A

Project Report
on
Service Quality Dimensions in Luxury Automobile Industry

in partial fulfillment of the requirements of

the Dissertation Project of
Master of Management Studies
through
Rizvi Institute of Management Studies & Research

under the guidance of

Dr. Kalim Khan

Submitted by
Irfan Shaikh
MMS
Batch: 2014 2016.

INDEX
Sr No.

Table of Contents

Introduction to Luxury Automobile Sector in India

Major Players in Luxury Automobile Sector

Emerging Trends in Luxury Automobile Sector

Customer Experience Review for Major Luxury Car Brands

Review of Literature

Research Methodology

Data Analysis & Interpretation

Findings

Suggestions & Recommendations

10

Bibliography

Page No.

CHAPTER 6
6.1 Service Quality Dimensions in Luxury Automobile Industry
6.2 Need and significance
This research aims to investigate the relationship between the service quality and customer
satisfaction in Luxury Automobile Market by using SERVQUAL analysis. It also aims to examine
the influence and effect of applying quality service towards customer satisfaction and to identify
which of the five (5) dimensions of SERVQUAL has the greatest influence on customers
satisfaction. The five dimensions of SERVQUAL, which are tangibles, reliability, responsiveness,
assurance, and empathy, are the identified independent variables, while customer satisfaction as
the identified dependent variable. Each of the dimensions of SERVQUAL was tested to determine
and measure the relationship with customer satisfaction. Besides that, this study also wants to
concentrate on the customers perception and evaluation toward service performance in Luxury
Automobile in India.
Luxury market in India is gradually gaining attention. Though the 'buzz', this sector is generating
is disproportionately high in comparison to the size of the market, but it shows that the global
luxury brands do recognize the high potential of the Indian luxury markets. Till a decade back,
luxury retail was only meant for just a few. Over the years, India's increasing urbanization rate has
monetarily empowered the consumer which has further helped luxury market to set a firm foot for
itself. The luxury market is growing at a rapid pace in India with a compounded annual growth of
25%. At US$4.76 billion, the luxury market in India is set to touch three times its current size at
US$14.72 billion by 2015. The country has become the prime destination for top-notch global
brands, while many high-end luxury brands have quickly set up their shops here. Out of the all
luxury segments in India, the Luxury Car segment acquires the major share.
A recent Economic Times report reveals that India's luxury car market has grown eight times in
the last seven years from 4,000 units in 2007 to 33,000 units in 2014. Luxury car experts are
expecting this number to reach 100,000 units by 2020. Recovering from the slowdown of 2012
and 2013, the luxury car market in India has shown stronger growth than the mass market segment,
like other high-growth emerging markets such as Brazil, Mexico and Russia.

Even during the lean period, top luxury brands like BMW, Audi and Mercedes Benz have grown
at double-digit pace, making India one of the "strategic markets" in Asia.
The experts believe a chunk of the future growth could come from non- metro cities. Along with
the metropolitan centers, we foresee growth potential among the young achievers, predominantly
from tier 1 and tier 2 cities, which have a dynamic attitude and are technology savvy.
Understandably, India's rise in luxury car segment is prompting the big guys in the business to do
some strategic thinking. Mercedes Benz, for example, has doubled production capacity to 20,000
units annually and with fresh investments, increased its total tally to Rs 1,000 crore.
Quality, price, and service are three factors critical to the success of any sales effort. Most
companies take great care to offer to their customers, products of great quality, meeting various
quality standards. The price of a product is dictated by the demand for such a quality of the product.
As products offered by major players in most industries have become comparable in quality and
price, service quality is becoming an important differentiator.
So therefore the need and significance of this project was to study the relationship between service
quality and customer satisfaction in luxury automobile market and to find out the root cause for
not meeting customers expectation by the service providers. The idea was to get input about the
relationship between the SERVQUAL dimensions and its impact on customer satisfaction.

6.3 Project Objective

To study the relationship between the service quality and its impact on customer
satisfaction. It will focus on the relationship of the five independent variables of
SERVQUAL model which are tangibles, reliability, responsiveness, assurance and
empathy with the identified dependent variable; customer satisfaction.

6.4 Research Objectives

To determine the relationship between service tangibility and the customer

satisfaction in Luxury Automobile Industry.

To determine the relationship between service reliability and the customer

satisfaction in Luxury Automobile Industry.

To know the relationship between service responsiveness and the customer

satisfaction in Luxury Automobile Industry.

To explore the relationship between service assurance and the customer satisfaction
in Luxury Automobile Industry.

To find out the relationship between service empathy and the customer satisfaction
in Luxury Automobile Industry.

To identify which is the best SERVQUAL dimension perceived by the customer in

Luxury Automobile Industry.

6.5 Sampling Framework/Sampling Plan

There are five steps under sampling design which are determining the target population, setting
sampling frame and location, deciding the sampling elements, selecting sampling techniques
and determining the sampling size of respondents.
6.5.1 Sample Definition
A process used in statistical analysis in which a predetermined number of observations will be
taken from a larger population. The methodology used to sample from a larger population will
depend upon the type of analysis being performed. To qualify as a respondent one should have
purchased a luxury vehicle at least once.
6.5.2 Sampling Technique
In this study, Convenience sampling technique was selected. To assess customer's perceptions
on quality of service in Luxury Automobile Industry, researcher has to get organized sampling
frame. To accomplish this, researcher will go through customer records and history to identify
the customers information such as email, home or office address.
6.5.3 Sample size
The sample size is 100 respondents in the city of Mumbai.
Location: Mumbai
Target Group: 70 Male and 30 Female respondents will be interviewed
Age Group

Sample Size

Male

Female

20-30

15

10

30-40

25

20

40-50

25

15

10

50-60

35

25

10

Sampling Justification
India's demographics have turned the country into one of the youngest luxury /premium car
markets in the world. Top luxury brands like Audi, Mercedes-Benz and BMW which together
comprise more than 95% of India's luxury car market say that India's luxury car demographic
is among the youngest even in the emerging market pecking order.
Take Audi which, with its more than 10,000 unit tally, is now the No. 1 luxury car brand in the
Indian market. India tops the list of young markets for Audi across the world, piping hot spot China
to the game. Said Joe King, head, Audi India: "The average age of luxury car buyer in India is
around 35 years. Globally, it would be 43-45 years. In the Audi ecosystem, India is the youngest
market.
Typically, emerging markets show a younger profile compared to developed ones. The average
age globally and in India has come down after the introduction of new models like the A Class and
B Class. In India, the average age for the A Class for example is 34-35 years but for the S Class it
would be 45-50 years. So it differs model to model.
6.6

Data Collection Methods

In this study, there are two ways in gathering data which is through primary and secondary data.
6.6.1 Primary Data
Primary data will be organized for the specific purpose of addressing the problem on hand. The
primary data that will be used is questionnaire survey whether by paper. While distribution of the
questionnaire, the researcher need cooperation and clarification from the respondents. Besides that,
primary data refer as first-hand information or data obtained originally by the researcher on the
variables of interest for the specific purpose of the study. Questionnaires can be efficient data
collection mechanism of what and how to measure the selected variables. Those questionnaires
were administered personally to the respondents.

6.6.2 Secondary Data

Secondary data refers to information gathered by other party that already conduct a previous
study. It helps researchers to get better understand and define the problems. To obtain
secondary data, the previous researchers study can be obtained through online journal
databases. Furthermore, the relevant articles and other sources through internet and online
library are aiding in the research. It requires inexpensive cost, time consuming and energy to
the researcher. The advance of technology helps a lot in finding resources especially the
Internet.
6.7

Hypotheses of the Study

This study will test the following hypotheses:H1: There is a significant correlation between service tangibility and customer satisfaction
in Luxury Automobile Industry.
H2: There is a significant correlation between service reliability and customer satisfaction
in Luxury Automobile Industry.
H3: There is a significant correlation between service responsiveness and customer
satisfaction in Luxury Automobile Industry.
H4: There is a significant correlation between service assurance and customer satisfaction
in Luxury Automobile Industry.
H6: There is a significant correlation between service empathy and customer satisfaction in
Luxury Automobile Industry.

6.8 Data Analysis

Quantative and Qualitative
6.9 Scope and limitations
1. The research is restricted only to the city of Mumbai & may not show a pattern applicable
to the whole nation.
2. It is also assumed whatever information is given by the consumer in the questionnaire holds
true and correct.