after sales service maruti
TRANSCRIPT
TABLE OF CONTAINT
CHAPTERNO.
CONTAINS PAGE NO.
CHAPTER1.
AFTER SALES SERVICE 1–3
CHAPTER2.
VALUE - CHAIN ANALYSIS (PORTER) 3-10
CHAPTER3.
KEY ELEMENTS OF AFTER-SALES SERVICE 10-13
CHAPTER4.
DIMENSIONAL ATTRIBUTES OF AFTER SALES SERVICE
13-14
CHAPTER5.
AFTER-SALES SERVICE NECESSITY AND EFFECTIVENESS
14-18
CHAPTER6.
AFTER SALES SERVICE STRATEGY18-21
CHAPTER7.
CUSTOMER SERVICE DOS AND DON'TS 21-24
CHAPTER8.
CUSTOMER COMPLAINTS 25-27
CHAPTER9.
DIFFRENTIATION OF AFTER SALEES SERVICEIN FOREIGN AND IN INDIA
27-28
CHAPTER10.
CASE STUDY - MARUTI SUZUKI INDIA LIMITED 29-47
CHAPTER11.
INDUSTRY VISIT - GENERAL MOTORS INDIA 48-50
CHAPTER12
CONCLUSION 51-52
CHAPTER13.
REFERRANCE 53
1
AFTER-SALES SERVICE
After-sales service, which is in after sell all kinds of services provided. From the sales
promotion to see, after-sales service itself is also a marketing tool. Follow up the stage in
tracking, sales people to take various forms of cooperation, through the after-sale service to
steps to improve the enterprise prestige of products and expand the market share, improve
work efficiency and benefit of selling. After-sales service, it is to point to the production
enterprise, dealers, the product (or service) sales to consumers, to provide consumers after a
series of service is the objective. In the fierce market competition today, with the increasing
awareness of the consumers and the changes in the concept of consumption, consumers in
purchasing products, not only pay attention to product entity itself, in the similar product
quality and performance similar circumstances, more importance to product after-sales
service. Therefore, the enterprise in the offer the good and cheap products at the same time,
to offer consumers perfect after-sale service, has become a modern enterprise market a new
focus of competition. China, have haier group for after-sales service, and sales to rise steadily
case. Objectively speaking, the high quality post-sale service is the product of brand service
economy, famous brand product post-sale service often better than hybrid product. Famous
brand of the price of the product brand enterprise service center. Case of general prep above,
on the one hand, the inferior brand based on the cost of product and quality, but also because
of the famous brand product sales strategies have considered after-sales service costs.
Definition
After Sales Service is defined as “Periodic or as-required maintenance or repair of
equipment by its manufacturer or supplier, during and after a warranty period.”
Customer Service
End-user of many types of product, ranging from computer systems to domestic
appliances, require customer support at some time – assistance to help them gain maximum
value from their purchase. In fact customer support entails all activities “to ensure that a
product is available for trouble-free use to consumers over its useful life span”(Goffin 2001).
The concept of customer service has been a generic term used by industry and academia to
describe a set of activities in which a firm engages to win and keep customers. Simply
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differentiation of customer service refers it to a variable that expands the image of a product
and thereby offers the possibility of giving the firm’s product market acceptance, growth and
the possibility of market dominance (Larissa, 1994)
In this prime role, customer service is viewed as an organized corporate philosophy
consisting of a comprehensive and related set of activities. Specifically, customer service is
not a generic abstraction, but rather a series of specific services prior to the transaction, during
the transaction, and after the transaction. Firms offer specific service elements, such as “timely
deliveries”, “efficient telephone handling of orders and queries”, “accurate purchase
statements”, and users receive customer service not in some abstract sense, but as the
“availability of an item”, “after-sales service and back-up”, “competent technical
representatives”, “demon-station of equipment” or “special product promotions”. While there
is broad agreement that these elements are commonly associated with customer service, the
degree of importance attached to each respective service variesfrom industry to industry and
company to company, depending on customer needs and the capability of the service-
providing organization (Larissa 1994).
There are two aspects of customer support, which particularly deserve management
attention. First, there is the need for customer support requirements to be fully considered at
the design stage – using what are called design for supportability techniques- in order to
develop products, which are economical and easy to support. Second, the logistic of delivering
customer support through suitable channels is key. Companies, which are good at both of
these aspects have differentiated themselves from their competitor stand won significant
market share.
According to Eppientte (1997), customer service has been emerging as a competitive
weapon for business firms. He mentioned “ it is becoming harder and harder to compete on
manufacturing excellence alone. Manufacturers who thrive… will compete by bundling
services with products.”. Of course, use of customer service, as a form of competition does not
apply only to manufacturers. With the economy becoming increasingly service based and new
kinds of services being offered continually (Schmenner, 1986), the input of customer service
may be even more dynamic for non-manufacturers. It is probably safe to say that, in one form
or another, all businesses are concerned with customer service. As early as 1972, Levitt noted
that everyone is involved in service and that the service sector ofthe economy includes
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everything from banking and airlines to product-related services and the sales-related services
offered by manufacturers and retailers. Obviously, customer service is a part of all facets of
our economy and is especially important to the long-term survival of companies.
VALUE - CHAIN ANALYSIS (PORTER)
The importance of customer service will be more recognized when Micheal porter
(1980) considers it as a parameter for his value – chain analysis model that make margin for
company. According to this analysis, which has shown below Figure, all the activities of the
entity are mapped into a value arrow. The right side of the arrow represents total value created
by the organization; in a competitive market, that is what customer are willing to pay, i.e.
revenue. To create those values, costs are incurred; the difference between revenue and costs
is the margin. To increase margin, the enterprise can, for example increase value for customer
(primary activities). Generically, primary activities are inbound logistics, operations, outbound
logistics, marketing and sales, and continuing service.
VALUE CHAIN ANALYSIS
4
MARGIN
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound
Logistics
Operation Outbound
Logistics
Marketing
And Sales
Service
Jeniffer Potter (1994) also believes, service is valuable for reducing cost, which finally
increases company’s profit. She mentions: many high-performance companies consider
service a vehicle for reducing costs for customers. While many organizations have streamlined
operations or practiced some form of just-in-time production to reduce costs, relatively few
companies look at one of their biggest cost-saving tools: their service providers. For years, the
Japanese have been training bright, knowledgeable service they receive from customer every
day.
After-sales service
The last few decades have seen a growing trend toward aggressive global
competition, increased marketplace demands, and accelerated technological changes. These
developments are forcing organizations to take closer look at their marketing channel strategy
including addressing the issue of how to distribute their products and offer associated after-
sales service support. Many value-conscious consumers are demanding that a company’s
products offer more value than its competitor’s products not only in its design and
manufacturing, but also in product delivery and support. Increasingly, distribution and service
support options available for a product are key determinations in consumers’ product
purchase decision (Loomba, 1998).
Products sale and distribution issues typically involve specific mechanisms for pricing
a product and distributing it to the end consumer. On the other hand, after-sales service
support issues entail all activities undertaken by service support providers (manufacturers,
retailers, and/or independent services) to ensure that a product is available for trouble-free use
to consumers over its useful life span. Management experts and marketing channel analysts
alike agree that distribution and after-sale service support functions do increasingly warrant
significant attention because they make up for an integral part of the product package
(Loomba, 1998).
Today competitive market caused that many company re-evaluate their strategy to be
more differentiate from others. After- sales service is one of the elements, which help all
firms in this matter. Many new breeds of high-tech companies are now discovering that they
need to differentiate themselves from rivals in appealing to customers and that technology
alone will not do it anymore. After-sales service support is being recognized as one of the
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competitive differentiators for most firms, which now produce in the same low-cost regions
of the world (Lele and Sheth, 1987).
Herve Mathe (1999) also emphasizes on after-sales service as a strong marketing
tools, which help firms to be competitive in the market. He mentions; Service is proving to be
a source of competitive advantage that enables firms to remain leaders in a highly
competitive market or to create differentiation, which will enable a challenger to attack and
overtake the leader. Therefore for using this advantages in a best way specially in a depressed
or highly competitive market, the outcome of an inadequate balance between service function
integration and separation brings about conflicting objectives between the different parties
involved in the ‘service chain’: Marketing, Sales, R&D, Production, Supply, After sales, etc.
This may lead to internal conflicts which progressively intensify, thus reducing the
effectiveness, and profitability, of direct and indirect after sales support
activities.
Pual (1993) believes an essential part of marketing strength is service support. When
customers buy a product, they expect certain levels of post purchase support to go along with
it. Defining those expectations is critical to marketing success and will be even more
important when markets mature.
However, industry experts caution that too many companies mismanage the total cost
of providing superior after-sales service support and so undo part of the competitive edge
won via technology and pricing (Landau, 1995).
According to Goffin (1999 & 2001) Customer support, which is also referred to as
product support, after-sales service, technical support, or simply service, is important for
because it:
• Can be a major source of revenue, although it often receives too little management
attention.
• Is essential for achieving customer satisfaction and good long-term relationship – as
identified by a number of researches.
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• Can provide a competitive advantage. This is true in most high-tech industries but also in
some low-tech sectors. As product differentiation becomes harder in many markets,
companies are increasingly looking to customer support as a potential source of competitive
advantage. A number of examples of how companies have own market share through good
support can be found in the trade press.
• Play a role in increasing the success rate of new products.
• Needs to be fully evaluated during new product development, as good product design can
make customer support more efficient and cost- effective.
Increased competition within many industries has led to increased attention on
customer service. Various studies indicate that upset customers may have big effect on sales of
company. Therefore, all firms try to put all their attention to keep their customers satisfied and
fulfill their needs and wants as much as possible. One of the strong tools which help all
companies in this matter is providing best after-sales service.
In this regard Tore (2003) stats; companies developing products and services need to
understand what consequences and benefits product attributes have on customer needs and
value, and how they affect customer expectation and satisfaction. Customer satisfaction is, in
other words, not only decided by value and performance of hardware purchased, but by the
total value received, and by the quality of the interaction and relationship experience
throughout the service life of the product.
Service traditionally has been considered a post-sale capability, primarily focused on
problem resolution or providing technical assistance. Now, these definitions are too limited.
Customers – whether internal or external – consider service a collective, organizational
responsibility rather than a functional or departmental one. As the relationships customers
have with companies continue to widen, anyone who interacts with a customer is in a position
either to jeopardize or to enhance that relationship. To ensure quality service, every person
who interacts with customers in any way must have the appropriate skills to respond,
efficiently and effectively, to customer needs (Jennifer Potter, 1994)
7
Providing good and reliable product, which is another main target of each company
can be achieved by good after sales service. Avinder (1996) believes; increasingly, after sales
customer service is becoming the order-winning criteria for most firms and is now being
recognized as an important research priority. According to a major study conducted by the
conference Board, the primary rationale of the manufacturers for offering after-sales service is
the need to support their products. In fact after sales service adds the product’s value and is
often treated as integral part of the product.
Proper after sales service helps companies in customer retention too. Many companies
have begun to align entire organization to deliver excellent service, since they know their
investment will pay off in terms of competitive advantage and customer retention. (Jennifer
potter, 1994)
Customer long-term retention will really helps companies to be more competitive in
the market and enable them to implement their entire marketing plan. The recent and ongoing
changes in the business environment – most notably escalating competition, increasing
globalization of markets, and more demanding customers – are making it difficult to compete
effectively on the basis of traditional marketing mix variables alone.
This reality is perhaps the primary impetus for the increasing attention that relationship
marketing has been receiving from both practitioners and researchers. And, given that long-
term customer retention is a key aim of relationship marketing, the focus is now shifting from
merely to customers to serving them effectively. (Parasuraman, 1998)
After sales service is often in response to a customer problem, e.g. product failure
restoration, problem diagnosis, expert assistance to resolve a problem, problem with using the
product, etc. Therefore, after sales service is a recovery process that attempts to resolve a
customer problem, which, if not resolved, causes dissatisfaction and less satisfied customer.
The service function therefore attempts to recover the customer satisfaction to the level it was
before the occurrences of problems (Gronroos, 2000).
Finally, see the main important effects of after-sales service in improvement of each
firm by Paul (1993) classification, which expressed the four main important aspects of after
sales service as follows:
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• First, service is perceived as high-profit, high-growth opportunity. With profit margins for
equipment sales under pressure from foreign and domestic competition, many U.S. firms
target after-sales service as a key area for investment, a sharp contrast to its historical image as
a backwater meriting little attention from top management.
• Second, managers are also beginning to realize that customers will buy more often and more
quantities from a company they feel will support them and give maximum post sale
satisfaction. After sale service, therefore, is an important aspect of a company’s marketing mix
to build loyalty and repeat business. The after market is a crucial ingredient for success in
international marketing.
• Third, Companies are also realizing that technological and feature advantages are short
lived. The rapid diffusion of technological change makes it increasingly difficult to maintain a
competitive advantage based on product features or design. As a result, both customers and
manufacturers focus on service as the key differentiator. Moreover, firms’ abilities to provide
service support have increased significantly.
• Fourth, Customer expectations are increasing and buyers today are demanding ever-higher
levels of service support. Customer expectations will create opportunities for innovative
products that meet changing service support needs and will increase competitive pressures to
continually improve product reliability and serviceability. They will make conventional
service contracts and endangered species, force manufacturers to unbundled the prices of
products and support services, and create a major profit squeeze in key segments of such
information age industries as telecommunications, computers, and office automation.
In spite of all above advantages, which push distributors provide after-sales service
there some other reasons that justify not relying on suppliers services only and having local
after-sales service. According the Goffin (1999) an important aspect of customer support is the
distribution channels used and whether companies have their own customer support
organization, or use third parties. If customers are to be provided with good product support,
companies need to select and effectively manage their distribution channels.
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Manufacturing companies may have their own – direct – organization for customer
support, or they may use alternative. The review of the trade and popular management press
confirmed the importance of good distribution channels.
In coordinating distribution channels through contractual arrangements; manufacturers
must deal with retailers who compete not only in price, but also in important non-price factors
such as in-store services, after sales support or faster check-out. Coordinating the price and
non-price competition among retailers can be a difficult task as illustrated by the following
example (Lyer, 1998).
KEY ELEMENTS OF AFTER-SALES SERVICE
Providing the proper after sales service is very important for firms and customers.
Traditionally, support merely constituted maintenance, service and repair. However, as the
scope of product support has broadened over the past decade, it has also included such aspects
as installation, commissioning, training, maintenance and repair services, documentation,
spare parts supply and logistics, product upgrading and medications, software, and warranty
schemes, telephone support, etc. (Tore and Uday, 2003)
An after-sales support strategy associated with a product may include elements such as
warranty provision, extended service contract provision, availability of repair service, loan
availability, toll-free phone support, etc. (Arvinder, 1996)
Study on each of these elements and choosing the best one(s) is a crucial activity for
all firms. According to Gulden (1997), after sale service consists of a number of dimensions or
elements. It is conceptualized as consisting of the following:
• The installation and start-up of the purchase product
• The provision of spare parts for products
• The provision of repair services
• Technical advise regarding the product
• The provision and support of warranties
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But Goffin (1999) explanation may be more complete, that states seven elements of
after-sales support which must be provided to customers over the working lifetime of products
as follows:
• Installation : For many products, the first element of product support following the sale is
installation. This is usually performed for complex products (e.g. computer systems), or where
safety issues are involved (e.g. medical devices) by personnel from the manufacturing
company, or their representatives. Increasingly, where product design allows it, customers
themselves will install their purchases and manufacturers face the challenge of making this
easy for, often, non-technically minded customers. A good example of the importance of easy
installation is that IBM recognized in 1990 that their personal computer customers wanted to
be able to unpack their purchases and have them running quickly. This led to products with
pre-installed software and which consequently could be unpacked, assembled, switched on
and in use within five minutes (Haug, 1990).
• User Training : The complexity of some types of equipment necessitates that
manufacturers provide good training for users. For example, hospital staff need to well-trained
in the use of critical care devices and the successful implementation of process innovations,
such as new manufacturing equipment, depends on extensive training being given over a long
period. Many computer-based products include functions which help users learn to use them
more efficiently; these can range from single Help functions, to full training packages as
offered by manufacturers such as IBM. However, training costs can still be very high business
users have to invest significant amounts of money in training their employees in efficient use
of personal computers. For simpler products, training is not necessary and details of product
operation are usually given in user documentation.
• Documentation : Most products have some form of documentation and industries such as
medical electronics it playas key role. Typical forms of documentation cover equipment
operation, installation, maintenance, and repair. Good documentation can lead to lower
support costs and increased products is poorly written and hard to understand. New technology
is being applied to documentation and, for example, CD-ROMs are making car servicing more
efficient.
• Maintenance and Repair: Historically, maintenance and repair has been an important
element of product support, which has required companies to invest significant resources. For
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example, an estimated 500,000 car mechanics are employed in the USA. If equipment fails,
fast and efficient repair is essential in many markets because “ down-time costs run typically
at anywhere from 100 to 10,000 times the price of spare parts or service”. In markets where
product failure has strong implications – for example, computer systems for financial
institutions- companies need to offer either equipment, which is very reliable (or even never
fails), or a rapid response to expedite repairs. One way to achieve a fast response is to provide
customers with loaner equipment in the event of breakdowns, where this is feasible. Another
strategy for maintenance and repair is to design disposable products; the approach used by
some companies for watches, torches and other products. Where repair costs do not exceed a
significant percentage of product replacement costs, having repairable products is the best
strategy for companies. For repairable products, it makes sense for companies to develop good
diagnostics- efficient means to test for problems and identify the causes. However, where
products are becoming cheaper and more reliable, as is the case with Pcs, service is becoming
less viable. In order to repair faulty equipment, companies need to have efficient logistics for
the management and movement of spares, the parts used in repairs. Some companies have
focused strongly on this area, to gain an advantage over their competitors. Maintenance also
referred to as preventive maintenance is undertaken to clean, refurbish or replace parts of
equipment which otherwise would be liable to fail. Mechanical parts, for example, normally
require regular maintenance as in the case of cars. In the computer sector, where fewer
mechanical parts are involved, remote support technology enables computers to be “
updated…diagnosed and repaired” by linking them to manufacturers support centers via
telephone lines. The US earth-moving equipment manufacturer Caterpillar, which focuses on
product serviceability – products that are easy to maintain and repair- is using similar
approaches. This has led them to develop products, which can be remotely monitored so that
maintenance can be performed before fault occurs.
• Online Support : Telephone advice on products is a major element of customer support in
many industries. Product experts give online consulting to customers to help them use
products more efficiently or, sometimes to trace the cause of fault (troubleshooting).
Whenever problems can be solved over the telephone, costs are much lower than an engineer
having to visit the customer site. Online support is particularly strongly utilized for software
products (software support). For example, companies such as Microsoft have invested
significant resources in telephone centers and support costs are typically 6 percent of revenues
in the software industry. Many software products can now be remotely configured, so that they
12
more exactly match customer requirements – for example, Microsoft’s Windows 95 product
has this capability.
• Warranty : Manufacturers of most products offer warranty and, in some markets such as
automobiles, manufacturers may try to gain a competitive advantage by offering longer
warranty periods. Warranty reduces the financial risk of owning products and therefore it is an
important element of customer support. Over the lifetime of product, support costs may be
greater than the initial purchase price. In the computer sector these costs are referred to as
cost-of-ownership and “the costs of buying and operating computer hardware for the office is
rather like an iceberg – most of them are hidden”. Consequently, as products have become
more complex and support costs have increased, customers have started to demand more
economical and effective support. To reduce the risk of expensive repairs, many
manufacturers offer customers the possibility to purchase extended warranty. However, in the
domestic appliance sector, manufacturers have been accused of charging excessively for this
cover.
• Upgrades : Offering customers the chance to enhance the performance of existing products
can be an important aspect of support. For example, computer manufacturers offer upgrades
because they increase the working lifetime of products and can be a significant source of
revenue. Original equipment manufacturers have a competitive advantage in this business
because they normally have records of where equipment has been sold which could benefit
from upgrading.
DIMENSIONAL ATTRIBUTES OF AFTER SALES SERVICE
After selecting the after-sales service method it is important that company choose the
right strategy for after-sales service too. Both of these elements are essential for any company
to have the most effective and efficient after-service center. For implementing a top quality
after sales service plan it is necessary to select the proper strategy too. The decision of how to
distribute products and to after-sales service support such as warranty, service contract,
repairs, etc. is linked to the overall strategy of the organization regarding its products and the
markets it plans to serve (Arvinder ,1996)
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According to Arvinder (1996), after study in various texts on marketing/ logistic/
distribution channels, the elements, that manager examine as they formulate their physical
distribution and after-sales service support strategies can be grouped into various dimensional
attributes. These include:
Product-related attributes such as its life cycle, complexity, value, physical
dimensions, and consumer perceptions;
Firm-related attributes such as managerial objectives, resources, desire for control,
and breadth of product line; and
Market- or industry- related attributes such as consumer preferences, and consumer
vs. organizational customers, geography, market size, competition, and nature and
availability of channel intermediaries.
AFTER-SALES SERVICE NECESSITY AND EFFECTIVENESS
After-sales service Advantages
According to Goffin (1999 and 2001) theory; competitive advantages, Creating customer
satisfaction and long-term relationship, and having effective role in developing the new
products are some of advantages of after-sales service, which persuade firms for providing
such a service. Paul (1993) theory added some other benefits to above advantages like: making
profit, speed up growth of company, build up customer loyalty, and making differentiation in
terms of product and service. Customer retention is also one the more useful advantage of
after-sales service, which introduced by Parsuraman (1998) theory.
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- Competitive advantages - Customer satisfaction
After-sales service Advantages
There are some advantages for after sales service, which persuade distributors to provide these
types of services in their organization. In this regard, I used all related factors, which
introduced on three theories of Goffin (2000), Paul (1993), and Parsuman (1998). I eliminated
all similar factors and extracted nine different after sales service advantages among these three
theories, which will be compared with the gathered data here.
Competitive advantages
Goffin (2001) considered this factor as one of the biggest advantages of after-sales
service. He believes many companies are looking for after sales service as a potential source
of competitive advantage. He emphases on service support as an essential part of marketing
strength. He said the customers expect certain levels of after sales service support when they
buy the products. Fulfillment of these expectations is an important key to marketing success
and will be even more important when markets get matured. Goffin (2001) also believes after
sales service can provide competitive advantages for any firm and considers it as an important
aspect of a company’s marketing mix.
Customer Satisfaction
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- Competitive advantages - Customer satisfaction
Goffin (1991 and
2000)Paul
(1993)
Parsurman (1998)
Another factor, which Goffin (2001) mentioned in his theory as an advantage of after-
sales service, is customer satisfaction. He believes that achieving the customer satisfaction is
one of the important issues for all companies and after sales service is a prerequisite for this
achievement. In fact, customer satisfaction is, not only decided by value and performance of
hardware purchased, but by the total value received, and by the quality of the interaction and
relationship experience throughout the service life of the product.
Therefore customer satisfaction, definitely, were one of the after sales service result for
any company and I can say data will prove the theory in this regard. Long-term customer
relationship, customer retention and customer Loyalty
In both theories of Goffin (2001) and Parsumen (1998) stated that good after sales service
creates long-term customer relationship with company and makes customer retention.
Parsuman (1998) says, if any company focuses on customer service effectively,
defiantly is able to make customer retention and this will really helps company to be more
compatible in the market and enable them to implement their entire marketing plan. Goffin
(2001), also believes that after sales service is one of the reason that customer keep their
relationship with company and prevent them to try other competitors similar products. Paul
(1993), is also believes on after sales service as important aspect of a company’s marketing
mix to build loyalty and repeat business and considered it as a crucial ingredient for success in
marketing for any firms.
According to data, good after sales service has impressive effect on customers’ mind.
It really makes a reliable and trustable relationship between customer and company for a long
time, which totally is precious for company’s future.
New Product Success and development
According to Paul (1993), customers are more demanding now a day and need higher
level of service support. These expectations create opportunities for new innovative products
that meet changing service support needs and will increase competitive pressures to
continually improve product reliability and serviceability. Actually service needs to be fully
16
evaluated during new product development, as good product design can make customer
support more efficient and cost effective.
High Profit
According to both Paul (1993) and Goffin (2001), after sales service considered as one
of major sources for making profit for company. Paul (1993) mentioned; service is perceived
as high-profit opportunity. With profit margins for equipment sales under pressure from
foreign and domestic competition, many firms target after-sales service as a key area for
investment, a sharp contrast to its historical image as a backwater meriting little attention from
top management
Differentiation
Another issue that must be analyze, as an advantage of after sales service is
differentiation. Paul (1993) believes that Companies are realizing that technological and
feature advantages are short lived. The rapid diffusion of technological change makes it
increasingly difficult to maintain a competitive advantage based on product features or design.
As a result, both customers and manufacturers focus on service as the key differentiator.
Moreover, firms’ abilities, to provide service support have increased significantly. In fact,
service is proving to be a source of competitive advantages that enables firms to remain
leaders in a highly competitive market and create differentiation, which will enable a
challenger to attack and overtake the leaders.
Branding
Branding was another issue that Sarir International initiates it, as another important
advantages of after sales service for itself, although it was not referred among the theories of
this thesis. According to empirical data, Sarir international has successfully launched its in-
house brand “SUZUKI”, in the market from three years ago. Actually Suzuki is the first OEM
brand, which has produced locally and easily competed with all other international computer
brands in the market. The company’s management team believes that after sales service had
essential role in this regard
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Customer loyalty
Customer loyalty schemes are an effective way to improve your customer-retention
levels. The high cost of bringing in new business compared to retaining existing clients is
undisputed so increasing your customer retention can significantly boost bottom-line profits.
And yet many firms are missing a trick when it comes to building customer loyalty.
In a competitive marketplace where customers find it easy to switch supplier, loyalty
schemes are an effective way to increase customer retention and improve your profitability. If
you want to build a loyal clientele, keeping the customer satisfied isn't always enough. The
fact that your customers are satisfied doesn't stop them from taking their business to a
competitor who offers them something extra.
To increase loyalty, you need to recognise and reward your best customers. A loyalty
scheme can be used to incentivise and delight your most valued customers. That in turn can
do wonders for your profitability.
The advantages of loyalty schemes
Loyalty initiatives allow you to focus on your best customers and improve customer
satisfaction levels. Loyal customers buy more and are often willing to pay more, which
boosts your cash flow. By increasing loyalty, you can increase profitability and extend the
time they place their business with you.
Loyal customers are also good for your business because they become your best
advocates. They recommend you to others, saving you marketing costs. A loyal customer's
endorsement is more powerful to their friends and family than any advertising campaign.
AFTER SALES SERVICE STRATEGY
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After Advantages of after sales service I am going to analyze the empirical data and
theory about after sales service’s strategy. According to the theory it was determined that
without proper strategy, supplier cannot be able to have efficient after sales service. Three
theories in this regards: Goffin (1999), Arvinder (1996), Milind (1997). In all these three
theories, the researcher mentioned different factors and variables which have influence on
company for selecting the after sales service strategy. In all these theories some variables and
factors has explained which apparently are different but basically can be considered in three
main following groups and help us to evaluate them more precisely with related theories:
1 - Product oriented factors :
In Arvinder (1996) theory, product related attributes has directly mentioned as a main
factor, which has effect on selecting the after sales service strategy for a company. It means
elements related to product like, life cycle, complexity, value, physical dimension must be
considered when after sales service strategy is going to be defined. In this method Product
related factors have main roles and other factors will be considered in second priority. The
same idea has explained in Millind (1997) theory too. He named elements like increasing the
product reliability, building the redundancy, and adopting a modular design as important
product related attributes, which have influence when company wants to setup their after sales
service strategy according to product characters. Meantime, Goffin (1999) added the design
for supportability factor, which can be considered as, product related attribute to above
elements. He believes product design strongly influences how easy it can be supported, so
good design make the support procedure easier which company can consider it as one the
main facts for setting up their after sales service strategy.
Example :-
Product related factors have direct influence on Sarir International’s after sales
strategy. According to empirical data, computer components, which are distributed by Sarir
international, have vast varieties with their own individual specifications and nature. Some of
them have long life cycle and some have short ones. Some of products are very complicated
which need more maintenance and services and some are very simple without the necessity of
maintenance. Meantime, computer technology is changing very fast so products are usually
replaced with new models rapidly. These changes put the company under pressure for
providing services for these new items as well as the old ones. Besides this company has been
19
always working on the best design and features because they believe these issues will affect on
the rate of faulty items and finally helps the after sales service center.
2 - Market Oriented strategy :
According to Arvinder (1996) some firms may define their after sales service strategy
based on the market situation and environment. In this case the issues like; Consumer
preferences, consumers v. organizational customers, geography, market size, competition, and
nature and availability of channels intermediaries may have influence on companies after sales
service strategy.
Goffin (1999) also mentioned to choosing or managing distribution channels and
promoting support for competitive advantage as two other market or industry related
attributes, which have impact on selecting the after sales service strategy for a company.
Meantime we can add customer risk reduction as another attribute, which introduced by
Milind (1997) and effects on after sales service strategy too. He believes; for some companies
reducing the customer risk through warranty and service contracts is principal and important
target. So they will consider this factor as main influencer when they want to define the after
sales service strategy for their companies.
According to data, market situation and attitudes have big role on after sales service
strategy. It was the market pressure, which pushed distributors to establish their service center
at first, and after that, it was the market that imposed them to select the types of services that
they have to provide. Recognizing the quality was not easy task for customers unless they buy
and test the part. So customers always had the risk of purchase, which prevented them to buy
products comfortably this problem and offered the best after sales service package and tried to
reduce this risk for customer and create trust and reliability about its products in customers.
3 - Firm related attribute :
The third category is firm related strategy, which is defined according to the firm
characters and attributes. According to Arvinder (1996), managerial objectives, resources,
desire for control, and breadth of product line can be considered as some of this factors.
Usually, company will only notice to company internal situation and target in this case, and
20
will define the strategy according to its firm’s related characters. Therefore, the management
attitudes and their ideas has big role for defining the after sales service strategy in this case.
Although this type of factors may have influence on some firms for defining the
strategy but according to data they cannot be considered as main influencers on after sales
service strategy. As it mentioned in empirical data, the external variables like market
competition, customers’ desires and product related factors make serious pressure on the
company for defining their strategy. Therefore the managements do not get the chance to
present their individual concerns and controls while defining the strategy for after sales
service. They have to follow the market environment, competitors, and products’ situation to
Setup Company’s strategy to fulfill the demands.
CUSTOMER SERVICE DOS AND DON'TS
- DO ensure that management objectives are aligned with service promises to
customers
On many occasions I see management objectives not being aligned to the commitments
being made to the customers, which is further exaggerated when it comes to the customer-
facing staff. For example, if your customer service proposition is all around quality, ensure
quality is the primary objective of the staff not speed of providing the service, as this can
drive the wrong behavior - eg provide a quick service, but with mistakes.
- DO make sure departments talk to each other
Communication often breaks down between different teams/departments. Often teams do
not realise the negative impact this has on their customers. It is crucial that customer-facing
teams are briefed on promotions so that there can be agreement on how any queries relating
to the promotion will be handled.
21
- DO manage customer expectations effectively
How many times have you experienced a train or plane delay and the message is, we'll be
departing in a few minutes, then it's a few more minutes and so on. Once customers have
heard this a couple of times and are still waiting the frustrations and displeasure grows
significantly. If the message to customers in the first instance was, there will be a 45-minute
delay, they have certainty about what to expect. The challenge here is for the customer-facing
staff who have to deliver these 'bad news' to be well trained and supported in delivering the
message, as often they are only the messenger but end up having to manage disgruntled
customers.
- DO listen to frontline staff
As they are the people who listen to your customers daily, they will tell you what's
working and what's not. All this can be extremely valuable in improving performance. At the
same time, if you collect complaints and customer satisfaction data (and if you don't you
should be) make sure you take action on the information. Reporting on the data alone will not
achieve anything unless you use the data.
- DO empower staff appropriately
Empower staff appropriately with clearly defined authorities and ensure clear escalation
processes exist where the member of staff doesn't have authority. For example, I was recently
staying in a hotel in London and shortly after having checked into my room, I discovered a
mouse running around. Having called reception, once they got over the shock of it, they
immediately found me another room. I went to reception to collect a new key and to start my
complaint properly and they offered to deduct the cost of breakfast from my bill. The staff
were doing what they thought was appropriate and operating within their powers of authority,
but in the circumstances they did not appreciate the severity of the issue and I had to escalate
the matter.
22
- DON'T assume that an online customer experience will replace offline service
In an increasingly web-enabled world, customers are displaying an increased desire for
completing sales and service over the web. I often find that whilst the online proposition is
well thought through, designed and implemented effectively, similar attention is not given to
the offline experience! It is critical that offline support is provided and should match the
online experience - thereby providing a consistent and joined-up end-to-end customer
experience which matches the brand and proposition. Do not assume that customers will
never need offline support.
This is not always as easy to do as perspectives often tend to be focused on specific elements
of the service proposition, but in order to deliver a consistent and coherent message to the
customer, organisations must take a step away from the business and map the end-to-end
customer journey, taking time to consider all 'what if' scenarios. Customers who need to
contact you eg. by phone or email and are then let down by the poor quality responses
delivered by the offline support are more likely to take their business elsewhere.
- DON'T oversell yourself to your customers
Often in promotional material organisations make aspirational statements about what
customers can expect from them when it comes to service. Having built the customers'
expectations up, the organisation then fails to meet these expectations, which leads to
customer dissatisfaction. Be true about the service customers can expect, and then ensure
internal objectives (from management to customer-facing staff), priorities, systems and
processes are implemented in a way which will support the service delivery.
- DON'T treat customers as transactions
In high volume based organisations and to keep operating costs to a minimum by
optimising efficiency, organisations often end up treating customers as transactions.
Recognise that customers needs, wants and expectations will vary so in the pursuit of
efficiency it is still critical to allow for the human touch and not provide a one size fits all
approach. If you do choose to operate a one size fits all approach ensure you manage their
expectations as part of your proposition messages.
23
- DON'T blame your customers for your poor service
How many call centres have you called only to receive a welcome message saying
something like 'due to unexpected high volumes of calls there is currently a long queue'.
What this message is actually saying it's the customers' fault for causing the delay as so many
are calling! Actually the problem lies with the organisation and the root cause could be a
number of things but often it will be due to a marketing promotional campaign that hasn't
been fully thought through or the call centre resource planning has not been fully engaged in
planning the promotional campaign. Contingency measures may also not have been put in
place. Whatever the cause is, don't blame the customers - they are only responding to your
marketing promotion.
- DON'T hide behind the environment, systems or processes
I had poor service experiences with a car dealership whose brand promises are around
quality and excellence. However, the service I experienced was repeatedly very poor and
found that the main root causes were around badly designed processes and poor
communication. I shared my experiences with the regional director and was able to quantify
the financial impact for his business which ran into thousands. Despite this feedback, the
director concluded that it would be ok when they moved to their new dealership site - as he
felt the problem was their very old and poor quality building. They have now moved to the
new site and having been back to test the experience, guess what, the service hasn't changed -
poor communication still exists, staff still moan about the systems to customers, the only
difference is you have a more comfortable environment in which to experience the poor
service.
So do identify the root cause of the problem and don't just assume that changing the premises
will fix everything. Unless you improve the processes, systems and manage/develop the
people the same issues will still arise.
24
CUSTOMER COMPLAINTS
There are more ways to communicate with customers than ever. The internet, email
and mobile phones are changing the way you can interact with customers. And yet it's poor
communication that makes many business relationships break down.
As a small business, it's up to you to initiate good communication. You can't rely on
your customers to tell you what they think. Not everyone takes the trouble to complain, so
many dissatisfied customers simply go elsewhere.
Getting communication right involves thinking about how you interact with customers
at every contact point. To communicate well you need to understand your customers and
respond to their needs.
Communication strategy -
The secret of good communication is to tailor your approach to the individual. One useful
theory you can use is that your customer will have one of four temperament styles -
aggressive, passive, analytical and expressive. Each of these personality types approaches
buying decisions in their own way. Look out for them and respond accordingly.
The aggressive type is an extrovert who is controlling, practical and decisive. To get
on their wavelength, avoid small talk and get straight down to business. Give them options so
they feel they're staying in control.
The expressive customer is also an extrovert but they are also more sociable and
impulsive. They will respond to an enthusiastic presentation style and need time to talk. Go
for the big picture and avoid too much detail if you want to win over an expressive customer.
25
The passive person is an introvert. They are friendly but can be totally indecisive. You
cannot hurry this type of customer. They hate sales pressure and need assurance.
The analytical customer is organised and critical. They are perfectionists who can
suffer from 'paralysis under analysis'. Give them plenty of detail and proof to win them
over.
Body language and the art of conversation -
More than 70 per cent of our communication is perceived non-verbally - so when you
meet and greet your customers, your body language sends signals that have a big impact.
Using open body language is a good way to create a rapport. Stand up straight, smile,
make eye contact and, when sitting, don't cross your arms or legs. Showing the palms of your
hands indicates an honest approach.
Another useful technique is to mirror your customer's body language. Many people
copy gestures unconsciously anyway. It sends the message that you like and agree with the
person you are talking to.
Remember to listen. If you are a big talker, you may have to curb your natural
tendency to interrupt or dominate the conversation. To develop a dialogue with your
customer, ask open-ended questions and listen to the answers. It's worth using the same
words and phrases your customer has used to show you are listening and to build rapport.
How to improve your communication strategy -
Good communication is not just about responding when your customer walks in. You
can actively plan a communication strategy that will ensure you build good customer
relationships that reward you with more business. Customers like to be kept informed at all
times.
Make regular contact using a communication method most suited to each customer,
whether phone, email, text, in person or via a newsletter. It's worth asking customers how
they like to be contacted. Most people will have a particular preference - and may find other
communication methods positively annoying. Keep the lines of communication open so you
26
can respond to your customers' changing requirements. As you build the relationship, you
will strengthen the ties that bind and develop a loyal customer (and fan) base.
AFTER SALES SERVICE OF LEXUS (TOYOTA MOTOR CORPORATION) IN
FOREIGN COUNTRIES
Lexus is the luxury vehicle division of Japanese automaker Toyota Motor
Corporation. First introduced in 1989 in the United States, Lexus is now sold globally and
has become Japan's largest-selling make of premium cars. The Lexus marque is marketed in
over 70 countries and territories worldwide, and has ranked among the ten largest Japanese
global brands in market value. Lexus is headquartered in Toyota City, Japan, with major
operational centers in Brussels, Belgium, and Torrance, California, United States.
Lexus originated from a clandestine flagship sedan project, code-named F1, which
began in 1983 and culminated in the launch of the original Lexus LS in 1989. Subsequently,
the division added sedan, coupé, convertible, and SUV models. In 2005, a hybrid version of
the RX crossover debuted, and additional hybrid models later joined the division's lineup. In
2007, Lexus launched its own F marque performance division with the debut of the IS F sport
sedan, followed by the LFA supercar in 2009.
After Sales service of Lexus
Showroom of a Lexus dealership in Sapporo, Hokkaido, Japan
Lexus has become known for efforts to project an upscale image, particularly with
service provided after the sale. The waiting areas in service departments are replete with
amenities, ranging from refreshment bars to indoor putting greens. Dealerships typically offer
complimentary loaner cars or "courtesy cars" and free car washes, and some have added on-
site cafes and designer boutiques. Service bays are lined with large picture windows for
27
owners to watch the servicing of their vehicle. In 2005, Lexus also began reserving parking
lots at major sporting arenas, entertainment events, and shopping malls, with the only
requirement for free entry being the ownership of a Lexus vehicle. An online owner
publication, Lexus Magazine, features automotive and lifestyle articles and is published
online monthly and on a mobile site.
Since 2002, Lexus has scored consecutive top ratings in the Auto Express and 76,000-
respondent Top Gear customer satisfaction surveys in the UK. Lexus has also repeatedly
topped the 79,000-respondent J.D. Power Customer Service Index and Luxury Institute, New
York surveys in the U.S. As a result of service satisfaction levels, the marque has one of the
highest customer loyalty rates in the industry.
AFTER SALES SERVICE OF TATA MOTORS IN INDIA
Tata Motors Limited is India’s largest automobile company, with revenues of
35,651.48 crore (US$7.23 billion) in 2007–08. It is the leader in commercial vehicles in each
segment, and among the top three in passenger vehicles in India with products in the
compact, midsize car and utility vehicle segments. Tata vehicles are sold primarily in India,
and over 4 million Tata vehicles have been produced domestically since the first Tata vehicle
was assembled in 1954. The company’s manufacturing base in India is spread across
Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar
(Uttarakhand) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005,
Tata set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon
(Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company is
establishing a new plant at Sanand (Gujarat). Tata's dealership, sales, service and spare parts
network comprises over 3500 touch points. Tata Motors also distributes and markets Fiat
branded cars in India.
Sales & Service Network
Tata Motors has more than 250 dealerships in more than 195 cities across 27 states
and 4 Union Territories of India. It has the 3rd largest Sales and Service Network after Maruti
Suzuki and Hyundai.
28
CASE STUDY
MARUTI UDYOG LIMITED – Managing competition successfully
MARUTI SUZUKI – Count On Us…!!!
Maruti Suzuki India Limited
29
Type Public
Traded asBSE: 532500
NSE: MARUTI
Industry Automotive
Founded 1981(as Maruti Udyog Limited)
Headquarters New Delhi, India [1]
Key peopleShinzo Nakanishi, Managing Director
and CEO
Products Automobiles
Revenue37,522.4 crore (US$7.61 billion)
(2010-11) [2]
Net income2,288.6 crore (US$464.13
million) (2010-11) [2]
Employees 6,903[3]
Parent Suzuki Motor Corporation
Website marutisuzuki.com
Maruti Suzuki India Limited (NSE: MARUTI, BSE: 532500) is a subsidiary company of
Japanese automaker Suzuki Motor Corporation. It is India's largest passenger car company,
accounting for over 45% of the domestic car market. The company offers a complete range of
cars from entry level Maruti 800 and Alto, to hatchback Ritz, A-Star, Swift, Wagon-R, Estillo
and sedans DZire, SX4, in the 'C' segment Maruti Eeco and Sports Utility vehicle Grand
Vitara.[4]
It was the first company in India to mass-produce and sell more than a million cars. It is
largely credited for having brought in an automobile revolution to India. It is the market
leader in India, and on 17 September 2007, Maruti Udyog Limited was renamed as Maruti
Suzuki India Limited. The company's headquarters are located in New Delhi.[1]
Table of Contents
30
Sr no Topic Name Page No
1 Profile 32-33
2 Partner for joint venture 34
3 Joint venture related issue 35-36
4 Industrial Relations 37
5 Service Offered 38-45
6 Issues & Problems 45
7 Exports 45
Profile
31
The old logo of Maruti Suzuki India Limited. Later the logo of Suzuki Motor Corp. was also
added to it
'To Munsiyari on a Maruti 800', Uttarakhand Himalayas
Maruti Suzuki plant in Manesar
Maruti Suzuki is India and Nepal's number one leading automobile manufacturer and the
market leader in the car segment, both in terms of volume of vehicles sold and revenue
earned. Until recently, 18.28% of the company was owned by the Indian government, and
54.2% by Suzuki of Japan. The BJP-led government held an initial public offering of 25% of
the company in June 2003. As of 10 May 2007, the government of India sold its complete
share to Indian financial institutions and no longer has any stake in Maruti Udyog.[citation needed]
Maruti Udyog Limited (MUL) was established in February 1981, though the actual
production commenced in 1983 with the Maruti 800, based on the Suzuki Alto kei car which
at the time was the only modern car available in India, its only competitors- the Hindustan
Ambassador and Premier Padmini were both around 25 years out of date at that point.
Through 2004, Maruti Suzuki has produced over 5 Million vehicles. Maruti Suzukis are sold
in India and various several other countries, depending upon export orders. Models similar to
Maruti Suzukis (but not manufactured by Maruti Udyog) are sold by Suzuki Motor
Corporation and manufactured in Pakistan and other South Asian countries.[citation needed]
The company exports more than 50,000 cars annually and has an extremely large domestic
market in India selling over 730,000 cars annually. Maruti 800, till 2004, was the India's
largest selling compact car ever since it was launched in 1983. More than a million units of
this car have been sold worldwide so far. Currently, Maruti Suzuki Alto tops the sales charts.[citation needed]
Due to the large number of Maruti 800s sold in the Indian market, the term "Maruti" is
commonly used to refer to this compact car model. Its manufacturing facilities are located at
two facilities Gurgaon and Manesar south of Delhi. Maruti Suzuki’s Gurgaon facility has an
installed capacity of 350,000 units per annum. The Manesar facilities, launched in February
2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year and a
Diesel Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar
and Gurgaon facilities have a combined capability to produce over 700,000 units annually.
More than half the cars sold in India are Maruti Suzuki cars. The company is a subsidiary of
32
Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is
owned by public and financial institutions. It is listed on the Bombay Stock Exchange and
National Stock Exchange in India.[citation needed]
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all,
over six million Maruti Suzuki cars are on Indian roads since the first car was rolled out on
14 December 1983. Maruti Suzuki offers 14 models, Maruti 800, Alto, WagonR, Estilo, A-
star, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Gypsy, Grand Vitara, Kizashi. Swift, Swift
DZire, A-star and SX4 are manufactured in Manesar, Grand Vitara and Kizashi are imported
from Japan as completely built units(CBU), remaining all models are manufactured in Maruti
Suzuki's Gurgaon Plant.[citation needed]
Suzuki Motor Corporation, the parent company, is a global leader in mini and compact cars
for three decades. Suzuki’s technical superiority lies in its ability to pack power and
performance into a compact, lightweight engine that is clean and fuel efficient. Nearly 75,000
people are employed directly by Maruti Suzuki and its partners. It has been rated first in
customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia
Pacific.
Partner for the joint venture
33
Sanjay Gandhi owned the Maruti Technical Services Limited, which ran into trouble and was
liquidated. After the death of Sanjay Gandhi, the Indira Gandhi government assigned a
delegation of Indian technocrats to hunt for a collaborator for the project. Initial rounds of
discussion were held with the giants of the automobile industry in Japan including Toyota,
Nissan and Honda. Suzuki Motor Corporation was at that time a small player in the four
wheeler automobile sector and had major share in the two wheeler segment. Suzuki's bid was
considered negligible.[citation needed]
While the major companies were personally represented in the initial rounds of discussion,
Osamu Suzuki, Chairman and CEO of the company ensured that he was present in all the
rounds of discussion. Osamu in an article writes that it subtly massaged their (Indian
delegation's) egos and also convinced them about the sincerity of Suzuki's bid. Suzuki in
return received a lot of help from the government in such matters as import clearances for
manufacturing equipment (against the wishes of the Indian machine tool industry then and its
own socialistic ideology), land purchase at government prices for setting up the factory
Gurgaon and reduced or removal of excise tariffs. This ensured that Suzuki conscientiously
nursed Maruti Suzuki through its infancy to become one of its flagship ventures.[6]
Joint venture related issues
34
Maruti Suzuki's A-Star vehicle during its unveiling in Pragati Maidan, Delhi. A-Star, Suzuki's
fifth global car model, was designed and is made only in India.[7] Maruti Suzuki is also
Suzuki's leading research and development arm outside Japan
Relationship between the Government of India, under the United Front (India) coalition and
Suzuki Motor Corporation over the joint venture was a point of heated debate in the Indian
media till Suzuki Motor Corporation gained the controlling stake. This highly profitable joint
venture that had a near monopolistic trade in the Indian automobile market and the nature of
the partnership built up till then was the underlying reason for most issues. The success of the
joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50%
in 1992. In 1982 both the venture partners had entered into an agreement to nominate their
candidate for the post of Managing Director and every Managing Director will have a tenure
of five years[8]
R.C. Bhargava was the initial managing director of the company since the inception of the
joint venture. Till today he is regarded as instrumental for the success of Maruti Suzuki.
Joining in 1982 he held several key positions in the company before heading the company as
Managing Director. Currently he is on the Board of Directors.[9] After completing his five
year tenure, Mr. Bhargava later assumed the office of Part-Time Chairman. The Government
nominated Mr. S.S.L.N. Bhaskarudu as the Managing Director on 27 August 1997. Mr.
Bhaskarudu had joined Maruti Suzuki in 1983 after spending 21 years in the Public sector
undertaking Bharat Heavy Electricals Limited as General Manager. In 1987 he was promoted
as Chief General Manager. In 1988 he was named Director, Productions and Projects. The
next year (1989) he was named Director of Materials[clarification needed] and in 1993 he became
Joint Managing Director.[citation needed]
Suzuki Motor Corporation didn't attend the Annual General Meeting of the Board with the
reason of it being called on a short notice.[10] Later Suzuki Motor Corporation went on record
to state that Bhaskarudu was "incompetent" and wanted someone else. However, the Ministry
of Industries, Government of India refuted the charges. Media stated from the Maruti Suzuki
sources that Bhaskarudu was interested to indigenise most of components for the models
including gear boxes especially for Maruti 800. Suzuki also felt that Bhaskarudu was a proxy
for the Government and would not let it increase its stake in the venture.[11] If Maruti Suzuki
would have been able to indigenise gear boxes then Maruti Suzuki would have been able to
35
manufacture all the models without the technical assistance from Suzuki. Till today the issue
of localization of gear boxes is highlighted in the press.[12]
The relations strained when Suzuki Motor Corporation moved to Delhi High Court to bring a
stay order against Bhaskarudu's appointment. The issue was resolved in an out-of-court
settlement and both the parties agreed that R S S L N Bhaskarudu would serve up to 31
December 1999, and from 1 January 2000, Jagdish Khattar, Executive Director of Maruti
Udyog Limited would assume charges as the Managing Director.[13] Many politicians stated
in parliament that the Suzuki Motor Corporation is unwilling to localize manufacturing and
reduce imports. As of 2011 Gear boxes are still imported from Japan and are assembled at the
Gurgaon facility.[citation needed]
Industrial relations
36
For most of its history, Maruti Udyog Limited had relatively few problems with its labour
force. Its emphasis of a Japanese work culture and the modern manufacturing process, first
instituted in Japan in the 1970s, was accepted by the workforce of the company without any
difficulty. But with the change in management in 1997, when it became predominantly
government controlled for a while, and the conflict between the United Front Government
and Suzuki may have been the cause of unrest among employees. A major row broke out in
September 2000 when employees of Maruti Udyog Ltd (MUL) went on an indefinite strike,
demanding among other things, revision of the incentive scheme offered and implementation
of a pension scheme.[citation needed]
Employees struck work for six hours in October 2000, irked over the suspension of nine
employees, going on a six-hour tools-down strike at its Gurgaon plant, demanding revision of
the incentive-linked pay and threatened to fast to death if the suspended employees were not
reinstated. About this time, the NDA government, following a disinvestments policy,
proposed to sell part of its stake in Maruti Suzuki in a public offering. The Staff union
opposed this sell-off plan on the grounds that the company will lose a major business
advantage of being subsidised by the Government.[citation needed]
The standoff with the management continued to December with a proposal by the
management to end the two-month long agitation rejected with a demand for reinstatement of
92 dismissed workers, with four MUL employees going on a fast-unto-death. In December
the company's shareholders met in New Delhi in an AGM that lasted 30 minutes. At the same
time around 1500 plant workers from the MUL's Gurgaon facility were agitating outside the
company's corporate office demanding commencement of production linked incentives, a
better pension scheme and other benefits. The management has refused to pass on the
benefits citing increased competition and lower margins.[14]
37
Services offered
Current sales of automobiles
Red Bull Maruti Suzuki Swift
Maruti Omni
India's Corps of Military Police personnel patrolling the Wagah border crossing in the Punjab
in a Maruti Gypsy.
38
Maruti Alto
Maruti Suzuki Swift
Suzuki SX4
7th Generation Suzuki Alto is sold as Maruti Suzuki A-Star in India.
Maruti Suzuki Swift DZire
39
Suzuki Splash is sold as Maruti Suzuki Ritz in India.
1. 800 (Launched 1983)
2. Omni (Launched 1984)
3. Gypsy (launched 1985)
4. WagonR (Launched 1999)
5. Alto (Launched 2000)
6. Swift (Launched 2005)
7. Estilo (Launched 2009)
8. SX4 (Launched 2007)
9. Swift DZire (Launched 2008)
10. A-star (Launched 2008)
11. Ritz (Launched 2009)
12. Eeco (Launched 2010)
13. Alto K10 (Launched 2010)
14. Maruti Ertiga, seven seater MPV R3 designed and developed in India, will compete
with Toyota Innova, Mahindra Xylo, and Tata Sumo Grande.[15]
Imported
Suzuki Grand Vitara
40
1. Grand Vitara (Launched 2007)
2. Kizashi (Launched 2011)
Discontinued car models
1. 1000 (1990–1994)
2. Zen (1993–2006)
3. Esteem (1994–2008)
4. Baleno (1999–2007)
5. Zen Estilo (2006–2009)
6. Versa (2001–2010)
7. Grand Vitara XL7 (2003–2007)
Manufacturing facilities
Maruti Suzuki has two state-of-the-art manufacturing facilities in India.[16] Both
manufacturing facilities have a combined production capacity of 1,250,000 vehicles annually.
Gurgaon Manufacturing Facility
The Gurgaon Manufacturing Facility has three fully integrated manufacturing plants and is
spread over 300 acres (1.2 km2). All three plants have an installed capacity of 350,000
vehicles annually but productivity improvements have enabled it to manufacture 700,000
vehicles annually. The Gurgaon facilities also manufacture 240,000 K-Series engines
annually. The entire facility is equipped with more than 150 robots, out of which 71 have
been developed in-house. The Gurgaon Facilities manufactures the 800, Alto, WagonR,
Estilo, Omni, Gypsy and Eeco.
Manesar Manufacturing Facility
The Manesar Manufacturing Plant was inaugurated in February 2007 and is spread over 600
acres (2.4 km2). Initially it had a production capacity of 100,000 vehicles annually but this
was increased to 300,000 vehicles annually in October 2008. The production capacity was
41
further increased by 250,000 vehicles taking total production capacity to 550,000 vehicles
annually. The Manesar Plant produces the A-star, Swift, Swift DZire and SX4.
Sales and service network
As of 31 March 2011 Maruti Suzuki has 933 dealerships across 666 towns and cities in all
states and union territories of India. It has 2,946 service stations (inclusive of dealer
workshops and Maruti Authorised Service Stations) in 1,395 towns and cities throughout
India.[17] It has 30 Express Service Stations on 30 National Highways across 1,314 cities in
India.
Service is a major revenue generator of the company. Most of the service stations are
managed on franchise basis, where Maruti Suzuki trains the local staff. Other automobile
companies have not been able to match this benchmark set by Maruti Suzuki. The Express
Service stations help many stranded vehicles on the highways by sending across their repair
man to the vehicle.[18]
Maruti Insurance
Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with the help of
the National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram.
The service was set up the company with the inception of two subsidiaries Maruti Insurance
Distributors Services Pvt. Ltd and Maruti Insurance Brokers Pvt. Limited[19]
This service started as a benefit or value addition to customers and was able to ramp up
easily. By December 2005 they were able to sell more than two million insurance policies
since its inception.[20]
Maruti Finance
To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in January 2002.
Prior to the start of this service Maruti Suzuki had started two joint ventures Citicorp Maruti
and Maruti Countrywide with Citi Group and GE Countrywide respectively to assist its client
in securing loan.[21] Maruti Suzuki tied up with ABN Amro Bank, HDFC Bank, ICICI
Limited, Kotak Mahindra, Standard Chartered Bank, and Sundaram to start this venture
including its strategic partners in car finance. Again the company entered into a strategic
42
partnership with SBI in March 2003[22] Since March 2003, Maruti has sold over 12,000
vehicles through SBI-Maruti Finance. SBI-Maruti Finance is currently available in 166 cities
across India.[23]
"Maruti Finance marks the coming together of the biggest players in the car finance business.
They are the benchmarks in quality and efficiency. Combined with Maruti volumes and
networked dealerships, this will enable Maruti Finance to offer superior service and
competitive rates in the marketplace".
— Jagdish Khattar, Managing director of Maruti Udyog Limited in a press conference
announcing the launch of Maruti Finance on 7 January 2002[21]
Citicorp Maruti Finance Limited is a joint venture between Citicorp Finance India and Maruti
Udyog Limited its primary business stated by the company is "hire-purchase financing of
Maruti Suzuki vehicles". Citi Finance India Limited is a wholly owned subsidiary of Citibank
Overseas Investment Corporation, Delaware, which in turn is a 100% wholly owned
subsidiary of Citibank N.A. Citi Finance India Limited holds 74% of the stake and Maruti
Suzuki holds the remaining 26%.[24] GE Capital, HDFC and Maruti Suzuki came together in
1995 to form Maruti Countrywide. Maruti claims that its finance program offers most
competitive interest rates to its customers, which are lower by 0.25% to 0.5% from the
market rates.[citation needed]
Maruti TrueValue
Main Article: Maruti True Value
Maruti True service offered by Maruti Suzuki to its customers. It is a market place for used
Maruti Suzuki Vehicles. One can buy, sell or exchange used Maruti Suzuki vehicles with the
help of this service in India. As of 31 March 2010 there are 341 Maruti True Value outlets.[citation needed]
N2N Fleet Management
N2N is the short form of End to End Fleet Management and provides lease and fleet
management solution to corporates. Clients who have signed up of this service include Gas
Authority of India Ltd, DuPont, Reckitt Benckiser, Sona Steering, Doordarshan, Singer India,
43
National Stock Exchange and Transworld. This fleet management service include end-to-end
solutions across the vehicle's life, which includes Leasing, Maintenance, Convenience
services and Remarketing.[25]
Accessories
Many of the auto component companies other than Maruti Suzuki started to offer components
and accessories that were compatible. This caused a serious threat and loss of revenue to
Maruti Suzuki. Maruti Suzuki started a new initiative under the brand name Maruti Genuine
Accessories to offer accessories like alloy wheels, body cover, carpets, door visors, fog
lamps, stereo systems, seat covers and other car care products. These products are sold
through dealer outlets and authorized service stations throughout India.[26]
Maruti Driving School
A Maruti Driving School in Chennai
As part of its corporate social responsibility Maruti Suzuki launched the Maruti Driving
School in Delhi. Later the services were extended to other cities of India as well. These
schools are modelled on international standards, where learners go through classroom and
practical sessions. Many international practices like road behaviour and attitudes are also
taught in these schools. Before driving actual vehicles participants are trained on simulators.[27]
"We are very concerned about mounting deaths on Indian roads. These can be brought down
if government, industry and the voluntary sector work together in an integrated manner. But
we felt that Maruti should first do something in this regard and hence this initiative of Maruti
Driving Schools."[citation needed]
— Jagdish Khattar, at the launch ceremony of Maruti Driving School, Bangalore
44
Issues and problems
On 24 February 2010, Maruti Suzuki India announced recalling of 100,000 A-Star
hatchbacks to fix a fuel leakage problem. the company will replace the gaskets for all
100,000 A-Star cars.
Exports
Maruti Exports Limited is the subsidiary of Maruti Suzuki with its major focus on exports
and it does not operate in the domestic Indian market. The first commercial consignment of
480 cars were sent to Hungary. By sending a consignment of 571 cars to the same country
Maruti Suzuki crossed the benchmark of 300,000 cars. Since its inception export was one of
the aspects government was keen to encourage.[citation needed] Every political party expected
Maruti Suzuki to earn foreign currency. Angola, Benin, Djibouti, Ethiopia, Europe, Kenya,
Morocco, Nepal, Sri Lanka, Uganda, Chile, Guatemala, Costa Rica and El Salvador are some
of the markets served by Maruti Exports
AFTER SALES SERVICE OF MARUTI SUZUKI INDIA LIMITED
The country’s largest car manufacturer, Maruti Suzuki India (MSIL), has initiated
its largest service network expansion drive this financial year since its inception. In the
course of the year, it intends to add 200 outlets to cater to demand across sectors.
45
“After-sales service availability is a critical deciding factor while choosing a car.
We intend to be within 25 km of customers by the end of the current financial year,”
informed Pankaj Narula, executive officer (service), MSIL.
MSIL has 2,855 service centres across 1,363 cities. The number is set to cross the
3,000-mark by the end of 2010-11. The company also has customers in 2,900 talukas and 70
per cent of these have been covered under their rule of a service station every 25 km. As of
date, the average distance to the closest MSIL service station in the remaining areas is 35 km.
“No company can fight competition on price. You need to have the right product,
distribution and service network to grow,” said Arvind Saxena, director and board member
(marketing and sales), Hyundai Motor India (HMIL). To this end, HMIL has firmed up plans
to open 130 additional facilities to service customers in 2011. This would increase the
number of service points for Hyundai cars to 757.
Toyota, set to foray into the intensely competitive small car segment with the Liva in
April next year, is working on doubling its sales and service centres by the end of this year.
Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar Motor, said: “Word-
of-mouth publicity plays an important part in selling vehicles in the country, which depends
on customer experience of the products and facilities we offer. Toyota products are known
for their quality; cost of ownership is low. We intend to double sales in 2011, and to service
the 150,000 cars we hope to sell, we are rapidly expanding our after-sales facilities.”
TKM had 97 sales and service centres last year, which would increase to 150 by the
end of this year. Of this, 135 centres would have workshops for maintenance activities.
Among others, Toyota has developed a new dealership management system, which would
enable the company to maintain a database for all its customers across the country.
46
“When a customer approaches any Toyota dealership for maintenance, his record
would already be available with us. We would be able to offer quality service within the
shortest time possible. Along with the Etios, we have also introduced an ‘Express
Maintenance' service, in which we give customers an assured delivery within 60 minutes.
This is a unique initiative taken by us to take care of our growing customer base,” said Singh.
After Sales Service:- “Kya yahan Maruti Service Station hai”
Availibility of service stations even in the remotest place in the
country.
Display
If you visit any of the Maruti Dealers showroom what you will notice is
one thing very similar, that is the display. They display only 2-3 cars
in the showroom. Well this is the strategy to make people concentrate
on only few choices otherwise they might get distract and get
confused. Here Maruti wins one customer.
Tie up with many banks
To promote its bottom line growth, Maruti launched Maruti Finance in
Jan 02.
47
Prior to the start of this service Maruti had started two joint ventures –
Citicorp Maruti and Maruti countrywide with Citi Group and GE
Countrywide
respectively to assist its client in securing loan.
Today Maruti has tie ups with ABN Amro Bank, HDFC Bank, ICICI
Ltd, Kotak Mahindra Bank, Standard Chartered Bank etc.
Exchange offers
Maruti has also placed its step and progress by marketing through
Exchange offers
Maruti has also placed its step and progress by marketing through
exchange offers. In this it makes possible to leave and get it replaced
for a new one with barely some amount. This is one of the greatest
ways to attract more and more customers and also makes possible to
increase sales.
SBI Maruti Car Loans
The country’s largest bank and the largest car maker have joined
hands to make affordable car finance available to more and more
48
people across the country. The mega alliance makes car loans
available at lower interest rates to a wider section of people, with
transparent terms and conditions.
The unbeatable advantages of SBI Maruti car loans:-
-Two market leaders in their respective industries with trusted brand
names.
-Low interest rates
-No processing fees or hidden costs to ensure transparency.
-Car loans available for diverse categories of customers including
govt. employees and agriculturist.
Based on your experience of using SANY products and impression on the other
competitors, please choose with your first reaction. Satisfied Dissatisfied Brand and
Quality 1 General impression on the brands. 5 4 3 2 1
CATERPILLAR KOMATSU OTHERS 2
Satisfaction degree of products quality. 5 4 3 2 1
49
CATERPILLAR KOMATSU OTHERS 3
Products capabilities to satisfy working demand. 5 4 3 2 1
CATERPILLAR KOMATSU OTHERS
4 Maintainability of products. 5 4 3 2 1
CATERPILLAR KOMATSU OTHERS 5
Satisfaction degree of products' fuel consumption. 5 4 3 2 1
CATERPILLAR KOMATSU OTHERS
6 Satisfaction degree of price-performance ratio. 5 4 3 2 1
CATERPILLAR KOMATSU OTHERS
After-sales service 7 Satisfaction degree of after-sale service. 5 4 3 2 1
CATERPILLAR KOMATSU OTHERS
8 Satisfaction degree of local service staff. 5 4 3 2 1
CATERPILLAR KOMATSU OTHERS
9 The company's reaction speed after receiving trouble
calls. 5 4 3 2 1 CATERPILLAR KOMATSU
OTHERS 10 The company's capability in spare
parts supply. 5 4 3 2 1 CATERPILLAR
KOMATSU OTHERS 11 Localization degree of
reference materials. 5 4 3 2 1 CATERPILLAR
50
KOMATSU OTHERS Please answer the
following questions. Yes No 12 Do you need product repurchase service? 13 Are
you willing to pay for extra service after the warranty period? In which
aspect(s) do you think we need improvement? Quality Service Spare parts
Material Product appearance Manuverability Others Do you
have any other suggestions to SANY?
v
INDUSTRY VISIT
51
GENERAL MOTORS INDIA
B-305, Mathura Complex 1, B.P. Road, Bhayandar (East), Thane. M : +91-9820533489.
General Motors India, aiming to treble sales in India by 2013 on the back of the six
new models it has slated for launch, starting December 2011, is expanding the number of
service facilities by 50 per cent to 300 by March 2011. P Balendran, director and vice-
president, corporate affairs, said: “On the back of growing income in the agricultural sector,
we have seen growing demand for the Beat and Spark in rural areas. We are adding service
centres in tier-II and tier-III cities.”
GM is offering three-year free maintenance for its small cars, the Chevrolet Beat,
Spark and Aveo UVA, a first in the industry. “We are looking at extending the scheme across
other products as well,” said Balendran. Besides, the company is offering a three-hour
assured delivery scheme for servicing cars.
A spokesperson for Tata Motors concurred, “We are well covered in the metros. We
are expanding our after-sales network in tier-II and tier-III cities on the back of increasing
demand.” It has 800 service points for passenger vehicles across 500 cities and towns.
KEY SUCCESS FACTORS
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(1)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.
(2) 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 MUL customers in
finding the right car.
(3) Quality Service Across 1036 Cities
In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7
parameters: least problems experienced with vehicle serviced, highest service quality, best in-
service experience, best service delivery, best service advisor experience, most user-friendly
service and best service initiation experience.
92% of Maruti Suzuki owners feel that work gets done right the first time during service. The
J.D. Power CSI study 2004 also reveals that 97% of Maruti Suzuki owners would probably
recommend the same make of vehicle, while 90% owners would probably repurchase the
same make of vehicle.
(4) One Stop Shop
At Maruti Suzuki, customers will find all car related needs met under one roof.
53
Whether it is easy finance, insurance, fleet management services, exchange- Maruti Suzuki is
set to provide a single-window solution for all car related needs.
(5) The Low Cost Maintenance Advantage
The acquisition cost is unfortunately not the only cost customers face when buying a
car. Although a car may be affordable to buy, it may not necessarily be affordable to
maintain, as some of its regularly used spare parts may be priced quite steeply. Not so in the
case of a Maruti Suzuki. It is in the economy segment that the affordability of spares is most
competitive, and it is here where Maruti Suzuki shines.
(6) Lowest Cost of Ownership
The highest satisfaction ratings with regard to cost of ownership among all models are
all Maruti Suzuki vehicles: Zen, Wagon R, Esteem, Maruti 800, Alto and Omni.
(7) Technological Advantage
It has introduced the superior 16x4 Hypertech engines across the entire Maruti Suzuki
range. This new technology harnesses the power of a brainy 16-bit computer to a fuel-
efficient 4-valve engine to create optimum engine delivery. This means every Maruti Suzuki
owner gets the ideal combination of power and performance from his car.
CONCLUSION
54
Maruti has always been identified as a traditional carmaker producing value-for-
money cars and right now the biggest hurdle Maruti is facing is to shed this image. Maruti
wants to change it for a more aggressive image. Maruti Baleno has failed due to one of the
major reasons being that customers could not identify Maruti with a car as sophisticated as
Maruti Baleno. Maruti is looking forward to bring about a perception change about the
company and its cars. Maruti started the exercise with the new-look Zen, and Suzuki's
decision to pick India as one of the first markets for this radically different-looking car gave
this endeavor a new thrust. Maruti has also changed its logo at the front grill. It has replaced
the traditional Maruti logo on grill ‘stylish ‘M’ with S’. The major thrust in the facelift
endeavour is with the launch of 1.3 litre Swift. It’s a style statement from Maruti to Indian
market.
The next threat Maruti faces is the growing competition in compact cars. Companies
like Toyota, Ford, Honda and Fiat are planning to come out with small segment cars in near
future.Ford is launching Focus and Fiesta, GM is launching Aveo in 2006, Chevrolet is
launching Spark in 2006, Hyundai is launching its new compact car in 2006, Honda is
launching Jazz in 2006, GM is has reduced prices of its Corsa, Fiat is coming up with Panda
and new Fiat Palio, Skoda is launching Fabia. All this will pose a major threat to Maruti
leadership in compact cars.
New emission norms like Bharat Stage 3 which has come into effect from April 2005
has increased car prices by Rs.20000 and Bharat Stage 4 which is coming into force in 2007
will contribute in increasing car prices further. This could be of concern to Maruti which is
low cost provider of passenger cars.
55
Rise in petrol prices and growing popularity of other substitute fuels like CNG will
be another threat to Maruti. There is also a threat to Suzuki from R&D investment by Toyota
and Honda in Hybrid cars. Hybrid cars could run on both petrol and gaseous fuels.
There is a threat to Maruti models ageing. Maruti models like Maruti 800 which is in
market for the last twenty years and others like Zen and Esteem which have also entered the
decline phase are the other threats. Maruti is planning phasing out Zen in 2007 and there were
rumors of phasing out Maruti 800 also. This all makes Suzuki to replace these brands with
new launches . As Swift and Wagon R are replacing the Zen market. Maruti will have to keep
on making modifications in its present models or its models will face extinction.
List of References
- Aaker, D.A., & day, G.S. (1990) Marketing Research, 4 ed. Newyork: Wiley cop.
56
- Marketing Management, Phillip Kotler, (13th Edition)
- Times of India, News Paper
- Levitt, Theodore. “After the sale is over,…” Harvard Business review 16 (1983): 87-
93.
- Parasuraman A., Customer service in business-to business markets: an agenda for
research, Journal of business & Industrial marketing, volume 13 number 4/5, 1998 pp.
309-321
- Gronroos, C.(2000), Service Management and Marketing: A Customer Relationship
Management Approach, 2 ed., Wiley, Chichester
- Websites :- www.marutisuzuki.com
:- www.wikipedia.com
:- www.economist.com
:- www.indiainfo.com
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