PROJECT REPORT ON STUDY OF MARKETING STRATEGIES S UB MI TT E D T O : Prof. Rakesh Gupta Faculty of Sales & Distribution Mgmt. I IL M (G S M) , G RE A TE R NO I DA Omshyam Phogat Rakesh Khatri Rakesh Ranjan
OF MARUTI UDYOG LIMTED S U BM I TT E D B Y :Abhisek Swain Adarsh Tyagi A n k i t G ir o tr a
ACKNOWLEDGEMENT
We take this opportunity to convey our sincere thanks and gratitude to all those who have directly or indirectly helped and contributed towards the completion o f this project. First and foremost, I would like to thank Mr. Rakesh Gupta Professor, IILM-GSM, Greater Noida for his constant guidance and support throughout this project. Dur ing the project, we realized that the degree of relevance of the marketing strat egies being imparted in the industry is very high. The marketing strategies stud y enabled us to get a better understanding of the nitty-gritty of the company. We would also like to thank my batch mates for the discussions that we had with them. All these have resulted in the enrichment of our knowledge and their input s have helped us to incorporate relevant issues into our project.
India Four Wheeler Industry The Four-Wheeler Industry in India has not quite matched up to the performance o f its counterparts in other parts of the world. The primary reason for this has been the all-pervasive regulatory atmosphere prevailing till the opening up of t he industry in the mid-1990s. The various layers of legislative Acts sheltered the industry from external competit ion for a long time. Moreover, the industry was considered low-priority as cars were thought of as unaffordable luxury". Post Liberalization, the car market in India have been in a burgeoning stage with all types of cars flooding the market in order to meet the demands of Indian customers who are increasingly exposed t o state of the world automobiles and want the best when it comes to purchasing a car. It is expected that by 2030, the Indian car market will be the 3rd largest car m arket across the globe. The main encouraging factors for the success story of th e car market in India are the increase in the opportunity for new investments, t he rise in the GDP rate, the growing per capita income, massive population, and high ownership capacity. The liberalization policies followed by the Indian gove rnment had been inviting foreign players to participate in the car market in Ind ia. The recent trend within the new generation to get work in the software based sector has led to the rise in the income level and change in the lifestyle sign ificantly, which has further led to the increase in the demand for luxurious car s among them. The car Market in India is crowded with all varieties of car models like the sma ll cars, mid-size cars, luxury cars, super luxury cars, and sports utility vehic les. Initially the most popular car model dominating the Car Market in India was the Ambassador, which however today gave way
to numerous new models like Hyundai, Honda, Mercedes-Benz, BMW, Bentley and many others. Moreover, there are many other models of cars in the pipeline, to be la unched in the car market in India. Some of the leading brands dominating the car market in India at present are Hindustan Motors, Reva Electric Car Co., Fiat In dia Private Ltd., Daimler Chrysler India Private Ltd, Ford India Ltd., Honda Sie l Cars India Ltd., General Motors India, Hyundai Motors India Ltd., Skoda Auto I ndia Private Ltd., and Toyota Kirloskar Motor Ltd. Since the demand for foreign cars are increasing with time, big brands like Mercedes Benz, Volkswagen, Aston Martin, Ferrari, and Rolls-Royce have long since made a foray into the Indian ca r market. Facts about Indian Car Market: Although the Indian automobile industry has come a long way since the deregulati on in 1993, India does not rank well among its global peers in many respects, vi z., the contribution of the sector to industrial output, number of cars per pers on, employment by the sector as a percentage of industrial employment, number of months' income required to purchase a car, and penetration of cars. Figure:-Passenger vehicle stock per 100 people India is far behind from other countries with just 6.9 cars per 100 persons, whi le Unites States has 76.9 cars on per 100 persons. Among developing countries, R ussia also stands ahead than India and China with 16.3 cars per 100 persons.
Two things that stunted growth of the Indian automobile industry in the past ha ve been low demand and lack of vision on the part of the original equipment manu facturers (OEMs). However, the demand has picked up after the liberalization of the regulatory environment, and global OEMs who enjoy scale economies both in terms of manufacturing and researc h and development (R&D) entered the Indian market. This has resulted in a signif icant shift in the way business is conducted by suppliers, assemblers and market ers. Maruti suzuki India LTD Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliam ent, to meet the growing demand of a personal mode of transport caused by the la ck of an efficient public transport system. It was established with the objectiv es of - modernizing the Indian automobile industry, producing fuel efficient veh icles to conserve scarce resources and producing indigenous utility cars for the growing needs of the Indian population. A license and a Joint Venture agreement were signed with the Suzuki Motor Company of Japan in Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well as Japanese management practices. Suzuki was preferred for the joint venture bec ause of its track record in manufacturing and selling small cars all over the wo rld. There was an option in the agreement to raise Suzuki ’s equity to 40%, which
it exercised in 1987. Five years later, in 1992, Suzuki further increased its e quity to 50% turning Maruti into a non-government organization managed on the li nes of Japanese management practices. Maruti created history by going into production in a record 13 months. Maruti is the highest volume car manufacturer in Asia, outside Japan and Korea, having pr oduced over 5 million vehicles by May 2005. Maruti is one of the most successful automobile joint ventures, and has made profits every year since inception till 2000-01. In 2000-01, although Maruti generated operating profits on an income o f Rs 92.5 billion, high depreciation on new model launches resulted in a book lo ss. COMPANY HISTORY AND BACKGROUND
The Evolution Maruti’s history of evolution can be examined in four phases: two phases during pre-liberalization period (1983-86, 1986-1992) and two phases during post-libera lization period (1992-97, 1997-2002), followed by the full privatization of Maru ti in June 2003 with the launch of an initial public offering (IPO).The first ph ase started when Maruti rolled out its first car in December 1983. During the in itial years Maruti had 883 employees, a capital of Rs. 607 mn and profit of Rs. 17 mn without any tax obligation. From such a modest start the company in just a bout a decade (beginning of second phase in 1992) had turned itself into an auto mobile giant capturing about 80% of the market share in India. Employees grew to 2000 (end of first phase 1986), 3900 (end of second phase 1992) and 5700 in 199 9. The profit after tax increased from Rs 18.67 mn in 1984 to Rs. 6854.54 mn in 1998 but started declining during 1997-2001. During the pre-liberalization period (1983-1992) a major source of Maruti’s stre ngth was the wholehearted willingness of the Government of India to subscribe to Suzuki’s technology and the principles and practices of Japanese management. La rge number of Indian managers, supervisors and workers were regularly sent to th e Suzuki plants in Japan for training. Batches of Japanese personnel came over t o Maruti to train, supervise and manage. Maruti’s style of management was essent ially to follow Japanese management practices.
The Path to Success for Maruti was as follows: (a) teamwork and recognition that each employee’s future growth and prosperity i s totally dependent on the company’s growth and prosperity (b) strict work discipline for individuals and the organization (c) constant efforts to increase the productivity of labor and capital (d) steady improvements in quality and reduction in costs (e) customer orientation (f) long-term objectives and policies with the confidence to realize the goals (g) respect of law, ethics and human beings. The “path to success” translated in to practices that Maruti’s culture approximated from the Japanese management pra ctices. OBJECTIVE OF THE COMPANY Maruti’s marketing objective is to continually offer the customer new products a nd services that: Reduce the customer’s cost of ownership of their cars; andanticipate and addres s the customer’s needs and preferences in all aspects and stages of car ownershi p, to provide what they refer to as the “360 degree customer experience.” They sell ten models with more than 50 variants in segments A, B, C, and utility vehicle segment of the Indian passenger car market. Of these, they manufacture nine models and import the Grand Vitara as a completely built unit from Suzuki i n Japan. Their models and variants are designed to address the changing demands of the market and are periodically upgraded in technology, styling and features. To take advantage of the brand recognition associated with their products, they retain the brand name of the product through various stages of product upgrades over time. For example, the version of the Maruti 800 brand currently sold in t he market is a significantly upgraded version, in terms of technology, design an d styling, of the Maruti 800 launched in 1983. G RA D E CAR A Maruti 800 A O MN I B Z en B Wagon R B A lt o
C C C C Utilit Utility y Utilit Utility y
E st e em B al e no V er s a S WI F T Vehic Vehicle le GYPSY GYPSY KING KING Vehicl Vehicle e GRAND GRAND VITAR VITARA A
Vision The leader in the India Automobile Industry, Creating Customer Delight and Share holder’s Wealth; A pride of India” Mission To provide maximum value for money to their customers through continuous improve ment of products and services. Maruti has a network of 391 sales outlets across 230 cities all over India. The service network covers 1,113 towns and cities, bolstered by 2,142 au thorized service outlets.The company s change in strategy and emphasis on develo ping effective marketing communications was their highlights.
MARKET SCENERIO (2008-09)
The company vouches for customer satisfaction. For its sincere eff orts it has been rated (by customers)first in customer satisfaction among all ca r makers in India for ten years in a row in annual survey. Maruti Suzuki India L imited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader o f the Indian car market for over two decades. During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 we re exported. In all, over six million Maruti cars are on Indian roads since the first car was rolled out on 14 December 1983.
MARUTI UDYOG LIMITED PRODUCT PROFILE OF MARUTI SUZUKI INDIA LIMITED LTD. ALTO - LET’S GOS The alto is a great combination of economy, practicality and success on the roads of Europe, it exemplifies the benchmark nd reliability in a compact car. This is testified by the 24 rd set on August 3, 2003 of covering 3082 kms in 24 hours at 128 kmph. BALENO – SURPRISING PERFORMANCE
styling. A runaway in build, quality a hour endurance reco an average speed of
India’s true performance sedan is upwardly mobility, redefined. The 13 advanced noise reduction technologies ensure the cabin is quiet and peaceful. The flat to rques of 132 Nm allows one to enjoy 94 bhp of refine power. Enjoying a cult foll owing among those who appreciate technology as an art form, the Baleno is a trul y awesome performer. GRAND VITARA XL – 7 - LIVE THE GRAND LIFE Live the grand life with the new GRAND VITARA XL –7. This luxurious 7 seater, 4 wheel drive sports utility vehicle comes equipped with a powerful V6 engine, 166 bhp of power and 236 Nm of torque. Which enables you to conquer any terrain wit h utmost ease? Enjoyed by both the adventurous and successful, the new restyled Grand Vitara XL –7 is now available in India directly imported from Suzuki, Japa n. GYPSY – ADVENTURES UNLIMITED Be it the wild outdoors or the urban jungle, the Gypsy King glide by with ease. The adventurous streak runs through all the gypsy siblings. This 1300 cc off – r oad vehicle combines the raw of 80 bhp (at 6000rpm) with superb 4 – wheel drive maneuverability and a rugged frame (it’s available in both soft and hard top ver sions). It’s useful fifth gear, of course, delivers over drive for on – road cru ising. OMNI – FITS ALL The Omni is truly India’s Original Multipurpose Vehicle. Today it is available i n six avatars – 5 seater, 8 seater, cargo, ambulance, CNG and LPG. It meets dive rse needs across different user segments and can double up both as a people carr ier and a goods carrier. This faithful workhouse is easy on the pocket, yet toug h on the job. VERSA - THE JOY OF TRAVELLING TOGETHER Equipped with twin AC, large sliding doors and flexible seating, the Versa enco urages families and friends to enjoy long drives and gateways together. In spite of being so spacious, its design allows for easy maneuverability in the city. MARUTI 800 - CHANGE YOUR LIFE It has gone beyond being just a car; it has actually changed the lifestyles of c ountless people, by bringing the joy of motoring to millions across the length a nd the breadth of the country. Standing testimony to this claim is the fact that more than 2 millions Maruti 800s have been sold till date. Today, India best se lling continues to be the final word on value and economy at the entry-level seg ment. WAGON R-INSPIRIED ENGINEERING The Wagon R’S original tall body design, spaciousness, ergonomically designed in terior and flexible seating all set it apart from other cars. It complements the buyers unique personality enables him to live a multi-dimensional life by the s heer excellence of its engineering and its versatility. ZEN –SURRENDER TO THE NEW ZEN If you are looking for a car with drop – dad looks and unmatched performances, t hen you need look beyond the Zen. With its new contemporary and aggressive look, the Zen preserves its core values of driver appeal, unmatched reliability and e conomy. 600000 satisfied customers in India and around the world bear testimony to this fact. ESTEEM – PERFORMANCE, QUALITY AND FUEL EFFICIENCY Undoubtedly one of India’s favorite entry – level “C” class vehicles, the esteem is the perfect combination of power, comfort and economy. It’s also the preferr ed choice of rally drivers across the country for its performance and reliabilit y. The Esteem offers the option of an 85 bhp petrol engine for those who desire power and a 57 bhp diesel for those who value economy. Not surprisingly, it tops its class in quality surveys. SWIFT- YOU ARE THE FUEL The hot looks, sexy interiors, the automatic climate control, the air bags, the power steering moreover, all so affordable. The wait is over. Swift has entered MUL’s portfolio. What are you waiting for? A-STAR-STOP @ NOTHING
Powered by state of art 998 cc engine, it’s the best fuel efficient car in its c ategory with, mileage coming around 20km per liter. SX-4 – MEN ARE BACK Revolutionary European design, world class “drive by wire” .Most spacious in its class, Steering mounted audio controls; with maximum ground clearance, high on safety with dual airbags. SWIT DZIRE- THE HEART CAR A car having everything you desire stunning looks, luxurious interiors, enough p ower to capture your heart. Just slide in desire and take it for a spin. Its sur e steal many of hearts including yours. Ritz -“Live the Moment” Model of 2009 known by the name Suzuki splash having attractive back with maximu m ground clearance Targeting:
Maruti was introduced targeting the middle class Its target segment are well depicted in its product pyramid profit model Targeting was based on a variety of factors such as style, color, Price preference, features etc.
4Ps:
Product Price Place Promotion
Product Strategy:Portfolio of 12 products Five product lines Product Line Products A1 800 A2 Alto, Zen ,Wagon –R, Swift, A-star A3 D ZiRE, Sx4 SUV Vitara, Gypsy C - Class Omni, Versa Price Strategy:The price of the Maruti car is between Rs. 210000 to Rs. 1500000. Maruti – 800 is the lowest price car of this company. Alto, Omni, Wagon R, are also the low price car of the company, Zen & Esteem are the mid price car of the company. But Grand Vitara is the high price model of the company. The price of car is decide d according to its product variety, quality, design etc. Place strategy:600 New car sales outlets covering 393 cities. 265 ‘Maruti True Value’ outlets spread across 166 cities. 2628 Maruti Authorized Service Stations, covering 1220 cities. Tie up with Adani group for exporting 200,000 units through Mnudra port Gujarat Suggested Place strategy:400 new car sales outlets in next three years. S150 new true value shops in next three years. 1200 new Maruti Authorized Service Stations in next three years. Tie up with other distributors for Exports.
Promotion Strategy:Advertising • TV Ads • Print Ads • Radio Ads “Ghar Aa Gaya Hindustan” “India Comes Home in Maruti Suzuki.” Information Advertising, alternative Advertising Options BTL - Sponsorships TV shows - India’s Got talent Place Advertising – Bill boards Sales Promotions Product warranties Premiums (gifts) Trade shows 2,628The number of workshops that provide customers with maintenance sup port in 1220 cities. Product life cycle Introduction Stage:Market share and growth is slight. Substantial research and development costs have been incurred Marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels Highly unlikely that companies will make profits on products. Example- A-star, Swift Dzire 2)Growth Stage:Characterized by rapid growth in sales and profits. Profit arise due to an increase in output(economics of scale). Significant promotional resources are traditionally invested in products that are firmly in the growth stage. Cheaper for businesses to invest in increasing their market share. Example- Swift, Zen estilo 3) Maturity Stage Competition is most intense as companies fight to maintain their market share. Any significant moves are likely to br copied by competitiors. The maturity stage is the time when most profit is earned by the market as a whole. Any expenditure on research and development is likely to improve product ion efficirncy and quality. Example- Alto, Wagon-R 4) Decline Stage Market is shrinking, reducing the overall amount of profit. Possible to take out some production cost, to transfer production to a c heaper facility, sell the product into other, cheaper markets. Depending on whether the product remains profitable, accompany may decid e to end the product. Care should br taken to control the amount of stocks of the product. Exmaple- Baleno,
Esteem
SWOT Analysis:
STRENGTHS Bigger name in the market Trust of People Maruti Udyog Ltd. is the market leader for more than a decade. Has a great dealership chain in the market. Better after sales service Low maintenance cost of vehicle WEAKNESSES Exports are not that good. Lesser diesel models in the market compare to others Global image is not that big OPPURTUNITIES Great opportunities to go global with success of Swift and SX4 allover Introduction of more diesel models. The diesel car segment is growing Opportunity to grow bigger by entering into bigger car markets Already a market leader so great opportunity to be the king of market in every
stage of industry THREATS Foreign companies entering market; so a bigger threat from MNCs. To the market share, as many big names are coming in the industry There is hardly any diesel models Rs. 1 lakh – Rs. 1.5 lakh car
Portfolio Analysis MATRIX OF MARUTI SUZUKI STAR: The Company has long run opportunity for growth and profitability. They ha ve high relative market share and high Growth rate. SWIFT, SWIFT DESIRE AND ZEN ESTILO is the fast growing and has pote ntial to gain substantial profit in the market. QUESTION MARK: there are also called as wild cats that are new products with pot ential for success but there cash needs are high And cash generation is low. In auto industry of MARUTI SX4, GRAND VITARA, ASTAR there has been improve the organization reputation As they want successful not only in Indian market but as well as in global marke t. CASH COW: It has ey generate cash MARUTI 800, ALTO EN ESTALIO and
high relative market share but compete in low growth rate as th in excess of their needs. AND WAGNOR have fallen to ladder 3 & 4 due to introduction of Z A STAR.
DOG: The dogs have no market share and do not have potential to bring in much ca sh.BALENO, OMINI, VERSA There business have liquidated and trim down thus
The strategies adopted are that are harvest, divest and drop. BCG matrix can serves as a simple tool for viewing a corporation’s business port folio at a glance , and may serves as a starting point for discussing resource allocation among strategic business units.
McKINSEY 7s FRAMEWORK:
Strategy: The plan devised to maintain and build competitive advantage o ver the competition. Structure: The way the organization is structured and who reports to who m. Systems: The daily activities and procedures that staff members engage i n to get the job done. Shared Value: called “superordinate goals” when the model was first deve loped, these are the core values of the company that are evidenced in the corpor ate culture and the general work ethic. Style: The style of leadership adopted. Staff: The employees & their general capabilities. Skills: The actual skills and competencies of the employees working for the company.
THE PRODUCTION PROCESS AT MARUTI
Strategy Their strategy is to capture the rural market by employing women who belong to t heir local community through which their product can reach to local consumers. T
heir strategy is to provide work for women to create awareness among confined co nsumers Process They started with Project Shakti in which their basic aim is to educate a rural person about their products through women who belongs to t heir own local community and who can communicate well in their language with the m. In this way many educated women get work in rural sector and on the other han d HLL Corporate Social Responsibility (CSR) also increases towards society by in troducing educative programs for the benefit of the rural sector KEY STRATEGIC INITIATIVES BY MARUTI A) TURNAROUND STRATEGIES MARUTI FOLLOWED Maruti was the undisputed leader in the automobile utility-car segment sector, c ontrolling about 84% of the market till 1998. With increasing competition from l ocal players like Telco, Hindustan Motors, Mahindra & Mahindra and foreign playe rs like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the whole auto industry struc ture in India has changed in the last seven years and resulted in the declining profits and market share for Maruti. At the same time the Indian government perm itted foreign car producers to invest in the automobile sector and hold majority stakes. In the wake of its diminishing profits and loss of market share, Maruti initiate d strategic responses to cope with India’s liberalization process and began to r edesign itself to face competition in the Indian market. Consultancy firms such as AT Kearney & McKinsey, together with an internationally reputed OD consultant , Dr. Athreya, have been consulted on modes of strategy and organization develop ment during the redesign process. The redesign process saw Maruti complete a Rs. 4000 mn expansion project which increased the total production capacity to over 3,70,000 vehicles per annum. Maruti executed a plan to launch new models for di fferent segments of the market. In its redesign plan, Maruti, launches a new mod el every year, reduce production costs by achieving 85-90% indigenization for ne w models, revamp marketing by increasing the dealer network from 150 to 300 and focus on bulk institutional sales, bring down number of vendors and introduce co mpetitive bidding. Together with the redesign plan, there has been a shift in bu siness focus of Maruti. When Maruti commanded the largest market share, business focus was to “sell what we produce”. The earlier focus of the whole organizatio n was "production, production and production" but now the focus has shifted to " marketing and customer focus". This can be observed from the changes in mission statement of the organization: 1984: "Fuel efficient vehicle with latest technology". 1987: "Leader in domestic market and be among global players in the overseas mar ket". 1997: "Creating customer delight and shareholders wealth". Focus on customer care has become a key element for Maruti. Increasing Maruti se rvice stations with the scope of one Maruti service station every 25 km on a hig hway. To increase its market share, Maruti launched new car models, concentrated on marketing and institutional sales. Institutional sales, which currently cont ributes to 7-8% of Maruti’s total sales. Cost reduction and increasing operating efficiency were another redesign variable. Cost reduction is being achieved by reaching an indigenization level of 85-90 percent for all the models. This would save foreign currency and also stabilize prices that fluctuate with exchange ra tes. However, change in the mindset was not as fast as required by the market. M aruti planned to reduce costs, increase productivity, quality and upgrade its te chnology (Euro I&II, MPFI). In addition, it followed a high volume production of about 400,000 vehicles / year, which entailed a smooth relationship between the workers and the managers.
Post 1999, the market structure changed drastically. Just before this change, Ma ruti had wasted two crucial years (1996-1998) due to governmental interventions and negotiation with Suzuki of Japan about the break-up of the share holding pat tern of the company. There was a change in leadership, Mr. Sato of Suzuki became the Chairman in June 1998, and the new Mr.J. Khatter was appointed as the new J oint MD. Khatter was a believer in consensus decision making and participative s tyle of management.As a result of the internal turmoil and the changes in the ex ternal environment, Maruti faced a depleting market share, reducing profits, and increase in inventory levels, which it had not faced in the last 18 years. After their fall in market share they redesigned their strategies and through th eir parent company Suzuki they learned a lot.The organizational learning of Maru ti was moderately successful, the cost was relatively inexpensive as Maruti had its strong Japanese practices to fall back upon. With the program of organizatio nal redesign, rationalization of cost and enhanced productivity, Maruti bounced back to competition with 50.8% market share and 40% rise in profit for the FY200 2-2003. B) CURRENT STRATEGIES FOLLOWED BY MUL PRICING STRATEGY - CATERING TO ALL SEGMENTS Maruti caters to all segment and has a product offering at all price points. It has a car priced at Rs.1,87,000.00 which is the lowest offer on road. Maruti get s 70% business from repeat buyers who earlier had owned a Maruti car. Their pric ing strategy is to provide an option to every customer looking for up gradation in his car. Their sole motive of having so many product offering is to be in the consideration set of every passenger car customer in India. Here is how every p rice point is covered.
S l . N o. 1 2 3 4 5
6
7 8
BR A ND V A RI A NT S PRICE IN DELHI (Rs.) GRAND VITARA X L7 16 , 97 , 0 00 . 0 0 MARUTI BALENO LX i 5 ,7 2 ,0 0 0. 0 0 V Xi 6, 4 2, 0 00 . 0 0 MARUTI ESTEEM LX 4, 6 6, 0 00 . 00 VX 5 , 39 , 00 0 . 00 MARUTI VERSA DX 4 , 19 , 0 00 . 0 0 D X2 4, 5 8, 0 00 . 0 0 MARUTI SWIFT LX i 3 ,9 5 ,0 0 0. 0 0 V Xi 4, 0 5, 0 00 . 0 0 Z Xi 4, 8 5, 0 00 . 0 0 MARUTI WAGON-R LX 3, 3 5, 0 00 . 00 L Xi 3, 6 2, 0 00 . 0 0 AX 4 , 63 , 00 0 . 00 V Xi 3, 8 7, 0 00 . 0 0 VXi VXi ABS ABS 4,20 4,20,0 ,000 00.0 .00 0 MARUTI GYPSY ST 5, 0 6, 0 00 . 00 HT 5 , 29 , 00 0 . 00 MARUTI ZEN D 3 , 58 , 00 0 .0 0 LX 3 , 41 , 00 0 . 00 L Xi 3, 6 8, 0 00 . 0 0
V Xi 3, 9 3, 0 00 . 0 0 9 MARUTI OMNI CA R G O 2 , 0 5, 0 00 . 00 CARGO LPG 1, 8 3, 0 0 0. 0 0 5 S E AT E R 2 , 27 , 0 00 . 00 8 S E AT E R 2 , 21 , 0 00 . 00 XL 5 SEATER 2 , 19 , 00 0 . 00 XL 8 SEATER 2 , 31 , 00 0 . 00 10 MARUTI ALTO ST A N DA R D 2 , 38 , 00 0 .0 0 LX 2 , 74 , 00 0 . 00 L Xi 2, 9 4, 0 00 . 0 0 11 MARUTI 800 STD. MPFI 2 , 1 4, 0 00 . 00 A/C MPFI 2 , 37 , 0 00 . 00 II. OFFERING ONE STOP SHOP TO CUSTOMERS OR CREATING DIFFERENT REVENUE STREAMS Maruti has successfully developed different revenue streams without making huge investments in the form of MDS, N2N, Maruti Insurance and Maruti Finance. These help them in making the customer experience hassle free and helps building custo mer satisfaction. Maruti Finance: In a market where more than 80% of cars are financed, Maruti has strategically entered into this and has successfully created a revenue stream f or Maruti. This has been found to be a major driver in converting a Maruti car s ale in certain cases. Finance is one of the major decision drivers in car purcha se. Maruti has tied up with 8 finance companies to form a consortium. This conso rtium comprises Citicorp Maruti, Maruti Countrywide, ICICI Bank, HDFC Bank, Kota k Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.( erstwhile-A shok Leyland Finance). Maruti Insurance : Insurance being a major concern of car owners. Maruti has bro ught all car insurance needs under one roof. Maruti has tied up with National In surance Company, Bajaj Allianz, New India Assurance and Royal Sundaram to bring this service for its customers. From identifying the most suitable car coverage to virtually hassle-free claim assistance it s your dealer who takes care of eve rything. Maruti Insurance is a hassle-free way for customers to have their cars repaired and claims processed at any Maruti dealer workshop in India. True Value – Initiative to capture used car market Another significant development is MUL s entry into the used car market in 2001, allowing customers to bring their vehicle to a Maruti True Value outlet and e xchange it for a new car, by paying the difference. They are offered loyalty dis counts in return.This helps them retain the customer. With Maruti True Value cus tomer has a trusted name to entrust in a highly unorganized market and where che ating is rampant and the biggest concern in biggest driver of sale is trust. Mar uti knows its strength in Indian market and has filled this gap of providing tru st in Indian used car market. Maruti has created a system where dealers pick up used cars, recondition them, give them a fresh warranty, and sell them again. Al l investments for True Value are made by dealers. Maruti has build up a strong n etwork of 172 showrooms across the nation. The used car market has a huge potent ial in India. The used car market in developed markets was 2-3 times as large as the new car market. N2N: Car maintenance is a time-consuming process, especially if you own a fleet. Maruti’s N2N Fleet Management Solutions for companies, takes care of the A-Z of automobile problems. Services include end-to-end backups/solutions across the v ehicle’s life: Leasing, Maintenance, Convenience services and Remarketing. Maruti Driving School (MDS): Maruti has established this with the goal to captu re the market where there is inhibition in buying cars due to inability to drive the car. This brings that customer to Maruti showroom and Maruti ends up creati ng a customer. III. REPOSITIONING OF MARUTI PRODUCTS Whenever a brand has grown old or its sales start dipping Maruti makes some face
lifts in the models. Other changes have been made from time to time based on mar ket responses or consumer feedbacks or the competitor moves. Here are the certai n changes observed in different models of Maruti. Omni has been given a major facelift in terms of interiors and exteriors two mon ths back. A new variant called Omni Cargo, which has been positioned as a vehicl e for transporting cargo and meant for small traders. It has received a very goo d response from market. A variant with LPG is receiving a very good response fro m customers who look for low cost of running. Versa prices have been slashed and right now the lowest variant starts at 3.3 la cs. They decreased the engine power from 1600cc to 1300cc and modified it again considering consumers perception. This was a result of intensive survey done all across the nation regarding the consumer perception of Versa. Esteem has gone through three facelifts. A new look last year has helped boost u p the waning sales of Esteem. Baleno was launched in 1999 at 7.2 lacs. In 2002 they slashed prices to 6.4 lacs . In 2003 they launched a lower variant as Baleno LXi at 5.46 lacs. This was to reduce the price and attract customers. Wagon-R was perceived as dull boxy car when it was launched. This made it a big failure on launch. Then further modifications in engine to increase performance and a facelift in the form of sporty looking grills on the roof. Now it’s of the most successful models in Maruti stable. Zen has been modified four times till date. They had come up with a limited peri od variant called Zen Classic. That was limited period offer to boost short term sales. Maruti 800 has so far been facelifted two times. Once it came with MPFi technolo gy and other time it came up with changes in front grill, head light, rear light s and with round curves all around. IV. CUSTOMER CENTRIC APPROACH Maruti’s customer centricity is very much exemplified by the five times consecut ive wins at J D Power CSI Awards. Focus on customer satisfaction is what Maruti lives with. Maruti has successfully shed off the public- sector laid back attitu de image and has inculcated the customer-friendly approach in its organization c ulture. The customer centric attitude is imbibed in its employees. Maruti dealer s and employees are answerable to even a single customer complain. There are ins tances of cancellation of dealerships based on customer feedback. Maruti has taken a number of initiatives to serve customer well. They have even changed their showroom layout so that customer has to walk minimum in the showro om and there are norms for service times and delivery of vehicles. The Dealer Sa les Executive, who is the first interaction medium with the Maruti customer when the customer walks in Maruti showroom, is trained on greeting etiquettes. Maru ti has proper customer complain handling cell under the CRM department. The Maru ti call center is another effort which brings Maruti closer to its customer. The ir Market Research department remains on its toes to study the changing consumer behaviour and market needs.Maruti enjoys seventy percent repeat buyers which fu rther bolsters their claim of being customer friendly. Maruti is investing a lot of money and effort in building customer loyalty programmes. V. COMMITTED TO MOTORIZING INDIA Maruti is committed to motorizing India. Maruti is right now working towards mak ing things simple for Indian consumers to upgrade from two-wheelers to the car. Towards this end, Maruti partnerships with State Bank of India and its Associate Banks took organized finance to small towns to enable people to buy Maruti cars . Rs. 2599 scheme was one of the outcomes of this effort. Maruti expects the compact cars, which currently constitute around 80% of the ma
rket, to be the engine of growth in the future. Robust economic growth, favorabl e regulatory framework, affordable finance and improvements in infrastructure fa vor growth of the passenger vehicles segment. The low penetration levels at 7 pe r thousand and rising income levels will augur well for the auto industry. Maruti is busy fine-tuning another innovation. While researching they found that rural people had strange notions about a car - that the EMI (equated monthly in stalments) would range between Rs 4,000 and Rs 5,000. That, plus another Rs 1,50 0-2,000 for monthly maintenance, another Rs 1,000 for fuel (would be the cost of using the car). To counter that apprehension, the company is working on a novel idea. Control over the fuel bill is in the consumer s hands. But, maintenance n eed not be. Says Khattar: "What the company is doing now is saying how much you spend on fuel is in your hands anyway. As far as the maintenance cost is concern ed, if you want it that way, we will charge a little extra in the EMI and offer free maintenance."
VI. DISINVESTMENT AND IPO OF MARUTI UDYOG LIMITED It was a long and tough journey, but a rewarding one at the end. A reward worth Rs 2,424 crore, making it the biggest privatization in India till date. The size of Maruti’s sell- off deal is proof of its success. On the investment of Rs 66 crore it made in 1982, when Maruti Udyog Limited (MUL) was formally set up, the sale represents a staggering return of 35 times The best part of the deal is the Rs 1,000 crore control premium the Government has been able to extract from Suz uki Motor Corporation for relinquishing its hold over India’s largest car compan y. Now looking at the strategy point of it – for Suzuki, of course, complete con trol of MUL means a lot. Maruti is its most profitable and the largest car compa ny outside Japan. Suzuki will now be in the driver’s seat and will not have to m ind the whims and fancies of ministers and bureaucrats. “Decisions will now beco me quicker. The response to changing market conditions and technological needs w ill be faster,” says Jagdish Khattar, managing director, MUL. After the disinves tment Suzuki became the decision maker at MUL. They flowed fund in India for the major revamp in MUL. Quoting from the report that appeared in The Economic Time s, 4th April 2005, The Indian car giant Maruti Udyog Limited has finalized its two mega investment plans — a new car plant and an engine and transmission manufacturing plant. Both the projects will be implemented by two different companies. At its meeting the company s board approved a total investment of Rs3,271.9 crore for these two ve ntures, which will be located in Haryana. The above signifies when GOI was a major stakeholder in the MUL strategies which lead to investment have had a bureaucracy factor in it but after the disinvestm ent strategy followed is a TOP DOWN approach with a fast implementation. Suzuki s proposed two-wheeler facility in India, would start making motorcycles and scooters by the end of 2005 through a joint venture, in which Maruti has 51 per cent stake. The two-wheeler unit will have a capacity of 250,000 units a yea r. The disinvestment followed by IPO gives the insight in the fact that now all the strategic decisions are taken by Maruti Suzuki Corporation. Disinvestment had h elped by removing the red tape and bureaucracy factor from its strategic decisio n making process. VII. REALISATION OF IMPORTANCE OF VEHICLE MAINTENANCE SERVICES MARKET In the old days, the company s operations could be boiled down to a simple three -box flowchart. Components came from the vendors to the factory where they w ere assembled and then sent out to the dealers . In this scheme, you know where
the company s revenues come from. The new scheme is more complicated. It revolv es around the total lifetime value of a car. Work on this began in 1999, when a MUL team, wondering about new revenue streams , traveled across the world. Says R.S. Kalsi, general manager (new business), MU L: "While car companies were moving from products to services, trying to capture more of the total lifetime value of a car, MUL was just making and selling cars ." If a buyer spends Rs 100 on a car during its entire life, one-third of that i s spent on its purchase. Another third went into fuel. And the final third went into maintenance. Earlier, Maruti was getting only the first one-third of the ov erall stream. As the Indian market matured, customers began to change cars faste r. Says Kalsi: "So the question was, if a car is going to see three users in, sa y, a life span of 10 years, how can I make sure that it comes back to me each ti me it changes hands ? So Maruti has changed gears to take a big share of this fi nal one-third spent on maintenance. Maintenance market has a huge market potenti al. Even after having fifty lakh vehicles on road Maruti is only catering to app roximately 20000 vehicles through its service stations everyday. For this they are conducting free service workshops to encourage consumers to co me to their service stations. Maruti has increased its authorized service statio ns to 1567 across 1036 cities. Every regional office is having a separate servic es and maintenance department which look after the growth of this revenue stream . VIII. PLAYING ON COST LEADERSHIP Maruti is the price dictator in Indian automobile industry. It’s the low cost pr ovider of car. The lowest car on road is from Maruti stable i.e. Maruti 800. Mar uti achieves this through continuous improvements in operational efficiency and productivity. The company has set itself (and its vendors) the target of a 50% improvement in productivity and a 30% reduction in costs in three years. The ability to keep lo wering the prices sets Maruti apart from other players in the league. Maruti spr ead the overheads over a larger base. The impressive sales and profits were the result of major efforts within the com pany. Maruti also increased focus on vendor management. Maruti consolidated its vendor base. This has provided its vendors with higher volumes and higher effici encies. Maruti does that by working with vendors, assuring them that for every d rop in price, volumes will go up. Maruti is now encouraging its vendors to devel op R&D capability for specialized components. Based upon such activities, produc t competitiveness in the market will further increase. Maruti also made strides in applying IT to manufacturing. A new Vehicle Tracking System improved efficiency on the shop floor and enhanced quality control. The e Nagare system, adopted from Suzuki Motor Corporation, smoothened Maruti’s Just In Time operations.
C) MAJOR FUTURE STRATEGIES I. PHASING OUT ZEN IN 2007 The launch of Swift and phasing out Zen is a strategic move. Alto was launched k eeping in mind that it will take over Maruti 800 market in future. Perhaps being the flagship product phasing out of Maruti 800 faced lots of resistance from de alers all over. Another reason behind not phasing out Maruti 800 was the fear of brand shift of customers to other competitor’s product. Swift was launched in M ay, 2005 in the price band starting from 4 lacs. Before launch of Swift Maruti m anagement had decided that they will phase out Zen since it had already came up
with two modifications. The major reason behind this decision was cannibalizatio n of Wagon R and Swift due to overlapping of price band. It is a rational decisi on to kill a product before it starts facing the decline stage in product cycle. Maruti is offering Rs. 3000.00 more margins to dealer on the sale of Wagon-R as compared to Zen. This is to let dealer push Wagon R instead of Zen. II. MARUTI PLANS FOR A BIG DIESEL FORAY The new car manufacturing company, called Maruti Suzuki Automobiles India Limite d, will be a joint venture between Maruti Udyog and Suzuki Motor Corporation hol ding a 70 per cent and 30 per cent stake respectively. The Rs1,524.2 crore plan t will have a capacity to roll out 1 lakh cars per year with a capacity to scale up to 2.5 lakh units per annum. The new car manufacturing plant will begin comm ercial production by the end of 2006. Maruti would set up a diesel engine plant at Gurgaon in line with its plan to be come a major player in diesel vehicles in a couple of years. This has been done in the wake of major competition from Tata Indica and meets the growing demand o f diesel cars in India. While the annual growth in the diesel segment was 13 per cent in the last three years, it was 19-20 per cent in the first quarter (April -June) of the current fiscal. Maruti has currently an insignificant presence in diesel vehicle. It will manufacture new generation CRDI (common rail direct inje ction) engines in collaboration with Fiat-GM Opel and engines will be of 1200 cc . The plant with a capacity to produce one lakh diesel engines would be operatio nal in 2006. At present, Peugeot of France, supplies diesel engines for Maruti s Zen and mid-sized Esteem models. This will further reduce the imported componen t in Maruti vehicles, making them more competitive in the Indian market. III. MARUTI PLANS FOR A NEW ENGINE AND TRANSMISSION PLANT The engine and the transmission plant will be owned by Suzuki Powertrain India L imited in which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog holding the balance. The ultimate total plant capacity would be three lak h diesel engines. However, the initial production would be 1 lakh diesel engines , 20,000 petrol engines and 1.4 lakh transmission assemblies. Investment in this facility will be Rs.1,747.7 crore. The commercial production will start by the end of 2006. IV. INDIA AS EXPORT HUB FOR MARUTI Three years back as an experiment, based on the increasing design capabilities o f suppliers in countries like India, McKinsey did an exercise to figure out just how much money could be saved if automobiles were to be made in overseas locati ons like India, Mexico and South Africa -- an automobile BPO, so to speak. The r esult was staggering: the industry stands to gain $ 150 billion annually in cost savings, and an additional $ 170 billion annually in new revenues once demand s hoots up following the drop in prices, and the combination of which means a 25 p er cent increase in existing revenue levels. According to the study, over 90 per cent of automobiles today are sold in the co untries they are made in, so there s a lot of money to be made by shifting the p roduction overseas. Till recently, just 100,000 cars produced in low-cost countr ies were exported to high-cost ones -- presumably this figure is going up now th at Altos from Maruti, Santros from Hyundai, Indicas from Tata Motors, and Ikons from Ford, among others, are being regularly exported out of India. Yet, as McKinsey points out, since it just costs $ 500 and just three weeks (and both figures are falling) to ship out a car to anywhere in the world, why produ ce cars in high-wage islands? If a car was produced in India instead of in Japan , the study says, it will cost 22-23 per cent less, after factoring in higher im port duties for components/steel, lower levels of automation, and transport cost s. In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since i
ts first export in 1986. Europe is the largest destination of Maruti’s exports a nd coincidentally after the first commercial shipment of 480 units to Hungary in 1987, the 300,00 mark was crossed by the shipment of 571 units to the same coun try. The top ten destination of the cumulative exports have been Netherlands, It aly, Germany, Chile, U.K., Hungary, Nepal, Greece, France and Poland in that ord er. The Alto, which meets the Euro-3 norms, has been very popular in Europe where a landmark 200,000 vehicle were exported till March 2003. Even in the highly devel oped and competitive markets of Netherlands, UK, Germany, France and Italy Marut i vehicles have made a mark. Though the main market for the Maruti vehicles is E urope, where it is selling over 70% of its exported quantity, it is exporting in over 70 countries. Maruti has entered some unconventional markets like Angola, Benin, Djibouti, Eth iopia, Morocco, Uganda, Chile, Costa Rica and El Salvador. The Middle-East regio n has also opened up and is showing good potential for growth. Some markets in t his region where Maruti is, are Saudi Arabia, Kuwait, Bahrain, Qatar and UAE. The markets outside of Europe that have large quantities, in the current year, a re Algeria, Saudi Arabia, Srilanka and Bangladesh. Maruti exported more than 51, 000 vehicles in 2003-04 which was 59% higher than last year. In the financial ye ar 2003-04 Maruti exports contributed to more than 10% of total Maruti sales. V. MARUTI EMERGING AS R&D HUB FOR SUZUKI MOTOR CORPORATION Japanese auto major Suzuki is all set to convert Maruti Udyog Ltd’s research and development (R&D) facility as its Asia hub by 2007 for the design and developme nt of new compact cars, according to a top official of the firm. The country’s l eading car manufacturer will make substantial investments to upgrade its researc h and development centre at Gurgaon in Haryana for executing design and developm ent projects for Suzuki. This includes localisation, modernisation and greater u se of composite technologies in upcoming models. The company will be hiring more software engineers and technocrats to handle Suz uki’s R&D projects. Investment would be more in terms of manpower than in infras tructure, which is already in place. Apart from working on innovative features, the R&D teams will focus on latest technologies using CAD-CAM tools to roll out new models that will meet the needs of MUL’s diverse customers in the future. The reasons as to why it can be good for R&D is that:Firstly the cost involved in R&D and infrastructure is low in India as compared to other countries. Also the technical skills are abundantly available; again at a cheaper cost. Secondly, India is growing as an export hub along with the Indian market growing aggressively into becoming an attractive one for investors. Thirdly, Suzuki’s investment in India, is also important as it has completely di vested now as a result MUL will now become a 100% subsidiary of Suzuki in the co ming year.
KEY SUCCESS FACTORS (1)The Quality Advantage Maruti Suzuki owners experience fewer problems with their vehicles than any othe r car manufacturer in India (J.D. Power IQS Study 2004). The Alto was chosen No. 1 in the premium compact car segment and the Esteem in the entry level mid - siz
e car segment across 9 parameters. (2)A Buying Experience Like No Other Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189 cities, with a workforce of over 6000 trained sales personnel to guide MUL custo mers in finding the right car. (3)Quality Service Across 1036 Cities In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7 parameters: least problems experienced with vehicle serviced, highest service qu ality, best in-service experience, best service delivery, best service advisor e xperience, most user-friendly service and best service initiation experience. 92% of Maruti Suzuki owners feel that work gets done right the first time during service. The J.D. Power CSI study 2004 also reveals that 97% of Maruti Suzuki o wners would probably recommend the same make of vehicle, while 90% owners would probably repurchase the same make of vehicle.
(4)One Stop Shop At Maruti Suzuki, customers will find all car related needs met under one roof. Whether it is easy finance, insurance, fleet management services, exchange- Maru ti Suzuki is set to provide a single-window solution for all car related needs. (5) The Low Cost Maintenance Advantage The acquisition cost is unfortunately not the only cost customers face when buyi ng a car. Although a car may be affordable to buy, it may not necessarily be aff ordable to maintain, as some of its regularly used spare parts may be priced qui te steeply. Not so in the case of a Maruti Suzuki. It is in the economy segment that the affordability of spares is most competitive, and it is here where Marut i Suzuki shines. (6)Lowest Cost of Ownership The highest satisfaction ratings with regard to cost of ownership among all mode ls are all Maruti Suzuki vehicles: Zen, Wagon R, Esteem, Maruti 800, Alto and Om ni. (7) Technological Advantage It has introduced the superior 16 * 4 Hypertech engines across the entire Maruti Suzuki range. This new technology harnesses the power of a brainy 16-bit comput er to a fuel-efficient 4-valve engine to create optimum engine delivery. This me ans every Maruti Suzuki owner gets the ideal combination of power and performanc e from his car.
COMPETITIVE FORCES IN INDIAN PASSENGER CAR MARKET Critical Issues and Future Trends The critical issue facing the Indian passenger car industry is the attainment of break-even volumes. This is related to the quantum of investments made by the p layers in capacity creation and the selling price of the car. The amount of inve stment in capacities by passenger car manufacturers in turn depends on the produ ction
strategies of the car manufacturers. Setting up integrated manufacturing facilit ies may require higher capital investments than establishing assembly facilities for semi knocked down kits or complete knocked down kits. In recent years, even though the ratio of sales to capacity (an important indicator of the ability to reach break-even volumes) of the domestic car manufacturers have improved, it i s still low for quite a few car manufacturers in India. India is also likely to increasingly serve as the sourcing base for global automotive companies, and aut omotive exports are likely to gain increasing importance over the medium term. H owever, the growth rates are likely to vary across segments. Although the Mini s egment is expected to sustain volumes, it is likely to continue losing market sh are; growth in the medium term is expected to be led largely by the Compact and Mid-range segments. Additionally, in terms of engine capacity, the Indian passen ger car market is moving towards cars of higher capacity. This apart, competitio n is likely to intensify in the SUV segment in India following the launch of new models at competitive prices. Maruti Suzuki is one of India s leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% of the company was owned by the Indian government , and 54.2% by Suzuki of Japan. The Indian government held an initial public off ering of 25% of the company in June 2003. As of May 10, 2007, Govt. of India sol d its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog. Maruti Udyog Limited (MUL) was established in February 1981, though the actual p roduction commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei ca r which at the time was the only modern car available in India, its only compet itors- the Hindustan Ambassador and Premier Padmini were both around 25 years ou t of date at that point. Through 2004, Maruti has produced over 5 Million vehicl es. Marutis are sold in India and various several other countries, depending upo n export orders. Models similar to Marutis (but not manufactured by Maruti Udyog ) are sold by Suzuki and manufactured in Pakistan and other South Asian countrie s. The company annually exports more than 50,000 cars and has an extremely large do mestic market in India selling over 730,000 cars annually. Maruti 800, till 2004 , was the India s largest selling compact car ever since it was launched in 1983 . More than a million units of this car have been sold worldwide so far. Current ly, Maruti Alto tops the sales charts and Maruti Swift is the largest selling in A2 segment.
Due to the large number of Maruti 800s sold in the Indian market, the term "Maru ti" is commonly used to refer to this compact car model. Till recently the term "Maruti", in popular Indian culture, was associated to the Maruti 800 model. Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for over two decades. Its manufacturing facilities are located at two facilities Gurgaon and Manesar s outh of New Delhi. Maruti’s Gurgaon facility has an installed capacity of 350,00 0 units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year and a Diesel En gine plant with an annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a combined capability to produce over 700,000 units annually. More than half the cars sold in India are Maruti cars. The company is a subsidia ry of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti. The r est is owned by the public and financial institutions. It is listed on the Bomba y Stock Exchange and National Stock Exchange in India. During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti cars are on Indian roads since the first car was rolled out on December 14, 1983. Maruti Suzuki offers 15 models, Maruti 800, Omni,Esteem, Baleno, Alto, Versa, Ri tz, Gypsy, A Star, Wagon R, Zen Estilo, Swift, Swift Dzire, SX4, and Grand Vitar a. Swift, Swift dzire, A star and SX4 are maufactured in Manesar, Grand Vitara i s imported from Japan as a completely built unit (CBU), remaining all models are manufactured in Maruti Suzuki s Gurgaon Plant. Suzuki Motor Corporation, the parent company, is a global leader in mini and com pact cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean a nd fuel efficient. Maruti is clearly an “employer of choice” for automotive engineers and young man agers from across the country. Nearly 75,000 people are employed directly by Mar uti and its partners. The company vouches for customer satisfaction. For its sincere efforts it has be en rated (by customers)first in customer satisfaction among all car makers in In dia for nine years in a row in annual survey by J D Power Asia Pacific. Maruti Suzuki was born as a government company, with Suzuki as a minor partner t o make a people s car for middle class India. Over the years, the product range has widened, ownership has changed hands and the customer has evolved. What rema ins unchanged, then and now, is Maruti’s mission to motorise India. Pressure started mounting on Indira and Sanjay Gandhi to share the details of th e progress on the Maruti Project. Since country s resources were made available by mother to her son s pet project. A delegation of Indian technocrats was assig ned to hunt a collaborator for the project. Initial rounds of discussion were he ld with the giants of the automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor Corporation was at that time a small player in the four wheeler automobile sector and had major share in the two wheeler segment. Suzuki s bid was considered negligible. In the initial rounds of discussion the giants had their bosses present and in t he later rounds related to the technical discussions executives of these automob ile giants were present. Osamu Suzuki, Chairman and CEO of the company ensured t hat he was present in all the rounds of discussion. Osamu in an article writes t hat it subtly massaged their (Indian delegation) egos and also convinced them ab out the sincerity of Suzuki s bid. In the initial days Suzuki took all steps to ensure the government about its sincerity on the project. Suzuki in return recei ved a lot of help from the government in such matters as import clearances for m anufacturing equipment (against the wishes of the Indian machine tool industry t hen and its own socialistic ideology), land purchase at government prices for se tting up the factory Gurgaon and reduced or removal of excise tariffs. This help ed Suzuki conscientiously nurse Maruti through its infancy to become one of its flagship ventu
BUSINESS STRATEGY They intend to continue to focus on the small car segment, while offering produc ts in most segments of the Indian passenger car market. They aim to achieve thei r principal objectives by pursuing the following business strategies: Maintain and enhance their product range: They intend to utilize Suzuki’s expert ise in small car technology to produce new variants of their existing models and to upgrade their products with contemporary technology and features. Increase reach and penetration: They plan to continue to utilize their extensive sales and service network to increase the reach, in terms of geographical sprea d, and penetration, in terms of sales volumes, of their products across India. Increased availability of automobile finance: They continue to seek opportunitie s to expand the size of the Indian passenger car market, especially in the small car segment, through facilitating easy availability of automobile finance. To t hat end, they have recently entered into an agreement with the State Bank of Ind ia. Secure repeat purchases by offering a “360 degree customer experience”: On the b asis of their belief that securing repeat purchases from an existing customer re quires less expenditure than acquiring a new customer, they aim to provide custo mers with a “one-stop shop” for automobiles and automobile-related products and services. Continue to benchmark their manufacturing capabilities: They plan to continue to benchmark our manufacturing capabilities with the most efficient car manufactur ing facilities of Suzuki and its subsidiaries. Continue to reduce costs to offer more competitive products: Cost competitiveness has been, and continues to be, central to their strategy as the leading manufacturer in the small car segment to expand the size of the mar ket by offering competitively priced, high quality products. The components of t his strategy are: Higher levels of localization Vendor participation in cost reduction Cost reduction on warranties Reduction in initial investment cost Reduction in number of vehicle platforms Achieve further cost reduction through higher productivity Lower cost of ownership: Through their business strategies, they seek to reduce the consumer’s cost of ow nership of their cars, which comprises the cost of purchase, the cost of fuel an d maintenance, including spare parts and repairs, during the life of the vehicle , insurance, and resale value. NEW INITIATIVES IN MARUTI SUZUKI
LIMITED (one stop shop to meet all your needs)
In an effort to become a complete car company, Maruti has entered the car insura nce business as well. It offers the customer all the advantages of settling insu rance claims directly with any of the company’s authorized dealers. This business provides complete fleet solutions to corporate and institutions. B randed Maruti N2N, this service includes the following: customized car policies, economical car leasing, maintenance, servicing, registration, insurance, emerge ncy assistance, accident management and eventual re-sale of cars. MARUTI FINANCE Maruti Finance offers the best finance packages to consumers across the entire M
aruti range. The service is being extended across the country in a phased manner . MARUTI GENUINE ACCESSORIES A single point of contact,Hassle-free transactions,Emergency Assistance ,Virtual ly Cashless Repairs Post accident repairs and insurance support at any dealer wo rkshop MARUTI TRUE VALUE Maruti has taken its first steps in the pre-owned car business under the brand n ame of Maruti True Value. Using their technological expertise, network support a nd the experience they have gained in the last 18 years, the company ensures the customers gets great value and completes the transaction zero hassles. EXTENDED WARRANTY 4 years or 80,000 kms Can bought anytime during primary warranty, best at time of purchase. ANYTIME MARUTI Maruti Suzuki has also set up state-of-the-art call centers (operational in Delh i, Gurgaon, Mumbai, Chennai, Bangalore and Hyderabad) Branded Anytime Maruti, th is 24 hour help-line clarifies all doubts and queries regarding Suzuki any time of the day or night CONCLUSION The price of a car is just one-third of what it cost you over its lifetime. Runn ing and maintaining it make up the other two-thirds. Take into account resale va lue and its real cost becomes clear. Maruti Suzuki stands for value as much as i t stands for performance. In spite of rising input costs, we try our best to kee p prices down. Their running costs and resale values are unbeatable too. Nothing matches the delight their cars deliver. In the JD Power CSI study 2005, 85% of Maruti Suzuki owners stated that they would definitely recommend the car they dr ive to someone else. Infact, you don’t buy a Maruti Suzuki. You invest in it. After the rash of new cars launches the past two years, the relative lull in the auto industry is showing up in the customer satisfaction indices. According to the 2005 four-wheeler Total Customer Satisfaction (TCS) study conducted by the s pecialist division of TNS Automotive, the automobile ownership experience or cus tomer ownership experience has declined in all areas compared to 2004. The stud y is one of the largest syndicated automotive studies in India, representing the responses of more than 7,000 new car buyers. The comprehensive study covers ove r 50 models with customer evaluations taken in the key areas of sales satisfacti on, product quality, vehicle performance and design, after-sales service, brand image, and cost-of-ownership. The TCS index score provides a measure of satisfac tion and loyalty a given model enjoys with its customers. According to TNS Auto motive, the decline is predominantly for older, small and entry mid-size car mod els. The ageing of these models seems to be posing a stiffer challenge for manuf acturers to sustain past performance levels at a time when customer expectations are rising sharply.
BIBLIOGRAPHY BOOKS
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Strategic Management and Business Policy by Thomas L. Wheelen J. David Hunger Krish Rangarajan
NEWS PAPERS THE ECONOMIC TIMES THE TIMES OF INDIA MAGAZINES BUSINESS INDIA INDIA TODAY INTERNET WEBSITES
www.scribd.com www.google.com www.marutisuzuki.com
