The Maruti Suzuki India Limited Marketing Essay

Maruti Suzuki India Limited :- subsidiary of Suzuki Motor Corporation of Japan, is Indias largest passenger car company, accounting for over 45% of the domestic car market. The company offers a complete range of cars from entry level Maruti-800 and Alto, to stylish hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara.[2]

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 Limited was renamed Maruti Suzuki India Limited. The company’s headquarters are located in Delhi.

Differentiated Marketing also called as multisegment marketing is wherein a company attempts to appeal to two or more clearly defined market segments with a specific product and unique marketing strategy tailored to each separate segment.

Differentiated marketing combines the best attributes of undifferentiated marketing and concentrated marketing. It appeals to two or more distinct market segments, with a different marketing plan for each. Typically differentiated marketing creates more total sales than undifferentiated marketing, but it also increases the costs of doing business.

Firms such as Maruti-Suzuki use differentiated marketing to attract all segments. Others, such as Hyundai, and Microsoft appeal to two or more segments, but not all segments.

Reason why it is differentiated because:-almost every class of people can afford cars made by maruti.

Middle class

Maruti uses differentiated marketing because it provide:-

Sales maximization.

2. Recognition as a specialist.

3. Diversification.

Differentiated marketing can be achieved without involvement in the majority fallacy.

enables maruti to reach different consumers, offers a degree of exclusivity, allows orders to be concentrated, and encourages private labels.

Total profits increases as the number of segments serviced increases.

It balance revenues obtained from selling to multiple segments against the costs.

Here in maruti easily maintain product distinctiveness in each consumer segment and to guard its image.

By using this stratezie maruti had targeted each and every class of people. Excepting people who follow in a very high class like the one who can easily afford cars like Mercedes, audi,bmw and lexus.

For middle class people maruti launched cars ,ike :-

800 (Launched 1983)

Omni (Launched 1984)

Gypsy (Launched 1985)

WagonR (Launched 2002)

Alto (Launched 2000)

For upper middle class ,cars like:-

Swift (Launched 2005),Estilo (Launched 2009)

SX4 (Launched 2007)

Swift DZire (Launched 2008)

A-star (Launched 2008)

Ritz (Launched 2009) ,Eeco (Launched 2010)

Maruti New Wagon R (Launched 2010)

Maruti Altok10high labour productivity

MUL COMPETTITIVE ADVANTAGE:-

1)size

2)low intial investment

3)unique consessions from government

4)indigenous sourcing of components

5)fully depreciated plants

Segmentation,targeting and positioning

Demographic:-

Segmentation:-

Age 20-35

Gender male/female

Family size 3-4,4+

Income -rs 200000-300000-500000,500000 and above.

Occupation-professionals,officials,supervisiors,home makers.youngseters

Psychographic

Social class,middle class,working class,upper lowers

Lifestyle strivers,achievers

Personality ambitions,compulsive

Behavioural

Benefits:quality:service,economy.speed

Readiness stage:interested,intending to buy

Target market:-

Expected price: a-star is excepted to be priced around the 3-4 lakh range

It will target the small car segment a segment where ALTO is the market leader

It will mainly focus on the middle and workers class people

It will satisfy both the needs of European and indian coustomers

POSITIONING:-

Th e A-star would be launched in other international markets gradually

The A-star might just be the new alto in india.

Market Expansion Strategies of Maruti Udyog:-

‘Market expansion strategies of Maruti Udyog’ examines the market expansion strategies adopted by Maruti Udyog Limited (MUL), India’s biggest carmaker, in response to intense competition and a decline in sales of its bread-and-butter model – the Maruti 800. MUL enjoyed a near-monopoly status, until the Government of India liberalized the economy in 1991.

This led to the entry of foreign players like Hyundai, Fiat, Mitsubishi, and Toyota. Even Indian auto players like Tata Motors and Mahindra and Mahindra entered the fray to give MUL tough challenges. MUL began to introduce new models, and upgrade its existing models in response to market demand.

Car sales in India is witnessing a dip and the reason is rising inflation. The competition to position strongly in the Indian car market segment is getting very tough.

During this period of high inflation, Indian auto leader, Maruti Suzuki Motors is amending its marketing strategies. The company is turning to 15-20-year-old cars to drive new car sales.

The company is working out many plans to increase the car sales and has tied up with different car dealers across the country. And as a part of the strategy, the car dealers have been asked to dispose old cars that they get in exchange of new cars. The company is also providing an exchange discount of about Rs 40,000.

The old car will be placed for occasion to scrap car dealers. The company feels that this bidding of old cars will benefit their pre-owned car business popularly known as True Value.

The exchange offer has churned out positive results in Maruti car sales. The sales figure revealed a hike of 12 per cent to 20 per cent, resulting in promotion of entry level car models like Alto.

Maruti is now completely relaying on the ‘old for new exchange’ scheme for the sales. May be we would soon see other car makers joining the race.

Manufacturing facilities:-

Maruti Suzuki has two state-of-the-art manufacturing facilities in India. Both manufacturing facilities have a combined production capacity of 1,000,000 vehicles annually.

Gurgaon Manufacturing Facility

The Gurgaon Manufacturing Facility has three fully integrated manufacturing plants and is spread over 300 acres. All three plants have an installed capacity of 350,000 vehicles annually but productivity improvements have enabled it to manufacture 700,000 vehicles annually. The Gurgaon facilities also manufacture 240,000 K-Series engines annually. The entire facility is equipped with more than 150 robots, out of which 71 have been developed in-house. The Gurgaon Facilities manufactures the 800, Alto, WagonR, Estilo, Omni , Gypsy, Swift and Eeco.

Manesar Manufacturing Facility:-

The Manesar Manufacturing Plant was inaugurated in February 2007 and is spread over 600 acres. Initially it had a production capacity of 100,000 vehicles annually but this was increased to 300,000 vehicles annually in October 2008. The Manesar Plant produces the A-star, Swift, Swift DZire and SX4. Sales and service network

Maruti Suzuki is one of the companies in India which has unparalleled sales and service network. As of June 2010 it currently has 800-plus dealerships across more than 500 cities in India. It plans to expand total number of dealerships to 1,000. To ensure the vehicles sold by them are serviced properly, Maruti Suzuki has 800-plus dealer workshops, 1,945 Maruti Authorized Service Stations and 30 Express Service Stations on 30 National Highways across 1,314 cities in India. The company is planning to expand the number of dealerships to 1,500 by 2015

Service is a major revenue generator of the company. Most of the service stations are managed on franchise basis, where Maruti Suzuki trains the local staff. Other automobile companies have not been able to match this benchmark set by Maruti Suzuki. The Express Service stations help many stranded vehicles on the highways by sending across their repair man to the vehicle.

Exports

Maruti Exports Limited is the subsidiary of Maruti Suzuki with its major focus on exports and it does not operate in the domestic Indian market. The first commercial consignment of 480 cars were sent to Hungary. By sending a consignment of 571 cars to the same country Maruti Suzuki crossed the benchmark of 300,000 cars. Since its inception export was one of the aspects government was keen to encourage. Every political party expected Maruti Suzuki to earn foreign currency.

Angola, Benin, Djibouti, Ethiopia, Europe, Kenya, Morocco, Sri Lanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some of the markets served by Maruti Exports.

 

 Every new venture ,every new scheme and every new product or service undertaken by Maruti iscommunicated through their advertisement in the most creative way.Maruti also provides road safetyinstruction along with a toll free contact number both for its service and road accidents.

MARKETING STRATEGY OF MUL IN LATE 1980’s

In the initial years, the MUL depended more on its M800 model, so when in late 1990’s the new playerslike MATIZ, SANTRO, and INDICA came into the market with more space and better comfort, at thesame price, then Maruti lost a major share of market: To gain back its lost share Maruti launched Zenalto and wagon R, these small segment cars gained huge response for the consumer followed by various promotional strategies has been thereafter to retain their position in the market.

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Maruti was the first company in India which studied the consumer demand and responded to itwell.

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

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

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Maruti van targeted businessmen and doctors(ambulance)

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The Gypsy targeted the paramilitary forces and the police.

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This resulted in complete control of Maruti over the market.

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The company advertised its different products according to costumers.

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

 

 

Maruti’s active involvement in CSR activities ensured that their consumer base increased with time.Maruti Suzuki has adopted a CSR policy, which serves as a guiding tool for the management and theemployees in steering Maruti Suzuki towards long term sustained growth in harmony along with theinterests of the stakeholder.The role of the CSR department is to professionalize CSR activities in Maruti Suzuki and strengthen themechanisms involving the activities. Significant efforts have been taken to contribute to society at large,through its corporate activities, especially in the areas of Road Safety and Vocational Training. MarutiSuzuki has set up dedicated teams with requisite expertise to steer the social projects.

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Differentiated Marketing:-

September 3, 2010 By Hitesh Bhasin 2 Comments

Differentiated marketing combines the best attributes of undifferentiated marketing and concentrated marketing. It appeals to two or more distinct market segments, with a different marketing plan for each. Typically differentiated marketing creates more total sales than undifferentiated marketing, but it also increases the costs of doing business.

Some features of Differentiated Marketing are:

A. Differentiated Marketing also called as multisegment marketing is wherein a company attempts to appeal to two or more clearly defined market segments with a specific product and unique marketing strategy tailored to each separate segment.

1. Firms such as Maruti-Suzuki use differentiated marketing to attract all segments. Others, such as Hyundai, and Microsoft appeal to two or more segments, but not all segments.

2. Some companies, such as Time Inc., use both undifferentiated marketing and concentrated marketing approaches in their multiple-segmentation strategy. They have one or more major brands for the mass market and secondary brands geared toward specific segments.

B. Company resources and abilities must be able to produce and market two or more different sizes, brands, or products. Costs vary, depending on modifications needed.

C. Differentiated marketing should enable the firm to achieve several objectives:

1. Sales maximization.

2. Recognition as a specialist.

3. Diversification.

D. Differentiated marketing can be achieved without involvement in the majority fallacy.

E. Two or more sizable and distinct consumer groups are necessary. The more clusters facing the firm, the greater the opportunity for differentiated marketing.

F. Wholesalers and retailers usually find differentiated marketing to be desirable, because it enables them to reach different consumers, offers a degree of exclusivity, allows orders to be concentrated, and encourages private labels.

G. Total profits should rise as the number of segments serviced increases.

H. A firm must balance revenues obtained from selling to multiple segments against the costs.

I. A company must be careful to maintain product distinctiveness in each consumer segment and to guard its image.

 

There are 3 main types of marketing:

Uundifferentiated marketing, differentiatedmarketing, and concentrated marketing.

Undifferentiated marketing

assumes everyone is the same and aims a particular  product at everyone. Advantages: easy to plan, doesn’t miss anyone. Disadvantages:can be wasteful, ignores segmentation, can lead to disappointing sales.

Differentiated marketing

aims the product at specific segments in the market. Thecompany may be trying to sell exactly the same product to different segments but itwill change its promotional methods and the image it creates. Advantages: separatemix can be developed for each segment, different markets can be easily identified.Disadvantages: Can be costly, message may by-pass some customers.

Concentrated marketing

is when the message is aimed at just one small market.Advantages: Small firms can concentrate their marketing, allows a specific mix to be developed. Disadvantages: Ignores other areas of the market, can cause problemsin future as may make it more difficult for company to expand.

 

Behavioural psychographic :-

BenefitsBases for Segmenting Consumer MarketsIn segmenting consumer markets, marketers can apply geographic,demographic, psychographic and behavioural variables related toconsumer characteristics as well as behavioral variables related toconsumer responses (see Table 3.5). Once the segments are formed, themarketer sees whether different characteristics are associated with eachconsumer-response segment.A: Geographic Segmentation (region, climate, population density)Geographic segmentation calls for dividing the market into differentgeographical units such as nations, states, regions, counties, cities, or neighborhoods. The company can operate in one or a few geographicareas or operate in all but pay attention to local variations. Somemarketers even segment down to a specific zip code. Consider a big retailhouse having large no of retail outlets divide on the Geographicsegmentation basis and keep their stock as per different regions accordingto their regional preferences and believes.

 

Market Segmentation:Definitions:

1)Breaking the whole market into smaller groups, each of which istargeted separately.

2)Grouping people according to their similarity related to a particular  product category”

3)Market segmentation is the study of the marketplace in order todiscover already existing viable groups of consumers who are similar or homogeneous in their approaches to choosing and/or consuming goodsand services.It is a process of identifying niche markets.

4)Process of dividing the total market for a good or service into severalsmaller, internally homogeneous groups.Members of each group are similar with respect to the factors thatinfluence demand.Characteristics1)age2)gender 3)geographic location4)income5)spending patterns6)cultural background7)demographics8)marital status9)education10)language11)mobilityLevels of Market SegmentationWe have four levels of segments1. Segments2. Niches3. Local areas4. Individuals.Segment MarketingA market segment consists of a large identifiable group within a market,with similar wants, purchasing power, geographical location, buyingattitudes, or buying habits. For example, an automaker may identify four  broad segments in the car market: buyers who are primarily seeking (1) basic transportation, (2) high performance, (3) luxury, or (4) safety

 

MeasurableDifferentiatedReachableSegmentation StrategiesMass marketing (undifferentiated marketing): offering the same productto the entire consumer populationConcentrated marketing (focused or niche marketing): selecting onemarket segment, even though the product may also appeal to othersDifferentiated marketing: selecting two or more different segmentsSegmentation in the Global MarketplaceThere are two approaches to market segmentationLocalization: treating each country as a separate market and seekingconsumer segments accordinglyIntermarket segmentation (also called “standardization”): selectinggroups of consumers who exhibit similar consumption behavior acrossdifferent countriesMarketers emphasize similarities rather than differences across countrymarketsConsumer Benefits and Product PositioningProduct positioning is the placement of a product, service, outlet, etc. inthe mind of the consumer There are five ways used to position products, services, outlets, etc.On perceived benefitsOn imageOn attributesAgainst competitorsCombination of two or more of the aboveRepositioning: shifting position in the consumer’s mind through changesin important product, price, distribution, and promotional and/or personalselling benefits.GOOD SEGMENTATION APPROACHES – Clearly identify targets – Discriminates on behavior  – Are logical, makes senseProvide insights for marketing initiative

Four ways to Identify Target Markets

Geographic

Demographic

Psychographics

Behaviors

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.

Conclusion:

Maruti Suzuki India limited has effectively and efficiently used the various marketing mix tools tosurvive the growing competition in the automobile industry for more than three decades thus making it aleader in its sector. Its success has been highly credited and acknowledged by many accolades andawards in various categories of pioneering.Thus, the industry has portrayed an example of fine balance between its product offered and meeting customer need obtained by the mixture of proper decisionmaking process and adaptability to the changing environment