maruti udyog limted study of marketing strategies 1
DESCRIPTION
marketing strategyTRANSCRIPT
INTRODUCTION OF THE COMAPANY
MARUTI UDYOG LIMITED
Maruti is India's largest automobile company. The company, a joint venture
with Suzuki of Japan, has been a success story like no other in the annals of the
Indian automobile industry.
Today, Maruti is India's largest automobile company. This feat was achieved by
the missionary zeal of our employees across the line and the far-sighted vision
of our management.
The Company Mission:
To provide a wide range of modern, high quality fuel efficient vehicles in order
to meet the need of different customers, both in domestic and export markets.
The Company Vision:
We must be an internationally competitive company in terms of our products
and services. We must retain our leadership in India and should also aspire to be
among the global players.
Their focus is on:
Building a continuously improving organisation adaptable to quick
changes
Providing value and satisfaction to the customer
Aligning and fully involving all our employees, suppliers and dealers to
face competition
Maximising Shareholder's value
Being a responsible corporate citizen
1
At Maruti, they have a clear perspective on manpower. They see it as a unique
resource, in the sense that optimal productivity of other resources depends
largely on the way human resources are utilised. The basic philosophy of
management that underlies the Maruti culture is that all employees of the
company should be moulded into a team which then strives as one, to achieve
commonly shared company goals and objectives. To make this philosophy
tenable, the Company takes several initiatives. Inputs are sought from
employees at all levels. They believe that everyone should contribute to the
formulation of company policies, goals and objectives. Secondly, at Maruti,
they encourage leadership in the best sense of the word. According to us, a
leader is one who must be impartial, must have the ability to rise above his own
subjectivity, and, most importantly, must practice what he preaches.
They understand that the process of creating a sense of belonging that all
employees can identify with is a lengthy one. To ensure that this translates into
concrete reality, they have taken several simple but specific and well thought
out measures. The first step in this direction has been the introduction of a
common uniform for all employees. Another measure is the creation of a
common canteen where all employees have lunch, stand in common queues,
and sit on the same table. Common toilets, common transport and similar
facilities for all levels of employees are other measures that reinforce their
emphasis on genuine equality in the workplace.
At Maruti They do not believe in the notion of organisational hierarchies. As a
matter of fact, the management structure and systems in Maruti have been
designed to promote decentralisation of authority. Maruti has a horizontal
management structure with only four functional levels of responsibility to
facilitate quicker decision making.
Another focus area of the Maruti culture is the maintenance of a smoothly
functioning communication network. Maruti believes that communication
2
channels between labour and management cannot simply consist of having a
labour representative on the Board of the Company. They have faith in the
ability of labour to effectively participate in management and make constructive
suggestions. To encourage this, they ensure that there is a thorough
dissemination of information at all levels, through newsletters or via a letter
from the Chief Executive to all employees. Meetings with the Union are held
regularly, and programmes being contemplated by the Company are discussed
with the Union. The Sahyog Samiti, a collection of representatives of non-
unionised employees, training programmes in Japan, Quality Circles,
productivity-linked incentive schemes, and an ethos of discipline and teamwork,
all contribute to the Maruti culture.
Several measures of performance have made amply clear that Maruti has
established a truly healthy work culture. They have met all project and
performance targets since inception. Their productivity levels are constantly
improving. The Company has had good labour relations with employees from
the very beginning, and they have been successful in the export market. Yet, the
Maruti culture is one that does not believe in resting on its laurels. They adhere
to the spirit of Kaizen, which states that constant improvement is always
possible. The most basic tenet of productivity that they hold dear is that " Today
should be better than Yesterday and Tomorrow should be better than Today".
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.
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 (which had catapulted Japan
over USA to the status of the top auto manufacturing country in the world).
3
A licence and a Joint Venture agreement was signed between Government of
India and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in
Oct 1982.
The objectives of MUL then were:
Modernization of the Indian Automobile Industry.
Production of fuel-efficient vehicles to conserve scarce resources.
Production of large number of motor vehicles, which was necessary for
economic growth.
Core Value
Customer Obsession
Fast, Flexible and First Mover
Innovation and Creativity
Networking and Partnership
Openness and Learning
Vision
The leader in the India Automobile Industry, Creating Customer Delight and
Shareholder’s Wealth; A pride of India”
Technological Advantage
We have introduced the superior 16 * 4 Hypertech engines across the entire
Maruti Suzuki range. This new technology harnesses the power of a brainy 16-
bit computer to a fuel-efficient 4-valve engine to create optimum engine
delivery. This means every Maruti Suzuki owner gets the ideal combination of
power and performance from his car.
4
Our other innovation has been the introduction of Electronic Power Steering
(EPS) in select models. This results in better and greater maneuverability. In
other words, our cars have become even more pleasurable to drive.
Production/R&D
Spread over a sprawling 297 acres with 3 fully-integrated production facilities,
the Maruti Udyog Plant has already rolled out over 4.3 million vehicles. In fact,
on an average, two vehicles roll out of the factory every minute. And it takes on
an average, just 14 hours to make a car. More importantly, with an incredible
range of 11 models available in 50 variants, there's a Maruti Suzuki made here
to fit every car-buyer's budget. And dream.
Production Milestones
1st vehicle produced, December 1983
1,00,000 vehicles produced by August, 1986
5,00,000 vehicles produced by June, 1990
10,00,000 vehicles produced by March, 1994
15,00,000 vehicles produced by April, 1996
20,00,000 vehicles produced by October, 1997
25,00,000 vehicles produced by March, 1999
30,00,000 vehicles produced by June, 2000
35,00,000 vehicles produced by December 2001
40,00,000 vehicles produced by April, 2003
45,00,000 vehicles produced by April, 2004
5
AWARDS
2005
Number one in JD Power SSI for the second consecutive
year
Number one in JD Power CSI for the sixth time in a row -
the only car to win
it so many times
M800, WagonR and Swift topped their segments in the
TNS Total
Customer Satisfaction Study
Leadership in the JD Power Initial Quality Study - Alto
number one in its
segment for the 2nd time in a row, Esteem number one in
its segment for
the 3rd year in a row, Swift number one in the premium
compact segment
WagonR and Esteem top their segments in the JD Power
APEAL study
TNS ranks Maruti 4th in the Corporate Reputation
Strength (CSR) study
(#1 in Auto sector)-Feb 05
Maruti bagged the "Manufacturer of the year" award from
Autocar-CNBC
( 2nd time in a row)-Feb 05
First Indian car manufacturer to reach 5 million vehicles
sales
Business World ranks Maruti among top five most
respected companies in
6
India-Oct 04
Maruti ranked among top ten (Rank7) greenest companies
in India by
Business Today - Sep '04
2004
Maruti Suzuki was No. 1 in Customer atisfaction, No. 1 in
Sales Satisfaction No.1 in Product Quality (Esteem and
Alto) and No. 1 in Product Appeal (Esteem and Wagon R)
No. 1 in Total Customer Satisfaction (Maruti 800, Zen and
Alto)
Business World ranked us among the country's five most
respected companies
Business World ranked us the country's most respected
automobile company
Voted Manufacturer of the year by CNBC
Voted one of India's Greenest Companies by Business
Today-AC Nielson ORG-MARG
2003
Maruti 800, Maruti Zen and Maruti Esteem make it to the
top 10 automotive brands in "Most Trusted Brand survey
2003"
J D Power ranked 3 models of Maruti on top: Wagonr,
Zen and Esteem
Maruti 800 and Wagonr top in NFO Total Customer
Satisfaction Study 2003.
MUL tops in J D Power CSI (2001) for 4th time in a row
7
2001
MUL tops in J D Power CSI (2001) for 2nd time in a row:
another international first
2000
Maruti bags JD Power CSI - 1st rank; unique achievement
by market leader anywhere in the world
1999
MSM launched as model workshop in India; achieves
highest CSI rating.
Central Board of Excise & Customs awards Maruti with
"Samman Patra", for contribution to exchequer and being
an ideal tax assessee
1998
CII's Business Excellence Award
1996
Maruti wins INSSAN award for "Excellence in Suggestion
Scheme"
Awarded the Star Trading House status by Ministry of
Commerce
1994-95
Engineering Exports Promotion Council's award for
export performance
1994
8
Best Canteen award among Haryana Industries as part of
employee welfare
1992-93
Engineering Exports Promotion Council's award for
export performance
1991-92
Engineering Exports Promotion Council's award for
export performance
9
WHY MARUTI SUZUKI
The Quality Advantage
A car is an engineering product, only as good as the technology used to
make it. Actual users of our technology are saying something very clearly
Maruti Suzuki is No.1 in quality:
Maruti Suzuki owners experience fewer problems with their vehicles than any
other can manufacturer in India (J.D. Power IQS Study 2004). The Alto was
chosen No.1 in the premium compact car segment and the Esteem in the entry
level mid-size car segment across 9 parameters.
The J.D. Power APEAL Study 2004 proclaimed the Wagon R. No. 1 in the
premium compact car segment and the Esteem No.1 in the entry level mid-
size car segment. This study measures owner delight in terms of design,
content, layout and performance of vehicles across 8 parameters.
Maruti Suzuki has a sales network of 307 state-of-the-art showrooms
across 189 cities*, with a workforce of over 6000 trained sales personnel
to guide our customers in finding the right car. Our high sales and
customer care standards led us to achieve the No.1 nameplate in the J.D.
Power SSI study 2004. The SSI study measures sales satisfaction across 6
parameters: deal received, paperwork, dealer facility, salesperson, delivery
timing and delivery process. Maruti Suzuki has not only got the No.1
nameplate in the J.D. Power SSI study 2004, but also ranked way above
the industry average (Maruti Suzuki was at 784 while industry average was
at 760). What is significant is that it was ranked above Skoda, Ford,
Chevrolet, Mitsubishi and Hyundai.
To be really happy with the car you own, it should have a reliable service
network at hand and within easy reach. Their 1036 city strong service
10
network is equipped to service 20,000 vehicles a day. No wonder Maruti
Suzuki has been awarded the No.1 nameplate in customer satisfaction in
India for the fifth year in a row, a feat unprecedented for any automobile
market leader in the world.
In the J.D. Power CSI study 2004, Maruti Suzuki scored the highest across
all 7 parameters: least problems experienced with vehicle serviced, highest
service quality, best in-service experience, best service delivery, best in-
service experience, most user-friendly service and best service initiation
experience.
In fact, 92% of Maruti Suzuki owners feel that work gets done right the first
time during service. The J.D. Power CSI study 2004 also reveals that 97% of
Maruti Suzuki owners would probable recommend the same make of vehicle,
while 90% owners would probable repurchase the same make of vehicle.
A Buying Experience Like No Other
Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across
189 cities, with a workforce of over 6000 trained sales personnel to guide our
customers in finding the right car. Our high sales and customer care standards
led us to achieve the No.1 nameplate in the J.D. Power SSI Study 2004.
Quality Service Across 1036 Cities
In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7
parameters: least problems experienced with vehicle serviced, highest service
quality, best in-service experience, best service delivery, best service advisor
experience, most user-friendly service and best service initiation experience.
92% of Maruti Suzuki owners feel that work gets done right the first time
during service. The J.D. Power CSI study 2004 also reveals that 97% of Maruti
11
Suzuki owners would probably recommend the same make of vehicle, while
90% owners would probably repurchase the same make of vehicle.
One Stop Shop
At Maruti Suzuki, you will find all your car related needs met under one roof.
Whether it is easy finance, insurance, fleet management services, exchange-
Maruti Suzuki is set to provide a single-window solution for all your car related
needs.
The Low Cost Maintenance Advantage
The acquisition cost is unfortunately not the only cost you face when
buying a car. Although a car may be affordable to buy, it may not
necessarily be affordable to maintain, as some of its regularly used spare
parts may be priced quite steeply. Not so in the case of a Maruti Suzuki. It
is in the economy segment that the affordability of spares is most
competitive, and it is here where Maruti Suzuki shines. The recent Auto
car Survey conducted in August 2004 bears testimony to this fact. In the
Maruti Suzuki stable, the Omni has the lowest aggregate cost of spares
followed by the Maruti-800. The Maruti-800 has the cheapest spares of
any Indian car with a basket of just Rs. 23,422. In the Lower Mid-size
segment as well, price-consciousness is very high, where the cars have to
be not only affordable on purchase price but also need to combine quality,
drivability and have comfortable interiors. In this segment, the Maruti
Suzuki Versa has scored particularly well with the lowest cost of spares in
the segment. In the Upper Mid-size segment, the Maruti Suzuki Baleno has
the segment's lowest prices on a majority of the spares.
Lowest Cost of Ownership
12
To be really happy with the car one owns, it should be easy on the pocket
to buy and to run-which is why the cost of ownership is so important. And
here again, a Maruti Suzuki is a clear winner, as shown by the recent
J.D.Power CSI study 2004. It is clear that a Maruti Suzuki delights you
even when you run it for years. The 6 highest satisfaction ratings with
regard to cost of ownership among all models are all Maruti Suzuki
vehicles: Zen, Wagon R, Esteem, Maruti 800, Alto and Omni. They are
proud to have the lowest cost of operation / km (among petrol vehicles) -
the top 5 models are all Maruti Suzuki models: Maruti 800, Alto, Zen,
Omni and Wagon R.
Employee Quality Measures
Kaizen is based on the concept of making incremental improvements in our
products. It incorporates a series of continuous small and simple improvements,
which aim at involving employees at all levels.
The Suggestion Scheme is based on the same principle. Under this scheme,
employees are encouraged to make suggestions for improvement in any area of
our operation. Over 50,000 suggestions are received from employees every
year.
Maruti has won the First place in "Excellence in Suggestion Scheme Contest
2003", which is the 6th consecutive award won in as many years. This contest
is organized by Indian National Suggestion Schemes Association (INSSAN).
Since 1998 Maruti has won this award 10 times.
"Quality Circles" are groups of five to eight members from a particular work
area who work as a team to identify priorities and solve work related problems
in the area.
We believe that it is this unwavering commitment to quality that will lead to the
further growth of the organization as competition increases.
13
ISO 9001:2000
At Maruti, our approach to quality is in keeping with the Japanese
practice--"build it into the product". Technicians themselves inspect the quality
of work. Supervisors educate and instruct technicians to continually improve
productivity and quality. The movement of quality indicators is reviewed in
weekly meetings by the top management.
In 2001, Maruti Udyog Ltd became one of the first automobile companies
anywhere in the world to get an ISO 9000:2000 certification. AV Belgium,
global auditors for International Organization for Standardisation(ISO), certified
Maruti after a four day long audit, covering varied parameters like Customer
Focussed organisation, Leadership, Involvement of people, Process approach,
System approach to Management, Continual improvement, etc.
14
In May 1995, Maruti got ISO 9002 certification. The audit for this covered
quality assurance in production, installation, marketing and sales as well as after
sales services. We were also one of the first companies in the world to pioneer
ISO 9000 certification for our dealers.
In October 1993, MUL passed the Conformity Of Production (COP) Audit,
which is based on a European Union Directive. This authenticated our quality
systems and testing facilities for export to Europe.
Their emphasis on total quality has meant that today they are in a position to
guide vendors and dealers in establishing and consolidating their individual
quality systems. This commitment to quality has ensured a consistently
satisfying product and world-class sales and after-sales services.
TS16949:2002 - A new feather was added recently in Maruti’s cap in the field
of quality when the Quality Management System of its Press Shop & associated
functions (collectively termed as Press Function) got certification for
conformance to the requirements of TS16949:2002 standard.
The need for TS certification of Press Function had its genesis in the prestigious
project that Maruti earned for the supply of stamped panels to General Motors
India for one of its forthcoming models.
As a part of Quality system requirements, GM requires all its suppliers to be
certified to either ISO TS 16949 or QS 9000.
These standards address Quality System requirements, which are particularly
specific to the automotive industry and requires an organization to be in
compliance with ISO 9000 systems as a basic requirement. However, whereas
QS 9000 would become defunct and cease to exist after Dec 2006, TS 16949 is
going to be the standard of the future.
15
The TS 16949 standard, brought out by ISO in the year 1999, is an extension of
the ISO 9001:2000 standard that prescribes Quality management system
requirements that are specifically applicable to the automotive industry.
TS 16949 has gained high popularity and almost all major automobile players
across the globe including GM, Ford, Daimler Chrysler, Nissan, Honda are
embracing & promoting it.
ISO
9001:2000
THEORITICAL PERSPECTIVE
Consumer is strictly, the ultimate consumer of a product, the ultimate user of a
product; the person who derives the satisfaction or the benefit offered. The
'consumer' is not necessarily the customer, since there are often 'customers' in
the buying/ distribution chain; moreover, the consumer is frequently not the
person who makes the buying decision; for instance, in the case of many
household products, where the housewife may make the purchase but
consumption or use is by the whole family. 'Consumer' is not normally applied
to the purchase of industrial goods and services where the customer is usually a
16
corporate body. Nevertheless, consumable goods are sold to industry for
corporate purposes and the consumers of these goods can be identified for
marketing practice.
Consumer behavior is the study of buying habits or patterns of behaviour of
consuming public either in general or in specific groups.
THE BUYING PROCESS
The complexity inherent in understanding consumer behaviour has led to
the construction of models of the buying process which indicate the stages
through which the consumer passes from the time he or she first becomes
aware of a need for a product or service to the time when a product is
purchased, a brand selected, and the consumer evaluates the success of his
purchase decides whether to buy that particular product and / or brand
again. It the same time, such models usually indicate the social and
psychological forces which shape the potential buyer's action at each stage
in the process. The two principal aims of such model building are the
prediction of future behavior based on measurement of relevant variable
and the explanation of this behavior in terms of theoretically relevant
constructs.
17
The starting point for understanding the buyer is the stimulus-
response model shown below
Marketing
stimuli
Other stimuli
Buyer's Character
istics
Buyer's decision process
Buyer's decisions
Product
Price
Place
Promotion
Economic
Technological
Political
Cultural
Cultural
Social
Personal
Psychological
Problem recognition
Information search
Evaluation decision
Post-purchase behavior
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount
Stages in Buying Decision Process
Need
recogniti
on
Informati
on search
Evaluation
of
alternatives
Purchas
e
decision
Post-
purchase
behavior
The consumer passes through five stages : Problem recognition
information search, evaluation of alternatives purchase decision and post-
purchase behavior. Clearly the buying process starts long before the actual
purchase and has consequences long after the purchase.
This model implies that consumers pass through all five stages in buying a
product. But this is not the case, especially in low-involvement purchase.
Consumers may skip or rreverse some stages. Thus a woman buying her
regular brand of toothpaste goes directly from the need for toothpaste to
18
the purchase decision, skipping information search and evaluation.
However, we have already used the model in above, because it captures the
full range of consideration that arise when a consumer facer a highly
involving new purchase. We will allude again to Linda Brown and try to
understand how she became interested in buying a laptop computer and the
try to understand how she became interested in buying a laptop computer
and stages she went through to make her final choice.
Major Factors Influencing Buying behavior
Cultural
Social
Culture
Subculture
Social Class
Reference group
Family
Roles and statuses
Personal
Age and life-cycle
stage
Occupation
Economic circumstan
ces
Lifestyle
Personality and self-concept
Psychological
Motivation
Perception
Learning
Beliefs and attitudes
Buyer
19
Rogers model for the adoption and diffusion of innovations Innovation
Adoption CURVE
The innovation adoption curve of Rogers is a model that classifies adopters of innovations into
various categories, based on the idea that certain individuals are inevitably more open to
adaptation than others. Is is also referred to as Multi-Step Flow Theory or Diffusion of
Innovations Theory.
Innovators
Brave people, puling the change. Innovators are very important communication.
Early Adopters
Respectable people, opinion leaders, try out new ideas, but in a careful way.
Early Majority
Thoughtful people, careful but accepting change more quickly than the average.
Late Majority
Skeptic people, will use new ideas or products only when the majority is using it.
20
Laggards
Traditional people, caring for the "old ways", are critical towards new ideas and will only
accept it if the new idea has become mainstream or even tradition.
The diffusion of innovations curve (innovation adoption curve) of Rogers is useful to
remember that trying to quickly and massively convince the mass of a new controversial idea
is useless. It makes more sense in these circumstances to start with convincing innovators and
early adopters first. Also the categories and percentages can be used as a first draft to estimate
target groups for communication purposes.
Diffusion research focus was on five elements: 1) the characteristics of an
innovation which may influence its adoption; 2) the decision-making process
that occurs when individuals consider adopting a new idea, product or practice;
3) the characteristics of individuals that make them likely to adopt an
innovation.
21
TARGET MARKETING
Target Marketing involves breaking a market into segments and then
concentrating your marketing efforts on one or a few key segments.
The beauty of target marketing is that it makes the promotion, pricing and
distribution of your products and/or services easier and more cost-effective.
Target marketing is the selection of customers you wish to service. The
decisions involved in it are
Which segments to target
How many products to offer
Which products to offer in which segments
There are three steps to targeting:
Market segmentation
Target choice
Product positioning
One of the first things you need to do is to refine your product or service so that
you are NOT trying to be 'all things to all people’.
Next, you need to understand that people purchase products or services for three
basic reasons:
To satisfy basic needs.
To solve problems.
To make themselves feel good.
22
The next step in creating an effective marketing strategy is to zero in on your
target market.
Target marketing is one of corporate America's most effective business
strategies. The idea is to increase sales by first identifying, and then targeting
smaller, yet more profitable customer groups within the total market.
Four Ways to Identify Target Markets
1. Geographic: The location, size of the area, density, and climate
zone of your customers.
2. Demographics: The age, gender, income, family composition and
size, occupation, and education of your customers.
3. Psychographics: The general personality, behavior, life-style, rate
of use, repetition of need, benefits sought, and loyalty characteristics
of your customers.
4. Behaviors: The needs they seek to fulfill, the level of knowledge,
information sources, attitude, use or response to a product of your
customers.
One of the best ways to identify your target market is to look at your existing
customer base. Who are your ideal clients? What do they have in common? If
you do not have an existing customer base, or if you are targeting a completely
new audience, speculate on who they might be, based on their needs and the
benefits they will receive. Investigate competitors or similar businesses in other
markets to gain insight.
TARGET MARKETING
Who are your best customers? Where should you direct your marketing
activities?
23
Where and how should you allocate your advertising and promotional
efforts?
Target Marketing, provides Focus for your business. It helps to establish
critical Operational goals and defines what must be done to achieve them
What Customers Want
Marketing is more than an activity, it is an attitude
Instead of trying to get customers to buy what the firm likes to make,
or happens to have on hand, the marketing oriented firm tries to
produce or sell what its customers want which can be sold at a
profit.
Do not simply throw out everything that you now have and replace goods
or production machinery with completely new items.
Customer Attitudes
For a long time, people have believed that advertising can be used to
change people's minds about what they want. This is an incredibly
difficult process at best, and an extremely expensive one. Because of
these two factors, it is a process that smaller firms simply cannot afford to
pursue. Instead, it is much more productive for any size firm to tune in to
target customer attitudes as they currently exist. Once they have
identified the actual prevailing attitudes, they can begin to organize
company resources needed to constructively address and satisfy these
attitudes the key question is,
"What are the existing customer attitudes?"
With this as an objective, developing an understanding of existing
customer attitudes becomes essential, and their identification becomes an
24
important part of the marketing process. Once these customer attitudes,
needs or preferences are identified, the entire firm can then organize itself
to satisfy these needs as completely and efficiently as possible.
Target Marketing
25
Comparison of Automobile And Consumer Durable At Dealership Level
S.No Attributes Automobile Consumer Durables
1 Turnover High Low
2 Margin 8%-12% 2%-4%
3Penetration Level
More in small or large towns or cities
More in Rural areas or in cities also
4
Training of Sales Executives
Executives get Training after every specific period
As such no training
5 Supply-ChainCo->Dealer->Customer
Co->Distributor->Dealer >Customer
6Discount Margin Cartel
Depends on Dealer To Dealer
7 CSRProper well organized
Only Sales man is there to serve the customer
8 ASSCustomer get 3free service
Customer have to go at manufactured level
9Brand Association
Customer first choice is more pertinent
Customer can change his or her choice
10 Payment Instantaneous Payment
More focus on Finance &
26
Installment
11Post-Sales Follow UP More Very Less
12Buying Procedure
Customer can wait for new model Instant buying
13 Database Large Few
14Brand Transition Single-Tier Multi-Tier
15 Advertisement
Parent Company & dealer both give advertisement
Only from Parent Company
16Loyality Programs Yes No
17
Customer Satisfaction Index
Well- Defined & Organized None
18 PromotionFree Service Camps None
19Customer Retention More Very Less
20 Maintenance
Only free service which customer can extend upto 4 years(first 2yr are free)
Annual Maintenance Contract (AMC)
27
MARUTI CULTURE
Their employees are their greatest strength and asset. It is this underlying
philosophy that has moulded their workforce into a team with common goals
and objectives. Their Employee-Management relationship is therefore
characterized by:
Participative Management.
Team work & Kaizen.
Communication and information sharing.
Open office culture for easy accessibility
To implement this philosophy, they have taken several measures like a flat
organizational structure. There are only three levels of responsibilities ranging
from the Board Of Directors, Division Heads to Department Heads. Other
visible features of this philosophy are an open office, common uniforms (at all
levels), and a common canteen for all.
This structure ensures better communication and speedy decision making
processes. It also creates an environment that builds trust, transparency and a
sense of belonging amongst employees.
For Investors:
Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, has
been the leader of the Indian car market for about two decades. Its
manufacturing plant, located some 25 km south of New Delhi in Gurgaon, has
an installed capacity of 3,50,000 units per annum, with a capability to produce
about half a million vehicles.
The company has a portfolio of 11 brands, including Maruti 800, Omni,
premium small car Zen, international brands Alto and WagonR, off-roader
28
Gypsy, mid size Esteem, luxury car Baleno, the MPV, Versa, Swift and Luxury
SUV Grand Vitara XL7.
In recent years, Maruti has made major strides towards its goal of becoming
Suzuki Motor Corporation's R and D hub for Asia. It has introduced upgraded
versions of WagonR Zen and Esteem, completely designed and styled in-house.
Maruti's contribution as the engine of growth of the Indian auto industry, indeed
its impact on the lifestyle and psyche of an entire generation of Indian middle
class, is widely acknowledged. Its emotional connect with the customer
continues.
Maruti tops customer satisfaction again for sixth year in a row according to the
J.D. Power Asia Pacific 2005 India Customer Satisfaction Index (CSI) Study.
The company has also ranked highest in India Sales Satisfaction Study.
The company's quality systems and practices have been rated as a "benchmark
for the automotive industry world-wide" by A V Belgium, global auditors for
International Organisation for Standardisation.
In keeping with its leadership position, Maruti supports safe driving and traffic
management through mass media messages and a state-of-the art driving
training and research institute that it manages for the Delhi Government.
The company's service businesses including sale and purchase of pre owned
cars (TrueValue), lease and fleet management service for corporates (N2N),
Maruti Insurance and Maruti Finance are now fully operational.. These
initiatives, besides providing total mobility solutions to customers in a
convenient and transparent manner, have helped improve economic viability of
The company's dealerships.
The company is listed on Bombay Stock Exchange and National Stock
Exchange.
29
MUL is a Board-managed company. Currently the directors on the Board are:
Mr Shinzo Nakanishi, Chairman
Mr Jagdish Khattar, Managing Director
Mr Hirofumi Nagao, Joint Managing Director
Mr Shinichi Takeuchi, Joint Managing Director
Mr Kinji Saito, Director (Marketing and Sales)
Mr Osamu Suzuki, Director
Mr R C Bhargava, Director
Mr S V Bhave, Director
Mr Kumar Mangalam Birla, Director
Mr Amal Ganguli, Director
Ms Pallavi Shroff, Director
Mr Manvinder Singh Banga, Director
30
OBJECTIVE OF THE COMPANY
Maruti’s marketing objective is to continually offer the customer new
products and services that:
Reduce the customer’s cost of ownership of their cars; and
anticipate and address the customer’s needs and preferences in all
aspects and stages of car ownership, to provide what they refer to as
the “360 degree customer experience.”
They sell ten models with more than 50 variants in segments A, B, C, and
utility vehicle segment of the Indian passenger car market. Of these,
they manufacture nine models and import the Grand Vitara as a
completely built unit from Suzuki in Japan. Their models and variants
are designed to address the changing demands of the market and are
periodically upgraded in technology, styling and features. To take
advantage of the brand recognition associated with their products,
they retain the brand name of the product through various stages of
product upgrades over time. For example, the version of the Maruti
800 brand currently sold in the market is a significantly upgraded
version, in terms of technology, design and styling, of the Maruti 800
launched in 1983.
A Maruti 800
A OMNI
B Zen
B Wagon R
B Alto
C Esteem
C Baleno
31
C Versa
C SWIFT
Utility Vehicle GYPSY KING
Utility Vehicle GRAND VITARA
BALENO
WAGON R
32
ESTEEM
MARUTI 800
33
NEW ALTO
OMNI
34
SWIFT
VERSA
ZEN
35
36
RESEARCH METHODOLOGY
The nature of the project work has been exploratory as no hypothesis, is
taken to be tested. Though the conclusions drawn could be taken as the
hypothesis and further tested by the research work undertaken in the
relevant field. The reason for choosing the exploratory research design
is the fact the project report has been primarily based upon the
secondary sources of data and whose authenticity could be assured of.
The reluctance of the company's personnel in parting with much of
information led the project report to be based substantially on the
secondary source of data. The sources of data used in data collection are
the following:
Primary sources
In order to gather information about the various products, I personally
visited a number of retail markets and collected data pertaining to the
prices of the products offered. The market visits were useful in knowing
the comparative prices and quality of the offered brands vis-à-vis the
competitive brands. Detail regarding the packaging of the products were
collected were collected and I also inquired about the various sales
promotion schemes followed by the three companies.
By interviewing these retailers valuable information was collected. I
inquired from them about their marketing advertising and distribution
strategies.
37
Secondary sources
Information was collected from secondary sources such as public
libraries, newspapers, business magazines.
Beside these the use of Internet was also made in collecting relevant
information. The data collected from the above mentioned sources has
been adequately structured and used at appropriate places in the report.
This particular way of data collection was used because of its low cost
(except data collected through surfing the internet) and less time
consumption.
The information gathered included:
Their annual reports (Procter & Gamble and Johnson and
Johnson).
Pamphlets.
Posters.
Press clippings.
News releases.
Newsletters.
Pictures.
38
FINDINGS OF THE STUDY
PRICES OF MARUTI PRODUCTS
Car market leader Maruti Udyog Limited has announced a marginal increase in
price of certain models. The increase, which comes into effect from today,
varies from 0.17 percent to 1.47 percent.
The price increase is due to rise in input costs and freight costs, which
increased following the rise in oil prices. In this phase, the company has
decided to pass on only a part of the increase in costs to the customers.
There is no change in the prices of Swift, Zen, Baleno (Vxi) and WagonR
(Petrol).
Ex-Showroom Prices in Delhi (in Rs)
Model New Old IncreaseChange
%
M800 Std 191646 191146 500 0.26%
M800 Std Ac 213062 212562 500 0.24%
Alto Std 231585 231085 500 0.22%
Alto Lx 265262 264762 500 0.19%
Alto Lxi 283878 283378 500 0.18%
Omni Cargo LPG 194725 192725 2000 1.04%
Omni Cargo 213706 213206 500 0.23%
Omni (Eight Seater) 221268 220768 500 0.23%
Omni LPG 230388 227388 3000 1.32%
39
Esteem Lx 445968 444968 1000 0.22%
Esteem Lxi 476223 475223 1000 0.21%
Esteem Vxi 511520 510520 1000 0.20%
Baleno Lxi 576173 575173 1000 0.17%
Versa Dx 433575 432575 1000 0.23%
Versa Dx2 471779 470779 1000 0.21%
Versa Std 360182 359182 1000 0.28%
WagonR Lx LPG 345106 340106 5000 1.47%
WagonR Lxi LPG 373160 368160 5000 1.36%
40
ORGANISATION STRUCTURE AT MUL
Maruti Udyog ltd. Has a flat organisation structure with a maximum of three
levels.
Head office
Head office
MD
MFG FIN OTHER
DIRECTOR N CONTROLLER GM DGMS AGMS
GM/ DGMS DGMS AGMS MGRS/AMS
MGRS/AMS MGRS/AM SR GM/EX
ENGINEERS(EX) SR. EX./EX TRAINEES
J.E. (TRAINEES)
41
THE PRODUCTION PROCESS AT MARUTI
42
STEEL COILS
BLANKING
PRESSING
WELDING
PAINTING
ASSEMBLY
VEHICLE INSPECTION
TEST RUN
SUPPLY & DISPATCH
FROM VENDOR
S
FROM VENDOR
S
FROM VENDOR
S
INTERNATIONAL BUSINESS
In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since
its first export in 1986. Europe is the largest destination of Maruti’s exports and
coincidentally after the first commercial shipment of 480 units to Hungary in
1987, the 300,00 mark was crossed by the shipment of 571 units to the same
country. The top ten destinations of the cumulative exports have been
Netherlands, Italy, Germany, Chile, U.K., Hungary, Nepal, Greece, France and
Poland in that order.
The Alto, which meets the Euro-3 norms, has been very popular in Europe
where a landmark 200,000 vehicle were exported till March 2003. Even in the
highly developed and competitive markets of Netherlands, UK, Germany,
France and Italy Maruti vehicles have made a mark. Though the main market
for the Maruti vehicles is Europe, where it is selling over 70% of its exported
quantity, it is exporting in over 70 countries.
Maruti has entered some unconventional markets like Angola, Benin, Djibouti,
Ethiopia, Morocco, Uganda, Chile, Costa Rica and El Salvador. The Middle-
East region has also opened up and is showing good potential for growth. Some
markets in this region where Maruti is, are Saudi Arabia, Kuwait, Bahrain,
Qatar and UAE.
The markets outside of Europe that have large quantities, in the current year, are Algeria,
Saudi Arabia, Srilanka and Bangladesh. Maruti exported more than 51,000 vehicles in 2003-
04 which was 59% higher than last year. In the financial year 2003-04 Maruti exports
contributed to more than 10% of total Maruti sales.
43
44
MARUTI ALL INDIA SALES – 3 YR TREND
Segment 2003-04
Growth
2004-05
Growth
2005-06
Growth
A1 (Mini - Hatchback) 167,561
17% 116,262 -31% 89,223 -23%
A2 (Compact - Hatchback)
176,132
47% 271,280 54% 335,136
24%
A3 (Mid Size) 14,173 28% 29,637 109% 31,939 8%A4/A5/A6 (Exec./Prem./Luxury)
NA NA NA NA NA NA
C (Van Type) 59,526 15% 65,019 9% 66,366 2%Passenger Cars - MUL 417,39
228% 482,198 16% 522,66
48%
Passenger Cars - Total Industry
758,123
26% 885,029 17% 948,669
7%
MUV (Utility Vehicles) 3,555 12% 5,204 46% 4,374 -16%Passenger Vehicles - MUL
420,947
28% 487,402 16% 527,038
8%
Passenger Vehicles - Total Industry
901,150
24% 1,050,246
17% 1,129,316
8%
45
MARKET SHARE
46
COMPETITION MODELS
SEGMENT Maruti Competition
A1 (Mini - Hatchback)
M800
A2 (Compact - Hatchback)
Zen, WagonR,
Alto, Swift
Hyundai - Santro & Getz; Tata - Indica & Palio; GM - Corsa Sail
A3 (Mid Size) Esteem, Baleno
Hyundai - Accent; Tata - Indigo & Petra; Honda - City; GM - Corsa, Optra, & Aveo; Ford -
Ikon, Fusion, & Fiesta A4/A5/A6
(Exec./Prem./Luxury) Hyundai - Elantra & Sonata;
Honda - Accord; GM - Vectra; Ford - Mondeo; Skoda - Octavia & Superb; Toyota - Corolla &
Camry; Daimler Chrysler - C,E, & S Class;
C (Van Type) Omni, Versa MUV (Utility
Vehicles)Gypsy, Grand
VitaraMitsubishi - Pajero; Hyundai -
Terracan & Tucson; Ford - Endeavor; Toyota - Prado &
Innova; Nissan - X Trail; Honda - CRV; GM - Forrester &
Tavera; Tata - Sumo & Safari; Mahindra - Jeeps, Scorpio, &
Bolero
COMPETITIVE STRENGTHS
MUL believes that they are well positioned to maintain and enhance their
leadership position in the small car segment in India, while continuing to offer
products in most segments of the Indian market, on account of their competitive
strengths, which include the following:
Expertise in small car technology: As a subsidiary of Suzuki, they have
access to globally respected technology in the small car segment. They
have the advantage of Suzuki’s expertise in all aspects of small car
technology and design, with respect to their products, their manufacturing
47
processes and business practices, the development of their supply chain
and the training of their personnel.
Extensive product portfolio: Their diverse product range includes cars in
segments A, B and C, and utility vehicles. They manufactured five out of
the ten models that were sold in the combined A and B segments in India
in fiscal 2002. They are the only manufacturer of cars in segment A
(priced below Rs.300,000) where they have two models, the Maruti 800
and the Omni. The Maruti 800 has been the largest selling car in India for
several years, and continued to have the highest sales volumes of any
model, with a market share of 25.3%. The Omni, a versatile vehicle that
can seat more passengers than the Maruti 800 or be used as an ambulance
or cargo vehicle, had a market share of 10.5% in fiscal 2002. They are also
the only manufacturer to sell three distinct models, the Zen, the Alto and
the Wagon R, in segment B (priced between Rs.300,000 and Rs.500,000).
They believe that theirdominance in segment A and extensive product
range in segment B enables us to offer the customer a wider choice in the
small car segment than any of their competitors. In addition, the absence
of other manufacturers in segments A gives their dealers greater flexibility
in promoting models in segment B.
Quality products: In November 2001, they were one of the first
automobile manufacturers in the world to receive the ISO 9001:2000
certification. They began to export products in 1988, primarily in order to
benchmark our products against international quality standards. They have
exported products to approximately 70 countries, including countries in
Western Europe. Their products for export are manufactured using the
same assembly line as our products for the domestic market.
Extensive sales and service network: They believe that they have the
largest network of dealers and service centers amongst car manufacturers
48
in India. As of March 31, 2003, we had 178 authorized dealers with 243
sales outlets in 161 cities. They estimate their car parc to be in excess of
3.5 million vehicles. To service this car parc, at March 31, 2003, they had
342 dealer workshops and 1,545 Maruti Authorized Service Stations, or
MASSs, which covered 898 cities in India backed by Express Service
Centers on 30 highways across the country. In addition to the distribution
of their cars, their dealership network is a critical resource in our efforts to
provide customers with a “one-stop shop” for automobiles and automobile
related products and services such as automobile finance, automobile
insurance, Maruti-certified pre-owned cars available for purchase, and
leasing and fleet management, in order to promote customer loyalty.
Brand strength: They have been present in the Indian market for almost
twenty years and have built their brand on the basis of the values of trust
and reliability. Most of their principal competitors have been present in the
Indian passenger car market for a significantly shorter period. Certain
manufacturers have ceased to manufacture certain products shortly after
introducing them, or have left the market altogether. In contrast, they
continue to support the maintenance of their products. This has contributed
to the strength of their brand. In 2000, 2001 and 2002, J. D. Power Asia
Pacific, Inc. ranked us No. 1 in the India Customer Satisfaction Index,
which assesses customer satisfaction with product quality and dealer
service. They believe that this was the first time that a volume leader in the
automobile industry anywhere in the world was ranked first on the JD
Power Customer Satisfaction Index. NFO Automotives 2002 Total
Customer Satisfaction Survey ranked Maruti products as No. 1 in the
“Economy”, “Premium Compact” and “Entry Midsize” segments
respectively, for 2002.
49
Integrated manufacturing facility: Their manufacturing facility
comprises three integrated plants with flexible assembly lines located at
Gurgaon in the northern state of Haryana. Their facility has advanced
engineering capability and each plant is upgraded on an ongoing basis to
improve productivity and quality. As a result, their first plant set up in
fiscal 1984 is technologically at par with their newer plants and is also
used in the production of their new models. They believe that they are one
of the most efficient among the vehicle manufacturing facilities of
Suzuki’s subsidiaries outside Japan in terms of productivity measured as
the ratio of number of vehicles produced to number of employees. They
have an installed capacity of 350,000 vehicles per year, which is the
highest among passenger car manufacturers in India and among the
passenger car manufacturing facilities of Suzuki’s subsidiaries outside
Japan. They have consistently produced in excess of their installed
capacity in the five fiscal years ended March 31, 002.
They believe that they would be able to expand their production to 500,000
cars per year with minimal additional capital expenditure. This would
enable them to benefit from significant economies of scale.
Strong vendor base and higher rates of localization: They work closely
with their vendor base for the supply of raw materials, components and
spare parts of their products. In order to improve quality and generate
economies of scale, they have reduced the number of their vendors of
components in India from 370 as of March 31, 2000 to 299 as of March 31,
2003, and intend to continue to reduce the number of our vendors. 113 of
their vendors at March 31, 2003 were in technical collaboration with
foreign entities. As of the same date, we had strategic equity interests
50
through joint venture agreements in 13 of their vendors, who together
supply a substantial portion of their purchases of components. A number
of their vendors are their dedicated suppliers in that they account for a
majority of their turnover. Vendors located within a radius of 100
kilometers from their facility supply the majority of their components. The
production systems of their vendors are generally aligned to their need for
a reliable and timely supply of components that meet their quality
requirements. This has enabled them to increase the proportion of locally
sourced, lower cost components in their models, a concept they refer to as
localisation. They have been able, in collaboration with their vendors, to
increase the rate at which they are able to localise production of their new
models over time. This has helped them reduce the cost of their
components.
Skilled labour and experienced management: Thei highly skilled labour
force has become increasingly productive in terms of vehicles produced
per employee and receives training on an ongoing basis, including training
by Suzuki. As of March 31, 2003, 1,900 of their employees had been
trained at Suzuki’s facilities in Japan. They have been present in the Indian
passenger car market for a significantly longer period than most of their
principal competitors. As a result, they have been able to build a highly
experienced management team that is familiar with conditions in the
Indian passenger car market. For instance, their managing director has
almost ten years of experience with them, and most of the heads of their
divisions have more than 15 years of experience with them.
51
Capital resources: They have cash and bank balances and current
investments amounting to Rs.9,992 million. As of the same date, they had
relatively low levels of outstanding indebtedness, in the amount of
Rs.4,555 million. As a result, they have relatively low interest expense and
flexibility to raise funds, if necessary, for their working capital and capital
expenditure in the future.
52
BUSINESS STRATEGY
They intend to continue to focus on the small car segment, while offering
products in most segments of the Indian passenger car market. They aim to
achieve their principal objectives by pursuing the following business
strategies:
Maintain and enhance their product range: They intend to utilize
Suzuki’s expertise in small car technology to produce new variants of their
existing models and to upgrade their products with contemporary
technology and features.
Increase reach and penetration: They plan to continue to utilize their
extensive sales and service network to increase the reach, in terms of
geographical spread, and penetration, in terms of sales volumes, of their
products across India.
Increased availability of automobile finance: They continue to seek
opportunities to expand the size of the Indian passenger car market,
especially in the small car segment, through facilitating easy availability of
automobile finance. To that end, they have recently entered into an
agreement with the State Bank of India.
Secure repeat purchases by offering a “360 degree customer
experience”: On the basis of their belief that securing repeat purchases
from an existing customer requires less expenditure than acquiring a new
customer, they aim to provide customers with a “one-stop shop” for
automobiles and automobile-related products and services.
Continue to benchmark their manufacturing capabilities: They plan to
continue to benchmark our manufacturing capabilities with the most
efficient car manufacturing facilities of Suzuki and its subsidiaries.
53
Continue to reduce costs to offer more competitive products:
Cost competitiveness has been, and continues to be, central to their
strategy as the leading manufacturer in the small car segment to expand the
size of the market by offering competitively priced, high quality products.
The components of this strategy are:
Higher levels of localization
Vendor participation in cost reduction
Cost reduction on warranties
Reduction in initial investment cost
Reduction in number of vehicle platforms
Achieve further cost reduction through higher productivity
Lower cost of ownership:
Through their business strategies, they seek to reduce the consumer’s cost
of ownership of their cars, which comprises the cost of purchase, the cost
of fuel and maintenance, including spare parts and repairs, during the life
of the vehicle, insurance, and resale value.
54
SALES NETWORK
Dealers: They offer their products to the customer through a network of
178 authorized dealers with 243 sales outlets across 161 cities. They
believe that this is the largest network of dealers amongst car
manufacturers in India. Their dealers employed more than 3,500 sales
executives. They are linked to their sales network through their secure
extranet-based information network. The sales of their spares, accessories
and automobile-related services such as insurance and finance serve as
additional sources of revenue for our dealers. They believe that the
availability of these related products and services at sales outlets also
helps to attract customers to the outlets and promotes sales of their cars.
Agreements with dealers: They generally appoint a limited number of
dealers for a certain geographical territory. Their dealers provide services
to customers such as pre-delivery inspection of vehicles, sales of cars,
after sales service, supply of spare parts and other services that promote
sales of cars within the territory for which they are appointed. They have
the right to sell their products and services through other dealers or
intermediaries in any territory, whether or not one of their dealers is
already established in that territory. Their dealers are required to maintain
their outlets in accordance with their specifications and employ well-
trained sales staff.
Their agreements with their dealers usually have terms of five years. These
agreements are generally renewable for successive terms of three years, by
mutual agreement. The agreements typically permit termination by either
the dealer or them with six months’ prior notice.
Enhancing dealer performance: Their central office in Delhi, their regional
offices and their area offices monitor and assist their dealer network. They
55
have nine regional offices, five area offices and 187 sales and marketing
personnel. They follow the performance of their dealers and frequently
suggest improvements. In order to assist their dealers in enhancing their
performance and capabilities, they have introduced a concept of “Balanced
Scorecard”. Using this tool, they seek to measure the performance of a
dealership in several areas of operations, including sales, service, spares
and accessories, financial management and management systems. They
reward dealers who perform well on the “Balanced Scorecard” with a cash
payment at the end of the fiscal year. They believe that the “Balanced
Scorecard” serves as an effective incentive for dealers to enhance their
performance.
Dealer training: They have established standard operating procedures,
showroom ambience and service quality standards for dealerships. They
provide periodic training through their training centres located at their
manufacturing facility and at Chennai, Kolkata, Guwahati and Pune. They
have trained more than 2,600 and 3,400 dealer sales personnel. Their
subsidiary, True Value Solutions Ltd., provides value-added services, such
as manpower recruitment and training, to their dealers.
AFTER-SALES SERVICE
Network
As on date there are 342 Maruti dealer workshops and 1,545 Maruti
Authorised Service Stations, or MASSs, covering 898 cities in India. In
addition, 24-hour mobile service is offered in 38 cities under the brand
“Maruti On-road Service”. They intend to extend this service to an
additional 25 cities over the next three years. As a benchmark for dealers
with respect to service quality and infrastructure facilities, they have
launched service stations under the brand “Maruti Service Masters, or
56
MSMs, in three locations in India. They have service stations on 30
highways in India under the brand “Express Service Stations”.
To promote sales of their spare parts and the availability of high quality,
reliable spare parts for their products, they sell spares under the brand
name “Maruti Genuine Parts”, or MGP. These are distributed through their
dealer network and through authorised sellers of their spare parts, to whom
they refer as stockists.
Many of their MASSs are at remote locations where they do not have
dealers. In order to increase the penetration, in terms of sales volumes, of
their products in these remote areas, they are exploring opportunities to
integrate some of the MASSs into the sales process in order to increase
sales of their cars and related products and services such as spares and
accessories, insurance and financing.
Genuine Accessories
They have also entered the business of marketing car accessories under the
brand name “Maruti Genuine Accessories”, or MGA, through their
dealership network. They seek to provide customers with the opportunity
to customize their vehicles with accessories such as music systems,
security systems, car-care products and utility products.
Warranty and Extended Warranty Program
They offer a two-year warranty on all their vehicles at the time of sale.
Their dealers are required to address any claim made by a customer, in
accordance with practices and procedures prescribed by them, under the
provisions of the warranty in force at that time. The dealers subsequently
claim the warranty cost from them. They analyse warranty claims from
dealers and either claim the cost from vendors, in the case of defective
57
components, or bear the cost ourselves, in the case of manufacturing
defects.
They offer an extended paid-warranty program marketed under the brand,
“Forever Yours” for the third and fourth year after purchase. They have
entered into arrangements with insurance companies to cover the costs of
warranties offered under this program. The extended warranty program is
intended to maintain the dealer’s contact with the customer and increase
the revenue generated from sale of spares, accessories and automobile-
related services. An effort is made during the period of the extended
warranty to encourage the customer to exchange his existing Maruti car for
a new Maruti car, or upgrade to a new Maruti car.
58
NEW BUSINESS INITIATIVES
As the largest manufacturer and leader in the small car segment, they
continually seek new ways to utilize their vast car parc, range of products and
extensive sales and service network to expand the size of the passenger car
market in India. They have recently launched new initiatives to develop the
market for automobile insurance, automobile finance, leasing and fleet
management, and pre-owned cars. They aim to provide customers with a “one-
stop shop” for automobiles and automobile-related products and services, and
build on their wide customer base and extensive sales and service network to
make available to their customers a wide range of Maruti-branded services at
different stages of ownership, which they refer to as the “360 degree customer
experience”.
Atithi Devo Bhava: One-stop shop
Inspired by the spirit of India. Atithi Devo Bhava, in Sanskirit, means “a guest
is like God”. It captures the Indian tradition of honouring guests. It's also the
inspiration for the welcome you’ll receive at a Maruti Suzuki dealership, and
the caring relationship they share with those who drive their cars. At Maruti
Suzuki, you will find all your car related needs met under one roof. Whether it
is easy finance, insurance, fleet management. services, exchange Maruti Suzuki
is set to provide a single window solution for all your car related needs.
That's why they have Maruti True Value, the best place to buy and sell
reliable used cars. Maruti Finance an agglomeration of the biggest finance
companies in India brought together by Maruti Suzuki to ensure that the
dream car is within everyone's reach. Similarly, Maruti Insurance brings
together some of the biggest names in the car insurance industry to provide
insurance solutions to every type of car consumer. Then, finally, there is
N2N, which offers fleet related solutions.
59
THE PLAYERS IN THE INDIAN AUTOMOBILE INDUSTRY
Hyundai Motor India Ltd
Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai
Motor Company, South Korea and is the second largest and the fastest growing
car manufacturer in India. HMIL presently markets 31 variants of passenger
cars in six segments. The Santro in the B segment, Getz in the B+ segment, the
Accent in the C segment, the Elantra in the D segment, the Sonata Embera in
the E segment and the Tucson and Terracan in the SUV segment.
The company recorded combined sales of 252,851 during calendar year 2005
with a growth of 17.26% over year 2004. HMIL is India's fastest growing car
company having rolled-out over 970,000 cars in just over 80 months since its
inception and is the largest exporter of passenger cars with exports of over Rs.
1,800 crores. HMIL has recorded a growth of 27.2% in exports over the year
2004.
HMIL’s fully integrated state-of-the-art manufacturing plant near Chennai
boasts some of the most advanced production, quality and testing capabilities in
the country. In continuation of its investment in providing the Indian customer
global technology, HMIL has announced plans for its second plant, which will
produce 300,000 units per annum, raising HMIL’s total production capacity to
600,000 per annum by 2007. The plant will be built on a 2.1 million square
meter site adjacent to the existing facility .HMIL is investing to expand capacity
in line with its positioning as HMC’s global export hub for compact cars. Apart
from expansion of production capacity, HMIL plans to expand its dealer
network, which will be increased from 157 to 200 this year. And with the
60
company’s greater focus on the quality of its after-sales service, HMIL’s service
network will be expanded to over 1,000 in 2006.
The year 2005 has been a significant year for Hyundai Motor India. It achieved
a significant milestone by rolling out the fastest “200,000th” export car. HMIL
exports to around 60 countries globally and recently made a foray into the
highly competitive UK market by exporting its first shipment of 820 cars.
Propelled by the strong performance in year 2005, Hyundai Motor India is on
the threshold of yet another grand milestone of rolling out its ‘One millionth’
car which is expected soon.
Tata Motors
Tata Motors is one of the largest companies in the Tata Group with a total
income of US$ 2.35 billion. More than 3 million Tata vehicles ply on
Indian roads making Tata a dominant force in the Indian automobile
industry.
Tata Motors is India's only fully integrated automobile manufacturer with
a portfolio that covers trucks, buses, utility vehicles and passenger cars. It
would be no exaggeration to say that Tata Motors provides the wheels for
India's growth.
Tata Motors has the unique distinction of giving India its first and only
indigenously built passenger car - The Tata Indica and the premium feature
sedan - The Tata Indigo. The Indica, launched in 1998, reached the 2,50,000
sales mark within 52 months of launch.
61
Tata Motors owes its leading position in the Indian automobile industry to its
strong focus on indigenisation. This focus has driven the Company to set up
world-class manufacturing units with state-of-the-art technology. Every stage of
product evolution-design, development, manufacturing, assembly and quality
control, is carried out meticulously. Their manufacturing plants are situated at
Jamshedpur in the East, Pune in the West and Lucknow in the North.
Ford India Limited
The Ford Motor Company has a rich legacy of translating better motoring ideas
to the roads. It has manufactured notable brands such as the Ford, Lincoln,
Mercury and the Jaguar. It is among the top five industrial corporations in the
world and is available in more than 200 countries around the world.
Ford has entered the Indian market through a tie - up with Mahindra Motors to
manufacture the Ford Escort. A project that has been set up with a investment of
Rs.1700 crore. Ford India Limited is a subsidiary of Ford Motor Company,
currently Ford has a 78% stake, which is going up to 92% soon. The Maraimalai
Nagar Plant of Ford India Limited, located roughly 45k.m.from Chennai,
provides employment to over 20000 people.The plant has the capacity to
manufacture 1,00,000 vehicles per annum, equipped with state-of-the-art
vehicle manufacturing technology from Ford.
Presently offering seven different models, Ford India Limited (FIL) is catching
up fast with the Indian consumer. This is secured through a quality check
program based on the principles of NOVA - C (New Overall Vehicle Audit -
Customer) wherein daily random checks are conducted from a customer's point
62
of view. To be doubly sure, routine calls are made to dealerships to check the
quality of cars delivered to them.
At Mahindra's dealerships are present trained professionals who provide
the best levels of service in India. Its intensive manpower training,
advanced service equipment and dedicated consumer satisfaction are the
are its plus points which is being followed by the entire industry.
Acknowledgement has come in the form of the J D power 1997 India Initial
Quality and Customer Satisfaction Awards. These internationally acclaimed and
recognized awards voted the Ford Escort as the Best Quality car and the
Mahindra Ford and its dealerships were rated the highest in Customer
Satisfaction. This is an honour as it its only the second time in automotive
history that the same brand/manufacturer has received both the awards in the
same year.
General Motors India
General Motors India, incorporated in 1994 as a 50-50 joint venture company
with the C.K. Birla Group of Companies, became a fully owned subsidiary of
GM in 1999 when GMOC bought the remaining shares. The company was
restructured in 1999 and was converted from a Public Limited company to a
Private Limited company. GM APH LLC currently holds 86 percent of voting
shares, and Holden (Australia) holds 14 percent. The SPO business was
integrated with the main business in the same company in 2000.
In India, GM strengthened its presence with new product launches Chevrolet
Optra in 2003 and Chevrolet Tavera (Multi Utility Vehicle) in 2004. Similarly
in 2004, GM India is expected to register a growth of 90% over 2003. With
63
sales volume going up, the market share of GM India has gone to nearly 2%.
The sales volume in 2003 was 15,155 units while 2004 figure is expected to be
around 27,000 units. In 2004, the company sold a total of 26,166 cars as against
15,155 cars in 2003 registering a growth of 73% while overall passenger car
growth during the year was only around 23-24%. These included 9191 Chevy
Optras in Entry 'D' Luxury sedan segment, 8369 Opel Corsas and 8417 units of
the new generation premium multi-utility vehicle (MUV) Chevrolet Tavera.
The existing GM India plant was originally built by Hindustan Motors. In 1994,
GM India entered into a 50% Joint Venture partnership with Hindustan Motors
and modernized the 45,000-square-meter plant near Halol, 45 kilometers
northwest of Vadodara, in the western state of Gujarat. In February, 1999, GM
bought the holdings of Hindutan Motors and GM India became a 100%
subsidiary of General Motors Corporation of USA. The plant produces the Opel
Corsa, Corsa Sail, Chevrolet Optra, and Chevrolet Tavera. The Chevrolet
Forester and Opel Vectra are sold as CBUs (Completely Built in Units) and as
imported from Japan and Germany respectively.
Toyota Motor Corporation is the third largest automaker in the world.
They have 34 dealers in India and in Delhi they have 2 dealers, first one is
‘South Delhi Toyota’ and second one is in Moti Nagar in which I have
visited during my survey. Dealer in Moti Nagar which is “Galaxy Toyota”
have predetermined mission that-Customer comes first and everything they
do is to meet their customer needs, basically they work for creating a
lifetime customer.
They work by dividing their work like in one showroom they have separate
teams for every product like relating to Corolla it comprises of 7 or 8
64
executives who handle all the work weather it is of sale or any enquiry or
telemarketing call that team must have some specific target to achieve.
They reach to the customers either by distributing Leaflets, Brochures to
the customers. They collect customer database from Directory (Yellow
Pages) or through customer references even they solve customers query
online and give information through e-mails. Recently they organized one
drawing competition between the kids of their existing customers just to
interact with the customer and build loyalty of their company products.
They judge their customer satisfaction by analyzing that repeat buyers are
more or not & moreover they have customer feedback form in which they
can analyze customers background and can forecast customer future
demands. They target only high profile customers.
They build customer loyalty by giving happy calls to the customer after
sale of every 1,3,7 month. They provide Periodic maintenance schedule,
which will ensure that vehicle, is kept in best able-bodied at all times. The
maintenance schedule may include periodic inspection, adjustment and
lubrication that will keep vehicle in the safest and most efficient condition,
they provide one booklet in which they give simple and useful tips for
maintenance of the car. They offer good schemes like providing free Test
Drive worth Rs 250 petrol at the time of sale of any car. They do road
shows to attract customers. To promote their product they organize
exchange mela, events, various cash discounts like currently they are
running one discount scheme on purchase of any of their car (Innova,
Toyota) they are giving free accessories worth Rs15000. They provide 4
free services after sale and with full clean diesel.
All employees of Galaxy Toyota shall consider how they should act and
how they might change their ways to benefit the company. They launch
one “Co Branded Credit Card” to provide additional benefits and services 65
to the Toyota customers. This Credit Card will give Toyota customers a
better payment flexibility and convenience, like Customer gets free service
voucher with the card, Special Invite to co-sponsored events, Personal
accident insurance coverage: Up to 20 lakhs etc. They have one Guest
Book in which they store valuable comments of customers, which they
think are very important for them, which will help them to improve their
service.
HONDA
Honda is one of the leading manufacturers of automobiles and power products
and the largest manufacture of motorcycles in the world. They have 20 dealers
in 42 different cities around India. In New Delhi they have 6 dealers, I have
visited one of them, which is in Najafgarh Road.
They do surveys to know customers need. They target either existing or their
perspective customers by giving advertisement in the newspaper or through
there satisfied customers which give references. They don’t believe on targeting
competitor’s customers because by not doing so they have such a brand
reputation with good quality products, only through this they are able to make
good sales.
They display their models in 8th Auto Expo, which held in New Delhi.
They are now focusing on their new model ‘Civic’. Honda's Civic perhaps
drew the maximum attention. The reason is simple: Civic is a new car from
the house of Honda. During my survey I get to know that Honda City
Model is the second largest selling car in the ‘C’ segment. They have a
good superiority with superior brand name in the country.
They prefer to have mode of communication with the customer through
mail, telephone and sometimes by letter. Customers who don’t have time
66
even to see the model or to call the dealer to make inquiries about their
reservation they desire to solve their query online itself.
To judge customer satisfaction they some times invite their customers to have a
get together, to have interaction with customer in a minute to know that are they
satisfied with their services and what they are expecting from them in the near
future. They make maximum of their sales from the fresh customers rather than
their repeat purchasers. To increase their sales they try to extort surreptitious
information from the customers and on their end they aim to ensure that the
product quality and product quantity should be available in required quantity in
their dealership.
They have Feedback form in which they take feedback of the customer as well
as their salesperson because through this they are able to get the information of
both the customer & their salesperson that are they giving the full information
to the customer. This Dealership even provide technical skills and techniques to
their employees that how to deal with the customer thoughtfully every after 6
months.
67
NEED FOR CRM IN AUTOMOBILE INDUSTRY
The global automotive industry exhibits most of the characteristics of mature
industries and closely follows their business cycles. While vehicle industry sales
have been strong for the past several years, they have started to slow recently
due to the current global economic slowdown. Deteriorating economic
conditions result in a drop in consumer confidence, which quickly impacts
automotive sales due to their big-ticket status and the relative low cost of
extending the life of an existing vehicle through maintenance and repair.
The advent of the Internet as a research tool (75 to 80 percent of auto consumers
research using the Internet) has shifted power to consumers, further increasing
pressure on prices. At the same time, government regulation and consumer
demands for sophisticated features have increased development, production, and
marketing costs. Regional economic fluctuations favor consolidation among car
companies, suppliers, and retailers -resulting in fewer, larger companies that
have more complete product lines targeted at existing and new markets.
Consolidation has heightened competition in all vehicle segments. Low-cost
manufacturers are expanding beyond their home markets with entry level
vehicles, traditional passenger car manufacturers are expanding into the light
truck markets, and luxury manufacturers are moving down market with
passenger cars and SUVs. As a result of these product and market extensions,
consumers find it difficult to exhibit brand loyalty because vehicles have
unclear brand identities, similar features, and comparable prices. In addition, an
overpopulation of dealers has resulted in local and regional competition among
same make dealers. This further reduces margins and damages the brand images
the car companies spend large amounts of money to build.
68
Relations between the car companies and their suppliers traditionally have been
difficult. In response to competitive pressure, suppliers have been forced by the
car companies to provide higher-quality components at constantly lower costs.
The resulting decrease in margins and the reduction in volume due to slowing
sales have increased the pressure to consolidate and forced some suppliers to the
brink of bankruptcy. Dealers too have a long history of adversarial relationships
with the car companies. Independent entrepreneurs who view some of the car
companies with skepticism or serious mistrust, dealers believe that many
manufacturer-sponsored customer satisfaction programs are actually designed to
force smaller dealers out of business or to gain control of customer relationships
that the retailers believe they "own."
These difficult relationships have prevented car companies and dealers from
maximizing the lifetime value of their combined customers. There are few
incentives or efficient methods for dealers and car companies to share critical
data, resulting in ineffective management of product, service, and household
information. In addition, consumers receive conflicting marketing
communications from the two groups, which results in reduced brand value.
KEY INDUSTRY PAIN POINTS
Decreasing sales and market share - The long-term battle for
market share continues to intensify. In the mature automotive
industry, where business cycles drive sales fluctuations, market
share is critical to survival. Consumers are less brand-loyal than in
the past, and every market segment has an increasing number of
vehicle choices. To increase sales and gain ground in the market
share battle, companies must improve their ability both to acquire
first-time customers and to develop customer loyalty to their current
brands. To achieve these related objectives, companies must set an
69
aggressive goal -deliver the best customer experience in the
automotive industry.
Difficult dealer relationships and a lack of dealer collaboration -
As the consumer 's primary touch point ,the dealer network is a
critical component of customer-facing operations. Therefore, the
integration of the dealer network is absolutely essential to improving
the quality of the customer experience. Only with an infrastructure
that enables the effective flow of information to and from dealers
can companies create a complete view of their customers. Car
companies must take the initiative in understanding the customer 's
perspective throughout the buying cycle.
Lack of multichannel capabilities - With the advent of the Internet
as a research tool, the majority of customers are accessing the
automotive enterprises through several different channels. Many
times, the switch between channels happens very rapidly as a
prospect or customer can view a Web site, make a phone inquiry,
and visit a retail store within days or even hours of an initial contact.
To improve customer satisfaction and secure customer lifetime
value, companies must be able to capture these multiple interactions,
provide seamless management between channels, and leverage
shared customer information to create rewarding experiences and to
develop and execute highly targeted marketing campaigns.
Inefficient demand chain planning and high associated IT cost -
Cost reduction is an ongoing competitive requirement. Just as supply
chain management must be supported by a sophisticated information
infrastructure, effective demand chain management also requires the
right supporting infrastructure, enabling car companies to fully
70
leverage each customer relationship through exceptional customer
service, efficient lead generation and management, and effective
promotions and campaigns. In addition, global automotive
enterprises operate a wide variety of IT systems in their various
business units and functional groups. Rationalizing these systems
offers significant cost savings.
Lack of effective information sharing - Car companies must
integrate global operations in order to achieve the benefits of
consolidation -cost reduction, effective communication, and true
integration of core competencies. In addition, internal alignment
between business units and functional groups is required to create a
unified view of consumers, products, and services. Currently, each
business unit, functional group, and brand operates through
independent systems, programs, and touch points. As a result, there
is limited synergy across the ecosystem, leading to significant
inefficiencies, lack of coordination, and most important, an inability
to maximize "share of wallet "from every customer through well-
targeted marketing and cross-selling. Synergy between traditionally
independent business units such as captive finance companies and
between functional groups such as sales, service, and marketing is
more critical now than ever before. Only by sharing customer
information can customer lifetime value be maximized among
different groups.
Complex data governance requirements - Global automotive
enterprises have large, complex information technology ecosystems.
While customer information must be shared within this ecosystem in
order to fully maximize global operations, it must also be protected.
Proper management of customer information requires a sophisticated
capability to manage a variety of access rules and to accommodate
71
legal restrictions that can change very quickly. The trust required for
successful collaboration between groups in the automotive enterprise
must be built by demonstrating that customer information can be
shared while observing these complex requirements.
Difficulty managing employee relationships - In today 's fast-
paced business environment, automotive companies need to ensure
that their most valuable asset -their employees -have immediate
access to the critical information, services, and applications required
to be productive. Organizations must enable employees to make
better decisions, work collaboratively, enhance customer
relationships, and maximize productive time. Global automotive
enterprises must be able to enact and enforce consistent policies
across business units, instill a common corporate culture across a
geographically dispersed and diverse workforce, equip employees
with effective search tools to access corporate knowledge bases, and
provide employees with the training necessary to service customers
in a volatile and demanding market.
Target Marketing Procedure Of Various Companies
TARGET SEGMENT
To reach to rural and lower middle class consumers. They begin with
small concentrated markets appealing to local culture and
aspirations of the targeted area
72
STRATEGY
THEIR STRATEGY IS TO CAPTURE THE RURAL MARKET BY
EMPLOYING WOMEN WHO BELONG TO THEIR LOCAL
COMMUNITY THROUGH WHICH THEIR PRODUCT CAN REACH
TO LOCAL CONSUMERS. THEIR STRATEGY IS TO PROVIDE
WORK FOR WOMEN TO CREATE AWARENESS AMONG
CONFINED CONSUMERS
Process
They started with Project Shakti in which their basic aim is to educate a rural person
about their products through women who belongs to their own local community and
who can communicate well in their language with them. In this way many educated
women get work in rural sector and on the other hand HLL Corporate Social
Responsibility (CSR) also increases towards society by introducing educative
programs for the benefit of the rural sector
Mode of Communication
They reach to customers by giving advertisements in the T.V. or through radio,
through wall painting, or through promotional activities like weakly haats, mela
or local bazaars and most importantly, their policies were flexible and they
could adapt to fast changing marketing situations.
Through Internet, E-mail usage, communication media like telephone and mail
facility this mode of communication is possible to a great extent. ITC’s
extensive India-wide distribution network enables its greeting cards reach over
12,000 multi brand outlets in over 700 cities across the country. In the last three
73
years, 10,000 greeting card designs have reached these outlets with the help of
ITC's web-enabled e-commerce model –Communication Model ITC markets
Opportunity
These days’ consumers are looking for convenience and instant
gratification. Communication media like the telephone and e-mail
facilitate communication to a great extent. But many greeting card sites
are moving from a 'free' to a 'pay' mode. This could be an emerging
revenue earning opportunity for content providers.
Threats
'Expressions' which is a competitor of ITC in this segment is currently the
second biggest greeting card brand in India with a market share of 20 per cent.
ITC has a five per cent share in the stationery market. The greeting card market
in India is estimated to be around Rs. 250 crore in terms of yearly consumer
spent. The unorganized sector in the greeting card market will be close to 40 per
cent. The organized sector, controlling 60 per cent of the market, is divided
between ITC, Archie’s and Hallmark. While Archie’s has licensing agreements
with international greetings brands
74
FINDINGS FROM SURVEY
Total Number of Respondents: 15 Officials
Number of Respondents
Maruti Udyog Limited 5
Hyundai Motors India Ltd 2
General Motors 2
Tata Motors 5
Ford India Limited 1
Do you face problems in maintaining good and effective relationships with customers?
Quite
Frequently
Frequently Average Rarely
Maruti Udyog
Limited
2 3 - -
Hyundai Motors
India Ltd
- 2 - -
General Motors - 2 - -
Tata Motors 3 2 - -
Ford India
Limited
- 1 - -
75
Findings: According to the responses of the respondents it can be concluded
that all the respondents face problems in maintaining good and effective
relationships with customers. With changing customer needs its quite obvious
that maintaining good relations with customers need an effort on part of the
Dealers and Manufacturers.
How well can your company identify its end user customers?
Maruti Udyog Limited: According to the officials of MUL, the
company’s endeavor is to be close to the customer, to anticipate and
fulfill their needs. They believe that the new business initiatives taken
by MUL have expanded the scope of this relationship. Maruti offers
auto insurance, auto finance, corporate lease and fleet management and
resale of pre-owned cars in partnership with its dealers. For the first
time, car customers in India are able to access these services through a
one-stop shop, backed by the leader brand. The way they look at it is
that this will provide complete mobility solutions to the Maruti
customer. This also enables them to extend their relationship with the
customer beyond the point of purchase to the entire ownership life
cycle. Since these services play a vital role in the car customer's
76
ownership experience, the new initiatives enable them to offer Maruti
owner’s greater value, assurance and convenience.
Hyundai Motors India Ltd: According to the officials of Hyundai Motor
India is at a very exciting stage in India today. They are experiencing
tremendous growth - which is a true sign of enjoying customer
confidence. In order to strengthen their position further in the Indian
market, they need to continuously work on building their corporate
reputation while aggressively positioning their products. For HMI's
focus and commitment to the Indian automobile customers is of critical
importance. Its been their continuous endeavor to fulfill the entire
spectrum of customer needs and desires, across all socio-economic &
lifestyle groups. They have therefore, in just 6 years of HMI's young
life, established nationwide sales & service network, scaled up state-of-
the-art manufacturing capacity, launched global-standard cars in rapid
succession and exported cars made-in-India across the globe. Getz, a
much admired lifestyle brand in Europe and elsewhere, is a step in the
same direction and is a cutting-edge, addition to HMI's extensive
product portfolio.
General Motors: According to the officials at General Motors is
positioned as a mature and responsible car manufacturer, which offers
great value-for-money products to its customers. The company
leverages its global expertise to manufacture and market well
engineered and safe products through its well-established retail network
that provide an excellent ownership experience to its customers.
Tata Motors: According to the officials of Tata Motors the foundation
of the company’s growth over the last 50 years is a deep understanding
of economic stimuli and customer needs, and the ability to translate
them into customer-desired offerings through leading edge R&D.
77
Ford India Limited: According to the officials of Ford India has
reaffirmed its commitment to enhancing the purchase and ownership
experience for its customers with the rollout of Ford Brand@Retail
concept across the country. Ford India has been revamping all
dealerships under the Ford Brand@ Retail, a global corporate identity
program to offer a world-class purchase experience to the customer.
Ford India continues to expand its distribution network and will grow to
115 dealer outlets in 79 locations by the end of 2005. The officials also
mentioned that Ford India provides training support to dealers in areas
including customer satisfaction, sales, technical and non-technical
aspects of the business and in the financial management of the
dealership.
Can your company differentiate its customers based on their value to you
and their needs from you?
Yes No
Maruti Udyog Limited 5 -
Hyundai Motors India
Ltd
2 -
General Motors 2 -
Tata Motors 5 -
Ford India Limited 1 -
78
Findings: According to the respondents (officials) at all the Five Automobile
Majors their company was able to differentiate its customers based on their
value to them and their needs from the company. This is important for the
automobile industry because the dynamics of selling cars is changing and
manufacturers and dealers who fail to meet the rising needs and expectations of
their customers will lose out to those who can. Buying a new car is an
experience customer will remember for a long time and ensuring that this
experience is a satisfactory one is essential in building brand loyalty and
customer advocacy.
How well do you interact with your customers?
Maruti Udyog Limited: According to the officials of MUL, their overall
strength lies in building an organization that is sharply focused on the voice
of the customer. Maruti's consistent performance over the past several years
has resulted in a steady increase in the percentage of its customers who say
they intend to remain loyal to the brand. n order to be closer to the
customers, it is essential that we should have multiple avenues of one-to-one
79
interaction with our customers. As a major step in this direction they have
started Call Center service with toll-free number for the people of National
Capital Region in year 2000. This service, named Anytime Maruti, is now
available nation-wide. Customers in over 700 cities/towns across India can
contact them any time during the day and all days of the week. The toll-free
service is 1800 1800 180, it is accessible from any fixed-line or mobile
phone of BSNL/MTNL network across the nation. The Anytime Maruti
Call-center can also be accessed using telephones on other networks by
dialing 09811801515 (not toll-free). The objective of this service is to ensure
that customers have quick and easy access to all information on their models,
prices, dealers, value added services, finance options, and the locations of
our numerous service stations. Anytime Maruti helps customers to learn
more about their Maruti Cars and also about other services offered by
Maruti. For prospective buyers, Anytime Maruti can help them deciding
amongst various Maruti Models and benefits of buying from Maruti.
Hyundai Motors India Ltd: According to the officials at HMI The
Company has set up more than 70 dealer workshops that are equipped
with the latest technology, machinery, and international quality press,
body and paint shops, across the country, thereby providing a one-stop
shop for a Hyundai customer. Hyundai also has a fleet of 78 emergency
road service cars - specially equipped Santro that can provide
emergency service to all its customers anytime, anywhere. The
customers can also call on 1800-11-4645 (Toll Free - Only from MTNL
& BSNL numbers)
011- 26924645 (For all GSM Connections / Landline other than MTNL
& BSNL numbers) for any queries & customer complaints.
General Motors: According to the official at GM, to bring greater value
and service to customers, they have introduced the GM Service Plus – a
80
unique cluster of services, designed to compliment every aspect of
owning a car and ensuring complete peace of mind. So be it emergency
assistance, an urgent car servicing or even sourcing genuine
accessories, Customers can be assured of yet another great moment
from General Motors. For any car related query or emergency
requirement, customers can call 24-hour assistance at 30308080. The
unique 3-hour service programme comes with a promise of servicing
your car in just 3 hours, or you get the service free. With their 24-hour
workshops, customers can now conveniently get their car serviced,
when they use it the least. Widespread sales and service outlets across
the country ensure that you have the assurance of great service
wherever you travel in India.
Tata Motors: according to the officials of Tata Motors the company has
strengthened its distribution and customer care network and today has
77 dealers and 230 authorized service outlets spread across 119
locations in India.
Ford India Limited: According to the officials at Ford solutions aims to
provide quality, peace-of-mind products for the customer and embodies
a brand synonymous with its ability to provide products that can be
tailored to suit one's individual needs. Ford Solutions serve to develop
products for Ford and the Dealer body that enhance customer
satisfaction. When your vehicle needs a repair or a component replaced,
you need Quality Care service. Your Ford Dealership is simply the best
place to have your vehicle serviced. Brakes, shocks, batteries or
anything your vehicle may need, your dealership is the place to get it.
Customers can place a online service request at Ford.
81
How well does your company customize its products and services based on
what it knows about its customers?
Highly Customer
centric
Somewhat Customer
centric
Not Customer centric
Maruti Udyog Limited
5 - -
Hyundai Motors India Ltd
2 - -
General Motors
2 - -
Tata Motors 5 - -
Ford India Limited
1 - -
Findings: All the officials of the Automobile Majors agree that all products and
services are highly customer centric and based on the information they know
about the customers.
82
Does the company have established quality assurance processes?
Yes No
Maruti Udyog Limited 5 -
Hyundai Motors India
Ltd
2 -
General Motors 2 -
Tata Motors 5 -
Ford India Limited 1 -
Findings: According to all the respondents their respective companies have
established quality assurance processes.
83
Does the company take customers' needs into consideration when selecting and implementing technology?
Yes No
Maruti Udyog Limited 5 -
Hyundai Motors India
Ltd
2 -
General Motors 2 -
Tata Motors 5 -
Ford India Limited 1 -
Findings: According to all the respondents their respective companies take
customers' needs into consideration when selecting and implementing
technology.
As per officials of GM the Tavera is a classic case of an India-specific product.
Though it is an international product, the car has been totally re-engineered for
Indian market requirements.
At Hyundai Segment-needs and budgets are specific and a suitable variant
strategy is inevitably required to meet different segment-needs and to be a
84
volume player in the segment. The variants are decided after considerable
research. They have been targeted at different segments and they presently
witness a healthy mix. As this segment evolves they rationalise the variant
strategy and add or delete variants to meet market requirements. They have
put in place a customer contact programme where they interact with
customers in groups as well at an individual level at regular intervals to
assess their needs and overall experience with their product.
The typical Indian consumer looks for value and does not mind paying a
little more for it. Fuel efficiency, airconditioning and reliability along with
ease of service and low cost of ownership are major considerations during
the purchase process in India.
Does the company provide its employees with technology that enables
them to help customers?
Yes No
Maruti Udyog Limited 5 -
Hyundai Motors India
Ltd
2 -
General Motors 2 -
Tata Motors 5 -
Ford India Limited 1 -
85
Findings: According to all the respondents the company provides its
employees with technology that enables them to help customers. Employee
and Dealer Training is a part of every company Customer Service
Initiative. This enables them to provide the customers with state of art
products and service to customers.
Does the company maintain a strategy for collecting and using
information about customers?
Yes No
Maruti Udyog Limited 5 -
Hyundai Motors India
Ltd
2 -
General Motors 2 -
Tata Motors 5 -
Ford India Limited 1 -
86
Findings: According to all the respondents they have proper information about
their most profitable customers. Companies use Informal Meetings, Sales
Interaction and calls to collect relevant information needed to maintain good
customer relationship. The most effective companies like Tata Motors use all
the above while most of other track the data during sales interaction. All the
Automobile majors surveyed used CRM software for tracking Customer
Information. According to the officials Customer and Supplier Feedback are
gathered through Call Centers, Mails and Direct Interviews. There are other
methods too but the above three are the most cost effective.
How effectively does the company combine information on customers with its experiences to generate knowledge about its customers?
Highly Effective Somewhat Effective
Not Effective
Maruti Udyog Limited
4 1 -
Hyundai Motors India Ltd
2 - -
General Motors
2 - -
Tata Motors 3 2 -
Ford India Limited
1 - -
87
Findings: All the 80% officials of the Automobile Majors their company
highly effective in combining information on customers with its
experiences to generate knowledge about its customers while 20% said that
the company was somewhat effective.
88
What steps has the company taken to improve the total experience of its
customers?
According to the Maruti Udyog Limited Officials: Sales experience is
the most important factor, accounting for 37 per cent of the SSI score,
and includes issues such as fulfillment of commitments and lack of
hassles during the sales process, overall honesty and integrity of the
dealership personnel and sufficient time to make the decision. Maruti
entered the Indian car market, to provide fuel efficient, low-cost
vehicles, which were reliable and of high quality. It also offered
customers a friendly sales and after sales service. With high customer
satisfaction ratio and Total automobile value these objectives shaped
Maruti as big Giant in the field of automobiles.
According to Hyundai Motors (India) Officials: Hyundai's big hit was
its compact family car named Santro which became a huge hit with its
launch and capture hearts of millions with increasing satisfied
customers day by day. When Hyundai forayed into the Indian market it
moved quickly to set up a network of dealers and service stations - it
has close to 260 of the latter. Service was identified as a powerful
differentiator to the way things were done and word of mouth did the
rest. It was one of the ways to keep the Hyundai customer within our
fold. Also, these are advanced cars, which can't be repaired by a corner
mechanic. Hyundai offers service for less, it's easily reachable and
allows flexibility and customers appreciate that. Hyundai Motor India
Ltd (HMIL) launched “Achieve Q1P1” quality campaign on March 24,
2006 primarily focusing on achieving the Global No.1 Quality & Brand
image. The campaign has been initiated across the Hyundai vendor
fraternity. This new initiative will strengthen the Vendor quality
89
organisation and will ensure the major part quality improvement such as
Six Sigma Activity, training and improve the Tier 2 suppliers. The
campaign will also help the suppliers to improve their 3C5S (3C –
Correct Container, Correct Quantity & Correct Location and 5S –
Sorting, Systematizing, Shining, Standardizing & Self-Discipline),
TPM (Total Productivity Maintenance), benchmarking activities and
upgrade quality systems.
According to Ford India Limited officials: Presently Ford is offering
seven different models, Ford India Limited (FIL) is catching up fast with
the Indian consumer. FIL was the first subsidiary of a multinational car
manufacturer in India to launch a car designed specifically for India. They
have consistently adapted the specification of the Ikon to ensure it meets
the needs of Indian consumers. They have improved the horn and the
steering column switch so that they are more robust; the new combination
switch has proved so effective that it is used worldwide. They have also
developed a hydraulically activated clutch system, improved ground
clearance and upgraded air conditioning to satisfy the specific needs of the
Indian customer. This is part of a continuous improvement process.
Satisfying our customers They have introduced initiatives to assess
customer satisfaction and to act on their concerns. The Intensified
Customer Concern Definition (ICCD) is a telephone survey of customers
conducted to assess problems in three areas:
They recognise the need for additional products. They are working towards
introducing products to match our customer’s dynamic lifestyle, products
which have progressive styling and are great to drive.
• Vehicle quality concern • Design and general comments • Negative sales
and service
90
According to GM officials: General Motors target is to offer a choice of
products to their customers to match their different needs and budgets.
Being the world’s largest car manufacturer, they have access to a range
of products through their global alliances. They are already present in
most segments and will shortly have products in additional segments.
However, they are focusing on the fast growing MPV segment with the
Chevrolet Tavera and have invested substantially in this product line.
They look for customers for life who will have a choice of products to
buy from their stable. Sustained brand building efforts coupled with
intensive ground-level activity has ensured that Optra has remained
among the top two players in its segment. They have refreshed the
product through continuous product improvements and have emerged as
segment leader in fuel efficiency. They have recently launched a limited
edition of 150 cars, which has received a very positive response and
given us rich dividend in terms of brand building and imagery. A
product refreshment plan ensures that they remain competitive and are
ready to meet future challenges in this segment. They also have a
regular Customer Relation Management programme whereby existing
customers are offered loyalty programmes and great offers. So far, they
have organised six Optra Max Mileage Rally meets where Optra
customers compete to extract the best fuel efficiency out of their cars
and all participants are treated to an overnight stay at an exotic locale
with an evening of entertainment. The winners of these rallies are given
healthy cash rewards. These vents go a long way in building goodwill
and brand loyalty.
According to Tata Motors Officials: TATA Motors is India's foremost,
and the only fully integrated automobile manufacturer. Established in
1945 as TATA Engineering & Locomotive Company (TELCO), to
91
manufacture locomotives and other engineering products, the company
is today among the world's top 10 producers of commercial vehicles.
TATA Motors was also previously known as TATA Engineering. It is
today one of the biggest and most prominent companies in the TATA
group, with an annual revenue of $1.8 billion in 2001-02. Today TATA
motors' vehicles run in more than 70 countries. TATA Motors use a
manual dealer management system, where every dealer managed
details. With legacy-based systems, the environment produced
inconsistent data, making interpretations difficult and resulting in
inefficient planning for capacity and spare parts. TATA Motors
required a standardised solution that would provide them with:
Increase in sales and profitability by easy management.
Improved accuracy of dealer-captured information.
Collaboration between vehicle manufacturers and dealers.
1. A strong feedback mechanism and interface for communicating with
customers. TATA Motors chose IBM as its partner to provide an
infrastructure solution. IBM created a Siebel solution to provide a DMS
solution for TATA Motors and then provided a reliable and scalable IT
infrastructure for developing and deploying its DMS application. The
IBM solution has simplified the IT infrastructure for TATA Motors. The
benefits include - low total cost of ownership, a more comprehensive
view of customers, enhanced customer experiences and improved loyalty.
With reengineered business process, the company can also analyse
customer interactions and other information more accurately, improve
capacity planning and increase profitability. Faced with increasing
competition from abroad, a cyclical business environment, and the
challenge of a widely dispersed dealer network, Tata Motors
implemented Siebel Automotive, a comprehensive customer relationship
92
management (CRM) solution designed specifically for companies in the
automotive industry. Seamlessly integrated with Tata Motors’ dealer
management system and SAP back-office applications, Siebel
Automotive has delivered significant benefits across the extended
organization, including improved customer satisfaction, increased
revenue and productivity, and reduced costs. Apart from providing its
customers with high performance automobiles, Tata Motors strongly
believes in customer safety. Several cases have been cited where
passengers driving Tata vehicles have been saved after terrible accidents.
Tata Motors established a crash-testing facility, the only one of its kind in
the country, in Pune in 1996. The small workforce of 21 members
including engineers aims to control the serious risks and intrusions in
accidents. The company believes that this factor has been vital to the
success of the Indica and other products under the company’s passenger
car unit. The key things that the critical people spend time on 1.
Commitment to quality manufacturing standards 2. Developing new
products 3. Customer Safety and satisfaction 4. Global expansion Norms.
How much 'influence do customers' needs have on the company's products and services?
Very High Substantial Very LowMaruti Udyog Limited
3 2 -
Hyundai Motors India Ltd
2 - -
General Motors 2 - -
Tata Motors 2 1 2
Ford India 1 - --
93
Limited
Findings: All the 67%(10) responding officials of the Automobile Majors
customer needs have a very high influence on company’s products and
services while 20%(3) respondents said that it had substantial influence
while 13%(2) respondents said that customer needs had very low influence
on company’s product and services.
ANALYSIS
Corporates, don't talk about exceeding customer satisfaction - that's passe - the
time has come to `dazzle the customer'. But to do that, first you must get
customer relationship management (CRM) in place. In the context of India, this
is very crucial as the recent World Economic Forum Report on Global
Competitiveness has ranked India 43 out of 49 nations surveyed, on `customer
orientation'.
94
Managing customer relationships is not only complex but is also multi-faceted
and thus calls for an inter-disciplinary approach. Particularly, as in the New
Economy, the customer has become very demanding and the emphasis needs to
be on being consumer-centric. Technology solutions as applied to various front-
end functions could aid in building a viable link between the organisations and
customers irrespective of geographical separation. This has to be backed with
appropriate systems and processes to mine the right type of data by the right
function in an organisation.
Besides technology, systems and processes, another important link is human
resource, If CRM is the key, HR would be the nerve centre for any CRM
activity.
At Maruti Udyog Ltd the first step for a company to enhance value through
CRM was to identify its target base. At Maruti, the categories which emerged
were:
* Two-wheeler owners;
* Customers taken away from the competition;
* Services sector.
After identifying the target, the next stage was to build on customer
relationships. Maruti, therefore, began evaluating the current database of
consumers to identify those who wanted Maruti service or better still, wanted to
upgrade up the value chain in Maruti products. Third, it began working in
tandem with the oil industry to get data feedback on two-wheeler consumers-
and identify those ready to move into four-wheeler purchases. Ultimately, CRM
is all about value enhancement for the organisation.
95
Faced with increasing competition from abroad, a cyclical business
environment, and the challenge of a widely dispersed dealer network, Tata
Motors implemented Siebel Automotive, a comprehensive customer
relationship management (CRM) solution designed specifically for companies
in the automotive industry. Seamlessly integrated with Tata Motors’ dealer
management system and SAP back-office applications, Siebel Automotive has
delivered significant benefits across the extended organization, including
improved customer satisfaction, increased revenue and productivity, and
reduced costs.
The Siebel CRM solution enables Tata Motors to gather feedback on products
to improve design or manufacturing quality as well as measure the effectiveness
of marketing campaigns and programmes. The automaker selected Siebel
Automotive because of its partner management capabilities to handle its large
dealer network, the solution's zero-footprint web-based architecture and user-
friendly interface-critical to support thousands of salespeople with various skill
levels.
Improved demand forecasting, planning, logistics management, and
inventory management
Overall reduction in quality-related costs due to faster product
performance feedback
Improved workflow and escalation of customer grievances for faster
resolution
Increased revenue growth from both higher vehicle sales and a rise
in the company's after-sales parts business
96
Limitations of the Study
Since the road to improvement is never ending, so this study also suffers
from certain limitations. Some of them are as follows:
Because of illiteracy, it was a time consuming method in which
continuous guidance was required.
Questionnaire method involves some uncertainty of response. Co-
operation on the part of informants, in some cases, was difficult to
presume.
It is possible that the information supplied by the informants may be
incorrect. So, the study may lack accuracy.
97
CONCLUSION
The price of a car is just one-third of what it cost you over its lifetime. Running
and maintaining it make up the other two-thirds. Take into account resale value
and its real cost becomes clear. Maruti Suzuki stands for value as much as it
stands for performance. In spite of rising input costs, we try our best to keep
prices down. Their running costs and resale values are unbeatable too. Nothing
matches the delight their cars deliver. In the JD Power CSI study 2005, 85% of
Maruti Suzuki owners stated that they would definitely recommend the car they
drive to someone else. Infact, you don’t buy a Maruti Suzuki. You invest in it.
After the rash of new cars launches the past two years, the relative lull in the
auto industry is showing up in the customer satisfaction indices. According to
the 2005 four-wheeler Total Customer Satisfaction (TCS) study conducted by
the specialist division of TNS Automotive, the automobile ownership
experience or customer ownership experience has declined in all areas
compared to 2004. The study is one of the largest syndicated automotive
studies in India, representing the responses of more than 7,000 new car buyers.
The comprehensive study covers over 50 models with customer evaluations
taken in the key areas of sales satisfaction, product quality, vehicle performance
and design, after-sales service, brand image, and cost-of-ownership. The TCS
index score provides a measure of satisfaction and loyalty a given model enjoys
with its customers. According to TNS Automotive, the decline is
predominantly for older, small and entry mid-size car models. The ageing of
these models seems to be posing a stiffer challenge for manufacturers to sustain
past performance levels at a time when customer expectations are rising sharply.
98
The study reveals a significant increase in the importance of sales satisfaction,
product quality (both performance and design) and brand image since 2003,
indicating rising customer expectations over the years. This year's study shows
the Maruti Suzuki Swift and the Toyota Innova as the winners, with the two
vehicles achieving segment-best ratings by performing well in areas of greater
relevance, particularly product and brand image. Sales satisfaction is weak in
both these models, largely because of the longer waiting time for new
deliveries.
99
TNS Automotive's TCS Study has, since its inception in 2002, surveyed over
25,000 car buyers and hasbuilt a sizeable sample base. Some of the key
findings, indicators and inferences from the 2005 study are:
Progressive reduction in car ownership cycle-time from an average of 61
months in 2002 to 53 months in 2005: This shortened cycle-time is bringing
these owners for repeat purchases sooner and will, therefore, further fuel the
growth of the four-wheeler market. This trend is already visible in the growing
additional/replacement purchases. Growth in additional (multi-car households)
and replacement purchases up from 51 per cent in 2002 to 65 per cent in 2005:
This will impact the volume growth in higher-end segments as the current car
owners show upward mobility.
100
Increasing budget for future purchases: Future intenders with a budget of Rs 6
lakh plus have increased from 44 per cent in 2002 to 58 per cent in 2005. While
first-time buyers are declining as a composition of total volumes, the figure in
absolute terms is high, fuelled by the up-gradation by two-wheeler owners The
study also throws up the question as to whether it is also possible that the first-
time car buyer who is generally a two-wheeler owner, is getting more fuel
efficiency conscious and tending towards postponing the car purchase decision
due to the high cost of fuel. Of course a shift in composition is also to be
expected with the upper premium compact and mid-size segments projected to
grow at a much faster rate than rest of the industry. The TCS study was
conducted from August through October across 21 cities. Small sample models
have not been featured in the charts. These include the Fiat Petra Diesel, Ford
Fusion, Ford Mondeo, Hyundai Terracan, Maruti Esteem Diesel, Maruti Suzuki
Grand Vitara, Maruti Zen Diesel, and Opel Corsa Sail. TNS has a global
network spanning 70 countries and is listed on the London Stock Exchange.
Maruti Udyog Ltd is one of India 's leading automobile manufacturers and
the market leader in the car segment, both in terms of volume of vehicles
sold and revenue.
101
Good Technology
Uniform Pricing
Good Strength
More Coverage Area
Frequent /Regular Product Launch
Market Leader (with 47% share)
Oriented Driven Company
More Product Offering
Healthy Annual Report
Brand Image
Maximum Dealership as compared to other brands
Good Sale Service
Spare parts are cheap as compared to any other brand
Cheap & reliable quality
AREAS FOR IMPOVEMENT / RECOMMENDATION
Facade/Quality of Dealership should be improve
Uniform of Sales Executives
Proper visiting cards should be available to the executives
102
Mostly dealers don’t have their specific website
All Japanese 5’s concept (Seiro, Sieton, Sciso, Seioetse, Shitsuke)
should be put into practice at Dealership
Maruti should regard as generous discount offers during Festival
Season like Navratra, Dusshera, and Diwali to gear-up their sales
Maruti should advertise in Sports because sports are increasingly
cutting into the share of mass entertainment channels
Maruti can start Money Bond Scheme instead of giving Cash
Discount with more value. Customers eligible for an income bond,
encashable after a 15year period.
103
BIBLOGRAPHY
Reference Books, Journals, Newspaper, Web Sites, Reports, etc are to be listed, out here
Books
Kotler Philips, Marketing Management Analysis, Planning Implementation & Control Edition 1998. Prentice hall of India Ltd. New Delhi
Magazines Jourals & Newapaper
Name of the articles, Business Today: 15-22May 2000
Name of the articles, The times of India . Mumbai: 21st May 2000
www.google.com
www.yahoo.com
www.maruti.com
104