Maruti Marketing mix

Contents

Serial No. Particulars Page No.

01 Acknowledgement 02

02 Company History And Background 03

03 India Four Wheeler Industry 05

04 Facts about Indian Car Market 06

05 Market Scenario (2008-09) 08

06 Market Segment Analysis 09

07 Objective of the Company 10

08 Marketing Mix (Product) 11

09 Marketing Mix (Price) 11

10 Marketing Mix (Place) 12

11 Marketing Mix (Promotion) 12

12 SWOT Analysis 13

13 Key Strategic Initiatives By Maruti 15

14 Factors that influence the consumer’s buying decision

17

15 Business Environment Factors 18

16 Conclusion 19

17 Bibliography 20

1 Paurak R. Shah (NIS Academy, Ahmedabad)

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 of this project.

First and foremost, I would like to thank Ms. Bina Patel , NIS

Academy for his constant guidance and support throughout this

project. During the project, we realized that the degree of

relevance of the marketing strategies being imparted in the

industry is very high. The marketing strategies study 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 inputs have helped us

to incorporate relevant issues into our project.


Maruti suzuki India LTD

Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament, to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. It was established with the objectives of - modernizing the Indian automobile industry, producing fuel efficient vehicles 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 because of its track record in manufacturing and selling small cars all over the world. 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 equity to 50% turning Maruti into a non-government organization managed on the lines 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 produced 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 of Rs 92.5 billion, high depreciation on new model launches resulted in a book loss.

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-liberalization period (1992-97, 1997-2002), followed by the full privatization of Maruti in June 2003 with the launch of an initial public offering (IPO).The first phase started when Maruti rolled out its first car in December 1983. During the initial 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 about a decade (beginning of second phase in 1992) had turned itself into an automobile 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 1999. 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 strength was the wholehearted willingness of the Government of India to subscribe to Suzuki’s technology and the principles and practices of Japanese management. Large number of Indian managers, supervisors and workers were regularly sent to the Suzuki plants in Japan for training. Batches of Japanese personnel came over to Maruti to train, supervise and manage. Maruti’s style of management was essentially 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 is 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 into practices that Maruti’s culture approximated from the Japanese management practices.


India Four Wheeler Industry

The Four-Wheeler Industry in India has not quite matched up to the performance of 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 the industry in the mid-1990s. The

various layers of legislative Acts sheltered the industry from external competition for a long time. Moreover, the industry was considered low-priority as cars were thought of as unaffordable luxury". 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 to 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 market across the globe. The main encouraging factors for the success story of the car market in India are the increase in the opportunity for new investments, the rise in the GDP rate, the growing per capita income, massive population, and high ownership capacity. The liberalization policies followed by the Indian government had been inviting foreign players to participate in the car market in India. 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 significantly, which has further led to the increase in the demand for luxurious cars among them.

The car Market in India is crowded with all varieties of car models like the small cars, mid-size cars, luxury cars, super luxury cars, and sports utility vehicles. 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 launched 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 India Private Ltd., Daimler Chrysler India Private Ltd, Ford India Ltd., Honda Siel Cars India Ltd., General Motors India, Hyundai Motors India Ltd., Skoda Auto India 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 car market.

Facts about Indian Car Market:

Although the Indian automobile industry has come a long way since the deregulation in 1993, India does not rank well among its global peers in many respects, viz., the contribution of the sector to industrial output, number of cars per person, 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, while Unites States has 76.9 cars on per 100 persons. Among developing countries, Russia also stands ahead than India and China with 16.3 cars per 100 persons.


INDIA EUROPE US CHIINA JAPAN RUSSIA0

20

40

60

80

100

120

6.9

40.8

76.9

1.6

41.3

16.3

Series 2Series 1

Two things that stunted growth of the Indian automobile industry in the past have been low demand and lack of vision on the part of the original equipment manufacturers (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 research and development (R&D) entered the Indian market. This has resulted in a significant shift in the way business is conducted by suppliers, assemblers and marketers.

Vision The leader in the India Automobile Industry, Creating Customer Delight and Shareholder’s Wealth; A pride of India”

MissionTo provide maximum value for money to their customers through continuous improvement 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 authorized service outlets.The company's change in strategy and emphasis on developing effective marketing communications was their highlights.



MARKET SCENERIO (2008-09)

The company vouches for customer satisfaction. For its sincere efforts it has been rated (by customers)first in customer satisfaction among all car makers in India for ten years in a row in annual survey. 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. 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 14 December 1983.


Market Segment AnalysisBased on economic strata, the Indian auto consumer segment can be sub divided in to 5 categories:

Economy Mid-Range Luxury Premium Super Premium


OBJECTIVE OF THE COMPANY

Maruti’s marketing objective is to continually offer the customer new products and services that:

Reduce the customer’s cost of ownership of their cars; andanticipate and address the customer’s needs and preferences in all aspects and stages of car ownership, 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 in 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 the market is a significantly upgraded version, in terms of technology, design and styling, of the Maruti 800 launched in 1983.

GRADE CARA Maruti 800A OMNIB ZenB Wagon RB AltoC EsteemC BalenoC VersaC SWIFT

Utility Vehicle GYPSY KINGUtility Vehicle GRAND VITARA


4Ps:-

Product Price

PlacePromotion

Product Strategy:- Portfolio of 12 products

Five product lines

Product Line ProductsA1 800A2 Alto, Zen ,Wagon –R, Swift, A-starA3 D ZiRE, Sx4SUV Vitara, GypsyC - 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 decided 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 support in 1220 cities.


SWOT AnalysisSTRENGTHS

1. Bigger name in the market.2. Established distribution & after sales network.3. Understanding of the Indian market.4. Ability to design product with differentiating features.5. Brand Image.6. Experience & Knowledge how in technology.7. Trust of People.8. Maruti Udyog Ltd. is the market leader for more than

decade.9. Has a great dealership chain in the market.

10. Better after sales service. 11. Low maintenance cost of vehicle.

WEAKNESSES1. Lack of experience in foreign market.2. Comparatively new to diesel cars.3. People resistant to upper segment models.4. Heavy import tariff on fully built imported models.5. Exports are not that good.6. Lesser diesel models in the market compare to others.7. Global image is not that big.


OPPURTUNITIES1. Increased purchasing power of Indian middle class

family.2. Government subsidies.3. Tax Benefits.4. Prospective buyers from two – wheeler segment.5. Great opportunities to go global with success of Swift

and SX4 allover.6. Introduction of more diesel models. The diesel car

segment is growing.7. Opportunity to grow bigger by entering into bigger car

markets.8. Already a market leader so great opportunity to be the

king of market in every stage of industry.

THREATS1. Foreign companies entering market; so a bigger threat

from MNCs.2. Competition from second hand cars & TATA Nano.3. Threats from Chinese manufactures.4. To the market share, as many big names are coming in

the industry5. There is hardly any diesel models6. Rs. 1 lakh – Rs. 1.5 lakh car


StrategyTheir strategy is to capture the rural market by employing women who belong to their local community through which their product can reach to local consumers. Their strategy is to provide work for women to create awareness among confined consumers

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 their own local community and who can communicate well in their language with them. In this way many educated women get work in rural sector and on the other hand HLL Corporate Social Responsibility (CSR) also increases towards society by introducing 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, controlling about 84% 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 years and resulted in the declining profits and market share for Maruti. At the same time the Indian government permitted 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 initiated strategic responses to cope with India’s liberalization process and began to redesign 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


development 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 different segments of the market. In its redesign plan, Maruti, launches a new model 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 on bulk 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. When Maruti 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" 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 market".

1997: "Creating customer delight and shareholders wealth".

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 gets 70% business from repeat buyers who 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 product offering is to be in the consideration set of every passenger car customer in India. Here is how every price point is covered.


Factors that influence the consumer’s buying decision for the productCultural

Social

Culture

Subculture

Social Class

Reference group

Family

Roles and statuses

Personal

Age and life-cycle stage

Occupation

Economic circumstances

Lifestyle

Personality and self-concept

Psychological

Motivation

Perception

Learning

Beliefs and attitudes

Buyer

A. Cultural Factors Value, perception, and preferences

Nationalities, religion, race, geographical regions

Social class

B. Social Factors Reference Groups

Social Class

Roles & Status

C. Personal Factors Economics Circumstances

Occupation

Age & Life Cycle Stage

Lifestyle

Personality and self-concept

D. Psychological Factors Motivation

Perception

Learning

Beliefs and attitudes


Business Environment Factors

Political Factors:-1. Government continuously slashing tax rates.

2. Government has launched automotive mission plan (AMP).

3. Automatic approval for FDI in automobile sector.

Economic Factors:-1. Stable economic policies.

2. Easy availability of finance.

3. Economics incentives by local state Government.

4. Lower duties & taxes.

5. Huge domestic demand.

Social Factors:-1. Lucrative market in rural India.

2. Rapid urbanization and income levels.

3. Skilled labour costs amongst the lowest in world.

Technological Factors:-1. Four Lakhs pass out every year.

2. Credible local suppliers of high quality components.

3. India emerging as an automobile hub for automobile manufacturing & research.

Ecological Factors:-1. India automotive regulations are closely aligned to world standards on emission

& safety.

2. Proximity to major export market.

Legal Factors:-1. Weighted tax deduction up to 150% on in house R & D activities.

2. Relatively High import Duties


CONCLUSION

The price of a car is just one-third of what it cost you over its lifetime. Running and maintaining it make up the other two-thirds. Take into account resale value and its real cost becomes clear. Maruti Suzuki stands for value as much as it stands for performance. In spite of rising input costs, we try our best to keep 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 drive 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 specialist division of TNS Automotive, the automobile ownership experience or customer ownership experience has declined in all areas compared to 2004. The study 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 over 50 models with customer evaluations taken in the key areas of sales satisfaction, product quality, vehicle performance and design, after-sales service, brand image, and cost-of-ownership. The TCS index score provides a measure of satisfaction and loyalty a given model enjoys with its customers. According to TNS Automotive, the decline is predominantly for older, small and entry mid-size car models. The ageing of these models seems to be posing a stiffer challenge for manufacturers to sustain past performance levels at a time when customer expectations are rising sharply.


BibliographyBOOKS

PGDAM (Post Graduate Diploma in Applied Management) Book - Semester 1 (Courseware 3)

NEWS PAPERS

THE ECONOMIC TIMES

THE TIMES OF INDIA

MAGAZINES

BUSINESS INDIA

INDIA TODAY

INTERNET WEBSITES

www.google.com

www.marut isuzuki .com


http://www.google.com/

Maruti Marketing mix

Documents

maruti factors

privatization of maruti

shah nis academy

initial years maruti

suzuki motor company

suzuki plants

capital of rs

profit of rs