Project Report on
Marketing Mix in Maruti Udyog Limited
In the partial fulfillment of Master of Business Administration session 2008 -2010
UNDER THE SUPERVISION OF Dr. HEMANT YADAV Sr. Marketing Faculty
SUBMITTED BY RAVI BHOOSHAN MBA- IIIrd Sem Roll No. 0812970055
FIT COLLEGE MEERUT (Approved by AICTE , Ministry of HRD, & Affiliated to U.P. Technical University)
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DECLARATION I,Ravi Bhooshan
here by declare that the final Dissertation report entitled
“MARKETING MIX IN MARUTI UDYOG LIMITED” that has been submitted to FIT College Meerut is my original.
Date: Place:
(Ravi Bhooshan)
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Contents 1) Declaration 2) Acknowledgement 3) Objective of the study
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4) company Profile
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5) Vision & Mission
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6) Environmental Analysis of Maruti
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7) Organizational Analysis
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8) Porter’s Five Forces Analysis
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9) Types of Strategy
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10)
Maruti organizational structure
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Quality Policy
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Research Methodology
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13)
Graphical representation
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Marketing Mix (4 P”s)
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Suggestion
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Limitation
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Conclusion
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Bibliography
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ACKNOWLEDGEMENT First of all I want to thank the almighty for providing me to be a student of FIT COLLEGE which has provided me with an opportunity to do the Final project for the period of three months. An acknowledgement must be given to the who provide me an opportunity to work this project. If was dynamic experience that enabled me to get the feel of the real situation which I will encounter in the coming years during the working in corporate world.
My heartfelt thanks to Mr……… HOD MBA and all faculty for his valuable guidance and who provided me help to do the project in MARKETING MIX IN MARUTI UDYOG LIMITED.
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OBJECTIVE OF THE STUDY To study marketing mix in MUL Role of marketing research in helping management select and execute a market mix strategy.
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COMPANY PROFILE
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COMPANY PROFILE Maruti Udyog Limited Company Name: Maruti Udyog Limited. Business Group: Suzuki Group.
Promoters: Government Of India: 18.28% Suzuki Motor Corporation: 54.21%
Industry: Auto – Cars and Jeeps. Products: Maruti 800, Maruti Alto, Maruti Zen.
1. Company Background Maruti collaborated with Suzuki of Japan to produce cars in 1983. At this time, the Indian car market had stagnated at a volume of 30,000 to 40,000 cars for the decade ending 1983. With MUL’s entry, the passenger car market saw a spurt in demand. The sector registered 18.6% CAGR growth in sales during 1981-90. The company reached a total production of one million vehicles in March 1994, becoming the first Indian Company to cross this milestone. It crossed the two million mark in 1997. In 2001, it launched new businesses – ‘True value’, ‘Maruti Finance’, ‘Maruti Insurance’ and ‘N2N’. In 2003, the company listed on BSE & NSE after its public issue.
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2.Business profile MUL is the leading automobile company in the passenger car segment with over 50% market share in FY04. It has a presence across many segments in automobiles. It is the leader in the mini and the compact segment with its brands like ‘800’, ‘Zen’,’ Alto’, ‘Wagon R’. It also has a presence in the mid-size segment with its ‘Esteem ‘and ‘Baleno’ brands and the ‘Omni’, ‘Vitara’, ‘Versa’ models.
3. Industry scenario The passenger vehicles industry comprises passenger cars, utility vehicles (UV) and Multi-purpose vehicles (MPVs). The fortunes of the auto sector are strongly correlated to macro-economic parameters and the performance of the industrial sector. In India, around 80% of all new cars are financed. The increased availability of finance at low rates and strong GDP growth translated in a healthy growth for the industry.
instance, UV’s account for 50% of the total Passenger vehicles market and in Indonesia they account for 80% of the market. Length based classification (introduced by SIAM in April 2008 -09): Passenger cars • Segment A1 (mini) – cars having a length of up to 3,400mm • Segment A2 (compact) – cars having a length of 3,401-4,000mm • Segment A3 (mid-size) – cars having a length of 4,001-4,500mm • Segment A4 (executive) – cars having a length of 4,501-4,700mm • Segment A5 (premium) – cars having a length of 4,701-5,000mm • Segment A6 (Luxury) – cars having a length of more than 5,000mm
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6.Vision The Leader in the Indian Automobile Industry, Creating Customer Delight and Shareholder's Wealth; A Pride of India. Core values: Customer Obsession Fast, Flexible and First Mover Innovation and Creativity Networking and Partnership Openness and Learning
Mission •
Modernization of the Indian Automobile Industry.
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Production of fuel-efficient vehicles to conserve scarce resources.
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Production of large number of motor vehicles which was
necessary for
economic growth. •
Continually improving & maintaining the environmental performance of activities, products and services.
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Reduce/prevent pollution, minimize waste & maximize resource efficiency.
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Will strive to work beyond legal regulatory requirements
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Enhance the environment awareness and commitment of employees and business associates.
Environmental Analysis of Maruti
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Before beginning the environmental analysis of the company, I would like to mention the bases for classification used here. The seven components of environment are: the social, political, economic, regulatory, market, supplier and technological sectors of environment.
A) Social Environment The social environment consists of factors related to human relationships and the development, forms and functions of such a relationship having a bearing on the business of the organisation.
In Maruti Udyog Limited (MUL), we have a company that was set up by an Act of Parliament in 1981, and is hence well known to most of the car-purchasing people in the country. Most of the “baby boomers” of the late 1970s and early 1980s are well acquainted with them, which indicates that their products have a high degree of knowledge. Also, the fact that India has a very strong emerging middle class of almost 330 million people, with median incomes in the range of Rs 2.5 lakh PA per family, means that when they purchase their first vehicle, Maruti will be the first choice that enters their thought process. Maruti has a range of cars, all the way from the basic Maruti 800 to the Suzuki Grand Vitara, at all price points in the market. Therefore, a person who is going in for his first car is likely to buy a Maruti, as studies show. Indeed, a recent ORG/MARG study indicated that 84% of first-time car buyers in India purchase a Maruti 800. Maruti have cottoned onto this, and they are cleverly marketing the 800 to target new buyers with a series of emotive print and television advertisements. This is a long term strategic
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decision they have taken, and it is paying rich dividends, both in terms of revenue and market share, with the Maruti 800 being a cash cow and market leader in terms of sales.
B) Political Environment The political environment consists of factors related to management of public affairs and their impact on the business of the organisation.
India’s political environment, a parliamentary democracy, has been generally accepted to be supportive of FDI/FII. However, with the Congress forming the majority of governments after independence, and the license raj set up by Nehru to protect smallscale players, there were few opportunities for large scale domestic car manufacturers to prove their worth, with Hindustan Motors’ venerable Ambassador leading the pack. Even for the first ten years of Maruti’s existence, they were hobbled by FDI restrictions, which prevented stakeholders Suzuki of Japan from implementing technology transfer and manufacturing improvements. This all changed in 1991, with the market reforms and liberalization implemented by Dr. Manmohan Singh, allowing greater
FDI and removing quantitative and qualitative
restrictions on foreign involvement in domestic companies. Suzuki took advantage of this and greatly expanded Maruti’s product line, while concurrently introducing Japanese techniques like Kaizen and JIT, to improve Maruti’s productivity. It is no coincidence that Maruti’s product line exploded, and they were transformed from a single product company into one with a varied and diversified portfolio, with cars covering virtually all market sectors, like the Maruti 1000, Esteem, Zen, Wagon R and Baleno. Newer projects, like the Rs. 6000 crore global engine manufacturing plant being set up, and the export oriented models currently being developed are also a direct offshoot of the
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liberalization of the Government policies. Therefore, helpful Government policies have been a huge help in allowing Maruti to diversify and improve their practices and product portfolio. Their entire product mix and strategy has been altered to allow them to better adjust to market dynamics.
C) Economic Environment The economic environment consists of macro-level factors related to the means of production and distribution of wealth that have an impact on the business of an organisation.
After liberalization in 1991, general economic indices in India like the per-capita income and GDP have been on the rise. This fundamentally means that there is now more money in the hands of people, and they are far more likely to treat it as disposable income. This creates a good environment for the marketers, as they have a better chance of selling their products. Maruti have not been lagging behind in their efforts, and they have entered into a large number of tie-ups with finance companies and agencies, to provide easy finance options to their customers.
D) Market Environment The market environment consists of factors related to the groups and other organisations that compete with and have an impact on an organisation’s markets and businesses.
One of the most important factors to be discussed in the market environment is the presence of competitors. Pre-1991, Maruti virtually monopolized the Indian car market.
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However, when entry restrictions into the Indian market were eased, a host of international auto manufacturers made their way into the Indian market. Among them were Korean auto giants Hyundai and Daewoo, along with industry luminaries like Mercedes Benz and General Motors. Maruti was shaken out of its complacency, and had to quickly improve its product offerings as well as its quality to stay competitive with global standards. A positive outcome of this was that the Indian consumer now had a wider choice of products, as well as quality that was well up to global standards. Maruti had to improve, it is true, but it was a move turned out to be in the interests of the Indian consumer as a whole.
E) Technological Environment The technological environment consists of those factors related to knowledge applied and the materials and machines used in the production of goods and services that have an impact on the business of an organisation.
In Maruti’s case, the main Source of Technology has been Suzuki, the Japanese giant. They have been involved in transfer of technology to India, to help set up Maruti’s production facilities. They have also been responsible for the transfer of soft-skill knowledge, like JIT and the Kaizen system that has been in widespread use in Japan. Pre-1991 also, foreign technological collaboration was popular in India, but it was subject to strict governmental regulation regarding indigenization, impact on the local sector and export items. However, these guidelines have now been eased, and Indian companies like Maruti are allowed access to the latest international techniques and methods. This has allowed them improvements in productivity and resource utilization, while also letting
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them indigenize the processes and adapt them to local needs.
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Organizational Analysis In this section, I will be analysing the organisation of Maruti Udyog Limited as a whole. Sections covered are the Marketing Capability Factors and Operational Capability Factors. I will be excluding Personnel Capability
A) Marketing Capability Factors
1) Product Related Product development in the automobile industry was a very capital intensive process. At the same time, car companies had no option but to introduce new models regularly. Maruti attempted to reduce the initial investment cost for new models through inhouse development and localized sourcing of dies, welding jigs, and other equipment, and by introducing flexible welding lines that could be used for multiple models. It also planned to source dies for new models and upgraded versions of existing models from countries such as Taiwan, which were less expensive than in Japan. Maruti reduced the number of platforms and standardized the engines. In the early 2000s, it had six basic vehicle platforms, which it intended to reduce to only three platforms – 1,061cc (Alto and Wagon R), 1,300cc (Esteem) and 1,600cc (Baleno). Maruti also discontinued two of its models - Maruti 1000 and Gypsy 1000 - as part of its efforts to rationalize the product range.
2) Distribution Related This is one area where they are head and shoulders ahead of the competition. From
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Kashmir to Kanyakumari, there are innumerable Maruti authorized service stations and retailers, and also quite a few unauthorized ones! This means that availability of spare parts is never an issue, and service is also well covered. The spare parts themselves are very cheap and easy to manufacture, giving Maruti an advantage over their competitors, especially Hyundai and GM. A side window for a Maruti Zen will not cost you more than 500-600 rupees, while a comparable spare part for a Hyundai Santro will cost in the region of 3500-4000 rupees! As competition intensified, Maruti realized the importance of getting closer to its customers. It launched various initiatives to improve customer service. In 1999, Maruti established a chain of model workshops across the country under the brand name, Maruti Service Masters (MSM). These service stations operated by franchises became one-stop shops to meet all vehicle needs for Maruti cars. The MSMs offered maintenance service, spares, accessories, insurance related services and took care of warranty claims. Maruti also set up Customer Call centers in the National Capital Region, Bangalore, Hyderabad, Chennai and Mumbai. Incumbent and prospective customers could interact with the company through a toll free telephone number. 178 authorized dealers with 243 sales outlets in 161 cities, 342 dealer workshops and 1,545 Maruti Authorized Service Stations (MASS) covering 898 cities, and express service stations on 30 highways across the country.
3) Brand Building Brand building had gained momentum at Maruti since the late 1990s. In 2002, Maruti had a promotional budget of Rs 230 crore.13 Maruti employed two ad agencies, Lintas and Rediffusion. Lintas handled advertising for Baleno, Esteem and Zen brands while Rediffusion took care of Maruti 800, Omni, Gypsy and Wagon R under its fold. With new product
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launches, upgradations and increasing competition, the company decided to give Capital Advertising the Rs 15-crore corporate advertising account, in 2008. In the late 1990s, Maruti had come up with various advertisements with striking appeal. In one ad, Maruti showed this Maruti 800 being easily parked while others were struggling. In another ad, Maruti projected its countrywide service network by depicting a situation where one could not find a restaurant in distant areas of Ladakh but could find a Maruti service station. In the early 2000s, Maruti retuned its ad campaign by using emotions. In one ad for the Maruti Esteem, a child after having fared poorly in the exam dreaded the prospect of showing his progress report to his father. Knowing his father was always in a good mood while driving the Maruti Esteem, the child asked his father whether they could go for a long drive. On the way, the kid informed his father about his report and got away without any scolding. Another ad showed a father seeing his son reaching the school in a Maruti belonging to one of his friends. Finally the father bought one and the ad ended with a new father-son pair going through the same emotions. Another ad showed a girl crying after missing her bus. A man driving a Wagon R invited her along with his family members and assured her that she would definitely catch the bus. Finally, the car reached the bus and the girl happily met her friend. In some cases, Maruti also used celebrities to endorse its products. In late 2002, Maruti's first multi-purpose luxury vehicle, Versa was unveiled by film star, Amitabh Bachchan and his son Abhishek. Through this ad, Maruti attempted to portray a combination of youthfulness and stature.
Maruti associated itself with motor sports as part of its promotional efforts. Since
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1999, it had sponsored Maruti Raid De Himalaya, India’s longest, highest and most arduous motor sport raid. The Raid was listed on the international off-road rallies calendar of the Fédération Internationale Motocycliste (FIM), Geneva, Switzerland. In 2001, the company also held a car rally – Autocross in Delhi for amateur drivers. The event was later held in Chandigarh, Ludhiana, Mumbai, Chennai, Kolkata and Goa. Maruti also had plans to sponsor other sporting events like golf and polo.
4) Exports MUL exported 51,175 units in FY04, a growth of 59% yoy. Its FOB value is Rs 9.4 billion in FY04 compared to Rs 6.2 billion in FY03, registering a 51.7% rise yoy. This growth was mainly due to ‘Maruti 800’ which grew 56.8%. The A2 category registered a 60.5% growth. The Alto and the Zen have done well for the company. The company registered good growth in Algeria, Belgium, Bhutan, Chile, Denmark, Germany, Hungary, Nepal, Sri Lanka and UK.
5) VRS The company has 3,334 employees as on March 31, 2004. It offered VRS to its employees in FY04 and 1,251 employees accepted the same. Rs1.2bn was accounted in the income statement to VRS in FY04. This was additional to the VRS offer in FY02, which was accepted by 1,050 employees.
Doubts Now that Suzuki is the majority shareholder in Maruti Udyog, and the Indian Government has washed its hands of the marketing of the cars, doubts do exist as to
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the viability of Suzuki’s marketing efforts, especially in the view of major global giants like GM, Ford and Hyundai as competition, all of which have deeper pockets than Suzuki.
b) Operations Capability Factors
1) Production Capabilities Maruti’s manufacturing facility comprised three integrated plants with flexible assembly lines at Gurgaon. The first plant was set up in 1984 with an installed capacity of 20,000 vehicles per annum. This was augmented to 130,000 by 1991. Installed capacity was further increased in 1995 to 200,000 vehicles per year with the second plant becoming operational. In 1996, Maruti increased its installed capacity to 250,000. With the third plant becoming operational in March 1999, installed capacity increased to 350,000 vehicles per year, which was the highest not only among passenger car manufacturers in India but also among the passenger car manufacturing facilities of Suzuki’s subsidiaries outside Japan. In 2008-09,Maruti produced 351,949 vehicles by operating at a capacity utilization of 102%, as compared to the industry average of 57.8%. Maruti had 17 manufacturing shops, which were capable of producing more than 50 variants of the nine basic models manufactured, with different specifications, within the same day. This was facilitated by the company’s information technology-enabled vehicle build sequence system and vehicle tracking system. Under the vehicle build sequence system, at the production planning stage, requirements were communicated via intranet (internally) and extranet (to vendors) in advance. Maruti adopted the Japanese management concept of Kaizen, or continuous
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improvement. Kaizen was based on the concept of making incremental improvements in the processes and the products. For example, Maruti started manufacturing 25 multi-axis robots and 16 multi-spot welders. Group discussions among employees in different departments were conducted on a monthly basis to discuss and resolve problems relating to their areas of operation. Maruti also had a suggestion scheme in which, employees were encouraged to contribute ideas for improvement in any area of operation. Over 50,000 suggestions were received from employees every year. The average number of suggestions made per employee improved by approximately 24% in 2003. Maruti also won numerous awards including the "Excellence in Suggestion Scheme" award instituted by the Indian National Saving Scheme Association regularly for each of the last four years and 15 trophies in quality circle competitions organized by the Confederation of Indian Industry. Under a three-year program, called ‘Challenge 50’, Maruti intended to raise productivity by 50% and to reduce the costs per vehicle by 30%, by 2004-05. It also planned to align its operating efficiencies with Suzuki's premier plant at Kosai in Japan by 2005. This program was personally vetted by O. Suzuki, chairman of the parent company. In order to meet these goals, Maruti started implementing new manufacturing techniques. Maruti also launched various value analysis and value engineering initiatives. New layouts and innovations like automated trolleys helped to reduce wasteful movements and worker fatigue. Maruti also involved component suppliers in Challenge 50. In-house automation, such as two-axis and four-axis robots and material handling devices also enhanced productivity. The effectiveness of these measures was reflected in a 30% fall in Hours per Vehicle 12 (HPV). Similarly, various productivity improvement programs were undertaken at some key vendors in
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collaboration with experts from Suzuki. Maruti had a 60-megawatt gas turbine captive power plant, which had multi-fuel capability. It also had a reverse osmosis water treatment plant and effluent and sewage treatment plant. Maruti emphasized the three principles of “Reduce, Reuse and Recycle” for conserving energy. Between 1997 and 2008, Maruti reduced the consumption of electricity measured as the ratio of kilowatt hours of power consumed to the number of vehicles produced, by approximately 29%. This was achieved by using energy-saving lights and natural light, and through more efficient usage of other electrical appliances. In the same period, it reduced the consumption of water by approximately 66% through recycling of wastewater and effluent and sewage treatment.
2) R&D The objective of R&D by MUL was two-fold. One was to reduce product costs and the second is to become the regional R&D hub for Suzuki operations. The R&D
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spends for FY04 stood at Rs 390 million which is 0.35% of total turnover. R&D operations include, face lifts and body changes – styling, clay modeling, and computer aided design, proto-type making, dies designing and so on. In FY04, the company introduced new Zen due to its R&D efforts. Sharing of vehicle platforms facilitated the use of common components. For instance, the Maruti 800 and the Alto LX model shared the same platform. So they shared the engine and other critical components. Maruti was Suzuki’s biggest operation outside Japan, accounting for about 10% of the group’s net profit. The current car penetration in the country was six per thousand households. Even if it were to rise to 12, which was the figure for Pakistan and Sri Lanka, the growth would be phenomenal. Keeping this in view and as part of its globalization drive, Suzuki believed it was important to strengthen Maruti’s technological capabilities. Suzuki planned to bring in new technology from Japan making Maruti capable of full model-development by 2008. This meant new models based on indigenous R&D would roll out of its Gurgaon plant. Maruti believed developing new models in India would enable it to drastically reduce its response time to the changing market dynamics. It would also ensure a high indigenous content from the beginning, thereby bringing costs down. In mid-2003, Suzuki’s decision to waive royalty on the old models and cut the cost of Japanese components by 10% reduced Maruti’s overall cost by Rs 180 crore a year. Suzuki had identified Japan as the global hub for big cars, and Hungary for mid-size ones. India was expected to supply small cars across the world. Maruti’s Alto symbolized this new role.
3) Vendor Management
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Vendor management was a critical success factor in the automobile industry, where many parts were outsourced. Maruti had implemented a system of Vendor Rating that gave timely feedback to vendors. While most of the vendors were ISO/OS certified, they were encouraged to obtain TS 16949 and ISO 14001 certification to strengthen further their quality systems. Besides, Quality Meets with CEOs of vendor companies, Cross Functional Teams were set up to solve quality problems. As a result, the Average Defect per Vehicle came down by 80% in 2002 compared to 2000. The percentage of ‘Direct Final Check OK’, which signified the percentage of vehicles that passed through the inspection stages as defect-free, another indicator of the quality of the manufacturing process, improved from approximately 19.5% in 2000-01 to 77% in 2006-07 and 87% in 2007-08. Maruti procured about Rs. 5000 crore of components every year. The company initiated various cost rationalization efforts by aggressive value analysis and value engineering, together with its vendor partners. Maruti also streamlined the sourcing and stocking of materials and components through its `Delivery Instruction system'. Web initiatives helped Maruti to bring down procurement time and costs. Maruti reduced the number of vendors from 370 in 2000 to 299 in 2008 and had plans to reduce the number further to 100. Earlier, Maruti had 30 to 40 suppliers for sheet metal. By creating subassemblies it reduced the number to six. Instead of assembling components from many small suppliers, Maruti started buying from big, tier-1 suppliers, who assembled supplies from others. This resulted in better coordination, smaller inventories and consequently lower costs. In line with the Japanese tradition, Maruti supported its vendors in various ways. It helped them in setting up plants, automating the process and finally in value
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engineering. In a country, where payment delays were common, Maruti paid its vendors within seven days of receipt of materials. Maruti sometimes reduced the cost of capital for its vendors by taking advantage of its superior credit rating and borrowing on their behalf. To facilitate just-in-time production, Maruti encouraged the vendors, who were located in far away places, to build a warehouse near Gurgaon, where its manufacturing facility was located. Maruti promised to compensate them for expenses incurred in maintaining the warehouses. Maruti started working with some of its major vendors to implement the Maruti Production System (on the lines of the Suzuki Production System) that focused on eliminating wasteful activities in the manufacturing process. The company set cost reduction targets for vendors and promised to share the benefits with the vendors. Maruti also launched various initiatives to reduce inventory in the supply chain. Component and raw material inventory on 31st March 2008 was about 35% less than at the start of the fiscal year. Concepts like Just-In-Time helped Maruti to reduce its inventory levels from 22 days in 1995-96 to 13 days in 2001-02 to 2.9 days in 200203.10 Implementation of ‘Delivery Instruction System’, one of the best practices Maruti had picked up from Suzuki was aimed at streamlining the scheduling and handling of materials and components. This system provided details of Maruti’s component requirements for every 15 days, across the different variants of the various models, to its vendors. Maruti connected to its vendors through an Internet-based information network, which maintained online information regarding order status and delivery instructions. This capability helped in reducing both inventory levels and lead times required for the supply of various components and sub-assemblies, and enabled vendors to plan and dispatch their products more efficiently. Extensive e-buying in consumables and
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services cut procurement costs. The extranet connecting all dealerships provided the necessary support for new business initiatives.
Strategic Advantage Profile Based on the information presented above, I have created a small Strategic Advantage Profile for Maruti Udyog Limited.
Capability Factor
Advantage/Disadvantage
Competitive Strengths/Weaknesses
1)Finance
Advantage
Large Investments, Very Cash Rich, Low Debt, Low Deferred Liabilities.
2)Marketing
Neutral
High Market Share in Cash Cow sectors, Ubiquitous Service Centres, Easily Available Cheap Spare Parts, Good Exports Performance, and Rationalisation of Employee Strength. Presence of Strong Competitors, with more funds may be a
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deterrent. Strong Advertisements and Brand Presence.
3)Operations
Advantage
No Capacity Constraints, Lower Production Time, Large Amount Of R&D and Design Work being done In House.
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BCG Matrix for Maruti Udyog Limited High
Mid size Esteem, Baleno
Market Growth
Compact Zen, Alto
??? MUV Gypsy
Mini 800
SUV Grand Vitara
MPV Versa, Omni
Low 10x
x
0.1x
Relative Market Share
The BCG Matrix for Maruti Udyog is as shown above.
A) In the Star segment, we have the Zen and Alto. Primarily driven by Export sales, the Zen is doing very well abroad, and even in India, it is the leading seller in the B segment. The Alto is being heavily promoted by Maruti as the successor to the long serving 800, with a succession of price cuts. In fact, the basic Alto LX is now within 15-20,000 rupees of the Maruti 800, and with better technology and more fuel efficiency, it is practically a no-brainer purchase decision.
B) In the Cash Cow segment, we have the Maruti 800 and the Omni, along with the Omni’s updated facsimile, the Versa. Despite Maruti’s positioning of the Alto as the 800’s replacement, the 800 still occupies prime position for first
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time car buyers, its main market. The Versa and Omni fulfill the need for a cheap, versatile load carrier, which no other manufacturer has tried to fill so far.
C) In the Dog segment, we have the Gypsy and the Grand Vitara, at opposite ends of the spectrum for the MUV segment. This segment is currently stagnant, and the old Gypsy has no chance. Its value perception is very low, having been unchanged for the last 12 odd years. The Grand Vitara is an enigma; a new car, technologically advanced. But it is priced very high, at around 14-16 lakhs, which may be a factor in its low sales to date. The entire segment as a whole, in fact, includes cars like the Toyota RAV4 and the Honda CR-V and is experiencing near-zero growth, with only the CR-V showing signs of life with a few sales. The car manufacturers have overestimated the demand for vehicles in this segment, and are now regarding it as a low potential area, concentrating their efforts in other directions.
D) We now have the Esteem and Baleno as the question marks, or the “riddle wrapped in an enigma” if you will. The segment as a whole is exhibiting high sales, with cars like the Ford Ikon, the Hyundai Accent and the Chevrolet Optra. The Baleno is not selling well at all, while the Esteem has at least managed to gain a toe-hold in the market. This may have something to do with the perception of Maruti as a value-car manufacturer, one which just cannot successfully build and provide a good higher-segment vehicle. They have quite a lot of work to do in order to banish this sentiment, and occupy prime position in the mind of the consumers.
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Medium
High
Mini 800
Compact Zen, Wagon R, Alto
Mid size Esteem, Baleno
Low
Industry Attractiveness
GE Matrix for Maruti Udyog Limited
MPV Versa, Omni
SUV Grand Vitara Low
Medium
High
Business Strength
The GE Matrix for Maruti is shown above. Similar to the BCG Matrix, we can see that the MUV Industry, to begin with, is of only medium attractiveness to the manufacturers Maruti’s sole presence in this market is the large Grand Vitara, which isn’t selling well at all.
The Esteem and Baleno, C segment cars, are present in one of the hottest market segments, with their competitors being the Ikon, Accent and Optra. Here, Maruti are quite strong, but without the brand cachet of the 800 and Alto in the lower A segment.
The Versa and Omni dominate the MPV segment, with no other competitors present. All the manufacturers view this segment as giving almost zero profit, so they prefer to concentrate their efforts in other segments. With the Omni, Maruti has the first mover 30
advantage, so they can afford to maintain a presence here, with almost 100% market share.
The Maruti 800, Alto and Zen are placed in the hottest market segments. The A & B segments are exhibiting large amounts of growth, with a bunch of first time buyers purchasing the 800 and Alto. Interestingly, the phenomenon of the “Second” exists in the case of the Zen, with the car being the most popular car purchased as an upgrade from an earlier, older car. With heavy promotion of the Alto LX as a Maruti 800 replacement, Maruti have got this market segment sewn up, with an 80% market share.
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Ansoff Matrix for Maruti
The Ansoff Matrix for MUL is given above. The intersection of “Existing Products – Existing Markets” gives us a strategy of Market Penetration. A) Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. Market penetration seeks to achieve four main objectives: • Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling. 32
• Secure dominance of growth markets. • Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors. • Increase usage by existing customers – for example by introducing loyalty schemes A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. Therefore, with the bread-and-butter Maruti Zen, Alto and 800, they are seeking to achieve maximum market share and secure dominance in the A and B segments, where their major earnings come from.
B) The intersection of “New Markets – Existing Products” gives us the Market Development strategy. Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy, including: • New geographical markets; for example exporting the product to a new country • New product dimensions or packaging: for example • New distribution channels
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• Different pricing policies to attract different customers or create new market segments Maruti Baleno is following this strategy, by entering new geographical markets and new market segments, as demarcated by Maruti.
C) The intersection of “Existing Markets – New Products” gives us the Product Development Strategy. Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. The Wagon R and the Grand Vitara represent attempts by Maruti to enter the burgeoning “tallboy” and SUV markets respectively.
D) The intersection of “New Markets – New Products” gives us the “Diversification” Strategy. Diversification is the name given to the growth strategy where a business markets new products in new markets. This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience. For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks. The Maruti Versa is one such product, where they are trying to popularize the concept of the “People Carrier” in India, especially with advertisements featuring Amitabh and
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Abhishek Bachchan!
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Porter’s Five Forces Analysis Entry Barriers It is not only incumbent rivals that pose a threat to firms in an industry; the possibility that new firms may enter the industry also affects competition. In theory, any firm should be able to enter and exit a market, and if free entry and exit exists, then profits always should be nominal. In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inhibit additional rivals from entering the market. These are barriers to entry Up until 1991, Maruti were in the cushy position of being in a near-monopoly in the Indian market, with the only other car manufacturers in India being Hindustan Motors, with their venerable Ambassador, and Tata Motors, with their workhorse Estate and Pickup. These hardly posed any competition to Maruti’s bread and butter 800 model, which as a result enjoyed a near monopoly in the small car market. The reason for this was that the Indian Government, in pursuance of their license raj and barrier system, as explained earlier, had set very stringent conditions on the entry of foreign car companies into India. Some of the restrictions included: •
Foreign equity greater than 35% not allowed.
•
Direct manufacturing not allowed, unless all components sourced from India.
•
Engine homologation procedures were very difficult.
As a result, it was small wonder that foreign companies did not think it worth their while to enter the Indian market. However, with the easing of Indian regulations in 1992-93, a number of foreign automobile manufacturers began entering the Indian market, beginning with Peugeot, with Premier Automobiles Limited (PAL) as their local partner. Hyundai
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followed suit in 1996, and Ford, GM and Toyota all have a strong local presence now. The restriction removal actually strengthened Maruti’s position in the Indian market for 2 reasons: •
The removal of entry restrictions on foreign companies coincided with the removal of restrictions on foreign technology transfer, which Suzuki took advantage of, by importing their state of the art processes and plant equipment from Japan. This helped Maruti streamline their manufacturing, and bring their inventory times down.
•
Competition breeds efficiency; though this statement is hard to quantify, the presence of competitors has shaken Maruti out of their stupour; they are now introducing new models quickly, and aggressively cutting prices as and when they can to keep the pressure on the competitors.
Threat of Substitutes In Porter's model, substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a product's demand is affected by the price change of a substitute product. A product's price elasticity is affected by substitute products - as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices. In terms of substitutes for cars, we need to look at existing public transport systems as the most likely to take the place of cars. In cities like Bombay, with excellent public transport systems in place, Maruti faces a real threat from the taxis, BEST buses, local trains and auto rickshaws. However, in mofussil towns like Belgaum and Dhanbad, in the absence of viable public transport systems, cars are the only way to get around, and Maruti’s price
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advantage gives them a clear lead over their competitors to get a market presence here. Therefore, ironic as it may seem, the lack of a good public transport system in non-metros is actually helping Maruti sell more cars!`
Rivalry In the traditional economic model, competition among rival firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are interested in these differences. Maruti’s main rivals in the A and B segments are Hyundai Motors and Tata Motors. They have the Santro and Indica respectively, to compete with the Zen and Maruti 800. The market share advantage enjoyed by the 800 is proving difficult to surpass however, and it remains the car to beat, so to speak. In the higher market segments, stiff competition exists for the Esteem and the Baleno in the shape of Hyundai’s Accent and GM’s Opel Corsa, as well as the Ford Ikon. As explained earlier, Maruti’s low brand image condemns them to a perpetually low market share in the C and D segments.
In order to combat its rivals, Maruti is following the strategies listed below: •
Changing prices - raising or lowering prices to gain a temporary advantage.
Followed quite often by Maruti, seasonal sales and price reductions are rapidly becoming a stable in their bag of tricks. •
Improving product differentiation - improving features, implementing
innovations in the manufacturing process and in the product itself.
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•
Creatively using channels of distribution - using vertical integration or using a
distribution channel that is novel to the industry. Mention has been made earlier of the MSMs at work, and Maruti’s extensive supplier network gives them ample room to work with in developing innovative distribution networks.
Supplier Power A producing industry requires raw materials - labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industry's profits. Maruti’s relationship with the suppliers is quite strong; their insistence that the vendors obtain high-level certification, like TS 16949 and ISO 14001 helps them get higherquality vendors. A problem exists with the engine suppliers; many of the engines are provided by a single company, e.g. the Peugeot diesel in the upcoming Esteem diesel variant, therefore they can exercise price control over the auto manufacturers. Maruti are trying to circumvent this by sourcing from different engine makers, but this search is taking them longer than expected, and as of now, they have Peugeot as their sole diesel supplier, with all the attendant problems.
Buyer Power The power of buyers is the impact that customers have on a producing industry. In 39
general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms a monopsony - a market in which there are many suppliers and one buyer. Under such market conditions, the buyer sets the price. In reality few pure monopsonies exist, but frequently there is some asymmetry between a producing industry and buyers. The points below have to be considered when evaluating buyer power: Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity Threat of backward integration Product differentiation Buyer concentration vs. industry Substitutes available Buyers' incentives
As of today, the Indian consumer is now a very demanding one, with huge numbers of buyers entering the market. They are market savvy, they demand sweeteners to the deals, and are quite pricing sensitive. Car buyers are quite fragmented demographically as well, with the ages and income groups varying dramatically. They are well informed about the cars being sold to them, and are also aware about the various finance schemes available to them. Maruti has a difficult job on their hands in catering to these people, but they must be doing
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something right, with the market share they have attained, especially in the A&B segments bearing ample testimony to the success of their marketing efforts.
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Types of strategy Corporate Level Strategy Suzuki has announced plans to establish a new company in India to manufacture automobile engines. The new company, Suzuki Engineering India (tentatively named), plans to construct a plant with a production capacity of 100,000 diesel engines per year in Haryana (Manesar), at a total investment of 10bn yen (Rs 420 crore). The plant is scheduled to start operations by the end of 2006, producing 1.3L diesel engines with 4 cylinders. For this engine, Suzuki had product licence agreements with Fiat Auto in Italy and Adam Opel AG in Germany. The new company will be merged with Suzuki Metal India, an aluminium casting company in India. A three company structure will give Suzuki transfer pricing options within the listed company framework and may earn tax benefits too. Suzuki Engineering India and Suzuki Motorcycle India (previously announced as Integra Overseas), plan to start production and marketing of motorcycles by the end of 2005. The company will form a project team for new assembly company in India. Suzuki representatives explained that this new corporate structure is a means to support MUL with investments and hedge risks. Said Maruti chairman Shinzo Nakanishi: “We are looking at total investments worth about Rs 6,000 crore in the next five years, which includes everything from the diesel engine and gearbox plants to new models. MUL’s revenue is Rs 2,000 crore, so the use of internal resources is not enough.
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Problems WHY would Suzuki Motor Corporation (SMC) want to promote two new companies in India to establish a diesel engine and a new car assembly plant when it already has a 54 per cent subsidiary in Maruti Udyog? The stock markets in India and Japan have delivered their respective verdicts on who could gain and who could lose from the move. The two days since the announcement have seen the Maruti stock fall by 9 per cent while the SMC stock has risen by 3.6 per cent on the Tokyo Stock Exchange. The Indian market appears nervous that Suzuki has not chosen to invest through Maruti and rightly so too. It appears clear that the two new companies, whatever their equity structure, represent the future of SMC's operations in India. The only difference between the two new companies on the one hand and Maruti on the other will be the presence of the Government as a shareholder. The latter holds 18 per cent in Maruti presently and also has its representative on the Board of the company. The Government will either be completely shut out or maybe a very minor shareholder in the two new companies depending on their capital structure. Ditto for public shareholders (including institutions) who currently own 27.5 per cent in Maruti. SMC's motivation appears to be to protect its future proprietary technology transfers for new car models and engines. The move may also be driven by the urge to retain most, if not all, of the earnings from future business with itself and not have to share it with other partners. SMC sees a major potential to use its Indian operations as a base to serve other markets in the region. India is anyway one of the biggest markets outside Japan for small cars and SMC is a leader in this segment. The There is also the possibility that the entire move is now designed to exert pressure on the government to sell its residual stake in Maruti to SMC before the stock loses further
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value. The public shareholders can always be bought out through an open offer. Interestingly, none of the big multinational passenger car companies in India is listed on the bourses. Ford, General Motors, Hyundai, Toyota, Honda and DaimlerChrysler all own between 95 and 100 per cent of their subsidiaries with absolutely no public shareholding. Suzuki is the only exception to that rule as Maruti is a listed company. But that may soon be history if SMC has its way. What we are now seeing is probably the first move in a well thought out plan that will, in the near future, see a Suzuki subsidiary in India wholly owned by it and having under its control the new car assembly line, the diesel engine plant and most important, the existing assets of Maruti Udyog. For Maruti and its public shareholders, the signals are indeed ominous. There is bound to be a clash of interest in future and at a time when Maruti will need newer platforms and models to take on competition. The new small car platform that Suzuki has promised for India could well go to the new companies rather than Maruti. The latter would then be saddled with models old by a decade or more and worse, compete with its own parent's newer models in the same market.
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Business Level Strategy Our policy is to be present in most segments, but our focus will be on small cars. This country for a good number of years will be a small car market because five million twowheelers are sold and only six lakh cars. You have got 35-40 million two-wheelers on the road. They have to upgrade. -
S.K BHARGAV, CMD,Maruti.
That, in a nutshell, is Maruti’s current basic business strategy. Their bread and butter model is the Maruti 800, launched way back in 1983. Since then, they have been concentrating on the sales and marketing of this car, with virtually no updates until 1992. That year, with the liberalization of the Indian car markets, foreign players began to enter the Indian scenario, and Maruti and their parent company, Suzuki of Japan soon learnt: innovate or perish. In order to combat the influx of foreign cars, they have implemented the following business strategies:
1) New Product Launches. Referring to the table above, on page 4, we can see that Maruti have launched the following models in the past 11 years: 1993 - Zen, B Segment 1994 – Esteem, C Segment 1999 – Wagon R, B Segment 1999 – Baleno, C Segment 2000 – Alto, A Segment. This has been necessary; in order to combat the legions of foreign cars entering the
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market, including such direct competitors, as the Hyundai Santro, Daewoo Matiz and the Tata Indica. A further launch coming up is that of the C segment hatchback, the radically styled new Swift. Priced at around Rs. 5 lakh, it is intended to be a radical alternative to the current crop of standard 3 box sedans. They also intend to innovate, with possible future variants including an estate version of the Esteem, slotting in below the Baleno Altura.
2) Diesel Variants Following the dismantling of the administered pricing mechanism for the petroleum sector, the price disparity between diesel and petrol was expected to narrow down. Maruti, therefore, did not anticipate a sustained demand for diesel cars and hence did not plan for a diesel engine facility. However, this has not happened as petrol suffers a higher excise duty when compared to diesel. Also, a cross-subsidy tax of Rs 6 per litre is levied on a litre of petrol, mainly to help subsidise kerosene and liquefied petroleum gas (LPG). It’s focus diesel now, with Maruti Udyog (MUL) stepping hard on the diesel. MUL will set up a 1 lakh units per annum diesel engine greenfield plant in Haryana to manufacture the 1.3-litre common rail direct injection (CRDi) engine. Maruti is sourcing technology for this from Fiat and Opel Adam, both General Motors (GM) Group companies. GM holds a stake in Suzuki. Maruti has been importing the 1490 CC, TUD 5 engine from Peugeot for the diesel cars it sells in the B and C segments, comprising the Zen and Esteem. With the 1.3-litre diesel engine, it will be able to change that situation. Commercial production at the Rs 350 crore plant will begin by ’06, after MUL directors approved the investment at the board meeting on May 19, 2004. The 1.3-litre diesel
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engine can go on any of Maruti’s existing B and C segment vehicles. MUL currently sells diesel engine models in modest numbers. With the setting up of a plant with the capacity to produce 1 lakh engines annually, this opens up huge possibilities. Speculation extends not to Maruti’s product range, but also for others like Fiat. The Maruti offerings in the segment, which can take the 1.3-litre engine are Zen and Esteem in the B and C and Gypsy in the multi-utility vehicle (MUV) segments.
3) Diversification Maruti entered four related businesses- corporate lease and fleet management (Mid2001), buying and selling of used cars (October 2001) auto finance (January 2002), car insurance (May 2002). Maruti believed it was important to provide customers a “one-stop shop” for automobiles and automobile-related products and services, in what it termed the “360 degree customer experience”. In mid-2001, Maruti started offering its leasing and fleet management services to corporate clients under the “Maruti N2N” brand. Brand management, business development, maintenance, risk-underwriting and fleet management operations were the responsibility of Maruti. But the services of four key alliance partners were used to operate the business: the financier, the dealer, the insurer and the car rental agency. The financier conducted initial credit assessment, provided funding, took residual value risk and was responsible for collections. The dealer maintained the cars and provided other value-added services such as valets and emergency assistance. The insurer provided vehicle risk underwriting. The car rental agency provided replacement cars if and when necessary. Maruti earned fleet management rental fees from the client and a business
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development fee from the financier.
Used cars addressed the needs of two segments- two-wheeler vehicle owners aspiring to own a car and existing car owners planning to upgrade their cars. The used car market in India was estimated to be between 1.1 and 1.3 times the size of the market for new cars in 2007. Until late 2008, the business of selling used cars was handled primarily by the unorganized sector, resulting in poor reliability and transparency. So in October 2001, Maruti entered the business of buying and selling used cars under the brand name ‘True Value’. As many as twelve ‘True Value’ outlets were set up across eleven cities.
Maruti believed that the used car business was a significant marketing tool to retain customers and reduce their cost of ownership, and to acquire new customers. While the central intermediary to the transaction was a dealer, Maruti played an advisory role in conducting technical evaluation, estimating the refurbishment cost and providing certification and warranty to the buyer of the preowned car. The warranty was covered by an arrangement with insurance companies. Prior to certification, every car passed through a 120-point check, which included verification of the seller’s credentials. The refurbishments of used cars improved the utilization rates of dealer workshops and other “Maruti True Value” outlets and also increased the sales of spares. Maruti received from dealers a proportion of their revenue, which was net of cost of refurbishment of the pre-owned car. As on March 31, 2004, “Maruti True Value” operated from 85 dealer-owned outlets spread over 40 cities. An additional 30 dealer-owned outlets were at various stages of launch. One of the key factors in the buying decision was the availability of finance. In the past, automobile finance had been made available through direct selling agents of independent
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finance companies. From January 2002, Maruti made available, through its dealers, products of eight selected finance companies, including those of two group companies, Maruti Countrywide Auto Financial Services Ltd., a joint venture among Maruti, Housing Development Finance Company Ltd. and GE Capital Services India Ltd., and Citicorp Maruti Finance Ltd (a joint venture between Maruti and Citicorp Overseas Investment Corporation Ltd). It aggregated the products and offered uniform financing terms to the customer. Maruti earned a sourcing fee from the finance company. The credit evaluation and the loan disbursement were done by the finance companies. In February 2003, Maruti entered into an arrangement with State Bank of India (SBI), India’s largest bank with over 9,000 branches across India (branded “SBI- Maruti Finance”). SBI became the preferred financier for customers who purchased Maruti’s cars. SBI provided finance to Maruti’s customers and worked with Maruti and its dealers to develop finance packages, conduct promotional activities and generate new business. The credit evaluation of the customer and the loan disbursement to the customer were left to SBI. Maruti believed the competitive interest rates and SBI’s extensive branch network would make passenger cars affordable to a greater number of customers. Maruti’s two subsidiaries, Maruti Insurance Brokers Ltd and Maruti Insurance Distribution Services Ltd. had entered into alliances with insurance companies. Since May 2002, these companies had been acting as intermediaries, offering products of these alliance partners under the brand name “Maruti Insurance”. As dealers got payments on insurance claims directly from the alliance partners, the customer benefited from a cashless transaction with regard to the repairs or spares that were covered by the insurance policy. Maruti earned sourcing revenues from the insurance companies.
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SWOT Analysis Where does Maruti stand on a SWOT (strengths, weaknesses, opportunities and threats) analysis?
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On the positive side, with Suzuki holding a 54 per cent controlling stake in MUL, one can expect a substantial reduction in costs with royalties and transfer prices being melted down. This, in turn, could translate into significantly better financials for MUL in FY04. It is worth noting that Suzuki is planning to use MUL's Gurgaon plant as a research and development (R&D) hub for its Asian region activities. Furthermore, Suzuki's engineering expertise and dominance in the small car segment world-wide could ensure that MUL remains the dominant player in the 'A' if not the 'B' segment even in the face of intense competition. The proliferation of car loans on offer, too, should spur passenger car demand, which in turn could help MUL expand operations in markets where it is already dominant. The concerns would include the dwindling position of MUL in the 'mind-space' of the Indian consumer, especially in the crucial 'B' segment where competition is growing rapidly. Furthermore, to grow, MUL will need to launch new models at sporadic intervals, and the capital cost and resultant depreciation charge of these would initially impact its bottomline adversely. The growing risk of non-acceptance of new launches in the marketplace further accentuates this risk which could manifest in yet another financial year like 2001, when the company's bottom-line slipped into the red. On the financial front, the losses notched up by MUL's group companies do not augur very well. Then, in the fast approaching post-WTO scenario, used cars will open up another avenue of competition and any threat to MUL's near monopoly status in the 'A' segment could adversely impact its prospects. Finally, while Suzuki Corp is undoubtedly gifted on the engineering front, its marketing
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capabilities in the absence of the reassuring shadow of the government remains to be tested. The long and the short of this SWOT snapshot is that at a forward price-earnings (P/E) multiple of 15 or thereabouts on estimated FY04 earnings at a price of Rs 160, the stock is already fundamentally stretched. Therefore, it may not constitute an excellent buy, and caution must be exercised before it is purchased and/or traded.
Strategy Suggestions •
Greater transparency in the issue of the company structure in India is a must. Suzuki must make abundantly clear the reason they have restructured the company into 3 different entities in India, so as to remove any lingering doubts from the minds of the shareholders. Even if they are doing it for the reason of tax breaks and extra benefits, as suggested earlier, it must be clarified for the shareholders
•
Expansion into the D segment: Suzuki is owned by General Motors, and they have plenty of cars that can be imported into the lucrative D segment, where Maruti-Suzuki has no models right now. Examples include the Cadillac Catera, Pontiac Grand Prix and Chevrolet Malibu. As of now, with only Hyundai and Ford, along with Mitsubishi present in this segment, they are losing out on revenue opportunities, which could be plugged with the proper entry of a new car from their product stable.
•
Quick R&D acceptance: Suzuki should quickly take advantage of Indian software know-how and expertise and make India their global R&D and outsourcing hub. The availability of skilled professionals, as well as a large labour pool makes India an obvious choice for the research work.
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•
Better Marketing and Promotion: In the face of strong competition from competitors like Hyundai and Ford, Maruti must quickly leverage their knowledge of the local market to promote and advertise their products in a better way. They must ensure ads with a strong local flavour, in order to reach their stated goal of selling a majority of their vehicles in the non-urban, rural areas.
•
Rural Targeting: Maruti must begin to target the rural areas on a larger scale, as the people there are the ones who are moving up to cars from their two- and threewheelers, representing a huge market. They have more money to spend and are exposed to global cultures and values, which makes them a most enticing target.
MARUTI’S ORGANISATIONAL STRUCTURE Introduction MUL is a functional organization. The Company is divided into different divisions
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according to the various functional areas. A Divisional Manager heads each Division. Divisions are further divided into Departments, which are headed by Department Managers who report to the respective divisional managers. Designations in the Company are based on the functional responsibility in terms of the Company's philosophy of de linking designations and functional responsibility from the salary levels. The total operations of the Company are divided into Divisions like Marketing & Sales, Spares, Engineering, Q.A. & Services, Production, Production Engineering, Materials, Information Services, Finance, Personnel & Administration, etc. Each Division is further divided into Departments. For example: In Marketing & Sales Division, the departments are Exports, Marketing, Sales Planning, Sales & Dispatch, RO-East, - West, - South, - North-I, North-II & MSS-N. In Information Services Division, the departments are Marketing & Sales Information, Production Management Information, Materials Management information & Resource Management Information. Maruti Udyog Limited has a total of 3354 employees (not including trainees or Japanese experts).
SYSTEM OF DESIGNATION There will be a dual set of designations. Internally, only the designations linked to functional responsibility will be used. For external dealings a different set of designations may be followed.
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The following system of designations would be practiced without any exception within the Company. For the purposes of defining explicit responsibility centers,
The Company has been divided into three layers of management.
Division Division Department Section
An official of the Company, who will be designated as Divisional Manager, Department Manager, Section Manager respectively would head each of these responsibility centers. Remaining employees of the Company will have no specific designation and would simply use the name of the Division/Department/Section to which they belong, to identify their location in the Company. The MD would make appointment to positions of Divisional Managers and Department Managers only. The Divisional Managers would appoint section Managers.
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MILESTONES REACHED BY MUL C
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1981
Incorporation of MUL
1982
Agreements signed with SMC
1983
First Maruti Car rolled out.
1984
40,000 vehicles rolled out
1985
Launch of new model car and gypsy
1986
1, 00,000 vehicles rolled out
1987 1988 1990
First lot of 500 cars shipped to Hungary Achieved 60% indigenization &1,00,000 Maruti 800 produced Launch of 1000 cc car, 5, 00,000 vehicles rolled out, 90% indigenization achieved & 5,000 vehicles exported
1993 1994
5, 00,000 Maruti 800 produced & Maruti Zen launched 10, 00,000 vehicles rolled out, Plant 2 starts operation.
1994
Esteem automatic launched, MUL exported 100,000 vehicles
1995
Cumulative export of vehicles to Europe touched 1,00,000
1996
1 millionth Maruti 800 produced
1997
New Esteem 98 launched.
1998
New models of Zen (Vx, Ax, D,) Omni (Omni & Omni-e) Launched.
1999
25,00,000th vehicle produced in March 99 & other versions of Zen launched. Baleno & Wagon R launched in Nov '99.
2000
Alto launched with two variants: LX and VX
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QUALITY POLICY
It has been Maruti’s endeavor to achieve consumer satisfaction through continuous improvement of its product and service by following ‘PDCA’ (Plan – Do- Check – Act) in all function of its organization. QUALITY SYSTEM-ISO: 9001:2001: At Maruti, the approach to quality is in keeping with the Japanese practice – “Build it into the product”. Technicians themselves inspect the quality of the work. Supervisors educate and instruct the technicians to continually improve the productivity and quality. The movement of quality indicators is reviewed in weekly meetings by the top management. In 2001, Maruti Udyog Limited becomes the first automobile sector in the world to get ISO: 9001:2001 certifications. AV Belgium, global auditors for the International Organization for Standardization (ISO), certified Maruti after a four day long audit, covering varied parameters like Customer focused organization, Leadership, Involvement of people, Process approach, System approach management, continual improvement etc. In May1995, Maruti got ISO9002 certification. The audit covered Quality Assurance production installation, marketing and sales as well as after sale services. Maruti was also one of the first companies in the world to pioneer ISO9000 certification for its dealers. In October 1993, MUL passed the conformity of production (COP) audit, which based on a European Union directive. This authenticated its quality systems and testing facilities for export to Europe. Maruti’s emphasis on total quality has proved that today it is in a position to guide vendors and dealers in establishing and consolidating their individual systems. This commitment to quality has ensured a consistently satisfying product and world class and world class sales and after sales services.
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EMPLOYMENT 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, are encouraged to make suggestions for improvement in any area of Maruti’s operation. Over 50000 suggestions are received from employees every year. To maintain
international standards, the Japanese have evolved certain standard quality statements, which are strictly adhered to in the production process. The quality tools used by Suzuki culture are:
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DIFFERENT SHOPS (Other than Assembly Shop) IN MARUTI
THE PRESS SHOP The press shop can be regarded as the starting point of car manufacturing process. Press shop is centrally located between weld1, weld2 and weld3 supplies components to all the three plants. The press shop has a batch production system whereas the plants have a line production system. The press shop maintains an inventory of at least two days. The weld shops as per their requirements pick the finished body parts. These may be divided as A, B & C. ‘A’ components are large outer components e.g. roof, door panels, front hood etc. These components are manufactured in the press shop at Maruti due to design secrecy and huge investment requirements. ‘B’ & ’C’ components are manufactured by joint ventures or bought from vendors. The press shop can be explained under following headings Raw Material Blanking Line Stamping Line
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RAW MATERIAL The raw material is in the form of cold rolled steel coils. It is specified in terms of steel grade and width of coil required. The coils weigh about 15000kg.
BLANKING LINE There are two blanking lines; ROSL (Rotary Oscillatory Shear Line) for rectangular sheets and the other employing die cutting, for irregular shapes. The rectangular sheets are obtained on ROSL while dies are employed to obtain the required shape sheets. The sequence of operations on the blanking line is as following: Uncoiling Cleaning Leveling Measuring Shearing/cutting Piling/stacking
STAMPING LINE There are six presses of capacity varying from 1500 tones to 4000 tones. Of these five are transfer presses and one is a semi-automatic press line, wherein the loading is manual. The dies can be changed to obtain different body components.
THE WELD SHOP The body panels produced in the press shop and other small components are joined here to give the “white body” or “shell”. In a typical car body about 1400 different components are welded together. The joining process being welded predominantly.
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The Weld shops have following facilities Welding jigs Spot Welding guns Kawasaki Welding robots Hemming machines Punching machine
PROCESS OUTLINE The shop has different lines for different models, each of, which is further, divided into three parts: -
THE UNDER BODY Here different under body panels are welded together. These comprise of rear underbody, central underbody and front engine room panel. These underbody panels are prepared on sub lines starting from singular components. The sub lines have specific jigs for each. There are chain hoists for transferring the job from one jig to another on the sub lines. Finally these underbodies are put on the conveyor and are welded together to give the underbody.
MAIN BODY The chassis number is punched on the cowl top and it is welded to the front engine room panel. As the body moves on the conveyor roof and side body panels are welded to it to give the main body. The side body panels are prepared on the sub lines.
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WHITE BODY The doors, hood and back door are attached on the main body with the help of bolts and screws to the main body, to make it a “white body”. The body is checked for dents, burr and spatter and these defects are repaired. After inspection and repairs the body is called WBOK, i.e. White Body- OK. It is sent to paint shop thereafter.
THE PAINT SHOP In the paint shop following processes are carried out Pre-treatment: The body is thoroughly washed to remove dirt and oil scales. ED coat: This is done by electric deposition method. After applying the ED coat body is baked in ovens. Intermediate coat: This is done by spray-painting method. After applying the coat, the body is dried in the oven. Final coat: For metallic coating, double coats are applied and aluminum flakes provide the shine to metallic paint. This is also done by spray painting method. The PBOK, i.e. Paint Body OK is sent to the assembly shop.
MACHINE SHOP The machine shop is the source of all major components for the Engine Assy. Shop. The unmachined crankshaft and camshaft forgings, transmission case, cylinder head and cylinder block castings are brought in as raw material from vendors. The cylinder head and transmission case are aluminum castings while crankshaft and camshaft are steel forgings. It has the following lines
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Transmission Case Line Cylinder Head Line Cylinder Block Line Crankshaft Line Camshaft Line ENGINE ASSEMBLY Engine assembly 3 is currently used to assemble the 1061cc engine for WagonR, F8D engine (5-speed transmission, 796cc MPFI) for Car800 and Alto. Engine assembly is divided into 3 main Sub-Assemblies, one Main Line and a Firing Test. The sub assemblies are: Cylinder Block Line Cylinder Head Line Transmission Line
The cylinder block, cylinder head, transmission case, camshaft and crankshaft are received here from the machine shop.
64
ASSEMBLY SHOP -II
There are 3 assembly shops in MUL which produce on an average 1750 cars daily. The assembly shop receives PB-OK i.e. paint body OK from the paint shop. Here the body is loaded on an over head conveyor. As the conveyor moves the body, fitments are made at various stations. I have been allotted the Assembly shop II. Assembly II mainly produces Alto (Domestic & Export Mainly), Zen (Domestic& Export) & Wagon R. The Whole process of assembling undergoes through 66 stations. There are about 375 employees in two shifts. The Assembly shop can be further subdivided as following Trim Chassis Final
TRIM LINE Trim can be further subdivided as following: Trim 1 This is the beginning of the assembly line conveyor. Here amongst the first tasks done is attaching the hydraulic supporters for the boot. The assembly line check sheet is put inside the body. Door is removed here and sent to final line .The various fitments made here are door/floor grommets, electric wiring, and door trims parking brake cable, inner and outer door openers, model stickers and emblems, roof silencer and cabin lamp. Steering gear case is put inside to be fixed later. Trim 2 It starts with Rear combination light fitment. Other operations done here are vacuum
65
booster/ brake master cylinder fitment, seat belts, fuse box, wiper Sprayer and motor, accelerator, clutch, brake pedals, door glasses and a/c panel fitment. Trim 2 ends with the fitment of the instrument panel, which is received from an instrument panel sub assembly. This sub assembly involves the fitting of the speedometer console, ashtray and stereo system.
Trim 3 The fittings done here are rear inside cover for boot, back door glass and windshield, quarter glasses and connecting pipe between fuel lid and fuel tank. Steering gear is mounted. For cementing application on the windshield, Motorman robots are employed. Here a process check is done
CHASSIS LINE The chassis receives a trim up body. Here underbody fitments are made; hence body is loaded on overhead jigs. Chassis is subdivided as following:
Chassis 1 Various fitments made here are rear shock absorbers, brake pipes, front coil spring with knuckle, steering wheel, tie rods, rear suspension, fuel pipes, fuel tank and rear brake drum. There is a knuckle sub assembly that feeds the line with knuckles for the front suspension system. Process check is done at the end of Chassis 1.
66
Chassis 2 The fitments made here the exhaust system (silencer and catalytic converter), engine cum transmission case assembly, gearshift rod, front and rear bumpers, stabilizer bars and tyres. The tie rod and drive shafts are connected to the knuckle to complete the front suspension system and ID plate fixation. A process check is done at the end of chassis 2.
FINAL Since all the fitments have been made, the body is referred as vehicle from now onwards. The vehicle is loaded on the final conveyor. Final area is further subdivided as: -
Final 1 The fitments made here are Spare wheel cover, scuff, seats, roof trim and carpet, boot carpet, battery and air cleaner. Clutch cable and parking brake connections are made. Brakes are evacuated and brake oil is filled. Coolant is also filled.
Final 2 Five liters of petrol is filled in the vehicle. A/C vacuum and charging is also done here, the refrigerant used here is R134a (400 gm +- 50).Door Assembly is also done here.
Final3 There is a process check at the end of this line. The vehicle is said to be AB-OK now. It is handed over to the vehicle inspection department.
67
VEHICLE INSPECTION II Vehicle Inspection has the following testing stations: Toe-in test Slip tester Head lamp test Appearance test Drum test Brake test Engine room and Pit inspection Shower test Road test Final check
68
RESEARCH METHODOLOGY In order to accomplish the objectives of a study, it is essential to articulate the manner in which it is to be conducted, i.e., the research process is carried-out in a certain framework. The research methodology, which follows, is the backbone of the study.
TYPE OF RESEARCH The objectives of the study necessitated the design of the research to be Conclusive and Descriptive. This is instrumental to provide information for the evaluation of particular courses of action. Descriptive research typically makes use of cross-sectional research i.e. survey research design and is appropriate when the research objectives include: •
Portraying the characteristics of marketing phenomena and determining the frequency of occurrence.
•
Determining the degree to which marketing variables are associated.
•
Making predictions regarding the occurrence of marketing phenomena.
In the project Descriptive Research was required to study the user – characteristics of premium car brands and to determine buyer perceptions of product features. Insights are also possible into the association of marketing variables. Such information may then be used for predictive purposes. Another tenet for this research design is that the means of controlling the factors determining product choice of the consumers were not present.
69
DATA COLLECTION APPROACH The plank on which the edifice of a study rests is information. The data contained herein is a mixture of that obtained from both primary and secondary sources of data. Secondary Data Already published data are the starting point of the study. This includes: i)
Internal Data Brochures, pamphlets Official reports
ii)
External Data Books Official reports The Internet
70
SAMPLING DESIGN Sampling Element: The basic unit, which needed to be examined through the study, were owners of four cars in the premium car segment. Population: The universe of study was all the owners of four cars of the premium segment viz.-Maruti Baleno, Mitsubishi Lancer, Opel Astra and Honda City. Method: The non-probability-based approach of convenience sampling and quota sampling was used. Convenience sampling was used as people were asked to volunteer for filling questionnaires and give their viewpoints. Quota sampling was used so that equal numbers may be allotted to each of the cars. Sample Size: The total number of respondent’s surveyed is160. This may be further divided on the basis of ownership of the respondents: Maruti Baleno
:
40
Mitsubishi Lancer
:
40
Opel Astra
:
40
Honda City
:
40
Sampling Extent: The scope of study was restricted to the geographical areas of the national capital, region of DELHI.
71
Graphical Representation Q1.We understand you own a Honda City / Mitsubishi Lancer /Opel Astra / Maruti Baleno
25%
25%
25%
25%
Mitsubishi Lancer
Honda City
Opel Astra
Maruti Baleno
The objective of this question was: • To differentiate between the questionnaires filled by different owner • To show the sample size i.e., Mitsubishi Lancer 40 Honda City 40 Opel Astra 40 Maruti Baleno 40
72
2. Which all models did you consider before making a decision to buy this car? This question was asked by all the four owner of the car:
Mitsubishi Lancer 35
31
30 25
18
20
12
15 10
6 3
5
1
1
2
1
0 Honda City
Opel Astra
Baleno Hyundai Accent
Ford Ikon
Opel Corsa
None
Qualis
Safari
• Respondents (Mitsubishi Lancer owners) while buying the car considered Honda City max. i.e. 31(77.5%) and Opel Astra 18 i.e. only 45%. • 6 respondents did not consider any other car. • 3 respondents considered Hyundai Accent The reason that respondents gave for considering this car were • In this Family Choice was maximum i.e. 2 • 1 respondent considered Ikon Ford The reason for his consideration was ONE Respondent Looks 1 Price Technology 1 Family Choice Promotion Strategy 1
TWO
THREE 1
73
1
1
Respondent Looks Economical
ONE 1 1
• 1 respondent considered Opel Corsa The reason for his consideration was Respondent Price Family Choice
ONE 1 1
• 2 respondent considered Tata Safari The reason for his consideration was Respondent ONE TWO Looks 1 1 Power Engine 1 Diesel Engine 1 AC very effective 1 1 • 1 respondent considered Qualis The reason for his consideration was Respondent Diesel Engine Economical Safe
ONE 1 1 1
• • • It was only 12 respondents i.e. 30% considered Baleno and the rest 28 respondents i.e. 70% did not consider it at all. • Respondents were simultaneous asked question:
74
1. Why not Baleno? Was there any particular reason, not having Baleno as your consideration? • This was asked from 28 respondents i.e. respondents who did not consider Maruti Baleno at all. 2. Is there any particular reason, why did you not buy Baleno? • This question was asked from the rest 12 respondents
75
Reasons that respondents gave for not considering as well as if considered not buying Maruti Baleno were: 25
23
20
16 13
15
9 10
11
8
7
5
Br an d
Ex te rio r Im I n W ag te or e rio ds "S r m O al fM lC ou ar th s" "F rie St nd "L at an s us & ce R rv el at /s iv Ba es le " no "o ve ra ll U np op lu la r
0
• 16 respondents said Maruti’s Brand Image is in all cars • 13 respondents said owning Maruti Baleno is not a Status Symbol • 9 said friends relatives were not in favor of this car 11 respondents said lancer was more preferred when compared this car 7respondents said it was said I was not aware of • Maximum respondents i.e. 23 (57.5%) gave the reason EXTERIOR LOOKS
76
back look 2 8
5
back light overall look 2
lacks style
11 should have a sleek look
• Out of 23 respondents 11 said they didn’t like over all looks of the car • 8 respondent said back look is not attractive • 5 respondent said it lacks style
77
8 respondents said INTERIOR LOOKS
dull look
6
6
dash board over all look
4
out of 8 respondent 6 respondent said dull look (overall interior) 6 said dash board looks 4 said inner space is too congested
HONDA CITY 35
34
30 25 20 15 10 5
14 10 4
4
4
1
1
2
1
Sa fa ri
Q ua lis
No ne
Es te em O pe lC or sa
0 M its ub ish iL an ce r O pe lA st ra B H al yu en nd o ai Ac ce nt Fo rd Ik on
• • •
too conjested
• while buying the car HONDA CITY maximum respondents i.e. 34 (85%)considered Lancer and 14 respondent i.e. 35% only considered 78
Opel Astra. • Only 1 respondent said he has not considered any car • 4 respondents considered Hyundai Accent The reason that respondents gave for his consideration were: Respondent Looks Price Technology Family Choice Good Reputation • In this price
ONE
TWO 1 1
1
1
THREE
FOUR 1
1 1
1 1
1 was the major factor of consideration i.e. 3
respondents • 4 respondent s considered Ford Ikon The reason that respondents gave for his consideration were: Respondent Looks Price Technology Family Choice •
ONE 1 1
TWO 1 1
1
THREE
FOUR
1
1
1
1
In this price was the major factor of consideration i.e. 4
respondents
79
• 4 respondents considered Maruti Esteem The reason that respondents gave for his consideration were: Respondent ONE TWO THREE FOUR Looks 1 Power Engine 1 Price 1 Family Choice 1 1 Good Reputation 1 1 1 Economical 1 1 Safe 1 • Maximum consider this car because of good reputation • Only 1 respondent considered Opel Corsa The reason being Respondent Looks Power Engine Diesel Engine AC very effective Price
ONE 1
1
• 2 respondents considered Qualis The reason being
80
Respondent Looks Power Engine Diesel Engine Safe
ONE 1
TWO 1
1 1
• Only 1 respondent considered Tata Safari The reason that respondents gave for his consideration were: Respondent Looks Diesel Engine
ONE 1 1
• It was only 10 respondents i.e. 25% considered Baleno and the rest 30 respondents i.e. 75% did not consider it at all. • Respondents were simultaneous asked question: 1. Why not Baleno? Was there any particular reason, not having Baleno as your consideration? • This was asked from 30 respondents i.e. respondents who did not consider Maruti Baleno at all. 2.
Is there any particular reason, why did you not buy Baleno? • This question was asked from the rest 10 respondents
Reasons that respondents gave for not considering as well as if considered not buying Maruti Baleno were
81
30
26
25 20 15
10
13
11
10
7
8
8
5
h "H "F on rie da S nd ta C s tu it y & s R v/ el s at B iv al es en " o" ov er U al np l op lu la r
W or ds
O
fM
B
ou t
ra nd
Im
ag e
"S
m
al
E
xt
In te rio
r lC ar s"
er io r
0
• 13 respondent said Maruti Brand Name is in Small Cars • 11 respondents said owning Maruti Baleno is not a Status Symbol • 7 said friends relatives were not in favor of this car • 8 respondents said lancer was more preferred when compared. • 8 respondents said it was said I was not aware of this car • Maximum respondents i.e. 26(65%) gave the reason EXTERIOR LOOKS
82
back look
2
back light
5 2
9
overall look lacks style should have a sleek look
12
• Out of 26 respondents 12 said they didn’t like over all looks of the car • 9 respondent said it lacks style • 5 respondent said back look is not attractive • 10 respondents said INTERIOR LOOKS dull look
4
5
24 26
25 Out of 10 respondent 5 respondent said dull look (overall interior) 4 said dash20 board looks 14 3 said inner15space is too congested 10 5
2
1
3
3
nd yu H
nt rd Ik o Es n te em N on e Sa fa ri
ce
83
Fo
Ac
ai
le
no
ity
Ba
C
da
on H
ub
is
hi
La
nc
er
0
M its
• • •
dash board over all look
OPEL ASTRA
3
30
too conjested
1
• Respondents (OPEL ASTRA owners) while buying the car considered Honda City maximum. i.e. 26(65%) and Lancer 24 respondents i.e. only 60%. • 3 respondents did not consider any other car. • 2 respondents considered Hyundai Accent The reason that respondents gave for considering this car were: Respondent ONE Looks Technology 1 Good Reputation 1 • Technology was preferred most.
84
TWO 1 1
•
3 respondents considered Maruti Esteem
The reason being ONE Respondent TWO Price 1 Good Reputation Economical 1 1 Good Service Facility 1 Safe 1 • Economical was the maximum response •
THREE 1 1 1
Only 1 considered Ford Ikon
The reason being Respondent Looks Power Engine
ONE 1 1
• Tata Safari was also considered by 1 respondent The reason that respondents gave for considering this car were: Respondent Looks Diesel Engine Ac Very Effective
ONE 1 1 1
• It was only 14 respondents i.e. 35% considered Baleno and the rest 26 respondents i.e. 65% did not consider it at all. • Respondents were simultaneous asked question:
85
1.
Why not Baleno? Was there any particular reason, not having Baleno as your consideration? • This was asked from 26 respondents i.e. respondents who did not consider Maruti Baleno at all.
2.
Is there any particular reason, why did you not buy Baleno? • This question was asked from the rest 14 respondents
86
Reasons that respondents gave for not considering as well as if considered not buying Maruti Baleno were:
24
25 20 15
11 11
10
10
8
5
5
7
io r al l pe "F C ar lA ri s" st end St ra s a & t v/ s R us Ba el a le no tive " o s" ve U np r a op ll lu la r
er
"O
W
or
ds
O
fM
ou
Br a
th
nd
Im
ag
e
"S
m
In t
Ex te r
io r
0
• 11 respondent said Maruti Brand Name is in Small Cars • 5 respondents said owning Maruti Baleno is not a Status Symbol • 10 said friends relatives were not in favor of this car • 8 respondents said lancer was more preferred when compared. • 7 respondents said it was said I was not aware of this car
87
• Maximum respondents i.e. 24(60%) gave the reason EXTERIOR LOOKS
back look
3
4
back light
8
overall look
6
12
lacks style
should have a sleek look
• Out of 24 respondents 12 said they didn’t like over all looks of the car • 8 respondent said back look is not attractive • 6 respondent said back lights need to change the design • 11respondents said INTERIOR LOOKS
dull look
5 7
too conjested dash board over all look
3
•
Out of 11 respondent 7 respondent said dull look (overall interior) 88
5 respondent said dash board looks 3 respondent said inner space is too congested MARUTI BALENO 25
24 21
20 15
9
10
8 7
5
5
it s
N on e
ub is
hi La nc er H on da C i ty O pe lA H yu st ra nd ai Ac ce nt Fo rd Ik on
0
M
• •
• Respondents (MARUTI BALENO owners) while buying the car considered Honda City maximum. i.e. 24(60%) and Lancer 21 respondents i.e. only 52.5% and Opel Astra 9 respondents i.e. 22.5%. • 8 respondents did not consider any other car. • 7 respondents considered Hyundai Accent The reason that respondents gave for considering this car were: Respondent
ONE TWO THREE FOUR FIVE
Looks
1
Price Report From Friends Good Reputation
1
1
1
1
1
89
1
1
1
1
SIX
SEVEN
1
1
1
• Maximum respondents i.e. 4 said reports from friend. • Maximum respondents i.e. 4 also said price as the main factor • 3 respondent said good reputation
90
•
5 respondents considered Ford Ikon
The reason being the mix blend of : Respondent Looks Power Engine Price Report From Friends Good Reputation 3.
ONE 1 1
TWO THREE FOUR 1
FIVE
1 1
1 1 1
1
Which were the sources that influenced you majorly in your decision making process? 28
30
24
25 20
15 14
15
21 18 20 20 14 9
9 9
10
13
12
7
5
9
6 56 4 44
5
6
8
5
4 2
4
us to m er s
C
Tr en ds
Lo ya l
M ar ke t
O pi n
io
n
ic e ho
D ea le rs
C
Ad s
pe rs sp a
on N ew
ni
Fa m ily
&
R of
of O pi
no n
T. V
s Fr ie nd
hi oc e C & O pi
Li ki ng Pe rs on al
Mitsubishi Lancer
el at iv es
0
Honda City
Opel Astra
Maruti Baleno
• Maruti Baleno had only show 4 LOYAL CUSTOMERS in this area • Mitsubishi Lancer owner i.e. 28(max.) out of 40 went with personal liking & choice whereas Maruti Baleno was only 14 out of 40 respondents
91
• Mitsubishi Lancer owner i.e. 21(max.) out of 40 went in for friends opinion. Here Baleno owner 20 out of 40 respondent went in for friends opinion. • Newspaper and T.V Ads had max. Impact on Opel Astra owners 14 out of 40 respondents and Baleno owners that is 13 out of 40
4.
Please give points to your Dealers performance on the following attributes according to your perception (out of a max. of 10 point).
350
296 296 295
305 307
297
284 283 281
300 250
294 295
230
229
307 290 311 279 241
305
253 277
242
231
216
200 150 100 50 0 Showroom looks Model display
Mitsubishi Lancer
Attention of the host
Host curtsy
Honda City
Opel Astra
Explanation of model
Test drive
Maruti Baleno
• Mitsubishi Lancer scored maximum points 1791 (total) in it’s Dealers Performance, after that, Opel Astra with 1740 points, then, Honda city
92
1724 points • In Dealers Performance Maruti Baleno scored the least point i.e. only 1389 points.
93
5.
Please give points to the following attributes that influenced you in making the final buying decision (out of a max. of 10 points). •
Pr Pe r fo ic e rm an Ex c te rio e rl In oo te r io k rl oo k L u Br an xur y d O im St pi ag at ni us on e sy of m fr i bo en l C ds , r om fo el at rt iv es ,e tc .
400 350 300 250 200 150 100 50 0
Mitsubishi Lancer
•
Honda City
Opel Astra
Maruti Baleno
Mitsubishi Lancer over all scored 2997 and max. Scored in
Status Symbol. • Honda City over all scored 2943 in these attributes and max. Scored in Brand Image. • Opel Astra overall scored 2744 point and least scored in Opinion of
94
friends, relatives, etc. • Maruti Baleno overall scored 2667 points and minimum scored in Status and Brand Image.
95
6.
What is the first thing that comes to your mind, when you think of the following?
45 40 35 30 25 20 15 10 5 S U C an 't S N ay ot M y Ty pe
al m
B
ra nd
Im
ag e
V
al
in
S
E
P
th O
xp
lC ar s
er s
e en s
iv
ry
y
Lu xu
on e
e
rM
fo
N am ue
ui ld B
ra nd B
E
S
ta
tu s xe cu tiv S ty e le /L oo ks
0
Mitsubishi Lancer
Honda City
Opel Astra
Maruti Baleno
Ikon Ford
Hyundai Accent
Corsa Opel
• Mitsubishi Lancer was considered as Status Symbol • Opel Astra was considered as an Executive car. • Honda City was perceived as a Stylish car. • Baleno as a Luxury car. Respondents also perceived Maruti Brand Image in small cars as well as PSU company. The negative aspect was people also perceived it an expensive car. • Ikon Ford was considered as a strong car. Hyudai Accent Brand Name. Opel Corsa as a Strong car.
96
7. What is the parameter that convince you most about the performance of a vehicle
30 31 29 31
35 30
19 21 21
25 20 15
15
16 12 12 12
10
3
5
5
7
5 0
CC(Cubic centimeters)
BHP(Brake Horse Power)
Mitsubishi Lancer
Torque
Honda City
Opel Astra
Technology
Maruti Baleno
• CC (Cubic Centimeters) were maximum considered by Mitsubishi Lancer owner that is 15 out of 40 and then Honda City, Opel Astra and Maruti Baleno owners 12 respondents considered. • BHP was maximum considered by Opel Astra and Honda City i.e. 21 respondents each and then Mitsubishi Lancer 19 respondents and the last Maruti Baleno only 16 respondents. • Torque was the minimum consideration by the four owners of car.
97
• Technology (Japanese, German) was major consideration of Maruti Baleno as well as Honda City owners i.e. 31 each then Lancer owners 30 respondents and the last is Opel Asra owners 29 respondents.
98
8.
Rank the following accessories in terms of importance to you
842
797 654 566
583 334
264 49
126 115
Le at he ru ph R ols ea t r s ery Le All po at oy ile he w r r W d he oo Lea oor els t d fin her pad st s is h ee Po das rin Sa w hb g er f ty o W ard N M in ee us do ds (s Ai ic s ws r af ty Co ys t fe nd em at ur ition es a & r bo dy )
900 800 700 600 500 400 300 200 100 0
•
Respondents ranked Leather Upholstery 1st, Leather Steering 2nd, Rear Spoiler 3rd, Wooden Finished Dash Board 4th, Alloy Wheels 5th, Leather Door Pads 6th, Music system 7th, Air Conditioner 8th, Safety (safety features & body) 9th, and Power Windows 10th.
99
9.
a) Are you completely satisfied with your car?
40
39 40
29
30
21
19
20
11
10 0
Mitsubishi Lancer
1 Yes
0 No
Honda City
Opel Astra
• Satisfaction Level for Mitsubishi Lancer is 97.5% • Satisfaction Level for Honda City is 100% • Satisfaction level for Opel Astra is 72.5% • Satisfaction level for Maruti Baleno is only 47.5%
100
Maruti Baleno
The reason for dissatisfaction with Mitsubishi Lancer was The reason of dissatisfaction with Opel Astra was 6
6
6 5
3
4
2
3 2 1 0
Maintenance cost is high
Spare part Average is low costly& difficult to get
After Sales Service
• Maximum respondent i.e. 6 each gave the response as Maintenance cost is high and spare parts are costly and difficult to get.
101
The reason that Maruti Baleno owners gave for their dissatisfaction were
10
9 6 4 3
2
2
2
2 1
1
1
Af te rS
al e Sp H sS G o ar ro rn erv e un P ic Pa r e S rts te d C obl e Av eri lea m n r M aila g P anc In ud b te e r r io G ility oble rs ra d Pro m ne & ed Bu ble N to o m m be t S pe Si r i p de Br mp aci s ea ro ou re ar ks ve s d vi ew G Pro (d. m ear ble .. ir r P m Bo or g rob s dy et lem is s s no tol t h en ea vy
10 9 8 7 6 5 4 3 2 1 0
• 10 respondent said after sales service of Maruti company as well as dealers was not a tall satisfactory. • 9 respondents referred horn problem • 6 respondents said Ground Clearance • 4 respondents said steering problem
102
b)
Would you suggest baleno to your relatives or friends? This question was asked to Baleno owners only. 32
40 30 20
8
10 0
Yes
No
• 32 respondents said they will recommend this car and the rest 8 8 6 4 2 0
8 2 1 Reports of Could have Uncomfortable Friend and bought better Relatives car in same option
respondents said No • 8 respondents said the better options then Baleno are available like Honda City, Lancer, & Opel Astra.
103
4.
a) Are you aware of “BALENO ALTURA”?
35
40 30
24 18 18
19 21 15
20
5
10 0
Mitsubishi Lancer
Yes
No
Honda City
Opel Astra
Maruti Baleno
• As a whole 95 respondent i.e. 60% out of 160 said they are aware of Baleno Altura.
104
b) How you feel about “BALENO ALTURA”?
16 14 12 10 8 6 4 2 r. tt e be e
in d n in
g
m
ad
ti ve
O
ve
ra
ll
lo
O
ok
ve
s
ra
ll
co
da
ul d
ha
N
bo sh
be
co
nc
ep
is k
ar
ew
d
lo o
Se e
on D
ia
d oo tg no
ci ou
s
s ro
Sp a
n
on
en
ad
si ve
id h
Ex p
uc m
't
ha
G
ve
oo
d
Lo
ok
s
ea
0
Mitsubishi Lancer
Honda City
Opel Astra
Maruti Baleno
• Over all respondents said it has good looks but does not have much idea about it. • Maximum respondents of Mitsubishi Lancer and Baleno owner said it as expensive car.
105
4P’S OF MARUTI ZEN
Product Two
Body
Box
Hatchback
Brakes Antilock brake system
n.a.
Front
Disc, 236 mm
Rear
Drums 180 mm
Front track
1335 mm
Ground clearance
165 mm
Kerb weight
765 kgs.
Overall Height
1405 mm
Overall Length
3495 mm
Overall Width
1495 mm
Rear track
1305 mm
Tank capacity
35 liters
Wheelbase
2335 mm
Bore & Stroke
n.a.
Brake Horse Power
60 bhp @ 6000 rpm
Compression ratio
9.4:1
Construction
Aluminum alloy
Displacement
993 cc
Dimensions
Engine
106
4
door
Fuel
Petrol
Ignition
Multipoint fuel injection
Layout
4 cylinder in-line
Torque
8 kgm @ 4500 rpm
Valve gear
4 valves per cylinder
City
n.a.
Highway
n.a.
Overall
15 kmpl.
Transmission
Manual 5 speed
Type
Front wheel drive
Fuel consumption
Power train
Steering
Type
Suspension
Front
Electronic power assisted, Rackand-Pinion McPherson strut 3-link rigid axle with isolated
Rear
trailing arm Coil springs and gas filled shock absorbers
107
•
Price
On Road Price
Registration City
Ex-
&
Registration
Service &
Showroom Charges
Service Comprehensive Total
Charges
(Individual)
(Company)
Total
Insurance
(Individual) (Company)
Ahmedabad
411,554
13,395
26,790
N.A.
424,949
438,344
Bangalore
399,519
32,867
32,867
13,118
445,504
445,504
Baroda
419,424
14,700
28,100
10,186
444,310
457,710
Calcutta
406,946
4,095
4,995
13,322
424,363
425,263
Chandigarh
405,187
N.A.
N.A.
N.A.
405,187
405,187
Chennai
409,152
13,850
24,850
9,859
432,861
443,861
Cochin
414,385
19,550
19,550
8,889
442,824
442,824
Delhi
399,223
4,465
4,465
13,214
416,902
416,902
Goa
420,778
15,727
15,727
9,042
445,547
445,547
Hyderabad
414,341
29,010
29,010
9,977
453,328
453,328
Jaipur
416,801
13,110
25,620
15,028
444,939
457,449
Ludhiana
423,623
N.A.
N.A.
N.A.
423,623
423,623
Mumbai
429,659
23,300
58,100
15,590
468,549
503,349
Pune
411,369
19,695
52,605
10,225
441,289
474,199
Vashi
407,727
22,900
56,000
13,680
444,307
477,407
Visakhapatnam 409,900
30,100
30,100
9,878
449,878
449,878
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Place MARUTI ZEN is running successfully everywhere. But it has great achievement in the following cities. 1. Ahmedabad 2. Bangalore 3. Baroda 4. Calcutta 5. Chandigarh 6. Chennai 7. Cochin 8. Delhi 9. Hyderabad 10.
Jaipur
11.
Ludhiana
12.
Mumbai
13.
Pune
14.
Visakhapatnam
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Promotion The Zen VXi has been modeled as the first car in India with 5 speed gears. This has served as a great advantage in its promotion factors. The Zen VXi is known to be called as
“The Intelligent Little Car”
The Maruti Alto 1.1/ Spin VXi can be said to be a newer version of its previous model ZEN VXi. MUL launched some extra features in its ALTO VXi model as compared to ZEN Vxi, but due to some technical and promotional lacking it could not create a long and steady run on the Indian Roads. Most of the features in ALTO VXi are the same as that in ZEN VXi and there are very few things or features to be found new in ALTO. The Maruti ALTO VXi is powered with a thundering 4 valves per cylinder MPFI engine. Mated with 5-speed manual gearshift and a 16-bit computer, the engine roars to life, giving plenty of power, great mileage and low emission.
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4P’S OF MARUTI ALTO
Product Features
Description
Ignition
Dual distributor-less digital Two ignition coils result in faster ignition
On-board
(DDLI)
Advantage
(Two start and efficient ignition as
Ignition Coils)
compared to single coil.
Available
Greater convenience, faster repair
Engine Check Electronic
and low maintenance cost. 16 bit computer
Faster,
Control
precise
and
accurate
engine response, adding to overall performance.
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Power
Electronic Power Steering
Steering
Speed
Sensitive
for
greater
control on fast drives and low maintenance cost.
Flat Torque
Flat torque curve
Comfortable
City
Driving
-
eliminating need to change gears frequently. Faster Pick Up 1C4V
Available
Better breathing characteristics
Technology
with more number of valves. This reduces load on the valves and engine and increases their life.
Total no. of 16
Better fuel management, lower
valves
emission,
better
engine
performance, and more available power. Total no. of 16
Better fuel management, lower
valves
emission,
better
engine
performance, and more available power. Max. speed Power
156
Thrilling drive
to 84
More available power per tone of
weight Ratio
load.
(bhp/tonne)
acceleration.
Engine
1061 cc
Optimum
displacement Turning
Better
pickup,
engine
faster
displacement
leading to longer life. 4.6
Better maneuverability and ease
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Radius 'Key
in parking. not Available
Reminder if key is left in the
removed'
ignition switch
reminder chime 'Lights
on' Available
More user-friendly. Is very useful
reminder
during foggy and rainy conditions when we switch lights on during daytime
and
tend
to
forget
switching them off. Electronic
Available
Improves driving efficiency by
Tachometer
changing gears at the right RPM. Also, one can check the rpm during idling and find out whether the engine is properly tuned or not.
Electronic
Available
Allow two people to log in
Odometer
distances covered simultaneously.
and Multi-trip
Since, it is digital, it is tamper-
meter
free.
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Price On Road Prices Due to unavailability of data, only prices of Maruti Alto VXi for the cities Delhi and Mumbai have been shown.
City
Ex Showroom
- Registration &
Registration
Service &
Comprehensive
Service Insurance
Charges
Charges
(Individual)
(Company)
Delhi
330,678
22,300
55,400
15,610
Mumbai
340,273
25,811
60,953
18,726
Place The Maruti Alto VXi was launched at all the places where Maruti products were already on the roads, in India. Although the product was launched country wide it was not backed by a favorable promotion and advertising, thereby creating a slack demand right from the start.
Promotion This was one of the major factors of the failure of Maruti Alto. It was launched with the punch line:
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SUGGESTION Maruti should come out with cars that are attractive and appeals to the masses. The Maruti 800 with a 5 speed transmission was a very impressive car in terms of economy as well as drive comfort, customers feel that the 800 model should again be launched with an overdrive 5th gear. The ground clearance of the cars especially Zen should be increased. The back seat divider should not be there due to uncomfortable sitting position due to it.
Supply should meet demand of the car; this is due to long waiting period in most of the air-conditioned models. The boot space of the car can be increased, especially in the Zen. Dealers should deliver the vehicle on the day it has been promised. Frequency of advertisements should be increased. A brand ambassador can create hype in the customers mind. Maruti must focus on retaining its customers and the True Value is a good step towards attaining it.
In the end one can say that a good marketing mix is all that is needed to sell the Maruti vehicles because they are still the best on the Indian road and definitely Maruti has got some advantages over its rival which are hard to beat.
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LIMITATION
There are few limitations attached with this study: • The limited time frame within which study conducted was short and so the sample size of 160 could only be reached. This sample size too was divided into 4 equal parts i.e. Mitsubishi Lancer 40, Opel Astra 40, Honda City 40, Maruti Baleno 40, therefore, in depth study could not be done. If the sample size had been more, than what has been taken, the finding would have been more authenticated. • As the surveys were conducted in Delhi only, therefore, these findings are limited to Delhi region only. • The biased responses of the respondents are also the limitation of this project report. • Respondents were not so forthcoming while answering the questions, as well as, inability of providing information on certain questions. • Lastly, despite being extremely careful while interacting with respondent’s communication errors are unavoidable.
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CONCLUSION It can be seen that the Indian car industry is a flourishing one, and a driving force behind any economy therefore it is necessary that this sector is given proper importance. Maruti which has now been divested has to compete in an environment with more than a dozen player and no government support, hence it is necessary that the company retains it own customer and attract more and more so as to produce in the large scale and attain economies of scale. Santro which is a major player in the market has swiped away maruti's share and in the future would continue to do so, hence our study should be made handy so as to choose the right marketing mix i.e. the product, price, place, promotion.
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BIBLIOGRAPHY
• KOTLER PHILIP “ MARKETING MANAGEMENT " • SAXENA RAJANA “ MARKETING MANAGEMENT ” • INTERNET WWW.opelindia.com WWW.lancerinindia.com WWW.hondacityindia.com WWW.marutiudyog.com • MAGAZINES (EDITION OF MARCH 2009) INDIAN MOTORING AUTOMOBILE BUYERS GUIDE AUTOINDIA MOTORING AUTOWORLD
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