14484132 Marketing Mix of Automotive Industry in India[1]

8/3/2019 14484132 Marketing Mix of Automotive Industry in India[1]

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PROJECT REPORT

On

MARKETING MIX OF AUTOMOTIVE SECTOR

Submitted in the partial fulfilment of the requirement

For the award of degree of

MASTER OF BUSINESS ADMINISTRATION (MBA)

To

UNIVERSITY BUSINESS SCHOOL

PANJAB UNIVERSITY REGIONAL CENTRE, LUDHIANA

SUPERVISED BY: SUBMITTED BY:-

Mr. ASHISH SAIHJPAL NAVDEEP ROSHAN

FACULTY PUNEET JAIN

UNIVERSITY BUSINESS SCHOOL SAHIL AGGARWAL

SUMITGOYAL

1 University Business School,

Panjab University Regional Centre,Ludhiana


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VIRENDER SINGH




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ACKNOWLEDGMENTS

Words fail us to express our deep sense of gratitude to our revered supervisor, Mr.

Ashish Saihjpal, University Business School, whose erudite guidance and

supervision have made this work possible. We are very thankful for this valuable

guidance and constant encouragement during the preparation of this project.

We are highly thankful to all other members of department ofUBS (PURC) for their

suggestions and kind co-operation in this project work.

We would like to thank all the respondents whose responses were of great importance

for the project.

NAVDEEP ROSHAN

PUNEET JAIN

SAHIL AGGARWAL

SUMIT GOYAL

VIRENDER SINGH




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OBJECTIVE OF THIS STUDY

This study is done in keeping following objectives in view:

To find out the present status of the automobile industriesin India.

To study the market research of the automobile industries.

To study the distribution and marketing strategy adopt byautomobile industries.

To enhance our analytical skills in the field of practicalapplication of Marketing

The marketers watchwords are quality,service, and value.

PHILIP KOTLER




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CONTENTS



S.NO. PARTICULARS PAGENO.

1 OVERVIEW 06

2 MARKET RESEARCH 15

3 MARKET ENVIRONMENT 16

4 SEGMENTATION 18

5 TARGET MARKET 20

6 NICHE MARKET 22

7 MARKET MIX 238 PRODUCT MIX 25

9 PRICE 32

10 PROMOTION 33

11 PLACE 44

12 PEOPLE 45

13 PHYSICAL EVIDENCE 46

14 PROCESS 48

15 DEALING WITH THE COMPETITION 49

16 DISTRIBUTION CHANNELS 51

17 THE VALUE CHAIN 52

18 SWOT ANALYSIS OF MARUTI UDYOG LTD. 53

19 PRODUCT LIFE CYCLE 56

20 INTRODUCTION OF TWO WHEELER 58

21 KEY PLAYER IN TWO WHEELER INDUSTRY 60

22 SEGMENTATION OF TWO WHEELER 61

23 KEY DRIVERS OF THE INDIAN TWO WHEELER 63

24 HERO HONDA PROFILE 66

25 MARKET MIX OF HERO HONDA 68

26 CASE STUDY OF KARIZMA 78

27 SWOT ANALYSIS OF KARIZMA 79

28 SWOT ANALYSIS OF COMPETITIOR (BAJAJ PULSAR 220) 8129 MARKETING MIX OF KARIZMA 84

30 CONCLUSION 89

31 BIBILIOGRAPHY 90


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OVERVIEW OF AUTOMOTIVE SECTOR

The industry is estimated to be a US$ 34 billion industry with exports

contributing 5 per cent of the revenues. The growth of the Indian middle class

with increasing purchasing power along with the strong growth of the

economy over the past few years has attracted global major auto

manufacturers to the Indian market. Moreover, India provides trained

manpower at competitive costs making India a favoured global manufacturing

hub. The Indian automobile industry is going through a technological change

where each firm is engaged in changing its processes and technologies to

maintain the competitive advantage and provide customers with the optimized

products and services. The de-licensing of the sector in 1991 and the

subsequent opening up of 100 per cent foreign direct investment (FDI)through the automatic route marked the beginning of a new era for the

Indian automotive industry. Since then almost all the global major

automobile players have set up their facilities in India taking the level of

production of vehicles from 2 million in 1991 to 10.83 million in 200708.

Stagnation of the auto sector in markets such as Europe, US and Japan on the

other, have resulted in shifting of new capacities and flow of capital to the

Indian auto industry. The Indian automobile industry has been growing at the

rate of 1527 per cent over the past five years. In two wheelers industry,

Indian companies are the largest manufacturers in the world. Bikes are a major

segment in the industry, the other two being scooters and mopeds. Moreover,

Indian car makers are earning acclaim worldwide. The home-grown

automaker, Maruti Suzuki has emerged as the fourth most reputed among




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auto companies in the world, even ahead of its parent Suzuki Motor Co of

Japan, according to the Global 200: The World's Best Corporate

Reputations list, compiled by US-based Reputation Institute.

EVOLUTION OF THE INDIAN AUTOMOBILE

INDUSTRY

Pre1983

1983-1993

1993-2007

Closed market

Growth of market

limited by supply Outdated models

Players

Hindustan Motors

Premier

Telco

Ashok Leyland Mahindra &

Mahindra

Suzuki, Japan and

GOI joint venture to

form Maruti Udyog Joint ventures with

companies in

commercial vehicles

and components

Players

Maruti Udyog

Hindustan Motors

Premier Telco

Ashok Leyland

Mahindra &

Mahindra

De-licensing of the

sector in 1993

Global major OEMsstart assembly in India

(GM, Ford, Honda,

Hyundai, etc.)

Imports allowed from

April 2001; alignment

of duty on components

and parts to ASEAN

levels

Implementation ofVAT

PRODUCTION: INDIA AS THE MANUFACTURING HUB

India with its rapidly growing middle class, market-oriented stable economy,

availability of trained manpower at competitive cost, fairly well-developed

credit and financing facilities and local availability of almost all the raw

materials at a competitive cost has emerged as one of the favourite investment




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destinations for the automotive manufacturers.

Japanese auto major, Nissan Motor Co, has identified India as one ofthe five low-cost countries to manufacture its new generation compact

cars, including the Micro.

Hyundai has made India its global hub for manufacturing small cars. It

will invest US$ 1 billion in its second plant in Chennai by 2013. In

addition, it is also investing US$ 40 million in its R&D facility in

Hyderabad.

General Motors has so far invested about US$ 1 billion into its Indianoperations. It has already started production of its small car, Spark in

its new Talegaon factory in Maharashtra, which has been set up with

an investment of US$ 300 million.

Mercedes-Benz will invest about US$ 64. 21 million in its plant at

Chakan near Pune, which would begin operations in February-March

next year. The plant would have a production capacity of 2,500 trucks

and buses and 10,000 cars over two shifts per year.

Renault has entered into 50:50 joint ventures with Nissan Motors and

together they have set up a manufacturing facility near Chennai at a

cost of US$ 901.35 million to deliver 400,000 cars annually.

Skoda Auto plans to make India its regional manufacturing hub. It will

start producing cars in India by 2010 with a manufacturing target of

50,000 units. Besides the domestic market, these will also be exported

to neighbouring countries like Nepal, Sri Lanka, Burma and

Bangladesh.

DOMESTIC MARKET

According to the Society of Indian Automobile Manufacturers (SIAM), the




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Indian auto industry recorded a production growth of 8.39 per cent during the

current fiscal year till October 2008, over the same period in the previous

fiscal.

SALES

The growth of the passenger vehicles segment during AprilOctober 2008 was

4.87 per cent over the same period, the previous year. Passenger cars grew by

3.51 per cent, utility vehicles by 6.33 per cent and multi-purpose vehicles by

18.15 per cent in this period. However, cumulative sales of commercial

vehicles segment registered a decline during the period. The segment

registered a decline of 2.97 per cent during AprilOctober 2008 as compared

to the same period last year.

In the three-wheelers segment, passenger carriers grew by 19.64 per cent

during April-October 2008.

Two-wheelers registered a growth of 6.65 per cent during AprilOctober

2008. Mopeds, motorcycles and scooters grew by 4.77 per cent, 6.59 per cent

and 6.79 per cent, respectively. Electric two-wheelers segment also grew by

54.25 per cent.

INDIA AS THE EXPORT HUB

In terms of manufacturing excellence and availability of low-cost quality

components as well as a fast expanding domestic market, India is all set to




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become the global export hub of the automobile industry. The exports markets

have helped carmakers such as Maruti Suzuki and Hyundai Motor India post

greater sales overseas than in the domestic market.

According to the figures released by SIAM, the period from AprilOctober

2008 saw automobile exports registering a growth of 29.36 per cent.

As the world moves away from big cars to smaller makes, owing to high fuel

costs and general recessionary trends, the small car advantage presents a huge

business opportunity for car makers in India. The Indian car market accounts

for 71 per cent of small cars, while in China it accounts for 33 per cent.

Home-grown auto major, Maruti Suzuki, the country's largest car maker,

currently exports Alto, M800, Omni, Wagon R and Zen Estilo to non-

European markets such as Chile, UAE, Algeria and East Africa. The Japanese

car maker, which exported 53,000 units in 200708, will up it to 200,000 units

by 2010.

Korean car makerHyundai exports 40 per cent of its small car production,

primarily 'i10' and 'Santro', which sells as 'Autos' in 97 countries across

the world. The sales of its newly-launched compact car i10 touched 106,749

units in the overseas markets within seven months of being launched in

December 2007.

As a part of its strategy to make India an export hub for compact cars,

Hyundai Motors has raised production to 0.6 million units per annum.

The latest addition to the list is Nissan, which plans to buy 50,000 A-Star

compact cars from its rival Maruti Suzuki and export to markets in Europe as

well as make small cars in India and start exporting it to Latin American and

African countries by 2010. The car makers in the markets like Latin America




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and Europe too have ramped up sourcing orders of small cars from Indian

companies.

FDI, MERGERS, ACQUISITIONS AND JOINT VENTURES

In sync with the dynamics of an open market, mergers and acquisitions and

joint ventures have continued to be the driving force in the Indian automobile

industry. Leading Japanese, Korean, European, French, Italian and American

automobile companies have either set up their own manufacturing base in

India or have tied up with Indian automotive firms to roll out new products

from Indian market. The list includes Toyota, Nissan, Renault, Fiat, Honda,

Kawasaki, Cummins and many more. On the other hand, Indian companieshave also been bullish in acquiring foreign automobile companies to reinforce

their presence in the global market.

The biggest acquisition in the first half of 2008 has been the Tata Motors'

acquisition of Jaguar-Land Rover from US automobile firm for US$ 2.3

billion. During this period, another auto major, Mahindra & Mahindra has

acquired three Italian companies - G R Grafica Ricerca, Metalcastello

and Engines Engineering. Another event is Daimler AG's acquisition of 26

per cent stake in Sutlej Motors.

The prominent private equity deals in the first half of the year include Golbot

Holding's (a Goldman Sach arm) 3.68 per cent stake in M&M for US$ 175

million, AIG Global Investment's US$ 20 million in Unipart, AIG's 14.5 per




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cent in Kinetic Engineering and Phi Advisors' 10 per cent in M&M's

subsidiary First Choice.

EMERGING TRENDS: SMALL CARS, HYBRID CARS

One of the innovative cars which is prominent in existence in the southern

zone of India is the electric car, Reva. Reva has now begun to capture other

markets too, with emphasis shifting to saving fuel. Other carmakers such as

Hero Electric and M&M are coming out with electric versions.

Recently, after the launch of Nano by Tata Motors, the global automotive

market has shifted its focus on the huge potential of small car segment. The

landmark innovation has shed light on a vast market of potential consumers

who were hitherto unable to afford a car.

The Invest India Incomes and Savings Survey 2007, by IIMS Data works, and

another study by CRISIL Research suggest that there is a huge demand base

for entry level cars in India. The immediate potential demand base for a car of

1.6 million units, according to the former, is based on the respondents, who do

not own a car at present but aspire to own one in the next 12 months. Nearly

all automotive giants have geared up towards leveraging the prospect of this

segment.

Quite a few of Indian auto-makersMaruti-Suzuki with its 'Splash'




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and 'A Star', Hyundai with 'i20', Fiat with 'Grande Punto'plan to

roll out new small car models by the end of 2008.

General Motors plans to roll out its new mini car next year from its

Talegaon plant, near Pune. This will be followed by the launch of a

sedan category car named Cruz by 2010.

Tata Motors is also set to offer an all-new version of its Indica, which

has lured the Indian auto consumer segment for the last many years.

Many new players would also make an entry into the small car

segment. Honda, with its much-awaited 'Jazz', and Volkswagen, with

an Indian version of its popular 'Polo compact', are among the

prominent ones.

Global biggies like Toyota and General Motors are also expected to

join the bandwagon by 2010.

Apart from that it is the hybrid car that has caught the attention of the

Indian auto manufacturers. India's first hybrid car, Honda's 'Civic'

sedan has been launched in June 2008.

Following the precedence, home-grown majors like, Tata Motors andMahindra & Mahindra are developing hybrid cars.

Even BMW is planning to introduce its hybrid car to India within two

years of its global launch due in the next 18 months.

AUTOMOTIVE MISSION PLAN 20062016

The vision of the Automotive Mission Plan (AMP) 20062016 is to emerge

as the destination of choice in the world for design and manufacture ofautomobiles and auto components with output reaching a level of US$ 145

billion accounting for more than 10 per cent of the GDP and providing

additional employment to 25 million people by 2016.

As per the AMP, it is estimated that the total turnover of the automotive




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industry in India would be in the order of US$ 122 billion159 billion in 2016.

It is expected that in real terms, India would continue to enjoy its eminent

position of being the largest tractor and three-wheeler manufacturers in the

world and the worlds second largest two-wheeler manufacturer. By 2016,

India would emerge as the worlds seventh largest car producer (as

compared to the eleventh largest currently) and retain the fourth largest

position in world truck manufacturing sector. Further, by 2016, the

automotive sector would double its contribution to the countrys GDP

from current levels of 5 per cent to 10 per cent.

LEADING PLAYERS AND SEGMENTS IN WHICH THEY OPERATE

Manufacturer Segments

Ashok Leyland LCVs, M&HCVs, Buses

Asian Motor Works M&HCVs

Atul Auto Three wheelers

Bajaj Auto Two and Three Wheelers

BMW India Cars and MUVsDaimler Chrysler India Cars

Eicher Motors LCVs, M&HCVs, Buses

Electrotherm India Electric Two Wheelers

Fiat India Cars

Force Motors Three Wheelers, MUVs and LCVs

Ford India Cars and MUVs

General Motors India Cars & MUVs

Hero Honda Motors Two Wheelers

Hindustan Motors Cars, MUVs and LCVs

Honda Two Wheelers, Cars and MUVsHyundai Motors Cars and MUVs

Kinetic Motor Two Wheelers

Mahindra & Mahindra Three Wheelers, Cars, MUVs, LCVs

Majestic Auto Three Wheelers

Maruti Suzuki Cars, MUVs

Piaggio Three Wheelers, LCVs

Reva Electric Car Co. Electric Cars

Royal Enfield Motors Two Wheelers




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Scooters India Three Wheelers

Skoda Auto India Cars

Suzuki Motorcycles Two Wheelers

Swaraj Mazda Ltd. LCVs, M&HCVSs, Buses

Tata Motors Cars, MUVs, LCVs, M&HCVs, Buses

Tatra Vectra Motors M&HCVs

Toyota Kirloskar Cars, MUVs

TVS Motor Co. Two Wheelers

Volvo India M&HCVs, Buses

Yamaha Motor India Two Wheelers

MARKET RESEARCH

Market research often refers to either primary or secondary research. Secondary

research involves a company using information compiled from various sources, which

is about a new or existing product.. Primary market research involves qualitative

research (such as focus groups or one-on-one interviews) and quantitative research

(such as surveys) as well as field tests or observations conducted for or tailoredspecifically to that product. Primary research, which is also called field research or

original research, is useful for finding new information and getting customers' views

on products.

SCORPIO

Having defined the competitive framework, the next task undertaken was that of

analyzing the consumer. Consumer segments of B and C category car buyers were

analyzed in terms of their expectations from a car, their perceptions about cars and

their relationship. Proprietary techniques of research, of the advertising agency

Interface Communications, like Mind & Mood, ICON and VIP were used to

understand this consumer. The findings were:




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* Size matters- big size stands for status

* Consumers seek latest technology

* Imagery but at affordable prices

* The sheer thrill and passion of driving an SUV

* Power of the vehicle makes a statement

* But along with the others, luxury was a very important parameter

* International vehicles define imagery

SUVs like Pajero, Land Cruiser and Prado are seen as urban vehicles for the rich and

famous consumers aspire to own these vehicles as the imagery of these vehicles has

become very desirable.

Consumers want to consume premium imagery at prices affordable to them

The Marketing Environment

Marketing environment consists of the actors and forces outside marketing that affect

marketing managements ability to build and maintain successful relationships with

target customers. The marketing environment offers both opportunities and threats.The environment continues to change rapidly. The marketing environment is made up

of Micro-environment and Macro-environment.

The Micro environment consists of the actors close to the company that affect its

ability to serve its customers. These actors are: the company, suppliers, marketing

intermediaries, customer markets, competitors and publics.

The Macro environment consists of the larger societal forces that affect the

microenvironment. These forces are: demographic, economic, natural, technological,

political and cultural forces.

GM STUXX




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THE DEMOGRAPHIC ENVIRONMENT

The demographic position will be on the United States. Since, the target market is for

the middle class; it will provide a boost for the 32% of the total population. Thisproduct will produce a superior value to customers who always value the brand. Also,

it will keep the popularity of the product at their trend. In this case, more and more

customers will be able to keep this product if it satisfies their condition. Additionally,

the middle class group will be loyal to this product brand and as generation goes by;

this product will be there forever. On the other hand, this product is also designed for

students, and working class people. This is due to the fancy and environmental design.

Students will be so grateful to have fancy car while the working class group will tend

to afford such an affordable environmental car design.

THE NATURAL ENVIRONMENT

This product is basically designed to reduce the carbon emission from fuels and help

to preserve our environment. It is very important to design such car to help decrease

the rate of carbon dioxide from the air and provide a better condition to tackle globalwarming. This car will provide a boost to the natural environment because it is safer

and has an image to be friendlier to the environment itself. In this case, more and

more people will tend to buy such car to protect the environment by reducing the

carbon emission to the air.

THE ECONOMICAL ENVIRONMENT

The world is facing a shortage of fuel and it has become an economical crisis to

everycountry. This is evidence as the price of fuel is increasing and the probability of

the price of a barrel to increase at any day is very high. Therefore, this product will

help customers to save money because it consumes less fuel. The fuel consumption is

one of the best criteria based on this product. On the other hand, customers will be

able to satisfy with this kind of product because it is not too expensive and everybody




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has the privilege to afford one. This product will satisfy the superior value of all

different customers since it has a very good design to solve to fuel shortage, less

expensive, and can be affordable to anyone.

THE TECHNOLOGICAL ENVIRONMENT

The fastest growing of information technology helps this product to be at its best. Its

design is basically provided with the help of information technology. Looking at its

design, this product benefits a lot from the technological sectors. This proves that this

product is favourable to the environment. Also, this product can be modified or even

upgraded to the standard where it will be suitable at any environmental condition. The

Information technology is very effective in letting this product to be very efficient. In

this case, it helps customers to satisfy this kind of product in this technological

environment.

THE SOCIAL AND CULTURAL ENVIRONMENT

It is believed that protecting the environment is a great concern. Therefore, this

product is purposely designed to be environmentally friendly. As a result, most people

in the United States and elsewhere are willing to offer such kind of product to save the

environment. If more and more people are keen to buy such kind of product then the

environment would be safe at any cost. Consequently, people will be more supportive

to save what is best for the communities and the environment.

SEGMENTATION

A market segment consists of a group of customers who share a similar set of wants




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The marketer does not create the segments; the marketers task is to identify the

segments and decide which one(s) to target. Segment marketing offers several

benefits over mass marketing. The company can create a more fine-tuned product or

service offering and price it appropriately for the target segment. The company can

more easily select the best distribution and communication channels, and it will also

have a clearer picture of its competitors, which are the companies going after the

same segment.

In the context of automotive sector, we would be classifying it in the following ways-:

BASED ON THE PRICE OF THE CAR

BASED ON THE LENGTH OF THE CAR

BASED ON THE USER SEGMENT

BASED ON THE PRICE OF THE CAR

On the basis of price of car we can segment the car in following ways-:

Economy Segment

o The economy segment of car ranges up to Rs. 2.5 lacs. The products in

ths segment are Maruti 800, Alto and the newly launched product of

TATA motors i.e. NANO.

Mid- Size Segment

o The mid-size segment of car ranges from 2.5 lacs to 4.5 lacs. It

includes the products like Hyundai santro, Maruti zen, Tata Indica etc.

Luxury car segment

o The luxury segment of car ranges from 4.5 lacs to 10 lacs. It includes

the products like Honda city, Hyundai Verna, Mahindra Scorpio etc.




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Super luxury car segment

o The super luxury segment of car ranges above 10 lacs. This segment

satisfies the elite class of the society. It includes the products like

Skoda Laura, Honda Accord, BMW, Mercedes, Audi etc.

BASED ON THE LENGTH OF THE CAR

A segment- Cars that are less than 3.5 meters long (800, omni)

B segment- Cars between 3.5 meters to 4 meters long( Zen, SX4, Santro)

C Segment- Cars between 4 meters to 4.5 meters long (Verna, Honda city,

ford fiesta)

D segment- Cars that are more than 4.5 meters long( Mercedez, Sonata,

Accord, Skoda)

BASED ON THE USER

Segmentation of automotive sector is also based on the user of the products. Like the

example of TATA Motors, when it observed that their product INDICA is used

extensively by the taxi operators, it came up with a new model of the car having

Round Tail Lights to distinguish it from the car having vertical tail lights used by the

individual buyers.

Individual Buyers

Taxi operators -:

Government /non-government institutions




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TARGET MARKETS

The segment that gives the greatest opportunity to the marketer is called target

marketing.

VOLVO MOTORS

Volvo Motors develops its cars for buyer to whom automobile safety is a major

concern. Volvo therefore positions its as a safest a customer can buy.

.

HYUNDAI MOTORS

Hyundai marketing strategy is differentiated marketing. Its primary consumer target

is middle to upper income professionals who need true value for their money and

comfortable ride in city conditions. Its secondary consumer target is college students

who need style and speed. Its primary business target is midsized to large sized

corporate that want to help their managers and employees by providing them a car for




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ease of transport. Its secondary business target is entrepreneurs and small business

owners who want to provide discounts to managers buying a new car.

Each of the four marketing strategies conveys Hyundai differentiation to the target

marketing segments identified above.

Hyundai Santro is targeting middle

professionals

Accent was launched to target corporate clients

NICHE MARKET

A niche is a more narrowly defined group seeking a distinctive mix of

benefits. Marketers usually identify niches by dividing a segment into sub segments.

BMW is targeting high class people but it is mainly targeting

the young people who earn a lot of money up to the age of 35-40 years and want to

have a stylish saloon.




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Mercedes is also targeting high class people but it is mainly

targeting the CEOs, chairmen, etc of age group of 50-60 years.

MARKETING MIX

A Marketing mix is the division of groups to make a particular product by pricing,

product, branding, place, and quality. Although some Day1 marketers have added

other P's, such as personnel, packaging and physical evidence, the fundamentals of

marketing typically identifies the four P's of the marketing mix as referring to:

"Marketing Mix" is set of correlated tools that work together to achieve company's

objectives, they are: product, price, promotion, place.

The set of controllable tactical marketing tools, product, price,place and promotion -

that the firm blends to produce the response it wants in the target market:


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Product- A tangible object or an intangible service that is mass produced or

manufactured on a large scale with a specific volume of units. Intangible

products are often service based like the tourism industry & the hotel industry.

Typical examples of a mass produced tangible object are the motor carand the

disposable razor. A less obvious but ubiquitous mass produced service is a

computer operating system.

Price The price is the amount a customer pays for the product. It is

determined by a number of factors including market share, competition,

material costs, product identity and the customer's perceived value of the

product. The business may increase or decrease the price of product if other

stores have the same product.

Place Place represents the location where a product can be purchased. It is

often referred to as the distribution channel. It can include any physical store

as well as virtual stores on the Internet.

Promotion Promotion represents all of the communications that a marketer

may use in the marketplace. Promotion has four distinct elements -

advertising, public relations, word of mouth and point of sale. A certain

amount of crossover occurs when promotion uses the four principal elements

together, which is common in film promotion. Advertising covers any

communication that is paid for, from television and cinema commercials, radio

and Internet adverts through print media and billboards. One of the most

notable means of promotion today is the Promotional Product, as in useful

items distributed to targeted audiences with no obligation attached. This

category has grown each year for the past decade while most other forms have

suffered. It is the only form of advertising that targets all five senses and has

the recipient thanking the giver. Public relations are where the communication

is not directly paid for and includes press releases, sponsorship deals,

exhibitions, conferences, seminars or trade fairs and events. Word of mouth is

any apparently informal communication about the product by ordinary

individuals, satisfied customers or people specifically engaged to create word


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of mouth momentum. Sales staff often plays an important role in word of

mouth and Public Relations

PRODUCT

MARUTI SWIFT




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European Styling. Japanese Engineering. Dream-Like Handling.

The new Swift is a generation different from Suzuki design. Styled with a clear sense of

muscularity, its one-and-a-half box, aggressive form makes for a look of stability, a sense

that it is packed with energy and ready to deliver a dynamic

drive. Its solid look is complemented by an equally rooted road presence and class-

defining ride quality. New chassis systems allow for the front suspension lower arms,

steering, gear box and rear engine mounting to be attached to a suspension frame. You

get lower road noise, and a greater feeling of stability as you sail over our roads with

feather-touch ease.

TATA INDICA

Though a late entrant, the Indica quickly established itself as the benchmark for the

segment. By offering exciting features, the car changed the rules of the category inSpace, Power, Style, Safety and Economy for international market. The Indica

ensured a pleasant ride and handling experience as it had features like wide large

tyres, generous leg room and independent front and rear suspension. It developed a

new segment of diesel small cars along with its petrol offering. The luggage space

was also the best in its class.

The rigid 980 kgs steel body of the car was rigorously tested at India's first and only

crash test facility. A collapsible steering wheel, impact absorbing bumpers, anti-

submarine seats, crumple zones and side impact beams are just a few of the features

that make the Indica one of the safest cars on the roads today. Savings are ensured

with the fuel-efficient 1.4L diesel engine, while the 1.4L petrol engine is optimized

for performance.




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Indica features for international market:

Collapsible steering column

Side-impact beam

Energy-absorbing crumple zones in the front

Anti-submarine seats

Child-safety locks on rear doors

Laminated front and rear windshield glass

SCORPIO

Rational benefits: World class vehicle, good looks, car like comfort, great value

Emotional benefits: Ownership experience of thrill, excitement and power

Relational benefits: Young modern, premium, city companion / extension of lifestyle.

PRODUCT, SERVICES AND BRANDING STRATEGY

What is a Product?

Product is anything that can be offered to a market for attention, acquisition, use, or

consumption that might satisfy a want or need. Products include more than just

tangible goods. Broadly defined, products include physical objects, services, events,




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persons, places, organizations, ideas or mixes of these entities. Services are a form of

product that consists of activities, benefits or satisfactions offered for sale that are

essentially intangible and do not result in the ownership of anything.

Example: banking, hotel and airline.

Products, Services and Experiences:

Today, companies are creating and managing customer experiences with their

products.

Levels of Products and Services:

Product Planners need to think on three levels:

1. Core Benefit: This addresses the question What the buyer is really buying?. At

this level, marketers must define the core: problem-solving benefits or services that

consumer seeks.

2. Actual Product: At this level, the core benefits must be turned into actual

products. Product planners need to develop product and service features, design,

quality level, brand name and packaging.

3. Augmented Product: Finally at this level, the product planners must bundle the

products with services. They must build an augmented product by offering additional

consumer services and benefits.

Hyundai Santro

CORE PRODUCT




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Core Product is the problem solving services or benefits that consumers purchase the

product for, and by applying this concept to Santro you can state that the core product

is speed, transportation, and freedom to go anywhere, easy traveling, and

convenience.

ACTUAL PRODUCT

Actual product meaning the products parts, quality, features, design, brand name and

other attributes received. Now, if we use these things and combine it with Santro we

can state that the actual product is: Santro, as the brand name, it matters little about

the name, because HYUNDAI is very famous already, people will recognize the

brand in an instance, and features such as the fact that the car is fully customizable, so

you can add most things to your car, i.e. Stereo, big speakers, rims for the tires, TV in

seat etc., also design, where you can choose between a lot of colours, seat colour, and

fabrics, all the things you can imagine. And of course the quality, the car will be

regular HYUNDAI standard, meaning quality will be the same as for any other car

made by HYUNDAI, which is high quality.

AUGMENTED PRODUCT

Augmented product is the additional consumer services and benefits built around the

core and actual product, as well as add value and differentiate the product from its

competition. The augmented product for Santro is after-sale services such as free

yearly check up, as well as a free oil check after 2 years, free installation of additional

features when you customize your car, and help with car insurance, and quick repair

services.

PRODUCTCLASSIFICATIONS

GM STUXX




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From the 4 product classifications, convenience, shopping, specialty and unsought,

the Stuxx is classified as a specialty good, since specialty goods are purchased

infrequently, and most of the times, buyers make special purchasing effort. By listing

some of the characteristics for specialty products we can say that substitutes are not

accepted, and that the product is infrequently purchased, and since our Stuxx is a GM

we know that there are some brand loyalty as well. And if we look at the strategy, we

can note limited distribution, and consumers might seek our product regardless of

location,

STAGES IN DEVELOPING PRODUCT AND SERVICE

ATTRIBUTES

PRODUCT ATTRIBUTES

Product attributes consist of several categories, such as Product quality, Product

features, Product style and design. For Stuxx product quality is the performance

quality, because it can be used a lot and still last for a long time (Durability). And as

for Product style we know that Stuxx offers many colours and many styles used to

attract attention from trendy consumers, and general consumers, the style howeverdoes not contribute to better performance. For Product design, the car has a very

special chassis that allows many changes, making this a fully customizable car, where

you are free to alter appearance, features, construction, such as adding items on the

back of the car, lowering the car making it look more stylish like a race car.

BRANDING




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There are several advantages for buyers when talking about branding, first of all

product recognition, everyone knows GM, so if they know GM, then they know Stuxx

as well. Quality on Stuxx is same standard as the rest of GMs cars. There are. But not

only buyers have advantages, no, sellers as well. Here are a few examples, basis for

products quality, provides legal protection, helps to segment the markets.

BRAND STRATEGY

A study of international brand names was done and a classification of brand names of

midsize cars and SUVs was done into groups. International brand naming trends and

strategies were analyzed. New names were generated. These brand names were

researched massively first by qualitative techniques and then by quantitative

techniques.

The name that emerged as most popular, and which was also the most liked name

internally at Mahindra was SCORPIO.

BRAND ENDORSEMENT STRATEGY

The relation between Scorpio and the mother brand Mahindra was also deliberated

upon. The strategy chosen for Brand Endorsement was - Scorpio from Mahindra -

shadow endorsement, one which does not shout Mahindra.

The Mahindra brand image was not modern and young. There was a need to create a

strong distinct modern brand. Hence Mahindra as a Masterbrand could not contribute

towards enhancing the Value Proposition. Yet Mahindra had to provide source




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reassurance. Also the distribution would be through Mahindra dealerships. Hence it

became a shadow endorser.

PACKAGING

Since product is a car, packaging might not be of much importance. Cars usually

dont come in a box. However, since Santro is made for students and older, they have

decided to make a big box, free of all charges, if the car is a gift for someones

birthday. Santro is a good choice as a first car; parents can easily buy it as a gift for

their young teenagers/students.

LABELING

No labelling, however for curious users, there will be a small brochure about the

ingredients car parts, so they can see how exactly the car works, and what and

where the different parts are from.

PRODUCT SUPPORT SERVICES

As for product support services, there are 3 things to know: Assess the value of

current services and obtain ideas for new services. Assess the cost of providing the

extra services and putting together a package of services that delights the customers

and yields profits for the company. All these, are already applied to Santro if we look

at Augmented Product, which I wrote about earlier. Customers would be delighted

about those extra services, and might tell friends about them and in the end make

more profit for the company.

PRODUCT LINE DECISIONS (The Product Mix)

When it comes to product line decisions, and product mix to be exact; we will find

that there are 3 types, namely width, length and depth. As for Stuxx, it is definitely

width, because Stuxx is a different product line for GM.




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PRICE

MARUTI SWIFT

After launching cars for the masses since so many years, Indias largest automobile

manufacturer is now targeting the premium segment with their latest model from the

Suzukis stable. Pricing of this premium hatchback is start from Rs.4 lakh. This price

range would practically rip apart Hyundais offering in Getz, which is priced at a

much higher tag of Rs. 4.5 lakh. Both the companies are known for their value basedofferings and Maruti with their extensive service network and brand reputation for

making reliable cars should get the customers nod over their competition.

TATA INDICA

Tata Motors adopted a competitive pricing strategy for Indica in the global market.

Prices were fixed on the basis of the norms prevailing in the international market.

Also the prices offered by their competitors like Toyota, Ford, Fiat, were kept in mind

while deciding the prices.

SCORPIO

Pricing Strategy: to be a premium brand yet

having universal appeal .Scorpio was to compete with the midsize

cars like Hyundai Accent, Ford Ikon, Opel Corsa, Maruti Suzuki Esteem on the one

side and UVs like Toyota Quails, Tata Safari and the Tata Sumo on the other. Scorpio

adopted the penetrative pricing strategy positioned in the psychological price barrier

of Rs. 5 -7 Lakhs.




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PROMOTION

MARUTI SWIFT

When Maruti Udyog launched the Swift, the automotive industry was agog with

expectation that the car had the makings of a real winner. Three versions were

launched with the base variant carrying a retail tag of Rs 3.85 lakh, ex-showroom,

New Delhi, and this aggressive pricing only reinforced this feeling.

Event Organized By Maruti to Promote Swift

Fever FM and Maruti Suzuki Swift organize a Night

Rally for Delhi-itesOn March 24, 2009

In a co-operative marketing initiative, Fever FM and

Maruti Suzuki Swift came together to organize a Night

Rally in Delhi. The Swift Night Life Rally was

organized for the Swift Life Club. The brand tied up with the station to extend the

experience to the people who were unable to participate in the activity.

Honda

Road Shows




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The company plans to stage road shows, to display vehicles in the pavilions during

various college festivals and exhibition.

Hyundai

Television advertisements

Advertisements to promote and market

our product are shown on leading televisionchannels. Major music and sports channels

promote and they reach out to the youth will be

promoted through Star, Zee, Sony and

A TV Commercial by Hyundai doordarshan etc as it has more viewers.

.

Radio

Radio is the medium with the widest coverage. Studies have recently shown high

levels of exposure to radio broadcasting both within urban and rural areas, whether or

not listeners actually own a set. Many people listen to other people's radios or hear

them in public places. So radio announcements are made and advertisements are

announced on the radio about the product features and price, qualities, etc.

Print Ads

Daily advertisements in leading newspapers and

magazines are used to promote the product.




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Leaflets at the initial stage are distributed at railway stations, malls, college areas and

various other locations.

Print ad by BMW

Workshops and Seminars

Workshops and seminars are held in colleges and big corporate to make people awareabout the companies past performance and product features, its affordability and

usage, vast distribution network.

Banners, neon signs

Hoardings, banners, neon signs are displayed at clubs,

discs, outside theatres, highways and shops to promote its

brand car.

Booklets and pamphlets

Booklets are kept at car showrooms, retail battery outlets, etc for the customer to read.

These booklets provide information about its company; the products offered which

suits the customers need accordingly.

TOYOTA COROLLA

The Promotion for Toyota Corolla consists of a blend of activities making its

Promotion Mix. Its Promotion Mix consists of almost all the possible techniques of

Promotion used for any other product. Some of the major elements of Promotion Mix

of Toyota Corolla are listed as under:




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Advertising

It uses many different techniques of Advertisement as a part of its Advertising

Strategy.

Most of the Print Ads of Toyota Corolla are individually targeted at one of these

factors such as Comfort, Performance, Styling, Power, Leg Room, Design, and

Driving Pleasure. One most common feature of almost all the Ads is that in every

Advertisement, the fact that it is the Worlds Largest Selling Car and its presence

across 160 countries is present. This is done to because the company wants to

differentiate the product in terms of its Reliability that it is an entrusted brand of 30

Million people across the globe. The fact that it is present in 160 countries proves that

it is a Global Car.

There are 3 TV Commercials of this Car in India. The Commercials show that this

Car is targeted mainly at the Indian youth and young Executive. It has been positioned

as a little sportier which is the main reason that it is for young people and is also like

by them too.

The Brochures, Posters/Leaflets are such designed that shows that Corolla is a car forpeople who demand Performance, Style, Power and Sheer Driving Pleasure. The car

being a perfect combination of these factors makes it a huge success across its

segment.

The Other Sources of Advertisement include Bill Boards, Display Signs, POP,

Displays, Symbol/Logo. The company does the Advertising of Corolla by displaying

Bill Boards and Display Signs at various target places where it feels that prospective

buyer will come across it. At the showroom also, there are huge amount of Point Of

Purchase Displays and also Symbols/Logo which add to it.

One of the major sources of Sales Promotion is Trade Fairs like AUTO EXPO,

MOTOR SHOW etc. The company used to take part in these types of fairs and used

it for its Sales Promotion. But now the trend is shifting because the company thinks




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that if they want to launch a product on a National Level, then there is no need for

such kind of shows as now there are various other powerful sources of media

available to them. Moreover the cost spent on these kinds of fairs was not justified. So

therefore the company is now keeping away from fairs. In 1999 Toyota last time

participant at the RAC rally in Britain.

Some other Sales Promotion technique used by the company is the Festival Season

Offers it introduces in the market at the time of Diwali, New Year, Christmas,

Navratri etc to boost short term sales.

Public Relations and Community Building Exercise

Contribution to Tsunami

Toyota Kirloskar Motor wins Best Ornamental Garden award for its landscape

Toyota Kirloskar signs MoU with Bangalore University for promotion of

Japanese Language

Toyota observes earth day by supporting local schools

Organizing Drawing/Painting Competition on Me and my Environment for

kids from Govt. Schools.




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http://www.toyotabharat.com/media/inen/images/about/saf_enviroment_big_1.jpg


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PERSONAL SELLING

Personal Selling largely takes place at the Dealers End. The way the customer isattended depends mainly on the Dealer as he acts as an interface between the

company and the Consumer.

The various cases in which Personal Selling takes place is Individual Sales, Corporate

Sales, Sales Presentations, Fair and trade Shows. Mostly in case of Individual Sales

the Customer goes to the showroom and takes a look at the product. There he is

attended to by the Sales Personnel of the Dealership. Sometimes the Senior Sales

Executive has to make Sales Presentation to Corporate Buyers. Personal Selling is

also practiced at Trade Fairs and Auto Shows wherein the Company appointed SalesPersonnel attend prospective customers and also book their orders.

DIRECT MARKETING

In the case of Direct Marketing the Company Officials directly contact the

Prospective buyers with the information available through various sources. For

example in case of Road Shows, Trade Fairs, Auto shows etc. Sometimes the existing

customers also provide references of prospective buyers such as their friends or

relatives.




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Toyota Stall at the Auto Expo

GM STUXX

GMI has launched several industry first programs such as Opel Club Card facility,

Opel Carnivals, Opel Autobahn newsletter, chauffeur training programmes, mobile

road-show caravan, car exchange programme for Opel customers, OK 5-Star used car

programme,

There is two-year and four-year warranty schemes, 2 year service holiday etc. Such

programmes have helped GM in building its brand equity and developing a loyal

customer base.

SCORPIO

Brand Promise: Luxury of a car. Thrill of an SUV

this brand positioning addresses the key consumer Insight and the product delivers the

promise. The position is also a unique proposition, which will help the brand have a

distinct image in the consumers mind.

Baseline - Nothing Else will do

The baseline captures the essence of the brand, which is superiority and

uncompromising attitude. It also summarises the spirit behind the making of the

Scorpio.

Media Strategy

*Dramatic and high impact launch




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* High visibility

* Push brand image even by the media vehicle

Building impact through multiple-media

* PR, Mass Media, Direct Marketing, Events

Public Relations

Pre-launch excitement and buzz was created by a full blown PR program. Media

coverage on the IDAM process, the people behind the Scorpio, the obsession, the

world class technology, etc set the tone for the hyped up launch. PR was also the first

tool used for launching the Scorpio. The coverage of the launch was massive. It gotfour cover stories

Mass Media

While the media targets would be achieved through the right selection of the media

mix, the Scorpio media posture was to ensure that Scorpio was present on the decided

media but with a difference. Scorpio would use media innovations to create

differentiation on the traditional media and do things in a bigger and better manner.

Customer Relationship Management (CRM)

CRM as a tool was used to create positive word-of-mouth, to monitor customer

experiences and generate referrals. A series of CRM activities were implemented with

regular direct communication, events and customer research. The CRM plan included

a welcome Pack on filling up Scorpio Club (Top Gear) form, satisfaction surveys,

Events, Festive offers, Rewards Program, etc.

TATA INDICA

More car per car is the famous tagline of this product. The Indicas positioning has

remained consistent with the brand's offering in an increasingly competitive market.




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The Indica is now synonymous with the word More, by encapsulating the inherent

product strengths and marrying them with the customer trait of desiring More.

A promotion strategy for Indica v2 in international market is more or less same as that

of the Indian market. Media innovations have been a key to the success of the Indica.

Tata at 29th Bangkok International Motor Show 2008

The positioning was strengthened with the successful launch of the Indica V2, which

assumed the leadership position in the year of its launch.

The Indica v2 was launched in the international market only through the press

medium, with three diesel versions and a petrol version, and this campaign shattered

many automobile advertising myths. The car was launched without any television

advertising, but through high-impact newspaper ads, dominating the medium and

delivering the desired impact. Headlines such as Youll never have to suffer a small

car again assisted customers in distinguishing between their old choices and the

Indica. This, in effect, placed the Indica on the pedestal of leadership, set to change

the rules of the game.

A recent campaign for the Indica V2 has helped in building the product on the rational

platform and adds an emotional layer. Anchored on the insight Its only human to




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want more, the campaign revolves around interesting candid moments in the daily

lives of normal everyday people who desire more; be it a boy wanting the other boys

bigger lollipop, or a baby crying when her parents stop driving her around in the

Indica V2. The latest campaign moves to the Even more car per car positioning.

PLACE

MARUTI SWIFT

The car manufacturing company, called Maruti Suzuki Automobiles India Limited, is

a joint venture between Maruti Udyog and Suzuki Motor Corporation holding a 70

per cent and 30 per cent stake respectively.

The Rs1,524.2 crore plant has a capacity to roll out 1 lakh cars per year with a

capacity to scale up to 2.5 lakh units per annum. The car manufacturing plant will

begin commercial production by the end of 2006.

The engine and the transmission plant has owned by Suzuki Power train India Limited

in which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog

holding the balance. The ultimate total plant capacity is three lakh diesel engines.

However, the initial production is 1 lakh diesel engines, 20,000 petrol engines and 1.4

lakh transmission assemblies.

TATA INDICA

Tata automobile group have a very large distribution network all over the world. Tata

Indica v2 is exported and assembled in many countries. South Africa has an

assembling unit for consumer vehicles. Other places where the companys products

(Tata Indica) are exported and in some assembled also are mentioned below:




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Africa :- Algeria , Angola , Ethiopia , Ghana , Kenya , Mauritius , Sudan ,

Uganda , South Africa , Senegal etc.

Europe: - Greece, Hungary, Italy, Malta, Portugal, Spain,

Switzerland, UK and Ireland.

CIS : - Belarus, Russia, Ukraine.

Asia: - Bangladesh, Malaysia, Sri-Lanka, Nepal, Bhutan.

Australia continent

PEOPLE

There are various types of people in any Organization. The various types of people in

case of Toyota can be classified as Customers, Sales Executives, Society,

Government, Competitors, and Media.

The most important out of these is our Customers. A customer can be any person who

purchases the product; he may or may not use that product for himself. A consumer is

one who actually uses the product himself. For example a father purchases Corolla for

his son. In this case the father will be the Customer and son will be the Consumer.

The main people involved in the purchase decision of the car are the Family

Members. In a recent study conducted, it was found out that these days children play a

major role in deciding which car to buy for the family. The company has to seriously

take into consideration all these factors. Also the factors that whether one uses the car

for travelling, office, shopping or family/personal etc.

As this car falls into a segment where price range is between 9-11 Lacs, so the

company has to target those people who not only have the ability to spend that much

amount of money but are also willing to spend that much amount of money. Data

regarding the purchasing power of different classes of people is also very necessary.

Customers tastes and preferences have to be taken into consideration.




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Next comes the Sales Executives who deal with the final customers and finish the

sales call. The Sales Executives play a major role. As the people of the organization

they are a window through which the customers interact with the company. They have

to be trained properly through customized modules designed especially for them

taking into consideration the various factors.

Corolla Owners Profile

Age : 25-45

Occupation : Business Class or High Level Service Executives

Social Class : These people (Lower Upper to Higher Upper Class) generally

have an existing C

segment car before they purchase Corolla

Areas : Urban/ Sub Urban, major Cities/Towns

Income Level : More than Rs. 2 lacs p.m.

PHYSICAL EVIDENCE

The Physical Evidence is created by displaying physically the product. Along with

that creating an atmosphere for the customers where in they feel the presence of

product. Toyota creates a powerful physical evidence for its customers through its

Showrooms, Hoardings, Logo etc. All the showrooms are designed on a common




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platform. The interiors of all the showrooms across India are the same. The designs

for the same are created by a team of Professionals in this field. The designs are

prepared very carefully keeping into consideration various factors such as customers

tastes and preferences, likes and dislikes etc. You will always find a Toyota

showroom having the Toyota Bill Board outside with white base and red foreground.

This creates a physical presence and people can feel the product.

SHOWROOM INTERIOR AND EXTERIOR




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SCORPIO

Infrastructure

Thirty-five showrooms across the country were redone entirely with the same look

and identity and a dcor built around movement, technology and sportiness. The

theme focused on giving the customer a memorable experience.

The showroom revamp was centered on the intention to provide a uniform customer

experience at all the touch points and to provide the customer with a unique

experience and not just a product. Therefore the back office would remain outside

the customers line of vision because the customer would be concerned with the

product and not with the paperwork.

PROCESS

The various processes involved in getting available the product from the manufacturer

to the end consumer are to be efficiently performed by the company. The processes

start when the customer is contacted by the Sales Personnel of the Dealership or the

customer contacts the Dealership if he is interested to buy a Corolla. The data

regarding the various customers can be had from various sources of data available

through different agencies which specialize in providing data. After the call is made,

an appointment is fixed. The Sales Executive prepares for the meet. He collects all the

possible information which would be needed for the meeting i.e. data about the




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customer, details about the car, maximum permissible discount structure, finance

options, delivery terms, free accessories which will be provided to the customer.

The sales personnel will find out that what is the present vehicle used by the

customer, his present buying power, satisfaction level, seriousness in buying etc.

Along with that he will also find out his exact needs, desired level of satisfaction,

lifestyle patterns etc. Sales personnel also ask certain questions through which he

comes to know about the various factors he wants to know. He asks both open as well

as closed ended questions. With the help of these questions, he can come to know the

various reasons due to which he is buying that car. These can be Performance, Safety,

Comfort, Driving Pleasure, Appearance etc.

These processes either lead to completion of sales call or sometimes unfortunately

leads to unsuccessful sales call which could not be competed.

DEALING WITH THE COMPETITION

Poor firms ignore their competitors; average firms copy their competitors; winningfirms lead their competitors PHILIP KOTLER

GENERAL ATTACK STRATEGY

FRONTAL ATTACK: the attacker matches its opponents product, advertising, price and

distribution.




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In this advertisement BMW is using frontal attack strategy against its biggest competitor

AUDI

AUDI is replying the BMW advertisement




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Along with AUDI and BMW, SUBARU and BENTLEY are using frontal attack strategy

against each others products.

DISTRIBUTION CHANNELS

SCORPIO

Since the Scorpio was targeted at an urban clientele it needed a stronger distribution

presence in Metros and urban areas. Hence, the distribution channel had to focus on

providing an appealing experience for modern car buyers and on offering

international standards of auto retail.

The Scorpio was launched in a phased manner - first in Metros Mumbai, Delhi,

Bangalore, Chennai. Twenty cities were included over a period of 4 months and

within a year 50 cities were covered. This ensured attention to main markets and to




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ensure that initial production of the vehicle could match demand. Dealerships were

revamped prior to launch in a particular city.

The Marketing Distribution Channel of Toyota Kirloskar Motor India, the

Manufacturer of Corolla, is a Single Level Channel depicted

DISTRIBUTION CHANNEL OF HYUNDAI



Manufacturer-TKM India, Bangalore

Toyota Flagship Dealer

Consumer

STOCKIST

DEALERS

SUB DEALERS

BOOKING AGENTS


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THE VALUE CHAIN

The Value-Chain Network within Stuxx is a significant medium for measuring the

products quality and performance, from Inbound Logistics-to- Operations-to-

Outbound Logistics-to- Marketing/Sales-to-Service. As a manufacturing firm, GM

that produces Stuxx manufactures the vehicle and then distributes it to its store all

over USA. The whole team network has a common purpose in operation and that is to

produce and to sell it to make the customer smiling when disembarking. This common

belief has brought a successful feedback to the overall sales and because providing the

service for selling is considered an important task by the employees at Stuxx, it has

never failed. Stores are designed so that accommodating a customer is luxurious but

keeping his/her perception to as not expensive-sense.

SWOT ANALYSIS OF

MARUTI UDYOG LTD.

STRENGTHS

WEAKNESSES

OPPURTUNITIES

THREATS




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STRENGTHS

The Quality Advantage

Maruti Suzuki owners experience fewer problems with their vehicles than any

other car manufacturer in India (J.D. Power IQS Study 2004). The Alto was

chosen No.1 in the premium compact car segment and the Esteem in the entry

level mid - size car segment across 9 parameters.

The J.D. Power APEAL Study 2004 proclaimed the Wagon R no. 1 in the

premium compact car segment and the Esteem No.1 in the entry level mid -

size car segment. This study measures owner in terms of design, content,layout and performance of vehicles across 8 parameters.

A Buying Experience like No Other

Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across

189 cities, with a workforce of over 6000 trained sales personnel to guide our

customers in finding the right car. Our high sales and customer care standards

led us to achieve the No.1 nameplate in the J.D. Power SSI Study 2004.

Quality Service across 1036 Cities

In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across

all 7 parameters: least problems experienced with vehicle serviced, highest

service quality, best in-service experience, best service delivery, best service

advisor experience, most user-friendly service and best service initiation

experience.

92% of Maruti Suzuki owners feel that work gets done right the first time

during service. The J.D. Power CSI study 2004 also reveals that 97% of




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Maruti Suzuki owners would probably recommend the same make of vehicle,

while 90% owners would probably repurchase the same make of vehicle.

WEAKNESSES

Commodity price risk

MULs commodity price risk relates to higher cost due to change in price of input

such as Ferro-alloys (steel), non Ferro alloys (aluminium), plastic and rubber, which

go into the production of automobile.

In order to mitigate these risks, the company continues to attempt to enter into long

term contracts based on its projection of prices in a volatile commodity market, whereyour company gives top priority to ensuring smooth availability of inputs, long term

contracts are helpful. They also help to minimise the impact of growing input price.

Conversely, long term contractor dilute the benefit if any, of a decline in input price.

Exchange Rate Risk

Your company is exposed to the risks associated with the fluctuation in foreign

exchange rates mainly on import of component & raw material and export of vehicles.

Your company has a well structured exchange risk management policy. The companymanages its exchange risk by using appropriate hedge instrument depending on the

prevailing market condition and the view on the currency.

OPPURTUNITIES

Leading Growth

As the market leader, your company led the growth in the passenger car sector last

year. Maruti's sales went up 30% to 4,72,000 units. This, as I said earlier, is the highest

annual sale since your company began operations 20 years ago. Maruti also gained

market share, mainly on account of its performance in the competitive A2 segment

where it increased its share from 40.3% in 2002-03 to 47.7% in 2003-04.




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AUTOMOTIVE

The record sales performance was reflected in the financials. Net Sales (excluding

excise) grew by 31% to Rs 93,456 million. Operating Profit Margin increased from 0.8

% in 2002-03 to 4.7 % in 2003-04. Profit after Tax jumped 270% to Rs 5421 million.

Your company is committed to motorising India. Towards this end, your company's

partnership with State Bank of India and its Associate Banks took organised finance to

small towns to enable people to buy Maruti cars.

THREATS

In the course of its business, MUL is exposed to a variety of market and other risks

including the effects of demand dynamics, commodity prices, currency exchange

rates, interest rate, as well as risk associated with financial issues, hazards event and

specific asset risk. Wherever possible, we use the instrument of insurance to mitigate

risk.

Business risk

The automotive industry is very capital intensive. Such investment requires a certain

scale of operation to generate viable returns. These scales depend on demand. Maruti

is still depending mainly on the Indian market. Although 2004-05 was year of

continued growth for the Indian economy, whether this growth momentum will

continue has to be seen.

THREATS FROM COMPETITORS

Tata Motors Limited

In the 2004 fiscal year, Tata Motors generated revenues of $3,542.2 million

(INR154,935.2 million). The company made a net profit of $185 million (INR8,103.4

million) in the 2004 fiscal year.

General Motors Corporation


http://www.automotive-business-review.com/companyprofile.asp?guid=10B103C6-24E0-440B-8D11-E901B4F74C24http://www.automotive-business-review.com/companyprofile.asp?guid=DAD3A6FC-60A1-4E63-AD90-B025AB2A0C12http://www.automotive-business-review.com/companyprofile.asp?guid=10B103C6-24E0-440B-8D11-E901B4F74C24http://www.automotive-business-review.com/companyprofile.asp?guid=DAD3A6FC-60A1-4E63-AD90-B025AB2A0C12


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AUTOMOTIVE

For the fiscal year ended December 2004, GM generated revenues of $193,517

million, an increase of 4.3% from the previous year. The company reported a net

income of $2,805 million for fiscal 2004, down 26.6% from the previous year.

PRODUCT LIFE CYCLE




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INTRODUCTION




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AUTOMOTIVE

The feeling of freedom and being one with the Nature comes only from riding a two

wheeler. Indians prefer the two wheelers because of their small manageable size, low

maintenance, and pricing and easy loan repayments. Indian streets are full of people

of all age groups riding a two wheeler. Motorized two wheelers are seen as a symbol

of status by the populace. Thus, in India, we would see swanky four wheels jostling

with our ever reliable and sturdy steed: Two wheelers in India are the second largest

producer and manufacturer of two-wheelers in the world. It stands next only to Japan

and China in terms of the number of two-wheelers produced and domestic sales

respectively. Indian two-wheeler industry has got spectacular growth in the last fewyears. Indian two-wheeler industry had a small beginning in the early 50's. The

Automobile Products of India (API) started manufacturing scooters in the country.

Bikes are a major segment of Indian two wheeler industry, the other two being

scooters and mopeds. Indian companies are among the largest two-wheeler

manufacturers in the world. In the initial stages, the scooter segment was dominated

by API; it was later overtaken by Bajaj Auto. Although various government and

private enterprises entered the fray for scooters, the only new player that has lasted till

today is LML.

The motorcycle segment was initially dominated by Enfield 350cc bikes and Escorts

175cc bike. The two-wheeler market was opened to foreign competition in the mid-

80s. And the then market leaders - Escorts and Enfield - were caught unaware by the

onslaught of the 100cc bikes of the four Indo-Japanese joint ventures. With the

availability of fuel efficient low power bikes, demand swelled, resulting in Hero

Honda - then the only producer of four stroke bikes (100cc category), gaining a top

slot.




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The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and

Hero Honda brought in the first two-stroke and four-stroke engine motorcycles

respectively. These two players initially started with assembly of CKD kits, and later

on progressed to indigenous manufacturing. In the 90s the major growth for

motorcycle segment was brought in by Japanese motorcycles, which grew at a rate of

nearly 25% CAGR in the last five years.

The industry had a smooth ride in the 50s, 60s and 70s when the Government

prohibited new entries and strictly controlled capacity expansion. The industry saw a

sudden growth in the 80s. The industry witnessed a steady growth of 14% leading to a

peak volume of 1.9mn vehicles in 1990.

In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a

decline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mn

vehicles. Barring Hero Honda, all the major producers suffered from recession in

FY93 and FY94. Hero Honda showed a marginal decline in 1992.

The reasons for recession in the sector were the incessant rise in fuel prices, high

input costs and reduced purchasing power due to significant rise in general price level

and credit crunch in consumer financing. Factors like increased production in 1992,

due to new entrants coupled with the recession in the industry resulted in company

either reporting losses or a fall in profits.




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AUTOMOTIVE

Key players in the Two-wheeler Industry

There are many two-wheeler manufacturers in India. Major players in the 2-wheeler

industry are Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS

Motor Company Ltd (TVS).




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AUTOMOTIVE

SEGMENTATION OF TWO WHEELER

A Two Wheeler Sector Sub-Segmenting in the three Segments.

1. Motorcycle

2. Scooter

3. Mopeds




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Segment-wise Analysis of Indian Two Wheeler Market

Segment Description share in 2001-02

Share in 2006-07

CAGR

A1 Scooter withenginecapacity lessthan 75 cc

5% 0% 33.99%

A2 Scooter withenginecapacity

between

5% 10% 32.9%




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75-125 cc(Scooterette)

A3 Scooter withenginecapacity

between125-250 cc

12% 1% -27.7%

B1 Motorcyclewith enginecapacity

between75-125 cc

62% 66% 14.9%

B2 Motorcycle

with enginecapacitybetween75-125 cc

5% 17% 44.8%

B3 Motorcyclewith enginecapacity

between75-125 cc

1% 1% 5.7%

C1 Mopeds 10% 5% -2.7%

Growth Prospects and Key Drivers of the Indian Two Wheelers Industry

The growth witnessed by the Indian two wheeler industry indicates the growing

demand for low cost personal transportation solutions amongst the 300 million Indian

middle class consumers. Despite this spectacular growth rate, the two wheeler

penetration (number of two wheelers per 1000 inhabitants) in India remains lower

than other Asian countries. This fact provides an opportunity for continued growth in

the market. India has the lowest Penetration of two wheelers as compared to countries

like Taiwan, Thailand, Malaysia, Vietnam, Indonesia and China. In the present

scenario, growth in the two wheeler Industry will b

Documents

14484132 Marketing Mix of Automotive Industry in India[1]