Akash Suzuki Project Final( to Be Printed)

7/30/2019 Akash Suzuki Project Final( to Be Printed)

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PROJECT REPORT ON

MARKETING STRATEGIES OF MARUTI SUZUKI

SUBMITTED BY

AKASH SHUKLA

T.Y.B.M.S.

2012 - 13

PROJECT GUIDE

SUMBUL

SUBMITTED TO

UNIVERSITY OF MUMBAI

VIDYALANKAR SCHOOL OF INFORMATION TECHNOLOGY

(AFFILIATED TO UNIVERSITY OF MUMBAI)

VIDYALANKAR MARG, WADALA (E),

MUMBAI 400 037


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M A R K E T I N G


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A Project Report on

MARKETING STRATEGIES OF SAMSUNG

Submitted By

AKASH SHUKLA

T.Y.B.M.S Semester V

2012 - 13

Submitted To

University of Mumbai

Vidyalankar School of Information Technology

(Affiliated to University of Mumbai)

Vidyalankar Marg, Wadala (E),

Mumbai 400 037


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VIDYALANKAR SCHOOL OF INFORMATION TECHNOLOGY(Affiliated to Mumbai University)

This is to certify thatMr./Ms. _________________________________ of B.M.S

Semester _____ has undertaken & completed the project work titled

______________________________ during the academic year

__________ under the guidance of Mr./Ms. _______________

submitted on _________ to this college in fulfillment of the curriculum of

Bachelor of Management Studies, University of Mumbai.

This is a bonafide project work & the information presented is True &

original to the best of our knowledge and belief.

PROJECT COURSE EXTERNAL PRINCIPALGUIDE CO-ORDINATOR EXAMINER


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DECLARATION

Vidyalankar School of Information Technology

(Affiliated to University of Mumbai)

Vidyalankar Marg, Wadala (E),

Mumbai 400 037

I AKASH SHUKLA of Vidyalankar School of Information

Technology, T.Y.B.M.S Semester V hereby declare that I have

completed the project on MARKETING STRATEGIES OF MARUTI

SUZUKI in academic year 2012 - 13

The information submitted is true and original to the best of my

knowledge

Signature of the Student,

AKASH SHUKLA

ACKNOWLEDGMENT


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I hereby acknowledge all those who directly or indirectly helped me to

draft the project report. It would not have been possible for me to complete the

task without their help and guidance

First of all I would like to thank the principal Dr. Rohini Kelkar Madam

and the coordinator Prof. Vijay Gawde Sir who gave me the opportunity to do

this project work. They also conveyed the important instructions from the

university from time to time. Secondly, I am very much obliged of Prof. [Name

of Project Guide] for giving guidance for completing the project

Then I must mention the person who co-operated with me Deepak Shide,

Ground Manager of Sai Service Andheri. They not only rendered time out of

their busy scheduled but also answered my queries without hesitation. He gave

me information on their system of working in their organisation and told me

how Promotional Strategies are done in their organisation.

Last but not the least, I am thankful to the University of Mumbai for

offering the project in the syllabus. I must mention my hearty gratitude towardsmy family, other faculties and friends who supported me to go ahead with the

project.

EXECUTIVE SUMMARY

What comes to your mind first when u come across the term MARUTISUZUKI, it always absolutely has to be Maruti 800, best known as The

Middle class car of India.


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Leading Growth as the market leader, MUL led the growth inthe passenger car sectorlast year. Marutis sales went up 30% to4,72,000/- units.

It is observed that, 46% of the customers are of opinion that Marutishould improve in quality, and 16% of the opinion that Maruti should

improve in price.

The company annually exports more than 50,000 cars and has anextremely largedomestic market in India selling over 730,000 cars

annually.

Maruti 800, till 2004, wasthe India's largest selling compact car eversince it was launched in 1983.

More than amillion units of this car have been sold worldwide so far.Currently, Maruti Alto tops thesales charts and Maruti Swift is thelargest selling in A2 segment

Due to the large number of Maruti 800s sold in the Indian market, theterm"Maruti" is commonly used to refer to this compact car model.


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INTRODUCTION TO THE STUDY

Aim of doing the project

To find the marketing strategies of Maruti Suzuki To learn about the strategies how they market their new products.

Objective of doing the project

1. To find out the market share of Maruti Suzuki 2. To study competitors of Maruti Suzuki 3. To study the marketing strategies of Maruti Suzuki

Limitation of doing the project:

1. It was difficult to get the information

2. Less Co operation from the organization

Methodology of data collection:

1. Questionnaire

2. Talks with aruti Suzuki Officials

3.Internet


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TABLE OF CONTENTS

Sr.No. Particulars PageNo.

1. INTRODUCTION

2. HISTORY OF MARUTI UDYOG

3. OTHER PRODUCTS OF MARUTI SUZUKI

4. TIMELINE

5. COMPETITORS

6. 7 Ps OF MARUTI SUZUKI

7. SWOT ANALYSIS

8. BRAND POSITIONING

9. ETHICAL ISSUES

10. COMPANY PROFILE

11. FUTURE STRATEGIES

12. FUTURE CHALLENGES


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13. INDUSTRY ANALYSIS

14 CURRENT SCENARIO

15 KEY STRATEGIES

16 CASE STUDY

17 ADD ON SERVICES

18 SUGGESTIONS

19

LIMITATIONS

20 QUESTIONNAIRE

21 CONCLUSION

22 BIBLOGRAPHY


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MARKETING STRATEGIES

OF

MARUTI SUZUKI

SWIFT


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MARUTI SUZUKI SWIFT

INTRODUCTION

Maruti Udyog Limited

Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation ofJapan, has been the leader of the Indian car market for about twodecades. Its manufacturing plant, located some 25 km south of NewDelhi in Gurgaon, has an installed capacity of 3,50,000 units per annum,with a capability to produce about half a million vehicles.

The company has a portfolio of 11 brands, including Maruti 800, Omni,premium small car Zen, international brands Alto and WagonR, off-roader Gypsy, mid size Esteem, luxury car Baleno, the MPV, Versa,Swift and Luxury SUV Grand Vitara XL7.

In recent years, Maruti has made major strides towards its goal ofbecoming Suzuki Motor Corporation's R and D hub for Asia. It hasintroduced upgraded versions of WagonR, Zen and Esteem, completelydesigned and styled in-house.Maruti's contribution as the engine of growth of the Indian autoindustry, indeed its impact on the lifestyle and psyche of an entire

generation of Indian middle class, is widely acknowledged. Itsemotional connect with the customer continues

Maruti tops customer satisfaction again for sixth year in a row accordingto the J.D. Power Asia Pacific 2005 India Customer Satisfaction Index(CSI) Study.The company has also ranked highest in India Sales Satisfaction Study.

The company's quality systems and practices have been rated as a

"benchmark for the automotive industry world-wide" by A V Belgium,global auditors for International Organisation forStandardisation. In


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keeping with its leadership position, Maruti supports safe driving andtraffic management through mass media messages and a state-of-the artdriving training and research institute that it manages for the DelhiGovernment.

The company's service businesses including sale and purchase of preowned cars (TrueValue), lease and fleet management service forcorporates (N2N), Maruti Insurance and Maruti Finance are now fullyoperational.. These initiatives, besides providing total mobility solutionsto customers in a convenient and transparent manner, have helpedimprove economic viability of The company's dealerships.

The company is listed on Bombay Stock Exchange and National Stock

Exchange.

The objectives of MUL then were: Modernization of the Indian Automobile Industry. Production of fuel-efficient vehicles to conserve scarce resources. Production of large number of motor vehicles which was necessary

for economic growth.

Production / R & D

Spread over a sprawling 297 acres with 3 fully-integrated productionfacilities, the Maruti Udyog Plant has already rolled out over 4.3 millionvehicles. In fact, on an average, two vehicles roll out of the factory everyminute. And it takes on an average, just 14 hours to make a car. Moreimportantly, with an incredible range of 11 models available in 50variants, there's a Maruti Suzuki made here to fit every car-buyer'sbudget. And dream.


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TIMELINE OF MARUTI UDYOG

1981- MARUTI UDYOG LTD was incorporated on under theINDIAN COMPANIES ACT, 1956.

1982- License and Joint Venture agreement signed between MarutiUdyog Ltd. & Suzuki Motor Corporation Japan(SMC).

1987- First lot of 500 cars exported to Hungary1992- SMC increases its stake in Maruti to 50 percent.2002- Maruti Finance in Mumbai with 10 Finance companies is

introduced.Childrens park inaugurated in Delhi.SMC acquires majority stake in MUL (increases to 54.2%).

2003- IPO (JUNE- ISSUE oversubscribed 11.2 times)Maruti gets listed on BSE and NSE- July.

2006- New car plant and the diesel engine facility commencesoperations during 2006-2007 at Manesar, Haryana.In November Maruti inaugurated a new Institute of DrivingTraining and Research( IDTR) set up as a collaborative

project with Delhi Government at Sarai Kale Khan in SouthDelhi.

2007- Board of Directors give approval to new name MUL to becomeMaruti Suzuki India Limited.Corporate Social Responsibility: adopts three villages in Manesar

2008- M-800 crosses 25 lakh mark.MSIL celebrates its Silver Jubilee.MSIL launches National Road Safety Program.

2009- A-STAR or Suzuki Alto debuts at Geneva Motor Show salesbegins.Capacity to manufacture expanded from 800,000 to a millionunits( Gurgaon plus Manesar plants) annually.


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HISTORY

The Evolution

Marutis history of evolution can be examined in four phases: two phases during pre-liberalization period (1983-86, 1986-1992) and two phases during post-liberalization period(1992-97, 1997-2002), followed by the full privatization of Maruti in June 2003 with thelaunch of an initial public offering (IPO).

The first phase started when Maruti rolled out its first car in December 1983. During the initialyears Maruti had 883 employees, a capital of Rs. 607 mn and profit of Rs. 17 mn without anytax obligation.

From such a modest start the company in just about a decade (beginning of second phase in1992) had turned itself into an automobile giant capturing about 80% of the market share inIndia. Employees grew to 2000 (end of first phase 1986), 3900 (end of second phase 1992) and5700 in 1999.

The profit after tax increased from Rs 18.67 mn in 1984 to Rs. 6854.54 mn in 1998 but starteddeclining during 1997-2001.

During the pre-liberalization period (1983-1992) a major source ofMarutis strength was thewholehearted willingness of the Government of India to subscribe to Suzukis technology andthe principles and practices of Japanese management.

Large number of Indian managers, supervisors and workers were regularly sent to the Suzukiplants in Japan for training. Batches of Japanese personnel came over to Maruti to train,supervise and manage.

Marutis style ofmanagement was essentially to follow Japanese management practices. The Path to Success for Maruti was as follows: (A)teamwork and recognition that each employees future growth and prosperity is totally

dependent on the companys 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 into

practices that Marutis culture approximated from the Japanese management practices.


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Maruti adopted the norm of wearing a uniform of the same color andquality of the fabric for all its employees thus giving an identity.

All the employees ate in the same canteen. They commuted in the samebuses without any discrimination in seating arrangements. Employeesreported early in shifts so that there were no time loss in-between shifts.

Attendance approximated around 94-95%. The plant had an open officesystem and practiced on-the-job training, quality circles, kaizen activities,teamwork and job- rotation.

Near-total transparency was introduced in the decision making process.There were laid-down norms, principles and procedures for groupdecision making.

These practices were unheard of in other Indian organizations but theyworked well in Maruti. During the pre- liberalization period the focuswas solely on production.

Employees were handsomely rewarded with increasing bonus as Marutiproduced more and sold more in a sellers market commanding an almost

monopoly situatio


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OTHER PRODUCTS OF

MARUTI SUZUKI

MARUTI SUZUKI SWIFTMODELS AVAILABLE FROM Rs 4.48 L - 6.80 L


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OTHER PRODUCTS OF

MARUTI SUZUKI

MARUTI SUZUKI RITZMODELS AVAILABLE FROMRs. 4.28L - Rs. 6.26 L


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OTHER PRODUCTS OF

MARUTI SUZUKI

MARUTI SUZUKI SWIFTMODELS AVAILABLE FROM Rs Rs 7.15 L - 9.43 L


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OTHER PRODUCTS OF

MARUTI SUZUKI

MARUTI SUZUKI ERTIGAMODELS AVAILABLE FROM Rs Rs 7.15 L - 9.43 L


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ABOUT MARUTI UDYOG

LTD.

MARUTI SUZUKI ERTIGAMODELS AVAILABLE FROM Rs Rs 3.02 L - 3.98


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COMPETITORS OF MARUTI UDYOG LTD.


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COMPETITORS OF MARUTI SUZUKI SWIFT

Hyundai Santro 1.1 CRDi

When Hyundai launch the Santros replacement in 2007, it will comewith the surprise addition of a 1.1 litre common rail diesel. Likely to bethe cheapest car on sale powered by a CRDi engine, this motor is thenew Accents CRDi unit less one cylinder. Incredibly powerful for its

size, this 1,120cc engine produces a whopping 75bhp. Unconfirmedreports talk of overall figures, city and highway combined, in excess of20 kilometres a litre.Hyundai Getz 1.5 CRDi

Not as attractive as the Swift, but more practical, with greater rear seatcomfort and more useable space, Hyundais diesel assault continues upthe range with its large hatch. The Getz will share its motors with thenew Accent/ Verna. Hyundai sell the Getz powered by a detunedversion of the new Accent motor in the European continent, and itslikely to be the case here as well. Producing 87bhp as against 108bhp,using two versions of the same engine will help Hyundai get a handleon costs. The diesel Getz also qualifies for excise sops, meeting bothlength and engine capacity criteria.

Tata Indica 1.3 Multijet

By the time the larger new Indica is out, the Tata-Fiat tie-up will begoing full throttle. Tata will borrow engines from Fiat with, you guessedit, the 1.3 litre Multijet being the engine of choice. Thoroughly localised,cheaply assembled and very capable, it will give the new Indica/ Indigofamily a huge leap forward as far as overall ability is concerned.


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7Ps OF MARUTI SUZUKISWIFT

PRODUCTPRICEPROMOTIONPLACEPHYSICAL LAYOUTPROVISION OF CUSTOMER SERVICEPROCESSES


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PRODUCTFeatures:The all-new Maruti Suzuki Swift is fully loaded with a range of excitingnew features. It's a perfect complement to your evolved tastes andlifestyle. And the best way to take your driving pleasure to a brand-newhigh.

European Styling. Japanese Engineering. Dream-Like Handling.

The new Swift is a generation different from Suzuki design. Styled with aclear sense of muscularity, its one-and-a-half box, aggressive form makesfor a look of stability, a sense that it is packed with energy and ready to

deliver a dynamic drive.

Its solid look is complemented by an equally rooted road presence andclass-defining ride quality. New chassis systems allow for the frontsuspension lower arms, steering, gearbox and rear engine mounting to beattached to a suspension frame. You get lower road noise, and a greaterfeeling of stability as you sail over our roads with feather-touch ease.There are three variants of Maruti Suzuki Swift :

Swift LXi Swift VXi Swift ZXi Swift LXi

3 assist grips, 3 spoke urethane steering wheel, antenna, cabin light (3position), console box (lower), cup holders (front 2, rear1), front doortrim pockets, green tinted glass window, halogen headlamps, headlamp

leveling device, heater and manual Air conditioning, OVRM (internallyadjusted), rear fog lamps, wind screen wiper 2 speed plus 1 speed


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intermittent, tailgate opener key type, trip meter (digital display), sunvisors (both sides), brake assist , child lock (rear door), high mountedstop lamp, power steering, rear seat belts etc. are the features availablein this model.

Swift VXiApart from the features found in other model, striking features of thismodel are black colored A & B pillars, 12v accessory socket in centerconsole, day and night rear view mirror, door ajar warming lamp,driver's seatbelt warning lamp, tachometer, driver's seat belt warninglamp, vanity mirrors (sun visor co-driver side), rear seat head restraints,fabric accented door trims, central door locking (4 door), front and rearelectronic windows, front fog lamps, light off/ key reminder, manualair-conditioning, key not removed warning buzzer, etc.

Swift ZXiSpecial features that have made this model more market friendly arerear window demister, rear parcel shelf, rear window wiper, room lampand luggage room, keyless entry,dual front airbags, colored outsidedoor mirror cowls, colored outside door handles, 12v accessory socket inluggage room, driver seat height adjuster, central door locking (5 doors),

seat belts 3-point ELR with shoulder adjusters, seat belts front 3-pointELR with pretensioning,tailgate opener electromagnetic type etc.


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PRICEMaruti is expected to take Hyundai heads on with the pricing of their

upcoming Maruti Suzuki Swift car. After launching cars for the massessince so many years, Indias largest automobile manufacturer is nowtargeting the premium segment with their latest model from theSuzukis stable. The analysts predict the pricing of this premiumhatchback to start from Rs. 4 lakh.

This price range would practically rip apart Hyundais offering in Getz,which is priced at a much higher tag of Rs. 4.5 lakh. Both the companiesare known for their value based offerings and Maruti with theirextensive service network and brand reputation for making reliable carsshould get the customers nod over their competition.

The official pricing however is still not out. However, the company issaid to be studying the prospects of launching the base model at the 4-lakh price tag. There is another advantage in doing so considering in thecapital city of Delhi NCR road tax on the sub 4 lakh priced cars iscomparatively lower at 2%. Cars at a price higher than 4 lakh have

to pay a 4% road tax.

Delhi NCR is one of the major targeted markets and it might get thebenefit of this policy. And if they indeed do take the chance of pricingSuzuki Swift at a considerable lower price than Hyundai Getz, theywould quite likely force the competition to rethink their strategy.

Variant

Non

MetallicPrice

Metallic Price

Swift LXi 416485 416485

Swift VXi 443924 443924

Swift VXi(ABS)

464962 464962

Swift ZXi 528096 528096


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PROMOTIONWhen Maruti Udyog launched the Swift in May last year, the

automotive industry was agog with expectation that the car had themakings of a real winner. Three versions were launched with the basevariant carrying a retail tag of Rs 3.85 lakh, ex-showroom, New Delhi,and this aggressive pricing only reinforced this feeling.

A year later, the company says the Swift is now the most-sold car in thefirst year of any car in the history of the Indian automobile industry,having totted up sales of 61,200 units.

This is higher than what Maruti had initially planned to sell. The carrecorded an estimated 4,000 bookings at the time of its launch, and theinitial output of 200 units a day on a two-shift basis, wasnt enough tocope with demand.

In October, the company increased capacity for the Swift which helpedcut down on the waiting time from an estimated three months. Thecompany currently makes over 300 units every day.

The Swift has made a real impact in the small hatchback segmentleaving its closet rival, the Getz far behind. Between April 2005 andApril 2006, Hyundai sold 16,872 units of the Getz. Maruti is now gearingup for the diesel version of the Swift which is expected to debut byOctober. The diesel version will benefit from the excise sops in thisyears buget, and it remains to be seen how the models fares in themarketplace.


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PLACEThe car manufacturing company, called Maruti Suzuki AutomobilesIndia Limited, is a joint venture between Maruti Udyog and SuzukiMotor Corporation holding a 70 per cent and 30 per cent stakerespectively.

The Rs1,524.2 crore plant has a capacity to roll out 1 lakh cars per yearwith a capacity to scale up to 2.5 lakh units per annum. The carmanufacturing plant will begin commercial production by the end of2006.

The engine and the transmission plant has owned by Suzuki PowertrainIndia Limited in which Suzuki Motor Corporation would hold 51 per

cent stake and Maruti Udyog holding the balance.


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The ultimate total plant capacity is three lakh diesel engines. However,the initial production is 1 lakh diesel engines, 20,000 petrol engines and1.4 lakh transmission assemblies.

MUMBAI - Showrooms

AUTOMOTIVE MANUFACTURERS LTDMIDC,TTC INDL.AREA, PLOTNO.D-234,SHIRVANEVILLAGEBOMBAY PUNE ROAD

Autovista257,S.V. ROAD, BANDRA (W)

MUMBAIMAHARASHTRA

M/S SK WHEELS PVT LTDSITE NO. D-267TTC INDUSTRIAL AREA, MIDCTURBHE, NAVI MUMBAI

NAVNIT MOTORS PVT LTDGOKUL NAGAR

MUMBAI-AGRA ROAD,THANE-400 061

RATAN MOTORS23/24 BEZZOLA COMPLEXSION-TROMBAY ROADCHEMBUR

SAH and SANGHI AUTO AGENCIES (P) LTDGIRI KUNJ, 11-C N S PATKAR MARGKEMPS CORNER

SAI SERVICE STATION LTDPHOENIX MILL COMPOUND,462,SENAPATI BAPAT MARG,


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LOWER PAREL,


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SWOT ANALYSIS OF

MARUTI UDYOG LTD.

STRENGTHSWEAKNESSESOPPURTUNITIESTHREATSSTRENGTHS

The Quality Advantage

Maruti Suzuki owners experience fewer problems with theirvehicles than any other car manufacturer in India (J.D. Power IQSStudy 2004). The Alto was chosen No.1 in the premium compactcar segment and the Esteem in the entry level mid - size car

segment across 9 parameters.

The J.D. Power APEAL Study 2004 proclaimed the Wagon R no. 1in the premium compact car segment and the Esteem No.1 in theentry level mid - size car segment. This study measures owner interms of design, content, layout and performance of vehiclesacross 8 parameters.

A Buying Experience Like No Other

Maruti Suzuki has a sales network of 307 state-of -the-artshowrooms across 189 cities, with a workforce of over 6000trained sales personnel to guide our customers in finding the rightcar. Our high sales and customer care standards led us to achievethe No.1 nameplate in the J.D. Power SSI Study 2004.


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Quality Service Across 1036 Cities

In the J.D. Power CSI Study 2004, Maruti Suzuki scored thehighest across all 7 parameters: least problems experienced with

vehicle serviced, highest service quality, best in-serviceexperience, best service delivery, best service advisor experience,most user-friendly service and best service initiation experience.

92% of Maruti Suzuki owners feel that work gets done right thefirst time during service. The J.D. Power CSI study 2004 alsoreveals that 97% of Maruti Suzuki owners would probablyrecommend the same make of vehicle, while 90% owners wouldprobably repurchase the same make of vehicle.

MUL is in a leadership position in the market. Major strength of MUL is having largest network of dealers

and after sales service caters in the country.

Self competing product range in small car segment Maruti 800 OmnI Zen

Wagon R Good promotional strategy is adopted by MUL to transform

its thoughts to the people about its products

After Sales Service - Availibility of service stations even inthe remotest place in the country.

Refurbished Cars: MUL has also entered into second handcar market with a brand name Maruti True Value

Loyal Customer Base is another big strength of MUL. In JDPower survey, MUL has been awarded consequently 5th

year for best customer satisfaction. Strong Brand Value Availability of raw material


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WEAKNESSES

Lack of having products in mid size car segment couldresult in shifting of loyal customers who has a desire toupgrade their cars.

Low interior quality in side the cars. Labour Laws and Labour Unions are not in a good form

in India.

Government intervention due to having share in MUL.


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OPPORTUNITIES-

Leading Growth as the market leader, MUL led the growth inthe passenger car sectorlast year. Marutis sales went up 30% to4,72,000/- units.

This is thehighest annual sale since the company beganoperations 20 years ago.Maruti also gained market share, mainlyon account of its performancein the competitive A2 segmentwhere it increased its share from 40.3%in 2002-03 to 47.7% in2003-04

The record sales performance was reflected in the financials.Net Sales(excluding excise) grew by 31% to Rs 93,456 million.

Operating ProfitMargin increased from 0.8 % in 2002-03 to 4.7% in 2003-04. Profit AfterTax jumped 2700 million to Rs 5421million.MUL is committed to motorising India.

Towards this end, companyspartnership with State Bank ofIndia and its Associate Banks tookorganised finance to smalltowns to enable people to buy Maruti cars

MUL may encash the opportunity to enter again into the dieselsegment of the cars to compete its nearest competitor TATA indiesel segment of small cars. Though MUL launched Zen indiesel version but it was not successful.

MUL has launched its LPG version of Wagon R and it was agood move simultaneously MUL can start R&D on electric carsfor a much better substitute of the fuel.

REMARKABLE GROWTH:- If we observe Maruti as a brand over the years we can note a

remarkable phenomena or strategy from their growth in pastyears.

It first became popular n still is with its launch of Maruti 800many years back. They targeted middle income groups, whowere first time car buyers, looking for low ownership cost withbasic need of a family vehicle and the price was approx 2lacs.

After this they never looked back. Then came the other varioushatchback models of Maruti like Zen, WagonR, and Alto etc.

These Cars again targeted the middle income groups, but this


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time the positioning was not as the basic need, it was comfort atcomparatively lower price, of 45 lacs.

Then putting Yet another Step forward, they came into Sedanswith a price of 8-9 lacs these Sedans targeted SEC A as well asB(up till a certain extent)

Economic growth of the country is sound and promising infuture.

Liberal policies of GOI. Big Market: Domestic and Abroad


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THREATSTHREATS FROM COMPETITORS

Tata Motors LimitedIn the 2004 fiscal year, Tata Motorsgenerated revenues of $3,542.2 million(INR154,935.2 million).

The company made a net profit of $185 million(INR8,103.4million) in the 2004 fiscal year.General Motors CorporationForthe fiscal year ended December 2004, GM generated revenuesof $193,517million, an increase of 4.3% from the previous year.

The company reported anet income of $2,805 million for fiscal2004, down 26.6% from the previous year.

Tata Motors has launched TATA NANO with a price tag of Rs.1 Lac and that could give a big impact on sales of MUL

HMIL is a challenger and trying hard to achieve number oneposition in the market.

China may give a good competition as they are also planning toenter into car segment.


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BRAND POSITINING

What comes to your mind first when u come across the termMARUTI SUZUKI, it always absolutely has to be Maruti 800,best known as The Middle class car of India.

BRAND IMAGE:-

MARUTI from as a brand itself is seldom looked at, as a luxurybrand. Maruti as a brand is more linked with the SEC B ratherthan A. And over past many years Maruti Has maintained andup till certain extent restricted its Target Market to same SECs.


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OBJECTIVES OF THE STUDY

1. To find out the market share of Maruti Suzuki2. To study competitors of Maruti Suzuki

3. To study the marketing strategies of Maruti Suzuki

4. To study the strength, weakness, opportunity, and

threats (swot - - analysis)

5. To study the customer satisfaction regarding

Maruti Suzuki cars

6. To study the comparison of swift and swift dzire.


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ETHICAL ISSUES OF MARUTI SUZUKI

Labor Pains Continue at Maruti Suzuki

Maruti Suzuki, the Indian subsidiary of Suzuki Motor of Japan, has been in thenews for the past several months because of a continuing workers agitation.The strike is now over. But the way it was settled raises several important issues

The problem arose at Marutis plant in Manesar (nearDelhi). Workers went onstrike October 7, demanding the reinstatement of employees who weresuspended during previous agitations and the establishment of an independentworkers union. The agitation was all set to accelerate with the Marutimanagement subsequently suspending home-grown leader Sonu Gujjar and 29others. We will fight to the end, the 24-year-old Gujjar told economicdailyBusinessLine a few days after he was suspended. The Indian presscharacterized Gujjar as the shy hero of Manesar and portrayed him as a youngArthur battling the dragons.Then, on Friday came reports that Gujjar and his suspended colleagues had afew days earlier taken severance checks from the Maruti management andresigned. Sonu Gujjar, suspended workers at Maruti grab check and quit,

reported NDTV. The Times of Indiais calling the defections a briberycontroversy and others are characterizing Gujjar and the other workers astraitors. The settlement amounts reportedly range from $20,000 to $80,000, withGujjar at the top end. In India, these are significant amounts for what is claimedto be a voluntary retirement payout, especially as most of the 30 had been withthe company for only four years.On Monday, there were reports that workers planned toregister a newunionand take the agitation forward. But the implications of the payouts go farbeyond one car plant and one company. The national trade unions have long

protested against what they see as heavy-handed labor policies by themanagement of multinational firms. Now they have a real-life, Indian example.The Maruti deal has gotten even progressive politicians and industrialiststhinking twice about how much flexibility should be given to companymanagement in dealing with labor strife.Its unfortunate that a few leaders have accepted money and fallen prey to the

practices of multinational companies, A.D. Nagpal, general secretary of theHind Mazdoor Sabha, told the Times of India. Although it is an isolatedincident, the damaging repercussions will hurt the [trade union] movement for a

long time.
http://www.firstpost.com/business/maruti-strike-this-union-will-be-independent-the-workers-will-not-give-up-124925.htmlhttp://www.firstpost.com/business/maruti-strike-this-union-will-be-independent-the-workers-will-not-give-up-124925.htmlhttp://www.firstpost.com/business/maruti-strike-this-union-will-be-independent-the-workers-will-not-give-up-124925.htmlhttp://www.firstpost.com/business/maruti-strike-this-union-will-be-independent-the-workers-will-not-give-up-124925.htmlhttp://www.firstpost.com/business/maruti-strike-this-union-will-be-independent-the-workers-will-not-give-up-124925.htmlhttp://www.firstpost.com/business/maruti-strike-this-union-will-be-independent-the-workers-will-not-give-up-124925.html


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The second fallout relates to corporate governance. In India, even largeshareholders have generally not interfered with the managements of companiesin which they own equity. They normally sell their stake and quit the companyrather than raise contentious issues. In the Maruti incident, in mid-October

Nirmal Bang Institutional Equities organized a conference call with Gujjar.Several analysts and shareholders participated. This was a first for India.

Now other investors are questioning the deal with the so-called Manesar 30.Of course, there is a corporate governance issue in what Maruti has done. Nodoubt about that. It was totally unbecoming of such a large company, AnilSinghvi of Institutional Investors Advisory Services, which works withshareholders on governance issues, told economic dailyBusiness Standard. Itis one of the most badly handled situations in the recent past.

The Manesar 30 have some supporters, however.Mint, a business daily, argued:Some 1,200 workers went on strike at Manesar. Of these 1,200, it was 30 whobore the brunt. They were suspended and, at one point, their jobs appeared to beunder threat. Effectively, they spearheaded the campaign while the others werefree-riding.In addition, Maruti leadership was facing significant hits to the companysbottom line due to the strike. The several rounds of labor agitation have resultedin loss of production of 51,000 to 83,000 vehicles, amounting to $330 million to$470 million, according to different estimates. The company couldnt afford tocontinue with those losses for too long, observers note.

Ritu Tripathi, an assistant professor of organizational behavior and humanresources management at the Indian Institute of Management in Bangalore, liststwo lessons others can take from the situation: the need for strong and opencommunication channels between workers and their organizations, and theimportance of transparency in all policies and procedures. Pointing out thatunions themselves often become hubs of politics, Tripathi says that workersmust be able to see procedural justice. Research has proved that wheneverworkers perceive that procedural justice is high, they are more committed

towards their organizations.This entry was posted inKnowledge@Wharton Today,Law and PublicPolicy,Strategic Managementand taggedIndia,Maruti Suzuki,strike.Bookmark thepermalink. Follow any comments here with theRSS feed for thispost.
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COMPANY PROFILE

Company ProfileMaruti Suzuki India Limitedis a publicly listed automaker in India. It is aleading four-wheeler automobile manufacturer inSouth Asia. Suzuki Motor Corporationof Japan holds a majority stake in the company. It wasthe first company in India to mass- produce and sell more than a million cars. It is largelycredited for having brought in anautomobile revolution to India. It is the market leader inIndia and on 17 September 2007,Maruti Udyogwas renamed Maruti Suzuki India Limited. The company's headquartersare in Gurgaon,Haryana (near Delhi).Maruti Suzuki is one of India's leading automobile manufacturers andthe marketleader 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, and54.2% by Suzuki of Japan. The Indian government held an initial public offering of 25% ofthecompany in June 2003. As of May 10, 2007, Govt. of India sold its complete sharetoIndian financial institutions. With this, Govt. of India no longer has stake inMarutiUdyog.Maruti Udyog Limited (MUL) was established in February 1981, though theactual production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei carwhich at the time was the only modern car available in India, its' only competitors-theHindustan Ambassador and Premier Padmini were both around 25 years out of date atthatpoint. Through 2004, Maruti has produced over 5 Million vehicles.Marutisare soldin India and various several other countries, depending upon export orders. Carssimilar to Marutis (but not manufactured by Maruti Udyog) are sold by Suzuki andmanufacturedin Pakistan and other South Asian countries.

The company annually exports more than 50,000 cars and has an extremely largedomesticmarket in India selling over 730,000 cars annually. Maruti 800, till 2004, wasthe India'slargest selling compact car ever since it was launched in 1983. More than amillion units ofthis car have been sold worldwide so far. Currently, Maruti Alto tops thesales charts andMaruti Swift is the largest selling in A2 segment.Due to the large number of Maruti 800s sold

in the Indian market, the term"Maruti" is commonly used to refer to this compact car model.Till recently the term"Maruti", in popular Indian culture, was associated to the Maruti 800model.Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan,hasbeen the leader of the Indian car market for over two decades.Its manufacturing facilities arelocated at two facilities Gurgaon and Manesar south of New Delhi. Marutis Gurgaon facilityhas an installed capacity of 350,000 units per annum. The Manesar facilities, launched inFebruary 2007 comprise a vehicleassembly plant with a capacity of 100,000 units per yearand a Diesel Engine plant withan annual capacity of 100,000 engines and transmissions.Manesar and Gurgaon facilitieshave a combined capability to produce over 700,000 unitsannually.More than half the cars sold in India are Maruti cars. The company is a subsidiaryofSuzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti. The rest isowned by

the public and financial institutions. It is listed on the Bombay Stock Exchangeand NationalStock Exchange in India.


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During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 wereexported. In all, over

six million Maruti cars are on Indian roads since the first car wasrolled out on December 14,

1983.Maruti Suzuki offers 12 models, Maruti 800, Omni, Alto, Versa, Gypsy, A Star,WagonR, Zen Estilo, Swift, Swift Dzire, SX4, Grand Vitara. Swift, Swift dzire, A star and SX4 are

manufactured in Manesar, Grand Vitara is imported from Japan as acompletely built unit

(CBU), remaining all models are manufactured in Maruti Suzuki'sGurgaon Plant.More than

half the numbers of cars sold in India wear a Maruti Suzuki badge.We are a subsidiary of

Suzuki Motor Corporation Japan.Suzuki Motor Corporation, the parent company, is a global

leader in mini andcompact cars for three decades. Suzukis technical superiority lies in its

ability to pack power and performance into a compact, lightweight engine that is clean and

fuel efficient.Maruti is clearly an employer of choice for automotive engineers and

youngmanagers from across the country. Nearly 75,000 people are employed directly by

Marutiand its


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REPOSITIONING OF MARUTI PRODUCTS

Whenever a brand has grown old or its sales start dipping Maruti makes some facelifts in themodels. Other changes have been made from time to time based on market responses or

consumer feedbacks or the competitor moves. Here are the certain changes observed in differentmodels of Maruti.

Omni has been given a major facelift in terms of interiors and exteriors two months back. A newvariant called Omni Cargo, which has been positioned as a vehicle for transporting cargo andmeant for small traders. It has received a very good response from market. A variant with LPG isreceiving a very good response from customers who look for low cost of running.

Versa prices have been slashed and right now the lowest variant starts at 3.3 lacs. Theydecreased the engine power from 1600cc to 1300cc and modified it again considering consumersperception. This was a result of intensive survey done all across the nation regarding theconsumer perception of Versa.

Esteem has gone through three facelifts. A new look last year has helped boost up the waningsales of Esteem.

Baleno was launched in 1999 at 7.2 lacs. In 2002 they slashed prices to 6.4 lacs. In 2003 theylaunched a lower variant as Baleno LXi at 5.46 lacs. This was to reduce the price and attractcustomers.

Wagon-R was perceived as dull boxy car when it was launched. This made it a big failure onlaunch. Then further modifications in engine to increase performance and a facelift in the form ofsporty looking grills on the roof. Now its of the most successful models in Maruti stable.

Zen has been modified four times till date. They had come up with a limited period variantcalled 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 technology and other

time it came up with changes in front grill, head light, rear lights and with round curves allaround.


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C) MAJOR FUTURE STRATEGIES

I. PHASING OUT ZEN IN 2007The launch of Swift and phasing out Zen is a strategic move. Alto was launched keeping in mindthat it will take over Maruti 800 market in future. Perhaps being the flagship product phasing outof Maruti 800 faced lots of resistance from dealers all over. Another reason behind not phasingout Maruti 800 was the fear of brand shift of customers to other competitors product. Swift waslaunched in May, 2005 in the price band starting from 4 lacs. Before launch of Swift Marutimanagement had decided that they will phase out Zen since it had already came up with twomodifications. The major reason behind this decision was cannibalization of Wagon R and Swiftdue to overlapping of price band. It is a rational decision 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 thesale 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 Limited, will be ajoint venture between Maruti Udyog and Suzuki Motor Corporation holding a 70 per cent and 30per cent stake respectively. The Rs1,524.2 crore plant will have a capacity to roll out 1 lakh carsper year with a capacity to scale up to 2.5 lakh units per annum. The new car manufacturing

plant will begin commercial production by the end of 2006.


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Maruti would set up a diesel engine plant at Gurgaon in line with its plan to become a majorplayer in diesel vehicles in a couple of years. This has been done in the wake of majorcompetition from Tata Indica and meets the growing demand of diesel cars in India. While theannual 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 insignificantpresence in diesel vehicle.It will manufacture new generation CRDI (common rail directinjection) engines in collaboration with Fiat-GM Opel and engines will be of 1200 cc. The plantwith a capacity to produce one lakh diesel engines would be operational in 2006.At present,Peugeot of France, supplies diesel engines for Maruti's Zen and mid-sized Esteem models. Thiswill further reduce the imported component in Maruti vehicles, making them more competitivein 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 Limited inwhich Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog holding thebalance. The ultimate total plant capacity would be three lakh diesel engines. However, theinitial production would be 1 lakh diesel engines, 20,000 petrol engines and 1.4 lakhtransmission assemblies. Investment in this facility will be Rs.1,747.7 crore. The commercialproduction 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 of suppliers incountries like India, McKinsey did an exercise to figure out just how much money could besaved if automobiles were to be made in overseas locations like India, Mexico and South Africa -- an automobile BPO, so to speak. The result was staggering: the industry stands to gain $ 150billion annually in cost savings, and an additional $ 170 billion annually in new revenues oncedemand shoots up following the drop in prices, and the combination of which means a 25 percent increase in existing revenue levels.

According to the study, over 90 per cent of automobiles today are sold in the countries they are

made in, so there's a lot of money to be made by shifting the production overseas. Till recently,just 100,000 cars produced in low-cost countries were exported to high-cost ones -- presumablythis figure is going up now that Altos from Maruti, Santros from Hyundai, Indicas from TataMotors, 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 arefalling) to ship out a car to anywhere in the world, why produce cars in high-wage islands? If acar was produced in India instead of in Japan, the study says, it will cost 22-23 per cent less, afterfactoring in higher import duties for components/steel, lower levels of automation, and transportcosts.


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In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since its first export in1986. Europe is the largest destination of Marutis exports and coincidentally after the firstcommercial shipment of 480 units to Hungary in 1987, the 300,00 mark was crossed by theshipment of 571 units to the same country. The top ten destination of the cumulative exports

have been Netherlands, Italy, Germany, Chile, U.K., Hungary, Nepal, Greece, France and Polandin that order.

The Alto, which meets the Euro-3 norms, has been very popular in Europe where a landmark200,000 vehicle were exported till March 2003. Even in the highly developed and competitivemarkets of Netherlands, UK, Germany, France and Italy Maruti vehicles have made a mark.Though the main market for the Maruti vehicles is Europe, where it is selling over 70% of itsexported quantity, it is exporting in over 70 countries.

Maruti has entered some unconventional markets like Angola, Benin, Djibouti, Ethiopia,Morocco, Uganda, Chile, Costa Rica and El Salvador. The Middle-East region has also openedup and is showing good potential for growth. Some markets in this region where Maruti is, areSaudi Arabia, Kuwait, Bahrain, Qatar and UAE.

The markets outside of Europe that have large quantities, in the current year, are Algeria, SaudiArabia, Srilanka and Bangladesh. Maruti exported more than 51,000 vehicles in 2003-04 whichwas 59% higher than last year. In the financial year 2003-04 Maruti exports contributed to morethan 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 Ltds research and development(R&D) facility as its Asia hub by 2007 for the design and development of new compact cars,according to a top official of the firm. The countrys leading car manufacturer will makesubstantial investments to upgrade its research and development centre at Gurgaon in Haryanafor executing design and development projects for Suzuki. This includes localisation,

modernisation and greater use of composite technologies in upcoming models.

The company will be hiring more software engineers and technocrats to handle Suzukis R&Dprojects. Investment would be more in terms of manpower than in infrastructure, which isalready in place. Apart from working on innovative features, the R&D teams will focus on latesttechnologies using CAD-CAM tools to roll out new models that will meet the needs of MULsdiverse customers in the future.

The reasons as to why it can be good for R&D is that


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Firstly the cost involved in R&D and infrastructure is low in India as compared to othercountries. 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 aggressivelyinto becoming an attractive one for investors.

Thirdly, Suzukis investment in India, is also important as it has completely divested now as aresult MUL will now become a 100% subsidiary of Suzuki in the coming year.


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KEY SUCCESS FACTORS

(1)The Quality Advantage

Maruti Suzuki owners experience fewer problems with their vehicles than any othercar manufacturer in India (J.D. Power IQS Study 2004). The Alto was chosen No.1in the premium compact car segment and the Esteem in the entry level mid - size carsegment across 9 parameters.

(2)A Buying Experience Like No Other

Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189cities, with a workforce of over 6000 trained sales personnel to guide MULcustomers 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 7parameters: least problems experienced with vehicle serviced, highest servicequality, best in-service experience, best service delivery, best service advisorexperience, most user-friendly service and best service initiation experience.92% of Maruti Suzuki owners feel that work gets done right the first time duringservice. The J.D. Power CSI study 2004 also reveals that 97% of Maruti Suzukiowners would probably recommend the same make of vehicle, while 90% ownerswould probably repurchase the same make of vehicle.


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(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- MarutiSuzuki 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 buying acar. Although a car may be affordable to buy, it may not necessarily be affordable tomaintain, as some of its regularly used spare parts may be priced quite steeply. Not

so in the case of a Maruti Suzuki. It is in the economy segment that the affordabilityof spares is most competitive, and it is here where Maruti Suzuki shines.

(6)Lowest Cost of Ownership

The highest satisfaction ratings with regard to cost of ownership among all modelsare all Maruti Suzuki vehicles: Zen, Wagon R, Esteem, Maruti 800, Alto and Omni.

(7) Technological Advantage

It has introduced the superior 16 * 4 Hypertech engines across the entire MarutiSuzuki range. This new technology harnesses the power of a brainy 16-bit computerto a fuel-efficient 4-valve engine to create optimum engine delivery. This meansevery Maruti Suzuki owner gets the ideal combination of power and performancefrom his car.


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FUTURE CHALLENGES

Maruti has always been identified as a traditional carmaker producing value-for-money cars and right now the biggest hurdle Maruti is facing is to shed thisimage. Maruti wants to change it for a more aggressive image. Maruti Balenohas failed due to one of the major reasons being that customers could notidentify Maruti with a car as sophisticated as Maruti Baleno. Maruti is lookingforward to bring about a perception change about the company and its cars.Maruti started the exercise with the new-look Zen, and Suzuki's decision to pick

India as one of the first markets for this radically different-looking car gave thisendeavor a new thrust. Maruti has also changed its logo at the front grill. It hasreplaced the traditional Maruti logo on grill stylish M with S. The majorthrust in the facelift endeavour is with the launch of 1.3 litre Swift. Its a stylestatement from Maruti to Indian market.

The next threat Maruti faces is the growing competition in compact cars.Companies like Toyota, Ford, Honda and Fiat are planning to come out with

small segment cars in near future.Ford is launching Focus and Fiesta, GM islaunching Aveo in 2006, Chevrolet is launching Spark in 2006, Hyundai islaunching its new compact car in 2006, Honda is launching Jazz in 2006, GM ishas reduced prices of its Corsa, Fiat is coming up with Panda and new FiatPalio, Skoda is launching Fabia. All this will pose a major threat to Marutileadership in compact cars.

New emission norms like Bharat Stage 3 which has come into effect from April2005 has increased car prices by Rs.20000 and Bharat Stage 4 which is coming


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into force in 2007 will contribute in increasing car prices further. This could beof concern to Maruti which is low cost provider of passenger cars.

Rise in petrol prices and growing popularity of other substitute fuels likeCNG will be another threat to Maruti. There is also a threat to Suzuki fromR&D investment by Toyota and Honda in Hybrid cars. Hybrid cars could runon both petrol and gaseous fuels.

There is a threat to Maruti models ageing. Maruti models like Maruti 800which is in market for the last twenty years and others like Zen and Esteemwhich have also entered the decline phase are the other threats. Maruti isplanning phasing out Zen in 2007 and there were rumors of phasing out Maruti

800 also. This all makes Suzuki to replace these brands with new launches . AsSwift and Wagon R are replacing the Zen market. Maruti will have to keep onmaking modifications in its present models or itsmodels will face extinction.


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INDUSTRY ANALYSIS

GLOBAL FOUR WHEELER INDUSTRY

Evolution

The automobile industry has undergone significant changes since Henry Ford first introduced theassembly line technique for the mass production of cars. Production concepts, processes and theassociated technologies have changed dramatically since the first cars were built. Some 70 yearsago, car assembly was primarily manual work. Today, the process of car assembly is almost fullyautomated. In the old days, firms attached importance to the production of virtually every part in asingle plant, while today, carmakers concentrate on only a few specific production stages (i.e. carassembly). Parts and module production, services and related activities have been shifted to other,specialised firms (outsourcing of production steps).Since the 1980s, it has become clear thatfurther productivity gains to retain competitiveness can be possible only by outsourcing andsecuring greater flexibility. For example, firms, especially small car producers whose marketshave been threatened by imports, have diversified their production programmes (e.g. by buildingoff-road cars or convertibles) thereby introducing greater flexibility in the production process.Also, firms and their production have become more internationalized in lieu of outsourcing.


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CURRENT SCENARIO

The global passenger car industry has been facing the problem of excess capacity for quitesometime now. For the year 2002, the global capacity in the automotive industry was 75 million

units a year, against production of only 56 million units (excess capacity estimated at 25%).Efforts to shore up capacity utilization have prompted severe price competition, thus affectingmargins and forcing fundamental changes in the industry. The pressure on sales and margins isdriving players to emerging markets in pursuit of better growth opportunities and/or access tolow-cost manufacturing bases. The concept of selling in the passenger car industry is changing from original sales towardslifecycle value generation, encompassing financing, repairs & maintenance, cleaning, provisionof accessories, and so on. Vehicle manufacturers are moving into completely new materials and technologiespartly

guided by environmental legislationin striving to come up with radically different products.Some of these new technologies involve parts that can be bolted on to an existing vehicle withrelatively few implications for the rest of the vehicle. Others are much more fundamental, andare likely to have a profound impact throughout the supply chain. The examples include battery,electric or hybrid power trains, and alternatives to the all-steel body. Carmakers are increasinglyoutsourcing component production, and focusing on product design, brand management andconsumer care, in contrast to the traditional emphasis on manufacturing and engineering. The increasing need to attain global scales underscores the importance of platform sharingamong carmakers. All original equipment manufacturers (OEMs) are trying to reduce the

number of vehicle platforms, but raise the number of models produced from each platform. Thismeans producing a number of seemingly distinct models from a common platform. As in manufacturing, distribution in the automobile industry is undergoing significant changes,involving Internet use, retailer consolidation, and unbundling of services provided by retailers.


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INDIAN FOUR WHEELER INDUSTRY

Evolution

The Indian automobile industry developed within the broader context of import substitutionduring the 1950s.The distinctive feature of the automobile industry in India was that in line withthe overall policy of State intervention in the economy, vehicle production was closelyregulated by an industrial licensing system till the early 1980s that controlled output, modelsand prices. The cars were built mostly by two companies, Premier Automobiles Limited andHM. However, the Indian market got transformed after 1983 following the relaxation of thelicensing policy and the entry of MUL into the car market. In 1991, car imports wereinsignificant, while component imports were equivalent to 20% of the domestic production,largely because of the continuing import of parts by MUL. The liberalization of the Indianautomotive industry that began in the early 1990s was directed at dismantling the system ofcontrols over investment and production, rather than at promoting foreign trade. Multinationalcompanies were allowed to invest in the assembly sector for the first time, and car productionwas no longer constrained by the licensing system. However, QRs on built-up vehiclesremained and foreign assemblers were obliged to meet local content requirements even asexport targets were agreed with the Government to maintain foreign exchange neutrality. Thenew policy regime and large potential demand led to inflows of foreign direct investment (FDI)by the mid-1990s. By the end of 1997, Daewoo, Ford India, GM, DaimlerChrysler and Peugeot

had started assembly operations in India. They were followed by Honda, HMIL, and Mitsubishi.

Major Players


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Bajaj Tempo Limited, DaimlerChrysler India Private Limited, Fiat India Automotive PrivateLimited, Ford India Limited, General Motors India Limited, Hindustan Motors Limited, HondaSiel Cars India Limited, Hyundai Motor India Limited, Mahindra & Mahindra Limited, MarutiUdyog Limited, Skoda Auto India Limited, Tata Motors Limited, Toyota Kirloskar Motors

Limited.

Current scenario in Passenger Car Category

The dominant basis of competition in the Indian passenger car industry has changed from priceto price-value, especially in the passenger car segment. While the Indian market remains pricesensitive, the stranglehold of Economy models has been slackening, giving way to higher-pricedproducts that better meet customer needs. Additionally, a dominant trend in the Indian passengercar segment is the increasing fragmentation of the market into sub-segments, reflecting theincreasing sophistication of the Indian consumer. With the launch of new models from FY2000onwards, 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 aniche in the urban market, having successfully shaken off the tag of commercial vehiclesattached to all MUVs till recently. Domestic car manufacturers are now venturing into areas suchas car financing, leasing and fleet management, and used-car reconditioning/sales, tocomplement their mainstay-business of selling new cars.


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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 players in capacity creation and theselling price of the car.

Threat from the new players: Increasing

Most of the major global players are present in the Indian market;few more are expected to enter.

Financial strength assumes importance as high are required forbuilding capacity and maintaining adequacy of working capital.

Access to distribution network is important. Lower tariffs in post WTO may expose Indian companies to threat of

imports.

Rivalry within the

industry: High

There is keencompetition in selectsegments. (compactand mid sizesegments).

New multinationalplayers may enter themarket.

Market strength of

suppliers: Low

A large number ofautomotive componentssuppliers.

Automotive players arerationalizing their vendorbase to achieveconsistency in quality.

Market strength of consumers:

Increasing Increased awareness among

consumers has increasedexpectations. Thus the ability toinnovate is critical.

Product differentiation via newfeatures, improved performanceand after-sales support is critical.

Increased competitive intensityhas limited the pricing power ofmanufacturers.

Threat from substitutes: Low to medium

With consumer preferences changing, interproduct substitution is taking place (Mini carsare being replaced by compact or mid sizedcars).


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The amount of investment in capacities by passenger car manufacturers in turn depends on theproductionstrategies of the car manufacturers. Setting up integrated manufacturing facilities

may require higher capital investments than establishing assembly facilities for semi knockeddown kits or complete knocked down kits. In recent years, even though the ratio of sales tocapacity (an important indicator of the ability to reach break-even volumes) of the domestic carmanufacturers have improved, it is still low for quite a few car manufacturers in India. India isalso likely to increasingly serve as the sourcing base for global automotive companies, andautomotive exports are likely to gain increasing importance over the medium term. However,the growth rates are likely to vary across segments. Although the Mini segment is expected tosustain volumes, it is likely to continue losing market share; growth in the medium term isexpected to be led largely by the Compact and Mid-range segments. Additionally, in terms ofengine capacity, the Indian passenger car market is moving towards cars of higher capacity.This apart, competition is likely to intensify in the SUV segment in India following the launchof new models at competitive prices.


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KEY STRATEGIC INITIATIVES BY MARUTI

A) TURNAROUND STRATEGIES MARUTI FOLLOWED

Maruti was the undisputed leader in the automobile utility-car segment sector, controlling about84% of the market till 1998. With increasing competition from local players like Telco,Hindustan Motors, Mahindra & Mahindra and foreign players like Daewoo, PAL, Toyota, Ford,Mitsubishi, GM, the whole auto industry structure in India has changed in the last seven yearsand resulted in the declining profits and market share for Maruti. At the same time the Indiangovernment permitted foreign car producers to invest in the automobile sector and hold majoritystakes.

In the wake of its diminishing profits and loss of market share, Maruti initiated strategicresponses to cope with Indias liberalization process and began to redesign itself to facecompetition in the Indian market. Consultancy firms such as AT Kearney & McKinsey,together with an internationally reputed OD consultant, Dr. Athreya, have been consulted onmodes of strategy and organization development during the redesign process. The redesignprocess saw Maruti complete a Rs. 4000 mn expansion project which increased the totalproduction capacity to over 3,70,000 vehicles per annum. Maruti executed a plan to launchnew models for different segments of the market. In its redesign plan, Maruti, launches a newmodel every year, reduce production costs by achieving 85-90% indigenization for new

models, revamp marketing by increasing the dealer network from 150 to 300 and focus onbulk institutional sales, bring down number of vendors and introduce competitive bidding.Together with the redesign plan, there has been a shift in business focus of Maruti. WhenMaruti commanded the largest market share, business focus was to sell what we produce.The earlier focus of the whole organization was "production, production and production" butnow the focus has shifted to "marketing and customer focus". This can be observed from thechanges inmission statementof the organization:

1984: "Fuel efficient vehicle with latest technology".

1987: "Leader in domestic market and be among global players in the overseas market".1997: "Creating customer delight and shareholders wealth".

Focus on customer care has become a key element for Maruti. Increasing Maruti servicestations with the scope of one Maruti service station every 25 km on a highway. To increase itsmarket share, Maruti launched new car models, concentrated on marketing and institutionalsales. Institutional sales, which currently contributes to 7-8% of Marutis total sales. Costreduction and increasing operating efficiency were another redesign variable. Cost reduction isbeing 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 rates.However, change in the mindset was not as fast as required by the market. Maruti planned to


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reduce costs, increase productivity, quality and upgrade its technology (Euro I&II, MPFI). Inaddition, it followed a high volume production of about 400,000 vehicles / year, which entailed asmooth relationship between the workers and the managers.

Post 1999, the market structure changed drastically. Just before this change, Maruti had wastedtwo crucial years (1996-1998) due to governmental interventions and negotiation with Suzuki ofJapan about the break-up of the share holding pattern of the company. There was a change inleadership, Mr. Sato of Suzuki became the Chairman in June 1998, and the new Mr.J. Khatterwas appointed as the new Joint MD. Khatter was a believer in consensus decision making andparticipative style of management.As a result of the internal turmoil and the changes in theexternal environment, Maruti faced a depleting market share, reducing profits, and increase ininventory levels, which it had not faced in the last 18 years.

After their fall in market share they redesigned their strategies and through their parent companySuzuki they learned a lot.The organizational learning of Maruti was moderately successful, thecost was relatively inexpensive as Maruti had its strong Japanese practices to fall back upon.With the program of organizational redesign, rationalization of cost and enhanced productivity,Maruti bounced back to competition with 50.8% market share and 40% rise in profit for theFY2002-2003.

B) CURRENT STRATEGIES FOLLOWED BY MUL

I. PRICING STRATEGY - CATERING TO ALL SEGMENTS


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Maruti caters to all segment and has a product offering at all price points. It has a car priced atRs.1,87,000.00 which is the lowest offer on road. Maruti gets 70% business from repeat buyerswho earlier had owned a Maruti car. Their pricing strategy is to provide an option to every

customer looking for up gradation in his car. Their sole motive of having so many productoffering is to be in the consideration set of every passenger car customer in India. Here is howevery price point is covered.

II. OFFERING ONE STOP SHOP TO CUSTOMERS OR CREATING DIFFERENT

REVENUE STREAMS

Maruti has successfully developed different revenue streams without making huge investmentsin the form of MDS, N2N, Maruti Insurance and Maruti Finance. These help them in making thecustomer experience hassle free and helps building customer satisfaction.

Maruti Finance: In a market where more than 80% of cars are financed, Maruti has strategicallyentered into this and has successfully created a revenue stream for Maruti. This has been found tobe a major driver in converting a Maruti car sale in certain cases. Finance is one of the majordecision drivers in car purchase. Maruti has tied up with 8 finance companies to form aconsortium. This consortium comprises Citicorp Maruti, Maruti Countrywide, ICICI Bank,

HDFC Bank, Kotak Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.(erstwhile-Ashok Leyland Finance).

Maruti Insurance : Insurance being a major concern of car owners. Maruti has brought all carinsurance needs under one roof. Maruti has tied up with National Insurance Company, BajajAllianz, New India Assurance and Royal Sundaram to bring this service for its customers. Fromidentifying the most suitable car coverage to virtually hassle-free claim assistance it's your dealerwho takes care of everything. Maruti Insurance is a hassle-free way for customers to have theircars repaired and claims processed at any Maruti dealer workshop in India.

True ValueInitiative to capture used car market


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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 andexchange it for a new car, by paying the difference. They are offered loyaltydiscounts in return.This helps them retain the customer. With Maruti True Valuecustomer has a trusted name to entrust in a highly unorganized market and wherecheating is rampant and the biggest concern in biggest driver of sale is trust. Marutiknows its strength in Indian market and has filled this gap of providing trust in Indianused car market. Maruti has created a system where dealers pick up used cars,recondition them, give them a fresh warranty, and sell them again. All investmentsfor True Value are made by dealers. Maruti has build up a strong network of 172showrooms across the nation.The used car market has a huge potential in India. Theused 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.Marutis N2N Fleet Management Solutions for companies, takes care of the A-Z ofautomobile problems. Services include end-to-end backups/solutions across thevehicles life: Leasing, Maintenance, Convenience services and Remarketing.

Maruti DrivingSchool (MDS): Maruti has established this with the goal to capturethe 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 creating acustomer.

III. REPOSITIONING OF MARUTI PRODUCTS

Whenever a brand has grown old or its sales start dipping Maruti makes somefacelifts in the models. Other changes have been made from time to time based onmarket responses or consumer feedbacks or the competitor moves. Here are thecertain changes observed in different models of Maruti.


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Omni has been given a major facelift in terms of interiors and exteriors two monthsback. A new variant called Omni Cargo, which has been positioned as a vehicle fortransporting cargo and meant for small traders. It has received a very good responsefrom market. A variant with LPG is receiving a very good response from customerswho look for low cost of running.

Versa prices have been slashed and right now the lowest variant starts at 3.3 lacs.They decreased the engine power from 1600cc to 1300cc and modified it againconsidering consumers perception. This was a result of intensive survey done allacross the nation regarding the consumer perception of Versa.

Esteem has gone through three facelifts. A new look last year has helped boost up the

waning sales of Esteem.

Baleno was launched in 1999 at 7.2 lacs. In 2002 they slashed prices to 6.4 lacs. In2003 they launched a lower variant as Baleno LXi at 5.46 lacs. This was to reduce theprice and attract customers.

Wagon-R was perceived as dull boxy car when it was launched. This made it a bigfailure on launch. Then further modifications in engine to increase performance and a

facelift in the form of sporty looking grills on the roof. Now its of the mostsuccessful models in Maruti stable.

Zen has been modified four times till date. They had come up with a limited periodvariant 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 technologyand other time it came up with changes in front grill, head light, rear lights and with

round curves all around.

IV. CUSTOMER CENTRIC APPROACH

Marutis customer centricity is very much exemplified by the five times consecutivewins at J D Power CSI Awards. Focus on customer satisfaction is what Maruti liveswith. Maruti has successfully shed off the public- sector laid back attitude image andhas inculcated the customer-friendly approach in its organization culture. The

customer centric attitude is imbibed in its employees. Maruti dealers and employees


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are answerable to even a single customer complain. There are instances ofcancellation 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 theshowroom and there are norms for service times and delivery of vehicles. The DealerSales Executive, who is the first interaction medium with the Maruti customer whenthe customer walks in Maruti showroom, is trained on greeting etiquettes. Maruti hasproper customer complain handling cell under the CRM department. The Maruti callcenter is another effort which brings Maruti closer to its customer. Their MarketResearch department remains on its toes to study the changing consumer behaviourand market needs.Maruti enjoys seventy percent repeat buyers which further bolsters

their claim of being customer friendly. Maruti is investing a lot of money and effortin building customer loyalty programmes.

V. COMMITTED TO MOTORIZING INDIA

Maruti is committed to motorizing India. Maruti is right now working towardsmaking 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 AssociateBanks 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 themarket, to be the engine of growth in the future. Robust economic growth, favorableregulatory framework, affordable finance and improvements in infrastructure favorgrowth of the passenger vehicles segment. The low penetration levels at 7 perthousand and rising income levels will augur well for the auto industry.

Maruti is busy fine-tuning another innovation. While researching they found thatrural people had strange notions about a car - that the EMI (equated monthlyinstalments) would range between Rs 4,000 and Rs 5,000. That, plus another Rs1,500-2,000 for monthly maintenance, another Rs 1,000 for fuel (would be the cost ofusing 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 need not be.Says Khattar: "What the company is doing now is saying how much you spend onfuel is in your hands anyway. As far as the maintenance cost is concerned, if you

want it that way, we will charge a little extra in the EMI and offer free maintenance."


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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 Rs2,424 crore, making it the biggest privatization in India till date. The size of Marutissell- off deal is proof of its success. On the investment of Rs 66 crore it made in1982, when Maruti Udyog Limited (MUL) was formally set up, the sale represents astaggering return of 35 times The best part of the deal is the Rs 1,000 crore controlpremium the Government has been able to extract from Suzuki Motor Corporationfor relinquishing its hold over Indias largest car company. Now looking at thestrategy point of it for Suzuki, of course, complete control of MUL means a lot.Maruti is its most profitable and the largest car company outside Japan. Suzuki willnow be in the drivers seat and will not have to mind the whims and fancies of

ministers and bureaucrats. Decisions will now become quicker. The response tochanging market conditions and technological needs will be faster, says JagdishKhattar, managing director, MUL. After the disinvestment Suzuki became thedecision maker at MUL. They flowed fund in India for the major revamp in MUL.Quoting from the report that appeared in The Economic Times, 4th April 2005, -The Indian car giant Maruti Udyog Limited has finalized its two mega investmentplans a new car plant and an engine and transmission manufacturing plant. Boththe 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 twoventures, which will be located in Haryana.

The above signifies when GOI was a major stakeholder in the MUL strategies whichlead to investment have had a bureaucracy factor in it but after the disinvestment strategyfollowed is a TOP DOWN approach with a fast implementation.

Suzuki's proposed two-wheeler facility in India, would start making motorcycles and scooters bythe end of 2005 through a joint venture, in which Maruti has 51 per cent stake. The two-wheelerunit will have a capacity of 250,000 units a year.

The disinvestment followed by IPO gives the insight in the fact that now all the strategicdecisions are taken by Maruti Suzuki Corporation. Disinvestment had helped by removing the redtape and bureaucracy factor from its strategic decision making process.

VII. REALISATION OF IMPORTANCE OF VEHICLE MAINTENANCE

SERVICES MARKET


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In the old days, the company's operations could be boiled down to a simple three-boxflowchart. Components came from the 'vendors' to the 'factory' where they wereassembled and then sent out to the 'dealers'. In this scheme, you know where thecompany's revenues come from. The new scheme is more complicated. It revolvesaround the total lifetime value of a car.

Work on this began in 1999, when a MUL team, wondering about new revenuestreams, traveled across the world. Says R.S. Kalsi, general manager (new business),MUL: "While car companies were moving from products to services, trying tocapture more of the total lifetime value of a car, MUL was just making and sellingcars." If a buyer spends Rs 100 on a car during its entire life, one-third of that is spenton 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 overall stream.As the Indian market matured, customers began to change cars faster. Says Kalsi: "Sothe question was, if a car is going to see three users in, say, a life span of 10 years,how can I make sure that it comes back to me each time it changes hands ? So Marutihas changed gears to take a big share of this final one-third spent on maintenance.Maintenance market has a huge market potential. Even after having fifty lakhvehicles on road Maruti is only catering to approximately 20000 vehicles through itsservice stations everyday.

For this they are conducting free service workshops to encourage consumers to cometo their service stations. Maruti has increased its authorized service stations to 1567across 1036 cities. Every regional office is having a separate services andmaintenance department which look after the growth of this revenue stream.

VIII. PLAYING ON COST LEADERSHIP

Maruti is the price dictator in Indian automobile industry. Its the low cost providerof car. The lowest car on road is from Maruti stable i.e. Maruti 800. Maruti achievesthis through continuous improvements in operational efficiency and productivity.The company has set itself (and its vendors) the target of a 50% improvement inproductivity and a 30% reduction in costs in three years. The ability to keep loweringthe prices sets Maruti apart from other players in the league. Maruti spread theoverheads over a larger base.The impressive sales and profits were the result of major efforts within the company.

Akash Suzuki Project Final( to Be Printed)

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