12881447 Maruti Suzuki Market Strategy

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Jai Prakash Choudhary Nishant Bhadauria

MBA PM

UNIVERSITY OF PETROLEUM AND ENERGY STUDIES


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Car SegmentsMaruti Suzuki Portfolio Strategies (Marketing and Promotion)Competition


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Source: World Bank, Provided by GAIL India Ltd. (2001-02)

Maruti Udyog Limited (MUL) was established inFeb 1981 through an Act of Parliament, to meetthe growing demand of a personal mode of

transport caused by the lack of an efficient publictransport system

MUL launched its first car Maruti800 on

december 14,1983 at initial price of Rs. 47,500.


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Suzuki Motor Company was chosen from seven prospectivepartners worldwide. This was due not only to their undisputedleadership in small cars but also to their commitment toactively bring to MUL contemporary technology and Japanese

management practices . A license and a Joint Ventureagreement was signed between Govt of India and SuzukiMotor Company (now Suzuki Motor Corporation of Japan) inOct 1982

Suzuki brought efficient management practices,bettertechnology and administration.

Initially Suzuki held the 26% stake in Maruti Suzuki .

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Maruti was the first company in India which studied the consumerdemand and responded to it well.

Market segmentation policy was adopted that targeted different typeof consumers with different type of models.

Maruti800 targeted medium income group,while the deluxe modeltargeted rich income group.

Maruti van targeted businessmen and doctors(ambulance)

The Gypsy targeted the paramilitary forces and the police.

This resulted in complete control of maruti over the market .

The company advertised its different products according to costumerse.g- maruti van was rechristened as Omni .

A special cell was made to make direct dealing of Gypsy with thegovernment & the army.

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The MUL depended more on its M800model, so when in late 1990s the newplayers like when Matiz, Santro and Indicacame into the market with more space andbetter comfort ,at same price, then Marutilost a major share of market.

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After year 2000,(and 2003 to be moreprecise)there was a change in automobilemarket which where due to-

1. The government has reduced regulation onthe industry and more foreign players wereinvited.

2. Banks and other financing companiesstarted providing car loans at reasonableinterest rate

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The Indian consumer now started buyingthe mid-size cars rather than small cars,the luxury cars also gained popularity,SUVs also started coming in the market.

The increasing level of income of urbanpeople ,the small cars were not considered

to be luxury item any more.

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To gain back its lost share Maruti launched Zen ,Alto andWagonR.These small segment car gained huge response forconsumers.

Maruti also launched aggressive promotional policy to promote themlike announcing Zen as the worldscar.

Maruti also made a slogan count on us.To emphasize its reliability In 2003 maruti came up with change your life campaign ,it provided

vehicle insurance at just Rs 1 to attract the customers. advertisment such as of Alto in which a small boy says to his father

papa ki karan petrol khatam hi nahi honda was make customer feelthat Alto was best fuel efficient.

During 2003 and 2004, MUL visualized and implemented a strategy

for its dealers to increase their profitability levels in view of increasedcompetition. According to the strategy, the 300-odd dealers of thecompany were asked to strengthen their manpower, increase thesalaries of their sales agents, and offer them better incentives.

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During 2003 and 2004, MUL visualized and implemented a strategyfor its dealers to increase their profitability levels in view of increasedcompetition. According to the strategy, the 300-odd dealers of thecompany were asked to strengthen their manpower, increase thesalaries of their sales agents, and offer them better incentives.

'2599' offer-In 2004, MUL introduced the '2599' offer under which aconsumer could buy an M-800 by paying an EMI of Rs 2,599 only,for a period of seven years. The down payment was fixed at Rs40,000. MUL entered into an agreement with the State Bank of India(SBI), the largest bank in India, to promote this scheme

'Teacher Plus' scheme-To further penetrate into the market, MULcontinued to focus its efforts on the rural markets and specific targetgroups. In 2004, it introduced the 'Teacher plus' scheme, in a tie-upwith SBI, aimed at teachers who were interested in buying a new car.

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Segmen

t Price Range CarsA < 3.0 lacs Maruti 800, Omni , RevaB 3.0 -5.0 lacs Wagon R, Zen, Versa, Ambassdor, Fiat

Palio, Esteem, Tata Indica, IndigoC 5.0 -10.0 lacs Baleno, Elantra, Honda City, Lancer,

Innova, Sx4D 10.0 -15.0 lacs Octivia, Corolla, CivicE 15.0 30.0 lacs Honda CRV, Maruti Grand Vitara,

Honda Accord

http://www.surfindia.com/automobile/automobile-industry.html


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The Journal of Business Perspective, Vol 10, No 1: Jan - Mar 2006


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The Maruti 800, has gone beyond just a car, ithas actually changed the lives and lifestyles ofcountless people, by bringing the joy of motoring

to millions across the length and breadth of thecountry


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The alto is a great combination of economy ,practicality and styling. A runaway success on

the roads of Europe, it exemplifies thebenchmark in build, quality and reliability in acompact car. This is testified by the 24-hourendurance record set on Aug 03, 2003 of

covering 3082 kms in 24 hours at an averagespeed of 128kmph.


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The Omni is truly Indias original Multipurpose

vehicle. Today it is available in 6 Avtars 5

Seater, 8 Seater, Cargo, Ambulance, CNG andLPG. It meets diverse needs across differentuser segments and can double up both as apeople carrier and a goods carrier. This faithful

workhorse is easy on the pocket, yet tough onthe job.


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A Spanish expression for Style, the new ZenEstillo stands true to its name. Its aerodynamic

body, unique bean shape, sparkling colors andsnazzy lights will rev up your style quotient. Anamazing blend of style and substance, its agilenature will leave you enthralled.


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Drive with complete peace of mind. The word-class safety features of the wagonR keep you

safe and secure, always. Wearing new vibrantcolors, the new wagonR is full of freshnessand energy to keep you charged up andalways to go.


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76% of Maruti cars are financed

44% through Maruti Finance, 12 % through SBI

and associate banks

In year 2006-07, it added Mahindra Finance,Magma Leasing , Cholamandalam and Axis

Bank.


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SegmentA

SegmentB

SegmentC

0

25

50

75

100FY02 FY03

Segment A:

Maruti 800, Omni

Segment B:Zen, Alto, Wagon R

Segment C:Swift, Esteem, Baleno


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Maruti 800 Omni Alto WagonR

Swift Zen Gypsy Esteem Versa SX4 Grand Vitara


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HYUNDAI SANTRO

TATA INDICA

CHEVY SPARK


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+ Santro rated Best Small Car in JD Power Asia Pacific Initial Quality and APPEALstudies.+ European styling , power-assisted brakes, advanced suspension system and uniquely

responsive engine.+ Celebrity endorsed (Shahrukh Khan and Preity Zinta).+ Hyundai had a national network of 300 sales and service outlets.- The spares are expensive than that of Maruti

- TATA INDICA

+ Car built for Indians by Indians+Ambassadors internal dimension and Maruti 800s price with option of diesel engine+ Has a sleek fascia with chrome lined grill, clear lens illumination, muscled flares, flexible

seating and electronic instrumentation with tachometer.+ Cheaper and home grown spares.

+ Has lowest running cost (around Rs. 2.06 /km)

Chevrolet SparkGeneral Motors rolled out its small car Chevrolet Spark in India as it takes on market leader

Maruti Suzuki.

+ Rs 3.09 lakh (Ex-showroom Delhi) slightly lower than Marutis Zen Estillo base model.

Improved cabin space22


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Higher localisation

it has rationalised vendors from 370 in 1999-00 to 225 in 2005-06

has resulted in MUL enjoying the highest operating margins amongstits peers

Commonality of platforms-

Commonality between the platforms of various models lead

to lower product development efforts and higher benefitsof economies of scale.uses only two platformsStrong support in R & D and Product from parent - MULsstrength lies in the strong parentage of SMC, Japan. TheJapanese SMC helps MUL in R&D and new model launches,as the Indian subsidiary contributes more than 25% of the

parent net income. The company also has access to itsparent's product portfolio, , which allows it to launch thelatest products in domestic markets. Zen Estillo waslaunched in a very short period of nine months with supportfrom the parent company.

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Maruti Suzuki is far behind in luxury andSUV car ,the other player likeGM,TATA,Mahindra ,Mitsubhisi and Toyota

are already established in the market ,soreplacing them would not be easy.

MUL has been now emphasizingconsistently on its Best customer

satisfaction car to keep an psychologicalimpact on costumers.


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Advertisements targeting differentsegments

Promotional offers through out the yearsPsychographics is used :

Wagon-R : Smarter people (executives)

Omni : People who need to transport goods

Alto : Small car : small family Zen Estillo : Young trendy people

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The joint initiatives taken by Maruti and itsteam of suppliers have generated over29% cost reduction over three years for

MarutiLess than 20 per cent of a car is

manufactured in-house. The rest is

accounted for by 215 suppliers andhundreds of second and third tier ofvendors who, in turn, supply to them.


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Maruti has launched two luxury modelsSX4 in 2006 and A STAR in Nov 2008,these two models are facing intense

competition from already establishedcompanies.

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Thank You

Documents

12881447 Maruti Suzuki Market Strategy