Maruti Suzuki India Limited
Maruti Suzuki India Limited is a publicly listed automaker in India. It is a leading four-wheeler automobile manufacturer in South Asia. Suzuki Motor Corporation of Japan holds a majority stake in the company. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog was renamed Maruti Suzuki India Limited. The company headquarter is in Gurgaon, Haryana (near Delhi).
The old logo of Maruti Suzuki India Limited. Later the logo of Suzuki Motor Corp. was also added to it.
Maruti Suzuki is one of India’s leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. The Indian government held an initial public offering of 25% of the company in June 2003. As of 10 May 2007, Govt. of India sold its complete share to Indian financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog.
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Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car which at the time was the only modern car available in India, its’ only competitors- the Hindustan Ambassador and Premier Padmini were both around 25 years out of date at that point. Through 2004, Maruti has produced over 5 Million vehicles. Marutis are sold in India and various several other countries, depending upon export orders. Models similar to Marutis (but not manufactured by Maruti Udyog) are sold by Suzuki and manufactured in Pakistan and other South Asian countries.
The company annually exports more than 50,000 cars and has an extremely large domestic market in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India’s largest selling compact car ever since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Currently, Maruti Alto tops the sales charts and Maruti Swift is the largest selling in A2 segment.
Due to the large number of Maruti 800s sold in the Indian market, the term “Maruti” is commonly used to refer to this compact car model. Till recently the term “Maruti”, in popular Indian culture, was associated to the Maruti 800 model.
Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for over two decades.
Its manufacturing facilities are located at two facilities Gurgaon and Manesar south of New Delhi. Maruti’s Gurgaon facility has an installed capacity of 350,000 units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year and a Diesel Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a combined capability to produce over 700,000 units annually.
More than half the cars sold in India are Maruti cars. The company is a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti. The rest is owned by the public and financial institutions. It is listed on the Bombay Stock Exchange and National Stock Exchange in India.
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti cars are on Indian roads since the first car was rolled out on 14 December 1983.
Maruti Suzuki offers 15 models, Maruti 800, Omni,Esteem, Baleno, Alto, Versa, Ritz, Gypsy, A Star, Wagon R, Zen Estilo, Swift, Swift Dzire, SX4, and Grand Vitara. Swift, Swift dzire, A star and SX4 are maufactured in Manesar, Grand Vitara is imported from Japan as a completely built unit (CBU), remaining all models are manufactured in Maruti Suzuki’s Gurgaon Plant.
Suzuki Motor Corporation, the parent company, is a global leader in mini and compact cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient.
Maruti is clearly an “employer of choice” for automotive engineers and young managers from across the country. Nearly 75,000 people are employed directly by Maruti and its partners.
The company vouches for customer satisfaction. For its sincere efforts it has been rated (by customers)first in customer satisfaction among all car makers in India for ten years in a row in annual survey by J D Power Asia Pacific.
Maruti Suzuki was born as a government company, with Suzuki as a minor partner to make a people’s car for middle class India. Over the years, the product range has widened, ownership has changed hands and the customer has evolved. What remains unchanged, then and now, is Maruti’s mission to motorise India.
‘To Munsiyari on a Maruti 800’, Uttarakhand Himalayas Maruti Suzuki plant in Gurgaon
Partner for the joint venture
Pressure started mounting on Indira and Sanjay Gandhi to share the details of the progress on the Maruti Project. Since country’s resources were made available by mother to her son’s pet project. A delegation of Indian technocrats was assigned to hunt a collaborator for the project. Initial rounds of discussion were held with the giants of the automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor Corporation was at that time a small player in the four wheeler automobile sector and had major share in the two wheeler segment. Suzuki’s bid was considered negligible.
In the initial rounds of discussion the giants had their bosses present and in the later rounds related to the technical discussions executives of these automobile giants were present. Osamu Suzuki, Chairman and CEO of the company ensured that he was present in all the rounds of discussion. Osamu in an article writes that it subtly massaged their (Indian delegation) egos and also convinced them about the sincerity of Suzuki’s bid. In the initial days Suzuki took all steps to ensure the government about its sincerity on the project. Suzuki in return received a lot of help from the government in such matters as import clearances for manufacturing equipment (against the wishes of the Indian machine tool industry then and its own socialistic ideology), land purchase at government prices for setting up the factory Gurgaon and reduced or removal of excise tariffs. This helped Suzuki conscientiously nurse Maruti through its infancy to become one of its flagship ventures.
Offers 14 models of car such as , Maruti 800, Omni, Zen Alto, Wagon R, Gypsy, Esteem, Baleno, Versa, Swift, SX4, etc.
Current sales of automobiles
- Maruti Estilo
- Maruti 800: Launched – 1983
- Maruti Omni: Launched – 1984
- Maruti Gypsy: Launched – 1985
- Maruti Alto: Launched – 2000
- Maruti Wagon-R: Launched – 2002
- Maruti Versa: Launched – 2003
- Maruti Grand Vitara Launched – 2004
- Maruti Suzuki Swift: Launched – 2005
- Maruti Suzuki SX4: Launched – 2007
- Maruti Swift Dzire: Launched – 2008
- Maruti Suzuki A-STAR: Launched – 2008
- Maruti Suzuki Ritz: Launched – 2009
- Maruti Suzuki Estilo: Launched – 2009
Maturi focused its promotions strategy on targeting two-wheelers owners, by enter in new domains and reaching out potential customers through its ‘True value’.
In 2003, to attract customer Maruti launched novel offers like “Change your life” campaign and also offered vehicle insurance for just Rupee one only.
In 2003, came out with a toy car advertisement that became popular for its simplicity.
“Kya Karron Papa Petrol khatam hi hani Hota.”
The sales figure for the year 2003 reached up to 196,820, vehicles.
The company Mission;
To provide awide range of modern,high quality fuel efficient vehicles in order to meet the need of different customer, both in domestic and export markets.
The company vision.
We must be an internationally competitive company in terms of our product and services. We must retatin our leadership in India and should also alpire to be among the global players.
The focus is on:
- Building a continuously inproving organization adaptable to quick changes
- Providing value and satisfaction to the customer
- Aligning and fully involving all our employees, suppliers and dealers to face competition
- Maximising 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 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 ojectives. To make this philosophy tenable, the company takes several initiative. Inputs are sought from employees at all levels. They believe that everyone should contribute to the formulation of company policis, goals and objective . Secondly, at Maruti, they encdourage leadership in the best sense of the word. According to us, a leader is one who must be impartial, must be impartial, must have the avlity to rise above his own subjectivity, and most importantly,, must practice what he preaches.
The objectives of MUL then were:
- Modernizations of the Indian Automobile Industry.
- Production of fuel-efficint vehicles to conserve scarce resources.
- Production of large number of motor vehicles, which was necessary economic growth.
- Customer Obsession
- Fast, Flexible and First Mover
- Innovation and Creativity
- Networking and partnership
- Openness and learning
The leader in the Indian Automobile Industry Creating Customer Delight and Share holder’s wealth; A pride of India”.
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 optimums engine delivery. This measn every Maruti Suzuki owner gets the ideal combination of power and performance form his car.
Our other innovation has been the introduction of Eloectronic Power Steering in select models. This result in better and Greater maneuverability. In other words, our cars have become even more pleasurable do drive.
Spread over a sprawling 297 acres with 3 fully-integrated production facilities, the Maruti Udyog Plant has already rolled our over 4.3 million vehicles, In fact, on and 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 Maruti Suzuki made here to fit ever car-buyer’s budget, and dream.
The company reached a total production of one million vehicles in March 1994.
“The first Indian company to cross this milestone”.
Their sales in the domestic market during March 2008 in 64,214 units.
Maruti has more than 5 Million satisfied customers in India and is currently having a share of around 54% in the domestic Passenger car market.
- 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 Mardh, 1994.
- 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.
The Quality Advantage of Maruti Suzuki
A car is an engineering product, only as good as the technology used to make it. Actual user 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 .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.
SWOT Analysis of Maruti Suzuki
- The Quality Advantage
- A Buying Experience Like No other
- Quality Service Across 1036 Cities
- One Stop Shop
- The Low cost Maintenance Advantage
- Lowest Cost of Ownership
- Technological Advantage
- The cost involved In R&D and infrastructure is low in India As compared to other country.
- Indian is growing as an export hub along with the Indian Market growing altressively into becoming an attractive one for investors.
- Suzuki’s Investment in India, is also important as it has completely divested now as a result MUL will now became a 100% subsidiary of Suzuki in the coming year.
- Maruti have laid down a clear road map to achieve an annual sale of one million cars in the domestic market and 200,000 exports by 2010-11.
- It has capacity to manufacture 100,000 diesel engines a year. This will be scaled up to 300,000 engines/by 2010.
- Huge export market such as Europe, America and other Indians car.
- A large domestic person who wants to buy a car.
- The threat of Maruti faces is the growing competition in compact cars.
- New emission norms like Bharat Stage 3 which has come into effect from April 2005 has increased car prices by Rs.20000 and Bharat stage 4 which is coming into force in 2007 will contribute in increasing car prices further.
- Rise in petrol prices and growing popularity of other substitute fuels like CNG will be another threat of Maruti.
- There is a threat to Maruti models ageing. Maruti models like Maruti 800 which is in market for the last twenty years and other like Zen and Esteem which have also entered the decline phase are the other threats.
Target Marketing involves breaking a market in segment 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 product and services easier and more cost-effective. Target marketing is the selection of customers you wish to service. The decisions involved in it are:
- Which segment to target
- How many products to offer
- Which products to offer in which segments
There are three steps to targeting:
One of the first things you need to do is 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 need
- To solve problems.
- To make themselves feed good.
The nest step in creating an effective marketing strategy is to zero in on target market.
Target marketing is one of corporate America’s most effective business strategies. The idea is to increase sales by first identifying and them targeting smaller, yet more profitable customer groups within the total market.
Four ways to Identify Target Markets
KEY STRATEGIC INITIATIVES BY MARUTI
A) TURNAROUND STRATEGIES MARUTI FOLLOWED
Maruti was the undisputed leader in the automobile utility-car segment sector, controlling about 84% of the market till 1998. With increasing competition from local players like Telco, Hindustan Motors, Mahindra & Mahindra and foreign players like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the whole auto industry structure in India has changed in the last seven years and resulted in the declining profits and market share for Maruti. At the same time the Indian government permitted foreign car producers to invest in the automobile sector and hold majority stakes.
1984: “Fuel efficient vehicle with latest technology”.
1987: “Leader in domestic market and be among global players in the overseas market”.
1997: “Creating customer delight and shareholders wealth”.
Focus on customer care has become a key element for Maruti. Increasing Maruti service stations with the scope of one Maruti service station every 25 km on a highway. To increase its market share, Maruti launched new car models, concentrated on marketing and institutional sales. Institutional sales, which currently contributes to 7-8% of Maruti’s total sales. Cost reduction and increasing operating efficiency were another redesign variable. Cost reduction is being achieved by reaching an indigenization level of 85-90 percent for all the models.
B) CURRENT STRATEGIES FOLLOWED BY MUL
I. PRICING STRATEGY – CATERING TO ALL SEGMENTS
Maruti caters to all segment and has a product offering at all price points. It has a car priced at Rs.1,87,000.00 which is the lowest offer on road. Maruti gets 70% business from repeat buyers who earlier had owned a Maruti car. Their pricing strategy is to provide an option to every customer looking for up gradation in his car. Their sole motive of having so many product offering is to be in the consideration set of every passenger car customer in India. Here is how every price point is covered.
II. OFFERING ONE STOP SHOP TO CUSTOMERS OR CREATING DIFFERENT REVENUE STREAMS
Maruti has successfully developed different revenue streams without making huge investments in the form of MDS, N2N, Maruti Insurance and Maruti Finance. These help them in making the customer experience hassle free and helps building customer satisfaction.
Maruti Finance: In a market where more than 80% of cars are financed, Maruti has strategically entered into this and has successfully created a revenue stream for Maruti. This has been found to be a major driver in converting a Maruti car sale in certain cases. Finance is one of the major decision drivers in car purchase. Maruti has tied up with 8 finance companies to form a consortium. This consortium comprises Citicorp Maruti, Maruti Countrywide, ICICI Bank, HDFC Bank, Kotak Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.( erstwhile-Ashok Leyland Finance).
Maruti Insurance : Insurance being a major concern of car owners. Maruti has brought all car insurance needs under one roof. Maruti has tied up with National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram to bring this service for its customers. From identifying the most suitable car coverage to virtually hassle-free claim assistance it’s your dealer who takes care of everything. Maruti Insurance is a hassle-free way for customers to have their cars repaired and claims processed at any Maruti dealer workshop in India.
True Value – Initiative to capture used car market
Another significant development is MUL’s entry into the used car market in 2001, allowing customers to bring their vehicle to a ‘Maruti True Value’ outlet and exchange it for a new car, by paying the difference. They are offered loyalty discounts in return.This helps them retain the customer. With Maruti True Value customer has a trusted name to entrust in a highly unorganized market and where cheating is rampant and the biggest concern in biggest driver of sale is trust
N2N: Car maintenance is a time-consuming process, especially if you own a fleet. Maruti’s N2N Fleet Management Solutions for companies, takes care of the A-Z of automobile problems. Services include end-to-end backups/solutions across the vehicle’s life: Leasing, Maintenance, Convenience services and Remarketing.
Maruti Driving School (MDS): Maruti has established this with the goal to capture the market where there is inhibition in buying cars due to inability to drive the car. This brings that customer to Maruti showroom and Maruti ends up creating a customer.
III. REPOSITIONING OF MARUTI PRODUCTS
Whenever a brand has grown old or its sales start dipping Maruti makes some facelifts in the models. Other changes have been made from time to time based on market responses or consumer feedbacks or the competitor moves. Here are the certain changes observed in different models of Maruti.
Omni has been given a major facelift in terms of interiors and exteriors two months back. A new variant called Omni Cargo, which has been positioned as a vehicle for transporting cargo and meant for small traders. It has received a very good response from market. A variant with LPG is receiving a very good response from customers who look for low cost of running.
Versa prices have been slashed and right now the lowest variant starts at 3.3 lacs. They decreased the engine power from 1600cc to 1300cc and modified it again considering consumers perception. This was a result of intensive survey done all across the nation regarding the consumer perception of Versa.
Esteem has gone through three facelifts. A new look last year has helped boost up the waning sales of Esteem.
Baleno was launched in 1999 at 7.2 lacs. In 2002 they slashed prices to 6.4 lacs. In 2003 they launched a lower variant as Baleno LXi at 5.46 lacs. This was to reduce the price and attract customers.
Wagon-R was perceived as dull boxy car when it was launched. This made it a big failure on launch. Then further modifications in engine to increase performance and a facelift in the form of sporty looking grills on the roof. Now it’s of the most successful models in Maruti stable.
Zen has been modified four times till date. They had come up with a limited period variant called Zen Classic. That was limited period offer to boost short term sales.
Maruti 800 has so far been facelifted two times. Once it came with MPFi technology and other time it came up with changes in front grill, head light, rear lights and with round curves all around.
IV. CUSTOMER CENTRIC APPROACH
Maruti’s customer centricity is very much exemplified by the five times consecutive wins at J D Power CSI Awards. Focus on customer satisfaction is what Maruti lives with. Maruti has successfully shed off the public- sector laid back attitude image and has inculcated the customer-friendly approach in its organization culture. The customer centric attitude is imbibed in its employees. Maruti dealers and employees are answerable to even a single customer complain. There are instances of cancellation of dealerships based on customer feedback.
Maruti has taken a number of initiatives to serve customer well. They have even changed their showroom layout so that customer has to walk minimum in the showroom and there are norms for service times and delivery of vehicles. The Dealer Sales Executive, who is the first interaction medium with the Maruti customer when the customer walks in Maruti showroom, is trained on greeting etiquettes. Maruti has proper customer complain handling cell under the CRM department. The Maruti call center is another effort which brings Maruti closer to its customer. Their Market Research department remains on its toes to study the changing consumer behaviour and market needs.Maruti enjoys seventy percent repeat buyers which further bolsters their claim of being customer friendly. Maruti is investing a lot of money and effort in building customer loyalty programmes.
V. COMMITTED TO MOTORIZING INDIA
Maruti is committed to motorizing India. Maruti is right now working towards making things simple for Indian consumers to upgrade from two-wheelers to the car. Towards this end, Maruti partnerships with State Bank of India and its Associate Banks took organized finance to small towns to enable people to buy Maruti cars. Rs. 2599 scheme was one of the outcomes of this effort.
VI. DISINVESTMENT AND IPO OF MARUTI UDYOG LIMITED
It was a long and tough journey, but a rewarding one at the end. A reward worth Rs 2,424 crore, making it the biggest privatization in India till date. The size of Maruti’s sell- off deal is proof of its success. On the investment of Rs 66 crore it made in 1982, when Maruti Udyog Limited (MUL) was formally set up, the sale represents a staggering return of 35 times The best part of the deal is the Rs 1,000 crore control premium the Government has been able to extract from Suzuki Motor Corporation for relinquishing its hold over India’s largest car company. Now looking at the strategy point of it – for Suzuki, of course, complete control of MUL means a lot. Maruti is its most profitable and the largest car company outside Japan.
VII. REALISATION OF IMPORTANCE OF VEHICLE MAINTENANCE SERVICES MARKET
In the old days, the company’s operations could be boiled down to a simple three-box flowchart. Components came from the ‘vendors’ to the ‘factory’ where they were assembled and then sent out to the ‘dealers’. In this scheme, you know where the company’s revenues come from. The new scheme is more complicated. It revolves around the total lifetime value of a car.
Work on this began in 1999, when a MUL team, wondering about new revenue streams, traveled across the world. Says R.S. Kalsi, general manager (new business), MUL: “While car companies were moving from products to services, trying to capture more of the total lifetime value of a car, MUL was just making and selling cars.” If a buyer spends Rs 100 on a car during its entire life, one-third of that is spent on its purchase. Another third went into fuel.
VIII. PLAYING ON COST LEADERSHIP
Maruti is the price dictator in Indian automobile industry. It’s the low cost provider of car. The lowest car on road is from Maruti stable i.e. Maruti 800. Maruti achieves this through continuous improvements in operational efficiency and productivity.
The company has set itself (and its vendors) the target of a 50% improvement in productivity and a 30% reduction in costs in three years. The ability to keep lowering the prices sets Maruti apart from other players in the league. Maruti spread the overheads over a larger base.
C) MAJOR FUTURE STRATEGIES
I. PHASING OUT ZEN IN 2007
The launch of Swift and phasing out Zen is a strategic move. Alto was launched keeping in mind that it will take over Maruti 800 market in future. Perhaps being the flagship product phasing out of Maruti 800 faced lots of resistance from dealers all over. Another reason behind not phasing out Maruti 800 was the fear of brand shift of customers to other competitor’s product. Swift was launched in May, 2005 in the price band starting from 4 lacs.
II. MARUTI PLANS FOR A BIG DIESEL FORAY
The new car manufacturing company, called Maruti Suzuki Automobiles India Limited, will be a joint venture between Maruti Udyog and Suzuki Motor Corporation holding a 70 per cent and 30 per cent stake respectively. The Rs1,524.2 crore plant will have a capacity to roll out 1 lakh cars per year with a capacity to scale up to 2.5 lakh units per annum. The new car manufacturing plant will begin commercial production by the end of 2006.
III. MARUTI PLANS FOR A NEW ENGINE AND TRANSMISSION PLANT
The engine and the transmission plant will be owned by Suzuki Powertrain India Limited in which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog holding the balance. The ultimate total plant capacity would be three lakh diesel engines. However, the initial production would be 1 lakh diesel engines, 20,000 petrol engines and 1.4 lakh transmission assemblies. Investment in this facility will be Rs.1,747.7 crore. The commercial production will start by the end of 2006.
IV. INDIA AS EXPORT HUB FOR MARUTI
Three years back as an experiment, based on the increasing design capabilities of suppliers in countries like India, McKinsey did an exercise to figure out just how much money could be saved if automobiles were to be made in overseas locations like India, Mexico and South Africa– an automobile BPO, so to speak. The result was staggering: the industry stands to gain $ 150 billion annually in cost savings, and an additional $ 170 billion annually in new revenues once demand shoots up following the drop in prices, and the combination of which means a 25 per cent increase in existing revenue levels.
V. MARUTI EMERGING AS R&D HUB FOR SUZUKI MOTOR CORPORATION
Japanese auto major Suzuki is all set to convert Maruti Udyog Ltd’s research and development (R&D) facility as its Asia hub by 2007 for the design and development of new compact cars, according to a top official of the firm. The country’s leading car manufacturer will make substantial investments to upgrade its research and development centre at Gurgaon in Haryana for executing design and development projects for Suzuki. This includes localisation, modernisation and greater use of composite technologies in upcoming models.
Product Life Cycle Stages of Maruti
THE PRODUCT LIFE CYCLE
A product’s life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product. The life cycle concept may apply to a brand or to a category of product. Its duration may be as short as a few months for a fad item or a century or more for product categories such as the gasoline-powered automobile. Product development is the incubation stage of the product life cycle. There are no sales and the firm prepares to introduce the product. As the product progresses through its life cycle, changes in the marketing mix usually are required in order to adjust to the evolving challenges and opportunities.
The four stages of product life cycle are:
- Introduction stage
- Growth stage
- Maturity stage
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