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Maruti Suzuki India Limited (MSIL) that was formerly known as Maruti Udyog Limited
is a subsidiary of Suzuki Motor Corporation, Japan. MSIL is the leader in the Indian
car market in terms of vehicles sold and revenue earned and has dominantly held
this position for nearly two and half decades. MSIL owns two manufacturing plants
situated at “Gurgaon” and “Manesar” that hold a combined annual production
capacity of over 1.2 million cars.
It can be rightly said that MSIL has revolutionized the Indian automobile market and
MSIL being the only Indian car company that has produced and sold one million cars
in a year justifies the statement. MSIL offers a wide range of cars across its
portfolio:
MSIL is also actively involved in its responsibility towards the environment. They
have introduced the latest “K-Series” engine which is highly fuel efficient,
lightweight, higher performance and also is low on CO2 emissions.
“The leader in the Indian Automobile Industry, Creating Customer Delight and
Shareholder’s Wealth; A Pride of India”
• Customer Obsession
• Fast, Flexible and First Mover
• Innovation and Creativity
• Networking and Partnership
• Openness and Learning
In other words, Marketing Environment refers to the external forces that influence a
company’s production of goods, effectiveness of its marketing and distribution
activities. In short, it’s the Macro environment that affects the operation and
performance of a company and on which the company has no control.
In order to achieve success the industry has to take measures to improve its labour
productivity and flexibility and capital efficiency. Quality manpower, improved
infrastructure and availability of raw materials will play a major role. Being
accessible to latest technology will ensure competitive advantage to the players in
the industry.
c. Pest-G analysis:
Pest analysis is the study of the external environment within which the businesses
operates. It can be expressed as:
P Political
E Economic
S Social
T Technological
➢ Political Factors:
✔ Regular slashing of tax rates by the Indian Government for companies
carrying in-house research and development activities
✔ In 1991, the Indian Automobile sector was opened up Foreign Direct
Investments (FDI)
✔ Launch of Automotive Mission Plan (AMP) by the Indian Government
➢ Economic Factors:
✔ Steady economic policies by the Indian government and incentives
provided by the respective state governments
✔ Attractive market prompting entry of competitors by way of partnering
with Indian firms, joint ventures and technology tie-ups
✔ India has established itself as a Manufacturing hub for OEM’s, cars and
various automotive equipments
✔ Increasing local demand for high mileage four-wheelers
➢ Social Factors:
✔ Rapid urbanization and changes in lifestyles
✔ Skilled and Cost effective labour in India
✔ Indian consumer market is highly educated and well informed and
belongs to a price-sensitive segment and take their purchasing
decision on “value for money”
➢ Technological Factors:
✔ Advantage of technology transfer from Global companies helping to
develop the production process and the overall product as well
✔ The development of “Alternative Fuel” greater emphasis is laid on
development of Hybrid cars and they are making a quick entry into the
market
✔ NATRIP Network: A significant initiative by the Indian Government to
develop and enhance R&D and technological advancements
After 1991, the Indian Automobile Industry witnessed a remarkable growth. The
economy was opened up and attracted major global players. Currently MSIL is the
market leader in the four-wheeler segment with more than half the market share.
The analysis of four-wheeler segment brings out the major players and their
respective market share:
(Source)
http://india-reports.in/transitions/indian-auto-industry-%E2%80%93-joint-ventures/
TATA Motors:
It is India’s largest automobile company. It is a leader in the commercial vehicles
segments and ranks among the top three in the passenger car segment. In 2008,
TATA Motors unveiled “Tata Nano” which is arguably the cheapest four wheeler car
in the world. Over the years, the company has expanded and succeeded in
acquiring the latest engineering technologies by means of mergers and acquisitions
and is keen on developing it. The company is equally focused towards being eco-
friendly. The company certainly poses a major threat to MSIL.
b. Sales trend:
The graph below presents the respective competitor’s sales trends. HMIL posted its
record sales figure for the year and along with Tata Motors is strongly competing
with MSIL.
The above table shows that HMIL is successfully managing to increase its market
share in the Indian market as it managed to sell over 600,000 units in 2010 as its
models “i10”and “Santro” are among the top 6 best selling cars in India. Tata
motors too managed a sale of over 260,000 units in 2010 and its model “Indica” is
among the top 3 best selling cars in India.(6)
c. Market share:
Among the competitors of MSIL, only HMIL and Tata Motors hold respective market
share with 18% and 14% respectively. Though the competitors are relatively new in
the industry when compared to MSIL, they are growing fast.
d. Target market:
A target market is a group of customers towards which the company has considered
to focus its products and marketing efforts. Each company targets its various
products to different segments of the market. The table below lists some of such
products where a Demographic segmentation is done on the basis of Income:
Bran
Models Target Market
d
Maruti 800, Alto, Estilo
Tata Nano, Indica Lower Income group where the purchase decision is highly influenced
by the price
Hyund
Santro
ai
Maruti Swift Dzire, SX4 Middle Income group where the purchase decision is decided upon
value for money attitude
Tata Indigo, Manza
Hyund i10, i20, Accent,
ai Verna
Maruti Kizashi
High Income Group consisting of Top-Level Managers who prefer luxury
Hyund and brand image over price
Sonata
ai
b. Market share:
MSIL hold lion’s share of the 4-wheeler segment of the Indian Automobile Market
with more than 51% of the market under its belt. It has done well to maintain its
leader’s position with launches of attractive car models in the market. MSIL’s “Alto”
is the best-selling car in India followed by “Wagon-R”.
c. Business sector:
i. Strengths:
1. Strong brand name in the market and achieved strong
customer confidence
2. Extensive distribution and after-sales service network
3. Maruti Suzuki cars are low on maintenance costs
4. Products designed with differentiating features
ii.Weaknesses:
1. Fewer exports and lack of experience in foreign markets
2. Customers not willing to purchase the upper segment
models
3. Fewer “diesel engine” cars when compared to
competitors
4. Heavy import tariff for fully built imported vehicles
iii.Opportunities:
1. Government subsidies
2. Attract prospective buyers from the two-wheeler segment
3. Attractiveness and growth of the diesel cars, more models
should be introduced
4. Aim to attract higher middle class segment of the society
iv.Threats:
1. Increasing competition from local and foreign companies
in the market
2. Product substitution: Tata Nano or two-wheelers
3. Increasing competition from Used car dealers
4. Threat from Chinese car manufacturers entering into the
country with cheaper technology
a. Market Segmentation:
The criteria used for market segmentation here is “Profile Criteria”. It is a more
customer-related method of segmenting the market and includes using
demographic methods (age, gender etc), socio-economic (income level, social
status etc) and geographic location (country, state, city etc).
b. Targeting:
i. Market Attractiveness:
To decide which market to target a company has to measure the attractiveness of
selected markets. MSIL too assessed the market attractiveness considering the
below factors:
1. Undifferentiated Marketing
2. Differentiated Marketing
3. Focused/Concentrated Marketing
4. Customized Marketing
MSIL has adopted a Focused Marketing approach and created segments within a
large market to promote its cars. The table above shows the products and to which
market/group they are targeted towards.
c. Positioning:
“Positioning is the process of reaching market segments. It distinguishes a branded
product or service from its competitors so that it becomes the preferred brand in
defined segments of the market. Positioning can focus on new brands but may also
involve repositioning existing brands.”
i. Perceptual Mapping:
High Cost
MS Kizashi
Hyundai Sonata
Hyundai i20
MS SX4
Hyundai Verna
MS Swift Dzire
Lower Higher
Hyundai i10
Benefits
Benefits
Tata Indigo
Tata Indica
Hyundai Santro
MS Zen Estilo
MS Alto
MS 800
Tata Nano
Low Cost
e. Growth Strategy:
Majority of organizations consider “Growth” as a primary objective. However, there
are different forms of growth and the company must ensure that the right growth
goals are selected. Growth can be:
A very essential tool that helps businesses decide their product and market growth
strategies is the “Ansoff Matrix”. It shows that the businesses growth decisions
depend on whether it chooses to market new or existing products in new or existing
markets.
Marketing Mix is “The mix of controllable marketing variables that the firm uses
to pursue the desired level of sales in the target market. The most common
classification of these factors is the four-factor classification called the “Four-Ps”
– price, product, promotion, and place (or distribution).”
The Marketing Mix of MSIL was formed considering the below four factors:
a. Product Mix:
“Product Mix is the composite of products offered for sale by a firm or a business
unit.”
– American Marketing Association
The above segmentation table shows the Product Portfolio of MSIL divided over 4
segments based on price ranging from “Segment A” basic level vehicles to
“Segment D” vehicles catering to premium segments.
i. Product Levels:
When customers purchase products (vehicles) they merely do not buy the simple
functional product, there are certain complexities involved in the purchase. In this
reference, the product is divided into 3 levels:
1. Core Product: This consists of the real benefit or service.
In case of MSIL the core product consists of basic feature
required in a car. For example, the basic purpose of a car
is to provide transportation and the core product suffices
the bare minimum required.
2. Actual Product: This consists of the physical good that
provides the expected benefit. For example, the
additional features, design, engine, seats, boot space etc.
3. Augmented Product: This consists of the actual product
plus all other factors that are required to support the
purchase. For example, finance, delivery, warranty, after
sales services etc.
“The four stages (introduction, growth, maturity, and decline) into one of which the
sales of a product fall during its market life.”
1. Introduction stage:
At this stage MSIL seeks to create product awareness and to develop a market for
the product. The products at this stage are “A-Star” and “Swift Dzire”. At this stage:
➢ Maintain Product quality level and branding
➢ Pricing is penetration pricing to build market share. Dzire an up-market sedan
(on-road price from Rs 580,000).
➢ Selective distribution restricted to urban centers initially until consumers
accept the product.
➢ Promotion is to build product awareness. A-Star ad campaign “Stop at
nothing” educating customers of its attractive features.
1. Growth stage:
At this stage MSIL seeks to build brand preference and attempt to increase its
market share. The cars at the Growth stage are “Swift” and “Zen Estilo”. At this
stage:
➢ The product quality is maintained and additional features are added. The new
“Swift” comes with CVT automatic transmission, built in hand controls.
➢ Price generally is maintained at same levels. MSIL increased the price of
“Swift” only on account of increased production costs.
➢ Distribution of these models is made extensive as its demand increases
among the customers.
➢ Initially “Swift” was targeted towards the youth but now it is widely marketed
towards the elder customer base also with the ad campaign “Young at heart”.
1. Maturity stage:
At this stage the strong growth in sales diminishes as the competitors come up with
similar products. MSIL currently aims to defend its market share. The products
currently at Maturity stage are “Alto” and “Wagon-R”. At this stage:
➢ “Alto” and “Wagon-R” now come with the environment friendly “K-Series”
engine that is highly fuel efficient and “Alto” also comes equipped with a CNG
kit. These enhanced features are to differentiate the products from the
competitors.
➢ Prices are lowered because of increased competition. MSIL reduced the price
of “Alto” in-order to boost sales.
➢ MSIL emphasized on product differentiation. The “Wagon-R” looks were
refreshed and the “Alto” was reintroduced with “2-cylinder engine” and “1-
litre K-Series engine” models.
➢ Promotion emphasized on product differentiation with the “Alto” and
“Wagon-R” coming with environmental friendly engines, with environment
friendly engines, promotion also highlighted on MSIL cars being the “best
resale value cars”.
1. Decline stage:
“Maruti 800” and “Maruti Esteem” are the products that have reached the decline
stage. At this stage the sales decline and the firm is left with options to:
➢ Maintain the product; this explains what is being done with “Maruti 800”. It is
not just a car for Maruti Suzuki it is more of a brand image for them and
would not certainly look to remove it from the market.
➢ Harvesting the product; MSIL has removed “Maruti 800” from nearly 13 big
cities in India and they are possibly looking to attract a particular niche
segment.
➢ Discontinue the product; MSIL has discontinued production and distribution of
“Esteem”.
a. Price
b. Place
c. Promotion
d. (People, processes, physical evidence)
3. Conclusion: