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    PROJECT REPORT

    ON

    STUDY OF MARKETING & PRICING

    STRATEGIES OF

    MARUTI SUZUKI INDIALIMTED

    SUBMITTED IN PARTIAL FULFILLMENT

    FOR THE DEGREE OF MASTERS OF BUSINESS ADMINISTRATION

    (2010-2012)

    SUBMITTED TO : SUBMITTED BY:

    Lt. (col) Dr. ANIRUDH TOMAR YEAMI KHARKONGOR

    ( DIRECTOR ) MBA- II Semester

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    ACKNOWLEDGEMENT

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

    inspired me by his able guidance and was a constant

    guiding light during the course of project study.

    The support and knowledge provided by him has been a great

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

    promising career.

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

    survey without whom the project would not have been completed

    successfully.

    (YEAMI KHARKONGOR)

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    INDEX

    INTRODUCTION OF THE COMPANY

    OBJECTIVE OF THE COMPANY

    RESEARCH METHODOLOGY

    LIMITATIONS

    CONCLUSION

    BIBILIOGRAPHY

    QUESTIONNAIRE

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    INTRODUCTION OF THE COMAPANY

    MARUTI SUZUKI INDIA LIMITED

    Maruti is India's largest automobile company. The company, a joint venture with

    Suzuki of Japan, has been a success story like no other in the annals of the Indian

    automobile industry.

    Today, Maruti is India's largest automobile company. This feat was achieved by the

    missionary zeal of our employees across the line and the far-sighted vision of our

    management.

    The Company Mission:

    To provide a wide range of modern, high quality fuel efficient vehicles in order to

    meet the need of different customers, both in domestic and export markets.

    The Company Vision:

    We must be an internationally competitive company in terms of our products and

    services. We must retain our leadership in India and should also aspire to be among

    the global players.

    Their focus is on:

    Building a continuously improving organisation adaptable to quick changes

    Providing value and satisfaction to the customer

    Aligning and fully involving all our employees, suppliers and dealers to face

    competition

    Maximizing Shareholder's value

    Being a responsible corporate citizen

    At Maruti, they have a clear perspective on manpower. They see it as a unique

    resource, in the sense that optimal productivity of other resources depends largely on

    the way human resources are utilized. The basic philosophy of management that

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    underlies the Maruti culture is that all employees of the company should be moulded

    into a team which then strives as one, to achieve commonly shared company goals

    and objectives. To make this philosophy tenable, the Company takes several

    initiatives. Inputs are sought from employees at all levels. They believe that

    everyone should contribute to the formulation of company policies, goals and

    objectives. Secondly, at Maruti, they encourage leadership in the best sense of the

    word. According to us, a leader is one who must be impartial, must have the ability

    to rise above his own subjectivity, and, most importantly, must practice what he

    preaches.

    They understand that the process of creating a sense of belonging that all employees

    can identify with is a lengthy one. To ensure that this translates into concrete reality,

    they have taken several simple but specific and well thought out measures. The first

    step in this direction has been the introduction of a common uniform for all

    employees. Another measure is the creation of a common canteen where all

    employees have lunch, stand in common queues, and sit on the same table. Common

    toilets, common transport and similar facilities for all levels of employees are other

    measures that reinforce their emphasis on genuine equality in the workplace.

    At Maruti They do not believe in the notion of organizational hierarchies. As a

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

    to promote decentralization of authority. Maruti has a horizontal management

    structure with only four functional levels of responsibility to facilitate quicker

    decision making.

    Another focus area of the Maruti culture is the maintenance of a smoothly

    functioning communication network. Maruti believes that communication channels

    between labor and management cannot simply consist of having a labor

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

    to effectively participate in management and make constructive suggestions. To

    encourage this, they ensure that there is a thorough dissemination of information at

    all levels, through newsletters or via a letter from the Chief Executive to all

    employees. Meetings with the Union are held regularly, and programmes being

    contemplated by the Company are discussed with the Union. The Sahyog Samiti, a

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    collection of representatives of non-unionized employees, training programmes in

    Japan, Quality Circles, productivity-linked incentive schemes, and an ethos of

    discipline and teamwork, all contribute to the Maruti culture.

    Several measures of performance have made amply clear that Maruti has established

    a truly healthy work culture. They have met all project and performance targets

    since inception. Their productivity levels are constantly improving. The Company

    has had good labor relations with employees from the very beginning, and they have

    been successful in the export market. Yet, the Maruti culture is one that does not

    believe in resting on its laurels. They adhere to the spirit of Kaizen, which states that

    constant improvement is always possible. The most basic tenet of productivity that

    they hold dear is that " Today should be better than Yesterday and Tomorrow should

    be better than Today".

    Maruti Suzuki India Limited (MSIL) was established in Feb 1981 through an Act of

    Parliament, to meet the growing demand of a personal mode of transport caused by

    the lack of an efficient public transport system.

    Suzuki Motor Company was chosen from seven prospective partners worldwide.

    This was due not only to their undisputed leadership in small cars but also to their

    commitment to actively bring to MSIL contemporary technology and Japanese

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

    auto manufacturing country in the world).

    A licence and a Joint Venture agreement was signed between Government of India

    and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982.

    The objectives of MSIL then were:

    Modernization of the Indian Automobile Industry.

    Production of fuel-efficient vehicles to conserve scarce resources.

    Production of large number of motor vehicles, which was necessary for

    economic growth.

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    Core Value

    Customer Obsession

    Fast, Flexible and First Mover

    Innovation and Creativity

    Networking and Partnership

    Openness and Learning

    Vision

    The leader in the India Automobile Industry, Creating Customer Delight and

    Shareholders Wealth; A pride of India

    Technological Advantage

    We have introduced the superior 16 * 4 Hypertech engines across the entire Maruti

    Suzuki range. This new technology harnesses the power of a brainy 16-bit computer

    to a fuel-efficient 4-valve engine to create optimum engine delivery. This means

    every Maruti Suzuki owner gets the ideal combination of power and performance

    from his car.

    Our other innovation has been the introduction of Electronic Power Steering (EPS)

    in select models. This results in better and greater maneuverability. In other words,

    our cars have become even more pleasurable to drive.

    Production/R&D

    Spread over a sprawling 297 acres with 3 fully-integrated production facilities, the

    Maruti Udyog Plant has already rolled out over 4.3 million vehicles. In fact, on an

    average, two vehicles roll out of the factory every minute. And it takes on an

    average, just 14 hours to make a car. More importantly, with an incredible range of

    11 models available in 50 variants, there's a Maruti Suzuki made here to fit every

    car-buyer's budget and dream.

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    GENERAL INFORMATION:

    Registered and Corporate office:

    Maruti Suzuki India limited,

    Nelson Mandela road,

    Vasant kunj ,

    New Delhi- 110070

    PLANTS :

    Gurgaon and Manesar plants

    Production Milestones

    1st vehicle produced, December 1983

    1,00,000 vehicles produced by August, 1986

    5,00,000 vehicles produced by June, 1990

    10,00,000 vehicles produced by March, 1994

    15,00,000 vehicles produced by April, 1996

    20,00,000 vehicles produced by October, 1997

    25,00,000 vehicles produced by March, 1999

    30,00,000 vehicles produced by June, 2000

    35,00,000 vehicles produced by December 2001

    40,00,000 vehicles produced by April, 2003

    45,00,000 vehicles produced by April, 2004

    55,00,000 vehicles produced by April 2006

    75,00,000 vehicles produced by April 2009

    85,00,000 vehicles produced by April 2010

    1 Crore (ten millionth) car by march 2011

    10

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    AWARDS

    2005Number one in JD Power SSI for the second consecutive year

    Number one in JD Power CSI for the sixth time in a row - the only

    car to winit so many timesM800, WagonR and Swift topped their segments in the TNS TotalCustomer Satisfaction Study

    Leadership in the JD Power Initial Quality Study - Alto number

    one in its

    segment for the 2nd time in a row, Esteem number one in its

    segment forthe 3rd year in a row, Swift number one in the premium compact

    segment

    WagonR and Esteem top their segments in the JD Power APEAL

    study

    TNS ranks Maruti 4th in the Corporate Reputation Strength (CSR)

    study(#1 in Auto sector)-Feb 05

    Maruti bagged the "Manufacturer of the year" award from Autocar-

    CNBC( 2nd time in a row)-Feb 05First Indian car manufacturer to reach 5 million vehicles sales

    Business World ranks Maruti among top five most respected

    companies inIndia-Oct 04

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

    byBusiness Today - Sep '04

    2004

    Maruti Suzuki was No. 1 in Customer atisfaction, No. 1 in Sales

    Satisfaction No.1 in Product Quality (Esteem and Alto) and No. 1

    in Product Appeal (Esteem and Wagon R)No. 1 in Total Customer Satisfaction (Maruti 800, Zen and Alto)

    Business World ranked us among the country's five most respected

    companies

    Business World ranked us the country's most respected automobile

    company

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    Voted Manufacturer of the year by CNBC

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

    Nielson ORG-MARG2003

    Maruti 800, Maruti Zen and Maruti Esteem make it to the top 10

    automotive brands in "Most Trusted Brand survey 2003"J D Power ranked 3 models of Maruti on top: Wagonr, Zen and

    Esteem

    Maruti 800 and WagonR top in NFO Total Customer Satisfaction

    Study 2003.MUL tops in J D Power CSI (2001) for 4th time in a row

    2001

    MUL tops in J D Power CSI (2001) for 2nd time in a row: another

    international first

    2000

    Maruti bags JD Power CSI - 1st rank; unique achievement by

    market leader anywhere in the world

    1999

    MSM launched as model workshop in India; achieves highest CSI

    rating.

    Central Board of Excise & Customs awards Maruti with "Samman

    Patra", for contribution to exchequer and being an ideal tax

    assessee

    1998CII's Business Excellence Award

    1996

    Maruti wins INSSAN award for "Excellence in Suggestion

    Scheme"Awarded the Star Trading House status by Ministry of Commerce

    1994-95

    Engineering Exports Promotion Council's award for export

    performance

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    1994

    Best Canteen award among Haryana Industries as part of employee

    welfare

    1992-93

    Engineering Exports Promotion Council's award for export

    performance

    1991-92

    Engineering Exports Promotion Council's award for export

    performance

    The sales numbers for March 2011 are as under:

    Segment Models

    In March Till March

    2011 2010%

    Change2010-11 2009-10

    %

    Change

    A1 M800 2915 2762 5.5% 26485 33028 -19.8%

    A2

    Alto, WagonR,

    Zen, Swift,Ritz, A-Star

    78460 54763 43.3% 808552 633190 27.7%

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

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

    A: Total Passenger

    Cars95388 67978 40.3% 966447 765533 26.2%

    B: MUVGypsy, GrandVitara

    620 677 -8.4% 5666 3932 44.1%

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

    Domestic Sales 110424 79530 38.8% 1132739 870790 30.1%

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

    Total Sales 121952 95123 28.2% 1271005 1018365 24.8%

    * Kizashi launched in February 2011. 2010-11 Highlights

    During the year, the company expanded its countrywide network:

    Number of 31 March2011

    31 March2010

    Increase

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    Sales Outlets 933 802 131

    Cities covered by sales

    network666 555 111

    Service Stations 2946 2740 206

    Cities covered by servicenetwork

    1395 1335 60

    Maruti Driving Schools 164 83 81

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    WHY MARUTI SUZUKI

    The Quality Advantage

    A car is an engineering product, only as good as the technology used to make

    it. Actual users of our technology are saying something very clearly Maruti

    Suzuki is No.1 in quality:

    Maruti Suzuki owners experience fewer problems with their vehicles than any other

    can manufacturer in India (J.D. Power IQS Study 2004). The Alto was chosen No.1

    in the premium compact car segment and the Esteem in the entry level mid-size car

    segment across 9 parameters.

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

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

    size car segment. This study measures owner delight in terms of design,

    content, layout and performance of vehicles across 8 parameters.

    Maruti Suzuki has a sales network of 307 state-of-the-art showrooms across189 cities*, with a workforce of over 6000 trained sales personnel to guide

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

    standards led us to achieve the No.1 nameplate in the J.D. Power SSI study

    2004. The SSI study measures sales satisfaction across 6 parameters: deal

    received, paperwork, dealer facility, salesperson, delivery timing and delivery

    process. Maruti Suzuki has not only got the No.1 nameplate in the J.D. Power

    SSI study 2004, but also ranked way above the industry average (Maruti

    Suzuki was at 784 while industry average was at 760). What is significant is

    that it was ranked above Skoda, Ford, Chevrolet, Mitsubishi and Hyundai.

    To be really happy with the car you own, it should have a reliable service

    network at hand and within easy reach. Their 1036 city strong service

    network is equipped to service 20,000 vehicles a day. No wonder Maruti

    Suzuki has been awarded the No.1 nameplate in customer satisfaction in India

    for the fifth year in a row, a feat unprecedented for any automobile marketleader in the world.

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

    7 parameters: least problems experienced with vehicle serviced, highest

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

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

    experience.

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

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

    Suzuki owners would probable recommend the same make of vehicle, while 90%

    owners would probable repurchase the same make of vehicle.

    A Buying Experience Like No Other

    Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189

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

    in finding the right car. Our high sales and customer care standards led us to achieve

    the No.1 nameplate in the J.D. Power SSI Study 2004.

    Quality Service Across 1036 Cities

    In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7

    parameters: least problems experienced with vehicle serviced, highest service

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

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

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

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

    owners would probably recommend the same make of vehicle, while 90% owners

    would probably repurchase the same make of vehicle.

    One Stop Shop

    At Maruti Suzuki, you will find all your car related needs met under one roof.

    Whether it is easy finance, insurance, fleet management services, exchange- Maruti

    Suzuki is set to provide a single-window solution for all your car related needs.

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    The Low Cost Maintenance Advantage

    The acquisition cost is unfortunately not the only cost you face when buying a

    car. Although a car may be affordable to buy, it may not necessarily be

    affordable to maintain, as some of its regularly used spare parts may be priced

    quite steeply. Not so in the case of a Maruti Suzuki. It is in the economy

    segment that the affordability of spares is most competitive, and it is here

    where Maruti Suzuki shines. The recent Auto car Survey conducted in August

    2004 bears testimony to this fact. In the Maruti Suzuki stable, the Omni has

    the lowest aggregate cost of spares followed by the Maruti-800. The Maruti-

    800 has the cheapest spares of any Indian car with a basket of just Rs. 23,422.

    In the Lower Mid-size segment as well, price-consciousness is very high,

    where the cars have to be not only affordable on purchase price but also need

    to combine quality, drivability and have comfortable interiors. In this

    segment, the Maruti Suzuki Versa has scored particularly well with the lowest

    cost of spares in the segment. In the Upper Mid-size segment, the Maruti

    Suzuki Baleno has the segment's lowest prices on a majority of the spares.

    Lowest Cost of Ownership

    To be really happy with the car one owns, it should be easy on the pocket to

    buy and to run-which is why the cost of ownership is so important. And here

    again, a Maruti Suzuki is a clear winner, as shown by the recent J.D.Power

    CSI study 2004. It is clear that a Maruti Suzuki delights you even when you

    run it for years. The 6 highest satisfaction ratings with regard to cost of

    ownership among all models are all Maruti Suzuki vehicles: Zen, Wagon R,

    Esteem, Maruti 800, Alto and Omni. They are proud to have the lowest cost of

    operation / km (among petrol vehicles) - the top 5 models are all Maruti

    Suzuki models: Maruti 800, Alto, Zen, Omni and Wagon R.

    Employee Quality Measures

    Kaizen is based on the concept of making incremental improvements in our

    products. It incorporates a series of continuous small and simple improvements,which aim at involving employees at all levels.

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    The Suggestion Scheme is based on the same principle. Under this scheme,

    employees are encouraged to make suggestions for improvement in any area of our

    operation. Over 50,000 suggestions are received from employees every year.

    Maruti has won the First place in "Excellence in Suggestion Scheme Contest

    2003", which is the 6th consecutive award won in as many years. This contest is

    organized by Indian National Suggestion Schemes Association (INSSAN). Since

    1998 Maruti has won this award 10 times.

    "Quality Circles" are groups of five to eight members from a particular work area

    who work as a team to identify priorities and solve work related problems in the

    area.

    We believe that it is this unwavering commitment to quality that will lead to the

    further growth of the organization as competition increases.

    ISO 9001:2000

    At Maruti, our approach to quality is in keeping with the Japanese practice--"build it

    into the product". Technicians themselves inspect the quality of work. Supervisors

    educate and instruct technicians to continually improve productivity and quality.

    The movement of quality indicators is reviewed in weekly meetings by the top

    management.

    In 2001, Maruti Udyog Ltd became one of the first automobile companies

    anywhere in the world to get an ISO 9000:2000 certification. AV Belgium,

    global auditors for International Organization for Standardisation(ISO), certified

    Maruti after a four day long audit, covering varied parameters like Customer

    Focussed organisation, Leadership, Involvement of people, Process approach,

    System approach to Management, Continual improvement, etc.

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    In May 1995, Maruti got ISO 9002 certification. The audit for this covered

    quality assurance in production, installation, marketing and sales as well as after

    sales services. We were also one of the first companies in the world to pioneer ISO

    9000 certification for our dealers.

    In October 1993, MSIL passed the Conformity Of Production (COP) Audit,

    which is based on a European Union Directive. This authenticated our quality

    systems and testing facilities for export to Europe.

    Their emphasis on total quality has meant that today they are in a position to guide

    vendors and dealers in establishing and consolidating their individual quality

    systems. This commitment to quality has ensured a consistently satisfying product

    and world-class sales and after-sales services.

    TS16949:2002 - A new feather was added recently in Marutis cap in the

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

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    associated functions (collectively termed as Press Function) got certification for

    conformance to the requirements of TS16949:2002 standard.

    The need for TS certification of Press Function had its genesis in the prestigious

    project that Maruti earned for the supply of stamped panels to General Motors India

    for one of its forthcoming models.

    As a part of Quality system requirements, GM requires all its suppliers to be

    certified to either ISO TS 16949 or QS 9000.

    These standards address Quality System requirements, which are particularly

    specific to the automotive industry and requires an organization to be in compliancewith ISO 9000 systems as a basic requirement. However, whereas QS 9000 would

    become defunct and cease to exist after Dec 2006, TS 16949 is going to be the

    standard of the future.

    The TS 16949 standard, brought out by ISO in the year 1999, is an extension of the

    ISO 9001:2000 standard that prescribes Quality management system requirements

    that are specifically applicable to the automotive industry.

    TS 16949 has gained high popularity and almost all major automobile players across

    the globe including GM, Ford, Daimler Chrysler, Nissan, Honda are embracing &

    promoting it.

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    ISO 9001:2000

    THEORITICAL PERSPECTIVE

    Marketing strategies:

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

    provided and a transactional exchange will take place.

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

    profitably'

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

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

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

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

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

    benefit provided the higher transactional value an organization can charge.

    Consumer is strictly, the ultimate consumer of a product, the ultimate user of a

    product; the person who derives the satisfaction or the benefit offered. The

    'consumer' is not necessarily the customer, since there are often 'customers' in the

    buying/ distribution chain; moreover, the consumer is frequently not the person who

    makes the buying decision; for instance, in the case of many household products,

    where the housewife may make the purchase but consumption or use is by the whole

    family. 'Consumer' is not normally applied to the purchase of industrial goods and

    services where the customer is usually a corporate body. Nevertheless, consumable

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

    can be identified for marketing practice.

    PRICING STRATEGIES:

    There are several different pricing strategies available to a business:

    Strategy Description

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

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

    Price skimmingSetting a high price before other competitors come into the

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

    Competitor pricing Setting a price based on competitors prices

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

    Psychologicalpricing

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

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

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

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

    pricing.

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

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

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

    Consumer behavior is the study of buying habits or patterns of behaviour of

    consuming public either in general or in specific groups.

    THE BUYING PROCESS

    The complexity inherent in understanding consumer behaviour has led to the

    construction of models of the buying process which indicate the stages

    through which the consumer passes from the time he or she first becomes

    aware of a need for a product or service to the time when a product is

    purchased, a brand selected, and the consumer evaluates the success of his

    purchase decides whether to buy that particular product and / or brand again.

    It the same time, such models usually indicate the social and psychological

    forces which shape the potential buyer's action at each stage in the process.

    The two principal aims of such model building are the prediction of future

    behavior based on measurement of relevant variable and the explanation of

    this behavior in terms of theoretically relevant constructs.

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

    shown below

    Marketing stimuli

    Otherstimuli

    Buyer'sCharacteris

    tics

    Buyer'sdecisionprocess

    Buyer'sdecisions

    Product

    Price

    Place

    Promotion

    Economic

    Technological

    Political

    Cultural

    Cultural

    Social

    Personal

    Psychological

    Problemrecognition

    Informationsearch

    Evaluationdecision

    Post-purchasebehavior

    Product choice

    Brand choice

    Dealer choice

    Purchase timing

    Purchaseamount

    Stages in Buying Decision Process

    Need

    recogniti

    on

    Informat

    ion

    search

    Evaluation

    of

    alternative

    s

    Purchas

    e

    decisio

    n

    Post-

    purchase

    behavior

    The consumer passes through five stages : Problem recognition information

    search, evaluation of alternatives purchase decision and post-purchase

    behavior. Clearly the buying process starts long before the actual purchase

    and has consequences long after the purchase.

    This model implies that consumers pass through all five stages in buying a

    product. But this is not the case, especially in low-involvement purchase.

    Consumers may skip or rreverse some stages. Thus a woman buying her

    regular brand of toothpaste goes directly from the need for toothpaste to the

    purchase decision, skipping information search and evaluation. However, we

    have already used the model in above, because it captures the full range of

    consideration that arise when a consumer facer a highly involving newpurchase. We will allude again to Linda Brown and try to understand how she

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    became interested in buying a laptop computer and the try to understand how

    she became interested in buying a laptop computer and stages she went

    through to make her final choice.

    MAJOR FACTORS INFLUENCING BUYING

    BEHAVIOR

    Cultural

    Social

    Culture

    Subculture

    Social Class

    Reference group

    Family

    Roles andstatuses

    Personal

    Age and life-cycle stage

    Occupation

    Economiccircumstances

    Lifestyle

    Personality andself-concept

    Psychological

    Motivation

    Perception

    Learning

    Beliefs andattitudes

    Buyer

    Rogers model for the adoption and diffusion of innovations Innovation

    Adoption CURVE

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    The innovation adoption curve ofRogers is a model that classifies adopters of innovations into

    various categories, based on the idea that certain individuals are inevitably more open to adaptation than

    others. Is is also referred to as Multi-Step Flow Theory orDiffusion of Innovations Theory.

    Innovators

    Brave people, puling the change. Innovators are very important communication.

    Early Adopters

    Respectable people, opinion leaders, try out new ideas, but in a careful way.

    Early Majority

    Thoughtful people, careful but accepting change more quickly than the average.

    Late Majority

    Skeptic people, will use new ideas or products only when the majority is using it.

    Laggards

    Traditional people, caring for the "old ways", are critical towards new ideas and will only accept it if the

    new idea has become mainstream or even tradition.

    The diffusion of innovations curve (innovation adoption curve) of Rogers is useful to remember that

    trying to quickly and massively convince the mass of a new controversial idea is useless. It makes more

    sense in these circumstances to start with convincing innovators and early adopters first. Also the

    categories and percentages can be used as a first draft to estimate target groups for communication

    purposes.

    Diffusion research focus was on five elements: 1) the characteristics of an

    innovation which may influence its adoption; 2) the decision-making process that

    occurs when individuals consider adopting a new idea, product or practice; 3) the

    characteristics of individuals that make them likely to adopt an innovation.

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    TARGET MARKETING

    Target Marketing involves breaking a market into segments and then concentrating

    your marketing efforts on one or a few key segments.

    The beauty of target marketing is that it makes the promotion, pricing and

    distribution of your products and/or services easier and more cost-effective. Target

    marketing is the selection of customers you wish to service. The decisions involved

    in it are

    Which segments to target

    How many products to offer

    Which products to offer in which segments

    There are three steps to targeting:

    Market segmentation

    Target choice

    Product positioning

    One of the first things you need to do is to refine your product or service so that you

    are NOT trying to be 'all things to all people.

    Next, you need to understand that people purchase products or services for three

    basic reasons:

    To satisfy basic needs.

    To solve problems.

    To make themselves feel good.

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

    market.

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    Target marketing is one of corporate America's most effective business strategies.

    The idea is to increase sales by first identifying, and then targeting smaller, yet more

    profitable customer groups within the total market.

    Four Ways to Identify Target Markets

    1. Geographic: The location, size of the area, density, and climate zone

    of your customers.

    2. Demographics: The age, gender, income, family composition and size,

    occupation, and education of your customers.

    3. Psychographics: The general personality, behavior, life-style, rate of

    use, repetition of need, benefits sought, and loyalty characteristics of

    your customers.

    4. Behaviors: The needs they seek to fulfill, the level of knowledge,

    information sources, attitude, use or response to a product of your

    customers.

    One of the best ways to identify your target market is to look at your existingcustomer base. Who are your ideal clients? What do they have in common? If you

    do not have an existing customer base, or if you are targeting a completely new

    audience, speculate on who they might be, based on their needs and the benefits they

    will receive. Investigate competitors or similar businesses in other markets to gain

    insight.

    TARGET MARKETING

    Who are your best customers? Where should you direct your marketing

    activities?

    Where and how should you allocate your advertising and promotional

    efforts?

    Target Marketing, provides Focus for your business. It helps to establish

    critical Operational goals and defines what must be done to achieve them

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    What Customers Want

    Marketing is more than an activity, it is an attitude Instead of trying to get customers to buy what the firm likes to make,

    or happens to have on hand, the marketing oriented firm tries to

    produce or sell what its customers want which can be sold at a profit.

    Do not simply throw out everything that you now have and replace goods or

    production machinery with completely new items.

    HOWEVER, AS YOU ANALYZE YOUR MARKET AND CUSTOMER

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

    REORIENT YOUR BUSINESS OVER TIME TO TAKE BEST

    ADVANTAGE OF THESE NEW INSIGHTS. CONSIDER BOTH THE

    SHORT TERM AND LONG-TERM IMPLICATIONS OF

    DEVELOPING AND IMPLEMENTING THE RIGHT TARGET

    MARKETING STRATEGY FOR YOUR BUSINESS.

    Customer Attitudes

    For a long time, people have believed that advertising can be used to change

    people's minds about what they want. This is an incredibly difficult process at

    best, and an extremely expensive one. Because of these two factors, it is a

    process that smaller firms simply cannot afford to pursue. Instead, it is much

    more productive for any size firm to tune in to target customer attitudes as they

    currently exist. Once they have identified the actual prevailing attitudes, they

    can begin to organize company resources needed to constructively address

    and satisfy these attitudes the key question is,

    "What are the existing customer attitudes?"

    With this as an objective, developing an understanding of existing customer

    attitudes becomes essential, and their identification becomes an important part

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    of the marketing process. Once these customer attitudes, needs or preferences

    are identified, the entire firm can then organize itself to satisfy these needs as

    completely and efficiently as possible.

    Target Marketing

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    Comparison of Automobile And ConsumerDurable

    At Dealership Level

    S.No Attributes Automobile Consumer Durables

    1 Turnover High Low

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

    3

    Penetration

    Level

    More in small or large

    towns or cities

    More in Rural areas

    or in cities also

    4

    Training ofSalesExecutives

    Executives get Trainingafter every specificperiod As such no training

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

    6DiscountMargin Cartel

    Depends on DealerTo Dealer

    7 CSR Proper well organized

    Only Sales man isthere to serve thecustomer

    8 ASSCustomer get 3freeservice

    Customer have to goat manufacturedlevel

    9BrandAssociation

    Customer first choice ismore pertinent

    Customer canchange his or herchoice

    10 Payment Instantaneous Payment

    More focus onFinance &Installment

    11Post-SalesFollow UP More Very Less

    12BuyingProcedure

    Customer can wait fornew model Instant buying

    13 Database Large Few

    14BrandTransition Single-Tier Multi-Tier

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    15 Advertisement

    Parent Company &dealer both giveadvertisement

    Only from ParentCompany

    16LoyalityPrograms Yes No

    17

    CustomerSatisfactionIndex

    Well- Defined &Organized None

    18 Promotion Free Service Camps None

    19CustomerRetention More Very Less

    20 Maintenance

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

    Annual MaintenanceContract (AMC)

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    MARUTI CULTURE

    Their employees are their greatest strength and asset. It is this underlying philosophy

    that has moulded their workforce into a team with common goals and objectives.

    Their Employee-Management relationship is therefore characterized by:

    Participative Management.

    Team work & Kaizen.

    Communication and information sharing.

    Open office culture for easy accessibility

    To implement this philosophy, they have taken several measures like a flat

    organizational structure. There are only three levels of responsibilities ranging from

    the Board Of Directors, Division Heads to Department Heads. Other visible features

    of this philosophy are an open office, common uniforms (at all levels), and a

    common canteen for all.

    This structure ensures better communication and speedy decision making processes.

    It also creates an environment that builds trust, transparency and a sense of

    belonging amongst employees.

    For Investors:

    Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan,

    has been the leader of the Indian car market for about two decades. Its

    manufacturing plant, located some 25 km south of New Delhi in Gurgaon, has an

    installed capacity of 3,50,000 units per annum, with a capability to produce about

    half a million vehicles.

    The company has a portfolio of 11 brands, including Maruti 800, Omni, premium

    small car Zen, international brands Alto and WagonR, off-roader Gypsy, mid size

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

    XL7.

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    In recent years, Maruti has made major strides towards its goal of becoming Suzuki

    Motor Corporation's R and D hub for Asia. It has introduced upgraded versions of

    WagonR Zen and Esteem, completely designed and styled in-house.

    Maruti's contribution as the engine of growth of the Indian auto industry, indeed its

    impact on the lifestyle and psyche of an entire generation of Indian middle class, is

    widely acknowledged. Its emotional connect with the customer continues.

    Maruti tops customer satisfaction again for sixth year in a row according to the J.D.

    Power Asia Pacific 2005 India Customer Satisfaction Index (CSI) Study.

    The company has also ranked highest in India Sales Satisfaction Study.

    The company's quality systems and practices have been rated as a "benchmark for

    the automotive industry world-wide" by A V Belgium, global auditors for

    International Organisation for Standardisation.

    In keeping with its leadership position, Maruti supports safe driving and traffic

    management through mass media messages and a state-of-the art driving training

    and research institute that it manages for the Delhi Government.

    The company's service businesses including sale and purchase of pre owned cars

    (TrueValue), lease and fleet management service for corporates (N2N), Maruti

    Insurance and Maruti Finance are now fully operational.. These initiatives, besides

    providing total mobility solutions to customers in a convenient and transparent

    manner, have helped improve economic viability of The company's dealerships.

    The company is listed on Bombay Stock Exchange and National Stock Exchange.

    MUL is a Board-managed company. Currently the directors on the Board are:

    Mr. Shinzo Nakanishi, Chairman

    Mr. Jagdish Khattar, Managing Director

    Mr. Hirofumi Nagao, Joint Managing Director

    Mr. Shinichi Takeuchi, Joint Managing Director

    Mr. Kinji Saito, Director (Marketing and Sales)

    Mr. Osamu Suzuki, Director

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    Mr. R C Bhargava, Director

    Mr. S V Bhave, Director

    Mr. Kumar Mangalam Birla, Director

    Mr. Amal Ganguli, Director

    Ms Pallavi Shroff, Director

    Mr. Manvinder Singh Banga, Director

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    OBJECTIVE OF THE COMPANY

    Marutis marketing objective is to continually offer the customer new

    products and services that:

    Reduce the customers cost of ownership of their cars; and

    anticipate and address the customers needs and preferences in all

    aspects and stages of car ownership, to provide what they refer to as

    the 360 degree customer experience.

    They sell ten models with more than 50 variants in segments A, B, C, and

    utility vehicle segment of the Indian passenger car market. Of these, they

    manufacture nine models and import the Grand Vitara as a completely built

    unit from Suzuki in Japan. Their models and variants are designed to address

    the changing demands of the market and are periodically upgraded in

    technology, styling and features. To take advantage of the brand recognition

    associated with their products, they retain the brand name of the product

    through various stages of product upgrades over time. For example, the

    version of the Maruti 800 brand currently sold in the market is a significantly

    upgraded version, in terms of technology, design and styling, of the Maruti

    800 launched in 1983.

    A Maruti 800

    A OMNI

    B Zen

    B Wagon R

    B Alto

    C Esteem

    C Baleno

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    C Versa

    C SWIFT

    Utility Vehicle GYPSY KING

    Utility Vehicle GRAND VITARA

    Sports Sedan KIZASHI

    BALENO

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    WAGON R

    RITZ

    38

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    MARUTI 800

    NEW ALTO

    39

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    OMNI

    SWIFT

    40

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    A STAR

    ZEN

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    KIZASHI

    RESEARCH METHODOLOGY

    The nature of the project work has been exploratory as no hypothesis, is

    taken to be tested. Though the conclusions drawn could be taken as the

    hypothesis and further tested by the research work undertaken in the

    relevant field. The reason for choosing the exploratory research design is

    the fact the project report has been primarily based upon the secondary

    sources of data and whose authenticity could be assured of.

    Following steps have been taken to obtain a correct result:

    1. Define research problem correctly

    2. Formulate hypothesis

    3. Develop research design

    4. Collect data

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    5. Analysis of data

    6. Interpret and report

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

    numerically inclined and was not based on primary data.

    Primary sources

    In order to gather information about the various products, I personally

    visited a number of retail markets and collected data pertaining to the

    prices of the products offered. The market visits were useful in knowing

    the comparative prices and quality of the offered brands vis--vis the

    competitive brands. Detail regarding the packaging of the products was

    collected.

    By interviewing these retailers valuable information was collected. I

    inquired from them about their marketing advertising and distribution

    strategies.

    Secondary sources

    Information was collected from secondary sources such as public libraries,

    newspapers, business magazines.

    Beside these the use of Internet was also made in collecting relevant

    information. The data collected from the above mentioned sources has been

    adequately structured and used at appropriate places in the report. This

    particular way of data collection was used because of its low cost (except

    data collected through surfing the internet) and less time consumption.

    The information gathered included:

    Their annual reports (Procter & Gamble and Johnson and Johnson).

    Pamphlets.

    Posters.

    Press clippings.

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    News releases.

    Newsletters.

    Pictures.

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    FINDINGS OF THE STUDY

    PRICES OF MARUTI PRODUCTS

    Car market leader Maruti Udyog Limited has announced a marginal increase in price

    of certain models.

    The price increase is due to rise in input costs and freight costs, which

    increased following the rise in oil prices. In this phase, the company has

    decided to pass on only a part of the increase in costs to the customers.

    Ex-Showroom Prices in Delhi (in Rs)

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    Omni

    Model /

    Vehicle

    T

    y

    pe

    Ex -

    Sho

    wroo

    m

    Pric

    e

    Ex -

    Sho

    wroo

    m

    Pric

    e

    (Wit

    h 3rd

    Year

    Ew)

    *

    Regis

    tratio

    n +

    SMA

    RT

    Card

    + No

    Plate

    Char

    ges

    MC

    D

    Par

    kin

    g

    Ch

    arg

    es

    Insu

    ranc

    e

    Han

    dlin

    g

    Cha

    rges

    B

    as

    ic

    Ki

    t

    A

    ut

    o

    C

    ar

    d

    On

    Ro

    ad

    Pri

    ce

    4th

    Year

    Exte

    nded

    War

    rant

    y

    Amo

    unt

    Omni 5Str

    224,737

    226,427

    9,7592,000

    7,504

    4,250

    1,640

    331

    251,911

    1,805

    Omni 5Str

    (M)

    227,052

    228,742

    9,8522,000

    7,572

    4,250

    1,640

    331

    254,387

    1,805

    Omni 8Str

    226,398

    228,088

    9,8262,000

    7,553

    4,250

    1,640

    331

    253,688

    1,805

    Omni 8Str

    (M)

    228,890

    230,580

    9,926 2,000

    7,626

    4,250

    1,640

    331

    256,353

    1,805

    OmniAmbulance

    259,553

    261,243

    11,152

    5,000

    4,250

    1,640

    331

    283,616

    1,805

    Alto

    Model

    /

    Vehicl

    e

    T

    yp

    e

    Ex -

    Sho

    wroo

    m

    Price

    Ex -

    Sho

    wroo

    m

    Price

    (Wit

    h 3rd

    Year

    Ew)*

    Registratio

    n +

    SMA

    RT

    Card

    + No

    Plate

    Char

    ges

    MC

    D

    Par

    kin

    g

    Ch

    arg

    es

    Insu

    ranc

    e

    Han

    dlin

    g

    Cha

    rges

    B

    as

    ic

    Ki

    t

    A

    ut

    o

    C

    ar

    d

    On

    Ro

    ad

    Pri

    ce

    4th

    Year

    Exte

    nded

    War

    ranty

    Amo

    unt

    AltoStd

    231,148

    232,938

    10,016

    2,000

    7,693

    4,250

    1,430

    331

    258,658

    2,400

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    ORGANISATION STRUCTURE AT MSIL

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

    levels.

    Head office

    MD

    MFG FIN OTHER

    DIRECTOR N CONTROLLER GM DGMS AGMS

    GM/ DGMS DGMS AGMS MGRS/AMS

    MGRS/AMS MGRS/AM SR GM/EX

    ENGINEERS(EX) SR. EX./EX

    TRAINEES

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    J.E. (TRAINEES)

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    THE PRODUCTION PROCESS AT MARUTI

    49

    STEEL COILS

    BLANKING

    PRESSING

    WELDING

    PAINTING

    ASSEMBLY

    VEHICLEINSPECTION

    TEST RUN

    SUPPLY &DISPATCH

    FROMVENDOR

    S

    FROMVENDORS

    FROMVENDOR

    S

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    INTERNATIONAL BUSINESS

    In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since its

    first export in 1986. Europe is the largest destination of Marutis exports and

    coincidentally after the first commercial shipment of 480 units to Hungary in 1987,

    the 300,00 mark was crossed by the shipment of 571 units to the same country. The

    top ten destinations of the cumulative exports have been Netherlands, Italy,

    Germany, Chile, U.K., Hungary, Nepal, Greece, France and Poland in that order.

    The Alto, which meets the Euro-3 norms, has been very popular in Europe where a

    landmark 200,000 vehicle were exported till March 2003. Even in the highly

    developed and competitive markets of Netherlands, UK, Germany, France and Italy

    Maruti vehicles have made a mark. Though the main market for the Maruti vehicles

    is Europe, where it is selling over 70% of its exported quantity, it is exporting in

    over 70 countries.

    Maruti has entered some unconventional markets like Angola, Benin, Djibouti,

    Ethiopia, Morocco, Uganda, Chile, Costa Rica and El Salvador. The Middle-East

    region has also opened up and is showing good potential for growth. Some markets

    in this region where Maruti is, are Saudi Arabia, Kuwait, Bahrain, Qatar and UAE.

    The markets outside of Europe that have large quantities, in the current year, are

    Algeria, Saudi Arabia, Srilanka and Bangladesh. Maruti exported more than 51,000

    vehicles in 2003-04 which was 59% higher than last year. In the financial year 2003-

    04 Maruti exports contributed to more than 10% of total Maruti sales.

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    51

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    MARUTI ALL INDIA SALES 3 YR TREND

    Segment 2003-04

    Growth

    2004-05 Growth

    2005-06

    Growth

    A1 (Mini - Hatchback) 167,561

    17% 116,262 -31% 89,223 -23%

    A2 (Compact - Hatchback) 176,132

    47% 271,280 54% 335,136 24%

    A3 (Mid Size) 14,173 28% 29,637 109% 31,939 8%

    A4/A5/A6(Exec./Prem./Luxury)

    NA NA NA NA NA NA

    C (Van Type) 59,526 15% 65,019 9% 66,366 2%

    Passenger Cars - MUL 417,392

    28% 482,198 16% 522,664

    8%

    Passenger Cars - TotalIndustry

    758,123

    26% 885,029 17% 948,669

    7%

    MUV (Utility Vehicles) 3,555 12% 5,204 46% 4,374 -16%

    Passenger Vehicles - MUL 420,947

    28% 487,402 16% 527,038

    8%

    Passenger Vehicles - TotalIndustry

    901,150

    24% 1,050,246

    17% 1,129,316

    8%

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    MARKET SHARE

    2005-06 Market Share-Segment A2

    TATA

    20%

    HYUNDAI

    21%MARUTI

    59%

    2005-06 Market Share-Segment A3

    TATA

    20%

    FORD

    14%

    GM

    6%HONDA

    20%

    OTHERS

    7%

    MARUTI

    17%

    HYUNDAI

    16%

    2005-06 Market Share-Passenger Cars

    TOYOTA

    1%

    OTHERS

    3%

    FORD

    3%

    GM

    1%

    HONDA

    4%

    TATA

    16%

    MARUTI

    55%

    HYUNDAI

    17%

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    COMPETITION MODELS

    SEGMENTMaruti Competition

    A1 (Mini -Hatchback)

    M800

    A2 (Compact -Hatchback)

    Zen, WagonR,Alto, Swift

    Hyundai - Santro & Getz; Tata -Indica & Palio; GM - Corsa Sail

    A3 (Mid Size) Esteem,Baleno

    Hyundai - Accent; Tata - Indigo &Petra; Honda - City; GM - Corsa,

    Optra, & Aveo; Ford - Ikon,Fusion, & Fiesta

    A4/A5/A6

    (Exec./Prem./Luxury)

    Hyundai - Elantra & Sonata;

    Honda - Accord; GM - Vectra; Ford- Mondeo; Skoda - Octavia &

    Superb; Toyota - Corolla & Camry;Daimler Chrysler - C,E, & S Class;

    C (Van Type) Omni, VersaMUV (Utility

    Vehicles)Gypsy, Grand

    VitaraMitsubishi - Pajero; Hyundai -Terracan & Tucson; Ford -Endeavor; Toyota - Prado &

    Innova; Nissan - X Trail; Honda -CRV; GM - Forrester & Tavera;

    Tata - Sumo & Safari; Mahindra -Jeeps, Scorpio, & Bolero

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    -

    COMPETITIVE STRENGTHS

    MUL believes that they are well positioned to maintain and enhance their leadership

    position in the small car segment in India, while continuing to offer products in most

    segments of the Indian market, on account of their competitive strengths, which

    include the following:

    Expertise in small car technology: As a subsidiary of Suzuki, they have

    access to globally respected technology in the small car segment. They have

    the advantage of Suzukis expertise in all aspects of small car technology and

    design, with respect to their products, their manufacturing processes and

    business practices, the development of their supply chain and the training of

    their personnel.

    Extensive product portfolio: Their diverse product range includes cars in

    segments A, B and C, and utility vehicles. They manufactured five out of the

    ten models that were sold in the combined A and B segments in India in fiscal

    2002. They are the only manufacturer of cars in segment A (priced below

    Rs.300,000) where they have two models, the Maruti 800 and the Omni. The

    Maruti 800 has been the largest selling car in India for several years, and

    continued to have the highest sales volumes of any model, with a market share

    of 25.3%. The Omni, a versatile vehicle that can seat more passengers than

    the Maruti 800 or be used as an ambulance or cargo vehicle, had a market

    share of 10.5% in fiscal 2002. They are also the only manufacturer to sell

    three distinct models, the Zen, the Alto and the Wagon R, in segment B

    (priced between Rs.300,000 and Rs.500,000). They believe that

    theirdominance in segment A and extensive product range in segment B

    enables us to offer the customer a wider choice in the small car segment than

    any of their competitors. In addition, the absence of other manufacturers in

    segments A gives their dealers greater flexibility in promoting models in

    segment B.

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    Quality products: In November 2001, they were one of the first automobile

    manufacturers in the world to receive the ISO 9001:2000 certification. They

    began to export products in 1988, primarily in order to benchmark our

    products against international quality standards. They have exported products

    to approximately 70 countries, including countries in Western Europe. Their

    products for export are manufactured using the same assembly line as our

    products for the domestic market.

    Extensive sales and service network: They believe that they have the largest

    network of dealers and service centers amongst car manufacturers in India. As

    of March 31, 2003, we had 178 authorized dealers with 243 sales outlets in

    161 cities. They estimate their car parc to be in excess of 3.5 million vehicles.

    To service this car parc, at March 31, 2003, they had 342 dealer workshops

    and 1,545 Maruti Authorized Service Stations, or MASSs, which covered 898

    cities in India backed by Express Service Centers on 30 highways across the

    country. In addition to the distribution of their cars, their dealership network

    is a critical resource in our efforts to provide customers with a one-stop

    shop for automobiles and automobile related products and services such as

    automobile finance, automobile insurance, Maruti-certified pre-owned cars

    available for purchase, and leasing and fleet management, in order to promote

    customer loyalty.

    Brand strength: They have been present in the Indian market for almost

    twenty years and have built their brand on the basis of the values of trust and

    reliability. Most of their principal competitors have been present in the Indian

    passenger car market for a significantly shorter period. Certain manufacturers

    have ceased to manufacture certain products shortly after introducing them, or

    have left the market altogether. In contrast, they continue to support the

    maintenance of their products. This has contributed to the strength of their

    brand. In 2000, 2001 and 2002, J. D. Power Asia Pacific, Inc. ranked us No. 1

    in the India Customer Satisfaction Index, which assesses customer satisfaction

    with product quality and dealer service. They believe that this was the first

    time that a volume leader in the automobile industry anywhere in the world

    was ranked first on the JD Power Customer Satisfaction Index. NFO

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    Automotives 2002 Total Customer Satisfaction Survey ranked Maruti

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

    Midsize segments respectively, for 2002.

    Integrated manufacturing facility: Their manufacturing facility comprises

    three integrated plants with flexible assembly lines located at Gurgaon in the

    northern state of Haryana. Their facility has advanced engineering capability

    and each plant is upgraded on an ongoing basis to improve productivity and

    quality. As a result, their first plant set up in fiscal 1984 is technologically at

    par with their newer plants and is also used in the production of their new

    models. They believe that they are one of the most efficient among the vehicle

    manufacturing facilities of Suzukis subsidiaries outside Japan in terms of

    productivity measured as the ratio of number of vehicles produced to number

    of employees. They have an installed capacity of 350,000 vehicles per year,

    which is the highest among passenger car manufacturers in India and among

    the passenger car manufacturing facilities of Suzukis subsidiaries outside

    Japan. They have consistently produced in excess of their installed capacity in

    the five fiscal years ended March 31, 002.

    They believe that they would be able to expand their production to 500,000

    cars per year with minimal additional capital expenditure. This would enable

    them to benefit from significant economies of scale.

    Strong vendor base and higher rates of localization: They work closely

    with their vendor base for the supply of raw materials, components and spare

    parts of their products. In order to improve quality and generate economies of

    scale, they have reduced the number of their vendors of components in India

    from 370 as of March 31, 2000 to 299 as of March 31, 2003, and intend to

    continue to reduce the number of our vendors. 113 of their vendors at March

    31, 2003 were in technical collaboration with foreign entities. As of the same

    date, we had strategic equity interests through joint venture agreements in 13

    of their vendors, who together supply a substantial portion of their purchases

    of components. A number of their vendors are their dedicated suppliers in that

    they account for a majority of their turnover. Vendors located within a radius

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    of 100 kilometers from their facility supply the majority of their components.

    The production systems of their vendors are generally aligned to their need

    for a reliable and timely supply of components that meet their quality

    requirements. This has enabled them to increase the proportion of locally

    sourced, lower cost components in their models, a concept they refer to as

    localisation. They have been able, in collaboration with their vendors, to

    increase the rate at which they are able to localise production of their new

    models over time. This has helped them reduce the cost of their components.

    Skilled labour and experienced management: Thei highly skilled labour force

    has become increasingly productive in terms of vehicles produced per

    employee and receives training on an ongoing basis, including training by

    Suzuki. As of March 31, 2003, 1,900 of their employees had been trained at

    Suzukis facilities in Japan. They have been present in the Indian passenger

    car market for a significantly longer period than most of their principal

    competitors. As a result, they have been able to build a highly experienced

    management team that is familiar with conditions in the Indian passenger car

    market. For instance, their managing director has almost ten years of

    experience with them, and most of the heads of their divisions have more than

    15 years of experience with them.

    Capital resources: They have cash and bank balances and current investments

    amounting to Rs.9,992 million. As of the same date, they had relatively low

    levels of outstanding indebtedness, in the amount of Rs.4,555 million. As a

    result, they have relatively low interest expense and flexibility to raise funds,

    if necessary, for their working capital and capital expenditure in the future.

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    BUSINESS STRATEGY

    They intend to continue to focus on the small car segment, while offering

    products in most segments of the Indian passenger car market. They aim to

    achieve their principal objectives by pursuing the following business

    strategies:

    Maintain and enhance their product range: They intend to utilize Suzukis

    expertise in small car technology to produce new variants of their existing

    models and to upgrade their products with contemporary technology and

    features.

    Increase reach and penetration: They plan to continue to utilize their

    extensive sales and service network to increase the reach, in terms of

    geographical spread, and penetration, in terms of sales volumes, of their

    products across India.

    Increased availability of automobile finance: They continue to seek

    opportunities to expand the size of the Indian passenger car market, especially

    in the small car segment, through facilitating easy availability of automobile

    finance. To that end, they have recently entered into an agreement with the

    State Bank of India.

    Secure repeat purchases by offering a 360 degree customer experience:

    On the basis of their belief that securing repeat purchases from an existing

    customer requires less expenditure than acquiring a new customer, they aim to

    provide customers with a one-stop shop for automobiles and automobile-

    related products and services.

    Continue to benchmark their manufacturing capabilities: They plan to

    continue to benchmark our manufacturing capabilities with the most efficient

    car manufacturing facilities of Suzuki and its subsidiaries.

    Continue to reduce costs to offer more competitive products:

    Cost competitiveness has been, and continues to be, central to their strategy as

    the leading manufacturer in the small car segment to expand the size of the

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    market by offering competitively priced, high quality products. The

    components of this strategy are:

    Higher levels of localization

    Vendor participation in cost reduction

    Cost reduction on warranties

    Reduction in initial investment cost

    Reduction in number of vehicle platforms

    Achieve further cost reduction through higher productivity

    Lower cost of ownership:

    Through their business strategies, they seek to reduce the consumers cost of

    ownership of their cars, which comprises the cost of purchase, the cost of fuel

    and maintenance, including spare parts and repairs, during the life of the

    vehicle, insurance, and resale value.

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    SALES NETWORK

    Dealers: They offer their products to the customer through a network of 178

    authorized dealers with 243 sales outlets across 161 cities. They believe that

    this is the largest network of dealers amongst car manufacturers in India.

    Their dealers employed more than 3,500 sales executives. They are linked to

    their sales network through their secure extranet-based information network.

    The sales of their spares, accessories and automobile-related services such as

    insurance and finance serve as additional sources of revenue for our dealers.

    They believe that the availability of these related products and services at

    sales outlets also helps to attract customers to the outlets and promotes sales

    of their cars.

    Agreements with dealers: They generally appoint a limited number of dealers

    for a certain geographical territory. Their dealers provide services to

    customers such as pre-delivery inspection of vehicles, sales of cars, after sales

    service, supply of spare parts and other services that promote sales of cars

    within the territory for which they are appointed. They have the right to sell

    their products and services through other dealers or intermediaries in any

    territory, whether or not one of their dealers is already established in that

    territory. Their dealers are required to maintain their outlets in accordance

    with their specifications and employ well-trained sales staff.

    Their agreements with their dealers usually have terms of five years. These

    agreements are generally renewable for successive terms of three years, by

    mutual agreement. The agreements typically permit termination by either the

    dealer or them with six months prior notice.

    Enhancing dealer performance: Their central office in Delhi, their regional

    offices and their area offices monitor and assist their dealer network. They

    have nine regional offices, five area offices and 187 sales and marketing

    personnel. They follow the performance of their dealers and frequently

    suggest improvements. In order to assist their dealers in enhancing their

    performance and capabilities, they have introduced a concept of Balanced

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    Scorecard. Using this tool, they seek to measure the performance of a

    dealership in several areas of operations, including sales, service, spares and

    accessories, financial management and management systems. They reward

    dealers who perform well on the Balanced Scorecard with a cash payment at

    the end of the fiscal year. They believe that the Balanced Scorecard serves

    as an effective incentive for dealers to enhance their performance.

    Dealer training: They have established standard operating procedures,

    showroom ambience and service quality standards for dealerships. They

    provide periodic training through their training centres located at their

    manufacturing facility and at Chennai, Kolkata, Guwahati and Pune. They

    have trained more than 2,600 and 3,400 dealer sales personnel. Their

    subsidiary, True Value Solutions Ltd., provides value-added services, such as

    manpower recruitment and training, to their dealers.

    AFTER-SALES SERVICE

    Network

    As on date there are 342 Maruti dealer workshops and 1,545 Maruti

    Authorised Service Stations, or MASSs, covering 898 cities in India. In

    addition, 24-hour mobile service is offered in 38 cities under the brand

    Maruti On-road Service. They intend to extend this service to an additional

    25 cities over the next three years. As a benchmark for dealers with respect to

    service quality and infrastructure facilities, they have launched service

    stations under the brand Maruti Service Masters, or MSMs, in three locations

    in India. They have service stations on 30 highways in India under the brand

    Express Service Stations.

    To promote sales of their spare parts and the availability of high quality,

    reliable spare parts for their products, they sell spares under the brand name

    Maruti Genuine Parts, or MGP. These are distributed through their dealer

    network and through authorised sellers of their spare parts, to whom they

    refer as stockists.

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    Many of their MASSs are at remote locations where they do not have dealers.

    In order to increase the penetration, in terms of sales volumes, of their

    products in these remote areas, they are exploring opportunities to integrate

    some of the MASSs into the sales process in order to increase sales of their

    cars and related products and services such as spares and accessories,

    insurance and financing.

    Genuine Accessories

    They have also entered the business of marketing car accessories under the

    brand name Maruti Genuine Accessories, or MGA, through their dealership

    network. They seek to provide customers with the opportunity to customize

    their vehicles with accessories such as music systems, security systems, car-

    care products and utility products.

    Warranty and Extended Warranty Program

    They offer a two-year warranty on all their vehicles at the time of sale. Their

    dealers are required to address any claim made by a customer, in accordance

    with practices and procedures prescribed by them, under the provisions of thewarranty in force at that time. The dealers subsequently claim the warranty

    cost from them. They analyse warranty claims from dealers and either claim

    the cost from vendors, in the case of defective components, or bear the cost

    ourselves, in the case of manufacturing defects.

    They offer an extended paid-warranty program marketed under the brand,

    Forever Yours for the third and fourth year after purchase. They have

    entered into arrangements with insurance companies to cover the costs of

    warranties offered under this program. The extended warranty program is

    intended to maintain the dealers contact with the customer and increase the

    revenue generated from sale of spares, accessories and automobile-related

    services. An effort is made during the period of the extended warranty to

    encourage the customer to exchange his existing Maruti car for a new Maruti

    car, or upgrade to a new Maruti car.

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    NEW BUSINESS INITIATIVES

    As the largest manufacturer and leader in the small car segment, they continually

    seek new ways to utilize their vast car parc, range of products and extensive sales

    and service network to expand the size of the passenger car market in India. They

    have recently launched new initiatives to develop the market for automobile

    insurance, automobile finance, leasing and fleet management, and pre-owned cars.

    They aim to provide customers with a one-stop shop for automobiles and

    automobile-related products and services, and build on their wide customer base and

    extensive sales and service network to make available to their customers a wide

    range of Maruti-branded services at different stages of ownership, which they refer

    to as the 360 degree customer experience.

    Atithi Devo Bhava: One-stop shop

    Inspired by the spirit of India. Atithi Devo Bhava, in Sanskirit, means a guest is

    like God. It captures the Indian tradition of honouring guests. It's also the

    inspiration for the welcome youll receive at a Maruti Suzuki dealership, and the

    caring relationship they share with those who drive their cars. At Maruti Suzuki, you

    will find all your car related needs met under one roof. Whether it is easy finance,

    insurance, fleet management. services, exchange Maruti Suzuki is set to provide a

    single window solution for all your car related needs.

    That's why they have Maruti True Value, the best place to buy and sell

    reliable used cars. Maruti Finance an agglomeration of the biggest finance

    companies in India brought together by Maruti Suzuki to ensure that thedream car is within everyone's reach. Similarly, Maruti Insurance brings

    together some of the biggest names in the car insurance industry to provide

    insurance solutions to every type of car consumer. Then, finally, there is N2N,

    which offers fleet related solutions.

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    THE PLAYERS IN THE INDIAN AUTOMOBILE INDUSTRY

    Hyundai Motor India Ltd

    Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai

    Motor Company, South Korea and is the second largest and the fastest growing car

    manufacturer in India. HMIL presently markets 31 variants of passenger cars in six

    segments. The Santro in the B segment, Getz in the B+ segment, the Accent in the C

    segment, the Elantra in the D segment, the Sonata Embera in the E segment and the

    Tucson and Terracan in the SUV segment.

    The company recorded combined sales of 252,851 during calendar year 2005 with a

    growth of 17.26% over year 2004. HMIL is India's fastest growing car company

    having rolled-out over 970,000 cars in just over 80 months since its inception and is

    the largest exporter of passenger cars with exports of over Rs. 1,800 crores. HMIL

    has recorded a growth of 27.2% in exports over the year 2004.

    HMILs fully integrated state-of-the-art manufacturing plant near Chennai boasts

    some of the most advanced production, quality and testing capabilities in the

    country. In continuation of its investment in providing the Indian customer global

    technology, HMIL has announced plans for its second plant, which will produce

    300,000 units per annum, raising HMILs total production capacity to 600,000 per

    annum by 2007. The plant will be built on a 2.1 million square meter site adjacent to

    the existing facility .HMIL is investing to expand capacity in line with its

    positioning as HMCs global export hub for compact cars. Apart from expansion of

    production capacity, HMIL plans to expand its dealer network, which will be

    increased from 157 to 200 this year. And with the companys greater focus on the

    quality of its after-sales service, HMILs service network will be expanded to over

    1,000 in 2006.

    The year 2005 has been a significant year for Hyundai Motor India. It achieved a

    significant milestone by rolling out the fastest 200,000th export car. HMIL

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    exports to around 60 countries globally and recently made a foray into the highly

    competitive UK market by exporting its first shipment of 820 cars.

    Propelled by the strong performance in year 2005, Hyundai Motor India is on the

    threshold of yet another grand milestone of rolling out its One millionth car which

    is expected soon.

    Tata Motors

    Tata Motors is one of the largest companies in the Tata Group with a total

    income of US$ 2.35 billion. More than 3 million Tata vehicles ply on Indian

    roads making Tata a dominant force in the Indian automobile industry.

    Tata Motors is India's only fully integrated automobile manufacturer with a

    portfolio that covers trucks, buses, utility vehicles and passenger cars. It

    would be no exaggeration to say that Tata Motors provides the wheels for

    India's growth.

    Tata Motors has the unique distinction of giving India its first and only indigenously

    built passenger car - The Tata Indica and the premium feature sedan - The Tata

    Indigo. The Indica, launched in 1998, reached the 2,50,000 sales mark within 52

    months of launch.

    Tata Motors owes its leading position in the Indian automobile industry to its strong

    focus on indigenisation. This focus has driven the Company to set up world-class

    manufacturing units with state-of-the-art technology. Every stage of product

    evolution-design, development, manufacturing, assembly and quality control, is

    carried out meticulously. Their manufacturing plants are situated at Jamshedpur in

    the East, Pune in the West and Lucknow in the North.

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    Ford India Limited

    The Ford Motor Company has a rich legacy of translating better motoring ideas tothe roads. It has manufactured notable brands such as the Ford, Lincoln, Mercury

    and the Jaguar. It is among the top five industrial corporations in the world and is

    available in more than 200 countries around the world.

    Ford has entered the Indian market through a tie - up with Mahindra Motors to

    manufacture the Ford Escort. A project that has been set up with a investment of

    Rs.1700 crore. Ford India Limited is a subsidiary of Ford Motor Company, currently

    Ford has a 78% stake, which is going up to 92% soon. The Maraimalai Nagar Plant

    of Ford India Limited, located roughly 45k.m.from Chennai, provides employment

    to over 20000 people.The plant has the capacity to manufacture 1,00,000 vehicles

    per annum, equipped with state-of-the-art vehicle manufacturing technology from

    Ford.

    Presently offering seven different models, Ford India Limited (FIL) is catching up

    fast with the Indian consumer. This is secured through a quality check program

    based on the principles of NOVA - C (New Overall Vehicle Audit - Customer)

    wherein daily random checks are conducted from a customer's point of view. To be

    doubly sure, routine calls are made to dealerships to check the quality of cars

    delivered to them.

    At Mahindra's dealerships are present trained professionals who provide the

    best levels of service in India. Its intensive manpower training, advanced

    service equipment and dedicated consumer satisfaction are the are its pluspoints which is being followed by the entire industry.

    Acknowledgement has come in the form of the J D power 1997 India Initial Quality

    and Customer Satisfaction Awards. These internationally acclaimed and recognized

    awards voted the Ford Escort as the Best Quality car and the Mahindra Ford and its

    dealerships were rated the highest in Customer Satisfaction. This is an honour as it

    its only the second time in automotive history that the same brand/manufacturer has

    received both the awards in the same year.

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    General Motors India

    General Motors India, incorporated in 1994 as a 50-50 joint venture company withthe C.K. Birla Group of Companies, became a fully owned subsidiary of GM in

    1999 when GMOC bought the remaining shares. The company was restructured in

    1999 and was converted from a Public Limited company to a Private Limited

    company. GM APH LLC currently holds 86 percent of voting shares, and Holden

    (Australia) holds 14 percent. The SPO business was integrated with the main

    business in the same company in 2000.

    In India, GM strengthened its presence with new product launches Chevrolet Optra

    in 2003 and Chevrolet Tavera (Multi Utility Vehicle) in 2004. Similarly in 2004,

    GM India is expected to register a growth of 90% over 2003. With sales volume

    going up, the market share of GM India has gone to nearly 2%. The sales volume in

    2003 was 15,155 units while 2004 figure is expected to be around 27,000 units. In

    2004, the company sold a total of 26,166 cars as against 15,155 cars in 2003

    registering a growth of 73% while overall passenger car growth during the year was

    only around 23-24%. These included 9191 Chevy Optras in Entry 'D' Luxury sedan

    segment, 8369 Opel Corsas and 8417 units of the new generation premium multi-

    utility vehicle (MUV) Chevrolet Tavera.

    The existing GM India plant was originally built by Hindustan Motors. In 1994, GM

    India entered into a 50% Joint Venture partnership with Hindustan Motors and

    modernized the 45,000-square-meter plant near Halol, 45 kilometers northwest of

    Vadodara, in the western state of Gujarat. In February, 1999, GM bought theholdings of Hindutan Motors and GM India became a 100% subsidiary of General

    Motors Corporation of USA. The plant produces the Opel Corsa, Corsa Sail,

    Chevrolet Optra, and Chevrolet Tavera. The Chevrolet Forester and Opel Vectra are

    sold as CBUs (Completely Built in Units) and as imported from Japan and Germany

    respectively.

    Toyota Motor Corporation is the third largest automaker in the world. They

    have 34 dealers in India and in Delhi they have 2 dealers, first one is South

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    Delhi Toyota and second one is in Moti Nagar in which I have visited during

    my survey. Dealer in Moti Nagar which is Galaxy Toyota have

    predetermined mission that-Customer comes first and everything they do is to

    meet their customer needs, basically they work for creating a lifetime

    customer.

    They work by dividing their work like in one showroom they have separate

    teams for every product like relating to Corolla it comprises of 7 or 8

    executives who handle all the work weather it is of sale or any enquiry or

    telemarketing call that team must have some specific target to achieve. They

    reach to the customers either by distributing Leaflets, Brochures to the

    customers. They collect customer database from Directory (Yellow Pages) or

    through customer references even they solve customers query online and give

    information through e-mails. Recently they organized one drawing

    competition between the kids of their existing customers just to interact with

    the customer and build loyalty of their company products. They judge their

    customer satisfaction by analyzing that repeat buyers are more or not &

    moreover they have customer feedback form in which they can analyze

    customers background and can forecast customer future demands. They target

    only high profile customers.

    They build customer loyalty by giving happy calls to the customer after sale

    of every 1,3,7 month. They provide Periodic maintenance schedule, which

    will ensure that vehicle, is kept in best able-bodied at all times. The

    maintenance schedule may include periodic inspection, adjustment andlubrication that will keep vehicle in the safest and most efficient condition,

    they provide one booklet in which they give simple and useful tips for

    maintenance of the car. They offer good schemes like providing free Test

    Drive worth Rs 250 petrol at the time of sale of any car. They do road shows

    to attract customers. To promote their product they organize exchange mela,

    events, various cash discounts like currently they are running one discount

    scheme on pur