Maruti India Limited Strategic Evaluation Ankit Jhamtani
Mr. R.C Bhargava Mr. Shinzo Nakanishi
Chairman Managing Director
•The time when scooters had a waiting period.
•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
•MUL launched its first car Maruti800 on December
14, 1983 at initial price of Rs. 47,500.Mr. Harpal
Singh, the first Maruti owner, still drives the car after
Vision and Core Values
“The leader in the Indian automobile Industry,
Creating Customer Delight and Share holder’s Wealth;
A pride of India”
• Customer Obsession.
• Fast, Flexible, & Fast Mover.
• Innovation and Creativity.
• Networking and Partnership.
• Openness and Learning
1983 “The people’s car is born”.
1987 Maruti goes overseas, exported 500 cars to Hungary.
1990 Launched India’s first sedan. (Esteem).
1992 Suzuki Motor Company increases stake in MUL to 50 %.
1993 Launched Maruti Zen “the world’s car”.
1996 1.5 million vehicles rolled out.
2000 JD power customer Satisfaction index Award.
2001 JD power customer Satisfaction index Award.
2001 Maruti versa launched , Maruti true value launched.
2002 JD power customer Satisfaction index Award.
2002 Maruti finance and insurance launched.
2002 Disinvestment, Suzuki Motor Company increases stake in MUL to 54.5%.
2003 Maruti gets listed on BSE and NSE (IPO Oversubscribed 11.2 times).
2003 JD power customer Satisfaction index Award.
2004 JD power customer Satisfaction index Award.
2005 Launched Swift.
2005 JD power customer Satisfaction index Award.
2006 JD power customer Satisfaction index Award.
2007 Launched SX4 Luxury sedan and SUV Grand Vitara.
2007 JD power customer Satisfaction index Award
2008 World premier of concept A-Star at Auto Expo , New Delhi
2008 JD power customer Satisfaction index Award.
2008 Launched M800 LPG.
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.
•A special cell was made to make direct dealing of Gypsy with the
government & the army.
The changing Auto Industry
After year 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
2. Banks and other financing companies started providing car loans at reasonable
•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.
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.
Maruti Suzuki was far behind in luxury and SUV car ,the other player like GM, TATA,
Mahindra , Mitsubhisi and Toyota were already established in the market ,so replacing
them was not easy.
THE RESPONSE S 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. advertisement 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
•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
plus -odd dealers of the company were asked to strengthen their manpower, increase the
salaries of their sales agents, and offer them better incentives.
• '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.
THE RESPONSE S (continued)
•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
•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.
Maruti Suzuki’s Current Profile
A. Maruti Suzuki India is India's leading maker of automobiles.
B. A partnership with Suzuki, the company makes models such as the Alto, Gypsy, and Swift.
One of its its newest models, the Swift Dzire, is a compact, entry-level sedan that offers a
variety of modern features.
C. Maruti Suzuki also exports selected models to many European markets.
D. Annual capacity of about 650,000 cars.(Gurgaon, Delhi, Manesar)
E. Maruti Suzuki enjoys just over a 50% share of its domestic market.
"I believe in Dr. C. K. Prahlad's concept of finding value at the bottom of the
pyramid. We are trying to increase market penetration through several
innovative schemes. There is still a very large segment of our population
which cannot afford a car."
- Jagdish Khattar, Former Managing Director, MUL, in 2004.
Maruti Suzuki’s Key Success Factors(KSF’s)
A. Technology-Related KSF’s
1. R&D facilities and Japanese collaboration.
2. Suzuki internationally known for Small cars
3. Launch of World class quality cars like
A- STAR and SPLASH
B. Manufacturing-Related KSF’s
1. Designing cars best suited for Indian market.
2. Cost leadership in the market due to efficient value chain and manufacturing
C. Distribution-Related KSF’s
1. The record sales performance was affected through the Company's vast
2. Car sales outlet increased to 600 covering 393 cities.
3. There are 265 ‘Maruti True Value’ outlets spread across 166 cities,
which are engaged in the sale, purchase and exchange of pre-owned
cars. ‘Maruti True Value’ is the largest organised pre-owned car sales
network in India.
D. Marketing-Related KSF’s
1. Full range of cars- from entry level Maruti 800 & Alto to stylish hatchback A- star, Swift,
Wagon R, Estillo and sedans DZire, SX4 and Sports Utility vehicle GrandVitara.
2. Communication through advertisement is totally to the need of indian culture
3. Pan-India service network.
E. Skills and Capability -Related KSF’s
1. The service network had a total of 2,628 service outlets including dealer workshop
as well as Maruti Authorised Service Stations, covering 1220 cities.
Maruti Suzuki’s Brand Equity
A. Authorized Service Stations
Maruti is one of the companies in India which has unparalleled service network. To ensure
the vehicles sold by them are serviced properly Maruti has 2628 listed Authorized service
stations and 30 Express Service Stations on 30 highways across India.
B. Maruti Insurance
This service started as a benefit or value addition to customers and was able to ramp up
easily. By December 2005 they were able to sell more than two million insurance policies
since its inception.
C. Maruti Finance
To promote its bottom line growth, Maruti launched Maruti Finance in January
2002.Maruti claims that its finance program offers competitive interest rates to its
customers, which are lower by 0.25% to 0.5% from the market rates.
D. Maruti TrueValue
Maruti True service offered by Maruti Udyog to its customers. It is a market place for
used Maruti Vehicles. One can buy, sell or exchange used Maruti vehicles with the help
of this service in India.
Maruti started a new initiative under the brand name Maruti Genuine Accessories to offer
accessories like alloy wheels, body cover, carpets, door visors, fog lamps, stereo systems,
seat covers and other car care products. These products are sold through dealer outlets
and authorized service stations throughout India.
F. N2N Fleet Management
N2N is the short form of End to End Fleet Management and provides lease and fleet
management solution to corporate. This fleet management service include end-to-end
solutions across the vehicle's life, which includes Leasing, Maintenance, Convenience
services and Remarketing.
G. Maruti Driving School
As part of its corporate social responsibility Maruti Udyog launched the Maruti Driving
School in Delhi. Later the services were extended to other cities of India as well. These
schools are modelled on international standards, where learners go through classroom and
practical sessions. Many international practices like road behaviour and attitudes are also
taught in these schools. Before driving actual vehicles participants are trained on
1. Brand Loyalty
2.Service and Distrbution Weakness
Network 1. Changing Customer
3. Japanese Technology Preferences.
2. Appears Daddy’s Brand.
1. Attraction Of Youth.
1. Foreign Brands.
2. Increasing Middle Class
3.Export Small Cars.
Competitive Advantage of MUL
•Dealer network across the country 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
•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.
•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 models.
•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.
Small Cars MUV’s
Model of Competitive Environment
FIRMS IN OTHER INDUSTRIES OFFERING
SUPPLERS RIVALRY AMONG Bargaining
Bargaining Industry Power
POTENTIAL NEW ENTRANTS
1. Industry Rivalry
A. High Fixed costs
When total costs are mostly fixed costs, the firm must produce capacity to attain
the lowest unit costs. Since the firm must sell this large quantity of product, high
levels of production lead to a fight for market share and results in increased
rivalry. The industry is typically capital intensive and thus involves high fixed
B. Slow market growth
In growing market, firms can improve their economies. Though the market growth
has been impressive in the last few years (about 8 to 15%), it takes a beat in
even slight economic disturbances as it involves a luxury good. Aggressive
pricing is needed to sustain growth in such situations.
C. Low switching costs
Free switching between products makes it difficult for the companies to capture
customers. Since, the purchase of the product involves a good amount of
2. Threat of substitutes
A. Increasing Two wheelers/Motor Cycle Market, Because of rising fuel prices.
B. Public Transportation.( Local trains, Metros, Buses)
Maruti ‘s Advantage Price performance comparison favours heavily towards Maruti in most
product categories. Also the high availability and quality of services offered by Maruti gives
the customer a better trade-off.
3. Buyer Power
A. When buyer power is strong, the buyer is the one who sets the price in the market.
For Maruti , the sales volumes have shown increasing trend over past so many years.
B. Difficult to measure since repurchases are rare.
C. Buyers get incentives in the form of cost discounts and better after sales
4. Supplier Power
Critical Components General Components
and Few Suppliers. and various Suppliers.
High Supplier Low Supplier
Steel is a major input in this industry and so steel prices have a sharp and immediate impact
on the product price.
Substitute inputs are restricted to non critical or additional components like electronic gadgets
and interior design components.
The industry being capital intensive switching costs of suppliers Is high, other than steel as raw
material which is highly price sensitive and the firm may easily move towards a supplier with
5. Barriers to Entry / Threat of Entry
Encouragement of competition by the new policies and to avoid monopolistic
Liberal policies for foreign brands to enter into India.
Patents and Proprietary knowledge
Maruti’s R&D capability has evolved. Its contribution to global design projects has been
recognised, first with the Swift and now the Concept A-Star. Let us do more. Further, Maruti
Suzuki has been rated first in
customer satisfaction for eight years in a row. The same applies to the
dealer practices, supply chain, quality processes, information technology, parts operations and
Economies of scale
Economies of scale are becoming increasingly important as
competition is driving the profit margins to lower levels. Also being a capital
intensive industry economies of scale have important consequences
SUZUKI REDRAWS INDIA PLAN
Suzuki Motor Corp is, reportedly, rethinking its India plans in line with market dynamics.
Suzuki plans to rework its investment, product, marketing, and engineering strategies for
As a first step, the car major effected a major organizational revamp and is all set to pump
in an additional Rs 7,200 crore for upgrading Maruti Suzuki's marketing and research
facilities in the country.
The Rs 7,200-crore investment will add to the already earmarked Rs 9,000 crore,
expected to spruce up manufacturing facilities in India. Suzuki plans to up capacity to one
million units by year 2010. The Indian operations of the company are not anywhere near
Suzuki Motor Corp’s output numbers. Suzuki Motor Corp still produces 1.2 million
vehicles, while Maruti Suzuki is yet to reach even the million-unit mark.
Aimed at establishing spare parts depots, vehicle stockyards, and display showrooms for
the million units that will be produced in India, the revamp would also include the
company’s research and development and engineering functions being upgraded. The
company plans to set up a new research and development centre in the northern state of
Meanwhile, Maruti Suzuki has said that it has reported a 26.95 per cent increase in net
profit for the quarter ended September 30, aided by a double-digit growth in its domestic
market sales. The company posted a net profit of Rs 466.5 crore. While domestic sales
went up 17.8 per cent to 1,79,154 units, exports almost doubled to 15,171 units.
Source: The Hindu
Current and Future Market
Design small cars suitable for the Indian conditions as a
strategy to beat the stiff competition with the entry of
global auto makers.
Company would capitalise on Suzuki’s research and development
capabilities and internal resources to finance its expansion,
thereby cushioning itself from the higher interest rates and
borrowing costs and become cost competitive.
Company’s plan to stay away from the ultra low-cost segment.
Maruti Suzuki is looking to make India an exclusive base to
manufacture small cars for Europe.
Current Maruti Suzuki’s India
Maruti expects to grow 5-7 per cent in February 2009
Tuesday February 17, 2009
Maruti Suzuki India Limited (MSIL), after reporting the highest ever monthly sales in January this year, is
expecting a sales growth of between 5 and 7 per cent in February as well. The company increased its production
in January and is continuing the same this month, in order to meet growing demand. Its three hot selling models -
Maruti Swift touches 3 lakh sales mark
Tuesday February 17, 2009
Maruti Suzuki’s premium hatchback, the Maruti Swift, crossed the 3 lakh sales mark this week, becoming the fastest car
model to reach that milestone, in India. It took Maruti 3 years and 6 weeks to sell 3 lakh units of the Swift. Company
representatives said that an online club for all Swift owners, known as the ‘Swift Life’, is being set up.
Maruti Suzuki sales up 5.6 per cent in January; others go down
Tuesday February 3, 2009
After three months of declining sales, Maruti Suzuki has registered a growth of 5.6 per cent
in domestic sales in January 2009. The company sold 67,005 cars last month, as against 63,253
units in the corresponding period the previous year. Auto industry experts have attributed
this growth to the massive discounts offered by Maruti on its models.
Maruti ties up with Corporation Bank
Friday February 6, 2009
Following Hyundai’s tie-up with Syndicate Bank and Tata Motors’ tie up with the
State Bank of India, the country’s biggest carmaker – Maruti Suzuki too has decided
to work with the Corporation Bank to sell its cars. The bank announced yesterday
that it had tied up with Maruti to finance the company’s vehicles.
Maruti Suzuki Heads with a Green Approach
Maruti Suzuki defines 3R as reduce, reuse, and recycle. The company is in continuous process
of promoting 100% recyclable and reusable car parts. It also targets reducing fresh water
consumption and implement rain water harvesting.
Promoting Green Procurement
Maruti Suzuki is also encouraging its customers to act upon environment friendly approach.
Even at the supplier’s end the company conducts regular training and education programmes.
Along with the suppliers, such sessions are also held at all possible places comprising people
from all arenas of the car industry.
Promoting Energy Conservation
Excelling in spreading the need of eco-friendly car technologies for car industry, Maruti Suzuki
also promotes energy conservation. It does this through various initiatives, education, and
improvements on the shop floor. In recent years, the adoption of energy saving technologies
has increased tremendously.
Some Word About MARUTI SUZUKI INDIA LIMITED (MSIL)
"One of Maruti's great strengths is that we have internal resources to finance both R&D
expansion as well as capital investments. The higher interest rates,
and the risk of making large borrowings to finance capital costs, will not affect us.“
"The employees of Maruti, whether they are technicians, engineers or sales persons,
have fully imbibed the Japanese work culture of making constant improvement, and
placing the prosperity of the Company as the means of their own advancement.“
Maruti Suzuki is now very much on the global map, recently being rated as the fourth
most reputed automobile company in the world. This has happened because of the
Contribution of all the stakeholders of Maruti.
“Count on us”
+91 99861 38338