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Maruti Suzuki

Marketing mix

Submitted to- Dr. Anurupa B Singh

Submitted by-

-Chetan-Shobhit-Pankaj-Anshu-Puneet

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-Ishan

CONTENTS

SerialNo.

Particulars PageNo.

1 Acknowledgement 32 Company History And

Background5

3 India Four WheelerIndustry

7

4 Facts about Indian CarMarket

9

5 Market Scenario (2008-09) 106 Market Segment Analysis 117 Objective of the Company 118 Marketing Mix (Product) 129 Marketing Mix (Price) 13

10 Marketing Mix (Place) 13

11 Marketing Mix (Promotion) 1412 SWOT Analysis 1413 Key Strategic Initiatives By

Maruti17

14 Factors that influence theconsumers buying decision

19

15 Business EnvironmentFactors

20

16 Conclusion 2217 Bibliography 23

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ACKNOWLEDGEMENT

We take this opportunity to convey our sincere thanksand gratitude to all those who have directly orindirectly helped and contributed towards the

completion of this project.During the project, we realized that the degree ofrelevance of the marketing strategies being imparted inthe industry is very high. The marketing strategiesstudy enabled us to get a better understanding of thenitty-gritty of the company.

We would also like to thank my batch mates for thediscussions that we had with them. All these haveresulted in the enrichment of our knowledge and theirinputs have helped us to incorporate relevant issuesinto our project.

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Maruti suzuki India LTD

Maruti Udyog Limited (MUL) was established in Feb1981 through an Act of Parliament, to meet thegrowing demand of a personal mode of transportcaused by the lack of an efficient public transportsystem. It was established with the objectives of-modernizing the Indian automobile industry, producingfuel efficient vehicles to conserve scarce resources andproducing indigenous utility cars for the growing needsof the Indian population. A license and a Joint Ventureagreement were signed with the Suzuki MotorCompany of Japan in Oct 1983, by which Suzukiacquired 26% of the equity and agreed to provide thelatest technology as well as Japanese managementpractices. Suzuki was preferred for the joint venture

because of its track record in manufacturing and sellingsmall cars all over the world. There was an option inthe agreement to raise Suzukis equity to 40%, which itexercised in 1987. Five years later, in 1992, Suzukifurther increased its equity to 50% turning Maruti into anongovernmentorganization managed on the lines of Japanese

management practices. Maruti created history by goinginto production in a record 13 months. Maruti is thehighest volume car manufacturer in Asia, outside Japanand Korea, having produced over 5 million vehicles byMay 2005. Maruti is one of the most successful

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automobile joint ventures, and has made profits everyyear since inception till 2000-01. In 2000-01, althoughMaruti generated operating profits on an income of Rs

92.5 billion, high depreciation on newmodel launches resulted in a book loss.

COMPANY HISTORY ANDBACKGROUND

The Evolution

Marutis history of evolution can be examined in fourphases: two phases during pre-liberalization period(1983-86,1986-1992) and two phases during post-liberalization period (1992-97, 1997-2002), followed bythe full privatization of Maruti in June 2003 with thelaunch of an initial public offering (IPO).The first phasestarted when Maruti rolled out its first car in December

1983. During the initial years Maruti had 883employees, a capital of Rs. 607 mn and profit of Rs. 17mn without any tax obligation. From such a modeststart the company in just about a decade (beginning ofsecond phase in 1992) had turned itself into anautomobile giant capturing about 80% of the marketshare in India. Employees grew to 2000 (end of first

phase 1986), 3900 (end of second phase1992) and5700 in 1999. The profit after tax increased from Rs18.67 mn in 1984 to Rs. 6854.54 mn in 1998 butstarted declining during 1997-2001. During the pre-liberalization period (1983-1992) a major source of

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Marutis strength was the wholehearted willingness ofthe Government of India to subscribe to Suzukistechnology and the principles and practices of Japanese

management. Large number of Indian managers,supervisors and workers were regularly sent to theSuzuki plants in Japan for training. Batches of Japanesepersonnel came over to Maruti to train, supervise andmanage. Marutis style of management was essentiallyto follow Japanese management practices. The Path toSuccess for Maruti was as follows:

(a) teamwork and recognition that each employeesfuture growth and prosperity is totally dependent onthe companys growth and prosperity.(b) strict work discipline for individuals and theorganization.(c) constant efforts to increase the productivity of laborand capital.

(d) steady improvements in quality and reduction incosts(e) customer orientation(f) long-term objectives and policies with theconfidence to realize the goals(g) respect of law, ethics and human beings. The pathto success translated into practices that Marutis

culture approximated from the Japanese managementpractices.

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Indian Four WheelerIndustry

The Four-Wheeler Industry in India has not quitematched up tothe performance of its counterparts inother parts of the world. The primary reason for thishas been the all-pervasive regulatory atmosphereprevailing till the opening up of the industry in themid-1990s. The various layers of legislative Actssheltered the industry from external competition for along time. Moreover, the industry was considered low-priority as cars were thought of as unaffordableluxury".Post Liberalization, the car market in India have been in

a burgeoning stage with all types of cars flooding themarket in order to meet the demands of Indiancustomers who are increasingly exposed to state of theworld automobiles and want the best when it comes topurchasing a car. It is expected that by 2030, theIndian car market will be the 3rd largest car marketacross the globe. The main encouraging

factors for the success story of the car market in Indiaare the increase in the opportunity for newinvestments, the rise in the GDP rate, the growing percapita income, massive population, and high ownershipcapacity. The liberalization policies followed by the

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Indian government had been inviting foreign players toparticipate in the car market in India. The recent trendwithin the new generation to get work in the software

based sector has ledto the rise in the income level and change in thelifestyle significantly, which has further led to theincrease in the demand for luxurious cars among them.The car Market in India is crowded with all varieties ofcar models like the small cars, mid-size cars, luxurycars, super luxury cars, and sports utility vehicles.Initially the most popular car model dominating the CarMarket in India was the Ambassador, whichhowever today gave way to numerous new models likeHyundai, Honda, Mercedes-Benz, BMW, Bentley andmany others.Moreover, there are many other models ofcars in the pipeline, to be launched in the car market inIndia.Some of the leadingbrands dominating the car market

in India at present are Hindustan Motors, Reva ElectricCar Co., Fiat India Private Ltd., Daimler Chrysler IndiaPrivate Ltd, Ford India Ltd., Honda Siel Cars India Ltd.,General Motors India, Hyundai Motors India Ltd., SkodaAuto India Private Ltd., and Toyota Kirloskar Motor Ltd.Since the demand for foreign cars are increasing withtime, big brands like Mercedes Benz, Volkswagen,

Aston Martin, Ferrari, and Rolls-Royce have long sincemade a foray into the Indian car market.

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Facts about Indian Car MarketAlthough the Indian automobile industry has come along way since the deregulation in 1993, India does notrank 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 ofmonths' income required to purchase a car, andpenetration ofcars.

Figure:-Passenger vehicle stock per 100 peopleIndia is far behind from other countries with just 6.9cars per 100 persons, while Unites States has 76.9 cars

on per 100 persons. Among developing countries,Russia also stands ahead than Indiaand China with 16.3 cars per 100 persons. Two thingsthat stunted growth of the Indian automobile industryin the past have been low demand and lack of vision onthe part of the original equipment manufacturers(OEMs). However, the demand has picked up after theliberalization of the regulatory environment, andglobal OEMs who enjoy scale economies both in termsof manufacturing and research and development (R&D)entered the Indian market. This has resulted in asignificant shift in the way business is conducted bysuppliers, assemblers and marketers.

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VisionThe leader in the India Automobile Industry, CreatingCustomer Delight and Shareholders Wealth; A pride ofIndiaMissionTo provide maximum value for money to theircustomers through continuous improvement of

products and services.Maruti has a network of 391 sales outlets across 230cities all over India. The service network covers 1,113towns and cities, bolstered by 2,142 authorized serviceoutlets.The company's change in strategy andemphasis on developing effective marketingcommunications was their highlights.

MARKET SCENERIO (2008-09)

The company vouches for customer satisfaction. For itssincere efforts it has been rated (by customers)first incustomer satisfaction among all car makers in India for

ten years in a row in annual survey. Maruti Suzuki IndiaLimited, a subsidiary of Suzuki Motor Corporation ofJapan, has been the leader of the Indian car market forover two decades.During 2007-08, Maruti Suzuki sold 764,842 cars, of

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which 53,024 were exported. In all, over six millionMaruti cars are on Indian roads since the first car wasrolled out on 14 December 1983.

Market Segment Analysis

Based on economic strata, the Indian auto consumersegment can be sub divided in to 5 categories:

EconomyMid-RangeLuxuryPremiumSuper Premium

OBJECTIVE OF THE COMPANYMarutis marketing objective is to continually offer thecustomer new products and services that: Reduce thecustomers cost of ownership of their cars;andanticipate and address the customers needs andpreferences in all aspects and stages of car ownership,

to provide what they refer to as the 360 degreecustomer experience. Maruti offer 13 brands and over150 variants ranging from people's car Maruti 800 tostylish hatchback Ritz, Alto, A star, Swift, Wagon R,Estillo, DZire, SX4 sedan and luxury suv Grand Vitara.

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Of these, they manufacture nine models and import theGrand Vitara as a completely built unit from Suzuki inJapan. Their models and variants are designed to

address the changing demands of the market and areperiodically upgraded in technology, styling andfeatures. To take advantage of the brand recognitionassociated with their products, they retain the brandname of the product through various stages of productupgrades over time. For example, the version of theMaruti 800 brand currently sold in the market is asignificantly upgraded version, in terms of technology,design and styling, of the Maruti 800 launched in 1983.

4Ps:- Product Price Place Promotion

Product Strategy:- Portfolio of 12 products Five product lines

Product Line Products

A1 800A2 Alto, Zen ,Wagon R,

Swift, A-star, Ritz

A3 DZire, Sx4

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SUV Vitara, Gypsy

C - Class Omni, Versa, Echo

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, A-star, Ritz are the lower

middle price car of the company, Swift, Dzire, Sx4 & Esteem are the mid price car of

the company. 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.

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STRENGTHS1. Bigger name in the market.2. Established distribution & after sales

network.3. Understanding of the Indian market.4. Ability to design product with differentiatingfeatures.5. Brand Image.6. Experience & Knowledge how in technology.7. Trust of People.8. Maruti Udyog Ltd. is the market leader formore 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 importedmodels.5.Exports are not that good.6. Lesser diesel models in the market compareto others.7. Global image is not that big.

OPPURTUNITIES1.Increased purchasing power of Indian middleclass family.

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2.Government subsidies.3.Tax Benefits.4.Prospective buyers from two wheeler

segment.5. Great opportunities to go global with successof Swift and SX4 allover.6. Introduction of more diesel models. Thediesel car segment is growing.7. Opportunity to grow bigger by entering intobigger car markets.8. Already a market leader so great opportunityto be the king of market in every stage ofindustry.

THREATS1. Foreign companies entering market; so abigger 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 arecoming 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 byemploying women who belong to their local communitythrough which their product can reach to localconsumers. Their strategy is to provide work

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for women to create awareness among confinedconsumers

ProcessThey started with Project Shakti in which their basicaim is to educate a rural person about their productsthrough women who belongs to their own localcommunity and who can communicate well in theirlanguage with them. In this way many educatedwomen get work in rural sector and on the other hand

HLL Corporate Social Responsibility (CSR) alsoincreases towards society by introducing educativeprograms for the benefit of therural sector.

KEY STRATEGIC INITIATIVES BY MARUTI

A) TURNAROUND STRATEGIES MARUTI FOLLOWED

Maruti was the undisputed leader in the automobileutility-car segment sector, controlling about 84% of themarket till 1998. With increasing competition from localplayers like Telco, Hindustan Motors, Mahindra &Mahindra and foreign players like Daewoo, PAL, Toyota,Ford, Mitsubishi, GM, the whole autoindustry structure in India has changed in the lastseven years and resulted in the declining profits and

market share for Maruti. At the same time the Indiangovernment permitted foreign car producers to investin the automobile sector and hold majority stakes.In the wake of its diminishing profits and loss of marketshare, Maruti initiated strategic responses to cope with

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Indias liberalization process and began to redesignitself to face competition in the Indian market.Consultancy firms such as AT Kearney & McKinsey,

together with an internationally reputed ODconsultant, Dr. Athreya, have been consulted on modesof strategy and organization development during theredesign process. The redesign process saw Maruticomplete a Rs. 4000 mn expansion project whichincreased the total productioncapacity to over 3,70,000 vehicles per annum. Marutiexecuted a plan to launch new models for differentsegments of the market. In its redesign plan, Maruti,launches a new model every year, reduce productioncosts by achieving 85-90% indigenization for newmodels, revamp marketing by increasing the dealernetwork from 150 to 300 and focus on bulk institutionalsales, bring down number of vendors and introducecompetitive 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. Theearlier focus of the whole organization was "production,production and production" but now the focus hasshifted to "marketing and customer focus". This can beobserved 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".

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1997: "Creating customer delight and shareholderswealth".

B) CURRENT STRATEGIES FOLLOWED BY MUL

PRICING STRATEGY - CATERING TO ALL SEGMENTSMaruti caters to all segment and has a product offeringat all price points. It has a car priced at Rs.1,87,000.00which is the lowest offer on road. Maruti gets 70%business from repeat buyers whoearlier had owned a Maruti car. Their pricing strategy isto provide an option to every customer looking for up

gradation in his car. Their sole motive of having somany product offering is to be in the consideration setof every passenger car customer in India. Here is howevery price point is covered.

Factors that influence the consumers

buying decision for the productCultural SocialCulture

Subculture

Social Class

Reference group

Family

Roles and statusesPersonal

Age and life-cycle stage

Occupation

Economic

circumstances

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Lifestyle

Personality and selfconcept

Psychological

MotivationPerception

Learning

Beliefs and attitudesBuyer

A. Cultural Factors

Value, perception, and preferences

Nationalities, religion, race, geographical regions

Social class

A. Social Factors

Reference Groups

Social Class

Roles & Status

A. Personal Factors

Economics Circumstances

Occupation

Age & Life Cycle Stage

Lifestyle

Personality and self-conceptA. Psychological Factors

Motivation

Perception

Learning

Beliefs and attitudes

Business Environment Factors

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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.22 Paurak R. Shah (NIS Academy, Ahmedabad)

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 automobilemanufacturing & research.Ecological Factors:-

1. India automotive regulations are closely aligned toworldstandards on emission & safety.2. Proximity to major export market.Legal Factors:-

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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 youover its lifetime. Running and maintaining it make upthe other twothirds. Take into account resale value andits real cost becomes clear. Maruti Suzuki stands forvalue as much as it stands for performance. In spite ofrising input costs, we try our best to keepprices down. Their running costs and resale values areunbeatable too. Nothing matches the delight their carsdeliver. In the JD Power CSI study 2005, 85% of MarutiSuzuki owners stated that they would definitelyrecommend the car they drive to someone else.Infact,

you dont buy a Maruti Suzuki. You invest in it. After therash of new cars launches the past two years, therelative lull in the auto industry is showing up in thecustomer satisfaction indices. According to the 2005four-wheeler Total Customer Satisfaction (TCS) studyconducted by the specialist division of TNS Automotive,the automobile ownership experience

or customer ownership experience has declined in allareas compared to 2004. The study is one of thelargest syndicated automotive studies in India,representing the responses of more than 7,000 new carbuyers. The comprehensive study covers over

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50 models with customer evaluations taken in the keyareas of sales satisfaction, product quality, vehicleperformance and design, after-sales service, brand

image, and cost-of-ownership.The TCS index score provides a measure of satisfactionand loyalty a given model enjoys with its customers.According to TNS Automotive, the decline ispredominantly for older, small and entry mid-size carmodels. The ageing of these models seems to beposing a stiffer challenge for manufacturers to sustainpast performance levels at a time when customerexpectations are rising sharply.

Bibliography

NEWS PAPERS

THE ECONOMIC TIMES

THE TIMES OF INDIAMAGAZINES

BUSINESS INDIAINDIA TODAYINTERNET WEBSITES

www.google.com

www.marutisuzuki.com

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http://www.marutisuzuki.com/http://www.marutisuzuki.com/

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Thank you!