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PROJECT REPORT
ON
STUDY OF MARKETING & PRICING
STRATEGIES OF
MARUTI SUZUKI INDIALIMTED
SUBMITTED IN PARTIAL FULFILLMENT
FOR THE DEGREE OF MASTERS OF BUSINESS ADMINISTRATION
(2010-2012)
SUBMITTED TO : SUBMITTED BY:
Lt. (col) Dr. ANIRUDH TOMAR YEAMI KHARKONGOR
( DIRECTOR ) MBA- II Semester
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ACKNOWLEDGEMENT
I owe my sincere thanks and gratitude to Dr. Anirudh Tomar who
inspired me by his able guidance and was a constant
guiding light during the course of project study.
The support and knowledge provided by him has been a great
value addition for me and will go a long way in building a
promising career.
Last but not least, I am also thankful to all the respondents of my
survey without whom the project would not have been completed
successfully.
(YEAMI KHARKONGOR)
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INDEX
INTRODUCTION OF THE COMPANY
OBJECTIVE OF THE COMPANY
RESEARCH METHODOLOGY
LIMITATIONS
CONCLUSION
BIBILIOGRAPHY
QUESTIONNAIRE
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INTRODUCTION OF THE COMAPANY
MARUTI SUZUKI INDIA LIMITED
Maruti is India's largest automobile company. The company, a joint venture with
Suzuki of Japan, has been a success story like no other in the annals of the Indian
automobile industry.
Today, Maruti is India's largest automobile company. This feat was achieved by the
missionary zeal of our employees across the line and the far-sighted vision of our
management.
The Company Mission:
To provide a wide range of modern, high quality fuel efficient vehicles in order to
meet the need of different customers, both in domestic and export markets.
The Company Vision:
We must be an internationally competitive company in terms of our products and
services. We must retain our leadership in India and should also aspire to be among
the global players.
Their focus is on:
Building a continuously improving organisation adaptable to quick changes
Providing value and satisfaction to the customer
Aligning and fully involving all our employees, suppliers and dealers to face
competition
Maximizing Shareholder's value
Being a responsible corporate citizen
At Maruti, they have a clear perspective on manpower. They see it as a unique
resource, in the sense that optimal productivity of other resources depends largely on
the way human resources are utilized. The basic philosophy of management that
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underlies the Maruti culture is that all employees of the company should be moulded
into a team which then strives as one, to achieve commonly shared company goals
and objectives. To make this philosophy tenable, the Company takes several
initiatives. Inputs are sought from employees at all levels. They believe that
everyone should contribute to the formulation of company policies, goals and
objectives. Secondly, at Maruti, they encourage leadership in the best sense of the
word. According to us, a leader is one who must be impartial, must have the ability
to rise above his own subjectivity, and, most importantly, must practice what he
preaches.
They understand that the process of creating a sense of belonging that all employees
can identify with is a lengthy one. To ensure that this translates into concrete reality,
they have taken several simple but specific and well thought out measures. The first
step in this direction has been the introduction of a common uniform for all
employees. Another measure is the creation of a common canteen where all
employees have lunch, stand in common queues, and sit on the same table. Common
toilets, common transport and similar facilities for all levels of employees are other
measures that reinforce their emphasis on genuine equality in the workplace.
At Maruti They do not believe in the notion of organizational hierarchies. As a
matter of fact, the management structure and systems in Maruti have been designed
to promote decentralization of authority. Maruti has a horizontal management
structure with only four functional levels of responsibility to facilitate quicker
decision making.
Another focus area of the Maruti culture is the maintenance of a smoothly
functioning communication network. Maruti believes that communication channels
between labor and management cannot simply consist of having a labor
representative on the Board of the Company. They have faith in the ability of labor
to effectively participate in management and make constructive suggestions. To
encourage this, they ensure that there is a thorough dissemination of information at
all levels, through newsletters or via a letter from the Chief Executive to all
employees. Meetings with the Union are held regularly, and programmes being
contemplated by the Company are discussed with the Union. The Sahyog Samiti, a
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collection of representatives of non-unionized employees, training programmes in
Japan, Quality Circles, productivity-linked incentive schemes, and an ethos of
discipline and teamwork, all contribute to the Maruti culture.
Several measures of performance have made amply clear that Maruti has established
a truly healthy work culture. They have met all project and performance targets
since inception. Their productivity levels are constantly improving. The Company
has had good labor relations with employees from the very beginning, and they have
been successful in the export market. Yet, the Maruti culture is one that does not
believe in resting on its laurels. They adhere to the spirit of Kaizen, which states that
constant improvement is always possible. The most basic tenet of productivity that
they hold dear is that " Today should be better than Yesterday and Tomorrow should
be better than Today".
Maruti Suzuki India Limited (MSIL) was established in Feb 1981 through an Act of
Parliament, to meet the growing demand of a personal mode of transport caused by
the lack of an efficient public transport system.
Suzuki Motor Company was chosen from seven prospective partners worldwide.
This was due not only to their undisputed leadership in small cars but also to their
commitment to actively bring to MSIL contemporary technology and Japanese
management practices (which had catapulted Japan over USA to the status of the top
auto manufacturing country in the world).
A licence and a Joint Venture agreement was signed between Government of India
and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982.
The objectives of MSIL then were:
Modernization of the Indian Automobile Industry.
Production of fuel-efficient vehicles to conserve scarce resources.
Production of large number of motor vehicles, which was necessary for
economic growth.
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Core Value
Customer Obsession
Fast, Flexible and First Mover
Innovation and Creativity
Networking and Partnership
Openness and Learning
Vision
The leader in the India Automobile Industry, Creating Customer Delight and
Shareholders Wealth; A pride of India
Technological Advantage
We have introduced the superior 16 * 4 Hypertech engines across the entire Maruti
Suzuki range. This new technology harnesses the power of a brainy 16-bit computer
to a fuel-efficient 4-valve engine to create optimum engine delivery. This means
every Maruti Suzuki owner gets the ideal combination of power and performance
from his car.
Our other innovation has been the introduction of Electronic Power Steering (EPS)
in select models. This results in better and greater maneuverability. In other words,
our cars have become even more pleasurable to drive.
Production/R&D
Spread over a sprawling 297 acres with 3 fully-integrated production facilities, the
Maruti Udyog Plant has already rolled out over 4.3 million vehicles. In fact, on an
average, two vehicles roll out of the factory every minute. And it takes on an
average, just 14 hours to make a car. More importantly, with an incredible range of
11 models available in 50 variants, there's a Maruti Suzuki made here to fit every
car-buyer's budget and dream.
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GENERAL INFORMATION:
Registered and Corporate office:
Maruti Suzuki India limited,
Nelson Mandela road,
Vasant kunj ,
New Delhi- 110070
PLANTS :
Gurgaon and Manesar plants
Production Milestones
1st vehicle produced, December 1983
1,00,000 vehicles produced by August, 1986
5,00,000 vehicles produced by June, 1990
10,00,000 vehicles produced by March, 1994
15,00,000 vehicles produced by April, 1996
20,00,000 vehicles produced by October, 1997
25,00,000 vehicles produced by March, 1999
30,00,000 vehicles produced by June, 2000
35,00,000 vehicles produced by December 2001
40,00,000 vehicles produced by April, 2003
45,00,000 vehicles produced by April, 2004
55,00,000 vehicles produced by April 2006
75,00,000 vehicles produced by April 2009
85,00,000 vehicles produced by April 2010
1 Crore (ten millionth) car by march 2011
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AWARDS
2005Number one in JD Power SSI for the second consecutive year
Number one in JD Power CSI for the sixth time in a row - the only
car to winit so many timesM800, WagonR and Swift topped their segments in the TNS TotalCustomer Satisfaction Study
Leadership in the JD Power Initial Quality Study - Alto number
one in its
segment for the 2nd time in a row, Esteem number one in its
segment forthe 3rd year in a row, Swift number one in the premium compact
segment
WagonR and Esteem top their segments in the JD Power APEAL
study
TNS ranks Maruti 4th in the Corporate Reputation Strength (CSR)
study(#1 in Auto sector)-Feb 05
Maruti bagged the "Manufacturer of the year" award from Autocar-
CNBC( 2nd time in a row)-Feb 05First Indian car manufacturer to reach 5 million vehicles sales
Business World ranks Maruti among top five most respected
companies inIndia-Oct 04
Maruti ranked among top ten (Rank7) greenest companies in India
byBusiness Today - Sep '04
2004
Maruti Suzuki was No. 1 in Customer atisfaction, No. 1 in Sales
Satisfaction No.1 in Product Quality (Esteem and Alto) and No. 1
in Product Appeal (Esteem and Wagon R)No. 1 in Total Customer Satisfaction (Maruti 800, Zen and Alto)
Business World ranked us among the country's five most respected
companies
Business World ranked us the country's most respected automobile
company
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Voted Manufacturer of the year by CNBC
Voted one of India's Greenest Companies by Business Today-AC
Nielson ORG-MARG2003
Maruti 800, Maruti Zen and Maruti Esteem make it to the top 10
automotive brands in "Most Trusted Brand survey 2003"J D Power ranked 3 models of Maruti on top: Wagonr, Zen and
Esteem
Maruti 800 and WagonR top in NFO Total Customer Satisfaction
Study 2003.MUL tops in J D Power CSI (2001) for 4th time in a row
2001
MUL tops in J D Power CSI (2001) for 2nd time in a row: another
international first
2000
Maruti bags JD Power CSI - 1st rank; unique achievement by
market leader anywhere in the world
1999
MSM launched as model workshop in India; achieves highest CSI
rating.
Central Board of Excise & Customs awards Maruti with "Samman
Patra", for contribution to exchequer and being an ideal tax
assessee
1998CII's Business Excellence Award
1996
Maruti wins INSSAN award for "Excellence in Suggestion
Scheme"Awarded the Star Trading House status by Ministry of Commerce
1994-95
Engineering Exports Promotion Council's award for export
performance
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1994
Best Canteen award among Haryana Industries as part of employee
welfare
1992-93
Engineering Exports Promotion Council's award for export
performance
1991-92
Engineering Exports Promotion Council's award for export
performance
The sales numbers for March 2011 are as under:
Segment Models
In March Till March
2011 2010%
Change2010-11 2009-10
%
Change
A1 M800 2915 2762 5.5% 26485 33028 -19.8%
A2
Alto, WagonR,
Zen, Swift,Ritz, A-Star
78460 54763 43.3% 808552 633190 27.7%
A3 SX4, D'zire 13910 10453 33.1% 131272 99315 32.2%
A4 Kizashi * 103 -- -- 138 -- --
A: Total Passenger
Cars95388 67978 40.3% 966447 765533 26.2%
B: MUVGypsy, GrandVitara
620 677 -8.4% 5666 3932 44.1%
C: VanType Omni, Versa,Eeco 14416 10875 32.6% 160626 101325 58.5%
Domestic Sales 110424 79530 38.8% 1132739 870790 30.1%
Export Sales 11528 15593 -26.1% 138266 147575 -6.3%
Total Sales 121952 95123 28.2% 1271005 1018365 24.8%
* Kizashi launched in February 2011. 2010-11 Highlights
During the year, the company expanded its countrywide network:
Number of 31 March2011
31 March2010
Increase
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Sales Outlets 933 802 131
Cities covered by sales
network666 555 111
Service Stations 2946 2740 206
Cities covered by servicenetwork
1395 1335 60
Maruti Driving Schools 164 83 81
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WHY MARUTI SUZUKI
The Quality Advantage
A car is an engineering product, only as good as the technology used to make
it. Actual users of our technology are saying something very clearly Maruti
Suzuki is No.1 in quality:
Maruti Suzuki owners experience fewer problems with their vehicles than any other
can manufacturer in India (J.D. Power IQS Study 2004). The Alto was chosen No.1
in the premium compact car segment and the Esteem in the entry level mid-size car
segment across 9 parameters.
The J.D. Power APEAL Study 2004 proclaimed the Wagon R. No. 1 in the
premium compact car segment and the Esteem No.1 in the entry level mid-
size car segment. This study measures owner delight in terms of design,
content, layout and performance of vehicles across 8 parameters.
Maruti Suzuki has a sales network of 307 state-of-the-art showrooms across189 cities*, with a workforce of over 6000 trained sales personnel to guide
our customers in finding the right car. Our high sales and customer care
standards led us to achieve the No.1 nameplate in the J.D. Power SSI study
2004. The SSI study measures sales satisfaction across 6 parameters: deal
received, paperwork, dealer facility, salesperson, delivery timing and delivery
process. Maruti Suzuki has not only got the No.1 nameplate in the J.D. Power
SSI study 2004, but also ranked way above the industry average (Maruti
Suzuki was at 784 while industry average was at 760). What is significant is
that it was ranked above Skoda, Ford, Chevrolet, Mitsubishi and Hyundai.
To be really happy with the car you own, it should have a reliable service
network at hand and within easy reach. Their 1036 city strong service
network is equipped to service 20,000 vehicles a day. No wonder Maruti
Suzuki has been awarded the No.1 nameplate in customer satisfaction in India
for the fifth year in a row, a feat unprecedented for any automobile marketleader in the world.
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In the J.D. Power CSI study 2004, Maruti Suzuki scored the highest across all
7 parameters: least problems experienced with vehicle serviced, highest
service quality, best in-service experience, best service delivery, best in-
service experience, most user-friendly service and best service initiation
experience.
In fact, 92% of Maruti Suzuki owners feel that work gets done right the first time
during service. The J.D. Power CSI study 2004 also reveals that 97% of Maruti
Suzuki owners would probable recommend the same make of vehicle, while 90%
owners would probable repurchase the same make of vehicle.
A Buying Experience Like No Other
Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189
cities, with a workforce of over 6000 trained sales personnel to guide our customers
in finding the right car. Our high sales and customer care standards led us to achieve
the No.1 nameplate in the J.D. Power SSI Study 2004.
Quality Service Across 1036 Cities
In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7
parameters: least problems experienced with vehicle serviced, highest service
quality, best in-service experience, best service delivery, best service advisor
experience, most user-friendly service and best service initiation experience.
92% of Maruti Suzuki owners feel that work gets done right the first time during
service. The J.D. Power CSI study 2004 also reveals that 97% of Maruti Suzuki
owners would probably recommend the same make of vehicle, while 90% owners
would probably repurchase the same make of vehicle.
One Stop Shop
At Maruti Suzuki, you will find all your car related needs met under one roof.
Whether it is easy finance, insurance, fleet management services, exchange- Maruti
Suzuki is set to provide a single-window solution for all your car related needs.
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The Low Cost Maintenance Advantage
The acquisition cost is unfortunately not the only cost you face when buying a
car. Although a car may be affordable to buy, it may not necessarily be
affordable to maintain, as some of its regularly used spare parts may be priced
quite steeply. Not so in the case of a Maruti Suzuki. It is in the economy
segment that the affordability of spares is most competitive, and it is here
where Maruti Suzuki shines. The recent Auto car Survey conducted in August
2004 bears testimony to this fact. In the Maruti Suzuki stable, the Omni has
the lowest aggregate cost of spares followed by the Maruti-800. The Maruti-
800 has the cheapest spares of any Indian car with a basket of just Rs. 23,422.
In the Lower Mid-size segment as well, price-consciousness is very high,
where the cars have to be not only affordable on purchase price but also need
to combine quality, drivability and have comfortable interiors. In this
segment, the Maruti Suzuki Versa has scored particularly well with the lowest
cost of spares in the segment. In the Upper Mid-size segment, the Maruti
Suzuki Baleno has the segment's lowest prices on a majority of the spares.
Lowest Cost of Ownership
To be really happy with the car one owns, it should be easy on the pocket to
buy and to run-which is why the cost of ownership is so important. And here
again, a Maruti Suzuki is a clear winner, as shown by the recent J.D.Power
CSI study 2004. It is clear that a Maruti Suzuki delights you even when you
run it for years. The 6 highest satisfaction ratings with regard to cost of
ownership among all models are all Maruti Suzuki vehicles: Zen, Wagon R,
Esteem, Maruti 800, Alto and Omni. They are proud to have the lowest cost of
operation / km (among petrol vehicles) - the top 5 models are all Maruti
Suzuki models: Maruti 800, Alto, Zen, Omni and Wagon R.
Employee Quality Measures
Kaizen is based on the concept of making incremental improvements in our
products. It incorporates a series of continuous small and simple improvements,which aim at involving employees at all levels.
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The Suggestion Scheme is based on the same principle. Under this scheme,
employees are encouraged to make suggestions for improvement in any area of our
operation. Over 50,000 suggestions are received from employees every year.
Maruti has won the First place in "Excellence in Suggestion Scheme Contest
2003", which is the 6th consecutive award won in as many years. This contest is
organized by Indian National Suggestion Schemes Association (INSSAN). Since
1998 Maruti has won this award 10 times.
"Quality Circles" are groups of five to eight members from a particular work area
who work as a team to identify priorities and solve work related problems in the
area.
We believe that it is this unwavering commitment to quality that will lead to the
further growth of the organization as competition increases.
ISO 9001:2000
At Maruti, our approach to quality is in keeping with the Japanese practice--"build it
into the product". Technicians themselves inspect the quality of work. Supervisors
educate and instruct technicians to continually improve productivity and quality.
The movement of quality indicators is reviewed in weekly meetings by the top
management.
In 2001, Maruti Udyog Ltd became one of the first automobile companies
anywhere in the world to get an ISO 9000:2000 certification. AV Belgium,
global auditors for International Organization for Standardisation(ISO), certified
Maruti after a four day long audit, covering varied parameters like Customer
Focussed organisation, Leadership, Involvement of people, Process approach,
System approach to Management, Continual improvement, etc.
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In May 1995, Maruti got ISO 9002 certification. The audit for this covered
quality assurance in production, installation, marketing and sales as well as after
sales services. We were also one of the first companies in the world to pioneer ISO
9000 certification for our dealers.
In October 1993, MSIL passed the Conformity Of Production (COP) Audit,
which is based on a European Union Directive. This authenticated our quality
systems and testing facilities for export to Europe.
Their emphasis on total quality has meant that today they are in a position to guide
vendors and dealers in establishing and consolidating their individual quality
systems. This commitment to quality has ensured a consistently satisfying product
and world-class sales and after-sales services.
TS16949:2002 - A new feather was added recently in Marutis cap in the
field of quality when the Quality Management System of its Press Shop &
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associated functions (collectively termed as Press Function) got certification for
conformance to the requirements of TS16949:2002 standard.
The need for TS certification of Press Function had its genesis in the prestigious
project that Maruti earned for the supply of stamped panels to General Motors India
for one of its forthcoming models.
As a part of Quality system requirements, GM requires all its suppliers to be
certified to either ISO TS 16949 or QS 9000.
These standards address Quality System requirements, which are particularly
specific to the automotive industry and requires an organization to be in compliancewith ISO 9000 systems as a basic requirement. However, whereas QS 9000 would
become defunct and cease to exist after Dec 2006, TS 16949 is going to be the
standard of the future.
The TS 16949 standard, brought out by ISO in the year 1999, is an extension of the
ISO 9001:2000 standard that prescribes Quality management system requirements
that are specifically applicable to the automotive industry.
TS 16949 has gained high popularity and almost all major automobile players across
the globe including GM, Ford, Daimler Chrysler, Nissan, Honda are embracing &
promoting it.
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ISO 9001:2000
THEORITICAL PERSPECTIVE
Marketing strategies:
The term marketing has changed and evolved over a period of time, today marketingis based around providing continual benefits to the customer, these benefits will be
provided and a transactional exchange will take place.
The Chartered Institute of Marketing define marketing as 'The management processresponsible for identifying , anticipating and satisfying customer requirements
profitably'
If we look at this definition in more detail Marketing is a management responsibilityand should not be solely left to junior members of staff. Marketing requires co-ordination, planning, implementation of campaigns and a competent manager(s)with the appropriate skills to ensure success.
Marketing objectives, goals and targets have to be monitored and met, competitorstrategies analyzed, anticipated and exceeded. Through effective use of market andmarketing research an organization should be able to identify the needs and wants ofthe customer and try to delivers benefits that will enhance or add to the customers
lifestyle, while at the same time ensuring that the satisfaction of these needs resultsin a healthy turnover for the organization.
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Philip Kotler defines marketing as 'satisfying needs and wants through an exchangeprocess'
Within this exchange transaction customers will only exchange what they value(money) if they feel that their needs are being fully satisfied, clearly the greater the
benefit provided the higher transactional value an organization can charge.
Consumer is strictly, the ultimate consumer of a product, the ultimate user of a
product; the person who derives the satisfaction or the benefit offered. The
'consumer' is not necessarily the customer, since there are often 'customers' in the
buying/ distribution chain; moreover, the consumer is frequently not the person who
makes the buying decision; for instance, in the case of many household products,
where the housewife may make the purchase but consumption or use is by the whole
family. 'Consumer' is not normally applied to the purchase of industrial goods and
services where the customer is usually a corporate body. Nevertheless, consumable
goods are sold to industry for corporate purposes and the consumers of these goods
can be identified for marketing practice.
PRICING STRATEGIES:
There are several different pricing strategies available to a business:
Strategy Description
Cost-plus pricingSetting a price by adding a fixed amount or percentage to thecost of making the product
Penetration pricing Setting a very low price to gain as many sales as possible
Price skimmingSetting a high price before other competitors come into the
marketPredatory pricing Setting a very low price to knock out all the other competition
Competitor pricing Setting a price based on competitors prices
Price discriminationSetting different prices for the same good, but to differentmarkets e.g. peak and off peak mobile phone calls
Psychologicalpricing
Setting a price just below a large number to make it seemsmaller e.g. 9.99 not 10
A new business that is entering the market might try the following strategies:
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If they are first into the market then they might use price SKIMMING.
If they are trying to establish themselves in the market then PENETRATION
pricing.
Sometimes a business may use a loss leader. This is a product where the price is solow that the retailer may not make any profit or even a loss on the sale, but doesattract shoppers to buy other full price products. Orange juice has been used by
businesses such as Rank Hovis McDougall to entice supermarkets to stock more oftheir other products.
Price skimming has been used for the launch of high technology products, such asDVD players and Personal Digital Assistants (PDAs) - which were far moreexpensive than they are now when they first arrived in the market.
Consumer behavior is the study of buying habits or patterns of behaviour of
consuming public either in general or in specific groups.
THE BUYING PROCESS
The complexity inherent in understanding consumer behaviour has led to the
construction of models of the buying process which indicate the stages
through which the consumer passes from the time he or she first becomes
aware of a need for a product or service to the time when a product is
purchased, a brand selected, and the consumer evaluates the success of his
purchase decides whether to buy that particular product and / or brand again.
It the same time, such models usually indicate the social and psychological
forces which shape the potential buyer's action at each stage in the process.
The two principal aims of such model building are the prediction of future
behavior based on measurement of relevant variable and the explanation of
this behavior in terms of theoretically relevant constructs.
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The starting point for understanding the buyer is the stimulus-response model
shown below
Marketing stimuli
Otherstimuli
Buyer'sCharacteris
tics
Buyer'sdecisionprocess
Buyer'sdecisions
Product
Price
Place
Promotion
Economic
Technological
Political
Cultural
Cultural
Social
Personal
Psychological
Problemrecognition
Informationsearch
Evaluationdecision
Post-purchasebehavior
Product choice
Brand choice
Dealer choice
Purchase timing
Purchaseamount
Stages in Buying Decision Process
Need
recogniti
on
Informat
ion
search
Evaluation
of
alternative
s
Purchas
e
decisio
n
Post-
purchase
behavior
The consumer passes through five stages : Problem recognition information
search, evaluation of alternatives purchase decision and post-purchase
behavior. Clearly the buying process starts long before the actual purchase
and has consequences long after the purchase.
This model implies that consumers pass through all five stages in buying a
product. But this is not the case, especially in low-involvement purchase.
Consumers may skip or rreverse some stages. Thus a woman buying her
regular brand of toothpaste goes directly from the need for toothpaste to the
purchase decision, skipping information search and evaluation. However, we
have already used the model in above, because it captures the full range of
consideration that arise when a consumer facer a highly involving newpurchase. We will allude again to Linda Brown and try to understand how she
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became interested in buying a laptop computer and the try to understand how
she became interested in buying a laptop computer and stages she went
through to make her final choice.
MAJOR FACTORS INFLUENCING BUYING
BEHAVIOR
Cultural
Social
Culture
Subculture
Social Class
Reference group
Family
Roles andstatuses
Personal
Age and life-cycle stage
Occupation
Economiccircumstances
Lifestyle
Personality andself-concept
Psychological
Motivation
Perception
Learning
Beliefs andattitudes
Buyer
Rogers model for the adoption and diffusion of innovations Innovation
Adoption CURVE
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The innovation adoption curve ofRogers is a model that classifies adopters of innovations into
various categories, based on the idea that certain individuals are inevitably more open to adaptation than
others. Is is also referred to as Multi-Step Flow Theory orDiffusion of Innovations Theory.
Innovators
Brave people, puling the change. Innovators are very important communication.
Early Adopters
Respectable people, opinion leaders, try out new ideas, but in a careful way.
Early Majority
Thoughtful people, careful but accepting change more quickly than the average.
Late Majority
Skeptic people, will use new ideas or products only when the majority is using it.
Laggards
Traditional people, caring for the "old ways", are critical towards new ideas and will only accept it if the
new idea has become mainstream or even tradition.
The diffusion of innovations curve (innovation adoption curve) of Rogers is useful to remember that
trying to quickly and massively convince the mass of a new controversial idea is useless. It makes more
sense in these circumstances to start with convincing innovators and early adopters first. Also the
categories and percentages can be used as a first draft to estimate target groups for communication
purposes.
Diffusion research focus was on five elements: 1) the characteristics of an
innovation which may influence its adoption; 2) the decision-making process that
occurs when individuals consider adopting a new idea, product or practice; 3) the
characteristics of individuals that make them likely to adopt an innovation.
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TARGET MARKETING
Target Marketing involves breaking a market into segments and then concentrating
your marketing efforts on one or a few key segments.
The beauty of target marketing is that it makes the promotion, pricing and
distribution of your products and/or services easier and more cost-effective. Target
marketing is the selection of customers you wish to service. The decisions involved
in it are
Which segments to target
How many products to offer
Which products to offer in which segments
There are three steps to targeting:
Market segmentation
Target choice
Product positioning
One of the first things you need to do is to refine your product or service so that you
are NOT trying to be 'all things to all people.
Next, you need to understand that people purchase products or services for three
basic reasons:
To satisfy basic needs.
To solve problems.
To make themselves feel good.
The next step in creating an effective marketing strategy is to zero in on your target
market.
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Target marketing is one of corporate America's most effective business strategies.
The idea is to increase sales by first identifying, and then targeting smaller, yet more
profitable customer groups within the total market.
Four Ways to Identify Target Markets
1. Geographic: The location, size of the area, density, and climate zone
of your customers.
2. Demographics: The age, gender, income, family composition and size,
occupation, and education of your customers.
3. Psychographics: The general personality, behavior, life-style, rate of
use, repetition of need, benefits sought, and loyalty characteristics of
your customers.
4. Behaviors: The needs they seek to fulfill, the level of knowledge,
information sources, attitude, use or response to a product of your
customers.
One of the best ways to identify your target market is to look at your existingcustomer base. Who are your ideal clients? What do they have in common? If you
do not have an existing customer base, or if you are targeting a completely new
audience, speculate on who they might be, based on their needs and the benefits they
will receive. Investigate competitors or similar businesses in other markets to gain
insight.
TARGET MARKETING
Who are your best customers? Where should you direct your marketing
activities?
Where and how should you allocate your advertising and promotional
efforts?
Target Marketing, provides Focus for your business. It helps to establish
critical Operational goals and defines what must be done to achieve them
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What Customers Want
Marketing is more than an activity, it is an attitude Instead of trying to get customers to buy what the firm likes to make,
or happens to have on hand, the marketing oriented firm tries to
produce or sell what its customers want which can be sold at a profit.
Do not simply throw out everything that you now have and replace goods or
production machinery with completely new items.
HOWEVER, AS YOU ANALYZE YOUR MARKET AND CUSTOMER
PROFILES, AND SO GAIN AN UNDERSTANDING OF THEIRWANTS, DESIRES, AND PERCEIVED NEEDS, YOU CAN BEGIN TO
REORIENT YOUR BUSINESS OVER TIME TO TAKE BEST
ADVANTAGE OF THESE NEW INSIGHTS. CONSIDER BOTH THE
SHORT TERM AND LONG-TERM IMPLICATIONS OF
DEVELOPING AND IMPLEMENTING THE RIGHT TARGET
MARKETING STRATEGY FOR YOUR BUSINESS.
Customer Attitudes
For a long time, people have believed that advertising can be used to change
people's minds about what they want. This is an incredibly difficult process at
best, and an extremely expensive one. Because of these two factors, it is a
process that smaller firms simply cannot afford to pursue. Instead, it is much
more productive for any size firm to tune in to target customer attitudes as they
currently exist. Once they have identified the actual prevailing attitudes, they
can begin to organize company resources needed to constructively address
and satisfy these attitudes the key question is,
"What are the existing customer attitudes?"
With this as an objective, developing an understanding of existing customer
attitudes becomes essential, and their identification becomes an important part
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of the marketing process. Once these customer attitudes, needs or preferences
are identified, the entire firm can then organize itself to satisfy these needs as
completely and efficiently as possible.
Target Marketing
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Comparison of Automobile And ConsumerDurable
At Dealership Level
S.No Attributes Automobile Consumer Durables
1 Turnover High Low
2 Margin 8%-12% 2%-4%
3
Penetration
Level
More in small or large
towns or cities
More in Rural areas
or in cities also
4
Training ofSalesExecutives
Executives get Trainingafter every specificperiod As such no training
5 Supply-Chain Co->Dealer->CustomerCo->Distributor->Dealer >Customer
6DiscountMargin Cartel
Depends on DealerTo Dealer
7 CSR Proper well organized
Only Sales man isthere to serve thecustomer
8 ASSCustomer get 3freeservice
Customer have to goat manufacturedlevel
9BrandAssociation
Customer first choice ismore pertinent
Customer canchange his or herchoice
10 Payment Instantaneous Payment
More focus onFinance &Installment
11Post-SalesFollow UP More Very Less
12BuyingProcedure
Customer can wait fornew model Instant buying
13 Database Large Few
14BrandTransition Single-Tier Multi-Tier
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15 Advertisement
Parent Company &dealer both giveadvertisement
Only from ParentCompany
16LoyalityPrograms Yes No
17
CustomerSatisfactionIndex
Well- Defined &Organized None
18 Promotion Free Service Camps None
19CustomerRetention More Very Less
20 Maintenance
Only free service whichcustomer can extendupto 4 years(first 2yr arefree)
Annual MaintenanceContract (AMC)
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MARUTI CULTURE
Their employees are their greatest strength and asset. It is this underlying philosophy
that has moulded their workforce into a team with common goals and objectives.
Their Employee-Management relationship is therefore characterized by:
Participative Management.
Team work & Kaizen.
Communication and information sharing.
Open office culture for easy accessibility
To implement this philosophy, they have taken several measures like a flat
organizational structure. There are only three levels of responsibilities ranging from
the Board Of Directors, Division Heads to Department Heads. Other visible features
of this philosophy are an open office, common uniforms (at all levels), and a
common canteen for all.
This structure ensures better communication and speedy decision making processes.
It also creates an environment that builds trust, transparency and a sense of
belonging amongst employees.
For Investors:
Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan,
has been the leader of the Indian car market for about two decades. Its
manufacturing plant, located some 25 km south of New Delhi in Gurgaon, has an
installed capacity of 3,50,000 units per annum, with a capability to produce about
half a million vehicles.
The company has a portfolio of 11 brands, including Maruti 800, Omni, premium
small car Zen, international brands Alto and WagonR, off-roader Gypsy, mid size
Esteem, luxury car Baleno, the MPV, Versa, Swift and Luxury SUV Grand Vitara
XL7.
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In recent years, Maruti has made major strides towards its goal of becoming Suzuki
Motor Corporation's R and D hub for Asia. It has introduced upgraded versions of
WagonR Zen and Esteem, completely designed and styled in-house.
Maruti's contribution as the engine of growth of the Indian auto industry, indeed its
impact on the lifestyle and psyche of an entire generation of Indian middle class, is
widely acknowledged. Its emotional connect with the customer continues.
Maruti tops customer satisfaction again for sixth year in a row according to the J.D.
Power Asia Pacific 2005 India Customer Satisfaction Index (CSI) Study.
The company has also ranked highest in India Sales Satisfaction Study.
The company's quality systems and practices have been rated as a "benchmark for
the automotive industry world-wide" by A V Belgium, global auditors for
International Organisation for Standardisation.
In keeping with its leadership position, Maruti supports safe driving and traffic
management through mass media messages and a state-of-the art driving training
and research institute that it manages for the Delhi Government.
The company's service businesses including sale and purchase of pre owned cars
(TrueValue), lease and fleet management service for corporates (N2N), Maruti
Insurance and Maruti Finance are now fully operational.. These initiatives, besides
providing total mobility solutions to customers in a convenient and transparent
manner, have helped improve economic viability of The company's dealerships.
The company is listed on Bombay Stock Exchange and National Stock Exchange.
MUL is a Board-managed company. Currently the directors on the Board are:
Mr. Shinzo Nakanishi, Chairman
Mr. Jagdish Khattar, Managing Director
Mr. Hirofumi Nagao, Joint Managing Director
Mr. Shinichi Takeuchi, Joint Managing Director
Mr. Kinji Saito, Director (Marketing and Sales)
Mr. Osamu Suzuki, Director
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Mr. R C Bhargava, Director
Mr. S V Bhave, Director
Mr. Kumar Mangalam Birla, Director
Mr. Amal Ganguli, Director
Ms Pallavi Shroff, Director
Mr. Manvinder Singh Banga, Director
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OBJECTIVE OF THE COMPANY
Marutis marketing objective is to continually offer the customer new
products and services that:
Reduce the customers cost of ownership of their cars; and
anticipate and address the customers needs and preferences in all
aspects and stages of car ownership, to provide what they refer to as
the 360 degree customer experience.
They sell ten models with more than 50 variants in segments A, B, C, and
utility vehicle segment of the Indian passenger car market. Of these, they
manufacture nine models and import the Grand Vitara as a completely built
unit from Suzuki in Japan. Their models and variants are designed to address
the changing demands of the market and are periodically upgraded in
technology, styling and features. To take advantage of the brand recognition
associated with their products, they retain the brand name of the product
through various stages of product upgrades over time. For example, the
version of the Maruti 800 brand currently sold in the market is a significantly
upgraded version, in terms of technology, design and styling, of the Maruti
800 launched in 1983.
A Maruti 800
A OMNI
B Zen
B Wagon R
B Alto
C Esteem
C Baleno
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C Versa
C SWIFT
Utility Vehicle GYPSY KING
Utility Vehicle GRAND VITARA
Sports Sedan KIZASHI
BALENO
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WAGON R
RITZ
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MARUTI 800
NEW ALTO
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OMNI
SWIFT
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A STAR
ZEN
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KIZASHI
RESEARCH METHODOLOGY
The nature of the project work has been exploratory as no hypothesis, is
taken to be tested. Though the conclusions drawn could be taken as the
hypothesis and further tested by the research work undertaken in the
relevant field. The reason for choosing the exploratory research design is
the fact the project report has been primarily based upon the secondary
sources of data and whose authenticity could be assured of.
Following steps have been taken to obtain a correct result:
1. Define research problem correctly
2. Formulate hypothesis
3. Develop research design
4. Collect data
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5. Analysis of data
6. Interpret and report
These steps were not fully followed in this study as the research was not
numerically inclined and was not based on primary data.
Primary sources
In order to gather information about the various products, I personally
visited a number of retail markets and collected data pertaining to the
prices of the products offered. The market visits were useful in knowing
the comparative prices and quality of the offered brands vis--vis the
competitive brands. Detail regarding the packaging of the products was
collected.
By interviewing these retailers valuable information was collected. I
inquired from them about their marketing advertising and distribution
strategies.
Secondary sources
Information was collected from secondary sources such as public libraries,
newspapers, business magazines.
Beside these the use of Internet was also made in collecting relevant
information. The data collected from the above mentioned sources has been
adequately structured and used at appropriate places in the report. This
particular way of data collection was used because of its low cost (except
data collected through surfing the internet) and less time consumption.
The information gathered included:
Their annual reports (Procter & Gamble and Johnson and Johnson).
Pamphlets.
Posters.
Press clippings.
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News releases.
Newsletters.
Pictures.
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FINDINGS OF THE STUDY
PRICES OF MARUTI PRODUCTS
Car market leader Maruti Udyog Limited has announced a marginal increase in price
of certain models.
The price increase is due to rise in input costs and freight costs, which
increased following the rise in oil prices. In this phase, the company has
decided to pass on only a part of the increase in costs to the customers.
Ex-Showroom Prices in Delhi (in Rs)
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Omni
Model /
Vehicle
T
y
pe
Ex -
Sho
wroo
m
Pric
e
Ex -
Sho
wroo
m
Pric
e
(Wit
h 3rd
Year
Ew)
*
Regis
tratio
n +
SMA
RT
Card
+ No
Plate
Char
ges
MC
D
Par
kin
g
Ch
arg
es
Insu
ranc
e
Han
dlin
g
Cha
rges
B
as
ic
Ki
t
A
ut
o
C
ar
d
On
Ro
ad
Pri
ce
4th
Year
Exte
nded
War
rant
y
Amo
unt
Omni 5Str
224,737
226,427
9,7592,000
7,504
4,250
1,640
331
251,911
1,805
Omni 5Str
(M)
227,052
228,742
9,8522,000
7,572
4,250
1,640
331
254,387
1,805
Omni 8Str
226,398
228,088
9,8262,000
7,553
4,250
1,640
331
253,688
1,805
Omni 8Str
(M)
228,890
230,580
9,926 2,000
7,626
4,250
1,640
331
256,353
1,805
OmniAmbulance
259,553
261,243
11,152
5,000
4,250
1,640
331
283,616
1,805
Alto
Model
/
Vehicl
e
T
yp
e
Ex -
Sho
wroo
m
Price
Ex -
Sho
wroo
m
Price
(Wit
h 3rd
Year
Ew)*
Registratio
n +
SMA
RT
Card
+ No
Plate
Char
ges
MC
D
Par
kin
g
Ch
arg
es
Insu
ranc
e
Han
dlin
g
Cha
rges
B
as
ic
Ki
t
A
ut
o
C
ar
d
On
Ro
ad
Pri
ce
4th
Year
Exte
nded
War
ranty
Amo
unt
AltoStd
231,148
232,938
10,016
2,000
7,693
4,250
1,430
331
258,658
2,400
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ORGANISATION STRUCTURE AT MSIL
Maruti Udyog ltd. Has a flat organization structure with a maximum of three
levels.
Head office
MD
MFG FIN OTHER
DIRECTOR N CONTROLLER GM DGMS AGMS
GM/ DGMS DGMS AGMS MGRS/AMS
MGRS/AMS MGRS/AM SR GM/EX
ENGINEERS(EX) SR. EX./EX
TRAINEES
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J.E. (TRAINEES)
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THE PRODUCTION PROCESS AT MARUTI
49
STEEL COILS
BLANKING
PRESSING
WELDING
PAINTING
ASSEMBLY
VEHICLEINSPECTION
TEST RUN
SUPPLY &DISPATCH
FROMVENDOR
S
FROMVENDORS
FROMVENDOR
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INTERNATIONAL BUSINESS
In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since its
first export in 1986. Europe is the largest destination of Marutis exports and
coincidentally after the first commercial shipment of 480 units to Hungary in 1987,
the 300,00 mark was crossed by the shipment of 571 units to the same country. The
top ten destinations of the cumulative exports have been Netherlands, Italy,
Germany, Chile, U.K., Hungary, Nepal, Greece, France and Poland in that order.
The Alto, which meets the Euro-3 norms, has been very popular in Europe where a
landmark 200,000 vehicle were exported till March 2003. Even in the highly
developed and competitive markets of Netherlands, UK, Germany, France and Italy
Maruti vehicles have made a mark. Though the main market for the Maruti vehicles
is Europe, where it is selling over 70% of its exported quantity, it is exporting in
over 70 countries.
Maruti has entered some unconventional markets like Angola, Benin, Djibouti,
Ethiopia, Morocco, Uganda, Chile, Costa Rica and El Salvador. The Middle-East
region has also opened up and is showing good potential for growth. Some markets
in this region where Maruti is, are Saudi Arabia, Kuwait, Bahrain, Qatar and UAE.
The markets outside of Europe that have large quantities, in the current year, are
Algeria, Saudi Arabia, Srilanka and Bangladesh. Maruti exported more than 51,000
vehicles in 2003-04 which was 59% higher than last year. In the financial year 2003-
04 Maruti exports contributed to more than 10% of total Maruti sales.
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MARUTI ALL INDIA SALES 3 YR TREND
Segment 2003-04
Growth
2004-05 Growth
2005-06
Growth
A1 (Mini - Hatchback) 167,561
17% 116,262 -31% 89,223 -23%
A2 (Compact - Hatchback) 176,132
47% 271,280 54% 335,136 24%
A3 (Mid Size) 14,173 28% 29,637 109% 31,939 8%
A4/A5/A6(Exec./Prem./Luxury)
NA NA NA NA NA NA
C (Van Type) 59,526 15% 65,019 9% 66,366 2%
Passenger Cars - MUL 417,392
28% 482,198 16% 522,664
8%
Passenger Cars - TotalIndustry
758,123
26% 885,029 17% 948,669
7%
MUV (Utility Vehicles) 3,555 12% 5,204 46% 4,374 -16%
Passenger Vehicles - MUL 420,947
28% 487,402 16% 527,038
8%
Passenger Vehicles - TotalIndustry
901,150
24% 1,050,246
17% 1,129,316
8%
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MARKET SHARE
2005-06 Market Share-Segment A2
TATA
20%
HYUNDAI
21%MARUTI
59%
2005-06 Market Share-Segment A3
TATA
20%
FORD
14%
GM
6%HONDA
20%
OTHERS
7%
MARUTI
17%
HYUNDAI
16%
2005-06 Market Share-Passenger Cars
TOYOTA
1%
OTHERS
3%
FORD
3%
GM
1%
HONDA
4%
TATA
16%
MARUTI
55%
HYUNDAI
17%
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COMPETITION MODELS
SEGMENTMaruti Competition
A1 (Mini -Hatchback)
M800
A2 (Compact -Hatchback)
Zen, WagonR,Alto, Swift
Hyundai - Santro & Getz; Tata -Indica & Palio; GM - Corsa Sail
A3 (Mid Size) Esteem,Baleno
Hyundai - Accent; Tata - Indigo &Petra; Honda - City; GM - Corsa,
Optra, & Aveo; Ford - Ikon,Fusion, & Fiesta
A4/A5/A6
(Exec./Prem./Luxury)
Hyundai - Elantra & Sonata;
Honda - Accord; GM - Vectra; Ford- Mondeo; Skoda - Octavia &
Superb; Toyota - Corolla & Camry;Daimler Chrysler - C,E, & S Class;
C (Van Type) Omni, VersaMUV (Utility
Vehicles)Gypsy, Grand
VitaraMitsubishi - Pajero; Hyundai -Terracan & Tucson; Ford -Endeavor; Toyota - Prado &
Innova; Nissan - X Trail; Honda -CRV; GM - Forrester & Tavera;
Tata - Sumo & Safari; Mahindra -Jeeps, Scorpio, & Bolero
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-
COMPETITIVE STRENGTHS
MUL believes that they are well positioned to maintain and enhance their leadership
position in the small car segment in India, while continuing to offer products in most
segments of the Indian market, on account of their competitive strengths, which
include the following:
Expertise in small car technology: As a subsidiary of Suzuki, they have
access to globally respected technology in the small car segment. They have
the advantage of Suzukis expertise in all aspects of small car technology and
design, with respect to their products, their manufacturing processes and
business practices, the development of their supply chain and the training of
their personnel.
Extensive product portfolio: Their diverse product range includes cars in
segments A, B and C, and utility vehicles. They manufactured five out of the
ten models that were sold in the combined A and B segments in India in fiscal
2002. They are the only manufacturer of cars in segment A (priced below
Rs.300,000) where they have two models, the Maruti 800 and the Omni. The
Maruti 800 has been the largest selling car in India for several years, and
continued to have the highest sales volumes of any model, with a market share
of 25.3%. The Omni, a versatile vehicle that can seat more passengers than
the Maruti 800 or be used as an ambulance or cargo vehicle, had a market
share of 10.5% in fiscal 2002. They are also the only manufacturer to sell
three distinct models, the Zen, the Alto and the Wagon R, in segment B
(priced between Rs.300,000 and Rs.500,000). They believe that
theirdominance in segment A and extensive product range in segment B
enables us to offer the customer a wider choice in the small car segment than
any of their competitors. In addition, the absence of other manufacturers in
segments A gives their dealers greater flexibility in promoting models in
segment B.
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Quality products: In November 2001, they were one of the first automobile
manufacturers in the world to receive the ISO 9001:2000 certification. They
began to export products in 1988, primarily in order to benchmark our
products against international quality standards. They have exported products
to approximately 70 countries, including countries in Western Europe. Their
products for export are manufactured using the same assembly line as our
products for the domestic market.
Extensive sales and service network: They believe that they have the largest
network of dealers and service centers amongst car manufacturers in India. As
of March 31, 2003, we had 178 authorized dealers with 243 sales outlets in
161 cities. They estimate their car parc to be in excess of 3.5 million vehicles.
To service this car parc, at March 31, 2003, they had 342 dealer workshops
and 1,545 Maruti Authorized Service Stations, or MASSs, which covered 898
cities in India backed by Express Service Centers on 30 highways across the
country. In addition to the distribution of their cars, their dealership network
is a critical resource in our efforts to provide customers with a one-stop
shop for automobiles and automobile related products and services such as
automobile finance, automobile insurance, Maruti-certified pre-owned cars
available for purchase, and leasing and fleet management, in order to promote
customer loyalty.
Brand strength: They have been present in the Indian market for almost
twenty years and have built their brand on the basis of the values of trust and
reliability. Most of their principal competitors have been present in the Indian
passenger car market for a significantly shorter period. Certain manufacturers
have ceased to manufacture certain products shortly after introducing them, or
have left the market altogether. In contrast, they continue to support the
maintenance of their products. This has contributed to the strength of their
brand. In 2000, 2001 and 2002, J. D. Power Asia Pacific, Inc. ranked us No. 1
in the India Customer Satisfaction Index, which assesses customer satisfaction
with product quality and dealer service. They believe that this was the first
time that a volume leader in the automobile industry anywhere in the world
was ranked first on the JD Power Customer Satisfaction Index. NFO
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Automotives 2002 Total Customer Satisfaction Survey ranked Maruti
products as No. 1 in the Economy, Premium Compact and Entry
Midsize segments respectively, for 2002.
Integrated manufacturing facility: Their manufacturing facility comprises
three integrated plants with flexible assembly lines located at Gurgaon in the
northern state of Haryana. Their facility has advanced engineering capability
and each plant is upgraded on an ongoing basis to improve productivity and
quality. As a result, their first plant set up in fiscal 1984 is technologically at
par with their newer plants and is also used in the production of their new
models. They believe that they are one of the most efficient among the vehicle
manufacturing facilities of Suzukis subsidiaries outside Japan in terms of
productivity measured as the ratio of number of vehicles produced to number
of employees. They have an installed capacity of 350,000 vehicles per year,
which is the highest among passenger car manufacturers in India and among
the passenger car manufacturing facilities of Suzukis subsidiaries outside
Japan. They have consistently produced in excess of their installed capacity in
the five fiscal years ended March 31, 002.
They believe that they would be able to expand their production to 500,000
cars per year with minimal additional capital expenditure. This would enable
them to benefit from significant economies of scale.
Strong vendor base and higher rates of localization: They work closely
with their vendor base for the supply of raw materials, components and spare
parts of their products. In order to improve quality and generate economies of
scale, they have reduced the number of their vendors of components in India
from 370 as of March 31, 2000 to 299 as of March 31, 2003, and intend to
continue to reduce the number of our vendors. 113 of their vendors at March
31, 2003 were in technical collaboration with foreign entities. As of the same
date, we had strategic equity interests through joint venture agreements in 13
of their vendors, who together supply a substantial portion of their purchases
of components. A number of their vendors are their dedicated suppliers in that
they account for a majority of their turnover. Vendors located within a radius
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of 100 kilometers from their facility supply the majority of their components.
The production systems of their vendors are generally aligned to their need
for a reliable and timely supply of components that meet their quality
requirements. This has enabled them to increase the proportion of locally
sourced, lower cost components in their models, a concept they refer to as
localisation. They have been able, in collaboration with their vendors, to
increase the rate at which they are able to localise production of their new
models over time. This has helped them reduce the cost of their components.
Skilled labour and experienced management: Thei highly skilled labour force
has become increasingly productive in terms of vehicles produced per
employee and receives training on an ongoing basis, including training by
Suzuki. As of March 31, 2003, 1,900 of their employees had been trained at
Suzukis facilities in Japan. They have been present in the Indian passenger
car market for a significantly longer period than most of their principal
competitors. As a result, they have been able to build a highly experienced
management team that is familiar with conditions in the Indian passenger car
market. For instance, their managing director has almost ten years of
experience with them, and most of the heads of their divisions have more than
15 years of experience with them.
Capital resources: They have cash and bank balances and current investments
amounting to Rs.9,992 million. As of the same date, they had relatively low
levels of outstanding indebtedness, in the amount of Rs.4,555 million. As a
result, they have relatively low interest expense and flexibility to raise funds,
if necessary, for their working capital and capital expenditure in the future.
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BUSINESS STRATEGY
They intend to continue to focus on the small car segment, while offering
products in most segments of the Indian passenger car market. They aim to
achieve their principal objectives by pursuing the following business
strategies:
Maintain and enhance their product range: They intend to utilize Suzukis
expertise in small car technology to produce new variants of their existing
models and to upgrade their products with contemporary technology and
features.
Increase reach and penetration: They plan to continue to utilize their
extensive sales and service network to increase the reach, in terms of
geographical spread, and penetration, in terms of sales volumes, of their
products across India.
Increased availability of automobile finance: They continue to seek
opportunities to expand the size of the Indian passenger car market, especially
in the small car segment, through facilitating easy availability of automobile
finance. To that end, they have recently entered into an agreement with the
State Bank of India.
Secure repeat purchases by offering a 360 degree customer experience:
On the basis of their belief that securing repeat purchases from an existing
customer requires less expenditure than acquiring a new customer, they aim to
provide customers with a one-stop shop for automobiles and automobile-
related products and services.
Continue to benchmark their manufacturing capabilities: They plan to
continue to benchmark our manufacturing capabilities with the most efficient
car manufacturing facilities of Suzuki and its subsidiaries.
Continue to reduce costs to offer more competitive products:
Cost competitiveness has been, and continues to be, central to their strategy as
the leading manufacturer in the small car segment to expand the size of the
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market by offering competitively priced, high quality products. The
components of this strategy are:
Higher levels of localization
Vendor participation in cost reduction
Cost reduction on warranties
Reduction in initial investment cost
Reduction in number of vehicle platforms
Achieve further cost reduction through higher productivity
Lower cost of ownership:
Through their business strategies, they seek to reduce the consumers cost of
ownership of their cars, which comprises the cost of purchase, the cost of fuel
and maintenance, including spare parts and repairs, during the life of the
vehicle, insurance, and resale value.
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SALES NETWORK
Dealers: They offer their products to the customer through a network of 178
authorized dealers with 243 sales outlets across 161 cities. They believe that
this is the largest network of dealers amongst car manufacturers in India.
Their dealers employed more than 3,500 sales executives. They are linked to
their sales network through their secure extranet-based information network.
The sales of their spares, accessories and automobile-related services such as
insurance and finance serve as additional sources of revenue for our dealers.
They believe that the availability of these related products and services at
sales outlets also helps to attract customers to the outlets and promotes sales
of their cars.
Agreements with dealers: They generally appoint a limited number of dealers
for a certain geographical territory. Their dealers provide services to
customers such as pre-delivery inspection of vehicles, sales of cars, after sales
service, supply of spare parts and other services that promote sales of cars
within the territory for which they are appointed. They have the right to sell
their products and services through other dealers or intermediaries in any
territory, whether or not one of their dealers is already established in that
territory. Their dealers are required to maintain their outlets in accordance
with their specifications and employ well-trained sales staff.
Their agreements with their dealers usually have terms of five years. These
agreements are generally renewable for successive terms of three years, by
mutual agreement. The agreements typically permit termination by either the
dealer or them with six months prior notice.
Enhancing dealer performance: Their central office in Delhi, their regional
offices and their area offices monitor and assist their dealer network. They
have nine regional offices, five area offices and 187 sales and marketing
personnel. They follow the performance of their dealers and frequently
suggest improvements. In order to assist their dealers in enhancing their
performance and capabilities, they have introduced a concept of Balanced
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Scorecard. Using this tool, they seek to measure the performance of a
dealership in several areas of operations, including sales, service, spares and
accessories, financial management and management systems. They reward
dealers who perform well on the Balanced Scorecard with a cash payment at
the end of the fiscal year. They believe that the Balanced Scorecard serves
as an effective incentive for dealers to enhance their performance.
Dealer training: They have established standard operating procedures,
showroom ambience and service quality standards for dealerships. They
provide periodic training through their training centres located at their
manufacturing facility and at Chennai, Kolkata, Guwahati and Pune. They
have trained more than 2,600 and 3,400 dealer sales personnel. Their
subsidiary, True Value Solutions Ltd., provides value-added services, such as
manpower recruitment and training, to their dealers.
AFTER-SALES SERVICE
Network
As on date there are 342 Maruti dealer workshops and 1,545 Maruti
Authorised Service Stations, or MASSs, covering 898 cities in India. In
addition, 24-hour mobile service is offered in 38 cities under the brand
Maruti On-road Service. They intend to extend this service to an additional
25 cities over the next three years. As a benchmark for dealers with respect to
service quality and infrastructure facilities, they have launched service
stations under the brand Maruti Service Masters, or MSMs, in three locations
in India. They have service stations on 30 highways in India under the brand
Express Service Stations.
To promote sales of their spare parts and the availability of high quality,
reliable spare parts for their products, they sell spares under the brand name
Maruti Genuine Parts, or MGP. These are distributed through their dealer
network and through authorised sellers of their spare parts, to whom they
refer as stockists.
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Many of their MASSs are at remote locations where they do not have dealers.
In order to increase the penetration, in terms of sales volumes, of their
products in these remote areas, they are exploring opportunities to integrate
some of the MASSs into the sales process in order to increase sales of their
cars and related products and services such as spares and accessories,
insurance and financing.
Genuine Accessories
They have also entered the business of marketing car accessories under the
brand name Maruti Genuine Accessories, or MGA, through their dealership
network. They seek to provide customers with the opportunity to customize
their vehicles with accessories such as music systems, security systems, car-
care products and utility products.
Warranty and Extended Warranty Program
They offer a two-year warranty on all their vehicles at the time of sale. Their
dealers are required to address any claim made by a customer, in accordance
with practices and procedures prescribed by them, under the provisions of thewarranty in force at that time. The dealers subsequently claim the warranty
cost from them. They analyse warranty claims from dealers and either claim
the cost from vendors, in the case of defective components, or bear the cost
ourselves, in the case of manufacturing defects.
They offer an extended paid-warranty program marketed under the brand,
Forever Yours for the third and fourth year after purchase. They have
entered into arrangements with insurance companies to cover the costs of
warranties offered under this program. The extended warranty program is
intended to maintain the dealers contact with the customer and increase the
revenue generated from sale of spares, accessories and automobile-related
services. An effort is made during the period of the extended warranty to
encourage the customer to exchange his existing Maruti car for a new Maruti
car, or upgrade to a new Maruti car.
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NEW BUSINESS INITIATIVES
As the largest manufacturer and leader in the small car segment, they continually
seek new ways to utilize their vast car parc, range of products and extensive sales
and service network to expand the size of the passenger car market in India. They
have recently launched new initiatives to develop the market for automobile
insurance, automobile finance, leasing and fleet management, and pre-owned cars.
They aim to provide customers with a one-stop shop for automobiles and
automobile-related products and services, and build on their wide customer base and
extensive sales and service network to make available to their customers a wide
range of Maruti-branded services at different stages of ownership, which they refer
to as the 360 degree customer experience.
Atithi Devo Bhava: One-stop shop
Inspired by the spirit of India. Atithi Devo Bhava, in Sanskirit, means a guest is
like God. It captures the Indian tradition of honouring guests. It's also the
inspiration for the welcome youll receive at a Maruti Suzuki dealership, and the
caring relationship they share with those who drive their cars. At Maruti Suzuki, you
will find all your car related needs met under one roof. Whether it is easy finance,
insurance, fleet management. services, exchange Maruti Suzuki is set to provide a
single window solution for all your car related needs.
That's why they have Maruti True Value, the best place to buy and sell
reliable used cars. Maruti Finance an agglomeration of the biggest finance
companies in India brought together by Maruti Suzuki to ensure that thedream car is within everyone's reach. Similarly, Maruti Insurance brings
together some of the biggest names in the car insurance industry to provide
insurance solutions to every type of car consumer. Then, finally, there is N2N,
which offers fleet related solutions.
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THE PLAYERS IN THE INDIAN AUTOMOBILE INDUSTRY
Hyundai Motor India Ltd
Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai
Motor Company, South Korea and is the second largest and the fastest growing car
manufacturer in India. HMIL presently markets 31 variants of passenger cars in six
segments. The Santro in the B segment, Getz in the B+ segment, the Accent in the C
segment, the Elantra in the D segment, the Sonata Embera in the E segment and the
Tucson and Terracan in the SUV segment.
The company recorded combined sales of 252,851 during calendar year 2005 with a
growth of 17.26% over year 2004. HMIL is India's fastest growing car company
having rolled-out over 970,000 cars in just over 80 months since its inception and is
the largest exporter of passenger cars with exports of over Rs. 1,800 crores. HMIL
has recorded a growth of 27.2% in exports over the year 2004.
HMILs fully integrated state-of-the-art manufacturing plant near Chennai boasts
some of the most advanced production, quality and testing capabilities in the
country. In continuation of its investment in providing the Indian customer global
technology, HMIL has announced plans for its second plant, which will produce
300,000 units per annum, raising HMILs total production capacity to 600,000 per
annum by 2007. The plant will be built on a 2.1 million square meter site adjacent to
the existing facility .HMIL is investing to expand capacity in line with its
positioning as HMCs global export hub for compact cars. Apart from expansion of
production capacity, HMIL plans to expand its dealer network, which will be
increased from 157 to 200 this year. And with the companys greater focus on the
quality of its after-sales service, HMILs service network will be expanded to over
1,000 in 2006.
The year 2005 has been a significant year for Hyundai Motor India. It achieved a
significant milestone by rolling out the fastest 200,000th export car. HMIL
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exports to around 60 countries globally and recently made a foray into the highly
competitive UK market by exporting its first shipment of 820 cars.
Propelled by the strong performance in year 2005, Hyundai Motor India is on the
threshold of yet another grand milestone of rolling out its One millionth car which
is expected soon.
Tata Motors
Tata Motors is one of the largest companies in the Tata Group with a total
income of US$ 2.35 billion. More than 3 million Tata vehicles ply on Indian
roads making Tata a dominant force in the Indian automobile industry.
Tata Motors is India's only fully integrated automobile manufacturer with a
portfolio that covers trucks, buses, utility vehicles and passenger cars. It
would be no exaggeration to say that Tata Motors provides the wheels for
India's growth.
Tata Motors has the unique distinction of giving India its first and only indigenously
built passenger car - The Tata Indica and the premium feature sedan - The Tata
Indigo. The Indica, launched in 1998, reached the 2,50,000 sales mark within 52
months of launch.
Tata Motors owes its leading position in the Indian automobile industry to its strong
focus on indigenisation. This focus has driven the Company to set up world-class
manufacturing units with state-of-the-art technology. Every stage of product
evolution-design, development, manufacturing, assembly and quality control, is
carried out meticulously. Their manufacturing plants are situated at Jamshedpur in
the East, Pune in the West and Lucknow in the North.
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Ford India Limited
The Ford Motor Company has a rich legacy of translating better motoring ideas tothe roads. It has manufactured notable brands such as the Ford, Lincoln, Mercury
and the Jaguar. It is among the top five industrial corporations in the world and is
available in more than 200 countries around the world.
Ford has entered the Indian market through a tie - up with Mahindra Motors to
manufacture the Ford Escort. A project that has been set up with a investment of
Rs.1700 crore. Ford India Limited is a subsidiary of Ford Motor Company, currently
Ford has a 78% stake, which is going up to 92% soon. The Maraimalai Nagar Plant
of Ford India Limited, located roughly 45k.m.from Chennai, provides employment
to over 20000 people.The plant has the capacity to manufacture 1,00,000 vehicles
per annum, equipped with state-of-the-art vehicle manufacturing technology from
Ford.
Presently offering seven different models, Ford India Limited (FIL) is catching up
fast with the Indian consumer. This is secured through a quality check program
based on the principles of NOVA - C (New Overall Vehicle Audit - Customer)
wherein daily random checks are conducted from a customer's point of view. To be
doubly sure, routine calls are made to dealerships to check the quality of cars
delivered to them.
At Mahindra's dealerships are present trained professionals who provide the
best levels of service in India. Its intensive manpower training, advanced
service equipment and dedicated consumer satisfaction are the are its pluspoints which is being followed by the entire industry.
Acknowledgement has come in the form of the J D power 1997 India Initial Quality
and Customer Satisfaction Awards. These internationally acclaimed and recognized
awards voted the Ford Escort as the Best Quality car and the Mahindra Ford and its
dealerships were rated the highest in Customer Satisfaction. This is an honour as it
its only the second time in automotive history that the same brand/manufacturer has
received both the awards in the same year.
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General Motors India
General Motors India, incorporated in 1994 as a 50-50 joint venture company withthe C.K. Birla Group of Companies, became a fully owned subsidiary of GM in
1999 when GMOC bought the remaining shares. The company was restructured in
1999 and was converted from a Public Limited company to a Private Limited
company. GM APH LLC currently holds 86 percent of voting shares, and Holden
(Australia) holds 14 percent. The SPO business was integrated with the main
business in the same company in 2000.
In India, GM strengthened its presence with new product launches Chevrolet Optra
in 2003 and Chevrolet Tavera (Multi Utility Vehicle) in 2004. Similarly in 2004,
GM India is expected to register a growth of 90% over 2003. With sales volume
going up, the market share of GM India has gone to nearly 2%. The sales volume in
2003 was 15,155 units while 2004 figure is expected to be around 27,000 units. In
2004, the company sold a total of 26,166 cars as against 15,155 cars in 2003
registering a growth of 73% while overall passenger car growth during the year was
only around 23-24%. These included 9191 Chevy Optras in Entry 'D' Luxury sedan
segment, 8369 Opel Corsas and 8417 units of the new generation premium multi-
utility vehicle (MUV) Chevrolet Tavera.
The existing GM India plant was originally built by Hindustan Motors. In 1994, GM
India entered into a 50% Joint Venture partnership with Hindustan Motors and
modernized the 45,000-square-meter plant near Halol, 45 kilometers northwest of
Vadodara, in the western state of Gujarat. In February, 1999, GM bought theholdings of Hindutan Motors and GM India became a 100% subsidiary of General
Motors Corporation of USA. The plant produces the Opel Corsa, Corsa Sail,
Chevrolet Optra, and Chevrolet Tavera. The Chevrolet Forester and Opel Vectra are
sold as CBUs (Completely Built in Units) and as imported from Japan and Germany
respectively.
Toyota Motor Corporation is the third largest automaker in the world. They
have 34 dealers in India and in Delhi they have 2 dealers, first one is South
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Delhi Toyota and second one is in Moti Nagar in which I have visited during
my survey. Dealer in Moti Nagar which is Galaxy Toyota have
predetermined mission that-Customer comes first and everything they do is to
meet their customer needs, basically they work for creating a lifetime
customer.
They work by dividing their work like in one showroom they have separate
teams for every product like relating to Corolla it comprises of 7 or 8
executives who handle all the work weather it is of sale or any enquiry or
telemarketing call that team must have some specific target to achieve. They
reach to the customers either by distributing Leaflets, Brochures to the
customers. They collect customer database from Directory (Yellow Pages) or
through customer references even they solve customers query online and give
information through e-mails. Recently they organized one drawing
competition between the kids of their existing customers just to interact with
the customer and build loyalty of their company products. They judge their
customer satisfaction by analyzing that repeat buyers are more or not &
moreover they have customer feedback form in which they can analyze
customers background and can forecast customer future demands. They target
only high profile customers.
They build customer loyalty by giving happy calls to the customer after sale
of every 1,3,7 month. They provide Periodic maintenance schedule, which
will ensure that vehicle, is kept in best able-bodied at all times. The
maintenance schedule may include periodic inspection, adjustment andlubrication that will keep vehicle in the safest and most efficient condition,
they provide one booklet in which they give simple and useful tips for
maintenance of the car. They offer good schemes like providing free Test
Drive worth Rs 250 petrol at the time of sale of any car. They do road shows
to attract customers. To promote their product they organize exchange mela,
events, various cash discounts like currently they are running one discount
scheme on pur