maruti suzuki final
Post on 27-Oct-2015
Embed Size (px)
Pavan Subhash Tirumalasetti
Indian Institute of Management Raipur
Maruti Suzuki is a subsidiary company of Japanese automaker Suzuki Motor Corporation. Initially it
was called as Maruti Udyog Limited (MUL), which was established in Feb 1981 through the act of
parliament. The main objective behind its inception was to meet the growing demand of personal
means of transport caused due to the lack of efficient public transport system.
It has a market share of 44.9% in passenger car market as of March 2011. Maruti Suzuki offers a
complete range of car starting from Entry Level, Hatchbacks to sedans and Sport Utility vehicles
(SUV). It was the first company in India to mass-produce and sell more than a million cars, In
February, 2012 it sold 10th
million vehicle in India.
Maruti Suzuki has two manufacturing facilities in India: Gurgoan and Manesar. Both
manufacturing facilities combined have an production capacity of 14,50,000 vehicles annually.
During a recent meeting with Narendra Modi, Gujarat Chief Minister, The chairman of Suzuki Motor
Corporation said that the work to establish a manufacturing unit in Gujarat would be started soon.
Maruti Suzuki has 933 dealerships across 669 towns and cities in India. It has 2,946 service stations
in 1,395 towns throughout India. It has 30 Express Service Stations on 30 National Highways across
1,314 cities in India. Major revenue comes from these service stations; Other Automaker giants in
India were unable to reach this benchmark setup by Maruti Suzuki.
Maruti Suzuki launched its first car Maruti800 on December 18, 1983, followed by other models like
Gypsy etc. MUL became a market leader holding a major market share. But, it depended mainly on
Maruti800, So in late 1990s new global players like Daewoo Matiz, Hyundai Santro entered the
market with more space and comfort, at same price, then market lost a major share of the market. To
gain back its market share Maruti launched models like Zen, Alto, WagonR. These models gained
ahuge response from consumers. Maruti Launched Alto800 in October, 2012 which is receiving
tremendous response from the market. Its Core Competencies are Post sale service, Mileage, Maruti
Insurance, Maruti Finance.
Companys Product Portfolio:
The company offers a portfolio of 14 brands, ranging from the peoples car, Maruti800, to the luxury
sedan, Kizashi. It must be thinking to restructure its product portfolio in the Indian market in the
current circumstances of dip in market share because of foreign players like Honda, Volkswagen,
Skoda entered into small car segment with Brio, Polo, Fabia respectively .
With the current growth in Indian economy and increased exposure to global market, consumer are
very conscious about reliability, post sale service, mileage, style, comfort, price as well. They are
expecting a mode of transport which satisfies all the above stated features in an affordable price
range. Since, Maruti Suzuki has positioned itself as a company that offers a Total Value Proposition
(TVP) to its customers. So, it is going to be challenging for Maruti Suzuki to manage its very old
brand name peoples car (affordable price and maintenance) by offering attractive models like its
Maruti Suzuki Portfolio
Kizashi (A4 4501 4700mm) Ertiga (Life Utility Vehicle) Grand Vitara (Multi Utiity Vehicle)
Gypsy (Multi Utility Vehicle) Omni (Multi Purpose Vehicle) Eeco (Multi Purpose Vehicle)
From the above set of products we can see that Maruti800 as the Traffic Master, Grand vitara as the
Prestige Builder. A-star aspires to become the Flagship Product of Maruti Suzuki after Alto and
WagonR. In 1990 Maruti Suzuki Introduced Maruti1000, Maruti Esteem an upgraded version to
Maruti1000 was launched in 1994. Maruti1000 is in production till 2000, but later it was taken out of
market due to sales. Esteem was in market till 2007 later it was replaced by Swift DZire. Due to the
launch of Esteem, Maruti1000 lost its market share this can be termed as Product Cannibalisation.
Maruti-Suzuki's launch of Suzuki Alto in the same sub-category as Maruti 800, which was the leader
of the small-car segment to counter the competition from Hyundai is seen to be a classic case of
cannibalization strategy. In the year 2000 Maruti Suzuki launched Alto. This product price was
between Maruti 800 and Maruti Zen. Here company was trying to fill the gap existed in the segment
by introducing ALTO i.e. line filling. Subsequently, company had deleted some of its failure
products, Line Deletion, and launched them with some upgrades. Maruti Suzukis leadership in small
car segment is undisputable, but company has failed to grab high end (i.e. price range above 5 lakhs)
market. For example, Maruti so far launched sedans like Baleno, DZire, SX4, Kizashi above that
price range, among them only DZire became successful. This clearly shows that Maruti has been
perceived as small car manufacturer only.
The Ansoff Matrix of Maruti Suzuki is as follows:
From the above matrix we can see that Maruti has offered new products like Maruti True value,
Maruti Finance, Maruti Insurance etc. to its existing markets. These services are offered to only
Maruti cars, where Maruti competitors literally failed to implement and follow. In addition, Maruti
exporting its passenger cars to many developing countries like Latin America and Asia, Maruti800
which was so popular in Indian market is no longer as it used to be. But, this small car is now
attracting African markets. In 2012 over 4,600 units were shipped to Algeria alone. It has started
shipping out sedan DZire to Africa. Apart from the Maruti 800, it also sells small cars such as the
Alto, the Alto K10 and the A-Star there. Large markets in the continent are Algeria, Angola,
Mozambique, Nigeria and Egypt. The company has a similar story to tell of Latin America, where it
has grown sales fourfold to 21,000 units over the past four years. Unfortunately or fortunately Maruti
Suzuki restrained from experimenting new products.
Indonesia, and Algeria.
Existing Products New Products
BCG Matrix of Maruti Suzuki can be shown as follows:
STAR: These products have large market share as well as high market growth; the company has high
growth rate and profitability. Company earns large revenue from these products.
Question Mark: Products in this category has high growth but low market share. Company needs to
put some effort to convert these into STAR category products; they have potential to become
Cash Cows: Products in this category has high market share but without any further growth. So,
company needs to invest revenues earned, from Cash Cows, into question mark category.
Dogs: These products have neither of them. So, it is better to liquidate those products. The market
strategy for this particular type is harvest, divest and drop.
M A R K E T S H A R E
DZire, Swift, Estilo ? SX4, Vitara, Kizashi
Alto, 800, WagonR
Baleno, Maruti 1000,
Pricing and STP:
Maruti Suzuki has 16 products in its current portfolio. Following table shows the price ranges of
each product. We can observe that Maruti has offered most of its products in the price range of
21,00,000 to 5,50,000 Rs.( Lowest Price ), Whereas, Maruti has very few products above the price of
1 Million Rupees.
Model Lowest Price(Rs) Highest Price(Rs)
Maruti800 217760.32 242884.58
Alto800 282914.67 366907.75
Estilo 359539.61 445425.29
A-Star 393461.49 476395.97
Omni 235546.17 273445.22
Gypsy 571032.82 624125.32
Eeco 324362.81 422888.60
Grand Vitara 2394953.00 2594757.00
Alto K10 327606.99 344365.78
Ritz 445948.04 646300.41
WagnoR 369767.41 455360.71
Swift 463718.70 704028.94
SX4 750079.14 982356.71
DZire 497464.71 752948.70
Ertiga 624722.24 904186.50
Kizashi 1699171.00 1800758.00
Maruti Suzuki offers EMI facility for many its products, even for Alto800. It offers exclusive
discount rates to customers during festival period and particular group of customers like government
employees. To promote its bottom line growth Maruti has launched Maruti Finance in 2002. Prior to
start off own finance, Maruti has two joint venture with Citigroup and GE. In addition, it has tied up
with many banks like ABN Amro, HDFC Bank, ICICI Limited, Kotak Mahindra Bank etc. Again
the company entered into a strategic partnership with SBI in March 2003. Since March 2003, Maruti