MARUTI MARKETING

STRATEGY AND ITS

STRENGTHS AND
WEAKNESSES

Jai Prakash Choudhary Nishant Bhadauria

MBA –PM
UNIVERSITY OF PETROLEUM AND ENERGY STUDIES
 Overview

Car Segments
Maruti Suzuki Portfolio
Strategies (Marketing and Promotion)
Competition
BRIEF HISTORY
 Maruti Udyog Limited (MUL) 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

 MUL launched its first car Maruti800 on

december 14,1983 at initial price of Rs.
47,500.

Source: World Bank, Provided by GAIL India Ltd. (2001-02)

The Suzuki Collaboration
 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 MUL
contemporary technology and Japanese management
practices . A license and a Joint Venture agreement was
signed between Govt of India and Suzuki Motor
Company (now Suzuki Motor Corporation of Japan) in
Oct 1982

 Suzuki brought efficient management

practices,bettertechnology and administration.

 Initially Suzuki held the 26% stake in Maruti Suzuki .

4
MARKETING STRATEGY OF MUL
IN LATE 1980’s
 Maruti was the first company in India which studied the consumer demand
and responded to it well.
 Market segmentation policy was adopted that targeted different type of
consumers with different type of models.
 Maruti800 targeted medium income group,while the deluxe model
targeted rich income group.
 Maruti van targeted businessmen and doctors(ambulance)
 The Gypsy targeted the paramilitary forces and the police.
This resulted in complete control of maruti over the market .
 The company advertised its different products according to costumers
e.g- maruti van was rechristened as Omni .
 A special cell was made to make direct dealing of Gypsy with the
government & the army.

5
THE MAJOR FAULTS
The MUL depended more on its M800
model, so when in late 1990’s the new
players like when Matiz, Santro and
Indica came into the market with more
space and better comfort ,at same
price, then Maruti lost a major share
of market.

6
The changing Auto Industry
 Afteryear 2000,(and 2003 to be more
precise)there was a change in
automobile market which where due to-
1. The government has reduced
regulation on the industry and more
foreign players were invited.
2. Banks and other financing companies
started providing car loans at reasonable
interest rate

7
Impacts
The Indian consumer now started
buying the mid-size cars rather than
small cars ,the luxury cars also gained
popularity,SUV’s also started coming
in the market.
The increasing level of income of
urban people ,the small cars were not
considered to be luxury item any
more.

8
 THE RESPONSE OF MARUTI
 To gain back its lost share Maruti launched Zen ,Alto and
WagonR.These small segment car gained huge response for
consumers.
 Maruti also launched aggressive promotional policy to
promote them like announcing Zen as the “world’s car”.
 Maruti also made a slogan “count on us”.To emphasize its
reliability
 In 2003 maruti came up with “change your life campaign” ,it
provided vehicle insurance at just Rs 1 to attract the
customers.
 advertisment such as of Alto in which a small boy says to his
father ”papa ki karan petrol khatam hi nahi honda” was make
customer feel that Alto was best fuel efficient.
 During 2003 and 2004, MUL visualized and implemented a
strategy for its dealers to increase their profitability levels in
view of increased competition. According to the strategy, the
300-odd dealers of the company were asked to strengthen
their manpower, increase the salaries of their sales agents,
and offer them better incentives.

9
 During 2003 and 2004, MUL visualized and implemented a
strategy for its dealers to increase their profitability levels in
view of increased competition. According to the strategy, the
300-odd dealers of the company were asked to strengthen
their manpower, increase the salaries of their sales agents,
and offer them better incentives.

q '2599' offer-In 2004, MUL introduced the '2599' offer under

which a consumer could buy an M-800 by paying an EMI of Rs
2,599 only, for a period of seven years. The down payment
was fixed at Rs 40,000. MUL entered into an agreement with
the State Bank of India (SBI), the largest bank in India, to
promote this scheme

10
Car Segmentation

http://www.surfindia.com/automobile/automobile-industry.html
Major players in the
market

The Journal of Business Perspective, Vol 10, No 1: Jan - Mar 2006

Maruti 800 : Change Your Life
 The Maruti 800, has gone beyond just a
car, it has actually changed the lives and
lifestyles of countless people, by bringing
the joy of motoring to millions across the
length and breadth of the country
 Alto: Let’s go
The alto is a great combination of economy ,
practicality and styling. A runaway success
on the roads of Europe, it exemplifies the
benchmark in build, quality and reliability in
a compact car. This is testified by the 24-
hour endurance record set on Aug 03, 2003
of covering 3082 kms in 24 hours at an
average speed of 128kmph.
 Omni: Fits all

 TheOmni is truly India’s original

Multipurpose vehicle. Today it is available in
6 Avtars – 5 Seater, 8 Seater, Cargo,
Ambulance, CNG and LPG. It meets diverse
needs across different user segments and
can double up both as a people carrier and
a goods carrier. This faithful workhorse is
easy on the pocket, yet tough on the job.
Zen Estilo: Shape Your World

A Spanish expression for Style, the new Zen

Estillo stands true to its name. Its
aerodynamic body, unique bean shape,
sparkling colors and snazzy lights will rev up
your style quotient. An amazing blend of
style and substance, its agile nature will
leave you enthralled.
Wagon R: For the Smarter Race
 Drivewith complete peace of mind. The
word-class safety features of the wagonR
keep you safe and secure, always.
Wearing new vibrant colors, the new
wagonR is full of freshness and energy to
keep you charged up and always to go.
 Easy Finance Options
 76% of Maruti cars are financed

 44% through Maruti Finance, 12 %

through SBI and associate banks

 In
year 2006-07, it added Mahindra Finance,
Magma Leasing , Cholamandalam and Axis
Bank.
Maruti’s Marketshare

Segment A:
Maruti 800, Omni

Segment B:
Zen, Alto, Wagon R

Segment C:
Swift, Esteem, Baleno

19
 Maruti Suzuki Product Portfolio
 Maruti 800
 Omni
 Alto
 WagonR
 Swift
 Zen
 Gypsy
 Esteem
 Versa
 SX4 
 Grand Vitara
 The
Competition
 HYUNDAI SANTRO

•                                             

•                                           TATA INDICA

 CHEVY SPARK
Hyundai Santro
+ Santro rated “Best Small Car” in JD Power Asia Pacific Initial Quality and
APPEAL studies.
+ European styling , power-assisted brakes, advanced suspension system and
uniquely responsive engine.
+ Celebrity endorsed (Shahrukh Khan and Preity Zinta).
+ Hyundai had a national network of 300 sales and service outlets.
- The spares are expensive than that of Maruti

- TATA INDICA
+ Car built for Indians by Indians
+ Ambassador’s internal dimension and Maruti 800’s price with option of diesel
engine
+ Has a sleek fascia with chrome lined grill, clear lens illumination, muscled flares,
flexible seating and electronic instrumentation with tachometer.
+ Cheaper and home grown spares.
+ Has lowest running cost (around Rs. 2.06 /km)

Chevrolet Spark
General Motors rolled out its small car Chevrolet Spark in India as it takes on
market leader Maruti Suzuki.

+ Rs 3.09 lakh (Ex-showroom Delhi) slightly lower than Maruti’s Zen Estillo base
model. Improved cabin space
22
Competitive Advantage of MUL
 Dealer network across the country
A wide dealership network allows the company to service customers over a
wider geographical area than competitors. Currently, MUL has 500 sales
outlets that cover 312 cities, as compared to 162 outlets of Hyundai Motors
and 140 outlets of Tata Motors

B True Value Operations

MUL providing its customers an opportunity to resale their car to MUL or

exchange with a new Maruti car under its “True Value” network has proven
really beneficial. In FY07 True Value network touched 10000 units a month
and more than 90% of that resulted in the exchange of a new car

C Presence across segments

In a car manufacturing plant, the press shop, paint shop, engine and
transmission
assembly, and machine shop are used for manufacturing different modelsA
presence

23
 Higher localisation
 it has rationalised vendors from 370 in 1999-00 to 225 in
2005-06 has resulted in MUL enjoying the highest operating
margins amongst its peers
 Commonality of platforms-
Commonality between the platforms of various models
lead to lower product development efforts and
higher benefits of economies of scale.uses only two
platforms
Strong support in R & D and Product from parent -
MUL’s strength lies in the strong parentage of SMC,
Japan. The Japanese SMC helps MUL in R&D and new
model launches, as the Indian subsidiary contributes
more than 25% of the parent net income. The
company also has access to its parent's product
portfolio, , which allows it to launch the latest
products in domestic markets. Zen Estillowas
launched in a very short period of nine months with
support from the parent company.
24
Increasing Productivity- MUL enjoys one of the best operating
margins in its peer group at 13.6% and 10.7% at the net income level
in FY07. The company has rationalised its work force, thereby
reducing the man-hours spent in producing a vehicle by around 21%
in the last 3 years. This has helped it to cut cost of producing per unit
of vehicle.

25
The company’s Strategies

26
Exports
Maruti’s current problems
Maruti Suzuki is far behind in luxury
and SUV car ,the other player like
GM,TATA,Mahindra ,Mitsubhisi and
Toyota are already established in the
market ,so replacing them would not
be easy.
MUL has been now emphasizing
consistently on it’s “Best customer
satisfaction” car to keep an
psychological impact on costumers.
Promotion
Advertisements targeting different
segments
Promotional offers through out the
years
Psychographics is used :
• Wagon-R : Smarter people (executives)
• Omni : People who need to transport goods
• Alto : Small car : small family
• Zen Estillo : Young trendy people

29
Supply Chain
The joint initiatives taken by Maruti
and its team of suppliers have
generated over 29% cost reduction
over three years for Maruti
Less than 20 per cent of a car is
manufactured in-house. The rest is
accounted for by 215 suppliers and
hundreds of second and third tier of
vendors who, in turn, supply to them.
The Recent Launches
Maruti has launched two luxury
models SX4 in 2006 and A STAR in
Nov 2008 ,these two models are
facing intense competition from
already established companies.

31
Thank You

32