Motivation Theories

The term â€Å"motivation†, which is defined using various terminologies, is often used to describe different types of behavior. Motivation is the â€Å"internal state or the condition that activates behavior and gives it direction; the desire or want that energizes and directs goal-oriented behavior, or the influence of needs and desires on the intensity and direction of behavior†. (Huitt, 2001) Motivation is specific to an individual’s make-up, their personal interests, wants and desires, or need to fulfill a goal. Several factors influence an employee’s level of motivation: pay, opportunity for advancement, growth and development, job security, honesty and integrity, working conditions, reward and recognition. Employee recognition is often praised at a â€Å"successful motivator†. To understand what factors influence motivation we need to understand the research and theories developed to define and explain motivation. Discussion Motivational theories dating back to the early 1950’s â€Å"provide a foundation to today’s motivational concepts†. Robbins, 2005) Abraham Maslow introduced the â€Å"hierarchy of needs† theory suggesting that needs are a physiological or psychological deficiency that a person feels the urge to satisfy. Maslow’s theory proposes that individuals are motivated by multiple needs and that these needs are present in a â€Å"hierarchical† order. Maslow’s theory was that an unsatisfied need influences an individual’s behaviour and once the need is satisfied it is no longer a motivator. The model of needs was developed using five levels of human needs: hysiological, safety, social, esteem, and self actualization. Physiological and safety levels were described as the lower levels of the model following the idea that these needs are satisfied externally. To satisfy the lower level needs of hunger, shelter, security is accomplished by things such as pay, medical benefits, or tenure. The â€Å"higher-order needs which are met internally include social, esteem, and self actualization. The concept is that an individual works through each level of the model one by one. Each level must be satisfied before moving on to the next level eventually attaining self-actualization. Self-actualization is the point in which one has reached their maximum potential. (Robbins, 171) Douglas McGregor had opposing theories â€Å"Theory X and Theory Y† to explain an individual’s behaviour in work and organizational life. McGregor theorized that â€Å"management involved more than simply giving orders and coercing obedience; it was a careful balancing of needs of the organization with the needs of individuals†. McGregor followed Maslow’s â€Å"hierarchy of needs† philosophy to describe human needs and to support the belief that an individual’s need is satisfied through work. Studying how managers interacted with employees, McGregor identified a set of beliefs managers used to assess employees. The assumptions identified in Theory X are based on the lower level needs (physiological, safety) on the hierarchy model. This portrayed a somewhat negative viewpoint using the assumption â€Å"that most people will avoid work because they don’t like it and must be persuaded to put forth significant effort. The individuals in this category are not interested in being â€Å"self-led†, do not care to take on responsibility as they are content following directions. † (Robbins, 2005) In opposition to this, Theory Y uses the upper level of the needs (social, esteem, self-actualization) hierarchy model stating that most individuals are â€Å"self-led† to accomplish goals in which they have set for themselves. In this positive view, McGregor identifies that employees regard work as a natural activity. This premise led to the belief that motivation occurs due to an individuals’ drive to satisfy their needs. McGregor identified those managers of Theory Y type employees believed that people inherently like to work. A result of this belief the manager pushes more responsibility on the employee in an attempt shape employee’s goals to align with the organization. Following the steps of Maslow and McGregor, Frederick Herzberg developed a motivational theory based on the â€Å"needs† concept. Trying to answer the question â€Å"what do people want from work†, he developed the â€Å"Two Factor† theory. Based upon his studies he believed that satisfaction and dissatisfaction at work arose from different factors, and was not simply opposing reactions. Hygiene needs are defined as company policy, work conditions, relationship with supervisor, and salary by Herzberg. He believed that people strive to achieve hygiene needs because without them they are unhappy, but once satisfied the effect will wear off. End result or meaning is that satisfaction is temporary. This factor indicates that people are not motivated by addressing these hygiene needs, fulfillment just appeases the individual. Herzberg’s second factor is identifying â€Å"motivators†, suggesting that individuals are motivated by enabling them to reach for and satisfy real motivating factors such as personal growth, development, recognition, responsibility and achievement which correspond to a high level of meaning and fulfillment. Maslow, McGregor, and Herzberg were pioneers in motivational study. The amount of research on the topic did not end there. Contemporary researchers have continued collecting data and developing theories in the subject area of motivation. The concept of â€Å"what motivates an employee† continues to intrigue researches. Data collected today is not a direct dispute to past theory but a reflection on the change of the times, the change in work environment. Clayton Alderfer modified Maslow’s â€Å"Hierarchy of Needs† introducing the ERG theory; consisting of three need categories: â€Å"existence†, relatedness, and â€Å"growth†. Alderfer’s theory suggested that movement between the need levels is quite simple, resulting in a regression when an individual does not meet a higher-order need. The ERG theory starts with â€Å"existence† identifying an individual’s need to satisfy hunger, thirst, and sex, correlating with Maslow’s lower level needs of physiological and safety. Alderfer classifies the need for successful relationships with others (family, friends, coworkers, etc) as â€Å"relatedness† aligning with Maslow’s theory of social need and esteem. Lastly, Alderfer categorized a person’s desire for personal growth and increasing competence as â€Å"growth†. (Robbins, 2005) The ERG theory although similar to Maslow’s Hierarchy of Needs theory differs in the philosophy that people can work towards fulfilling the different level of needs at the same time. Contrary to Maslow’s beliefs that an individual must obtain and satisfy a â€Å"need† before attempting to work on the next need level Alderfer theorized that these areas are simultaneous. In addition to believing that individuals worked on the different needs categories at the same time he also introduced the concept of â€Å"regression†. As an individual attempts to satisfy a high lever need frustration my occur resulting in regression to satisfying a lower level need. This idea proposes potential impacts in employee motivation. An employee can become frustrated if the opportunity for growth and development is not made available resulting in regression towards the â€Å"relatedness† need. This leads to â€Å"de-motivation† where as the employee loses focus on satisfying the â€Å"growth† need and begins to concentrate on building and maintaining relationships with others. David McClelland developed a motivational theory based on needs as well. McClelland proposed that individual needs are acquired over time and are shaped by the early experiences faced in life. McClelland identified three needs influence an individual’s motivation and effectiveness in an organization: achievement, power and affiliation. McClelland based his theory on the thought that everyone prioritizes needs differently. He also believed that needs were acquired based on an individual’s experiences in life. The need to succeed or excel (achievement) is associated with individuals who are driven to do things better. These individuals are motivated by personal responsibility in identifying solutions to problems, desire immediate feedback on their performance to determine if they are improving or not, and set challenging goals. The need for power is the desire to have impact, to be influential, and to control others†. (Robbins, 2005) Power can be categorized in one of two types; personal and institutional. Individuals driven to direct others when its unwanted is personal power, whereas those who want to organize the efforts of others to further the goals of the company is institutional power. Individuals who possess the need for institutional power are more effective leading employees than one who desires to control people. Individual who have a high need of power are likely to follow a path of continued promotion over time. Behaviors including enjoying being in charge, wanting to influence others, prefer competitive situations, and are more concerned with prestige and influence over others versus effective performance are associated with the need for power. And finally, McClelland identified the need for affiliation. People with the need for affiliation seek harmonious relationships, social approval, and need to feel accepted by other people. Individuals seeking to fulfill the affiliation need prefer to work in situations that provide social interaction; they enjoy being part of a group and tend to conform to the norm of the group. There are two types of motivation: intrinsic and extrinsic. Intrinsic motivation is when individuals are internally motivated to do something because it either brings them pleasure, or they believe it is important. Many of the motivational theories discussed in the first portion of this paper are associated with intrinsic motivation. Maslow, McGregor, Herzberg, Alderfer, and McClelland based their theories of behavior on individuals’ desire to satisfy basic and advanced needs. These desires are based on the individual’s level of personal satisfaction and the theory focuses on the natural tendency toward growth and development. Additional studies have been conducted with theories based on â€Å"extrinsic† motivation. Extrinsic motivation is when an individual is compelled to perform based on external factors like money, recognition, rewards, ect. Cognitive theories such as â€Å"Goal-Setting†, â€Å"Reinforcement†, and Equity have received a similar amount of attention as needs-based theories. Cognitive theory is based on the idea that â€Å"high intrinsic motivation levels are strongly resistant to the detrimental impacts of extrinsic rewards. No matter how interesting or exciting a job is there is still an expectation for some type of extrinsic payment. For those positions or jobs that fall in between the highly satisfying intrinsically and low level less interesting work cognitive theory may be more appropriate. (Robbins, 2005) Edwin Locke believed that the objective of working towards a goal is a key foundation in employee motivation. Locke introduced the â€Å"Goal-Setting† theory using the concept that setting goals offers an employee structure. Goals establish was needs to be done, and from this the individual understands how much effort is required to complete the task. As the goal becomes more challenging the effort required increases. Understanding this basic concept supports the theory that goals are valuable to the company in the respect that challenging goals leads to increased employee performance. Locke further suggests that employee involvement in goal setting increases the commitment and drive to obtain the goal. Taking a slightly different approach, the â€Å"Reinforcement† theory looks at the relationship between behavior and the consequences that arise from specific behaviors. The theory implies that individual behavior can be modified using different techniques such as positive reinforcement, avoidance, extinction, or punishment. â€Å"Reinforcement theory ignores the state of the individual and concentrates solely on what happens to a person when he or she takes some action†. (Robbins, 2005) This theory is based on the idea that is the physical, environmental stimuli that individuals are exposed to affects one’s behavior, their motivation does not come from within (emotions, feelings, desires, etc. The idea is to respond or do not respond to certain types of behavior. An example of reinforcement is when a frustrated child is throwing a temper tantrum, one of two reinforcement approaches can be used: Avoidance; the parent ignores the behavior in an attempt to show the tantrum will not be acknowledged and the tantrum will end. Or, punishment such as placing the child in time will reinforce that the type of behavior is unacceptable and will no t be tolerated. The theory is that the negative consequence of being in time out will deter similar behavior. An individual’s perception can play a large role in their job performance. The Equity theory states that employees compare their job process, the tasks required and their performance with other employees and react accordingly. Based on the comparison the employee may feel as though others are treated better, (increased pay, better working conditions, more/less hours) and tend to act accordingly. Employees will also compare their output in relation to the company’s input (reward) to determine if the input is equal to their effort. When there is a negative perception, or it felt that there is an inequality an individual may decide to decrease the amount of effort they put forward, look for work elsewhere, reduce the quality of their work or attempt to persuade co-workers perceptions. On the other side of the theory when employees perceive that they are being treated equitably or fairly they are more apt to be happy or satisfied resulting in increased participation/productivity. Given a thorough review of the different theories that have been developed, studied and documented there is not a quick, easy, or one size fits all answer to what motivates employees. Most often the typical response to this question is â€Å"money†. But surprisingly enough when employees are surveyed money is not the number one answer. (Robbins, 2005) Kenneth Kovach Ph. D. , discusses employee survey results in â€Å"Employee Motivation: Addressing a Crucial Factor in Your Organization’s Performance†. Ranking high on the scale is â€Å"full appreciation of work done†. (Kovach, 1995) Kovach compared results from an employee survey conducted in 1946 and in 1995, employees ranked â€Å"full appreciation of work done† number 1 and number 2 respectively. Obviously the change in times and work environment played a part in the slight change over the years. Kovach’s point is that based upon employee surveys money is not a hot topic, what seem to be on the minds of employees is interesting work, appreciation of work and the feeling of being in on things or involved. One approach to satisfy these desires is the use of recognition. Recognition, what is it? Webster’s dictionary defines â€Å"recognition† as â€Å"to recognize†, â€Å"to know†, â€Å"to admit the value†. To use this in today’s organizations recognition is about â€Å"noticing and honoring† one’s performance. Hansen, Smith, & Hansen, 2002) Employee recognition is the communication used to identify the positive performance or outcomes conducted for the organization. How do we correlate the use and effect of recognition with the different motivational theories? Hansen discusses Maslow’s concept of â€Å"expressive mode† theorizing that people are propelled by growth motivation rather than by deficiency motivation (lack of faith in human potential) Employees are not dependant on the extrinsic satisfaction, but rather dependant on their own personalities and hidden resources for their continued growth and development. Hansen, 2002) Simply put, individuals are motivated by acknowledgment of progress, growth and development, as well as performance. Similarly, Herzberg’s two-factor theory distinguishes between hygiene and motivator motivation factors. Hygiene factors correlate to job dissatisfaction, while motivator factors align with job satisfaction. Herzberg believed that job dissatisfaction and job satisfaction were not opposite each other, meaning that the lack of one did not result in the other. â€Å"Job dissatisfaction do es not mean that there isn’t â€Å"any† job satisfaction. Hygiene factors (rewards) can be observed when an employee is asked to complete a project with a promise of position advancement, versus recognition for achievement as a motivator factor that is basic to the job. Ultimately, the use of rewards corresponds to the use of â€Å"hygiene factors† just as the use of recognition signifies the use of â€Å"motivator† factors. (Hansen, 2002) Using the mind set that â€Å"we want employees to perform well, and, given the right environment, and incentives, employees also want to perform well†. Bobic & Davis, 2003) Reflecting on McGregor’s Theory Y, the managerial approach assumes first that people prefer to work and strive to perform, thus delegating responsibility to the employee allowing the worker to be creative, to have the opportunity to identify areas of concerns and find solutions. When this is accomplished with success, the manager recognizes the individual’s ability to perform. The result is employee recognition resulting in increased responsibility and accountability. McGregor supported Maslow’s theory that all humans had the potential to be creative, stating that â€Å"†¦ elf actualized creativity to be innovative†¦Ã¢â‚¬  (Bobic &Davis) Management has the ability to â€Å"motivate† an individual’s pursuit of self esteem, and self actualization through recognizing their ability to assume responsibility. Recognition of creativity and innovation will encourage the commitment and initiative the employee brings to company. â€Å"By strengthening and enhancing behaviors that are a source of differentiation and uniqueness, recognition serves a strategic function. (Hansen, 2002) Motivational theories differ in the way the concept of motivation is defined and controlled. Each theory has it basis, whether it is a â€Å"needs† based concept, or a â€Å"behavioral† concept. Just as humans are genuinely different, so are the theories. We can make general assumptions in regards to human character, trait, desires, and reactions but in the end what is definite is situational. There are many factors such as cultural background, environment, economics, and a person’s upbringing that potentially has an effect on what will motivate an individual. Reviewing the basic concept behind the theory of motivation and recognition you can identify some simple correlations. The reinforcement theory is not just about administering negative consequences. There are several different types of â€Å"behavioral† based programs available to address different concepts. For example a behavioral based safety program is built on the concept of recognizing safe behavior. Instead of focusing on the negative actions or unsafe attitudes of employees the program is established to recognize and reward safe behavior and encourage employee participation in identifying and correcting unsafe conditions. In the same manner, the reinforcement theory can enhance employee motivation towards work performance if a positive approach is used. Pointing out the negative performance ratings or avoiding a problem employee results in de-motivating the employee. Similarly, avoiding a problem employee gives the perception that the manager or company doesn’t care and fosters thinking of â€Å"why should I†? The last concept or theory to consider is the Equity theory. The basis for this theory is that employees expect a fair return for what they contribute to their job. This â€Å"fair return† is often evaluated based on what the return is for their effort. These individuals compare the input (reward/pay) by the company to the output (their effort) to determine if the reward warrants the effort put forth. Using the same concept employs also compare their input/outputs with their coworker to determine equality. If they feel that their coworker was given more for the same amount of work or less the employee will perceive this as unjust practices. Conclusion Motivation is â€Å"the processes that account for an individual’s intensity, direction, and persistence of effort in attaining a goal†. Robbins, pg. 170) Identifying what drives and contributes to employee motivation has been a topic for numerous researches, psychologists, and organizations alike over the last fifty to sixty years. During these years many motivational theories were developed to explain what motivates individuals. Theories based on â€Å"needs† principal were developed by researchers/psychologist such as Maslow, Herzberg, & McGregor. â€Å"Maslow professed that the specific needs of people that must be met in order for them to be motivated, thus improving productivity†. Herra, 2002) Additionally motivational theories were developed based on the concept of equity or reinforcement. The â€Å"Equity† theory represent the idea that equity is a perception of justice/equality based on what the employee puts out and receives in return. A comparison is made in regards as to performance/effort and what reward/recognition is received to determine if equality exist. Tasked with understanding what motivates employees organizations have spent a great amount of time, energy and resources identifying how to keep employees motivated under various, ever changing conditions. When asked what is of key importance employees respond with â€Å"recognition† (Robbins, 2005) Recognition of an employee’s accomplishments, performance and/or dedication to the organization results in increased productivity, continued support of the company’s goals, and positive employee attitude. Based on the motivational theories established, recognition, while not the only source of motivation seems to an easy, simplistic solution to improve employee motivation. Employee recognition serves two distinct purposes: enhance employee motivation as well as bond together other motivators presently used for business organizations. An employee’s wage is payment for doing a job, benefits are designed to preserve an employee’s well being, and rewards are used to compensate for completion of a specific task or organizational goal. Recognition pulls the three aspects together as a means for organizations to develop and maintain a strong employee workforce.

The Tort Law Free Essay Example, 17000 words

In the case of a police officer suspected a woman of solicitation and wanted to question her but she turned to go. He held her arm to prevent her from going but she scratched him instead. The lower court found the woman guilty but on appeal, the police officer was found to be liable for the battery for holding her arm although there was no injury on her part. Even if consent is initially present; battery will still lie if the result contemplated by the person who gave consent is not the same as the actual result of the force applied. In the case of Nash v Sheen [1953] CLY 3726, the Court held that the act of a hairdresser in applying tone-rinse to the claimant, which resulted in a change of hair color and rash to the customer when the latter specifically asked for a permanent amounted to battery although there was no intention to do harm. Applying the principles of the aforementioned cases to the present case, Gracie could be held liable for battery because when she deliberately hit Brenda, as a joke, with the ping-pong ball on the head, she applied direct force to the latter with intent and without Brenda s consent. We will write a custom essay sample on The Tort Law or any topic specifically for you Only $17.96 $11.86/page The definition of equipment as defined in the case of as anything that the employer has furnished to the employee for the purpose of having it used by the employee in the course of his work under the employment and even includes, in this case, a flagstone.