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PROJECT REPORT

ON

STUDY OF MARKETING & PRICING

STRATEGIES OF

MARUTI SUZUKI INDIALIMTED

SUBMITTED IN PARTIAL FULFILLMENT

FOR THE DEGREE OF MASTERS OF BUSINESS ADMINISTRATION

(2010-2012)

SUBMITTED TO : SUBMITTED BY:

Lt. (col) Dr. ANIRUDH TOMAR YEAMI KHARKONGOR

( DIRECTOR ) MBA- II Semester


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ACKNOWLEDGEMENT

I owe my sincere thanks and gratitude to Dr. Anirudh Tomar who

inspired me by his able guidance and was a constant

guiding light during the course of project study.

The support and knowledge provided by him has been a great

value addition for me and will go a long way in building a

promising career.

Last but not least, I am also thankful to all the respondents of my

survey without whom the project would not have been completed

successfully.

(YEAMI KHARKONGOR)

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INDEX

INTRODUCTION OF THE COMPANY

OBJECTIVE OF THE COMPANY

RESEARCH METHODOLOGY

LIMITATIONS

CONCLUSION

BIBILIOGRAPHY

QUESTIONNAIRE

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INTRODUCTION OF THE COMAPANY

MARUTI SUZUKI INDIA 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

Maximizing Shareholder's value

Being a responsible corporate citizen

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 utilized. The basic philosophy of management that

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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 organizational hierarchies. As a

matter of fact, the management structure and systems in Maruti have been designed

to promote decentralization 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 channels

between labor and management cannot simply consist of having a labor

representative on the Board of the Company. They have faith in the ability of labor

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

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collection of representatives of non-unionized 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 labor 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 Suzuki India Limited (MSIL) 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 MSIL contemporary technology and Japanese

management practices (which had catapulted Japan over USA to the status of the top

auto manufacturing country in the world).

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 MSIL 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.

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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

Shareholders 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.

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.

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GENERAL INFORMATION:

Registered and Corporate office:

Maruti Suzuki India limited,

Nelson Mandela road,

Vasant kunj ,

New Delhi- 110070

PLANTS :

Gurgaon and Manesar plants

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



55,00,000 vehicles produced by April 2006



1 Crore (ten millionth) car by march 2011

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AWARDS

2005Number 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 winit so many timesM800, WagonR and Swift topped their segments in the TNS TotalCustomer 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 forthe 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 05First Indian car manufacturer to reach 5 million vehicles sales

Business World ranks Maruti among top five most respected

companies inIndia-Oct 04

Maruti ranked among top ten (Rank7) greenest companies in India

byBusiness 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

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Voted Manufacturer of the year by CNBC

Voted one of India's Greenest Companies by Business Today-AC

Nielson ORG-MARG2003

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

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

1998CII'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

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1994

Best Canteen award among Haryana Industries as part of employee

welfare

1992-93


performance

1991-92


performance

The sales numbers for March 2011 are as under:

Segment Models

In March Till March

2011 2010%

Change2010-11 2009-10

%

Change

A1 M800 2915 2762 5.5% 26485 33028 -19.8%

A2

Alto, WagonR,

Zen, Swift,Ritz, A-Star

78460 54763 43.3% 808552 633190 27.7%

A3 SX4, D'zire 13910 10453 33.1% 131272 99315 32.2%

A4 Kizashi * 103 -- -- 138 -- --

A: Total Passenger

Cars95388 67978 40.3% 966447 765533 26.2%

B: MUVGypsy, GrandVitara

620 677 -8.4% 5666 3932 44.1%

C: VanType Omni, Versa,Eeco 14416 10875 32.6% 160626 101325 58.5%

Domestic Sales 110424 79530 38.8% 1132739 870790 30.1%

Export Sales 11528 15593 -26.1% 138266 147575 -6.3%

Total Sales 121952 95123 28.2% 1271005 1018365 24.8%

* Kizashi launched in February 2011. 2010-11 Highlights

During the year, the company expanded its countrywide network:

Number of 31 March2011

31 March2010

Increase

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Sales Outlets 933 802 131

Cities covered by sales

network666 555 111

Service Stations 2946 2740 206

Cities covered by servicenetwork

1395 1335 60

Maruti Driving Schools 164 83 81

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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 across189 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

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 marketleader in the world.

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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 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.

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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

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.

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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.

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.

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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, MSIL 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 Marutis cap in the

field of quality when the Quality Management System of its Press Shop &

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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 compliancewith 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.

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.

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ISO 9001:2000

THEORITICAL PERSPECTIVE

Marketing strategies:

The term marketing has changed and evolved over a period of time, today marketingis based around providing continual benefits to the customer, these benefits will be

provided and a transactional exchange will take place.

The Chartered Institute of Marketing define marketing as 'The management processresponsible for identifying , anticipating and satisfying customer requirements

profitably'

If we look at this definition in more detail Marketing is a management responsibilityand should not be solely left to junior members of staff. Marketing requires co-ordination, planning, implementation of campaigns and a competent manager(s)with the appropriate skills to ensure success.

Marketing objectives, goals and targets have to be monitored and met, competitorstrategies analyzed, anticipated and exceeded. Through effective use of market andmarketing research an organization should be able to identify the needs and wants ofthe customer and try to delivers benefits that will enhance or add to the customers

lifestyle, while at the same time ensuring that the satisfaction of these needs resultsin a healthy turnover for the organization.

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Philip Kotler defines marketing as 'satisfying needs and wants through an exchangeprocess'

Within this exchange transaction customers will only exchange what they value(money) if they feel that their needs are being fully satisfied, clearly the greater the

benefit provided the higher transactional value an organization can charge.

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 corporate body. Nevertheless, consumable

goods are sold to industry for corporate purposes and the consumers of these goods

can be identified for marketing practice.

PRICING STRATEGIES:

There are several different pricing strategies available to a business:

Strategy Description

Cost-plus pricingSetting a price by adding a fixed amount or percentage to thecost of making the product

Penetration pricing Setting a very low price to gain as many sales as possible

Price skimmingSetting a high price before other competitors come into the

marketPredatory pricing Setting a very low price to knock out all the other competition

Competitor pricing Setting a price based on competitors prices

Price discriminationSetting different prices for the same good, but to differentmarkets e.g. peak and off peak mobile phone calls

Psychologicalpricing

Setting a price just below a large number to make it seemsmaller e.g. 9.99 not 10

A new business that is entering the market might try the following strategies:

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If they are first into the market then they might use price SKIMMING.

If they are trying to establish themselves in the market then PENETRATION

pricing.

Sometimes a business may use a loss leader. This is a product where the price is solow that the retailer may not make any profit or even a loss on the sale, but doesattract shoppers to buy other full price products. Orange juice has been used by

businesses such as Rank Hovis McDougall to entice supermarkets to stock more oftheir other products.

Price skimming has been used for the launch of high technology products, such asDVD players and Personal Digital Assistants (PDAs) - which were far moreexpensive than they are now when they first arrived in the market.

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.

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The starting point for understanding the buyer is the stimulus-response model

shown below

Marketing stimuli

Otherstimuli

Buyer'sCharacteris

tics

Buyer'sdecisionprocess

Buyer'sdecisions

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Cultural

Social

Personal

Psychological

Problemrecognition

Informationsearch

Evaluationdecision

Post-purchasebehavior

Product choice

Brand choice

Dealer choice

Purchase timing

Purchaseamount

Stages in Buying Decision Process

Need

recogniti

on

Informat

ion

search

Evaluation

of

alternative

s

Purchas

e

decisio

n

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 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 newpurchase. We will allude again to Linda Brown and try to understand how she

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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 andstatuses

Personal

Age and life-cycle stage

Occupation

Economiccircumstances

Lifestyle

Personality andself-concept

Psychological

Motivation

Perception

Learning

Beliefs andattitudes

Buyer

Rogers model for the adoption and diffusion of innovations Innovation

Adoption CURVE

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The innovation adoption curve ofRogers 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 orDiffusion 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.

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.

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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.

The next step in creating an effective marketing strategy is to zero in on your target

market.

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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 existingcustomer 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?

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

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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.

HOWEVER, AS YOU ANALYZE YOUR MARKET AND CUSTOMER

PROFILES, AND SO GAIN AN UNDERSTANDING OF THEIRWANTS, DESIRES, AND PERCEIVED NEEDS, YOU CAN BEGIN TO

REORIENT YOUR BUSINESS OVER TIME TO TAKE BEST

ADVANTAGE OF THESE NEW INSIGHTS. CONSIDER BOTH THE

SHORT TERM AND LONG-TERM IMPLICATIONS OF

DEVELOPING AND IMPLEMENTING THE RIGHT TARGET

MARKETING STRATEGY FOR YOUR BUSINESS.

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 important part

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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

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Comparison of Automobile And ConsumerDurable

At Dealership Level

S.No Attributes Automobile Consumer Durables

1 Turnover High Low

2 Margin 8%-12% 2%-4%

3

Penetration

Level

More in small or large

towns or cities

More in Rural areas

or in cities also

4

Training ofSalesExecutives

Executives get Trainingafter every specificperiod As such no training

5 Supply-Chain Co->Dealer->CustomerCo->Distributor->Dealer >Customer

6DiscountMargin Cartel

Depends on DealerTo Dealer

7 CSR Proper well organized

Only Sales man isthere to serve thecustomer

8 ASSCustomer get 3freeservice

Customer have to goat manufacturedlevel

9BrandAssociation

Customer first choice ismore pertinent

Customer canchange his or herchoice

10 Payment Instantaneous Payment

More focus onFinance &Installment

11Post-SalesFollow UP More Very Less

12BuyingProcedure

Customer can wait fornew model Instant buying

13 Database Large Few

14BrandTransition Single-Tier Multi-Tier

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15 Advertisement

Parent Company &dealer both giveadvertisement

Only from ParentCompany

16LoyalityPrograms Yes No

17

CustomerSatisfactionIndex

Well- Defined &Organized None

18 Promotion Free Service Camps None

19CustomerRetention More Very Less

20 Maintenance

Only free service whichcustomer can extendupto 4 years(first 2yr arefree)

Annual MaintenanceContract (AMC)

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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 Suzuki India 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 Gypsy, mid size

Esteem, luxury car Baleno, the MPV, Versa, Swift and Luxury SUV Grand Vitara

XL7.

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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.

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

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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

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OBJECTIVE OF THE COMPANY

Marutis marketing objective is to continually offer the customer new

products and services that:

Reduce the customers cost of ownership of their cars; and

anticipate and address the customers 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

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C Versa

C SWIFT

Utility Vehicle GYPSY KING

Utility Vehicle GRAND VITARA

Sports Sedan KIZASHI

BALENO

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WAGON R

RITZ

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MARUTI 800

NEW ALTO

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OMNI

SWIFT

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A STAR

ZEN

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KIZASHI

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.

Following steps have been taken to obtain a correct result:

1. Define research problem correctly

2. Formulate hypothesis

3. Develop research design

4. Collect data

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5. Analysis of data

6. Interpret and report

These steps were not fully followed in this study as the research was not

numerically inclined and was not based on primary data.

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--vis the

competitive brands. Detail regarding the packaging of the products was

collected.

By interviewing these retailers valuable information was collected. I

inquired from them about their marketing advertising and distribution

strategies.

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.

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News releases.

Newsletters.

Pictures.

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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 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.

Ex-Showroom Prices in Delhi (in Rs)

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Omni

Model /

Vehicle

T

y

pe

Ex -

Sho

wroo

m

Pric

e

Ex -

Sho

wroo

m

Pric

e

(Wit

h 3rd

Year

Ew)

*

Regis

tratio

n +

SMA

RT

Card

+ No

Plate

Char

ges

MC

D

Par

kin

g

Ch

arg

es

Insu

ranc

e

Han

dlin

g

Cha

rges

B

as

ic

Ki

t

A

ut

o

C

ar

d

On

Ro

ad

Pri

ce

4th

Year

Exte

nded

War

rant

y

Amo

unt

Omni 5Str

224,737

226,427

9,7592,000

7,504

4,250

1,640

331

251,911

1,805

Omni 5Str

(M)

227,052

228,742

9,8522,000

7,572

4,250

1,640

331

254,387

1,805

Omni 8Str

226,398

228,088

9,8262,000

7,553

4,250

1,640

331

253,688

1,805

Omni 8Str

(M)

228,890

230,580

9,926 2,000

7,626

4,250

1,640

331

256,353

1,805

OmniAmbulance

259,553

261,243

11,152

5,000

4,250

1,640

331

283,616

1,805

Alto

Model

/

Vehicl

e

T

yp

e

Ex -

Sho

wroo

m

Price

Ex -

Sho

wroo

m

Price

(Wit

h 3rd

Year

Ew)*

Registratio

n +

SMA

RT

Card

+ No

Plate

Char

ges

MC

D

Par

kin

g

Ch

arg

es

Insu

ranc

e

Han

dlin

g

Cha

rges

B

as

ic

Ki

t

A

ut

o

C

ar

d

On

Ro

ad

Pri

ce

4th

Year

Exte

nded

War

ranty

Amo

unt

AltoStd

231,148

232,938

10,016

2,000

7,693

4,250

1,430

331

258,658

2,400

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ORGANISATION STRUCTURE AT MSIL

Maruti Udyog ltd. Has a flat organization structure with a maximum of three

levels.

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

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J.E. (TRAINEES)

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THE PRODUCTION PROCESS AT MARUTI

49

STEEL COILS

BLANKING

PRESSING

WELDING

PAINTING

ASSEMBLY

VEHICLEINSPECTION

TEST RUN

SUPPLY &DISPATCH

FROMVENDOR

S

FROMVENDORS

FROMVENDOR

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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 Marutis 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.

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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 417,392

28% 482,198 16% 522,664

8%

Passenger Cars - TotalIndustry

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 - TotalIndustry

901,150

24% 1,050,246

17% 1,129,316

8%

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MARKET SHARE

2005-06 Market Share-Segment A2

TATA

20%

HYUNDAI

21%MARUTI

59%

2005-06 Market Share-Segment A3

TATA

20%

FORD

14%

GM

6%HONDA

20%

OTHERS

7%

MARUTI

17%

HYUNDAI

16%

2005-06 Market Share-Passenger Cars

TOYOTA

1%

OTHERS

3%

FORD

3%

GM

1%

HONDA

4%

TATA

16%

MARUTI

55%

HYUNDAI

17%

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COMPETITION MODELS

SEGMENTMaruti 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, VersaMUV (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

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-

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 Suzukis expertise in all aspects of small car technology and

design, with respect to their products, their manufacturing 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.

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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 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

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Automotives 2002 Total Customer Satisfaction Survey ranked Maruti

products as No. 1 in the Economy, Premium Compact and Entry

Midsize segments respectively, for 2002.

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 Suzukis 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 Suzukis 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 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

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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

Suzukis 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.

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.

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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 Suzukis

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.

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

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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 consumers 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.

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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

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

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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 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.

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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 thewarranty 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 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 dealers 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.

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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 youll 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 thedream 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.

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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.

HMILs 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 HMILs 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 HMCs 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 companys greater focus on the

quality of its after-sales service, HMILs 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

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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.

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.

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Ford India Limited

The Ford Motor Company has a rich legacy of translating better motoring ideas tothe 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 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 pluspoints 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.

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General Motors India

General Motors India, incorporated in 1994 as a 50-50 joint venture company withthe 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 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 theholdings 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

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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

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 andlubrication 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 pur

maruti pjt 1

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