Company Analysis of Maruti Suzuki
By, Pavan Subhash Tirumalasetti PGP (2012-14) Indian Institute of Management Raipur
395 towns throughout India. But. The main objective behind its inception was to meet the growing demand of personal means of transport caused due to the lack of efficient public transport system. Hatchbacks to sedans and Sport Utility vehicles (SUV).314 cities in India. WagonR. It has 2. Maruti Suzuki has two manufacturing facilities in India: Gurgoan and Manesar. Initially it was called as Maruti Udyog Limited (MUL). MUL became a market leader holding a major market share. 2012 which is receiving tremendous response from the market. Major revenue comes from these service stations. In February.Introduction:
Maruti Suzuki is a subsidiary company of Japanese automaker Suzuki Motor Corporation.000 vehicles annually. at same price. It has a market share of 44. These models gained ahuge response from consumers. Maruti800. 1983.946 service stations in 1. then market lost a major share of the market. The chairman of Suzuki Motor Corporation said that the work to establish a manufacturing unit in Gujarat would be started soon. it depended mainly on Maruti800.9% in passenger car market as of March 2011. Its Core Competencies are Post sale service.
Company’s Product Portfolio:
The company offers a portfolio of 14 brands. Kizashi. Both manufacturing facilities combined have an production capacity of 14. Maruti Suzuki offers a complete range of car starting from Entry Level. Maruti Insurance. Maruti Finance. 2012 it sold 10th million vehicle in India. So in late 1990’s new global players like Daewoo Matiz. ranging from the people’s car. to the luxury sedan. It must be thinking to restructure its product portfolio in the Indian market in the
. It has 30 Express Service Stations on 30 National Highways across 1. To gain back its market share Maruti launched models like Zen. Mileage. Gujarat Chief Minister. Hyundai Santro entered the market with more space and comfort.50. Maruti Launched Alto800 in October. Other Automaker giants in India were unable to reach this benchmark setup by Maruti Suzuki. During a recent meeting with Narendra Modi. Maruti Suzuki has 933 dealerships across 669 towns and cities in India. It was the first company in India to mass-produce and sell more than a million cars. Alto. Maruti Suzuki launched its first car Maruti800 on December 18. which was established in Feb 1981 through the act of parliament. followed by other models like Gypsy etc.
Polo. mileage. style. They are expecting a mode of transport which satisfies all the above stated features in an affordable price range. Maruti Suzuki has positioned itself as a company that offers a Total Value Proposition (TVP) to its customers. Maruti Suzuki Portfolio by offering attractive models like its
Maruti800 (A1 <3400mm)
Alto (A2 3401-4000mm)
Estilo (A2 3401-4000mm)
Wagnor (A2 3401-4000mm)
A. Skoda entered into small car segment with Brio. price as well. consumer are very conscious about reliability. Since. it is going to be challenging for Maruti Suzuki to manage its very old brand name people’s car (affordable price and maintenance) competitors. So.current circumstances of dip in market share because of foreign players like Honda. With the current growth in Indian economy and increased exposure to global market. Volkswagen.Star (A2 3401-4000mm)
Ritz (A2 3401-4000mm)
Swift (A2 3401-4000mm)
Dzire (A3 4001 – 4500mm)
Sx4 (A3 4001 – 4500mm)
. comfort. post sale service. Fabia respectively .
Maruti Esteem an upgraded version to
Maruti1000 was launched in 1994. For example. DZire.
. Maruti so far launched sedans like Baleno. Grand vitara as the Prestige Builder. In the year 2000 Maruti Suzuki launched Alto.e. and launched them with some upgrades. but company has failed to grab high end (i. but later it was taken out of market due to sales. Maruti Suzuki’s leadership in small car segment is undisputable. This clearly shows that Maruti has been perceived as small car manufacturer only. Maruti-Suzuki's launch of Suzuki Alto in the same sub-category as Maruti 800. Esteem was in market till 2007 later it was replaced by Swift DZire. A-star aspires to become the Flagship Product of Maruti Suzuki after Alto and WagonR. Kizashi above that price range. Maruti1000 lost its market share this can be termed as Product Cannibalisation. price range above 5 lakhs) market. Maruti1000 is in production till 2000.e. This product price was between Maruti 800 and Maruti Zen. Subsequently. In 1990 Maruti Suzuki Introduced Maruti1000. Here company was trying to fill the gap existed in the segment by introducing ALTO i. among them only DZire became successful. line filling. SX4. Due to the launch of Esteem. Line Deletion. company had deleted some of its failure products.Kizashi (A4 4501 – 4700mm) Ertiga (Life Utility Vehicle)
Grand Vitara (Multi Utiity Vehicle)
Gypsy (Multi Utility Vehicle)
Omni (Multi Purpose Vehicle)
Eeco (Multi Purpose Vehicle)
From the above set of products we can see that Maruti800 as the Traffic Master. which was the leader of the small-car segment to counter the competition from Hyundai is seen to be a classic case of cannibalization strategy.
These services are offered to only Maruti cars.The Ansoff Matrix of Maruti Suzuki is as follows:
Existing Products New Products
. (Product Development)
New Market s
Poland. Hungary. Maruti Finance. In addition. Maruti Finance. Maruti TrueValue. Angola. Nigeria and Egypt. Alto. Gypsy (Market Penetration)
Alto800. It has started shipping out sedan DZire to Africa. and Algeria. where it has grown sales fourfold to 21. the Alto K10 and the A-Star there. this small car is now attracting African markets. Maruti800 which was so popular in Indian market is no longer as it used to be. The company has a similar story to tell of Latin America. But.000 units over the past four years. where Maruti competitors literally failed to implement and follow. Maruti exporting its passenger cars to many developing countries like Latin America and Asia. Large markets in the continent are Algeria. Unfortunately or fortunately Maruti Suzuki restrained from experimenting new products. Mozambique. WagnoR. In 2012 over 4. Maruti Insurance etc.600 units were shipped to Algeria alone. Apart from the Maruti 800. Indonesia. (Market Development)
From the above matrix we can see that Maruti has offered new products like Maruti True value. to its existing markets. it also sells small cars such as the Alto.
Question Mark: Products in this category has high growth but low market share. they have potential to become successful.
. into question mark category. So. the company has high
growth rate and profitability. Omni. Versa. Kizashi
Cash Cows Alto. 800. divest and drop. Dogs: These products have neither of them. Company needs to put some effort to convert these into STAR category products. Estilo
K E T G R O W T H
SX4. from Cash Cows.
STAR: These products have large market share as well as high market growth. Cash Cows: Products in this category has high market share but without any further growth. Vitara. WagonR
Dogs Baleno. Company earns large revenue from these products. The market strategy for this particular type is harvest. company needs to invest revenues earned. Maruti 1000. So.BCG Matrix of Maruti Suzuki can be shown as follows:
M A R K E T S H A R E M A
DZire. it is better to liquidate those products.
ICICI Limited.58 366907.00
Maruti Suzuki offers EMI facility for many its products.
. Maruti has very few products above the price of 1 Million Rupees.41 463718. even for Alto800.41 455360.00 Highest Price(Rs) 242884.70 904186.71 704028. it has tied up with many banks like ABN Amro.32 282914.49 235546.32 422888.71 752948.00 344365.82 324362.81 2394953.94 982356. Following table shows the price ranges of each product. Maruti has sold over 12.67 359539. SBI-Maruti Finance is currently available in 166 cities across India. Since March 2003.50 1800758.000 Rs.22 624125.99 445948.00. We can observe that Maruti has offered most of its products in the price range of 21. Maruti has two joint venture with Citigroup and GE.04 369767.60 2594757. Again the company entered into a strategic partnership with SBI in March 2003.000 to 5.00 327606.50.24 1699171.61 393461.70 750079.97 273445. Model Maruti800 Alto800 Estilo A-Star Omni Gypsy Eeco Grand Vitara Alto K10 Ritz WagnoR Swift SX4 DZire Ertiga Kizashi Lowest Price(Rs) 217760.78 646300.71 624722. Kotak Mahindra Bank etc. Prior to start off own finance.000 vehicles through SBI-Maruti Finance. In addition.17 571032. To promote its bottom line growth Maruti has launched Maruti Finance in 2002.29 476395. It offers exclusive discount rates to customers during festival period and particular group of customers like government employees.Pricing and STP:
Maruti Suzuki has 16 products in its current portfolio.14 497464.75 445425. HDFC Bank.( Lowest Price ). Whereas.
With low involvement decisions. to create positive brand/product attitude one has to be aware of the king of decision involved in purchasing. Alto Middle Income Group: WagonR. with high involvement decisions to initiate the positive attitude the target audience not only needs to pay attention and learn something about the brand but also they should believe what is said. SX4. Swift. DZire.
Involvement and Motivation are the two important dimensions need to consider understanding how purchase decisions are made. Let us analyse Maruti Suzuki promotion campaigns using RPG: The following shown is the Rossiter – Percy Grid: Rossiter – Percy Grid Informational (Negative) Transformational (Positive)
Low Involvement product
Product: Cars Brand: Maruti Suzuki
High involvement product
. High Income Group: Kizashi. Generally. as a whole it is positioned as “affordable car with good post sale benefits” compared to its rivals. Vitara. Even Maruti has different target markets and positioning strategies for different products. for that one can use Rossiter – Percy Grid. to initiate positive attitude the target audience need only pay attention to and learn something about the brand. Ritz. Lower Income Group: 800. cars come under high involvement product because of the perceived risk involved in purchasing the product.Maruti Suzuki has adopted a focused approach and wisely created segments within a large market to promote their cars. Awareness about the brand creates brand attitude. The RPG uses awareness as necessary condition for the effectiveness of advertising. Whereas.
who want to feel the pride of owning a car. Finally. Target audience must personally identify the brand as it is portrayed in the execution. emotional response is created and linked it to the brand. Principle to be followed while implementing high involvement transformational brand attitude strategies: 1. Now let us compare the principle to Maruti Suzuki Ad campaigns. and it likely to be around for a long time. Liking must go beyond the execution and extend specifically to brand and product. buying a new car is positively motivated. The primary motivation here is one should like the brand and particular model before even consider it for purchase. 2. somewhere in the campaign we need to provide believable information in order to satisfy the secondary motivation that is target audience “likes”. Maruti800 is the product. how much mileage it gives. Along with the new product launch it tags a punch line to that product. If we observe all the principles are followed. with low income. detailed analysis is given below: Maruti800:
Change your Life
Maruti800 targeted low income group family customers and it is positioned as people’s car. there are number of problems addressed as well: How reliable is it.For most of the people. Maruti Suzuki promotes its products mainly through TV Ads and Print media. In its Ad campaign Change your Life. Dual motivation could also be needed. which is why no matter how many times company has explicitly announced that they are deleting Maruti800 from their product line but still it can do so because of the demand. for instance Ritz means Ostentatious luxury and glamour. what kind of service is provided. What about the resale value. In this campaign we can see a mood was created changing one’s life and linked it to target audience. however. because a car is such a significant investment. Elicit the correct emotional response and link to the brand 3. Be certain that is emotionally authentic. the execution is: For People. Every product name has a meaning which communicates its offering. In addition. Swift means happening quickly or promptly. 4. it was shown that a particular family’s life style had changed after owning a Maruti800. 5.
. it is believable.
Its Ad campaign shows that it is a car that keeps you calm and comfortable. Likewise we can analyse all the product promotion campaigns using RPG grid. people feel who owns this feel so independent and confident so that they do not want to stop at anything. In this Ad campaign. USP of this product is safety features for compact car suited to Indian roads. Alto is one of the most selling cars in India and globally. Ritz: Live the moment Unique selling proposition of this product is luxurious look in small car segment. Maruti SX4: Men are back A premium sedan with an affordable price compared to its competitors.
. WagnoR: For the smarter race Based on a new platform. Estilo: Take a fresh view of life With its aerodynamic contours and smooth curves. mood that was created is. practicality. the all-new WagonR is the tallest in its class and has a distinct sloping stance. company never showed a child with the couple. It is positioned as for the men who want to control the road. styling in an affordable price range. from this we can infer that it is targeted towards newly married couple. It is positioned as compact car for the owners who do not want to stop at anything. And it is positioned as India’s most fuel efficient car. I have provided brief description of few Ad campaigns: Alto: Let’s Go Alto is a great combination of economy. In its campaign Let’s Go. Its upgraded model Alto k10 has some changes in the interior design. the Estilo is a perfect combination of sturdiness and class. It is mainly targeted towards Middle level income groups.A – Star: Stop @ Nothing The unique selling proposition of this product is fuel efficient car with high mileage.
Automobile exhibitions and exhibition in shopping malls.
Entry of foreign players like Honda. In addition to Tv and Print media promotion.
Maruti recently entered into foreign market with its models Success of DZire is a good sign to enter into Mid Class Segment. Presence across segments. The desire to transform from a small car manufacturer to sedan maker may be the main objective behind this change in distribution strategy. It also promotes its products through tradeshows. which requires low maintenance. Maruti also offers an extensive service to its customers. It has around 900 outlets across the country. Strong brand value and huge customer base. This is a major shift in the traditional model where Maruti use to outsource the distribution to franchisee. Volkswagen. in a particular Ad it was shown that child stops crying only when his mother takes him into her hands. Concentrated only in small car & hatchback segments.Maruti Swift DZire: The heart car Luxurious car from Maruti.
Distribution Network & After sale services Largest market share of 50% It is the first company to start second hand sales through its True Value entity. Still Kizashi is being imported from Japan.
Unable to make its mark in upper class segment. In addition. Maruti plans to buy 12 prime properties across the metros as it have already built 5 on its own and handed over to distributors. The DZire is a car that has everything one can desire. Untapped rural market
. Maruti is going to launch diesel version in 800cc range. Skoda into small car segments.
Maruti Suzuki is known for its distribution network. Increase in Petrol prices. Management and workers are not in good sync. Maruti slightly lost its market share. Maruti Swift: You are the fuel It is positioned as the car which is powered by the person who is driving.
The Act governs emission norms and safety standards in India and consolidates the law pertaining to motor vehicles.
Technological Implications: With the rapid changing technology in automobile industry.
Political Implications: Exercise duties were enhanced by 2 % on all types of cars. For them social status is seen as an important criterion. and the diesel tax can substantially impact our FY13 estimates for Maruti. thus there has
been increase in price of all the cars.
Legal Implications: It is important for Automobile manufacturers abide to the legal norms like
Motor vehicles Act. New technology may increases safety or mileage or power of the engine. it is important for
a company to introduce more electric or LPG/CNG variants. 1988.
Economic Implications: The disposable income of Indian consumers has increased.
Social Implications: With the increase in disposable income among younger generation. This shows that government wants people to use public mode of transport system instead of owning a private car. Even during
the economic slowdown. every
company is trying to outdo its competitor by introducing new technology. owning
a sedan is seen as status symbol. and estimated at 29%+ for FY13).
Environmental Implications: With the growing demand for eco-friendly cars. According to Kriti Parikh Committee. Maruti Suzuki India on October 3.PESTEL Analysis:
PESTEL analysis is a framework that is used to analyse effect macro
environment factors on Maruti Suzuki Ltd.250 with immediate effect to offset adverse impact of foreign exchange fluctuation and rising input costs. 2012 said it has hiked prices of its all models by up to Rs 5. Young generations are more driven by technologically advanced cars rather than being brand loyal. Maruti Suzuki has a high exposure to diesel cars (currently about 25% of domestic portfolio.
we can see that it was slightly losing its share from 55. Regarding small car segment its present share is 44. in the price range of 9-16 lakhs. there is a lot more to concentrate in this segment.9%.6 per cent in 2007-2008 to 26 per cent in 2011-2012.
.5% in 2000. To achieve this Maruti Suzuki has provided industry visits for sarpanchs. So. In addition. it is important to stay focussed on this segment as well. opinion leaders. It has a market share of 44.9% in passenger car segment. So. which provides a tremendous potential to the company to increase its sales there.Conclusion:
Maruti Suzuki is the market leader in automobile industry. As of now Maruti Suzuki has only two sedans. It is present across all the segments. SX4 and Kizashi. there is a huge untapped rural market in India. All these efforts have definitely paid off and have seen the contribution of sales in rural India rising from 3. and appointed sales executives who can converse well in local dialect and influence consumer behaviour. Maruti Suzuki firmly believes that the rural India is getting more affluent and is largely unaffected by the recession being faced by the entire world.
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