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MUMBAI UNIVERSITY, PUNE M.COM (Part-I) (SEM-I) STRATEGIC
MANAGEMENT (PROJECT) YEAR: 2012 2013 PROJECT TOPIC: A PROJECT
REPORT ON MARUTI 800 NAME OF THE STUDENT: KURESHI FATIMA HABIBULLA
NAME OF THE COLLEGE: RAJASTHANI SAMMELANS GHANSHYAMDAS SARAF
COLLEGE, AFFILIATED TO UNIVERSITY OF MUMBAI ACCREDITED BY NAAC WITH
A GRADE & DURGADEVI SARAF JUNIOR COLLEGE (ARTS AND COMMERCE)
S.V.ROAD, MALAD (W) MUMBAI _ 400064.
PROJECT GUIDE: PROF. MISS. RASHMI BHATTACHARYAM.COM (PART I) SEM
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DECLARATIONI miss KURESHI FATIMA HABIBULLA of GHANSHYAMDAS SARAF
COLLEGE of Arts & Commerce of class M.COM (PART-I) (SEM-I)
herby declare that I have completed STRATEGIC MANAGEMENT project
titled A PROJECT REPORT ON MARUTI 800 in the academic year 2012
-2013. The information submitted is true and original to the best
of my knowledge.
Date:
Signature of Student
M.COM (PART I) SEM - I
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CERTIFICATEI Prof. Miss. RASHMI BHATTACHARYA hereby certify that
miss KURESHI FATIMA HABIBULLA of GHANSHYAMDAS SARAF COLLEGE class
M.COM (PART-I) (SEM I) has completed STRATEGIC MANAGEMENT project
titled A PROJECT REPORT ON MARUTI 800 in the academic year 2012
2013. The information submitted is true and original to the best of
my knowledge.
External Guide:
Project Guide:
Date:
Date:
College Seal:
Principal:
M.COM (PART I) SEM - I
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ACKNOWLEDGEMENTI miss KURESHI FATIMA HABIBULLA of GHANSHYAMDAS
SARAF COLLEGE of Arts & Commerce of class M.COM(part-I) (SEM I)
would like to thank UNIVERSITY OF MUMBAI and my college for giving
me this opportunity for taking such a challenging project, which
has enhanced my knowledge about the topic A PROJECT REPORT ON
MARUTI 800 in the academic year 2012 2013. It is with a deep sense
of gratitude, I would like to thank to Prof. Miss. RASHMI
BHATTACHARYA under whose guidance I was able to complete my project
successfully.
Date:
Signature of Student
M.COM (PART I) SEM - I
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INDEX: Project Title Declaration Certificate Acknowledgement
Index I II III IV V Page No. 6 7 8 9 11 13 17 17 19 21 23 32 33 36
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Sr. No. TABLE OF CONTENTS 1. 2. 3. 4 5. 6. 7. 8. 9. 10. 11. 12.
13. 14. 15. Justification and relevance Introduction Product
(Maruti 800) Background The past: limited choices left better alone
SWOT Analysis PEST Analysis for Maruti 800 to enter India
Segmentation, Targeting, Positioning of the Maruti 800 Reasons For
The Success of the Maruti800 The 800's Effect on India Maruti 800
In The BCG Matrix As Of 2004 Maruti 800s Competition And Strategy:
2000 Onwards Timeline The 800: Future Imperfect? Fate Of
Maruti-800: Bibliography
M.COM (PART I) SEM - I
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TOPIC FOR THE STUDY: Maruti 800 Model Car Of The MUL Company.1.
JUSTIFICATION AND RELEVANCE: Maruti 800 was a revolution of sorts
in the 4-wheeler area in India. It was the first small car to be
launched in India. The strategies used by MUL from time to time to
maintain/increase the sales of Maruti 800 were exemplary. It was
the leader in market sales for nearly 20 years. All these points
make for a good case-study.
M.COM (PART I) SEM - I
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2. INTRODUCTION: COMPANY (MUL) INTRODUCTION:MUL was a joint
venture created in February 1981 between Japans Suzuki Motor
Company and the Indian Government when the latter decided to
produce small, economical cars for the masses. The intention from
the beginning was to produce a peoples car. To get the project off
the ground MUL took over the assets of the erstwhile Maruti Ltd.,
which was set up in 1971 and closed in1978.It was the fagend of
1983, in the cold winter of North India, when one Harpal Singh of
New Delhi was handed the keys to a small,
never-seen-before-in-India, hatchback by the then Prime Minister,
the late Indira Gandhi. What in any other circumstances would have
been just an ordinary car launch turned out to be the start of the
automobile revolution in India.
M.COM (PART I) SEM - I
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3. PRODUCT (MARUTI 800) BACKGROUND:On December 14, 1983, MUL
launched the first Maruti vehicle the Maruti800. The first model
was the SS80, a 796cc hatchback car priced at Rs.
47,500.Subsequently, in spite of price hikes, the car remained
within the reach of the Indian middle class and became a runaway
success. Available in vibrant colours when Indias passenger car
population comprised mainly Ambassadors and Fiats in black and
white, M800 gave Indians the first taste of global quality and
reliability. In the 1980s, the Maruti 800 (M800) was Indias first
peoples car. It caught the fancy of the middle class. Maruti Suzuki
has never looked back since. In fact, in 2004, MUL will mark its
21st year of leadership in the Indian car market. The M800, first
manufactured in 1983, has sold over 2.1 million units. Even though
competition predicts that the A segment is dying, the M800
continues to sell an average 12,000 units per month. The Maruti800
may be based on 1980s technology, but it remains very popular as an
entry-level model in India. Its obituary has been written before,
but the 800 has defied predictions of its demise. But changes to
the regulatory environment in India could finally mean the end of
the road for the 800.
M.COM (PART I) SEM - I
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4. THE PAST: LIMITED CHOICES BETTER LEFT ALONEIndia's protected
market meant that until the early eighties Indians had essentially
three model choices in terms of automobiles: the Morris Oxford
derived Hindustan Ambassador, theFiat1100 derived Premier Padmini
and the Standard Herald derived Gazel. With all three products
obsolete, quality construction more of an
afterthought and attributes like power, safety and comfort being
last on a manufacturer's to-do-list, the Indian automobile industry
was going through what might be termed its anthracite period in
history. The company Maruti Udyog was conceived by the Indian
government in 1981as a means of providing affordable personal
transportation to Indians. Named after Hanuman, the name of the God
of Wind in Hindu mythology, Maruti was the brainchild of the late
Sanjay Gandhi, son of the then Prime Minister Indira Gandhi. After
toying with the idea of a joint venture with Volkswagen, Renault,
Daihatsu and some other majors, Suzuki was short-listed because of
the Japanese major's expertise in small cars.TheMaruti800 based on
the European Alto IV (SS80 in export markets) was launched in
December 1983 in a four-door, two-box saloon (the tailgate opened
only from the externally hinged rear window that was the access to
the boot area) with a total length of 329.5cm. The car was powered
by a 796cc, three-cylinder, SOHC, 6-valve, carbureted engine and
had front-wheel drive. Power was 39 bhp, which though not much,
still made for a respectable power-to-weight ratio because the car
weighedM.COM (PART I) SEM - I
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slightly above 600kgs. The launch price was INR 47,500 making it
the cheapest car at that time in India. The rivals tried to play it
down on the power front, citing three cylinders to be insufficient
for taking on a five-passenger load. However, the Maruti 800 proved
everyone wrong by a long margin. It was a time of licenses in India
and manufacturers needed to get a license from the government on
what to make and what numbers to make. This used to create a huge
gap between demand and supply resulting in long waiting lists.
Often waiting lists for cars would take up to three years to clear.
A Maruti800 booked in 1984-85 would be cleared only by 1987-88. The
800 soon notched up a huge waiting list as sales
boomed.TheMaruti800, in 1983, marked the introduction of the modern
automobile into the Indian passenger car market. People were awed
by Japanese reliability, ease of operation, refinement and fuel
efficiency - attributes that the small Indian passenger car
industry, in 1983, was unable to provide.
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5. SWOT ANALYSIS:
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i). MARUTI- SUZUKIS STRENGTH: At the time of its entry in the
Indian auto sector was its technological know-how and ability to
produce quality products. They had expertise in engine building
courtesy Suzuki .They knew what the Indian car buying populace
desired and they delivered it in spades. ii). WEAKNESS: At the time
could only have been its relative inexperience with the Indian
audience. Maruti were entering muddy waters and they read the minds
of the consumer so well that the company became Indias largest car
manufacturing company with the largest number of models and
iterations on the road and today with a commanding market share of
close to 50%. iii). OPPORTUNITY: That was quickly realized by
Maruti was the existing demand for enhanced mobility among the
Indian car buying audience. They wanted and deserved better
products which Maruti had and was ready to sell to them. The
growing purchasing power and disposable income of the Indian middle
class was at an all time high which was perfectly tapped by Maruti
with the all conquering 800.
M.COM (PART I) SEM - I
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iv). THREAT: At the time could only have come by way of
sanctions that the Indian government could have applied on Maruti
or from a similar new entrant that could have also entered the
Indian market like Suzuki. There was no major threat to its
operations either from its existing competitors or perspective new
players. So all in all, things were favorable for Maruti on
virtually all fronts.
6. PEST ANALYSIS for Maruti Suzuki to enter India:i). POLITICAL
FACTOR: The political environment favored Maruti to enter the
Indian market with tie up with Suzuki at the time in 1983. The
government waslifting sanctions and making it easier for foreign
players to enter the market. In1983, the government permitted
Suzuki - for some time, the only FDI player to enter the market in
a joint venture with Maruti - a state operated enterprise at the
time. Ten years later, as part of a broader move to liberalize its
economy, India de-licensed passenger car manufacturing and opened
it up further to foreign participation. The 800, being a Maruti
model, enjoyed a number of benefits from the government. There were
other sops too specifically for Maruti, which helped the company
keep prices down for the 800. The Indian government is alleged to
have curbed competition in order to promote state-owned Maruti.
Consequently, several new car projects likeM.COM (PART I) SEM -
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Premier Automobiles planned tie-up with Nissan to manufacture
the Sunny in the mid-80s did not receive government approval. ii).
ECONOMICAL FACTOR: The economic conditions in India where favoring
Maruti Suzuki because the people were willing to spend more on
automobile sector. The Indian economy was doing better and after
the last decades emergency rule under Indira Gandhi the eighties
was a time of development and stabilization for the economy and
people. The disposable income of the middleclass was rising and
they could now think of investing in things like better homes and
cars so Marutis entry at the time was perfect. iii). SOCIAL FACTOR:
Socially the Indian middle class was gaining in repute and spending
power. The common man wanted to buy a family car that gave him
mobility and didnt cost a bomb and was easier to own and maintain.
The population was rising and there was a serious shortage of
options as far as car models in the nation was concerned we were
not exactly spoilt for choice as far as cars was concerned.
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iv). TECHNOLOGICAL FACTOR: With the presence of only two players
in the industry The Hindustan Motors AMBASSADOR and the Premier
Padmini (PAL) FIAT, it is safe to say that technologically the cars
being sold in the era, were dated and old. Maruti entered India
with Suzuki (Japan) and brought with itself latest technology that
included a)A modern compact efficient engine; b)Bucket seats;
c)Floor mounted gear box; d)Better servicing options; e)Cheaper
spares; So with a favorable PEST analysis Maruti Suzuki zoomed into
the country and the hearts of millions of people.
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PORTERS 5 FORCE MODEL:
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7. SEGMENTATION, TARGETING, POSITIONING OF THE MARUTI 800:The
Maruti 800 was mass marketed since day one and with India being a
largely price-driven market; the 800 became an entry point for
first time car buyers. Price difference between Maruti 800 and its
nearest rival used to be about INR 50,000-100,000, which was 25-50%
of the 800's price. The Maruti 800 was targeted at small families
and the middle class. People who wanted to upgrade from a two
wheeler to a 4 wheeler, the 800 had great aspirational value to
millions of its first time buyers. The Maruti 800 made an excellent
entry-level car. It was good value for money and yet came with
basic amenities like air conditioning, coilsprung rear suspension
and bucket seats in the front. Indian legislation has also ensured
that there were three-point seat belts all around. So it was
positioned as an entry level car for those who wanted to step up to
the world of four wheeling.
8. REASONS FOR THE SUCCESS OF THE MARUTI800:Within a few months
of its launch, theMaruti800 became the largest selling car in
India, a title it has held for every month since then, till the
month of May2004, when its stable-mate Alto led it by a few hundred
units .Like all success stories, it is difficult to point out one
single factor that has been responsible for the car's success, but
several factors stand out, including:
M.COM (PART I) SEM - I
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TheMaruti800 is the cheapest car in the Indian market. With
India being a largely price-driven market, the 800 has become an
entry point for first time car buyers. Price difference between
Maruti800 and its nearest rival used to be about INR
50,000-100,000, which is 25-50% of the 800's price. TheMaruti800
makes an excellent entry-level car. It is good value for money and
yet comes with basic amenities like air conditioning, coil-sprung
rear suspension and bucket seats in the front. Indian legislation
has also ensured that there are threepoint seat belts all around.
Over the last twenty years the 800 has established a reputation for
being trustworthy and reliable. The Maruti800 is simple and basic
and yet sophisticated enough to meet the requirements of safety and
comfort. Maruti has the largest network of dealers in India, which
means that the800 has the widest reach. Apart from these, the 800,
being a Maruti model, enjoyed a number of benefits from the
government. There were other sops (Standard Operating Procedure)too
specifically for Maruti, which helped the company keep prices down
for the800. The Indian government is alleged to have curbed
competition in order to promote state-owned Maruti. Consequently,
several new car projects like Premier Automobiles planned tie-up
with Nissan to manufacture theM.COM (PART I) SEM - I
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Sunny in the mid-80s did not receive government approval. Thus
theMaruti800 (actually up to the late 90s) did not have any real
competition in the Indian market. Along period of more than 15
years without any real competition ensured that the800's volumes
stayed high, enough to amortize costs of the plants and dies used
for manufacturing. This has ensured that the Maruti800 has managed
to retain its low pricing in a market where the nearest competitor,
till a few months back, was priced about 50% higher.
9. THE 800'S EFFECT ON INDIA:It would be wrong to credit the 800
with merely the physical growth of the Indian market in its early
days. The car has been for the Indian market what the2CV and the
Beetle have been for their respective markets. The 800 has been the
car that has put India on wheels. Thanks to the model being
launched in1983, the Indian automotive benchmark was raised a few
notches in terms of performance and quality. From an object of
purely aspirational value, the 800has transformed the passenger car
in India to a perception more along the lines of a basic necessity.
In doing so the 800 has provided a platform for all the models
higher than it in the market. It has helped the market to mature to
a level in which there is a place for many product segments and, at
the top-end, models like the Porsche Cayenne or the latest S-Class.
The 800 has encouraged low pricing in the Indian marketplace.M.COM
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Thanks to the low price benchmark set by the 800, competitors
are inclined to price their products lower to come close to the
800. This has resulted in a market where the B-segment hatchbacks
start retailing at little above INR 250,000 and a subcompact like
the Tata Indigo and the Ford Ikon (three-box Fiesta saloon based on
last generation European model) at little above INR 400,000. This
has made a number of cars more accessible to the Indian customer.
The employment generated (both primary and secondary) was huge as
Maruti resulted in the growth of a number of ancillary units.
Thanks to the large volumes produced of the 800, the ancillary
industry that started with Maruti in the Delhi-National Capital
Region has benefited the most. Companies like Sona Steering (now
Sona Koyo), Subros and Jai Bharat Maruti are amongst the most
successful suppliers in India. On the other hand the contribution
of the 800 in the socio-economic development of the satellite
townships of Delhi cannot be denied. The initial phases of the
growth of Gurgaon (a significant satellite township of Delhi) was
fuelled by the local Maruti manufacturing unit. The infrastructure
development kicked-off by Maruti(and its mainstay, the 800) in the
early 80s laid the foundation for Gurgaon to develop into the
modern IT-BPO hub that it is today.
M.COM (PART I) SEM - I
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10. MARUTI 800 IN THE BCG MATRIX AS OF 2004:Even according to
the latest (year 2004) BCG matrix the famed Maruti 800 is a cash
cow business for Maruti, yes the sales have slumped to around 2500
monthly. But there are still hard core fans that swear by the 800
name and would just not put their trust in any other car. Thats the
precise reason why MUL would not discontinue the 800 just yet. Yes
because of the latest Bharat Stage 4 emission norms it has been
proposed that the 800 be phased out but that phase out would not be
immediate it would be carried out slowly and timely as its been
started with Maruti not selling/producing the 800 in 13 of Indias
top cities, the phase out would follow a similar path into tier1
and tier 2 cities. If we take a look back at Marutis flagship
models performance a decade and half ago it was the shining star of
Maruti. When the car was launched in 1983within two years the car
lapped up numbers like no other and emerged as a star for the
company. For more than a decade since 1987 till 1998 it was the
star of the Maruti stable and thereafter it assumed the role of a
cash cow which it holds to this day. Its safe to say that Indias
answer to VW Beetle and the Citroen 2cvwill not die just yet. On
the advertising and promotional front the 800 has always been
projected as a compact entry level family car. The campaigns have
always shown a sensitive, family centric theme that always found
favor with the sentimental Indian audience. Since theyM.COM (PART
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were high involvement purchases involving a great degree of
thought, time and effort Maruti always scored big by making their
ads high on the emotion quotient as well. Maruti always touched the
emotional cord with their adds weather it was the India comes home
in a Maruti campaign or joy of life campaign their adds were always
that much closer to the hearts of the audience. There portrayal of
the 800 as a member of the family only goes to reinforce their
family and values orientation. Fuel efficiency was another trump
card on their side that Maruti always played to perfection. The
campaign Petrol Khatam Hi Nahi hunda highlighted the super mileage
of the car and incorporated the warmth of the family as well. Their
creatives also targeted the youth quite effectively as it was
presented as young peppy car when actually it was aging, their
target audience was always most certainly the young family man or a
young man who is about to start one. On the PLC front though sadly
it is coming to an end its in the decline phase of its life with it
having already created a market share and that too is being eaten
away. Marutis plans of taking it out in 2-3 years would mean the
end of the road for a motoring true icon.
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11. MARUTI 800S COMPETITION AND STRATEGY: 2000 ONWARDS:Maruti
800, the name most common for a middle class Indians and the only
car in the A-Segment category. It served as cash cow of MUL for
nearly 17 years. It can still milk better and MUL is trying its
level best to capture the market. The basic strategic focus of MUL
is to offer Zen, Alto LX and its variants to all the existing
customers and on the other hand position Maruti 800 to those who
want to switch from two wheeler to four-wheelers segment. The
obvious idea is to keep Maruti 800 out of the competition and make
it nearest alternative for two wheeler segment. According to Ansoff
matrix it will be called as new market / old product move. It is
quite clear from the strategic point of view that Alto never
influence Maruti 800 or its variants for cannibalization. Though
there was hardly any difference of more than Rs.35000 between the
two entry level and small car segment. Placing all facts and moves
of MUL since 2000 will give a broader picture of the game plan and
strategic sequence. Tracing back to start of year 2000, MUL market
share had fallen to 51 percent from 80 percent that it had enjoyed
for nearly seventeen years. Though the market share had fallen
altogether, the sales of Maruti 800 had grown by 22 per cent, that
of Omni by 48 per cent and that of the Zen by 22 per cent. The MUL
slogic for increase in unit sale with the decrease in over-all
market share is that when there are more players in the market
there will be competition. WhenM.COM (PART I) SEM - I
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there is competition, the market expands and the consumer base
increases which means there will be more number of unit sales.
March 2000, MUL came out of the mess with sales of 44,167 units.
The sales included 3,980 units for export. These sales included
12,348 units in the 'B' segment and 7,510 units of Zen and4,838
units of Wagon R. The market equation balanced the loss on Hyundais
Santro and Daewoos Matiz part. Some market share was eaten up by
Telcos Indica as well. The Hyundais loss of market share was not
because of lack in marketing strategy but the production problem.
Hyundais Santro and Accent was produced on the same assembly line
and Hyundai was trapped in catch-22to maintain a restriction on
trade off between the production of Santro and Accent. MULs
strategy to offer credit sale to its dealers also fueled the fire.
At the same time Alto was strategically placed with two variants LX
and VX. Alto LX was placed between Maruti 800 and Zen at price Rs.
299,000 (mind the psychological pricing) while Alto LX was placed
between Wagon R and Esteem at price Rs. 365000. Later on the VX
version was backed out from the market as customers were hardly
able to differentiate between two models. The difference was of LX
and VX but one cost 66,000 more then another. So what is the lesson
from this mistake - Never position two brand extensions with high
price difference and to wrong customers! January 2003, MUL hiked
the price of its all800 cc variants, Omni and Esteem. Competitors
were emotionless on this move of MUL. Just six months after that
Tata EngineeringM.COM (PART I) SEM - I
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gestured for price hike due to higher input cost. MUL going
against the situation slashed the price of its entry level
car-Maruti 800. OOPS!! How it is possible when the cost of raw
material is increasing and out of 12 Manufacturer one (MUL) has
slashed the price and for what did they hike the price for just six
months. This key insight was in the long term profit at the expense
of short term decrease in sales. The three Brands, Maruti 800, Omni
and Esteem covered 55 percent sales of MUL portfolio and MUL
covered 60 percent market share of the total four wheeler segments.
The whole game plan was to cash this opportunity of increase in raw
material cost. If you remember, the increase in price in Jan-2002
was nearly Rs. 8000 for 800 cc variants and Rs. 4000 for Omni and
Esteem. Now after six month the price reduction was only for Maruti
800 and in the range of Rs.15000 for 800 cc variants. Logically,
there was no loss but profit by this price decrease. The only thing
they did was that they took money Rs. 8000 from one consumer (price
hike) in the month of January and gave it to a customer who bought
in the month of July (as a decreased price) and the increase in
sales with this game plan bought all the profit. The only question
arises is that how did it happen? The answer comes from
psychological effect on customer with the increase in the steel
cost. But some still think that the price reduction was due to
decrease in sales and on the other hand MUL told its due to cost
rationalization and improvement in production efficiency. MUL was
thinking hard to curb the market in the A and B segment. The
mainM.COM (PART I) SEM - I
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competition for these segments was coming from second hand cars
market as substitute. This market being unorganized and large was
on the radar of MUL. The MUL shaped it as organized sector with the
brand name True Value. All dealers in this market were selling the
second hand car with 85 percent price of the new car. All the
damaged parts were replaced with the new Maruti branded parts. Only
vehicles which are less than seven years old were procured under
the True Value scheme in accordance with the norms of MUL. All the
vehicles done lesser then 60,000km were on oneyear warrantee. The
highly sold brands were Maruti 800, Zen and Santro. The motive of
Maruti behind this ball game was to maintain market share of its
brands and to regulate the market from either end. The Zen was in
the top list of true value brands. To make some visible
differentiation between a newly bought Zen and the one bought under
True Value brand, MUL re-launched Zen with new look and without a
price change. How Smart!!!The luck charmed on the royal part too
which was exempted by Suzuki for Alto, Maruti 800, Omni, Gypsy,
Esteem and Zen Suzuki, for the period April 2003 to March 2005. A
10 per cent discount on knocked down components imported by Maruti
came as additional relax to MUL. To make it an opportunity MUL
reduced Rs. 50000 on Alto. Competitively, MUL was on a strong
position. The portfolio of MUL had at least five models in the A
and B segments, while on the other side Hyundai with Santro, Tata
Engineering with Indica and Fiat Auto with Palio were competing
with onlyM.COM (PART I) SEM - I
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one product in B segment. The competitors were not ready to
reduce the prices and were shrinking their market with more
expensive variants like Hyundai Getz. The indication is that MUL is
only company to penetrate in the market with low priced vehicles.
This makes the MUL also busy in price adjustments. The upcoming
problem was of Maruti 800 and its variants. Sales of Maruti 800
were eroding continuously since 2000. To make strategic fit of
Maruti 800, MUL stepped out in year 2003 to tie-up with the State
Bank of India for financing, the main objective was to use wider
rural market network of SBI for tapping the prospects. To take the
competition by Hyundai's Santro and Tata Motors' Indica seriously
for B-segment cars, Maruti Udyog Ltd, India's largest carmaker,
unveiled a new-look Zen, without change in price. In mid of 2004,
more national and international bank started integrating in the
win-win strategy of MUL.HDFC Bank has launched a new product for
financing Maruti 800. The bank promised to offer 85 percent finance
for on road Maruti 800 (with registration and insurance) for tenure
of seven years. The objective was to match EMI of the two-wheeler
with Maruti 800. Apart from easy loans from banks, MUL launched a
new market offer called `2-se-4' in Ahmedabad and Hyderabad under
which a consumer can exchange his two-wheeler for a Maruti 800. In
the same year, Alto performance made it to overtake the companys
bread-and-butter car Maruti 800 to become the largest selling car.
In July 2004, Alto sales were 14 percent higher then Maruti 800.To
cope up with theM.COM (PART I) SEM - I
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increasing cost, MUL increased the price of all models
indirectly by launching new variants of Zen. The price of Maruti
800 was kept constant to suit it for the targeted customers who
were two-wheelers owners. The next thing MUL did was to increase
the procurement of steel from domestic market by 15%. This was to
get competitive advantage of low cost steel as compared to imported
steel. MUL also relaxed the norms of schemes for True Value cars to
increase the market share. It was a different kind of proliferation
where a customer can choose a second hand Maruti 800 or Zen or a
new variant of Zen and Wagon R as per the value fathomed by
customers. With eye on entry car market, Tata threaten with a car
priced on Rs. 100,000 which is still on papers. The threat was
caught by MUL and proactively advertised launch of its LPG variants
of Maruti 800 and Alto. The idea was to reduce the maintenance and
fueling cost. WOW!! Handle threat with a counter threat. The
over-all sales MUL grown by 20 percent in the financial year 2007
Despite decrease in sales of Maruti 800 by 11 percent, Baleno and
Esteem sales by 7 percent Alto, Zen and Wagon R shares the highest
share of sales in the product portfolio of MUL and maintained the
over all sales increase by 20 percent. InA3 segment, with the
presence and focus of car-makers such as Hyundai, Ford, GM, Honda
and new entrants like Mahindra-Renault combine is making existing
and competition intense. Maruti the major player of the small car
segment market has only 15 percent share in the A3 segment. The
true indication of Head-on can beM.COM (PART I) SEM - I
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guessed by the launch of new models by major players who also
expanding their presence in the segment. MUL launched sedanSX4 and
priced just at par with Honda City. This launch was the replacement
of Baleno and to strengthen the A3 segment. The only restriction
will come with production unit at Manesar which produces the Swift
and SX4.The installation capacity of this unit is 100,000 units.
Nearly 7000 units of Swift already produced from this plant per
month. This left little score for the production of SX4. The
momentum in the economy and increase in the disposable income of
the consumers increased the market demand by 22 percent. So the
scope in the market is higher. The MUL reshuffled its portfolio
launched five new models starting with Swift Petrol in May 2005. In
2006-07, the company phased out the Zen and replaced it with a
brand new car the Estilo and gave Wagon R a facelift. Apart from
internal problems, the external factors are turning unfavourable to
customers. It is fact that 75 percent of the customers buy the cars
on loans. The increasing interest rates have begun to affecting the
sales. On the other hand increasing cost of steel procurement has
affected the operation margin which is flat on 13.36 percent. In
the FY06, the sales were driven by lower exercise duties. The
strategic focus is on three dimensions; new engine design, fuel
efficiency and diesel engines. Till now the diesel engine is the
domain of Tata. The launch of LPG models has witnessed the strategy
of MUL. Swift diesel was initial step for the whole journey. To
beat the competition, loans for Maruti's cars areM.COM (PART I) SEM
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being priced at the lowest rates in the industry - 8.59 per cent
per annum, which is about 40 basis points lower than that offered
by arch rival Hyundai Motor, makers of the popular model Santro.
MUL has the capacity of producing 2500 units per month due to
restriction on production capacity. The car maker's inability to
replace its fading models Gypsy, Versa and Omni is also going
against the company. In June2007, MUL has offered discounts ranging
from Rs 5,000 to 35,000 across various models. The discount is on
Maruti 800, Omni, Alto, Esteem, Versa and on the petrol models of
Wagon R, Swift. No discounts have been given on Swift diesel and
SX4. The domestic sales were zoomed by 25.5 percent. C segment,
that comprises Omni and Versa, MUL sales up by 24 percent. The
company sold37,646 units in the A2 segment comprising hatchbacks
Alto, Wagon-R, Zen and Swift as against 27,228 units in the same
month last year, up 38.3 per cent. Sales of sedans Esteem and
newly-launched SX4 increased 46.4 per cent in the month at 3,923
units. Sales in the A1 segment, comprising MUL's
flagshipMaruti-800, dipped 20.3 per cent at 6,214 units.
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Maruti800 (Domestic Sales Volume in Units): Fiscal Years 1983-84
1984-85 1987-88 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00
2000-01 2001-02 2002-03 2003-04 Domestic sales (in units) 852 20269
63763 106114 139403 183593 184584 161975 189061 151976 144387
143322 167561
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12. TIME LINE:Maruti launched the first 800 (Alto IV
generation), the SS80, in the Indian market in December 1983. The
car was known just as the Maruti800 and was essentially a four-door
saloon with a rear window that opened for access to the boot area.
The model received a heavy facelift in 1986 with the introduction
of the SB 308 body style. This new shape made the 800 into a
five-door hatchback though the mechanicals remained the same
including the 796cc, three-cylinder engine and the leaf-spring rear
suspension. This body style continued unaltered, barring a few
changes to the grille, for the next 11 years till 1997. The present
Maruti800 shape was launched in 1997.Maruti replaced the
carburetion system 2,32,444, June 2000 in the 796cc engine in early
2000 with an MPFI unit to meet the Euro II emission norms. Power
went up from 39bhp to 46bhp though there were no other major
changes. Platform remained the same though the rear leaf spring
suspension was changed to coil springs for the deluxe model. The
company also offered a fivespeed gearbox in the deluxe model. The
800 in this form has continued till date though the company has now
withdrawn the five-speed gearbox from the range in order to push
the new Alto. December 1983: Launch. SS80, four door saloon with a
rear window that opened like a hatch.M.COM (PART I) SEM - I
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1986: Major facelift: SB 308, the tailgate opens completely and
the car is now a five-door hatchback 1997: First major facelift in
eleven years. New headlight, taillight, dashboard, indicators etc
2000: Upgraded engine MPFI. 46bhp. Also five-speed gearbox,
coil-spring rear suspension and radial tyres. 2003: Five speed
version withdrawn.
13.
THE 800: FUTURE IMPERFECT?
The Indian passenger car market is witnessing a sea change with
the B- and Csegments being the fastest growing. The A-segment,
where theMaruti800 is the only player is not growing and 800 sales
have been stagnating in recent months. In fact, May sales went down
on a year-on-year basis, which Maruti attributed to
uncharacteristically higher sales in May 2003. But more than the
stagnation (or decrease) in sales, it is the rise in sales of the
Alto that has affected the 800. Some time back, Maruti had reduced
the prices of the Alto with the base version now selling at around
INR 230,000 (non AC), only slightly higher than the AC version of
the 800 (INR 226,000). Even the AC version of the Alto at INR
260,000 is not very far off the 800. The Alto is powered by the
same 796ccengine, has moreM.COM (PART I) SEM - I
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modern mechanicals and is bigger. It is also regarded as amore
expensive car in the typical Indian social strata. Thus the pricing
of the Alto has made it a substitute for the 800, the worst
affected being the 800'swedding gift market. People who used to
giftMaruti800s are now gifting the Alto as for only a few thousand
more they command more respect. Alto sales started creeping up once
Maruti launched the non-AC version and the gap between the 800 and
Alto narrowed and the bigger car finally overtook the traditional
best seller in May 2004. In May, the score read:Maruti800 -
10,016;Alto - 10,373 units. It seems likely that the Alto will
continue to lead in the Indian market. Maruti executives point out
that April-July is not a good period for the 800 sales as the800's
main customer - the salaried middleclass in India - are under
financial pressure (because of income tax in Feb-March and expenses
during the start of the financial year like school/college
admission fees) during these months and also because of a tendency
to defer purchase decisions till after monsoon. In reaction to
falling sales, the Indian media has been quick to speculate the
eventual demise of theMaruti800, a speculation that Maruti
executives are quick to dismiss and they have a point too as a
10,000 unit per month model(and currently India's second largest
selling car) cannot be retired so easily. They point out that the
company's strategy is to bring down the Alto to A-segment prices so
that Maruti can offer two models in the same price band." Two
models will only help grow the A-segment like our three models have
grown the BM.COM (PART I) SEM - I
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segment," pointed out an executive. The then Managing Director
of Maruti Udyog added, "The point that Maruti 800 would make way
for a lower priced Alto, assumes that price is the only factor for
entry-level buyers. That is not true. For many thousand
aspirants,Maruti800 is the only brand they will settle for, because
it is the one they trust." And trust is something that the 800 has
in abundance as a brand that has crossed20 years of existence and
sold in excess of two million units to date. To support the
800,Marutiis now targeting the 40-million two-wheeler owners in
India. With financial institutions ready to offer loans up to eight
years, theMaruti800 base model is now available at a down payment
of INR 21,000 and an EMI of INR 2,500, something that brings it
closer to two-wheeler prices, a fact that Maruti is strongly
publicising with millions spent on a new ad campaign to highlight
the affordability of the 800. A fresh facelift cannot be ruled out.
et, the bias towards the Alto cannot be missed as the company
realises that they have an eventual replacement of the 800 now. The
intention is to depreciate the Alto faster so that prices can be
further brought down. Maruti is also working hard to further reduce
component costs of the Alto so that prices can be further
rationalised. Other steps, like stopping the 800 five-speed version
and delaying a long overdue facelift for the 800, have pushed
customers towards the Alto. What may eventually bring the end to
the 800 story - point out some analysts -is future legislation. New
safety legislation and the impending upgrade to Euro III may make
Maruti think very hardM.COM (PART I) SEM - I
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about whether or not to invest in the 800.But that is still
three years away and this is a long time period in India's
automotive industry.
14. FATE OF MARUTI-800:In early Feb-2009 Maruti-Suzuki Limited
announced to scale down the production of the popular brand
Maruti-800. They cited inability to upgrade theMaruti-800 engine to
comply with engine efficiency and pollution standards as reason for
the same. At that time Euro IV norms were recently adopted in
11major cities of India. The cities were Delhi, Mumbai, Kolkata,
Chennai, Bangalore, Hyderabad, Pune, Kanpur, Ahmedabad, Surat and
Agra. Later in the same year the Maruti-800 was phased out from
production schedules completely due to ever diminishing
contribution to the sales revenue.
M.COM (PART I) SEM - I
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EXHIBIT-1 MARKET SEGMENT OF INDIA CAR INDUSTRY -2010:
M.COM (PART I) SEM - I
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Step of the company was spot on considering the country they
were in. Varying Marketing strategies to maintain/increase the
sales of the product. Managing cannibalization from its own
product. Exiting the market at the right time.
15. BIBLIOGRAPHY: Philp Kotler Prof. Bharadwajs Slides
WikipediaGoogle www.managementfunda.com www.articlesbase.com
www.icmrindia.org www.slideshare.net www.internsindia.com
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