Re: Why Do We Have Variants in a Car?
Why do we have so many variants in every Car Model?
Why not only 1 or 2 variants at the max?
Wont this strategy help in cutting the costs and overheads of the company, which will bring the prices down and benefit both the company as well as the customer.
If a brand is mainly dealing in the mass-market, then, the brand has to be considerate of the fact that not everyone has the budget to opt for the Top Spec, fully loaded version and neither the buyer wants a basic model which misses on the host of features i.e both in terms of safety & comfort. Every buyer has a different set of requirement and budget when buying a car or for that matter any FMCG product. Hence, the brand, makes sure that for every buyer they have a product to offer. Example: A buyer has a budget of say 30K and wants a LED TV and he/she approaches a brand for purchase so if the brand doesn't have product to offer in his/her price range then the buyer may walk away there by ruling off a sale which shall impact on the sales revenue of the brand. In a
mass-market segment, the competition is high so every brand makes sure that it gets maximum number of customers/buyers which can happen only if the brand offers a product in possibly every price band. As far as the lowering of prices goes with less number of variants, the company/brand might be able to reduce their operational cost and overall investment but then the sales & revenue will also take a hit because in today's market, the customer/buyer doesn't settle for just a single product easily, they look for choices and accordingly choose the product. It is to be noted, among the buyers & sellers, the buyer has an upper hand. The comfort level of the buyer hold utmost importance.
Why not make 2 variants in which:
Variant 1: All the safety features + 2/3 Comfort and Convenience features
Variant 2: All the safety features + All Comfort and Convenience features
As I mentioned above buddy, every buyer has a different set of requirement, budget and needs during the purchase process hence, the buyer will choose the product which suits his/her need. If one brand has a product suiting the needs well and good but if the brand doesn't have one then buyer has all the time to look for other available brands that offer products matching to their requirements. In India, the mass-market segment of cars is quite customer centered because brands look to capture the buyer base. There are buyers who'll opt for base model (without safety & less comfort), there will be buyers who'll opt for a mid model (with optional or mediocre safety and comfort) and there will be buyers who'll go for fully loaded model. So, the brand has to make this product line up in such a way that there is something for everyone.
Another important aspect here is the sales target. In mass-market segment, the minimum sales target for a month for one person can be minimum 100-120 cars so if there are just 2 variants then the sales guys will have a tough time selling them because they won't have anything to offer the buyer base that looks for the middle spec models. And as you may have observed, the middle spec sells the most followed by the top spec in 2nd place.
If i am buying a 20 lac base model of a 'D' segment car, i would at least want the Safety, Comfort and Convenience features which i get on the top-end variant of a 'C' segment car.
C&D segments are luxury segments which isn't in the reach of majority of car buyers because today the pricing in these segments specially of top spec and one below top spec model has kind of gone beyond the purchase limits of majority. Look at the pricing of Top Spec Honda CITY Top Model for example. At one stage, the Honda CITY was well within buyer's reach but now it has gone much higher. In C-Segment as well, the need of multiple variants is there because there are people who'll like to own a big sedan and choose a variant that suits their pocket and needs.
Coming to D Segment, this is where the niche buyers come in picture. The sales target of D-Segment cars is like 50-60 cars in a month. Not every brand in India looks to cater in D-Segment because the sales / revenue generation is more in mass-market segments. So, as D segment has defined buyer base so they can maintain 2 variants in their model line up because their dealers do not have to hard sell to every walk-in in the showroom. Therefore, the brands catering to D-Segment buyers in a market will keep the line up short and simple.
However, with the changing economic stature of the working class and easy availability of financial resources possibly there will be a rise in buying of D-Segment cars too which may make the brands of this segment re-think on their strategy w.r.t the model line up and sales.
Regards
Akash