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A Comparative Analysis of Marketing Strategies of Automobile

Companies in India.

Title:
A Comparative Analysis of the Marketing Strategies of Automobile
Companies in India.
The firms namely:

Maruti Suzuki
Hyundai
Mahindra & Mahindra
Toyota

Keywords:
Marketing Strategy, Strategic Management, Brand Position, Brand
Equity, Marketing, Advertising, Product, Price, Distribution,
Promotion

ABID SHAIKH

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

Abstract:
In todays competitive era the word Strategy is very crucial for
all business organizations. Presently organizations started
realizing that customer centric and aggressive marketing
strategies plays vital role to become successful leaders. Though
globalization has opened the doors of opportunities for all, the
market is still crowded with some unknown risks and a lot of
competition. Because of this competition, a marketing strategy
must aim at being unique, differential-creating and advantagecreating.
Therefore, at the heart of any business strategy is a marketing
strategy. All the marketing strategies are based on the right mix
of 4Ps, only those can be ahead which have the right marketing
strategies because it increases the chances of better market
penetration with proper utilization of resources. Marketing
strategies include all basic and long term activities in the field of
marketing that deal with the analysis of the strategic initial
situation of a company and formulation, evaluation and selection
of market-oriented strategies and therefore contribute to the
goals of the company and its marketing objectives.

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

Overview of Indian Automobile Industry:


The automobile industry is one of Indias most vibrant and
growing industries. This industry accounts for 22 per cent of the
country's manufacturing gross domestic product (GDP). The auto
sector is one of the biggest job creators, both directly and
indirectly. It is estimated that every job created in an auto
company leads to three to five indirect ancillary jobs. India's
domestic market and its growth potential have been a big
attraction for many global automakers. India is presently the
world's third largest exporter of two-wheelers after China and
Japan. According to a report by Standard Chartered Bank, India is
likely to overtake Thailand in global auto-export market share by
the year 2020. The next few years are projected to show solid but
cautious growth due to improved affordability, rising incomes and
untapped markets. With the governments backing, and trends in
the international scenario such as the decline in prices of natural
rubber, the Indian automobile industry is slated to witness some
major growth.
Market size - The cumulative foreign direct investment (FDI)
inflows into the Indian automobile industry during the period April
2000 August 2014 was recorded at US$ 10,119.68 million, as
per data by Department of Industrial Policy and Promotion (DIPP).
Data from industry body Society of Indian Automobile
Manufacturers (SIAM) showed that 137,873 passenger cars were
sold in July 2014 compared to 131,257 units during the
corresponding month of 2013. Among the auto makers, Maruti
Suzuki, Hyundai Motor India and Honda Cars India emerged the
top three gainers with sales growth of 15.45 per cent, 12 per cent
and 11 per cent, respectively. The three-wheeler segment posted
a 24 per cent growth to 51,461 units on the back of increased
demands from the urban market. Total sales across different
vehicle segments grew 12 per cent year on year (y-o-y) to

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

1,586,123 units. Scooter sales have jumped by 29 per cent in the


on-going fiscal, and now form 27 per cent of the total two-wheeler
market from just 8 per cent a decade back. The ever-rising
demand for scooters, which has far outstripped supply, has
prompted Honda to set up its first dedicated scooter plant in
Ahmedabad. Tractor sales in the country are expected to grow at
a compound annual growth rate (CAGR) of 89 per cent in the
next five years making India a high-potential market for many
international brands.
Investments - To match production with demand, many auto
makers have started to invest heavily in various segments in the
industry in the last few months. Some of the major investments
and developments in the automobile sector in India are as follows:
Ashok Leyland plans to invest Rs 450500 crore (US$ 73.54
81.71 million) in India, by way of capital expenditure (capex)
and investment during FY15. The company is required to
manage Rs 6,000 crore (US$ 980.56 million) of assets in
seven locations across the world, for which maintenance
capex is needed.
Honda Motors plans to set up the world's largest scooter
plant in Gujarat to roll out 1.2 million units annually and
achieve leadership position in the Indian two-wheeler
market. The company plans to spend around Rs 1,100 crore
(US$ 179.76 million) on the new plant in Ahmedabad, and
expand its range with a few more offerings.
Yamaha Motor Co has restructured its business in India. Now,
Yamaha Motor India (YMI) will take care of its India
operations. The restructuring is part of Yamahas mid-term
plan aimed at improving organisational efficiency, as per Mr
Hiroyuki Suzuki, Chief Executive and Managing Director. YMI
would be responsible for corporate planning and strategy,
business planning and business expansion, quality control,
and regional control of Yamaha India Business.
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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

Tata Motors plans to use the 'hub-and-spoke' model in which


India will be the key manufacturing base while it will have
mini-hubs in overseas markets. The company also plans to
set up mini hubs in potential markets like Africa, Middle-East
and South East Asia.
Hero Cycles through its unit OPM Global has acquired a
majority stake in German bicycle company Mitteldeutsche
Fahrradwerke AG (MIFA) for 15 million (US$ 19.11 million).
The company plans to invest an additional 4 million (US$
5.09 million) as capital expenses in restructuring the
acquired company.
Government Initiatives - The Government of India encourages
foreign investment in the automobile sector and allows 100 per
cent FDI under the automatic route. To boost manufacturing, the
government had lowered excise duty on small cars, motorcycles,
scooters and commercial vehicles to eight per cent from 12 per
cent, on sports utility vehicles to 24 per cent from 30 per cent, on
mid-segment cars to 20 per cent from 24 per cent and on largesegment cars to 24 per cent from 27 per cent. The governments
decision to resolve VAT disputes has also resulted in the top
Indian auto makers namely, Volkswagen, Bajaj Auto, Mahindra &
Mahindra and Tata Motors announcing an investment of around Rs
11,500 crore (US$ 1.87 billion) in Maharashtra. The Automobile
Mission Plan for the period 20062016, designed by the
government is aimed at accelerating and sustaining growth in this
sector. Also, the well-established Regulatory Framework under the
Ministry of Shipping, Road Transport and Highways, plays a part in
providing a boost to this sector. The Government of Indiaappointed SIAM and Automotive Components Manufacturers
Association (ACMA) are responsible in working for the
development of the Indian automobile industry.
Road Ahead - The future of the auto industry depends on the
positive sentiments and the demand for vehicles in the market.
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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

With the festival season coming up, the Indian auto sector will see
a rise in demand which is expected to bring in major growth. An
auto dealer survey by firm UBS suggested that the Indian auto
industry, riding on trends like the upcoming festival season and
decline in fuel price, will observe a 12 per cent y-o-y growth in
FY15. Also, keeping up with international trends, there is expected
to be a surge in the number of hybrid vehicles in the Indian auto
sector in the years to come.

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

Introduction:
The automobile industry is facing new and pressing challenges.
Globalization, individualization, digitalization and increasing
competition are pressing the face of the industry. In addition,
increasing safety requirements and voluntary environmental
commitments by the automotive industry have also contributed to
the changes ahead. Size is no longer a guarantee of success. Only
those companies that find new ways to create value will prosper
in the future. Based on this perspective, some strategic
methodology is needed which would enable them to transform
themselves for the competition.
The global automotive industry is subjected to a range of factors
that are increasing complexity and influencing the economic
options available to the automobile manufacturers. The majority
of these factors interacts with one another and has strong
interdependencies. However, some of these factors are marketinduced and consequently, cannot be influenced directly by the
automobile manufacturers. These factors include:
Globalization, regionalization and market convergence Due
to the effects of liberalization, national markets are
increasingly getting globalized. This gives companies a
chance to expand to new markets, but also increases the
threat of new entrants or increased competition in traditional
markets.
Increasingly diversified consumer aggregate patterns of
behaviour Consumers are no longer accepting standardized
products that satisfy their individual requirements. Target
groups thus have to be downsized by companies so
customers will be attracted by the products offered.
However, because of the increased global competition with a
stronger focus on price and not on brand loyalty, consumers
generally do not reward companies for their more
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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

individualized products. As a result of these factors,


automobile
manufacturers
have
new
demanding
requirements within their field of activity.
Accelerated modification and diversification of the product
portfolio These companies have to shorten product
lifecycles in order to react to the expectations of individuals
and fast changing consumer demands with innovative
products. In the past, an average product lifecycle in the
automotive industry was eight years; today, lifecycles are
much shorter, or at least the product design is often
modified after just two or three years on the market. With
development costs for a new model remaining on the same
level or even increasing, this concurrently means a
shortening of amortization time for the OEM and potentially
lower profits.
Pervasion of automobiles with digital technology In 2002,
digital technology is cars averaged 22 percent of the total
value of a car, with a forecasted increase to 35 percent of
the total value in 2010. The integration of hardware and
software into automobiles represents the predominant
accelerator of increased functionality coupled with increasing
complexity. This complexity results in overstrained car
development departments, product failures, a cost explosion
with respect to guarantee and warranty costs, and an impact
on customer satisfaction.
Increased pressure for innovation and flexibility in
development
and
manufacturing

Development
departments are not just overburdened by the complexity of
digital technology, but also by the shortening of product
lifecycles. Another aspect is the increasing number of
parallel development projects since companies develop more
and more niche models for special target groups. This
certainly requires the use of new development techniques
such as virtual reality. For example, this technique enabled

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

BMW to shorten the development of its Z4 model to just 30


months.

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

Objectives:
To review the progress of Indian Automobile
(Passenger vehicles)
To understand the marketing strategies of:
Maruti Suzuki
Hyundai
Mahindra & Mahindra
Toyota
To assess their competitive strength.

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sector

A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

Literature Review:
K.S. Venugopal Rao (1996) [1] had conducted a study of marketing
strategies for emerging markets. The world economic order is
changing and changing very fast. Emerging markets are
characterized by some unique features which can be applied to all
situations like mass dispersed markets; penetration is abysmally
low in key product categories. Emergence of information
technology, high-level of conspicuous consumption, antiquated
rules and procedures, shift from a protectionist regime to a free
market economy, a young and vibrant services economy are
characteristics of the emerging markets in India.
Yaseer Maharoff (2000) [2] has illustrated some marketing
strategies for firms in emerging markets. Despite the billions of
untapped consumers in the worlds emerging markets,
multinational firms often flounder in areas such as Eastern
Europe, China, India and Latin America. Corporations are quickly
realizing that the local consumers do not reciprocate with
enthusiasm. While failure is often attributed to market difficulties,
more often it can be traced back to the multinationals inability to
recognize the fact that emerging markets are different. Marketing
i.e., those that rely on product innovation, fine segmentation, high
margins and global brands do not necessarily work in emerging
economies.
According to Ahmadi, R & Yang (2006) [3] marketing strategy
encompasses the strategy involved in the management of a given
product. A given firm may hold numerous products in the
marketplace, spanning numerous and sometimes wholly
unrelated industries. Accordingly, a plan is required in order to
effectively manage such products. Evidently, a company needs to
weigh up and ascertain how to utilize its finite resources. For
example, a start-up car manufacturing firm would face little
success should it attempt to rival Toyota, Ford, Nissan, Chevrolet,

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

or any other large global car maker. Moreover, a product may be


reaching the end of its life-cycle. Thus, the issue of divesting, or a
ceasing of production, may be made. Each scenario requires a
unique marketing strategy.
Multinational companies in India: The beginnings of automotive
industry in India can be traced during 1940s. After the nation
became independent in the year 1947, the Indian Government
and the private sector launched their efforts to establish an
automotive component manufacturing industry to meet the needs
of the automobile industry. The growth of this segment was
however not so encouraging in the initial stage and through the
1950s and 1960s on account of nationalization combined with
the license raj that Audi, BMW, Fiat, Ford Motors, General Motors,
Honda, Hyundai, Toyota, Skoda, Mitsubishi Motors, MercedesBenz, Renault-Nissan entered into the Indian market. Bergen, M,
Heide, J.B. (2000) [4].
According to Cavusgil, S.T., & Sikora, E (2000) [5] the marketing
strategies for small the period that followed 1970s, witnessed a
sizeable growth contributed by tractors, scooters and commercial
vehicles. Even till those days, cars were something of a sort of a
major luxury. Eventually, the country saw the entry of Japanese
manufacturers establishing Maruti Udyog.
During the period that followed, several foreign-based companies
started joint ventures with Indian companies. In 1953, the Indian
government initiated manufacturing processes to help develop
the automobile industry, which had emerged by the 1940s in a
nascent form. Between 1970 to the economic liberalization of
1991, the automobile industry continues to grow at a slow pace
due to the many government restrictions. A number of Indian
manufacturers appeared from 1970 to 1980. Many manufacturers
entered the Indian market ultimately leading to the establishment
of new joint venture companies. A number of foreign firms

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

initiated joint ventures with Indian companies. Cespedes, F.V.,


Corey, R.E., & Rangan, K (1996) [6].
According to Kowske, Brenda, J., Herman, Anne E., & Wiley, Jack
W. (2010) [7] Indian automobile sector is set to emerge as the
global leader by 2020. In the year 2009, India rose to be the
fourth largest exporter of automobiles following Japan, South
Korea and Thailand. Experts state that in the Indian Automobile
Industry at present, about 75 percent of Indias automobile
industry is made up by small cars, with the figure ranking the
nation on top of any other country on the globe. Over the next
two or three years, the country is expecting the arrival of more
than a dozen new brands making compact car models.
According to Bucklin, L.P. (2008) [8], automotive giants of India
including General Motors (GM), Volkswagen, Honda, and Hyundai,
have declared significant expansion plans. On account of its huge
market potential, a very low base of car ownership in the country
estimated at about 25 per 1,000 people, and a rapidly surging
economy, the nation is firmly set on its way to become an
outsourcing platform for a number of global auto companies.
According to Corey, R.E., & Rangan, K (2006) [9], Automobile
industry in India is one of the fastest growing automobile
industries and has made its position in the world market. The
Indian automobile industry is currently growing at a remarkable
pace of around 18 percent per annum. The technological changes
and progress successfully led to the progress of automobile sector
in India. The main reason behind this tremendous progress is the
economic liberalization by the Indian government. The Indian
Automobile Industry is growing in all respects and it is also
serving as an important source of employment. Innovation and
new product launches are a major factor driving growth in sales of
cars. A wide distribution & service station network is a key to

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

growth in India. The automobile sector is expected to witness


strong growth and improve its share in global markets too.
According to Clarke III, I. & Owens, M (2002) [10] to cover the high
costs of product development and the setting up of production
facilities to cater to local demands, many global automobile giant
manufacturing strategies is to assemble vehicles at scale
economies and offload them to their franchise dealers. To keep
agency problems with their franchise dealers in check,
manufacturers implement the market-division strategy and the
associated penalty system MNCs manufacturing and distribution
strategies partly contribute to the existence of regional
differences in the pricing and availability of specific models and
specifications of vehicles. These necessary conditions allow
opportunistic parallel traders to engage in arbitrage.

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

Research Methodology:
This comprehensive project shall be purely based on secondary
data and through that, it will try to study the different strategies
of four major players in the Indian Automobile Industry (Passenger
vehicles), namely Maruti Suzuki, Hyundai, Mahindra & Mahindra
and Toyota which have over 75 percent of the entire market share
of Indian passenger vehicles market. The purpose of the project is
to study their network of dealers and service centres, their
effective promotional techniques and their customer relationship
management which is the mainstay of their product line-up as
well. The secondary research shall be based upon data collected
from sources such as magazines, news articles, journals, blogs
and others. They shall be effectively studied to draw conclusions
about the objectives & to frame results and also to understand it
as
an
industry
as
a
whole.

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Companies in India.

References:
1. K.S. Venugopal Rao (1996). Product and Brand Building
Strategies A study of marketing strategies for emerging
markets. IOSR journals.
2. Yaseer Maharoff (2000). Product and Brand Building
Strategies A Study of marketing strategies for emerging
markets. IOSR journals.
3. Ahmadi, R & Yang (2006). Parallel imports: Challenges from
unauthorized distribution channels. Handbook of Research
on Strategy and Foresight. Google Books.
4. Bergen, M, Heide, J.B. (2000). Implications of switching or
replacing products or suppliers. IJRM Volume-30 #4 (2013)
5. Cavusgil, S.T. & Sikora, E. (2000). Factors that affect pricing
strategies
for
international
firms.
papers.ssrn.com/SSRN_ID1922867
6. Cespedes, F.V., Corey, R.E., & Rangan, K. (1996). Going to
Market: Distribution systems for Industrial Products. Harvard
Business School Press.
7. Kowske, Brenda, J., Herman, Anne E., & Wiley, Jack W.
(2010).
Exploring
Leadership
and
Organizational
Effectiveness. Kenexa Research Institute WorkTrends Report.
8. Bucklin, L.P. (2008). Competition and Evolution in the
Distributive trades. Prentice Hall Publication.
9. Corey, R.E., & Rangan, K. (2006). Business Marketing
Strategy: Cases, Concepts and Applications. McGraw
Hill/Irwin Professional. Irwin Professional Publishing.
10.
Clarke III, I. & Owens, M. (2002). Research in Consumer
Behaviour. Volume 12. Google Books.

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Companies in India.

11.

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Companies in India.

Bibliography:
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Agarwal, Madhu (1994). Review of a 40-year debate in
international
advertising
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and
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Boddewyn, Joan J., Soehl, R. and Picard, J. (1986).
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NPD.

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Automotive

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(2002).

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SIAM (2004). The Thailand & ASEAN India Free Trade
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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

Neelamegham, S (2012). Marketing India (4th edition), Vikash


Publication, New Delhi.

Tentative Chapter Plan:

Title
Abstract
Introduction
Literature Review
Industry Overview
Objectives
Market Description
SWOT Analysis
SWOT Explanation
Marketing Strategy(Maruti Suzuki, Hyundai, Mahindra &
Mahindra, Toyota)
Positioning
Product Strategy
Pricing Strategy
Distribution Strategy
Marketing Communication Strategy
Media Selection
Analysis of strategies
Results
Discussions
Conclusion
References
Bibliography

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

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A Comparative Analysis of Marketing Strategies of Automobile


Companies in India.

The Automobile industry Industry of Industries.


January 2015

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