MARKETING MANAGEMENT-IIFORE SCHOOL OF MANAGEMENT
FORE SCHOOL OF MANAGEMENT
OPERATIONS MANAGEMENT IIProject ReportON
MARUTI SUZUKI
Submitted to:
Proff. Kaushal GoelProfessorFore School of Management
Qutub Institutional Area, New Delhi
Submitted by:
Group 4
Abhishek Goel(231009)Aditya Nagpal(231013)Anant
Aggarwal(231023)Anupreet Kaur(231030)Deepankar
Anand(231049)Gursimran Singh(231060)FMG23-A
Date: 23th March 2015
ACKNOWLEDGEMENT
First and foremost, we offer our sincere gratitude to Prof.
Kaushal Goel for giving us this opportunity to work on this project
under his guidance. We are humbled by his constant support and
encouragement which helped us in the realization of this project.We
are humbly grateful to Fore School of Management for providing a
conductive environment for working on this project. We thank Dr.
Jitendra K. Das for providing us an opportunity to be a part of
this institute.Our acknowledgement would be incomplete if we do not
honour and salute our family members, who have always been the
source of constant love, affection and support.
Abhishek GoelAditya NagpalAnant AggarwalAnupreet KaurDeepankar
AnandGursimran Singh
CONTENTSLIST OF FIGURESiEXECUTIVE SUMMARYiiMISSION1INDUSTRY AND
COMPETITIVE ANALYSIS1Passenger Vehicle Industry1Industry
performance for last five years (FY 09 to FY 14)3Growth in demand
for Passenger Vehicles Urban v/s Rural5Market share of different
manufacturers of Passenger cars in India6PERFORMANCE
REVIEW6OBJECTIVE:8MARKETING STRATEGY8Positioning Statement:8Overall
Marketing Strategy8ACTION PLAN9Product Strategy9Points of
Differentiation11Points of Parity11Packaging11Optional
Features11Warranty11Product Objectives11Brand Positioning Bulls
eye12Distribution Strategy12Pricing Strategy12Promotional
Strategy14MONITORING AND CONTINGENCY PLAN15PROFIT AND LOSS
STATEMENT17REFERENCES19REFERENCSOPERATIONS MANAGEMENT IIFORE SCHOOL
OF MANAGEMENT
LIST OF FIGURES
Figure 1: Porters five forcesFigure 2: Market share of Segments
of Automobile industry in IndiaFigure 3: Passenger Vehicles Sales
in UnitsFigure 4: Passenger Vehicle Growth RateFigure 5: Division
of Sales of Passenger VehiclesFigure 6: Projection of Passenger
Vehicle Industry for 5 years (units)Figure 7: Growth in demand for
Passenger Vehicles Urban v/s RuralFigure 8: Market Share of leaders
in Passenger VehiclesFigure 9: Perceptual Map
EXECUTIVE SUMMARY
This report broadly focuses on the Automobile Industry in India.
In this report we have studied and analyzed the Automobile Industry
in India on a broad spectrum and tried to find a segment where we
can place our product which is a compact SUV from MSIL.On the
following pages, you will find Mission Statement: We have studied
the mission, vision and values of MSIL. Core competencies of MSIL
including strong customer base and brand image, well developed
sales and service network and strong knowledge of Indian market
have helped them to survive the tough competition from players like
Hyundai and Honda post liberalization. The present strategies of
MSIL are to make India exclusive car manufacturing base and carry
operations from design till production. In the second part we have
conducted a PESTLE analysis for the automobile industry in India.
Recent initiatives of making India a manufacturing hub with special
emphasis on the automobile industry by reducing excise duty and
allowing 100 percent FDI. Easy finance schemes and tax deductions
in R&D (Economic), increase in number of middle class segment
and opting for comfortable options (Social), word class technology
by global leaders (Technological), provisions relating to safety
and emissions (Political) and growing concerns of communities and
government towards environment (Environmental) are the various
factors that have affected the automobile industry in India at
large. Using porters five forces analysis we have identified high
risk of competitive rivalry and high bargaining power and low
threats of new entrants, substitute products and bargaining power
of suppliers. In the third part we have defined the automobile
industry we want to compete in. The last 5 year sale in passenger
vehicles segment (which is 14 percent of total automobile industry)
gives us a CAGR of 5.11%. Due to decrease in excise duty, reduction
in fuel price and new Economic reforms we estimate growth of 10% in
passenger vehicles in the coming years. Report published by KPMG
shows a major growth in demand for passenger vehicle from rural
segment, breakup of which is presented in detail in the report. The
market share in passenger cars of MSIL, Hyundai, M&M, Tata
Motors and Honda, according to a report published in statista.com
is 42.08%, 15.18%, 9.15%, 5.59% and 5.36% respectively. Further we
have analyzed the marketing strategy of the competitors in our
product segment. In SWOT analysis we have derived the opportunities
and threats from the PESTLE analysis and industry review. PESTLE
points towards a very high opportunity for the automobiles sector,
especially the established ones, due to the projection of India
becoming 4th largest automobile market and sales of 6 million
expected in 2020. At the same time there is an ample opportunity
lying in the development of more fuel efficient and alternate fuel
source technology. But there is also a threat from foreign giants
which are showing increasing sales figures in recent years. FDI of
100 percent is a major threat to MSIL. We have also studied and
presented in details the internal strengths and weaknesses of MSIL.
In fourth Part we have reviewed the performance of MSIL. It is the
only company to cross 10 million saes mark since its inception and
has been ranked no. 1 for 15th consecutive years in customer
satisfaction. The product strategy of Maruti is to focus on
catering the needs of people from lower and middle income groups by
creating products that are unique and valued and it is attaining
advantage either through differentiation via new features, improved
performance, after sales service or through cost leadership at two
state of the art manufacturing facilities in India (Gurgaon and
Manesar). It has the largest distribution & Service network. In
the fifth part we have segmented the population on the basis of
demographic, psychographic and behavioural aspect and targeted
young male professional, having a nuclear family. The positioning
statement we used for our product is To all the young men,
adventure is back! Presenting the new cross, a compact SUV for all
your family needs. Well position our compact SUV towards fuel
efficiency and best in vehicle styling (exterior) in the perceptual
map. In sixth part of the report we have defined our objective
which is to obtain a market share of 10% by selling 60000 units in
the first year estimating per unit profit percent of 20. Seventh
part of this report presents the positioning of our product XA
Alpha as the ultra modern, fuel efficient compact SUV for the new
age modern family, friendly to pocket and easy on maintenance. We
have defined the marketing strategy in detail in the report.
Chapter 8 defined our Action plan we will be adopting to get an
advantage over the prevailing players in the market. Here we have
defined our product, pricing, distribution, promotional and sales
force strategies. We will be launching our compact SUV in three
variants. Detailed points of differentiation and parity, packaging
and warranty structure are discussed further in the report. As a
distribution strategy we will be utilizing the already established
network of Maruti. For pricing we will be adopting market
penetration pricing strategy to fulfil the objective of maximum
market share. The promotion for the product is divided into 4
phases. 9th part of the report presents the Monitoring and
Contingency plans. Different tools are identified for the launch of
our product. Using Marutis extranet-based information network and
balanced scorecard concept, we will measure and track the
performance of the dealers. Trainings, GPS enabled trucks,
exclusive team for handling sales of SUV, group leader assigned to
the group will help in the tracking and monitoring of the sales.
Section 10 gives us the profit and loss account for our product.
Expecting sales of 60000 units in the ratio of 8:9:3 for the LDi,
VDi and ZDi models we will be able to generate a net profit of 77.2
lacs in the first year. Profit in the first year expected due to
low cost of production due to existing setup of MSIL and only cost
involved in R&D, engineering costs, developing prototypes
testing, and making modifications in the existing plant.
(ii)
MISSIONMission StatementTo create exceptional automotive value
for our customers by harmoniously blending safety, quality and
efficiency. With our diverse team, we will provide responsible
stewardship to our community and environment while achieving
stability and security now and for future generations. VisionThe
leader in the Indian Automobile industry, Creating customer delight
and shareholders wealth; A pride of India.Values Customer obsession
Fast, Flexible and first mover. Innovation and creativity.
Networking and Partnership. Openness and Learning.Maruti belongs to
an automobile industry which has tough competitions from other
players after liberalization when companies like Hyundai, Honda,
Skoda and Toyota started selling in India. The core competencies of
Maruti include strong customer base and brand image, well developed
sales and service network, very strong knowledge of Indian market.
The current strategies of MSIL includes develop capabilities and
internal resources to finance its expansion and growth, To make
India an exclusive car manufacturing base to leverage frugal
engineering, to establish R&D facility in India to produce cars
in India, starting from design till production. Marutis leadership
in market is due to its cost advantage which is the least among all
other players in the market. The willingness to pay is also high
because customers can easily pay required cost because they are
getting what they are expecting with low cost.INDUSTRY AND
COMPETITIVE ANALYSISPassenger Vehicle IndustryThe automobile
industry is one of Indias most vibrant and growing industries. This
industry accounts for 22 per cent of the country's manufacturing
gross domestic product (GDP). The auto sector is one of the biggest
job creators, both directly and indirectly. It is estimated that
every job created in an auto company leads to three to five
indirect ancillary jobs. The automobile Sector is divided into four
parts a)Passenger Vehicle; b)Commercial Vehicle; c) Two Wheeler and
d)Three Wheeler.Domestic Market share of each segment in Indian
Automobile Industry in percentage is:
Figure 2: Market share of Segments of Automobile industry in
IndiaData from industry body Society of Indian Automobile
Manufacturers (SIAM) showed that 137,873 passenger cars were sold
in July 2014 compared to 131,257 units during the corresponding
month of 2013. Among the auto makers, Maruti Suzuki, Hyundai Motor
India and Honda Cars India emerged the top three gainers with sales
growth of 15.45 per cent, 12 per cent and 11 per cent,
respectively.The Passenger Vehicle Industry is further divide into
three Categories. Passenger Cars Utility Vehicles Vans
Major players in Indian Passenger Vehicle Industry are:Maruti
Suzuki India Ltd (MSIL)Maruti Suzuki India Ltd (MSIL), commonly
referred to as Maruti and formerly known as MarutiUdyog Ltd, is an
automobile manufacturer in India. The company is engaged in the
business of manufacture, purchase and sale of motor vehicles,
automobile components and spare parts (automobiles). Leader in car
market Market share of 39.12 per cent in overall passenger vehicle
market Production of 1.5 million cars every year Net sales rose
21.3 per cent to Rs 426, 125 million in (US$ 6.83 billion) FY13 Net
profit up by 40.6 per cent to Rs 23,921 million (US$ 383.48
million) in FY13.Hyundai Motor India Ltd (HMIL)Hyundai Motor India
Ltd (HMIL) is a wholly owned subsidiary of Hyundai Motor Company
(HMC). It is the largest passenger car exporter and the second
largest car manufacturer in India. It currently markets 10 car
models across segments (the classification is done on the basis of
the length of the automobiles) in the A2 segment it has the Eon,
Santro, i10, Grand, Xcent and the i20; in the A3 segment the Verna;
in the A4 segment the Elantra; in the A5 segment Sonata; and in the
SUV segment the Santa Fe.Tata Motors LimitedEstablished in 1945,
Tata Motors Limited is India's largest automobile company with over
60,000 employees. The company is the leader in commercial vehicles
in each segment, and among the top in passenger vehicles with
winning products in the compact, midsize car and utility vehicle
segments. Honda Cars India Ltd., (HCIL)Honda Cars India Ltd.,
(HCIL) Is A Leading Manufacturer Of Premium Cars In India. The
Company Was established In 1995 With A Commitment To Provide Hondas
Latest Passenger Car Models And Technologies, To The Indian
Customers. The Company Is A Subsidiary Of Honda Motor Co. Ltd.,
Japan.Industry performance for last five years (FY 09 to FY
14)Domestic Passenger Vehicle Sales Trend
Figure 3: Passenger Vehicles Sales in Units (Source: SIAM)
Passenger Vehicle Growth
Figure 4: Passenger Vehicle Growth Rate (Source: IBEF;
SIAM)Division of sales of Passenger Vehicles
Figure 5: Division of Sales of Passenger Vehicles (Source:
SIAM)Sales Volume of Compact SUV in IndiaCompact SUV/ Sales
Volume20132014
UnitsUnits
Renault Duster5557146786
Ford EcoSport*Launched in June 201356336
Mahindra Scorpio5311858049
Nissan Terrano1253319757
Source: AutoSport.com, Renault Monthly Sales report, Ford
Monthly Sales Report, ET
Projection of Growth in Car Sales for Five YearIn July 2014
passenger vehicle Industry grew by 2.46% (Source IBEF) and its been
increasing since then at rate of 3-5%. Due to decrease in excise
duty, reduction in fuel price and new Economic reforms under P.M
NarendraModi, its been estimated that passenger vehicle industry
will grow by 10%.According to result sales analysis by ford,
Renault and Mahindra UV segment will grow by 15%.CAGR for Passenger
Vehicles: 10%.CAGR for Utility Vehicles : 15%
Figure 6: Projection of Passenger Vehicle Industry for 5 years
(units)Growth in demand for Passenger Vehicles Urban v/s Rural
Figure 7: Growth in demand for Passenger Vehicles Urban v/s
RuralSource: KPMG;TATA motors; Emkay Research; NCAER
The automobile industry has yet to fully tap into demand from
rural areas. Previously, consumers from these areas would need to
go to automobile dealerships in towns and cities for their vehicle
purchases. However, in recent years, market players have made
overtures to rural consumers. We can see a gradual increase in
sales in Rural Areas. There is need for sufficient presence in
rural segments with cars/UVs which meet the specific needs (e.g.,
low cost UVs) of the agrarian, self-employed customer base.Market
share of different manufacturers of Passenger cars in IndiaThe
below statistics shows the market share of different manufacturers
of passenger cars in India in Financial year 2014.
Figure 8: Market Share of leaders in Passenger VehiclesSource:
http://www.statista.com/statistics/316850/indian-passenger-car-market-share/PERFORMANCE
REVIEWMaruti Suzuki India Limited is Indias leading Passenger car
manufacturer and market leader both in terms of vehicles sold and
revenue earned.The company has variety of brands in its basket to
cater to demand of various customers i.e ranging from the peoples
car Maruti 800 to the stylish hatch-back Swift, recently launched
Ciaz sedan and luxury sports utility vehicle (SUV) Grand Vitara.
The company has received various accolades due to its continuous
innovations and technological up gradations. The company today is
very conscious about safeguarding the environment from vehicle
pollution which resulted in launching of its advanced K-Series
engines. Despite of stiff competition, Maruti Suzuki India Limited
is presently considered as the leading automobile manufacturer due
to its significant Economic, Environmental & Social
performances. Maruti is the only company to cross 10million sales
mark since its inception. Maruti Suzuki has been ranked No1 by JD
Power Asia Pacific 2014 in customer satisfaction and for the 15th
consecutive year.Product Mix The product strategy of Maruti is that
its focus is on catering the needs of people from lower and middle
income groups. Company creates products that are unique and valued
and it is attaining advantage either through differentiation via
new features, improved performance, after sales service or through
cost leadership. Maruti Suzuki has divided its products into
various categories as belowHatchbacksAlto 800, Alto K10, WagonR,
Swift, Ritz, Celerio,Stingray
SedansDzire, Ciaz
VansEEco, Omni
SUVs/MUVsErtiga, Gypsy, Grand Vitara
The cars can also be divided on type of fuel used. Some cars are
available in both diesel and petrol option. Few cars come with CNG
fitting too like Alto K10. Pricing Strategy Marutis pricing
strategies are such that every consumer can own a car or upgrade to
another one of his or her choice. Consumers using two wheeler can
upgrade to four wheelers and already four wheeler owners to upgrade
to a better car offered by the company. It follows a
price-point-strategy wherein they have products available in almost
all possible price points. Alto-800 is the lowest price model of
this company. Grand Vitara is the highest price model of the
company.Place Maruti Suzuki has two state of the art manufacturing
facilities in India (Gurgaon and Manesar). This is the advantage
that Maruti enjoys over its competitors since its present in the
country for the longest time period. It has the largest
distribution & Service network comprising of 933 dealerships
across 666 towns and cities of India. It has more than 3000 service
stations in 1454 towns and cities throughout India. It has 30
Express Service Stations on 30 National Highways across 1,436
cities in India. Promotion Strategy Maruti has for most of its
years of operation targeted Indian middle class families as their
main consumers. The company tries to create an emotional connect
with its customers through its advertising campaigns like Count on
Us or Lets go home in a Maruti Suzuki. Maruti Suzuki has also
partnered with certain TV shows like Indias Got talent and also
provides sponsorship to various big events to make its presence
felt. The company also emphasizes on road safety. Company has also
partnered with banks , insurance companies to provide its customer
hassle free environment in purchasing of the car. The company also
has a brand loyalty programme Auto Card to retain customers and and
to increase brand loyalty by giving attractive exchange discounts,
complentary gift vouchers. The company has taken help of all the
promotional tools like radio, television, road shows, print media,
workshops and seminars to promote their cars.OBJECTIVE:To obtain a
market share of 10% by selling 60000 units in the first year.The
estimated profit per unit would be approximately 20% of the Cost of
car, which is to be launched in three variants Ldi for Rs. 7.5
lacs, Vdi for Rs. 8.5 lacs and Zdi for Rs. 9.5 lacs.MARKETING
STRATEGYPositioning Statement:We are positioning the XA Aplha as
the ultra modern, fuel efficient compact SUV for the new age modern
family. It is friendly for the pocket and easy on
maintenance.Overall Marketing StrategyMaruti will use the
established Brand in the minds of the consumer and portray the new
Compact SUV with basic features of Comfort and Sporty look
associating the same as High on Safety, Performance and a New Age
Family car. The new launch shall compete on differentiation on the
grounds of- Fuel Efficiency Best Service Network Computerized Fuel
Management System to optimize fuel consumption
Maruti as a brand is one that has long enjoyed unmatched market
domination in India for decades as one whose quality service,
genuine spares and a customer friendly dealership is available
across the every nook and corner of urban India, characteristics
which its competitors in the segment cannot establish in the
foreseeable future. To best take advantage of the same, the target
customer is a young male professional, having a nuclear family. He
aspires to own a vehicle that is technology-feature rich, premium,
sporty and modern. The vehicle has been designed to differentiate
him from others in his social circle, who own cars and at the same
time support their daily personal and professional needs. This
makes the possession of a compact SUV by an age old trusted and
well penetrated brand a tempting choice for the consumer who wishes
and is able to pay more than a sedan/hatchback for an all weather
and road car while increasing their societal prestige.The vehicle
is suited for urban lifestyle enabling one to discover new places.
Thus it is targeted mainly for the tier 1 and tier 2 cities.The
promotional activity for the new launch would comprise of
advertisements in TV and print media, events and experiences
through activities such as ride and drive events and celebrity
endorsements. Maruti has a strong dealer network. Thus we would
make use of the already established vast dealer and service network
for the new launch.Sales ObjectivesThe target is to gain 8-10% of
market share in the first year by selling 60000 units. We will opt
for aggressive marketing strategies in order to achieve a sales
target of 1,00,000 lac units in a time span of 1.5 yrs. The
expected sales for the upcoming years are mentioned below :- First
year 60,000 units Second year 75,000 units Third year 93,750
unitsACTION PLANProduct StrategyWe have developed marketing plan
for the launch of a Compact SUV (Sub urban vehicle) under the brand
of Maruti-Suzuki, by the name of XA Alpha.Specifications of XA
Alpha for LDI (Basic) Model Engine: 1.3 litre multijet Deisel
Engine Fuel Type: Deisel Maximum Speed: 180 kmph Gear Box : 6 Speed
manual Transmission Maximum Power: 105 bhp Other: 64-bit
Computerized Fuel Management System
Features of XA Alpha for LDI (Basic) Model (14)
Air Conditioner with Front and Rear A/C Vents Power Steering
Engine Start/Stop Button Foldable Rear Seat Bench Folding
Navigation System Adjustable Seats Integrated 2DIN Sony Touch
Screen Audio System with Bluetooth Connectivity Automatic Climate
Control Air Quality Control Multi-function Steering Wheel LED day
Light ABS system Air bags in FrontThe XA Alpha will be launched
with 3 variants.LDI : Will be the basic model of XA AlphaVDI : It
will have all the features of basic model plus the additional
feature will be two modes of driving i.e Economy and Sports mode.
ZDI : It will have all the features of VDI model plus additional
features will be Cruise Control, Automatic Transmission, 4 Air
bags, Alloy Wheels, Active Parking Assist and panoramic
sunroof.
Points of Differentiation Vast Service Network of Maruti-Suzuki
giving XA Alpha a low maintenance cost and assured high Reliability
from Maruti. Highly Fuel efficient giving mileage of 19/22 kmpl in
city/highway. Computerized Fuel Management System to optimize fuel
consumption based on drivers Driving pattern.Points of Parity A
5-seater comfortable passenger car giving a feeling of luxury and
high on performance. It has great styling and gives a sporty look.
Easy to Drive.PackagingXA Alpha will be launched in 7 Color:
Obsidian Black Palladium Silver Polar White Imperial Blue Electric
Red Sparkling Bronze Mineral Gray
Optional Features Can add Spoiler to the car costing an
additional Rs. 10,000\- Stickers and custom paint job as per the
Customer requirement at the time of placing order by paying
additional Rs.25,000\- WarrantyEvery Maruti Suzuki car comes with a
statement of support to promote customer confidence: our warranty.
The support it provides is in the form of replacement parts or
repairs done for qualified failures associated with manufacturing
defects in material and/or workmanship.Our primary warranty, as of
now, is for a period of 36 months or 50,000 kms (whichever comes
first) from the date the first owner takes delivery.Forever Yours
is the extended warranty program. The standard warranty can be
extended by one or two years for a nominal amount, at any time
before the warranty period ends or before 40,000 kms.Product
ObjectivesWe want to provide our customers, a car with sporty looks
& comfortable driving experience combined with an unbelievable
mileage. We will promote the following characteristics of our car
by communicating these features1-Mileage2-Sporty looks 3-Features
4-Space
Brand Positioning Bulls eye
Distribution StrategyDistribution strategy of a firm is a plan
created by the management of a manufacturing business that
specifies how the firm wishes to transfer its products to
intermediaries, retailers and end consumers. Maruti has a strong
dealer network. In fact it was one of the very first companies in
the country to understand the importance of after sales service in
high involvement products like cars. It has the largest
distribution & Service network comprising of dealer sales
network of 1204 in 874 cities and service network of 3013 in 1436
cities. It has 30 Express Service Stations on 30 National Highways
across 1,314 cities in India. Most of the service stations are
managed on franchise basis where Maruti trains the local staff. To
increase their reach to rural India, where setting up a complete
dealership was very difficult, they opened extension counters which
are operated by some dealer in the city thereby ensuring increased
customer touch points without risking the viability of the dealers.
Thus we would make use of the already established vast dealer and
service network for the new launch.Pricing StrategyThere are
various factors to determine a priceof a car, such as market
condition, cost incurred to build a car, profit by company, dealer
margins.Objective: To get maximum market share in the long term in
their respective segment. MUL follows a market-penetration pricing
strategy to fulfill its objective.Elasticity: Demand curve for cars
is highly elastic since price in an important attribute and plays a
major role in consumer decision making for cars and there is also a
significant competition for cars in this segment.Particulars for
LDi ModelCost per Unit (Rs.)
Cost of manufacturing a car4,50,000
Excise Duty-12%54,000
Warehousing2,000
Selling,Transportation & Freight Insurance15,000
Admin Expenses & Operating Costs30,000
Promotion20,000
Distributor Margin 60,000
Total Cost6,31,000
Profit Margin by Company1,20,000
Ex-Showroom Price7,51,000
Registration Charges(8.75%)65,712.5
MCD registration and Road tax(4.5%)36,856.25
Insurance24,000
On Road Price to customer8,78,570
*Note: Registration charges and Road Tax are applicable in
DelhiThe company offered a different model at a price difference of
around 100,000 and the prices below are Ex-showroom prices. Ford
EcosportRenault DusterMaruti XA Alpha
Base model Rs. 7,80,000Rs. 8,99,000Rs. 7,51,000
Middle ModelRs. 8,90,000Rs. 10,73,000Rs. 8,51,000
Top ModelRs. 9,89,000Rs. 11,63,630Rs. 9,51,000
For the base model(LDI),the company keeps a profit of 8% i.e.
Rs.60000 for the dealer and the profit increases nominally as per
the variant.For the VDI,which achieves the highest sales, the
profit kept for dealers is of 10% and in case of the top end
model(ZDI) is it restricted to 11%.As far as the payment terms are
concerned, the company doesnt have any credit terms with the
dealers, the cars are delivered only after receiving the complete
payment from them. The company also has incentives (1.5% discount)
for dealers who cross a sale target of 100 units per month.The Car
has been strategically priced among its competitors. MUL has an
excellent brand image in compact car segment build over last three
decades. This adds to consumer perceived value. The price of the
car is also at par with the benefits it provides to the customers
which is in accordance to MULs brand image. The price of the
product is subject to fluctuation in price of raw materials and
foreign exchange rates. Company has to charge for covering these
risks. Promotional StrategyPHASE 1:XA Alpha will be launched in
Auto Expo 2016. This is the first time, the car would appear for
press and public. Full page front advertisements would start
appearing in major national newspapers like HT, TOI, Navbharat
Times, Economic Times, Punjab Kesri , Tribune and local dailies too
from December 2015 on weekends, not revealing the car name, but
just indicating that a compact SUV from Maruti Suzuki is going to
be launched in the upcoming Auto-Expo 2016.The advertisements would
focus on exciting the customer about coming to the Auto-Expo and
taking the first look of the new SUV. The tag line which would
appear in the newspapers for December would be:Come and experience
the next generation of compact SUVs by Maruti Suzuki this Auto-Expo
season. The car showcase would be done by celebrity Akshay Kumar,
since his public image relates to the personality of the car we are
launching, Stylish, modern and for the Indian family.PHASE 2:After
being launched in the Auto-Expo, the car would be available through
various events for experiencing, covering mainly the major malls in
our target cities, and also would be available at all the showrooms
across the country for a test drive experience. The weekend (full
page front/back ads) newspaper coverage would continue to attract
the interest of the customers.There would also be TV advertisements
running along with these campaigns in which Akshay Kumar would be
seen endorsing XA Alpha. The post launch tag line for XA Alpha plus
would be: DONT DREAM, DRIVE ITBE AN ALPHAPHASE 2 ADDED ATTRACTION:
After 2 weeks of these campaigns running, there would be a special
weekend newspaper promotion activity in which a real car key would
be given attached/sticked with newspaper front add and customers
can bring that car key for test drive and win gift hampers from
Maruti Suzuki.
PHASE 3: After 1-2 month of the launch, an event called RIDE AND
DRIVE would be organized in major cities/metro cities in which car
rallies would be organized and people who already have the car,
booked the car would be invited. Also various people like prominent
bloggers for auto industry ,media, journalists would be
invited.PHASE 4: Maruti Suzuki plans to present one XA Alpha to the
man of the series in T20 World Cup.APPROXIMATE BUDGET FOR THE ABOVE
MENTIONED PROMOTIONAL ACTIVITIES:MODEAPPROXIMATE
BUDGET(Cr.)%REMARK
AUTO EXPO.45.375AUTO-EXPO can provide a great platform for
capturing the target audience plus a great media coverage.
CELEBRITY ENDORSEMENT1512.5Brand personification/Public
attraction.
NEWSPAPER ADSAND PROMOTION 4537.5Mass awareness. All major
national and local dailies to be covered, primarily on
weekends.
TV ADS ANDPROMOTION4033.33All major channels like news, sports,
family and entertainment.
RIDE AND DRIVEEVENT108.33Generating and maintaining customer
interest.
T20 WORLD CUPJune July 20169.557.95Creating more Brand/Product
value and popularity.
Total120100
Source: All estimates have been quoted by taking prices from
various websites from the internet.MONITORING AND CONTINGENCY PLANA
well planned and managed launch plan is critical to a new products
success in the market place and achieving product goals. From the
customers view point , the launch of a new product or service must
appear smooth and its value proposition compellingSupport Tools for
effective launch Sales force ,tools and training Distribution and
logistics CRM Tools Product Management Tools and KPILaunch
Monitoring and Adjustments Performance dashboards Operation
monitoring Product Performance Tracking
The sales network of Maruti is linked with the secured
extranet-based information network. The dealers are asked to
maintain the showroom as per the norms and specification provided
by Maruti. By the help of balanced scorecard concept, MUL measures
the performance of the dealership in areas like services, sales,
spares and accessories, management system and financial management.
The dealers who perform well are rewarded by the company at the end
of each financial year thereby enhancing the performance of the
dealers.
The company exclusively arranges training for all the staffs
(technical, non-technical) to keep them well-run. The companys
trucks carrying the vehicles are all equipped with GPS so that the
dealers can track their dispatch from the factory to the
showrooms.
Since all the cars are sold under one roof, the only way to
boost the sales of the SUV is by assigning exclusive manpower to
the new product with complete accountability for sales of the car.
There would be an exclusive team handling the sales of the car and
would trained appropriately about the SUV.
Apart from showroom sales there are other channel of sales that
need to be looked and monitored. These could be retail finance
sales, institutional sales and sales through direct marketing
activities. There would be a separate team handling each kind of
sales. For ease of monitoring and controlling one person from each
of the specified sales team would be designated as group leader,
who would be accountable for teams performance.Once the showroom as
well as field teams are in place, there would be a marketing
manager to coordinate the activities of these various teams and be
responsible for strategy formulation, target setting, monitoring
and evaluation of performance of each team, in line with overall
objectives of the company.Sales planning involve two concepts
Target setting: Target for each month to be defined and
communicated to the team. This will give each member a goal to
strive for and help in quantifying his/her performance. Enquiry
Targets: For achieving the desired sales volume, it is important
that adequate number of sales enquiries are generated .Depending
upon enquiry to conversion (sales) ratio, target for the number of
enquiries per month should be defined. Enquiry generation would of
course depend upon the publicity level. Therefore a well planned
target setting and monitoring system for enquiries will make the
task of achieving sales target easier.Monitoring achievements
against targets at regular intervals is of immense importance. It
allows us to take stock of the situation every ten days and help in
initiating corrective actions well before the month end.In the
worst case scenario if this plan fails, exiting from the segment is
not an option. Marutis vision is to be a leader in the automobile
industry and to be a major player in the industry its crucial to
enter the compact SUV segment. This is a segment where the size of
the target customers are growing at a fast rate and at the same
time the number of players catering to the needs of these consumers
are relatively low. Hence if the present plan fails, Maruti should
reposition and try and break into the segment again. It can reduce
the price since the margin is good enough else it can also do
facelift like change some styling like introduce new headlamps,
exterior grill or some changes in the interior.PROFIT AND LOSS
STATEMENTLDI ModelVDI ModelZDI Model
Units Produced 28,80032,40010,800
Units Sold 24000270009000
ItemsPer Unit Price (Rs.)Total Cost (Rs.)Per Unit Price
(Rs.)Total Cost (Rs.)Per Unit Price (Rs.)Total Cost (Rs.)
*10000*10000*10000
Fixed cost For R&D, Assembly Line for New Car
14000157505250
Cost of manufacturing a
car45000012960004900001587600535000577800
Excise Duty-12%54,000155520588001905126420069336
Warehousing2,00057602000648020002160
Selling,Transportation & Freight
Insurance15,0004320015000486001500016200
Admin Exps & Operating
Costs30,0008640030000972003000032400
Promotion20,0005760020000648002000021600
Distributor Margin 60,00017280085000275400104500112860
Total Cost18024002297700855900
Ex-Showroom Price751000851000951000
Total Sales ( Units Sold X Ex-Showroom
Price)18024002297700855900
Profit /Loss(Total Sales - Total
Cost)-10027.78-288803505.561135816938.8918294
Net Profit77,20,000
The Net Profit made on all the models combined is Rs. 77.2 lacs
and closing Inventory of 12,000 units.Since Maruti has an existing
set-up for production of cars and had reached the breakeven point
in 1970s, the costs of developing a new car involves R&D,
engineering costs, developing prototypes testing, and making
modifications in the existing plant, the expected costs sums up to
Rs.35cr.These figures have been estimated on the assumption* that
40% of sales are of the base variant(LDi), 45% of the cars sold are
of the intermediate variant (VDi) and nearly 15% of the sales are
of the top model(ZDi).*This assumption has been taken on the data
provided by an authorized Maruti dealer loacated in Lajpat Nagar.As
per the usual demand of customers, the production of each variant
will also be in the ratio of 8:9:3. We have estimated that the
annual production is of 72000 units, however we were successful in
selling 60000 units. The respective costs and profits per variant
are given below.
REFERENCES
KPMG Automotive Survey-2012 and -2014.Crisil Automotive Sector
in India
Researchwww.ibef.orghttp://www.siamindia.com/scripts/market-share.aspxhttp://118.67.250.203//scripts/industrystatistics.aspxwww.ibef.org/download/Automobile-August-2014.pdfarticles.economictimes.indiatimes.com/2014-04-11/news/49058710_1_honda-cars-india-maruti-suzuki-india-passenger-vehicle-saleshttp://www.managementparadise.com/knt.nallasamygounder/documents/5040/marketing-strategy-analysis-of-maruti-suzuki/http://www.slideshare.net/iimjobs/india-automobiles-sector-report-april-2014http://www.managementparadise.com/knt.nallasamygounder/documents/5040/marketing-strategy-analysis-of-maruti-suzuki/http://www.marketing91.com/swot-analysis-maruti-suzuki/www.mbaskool.com/brandguide/automobiles/1299-maruti-suzuki.htmlArticles
from Business Standard, Economic
Times.http://www.careergyaan.org/downloads/scdl/38119894-car-strategies-in-india.pdfhttp://en.wikipedia.org/wiki/Ford_India_Private_Limitedhttp://en.wikipedia.org/wiki/Renault_India_Private_Limited