Launch of VERSA

Whether the glass is half empty or half full, All depends on the attitude of the thinker. The most adverse market conditions that can ever happen. On going recession, further worsened by a battery of products offered by other manufacturers who are not only fierce competitors but also have reputation of being giants in world automobile arena. For any manufacturers this could be an ideal situation to consolidate its resources and to wait patiently till the worst is over. But this is what makes the leaders different. MUL saw an opportunity in this situation. It was the time to take lead innovate and offer a product which is not only unique but also offers all together new and totally untapped concept of MPV in the Indian market. It was the time chosen by MUL not only to launch a new model but also to carve out a new segment in Indian Automobile market, now know as MPV. It was VERSA. The 1300 cc MPFI. 7/8 seater urban car with a strong heart delivering 82 Horses at peak. Equipped with single/twin AC systems Y unique space management system. Here we need to analyze the entire sequence of events pertaining to launch of VERSA by MUL in the light of Marketing Concepts. Product Development Strategy The market research led to the conclusion that Maruti stable is full of products nearly competing with each other for a price difference of RS. 30000. While other manufacturers were busy launching, promoting & sustaining slumped sale of C&D segment luxury sedans with below cost price tags, MUL opted for something which was innovative, creative & totally new concept of MPV. The product chosen for launch was absolutely new to Indian market, be it the features, styling, comfort, space management system or engine positioning. The basic idea was to introduce some thing for medium/big size urban and sub-urban joint families, which usually spill out the currently available Cars with seating capacity of 4 to 5 persons. It was also well thought strategy to keep it distinct from MUVs like SUMO, QUALIS etc, which are largely caters to commercial taxi segment. The Target Segment: The upper middle class large/joint families were the principal target segment. Their needs were very different from nuclear families. They want to remain together move together, share the joy & sorrows of life together. The vehicle opted must have enough space, comfort & flexible enough to suit their changing occasional needs. Market research revealed that this was the segment totally un-addressed. A self driven vehicle with seating capacity of up to 8 persons, easily convertible to 5 seater, essentially equipped with enough power and air-conditioning, and having elegant looks was the best fit in this segment. This segment is capable enough to pay the price between Rs. 5 to 7 lakhs therefore can afford a vehicle with C segment features. The target customers also included people desiring to upgrade from Wagon R to a vehicle equally spacious, more luxurious & fit for MPV profile. Other users could be luxury rent a car segments. The Product: VERSA has all the features as identified by Mkt. research & preferred by target segment. About the Body:

VERSA will be offered in three variants, including two deluxe (8 seater) and a super deluxe version (7 seater). The MPV will come equipped with a metatesh engine that is smooth and responsive, a dynamic safety surround system, Maruti’s True Response Electronic Power Steering and a tight turning radius that makes it suited for city driving. VERSA will have a cable operated gearshift, resulting in lower vibration and silent operation. The Soul: The VERSA has a maximum power output of 82@6000 rpm., maximum torque of 102 Nm (104 k gm)@3000 rpm and excellent suspension 1300cc heart engine mounted beneath the driving seat, generating peak power equivalent to 82 horses. Engine mounting was specially designed to prevent vibrations to prevent vibrations and engine generated heat from transmitting inside the car. Also Convenience & Safety: The safety and security features include a collapsible steering column, side & front compact beams, seat belts and child-proof lock on sliding doors and windows. The DX and the SDX have an un-laden weight of 975 kg while the DX2 weighs 985 kg. Note: All features & technical details annexed (Annexure-1) The Marketing Campaign: All the three communication channels including Electronic & Print Media were utilized to run the pre-launch and post launch campaign of VERSA. Inline with ongoing trend of involving celebrities to promote the product, top celebrities of the country Amitabh Bachchan and his son Abhishek were also roped in. Why have we chosen the Bachchans as brand ambassadors for Versa? (In their own words) The product that we are seeking to introduce will change the motoring landscape of the country. It will be the first Indian Multi Purpose Vehicle or MPV. The popularity of MPVs has grown in the developed world. With changing lifestyles, people want both luxury and space in their vehicles. MPVs are built on this concept. And yet against is no surprise that MUL is responsible for bringing about a change in the Indian market. This product marks the beginning of a segment of vehicles that is the rage in the developed automotive markets of the world. It is a happy amalgam of space and ‘driveability’. Add to that, contemporary, ergonomic interior and a cabin that makes both driving as well as riding a pleasure. Given this background, we were on the lookout for a personality that would amplify this message about the product. We were seeking a personality or a set of personalities who would ‘fit’ with the product. We found in Amitabh and Abhishek Bachchan the perfect fit with the message that we wanted to convey to the consumer. Not only do they symbolize the quintessential good values of being Indian, they are also part of the ‘new’, energetic India. They represent the change that India is going through, adopting the new (dynamics between a father and son) while keeping the ‘Indian’ values of respect intact. Their relationship is almost the perfect blend of growth and change in harmony. Their togetherness is marked by a respect for individually. In signing the Bachchans we have a combination of Youthfulness and stature. Which both the individuals bring to the brand. What the Bachchans depict is not limited to them alone. It is something that is happening in almost every contemporary Indian household.

The campaign was launched for full 2 weeks before the launch and was continued during the later months. Initially it took lot of efforts to communicate the message due to new product & the matching market strategy to the target audience till the TV commercials were released. The lesson was that print media was not enough to create visual image of a vibrant product with needs dynamic image in the minds of target audience. It was electronic media which won the battle for MUL. Launch Logistics: Before the product could be launched in Mumbai, it was ensured that select dealerships in all metros and A class target cities were having the product in their showrooms for display. Rides were also scheduled at select dealers in metros. The intention was to make product visible & available for test drive in target cities. The exercise was completed almost 10 days ahead of launch. All the concerned dealerships were advised to organize VERSA road shows immediately after the launch to ensure continuity in promotion efforts, till the product was visible on roads. Marketing division felt that on road visibility of product shall further boost the market opinion about the product. Sales Target: Considering the unfamiliarity of the product for Indian market and the most competitive product category, the initial sales target for the current years were set at lower tone. The company intends to sell only 3500 vehicle till March 2001. The results: The company has already sold 800 plus vehicles since 24th Oct, 2001 the launch day. The careful planning & promotion of product has resulted in outright interest among the target segment. The Versa has already outsold its D segment vehicles the Baleno & Altura combined. Maruti Udyog Limited has once again proved that the future belongs to those who dare to innovate and offer customer oriented products irrespective of market conditions or state of economy. In fact, such organizations create markets and influence economy in their favor thereby they are recognized as leaders. While announcing the launch of the versatile VERSA, Director (Marketing and Sales) of Maruti Udyog, J Sugimori, Said. “Maruti’s first vehicle in the 21st Century is a response to changing lifestyle demands in the country. VERSA will bring to India the international way of traveling together. Maruti has successfully brought new categories at products into the domestic masrket and VERSA is yet another effort in this direction.”

Annexure I Technical Specification: MANUFACTURER MARUTI SUZUKI WEIGHTS & DIMENSIONS MODEL VERSA MODEL VERSA VARIANT DX/SDX VARIANT DX/SDX ENGINE Type Fuel System Cylinders Cubic Capacity Maximum Power Maximum Torque

Petrol 1C4V-SOHC MPI Four 1298cc 81.6bhp@6000rpm 10.4 kgm@3000rpm

Overall Length Overall Width Overall Height Wheelbase Kerb Weight Ground Clearance Seating Capacity

3675mm 1475mm 1905mm 2350mm 945kg 170mm 8/7

TRANSMISSION Gears

5 Sp M/T

STEERING Turning Radius

4.5m

TYRES 155/80 R 13

Annexure II Sub: Versa -the television commercial Since the introduction of Versa on 24 October 2001, the customer response to test drives have been overwhelming. With Versa, a new category of vehicles is being introduced in the Indian Auto market. This category is the Multi purpose vehicle (MPV) category. MPVs a popular category internationally and every leading global car manufacturer boasts of a MPV in their product range. The MPV’s are the most versatile vehicles on the road, they offer a car-like ride & handling and the luxury of space. After the news media coverage and newspaper ad campaign, we now enter the next phase of start of Television commercial from 10 Nov. 2001. These TV commercials will further increase curiosity in this new luxury car- Versa and the new category- MPV. The television commercial to be aired from Today brings together the magic of Amitabh and Abhishek Bachchan for the first time. The advertising campaign designed by Lowe Lintas highlights the concept of two luxury cars in one. The ads for VERSA give you a glimpse of the father-son chemistry, which would positively, stand out in the flurry of celeb endorsements. Racy repartee between the two sets the pace and feel of the campaign. Quips like, “Yaar tumhari gaadi mein driver ki awaz bahut aati hai” from Amitabh to Abhishek (The driver in this scene) is guaranteed to bring a smile to your face. The VERSA advertising campaign is targeted at both the generations. Amitabh settles for the luxury of space whereas Abhishek goes for the driving pleasure. It builds on the comfort, luxury, elegance and stature of the VERSA leveraging the aura of Amitabh Bachchan whereas Abhishek Bachchan revs up the ad campaign personifying the power, performance and driving pleasure of the VERSA. Enclosed is the schedule for first two weeks of the VERSA TV commercial. Subsequent schedule will also be shared with all.

Annexure III Caption Maruti Udyog Ltd. Brand Versa Caption Spin Duration 40” Period 2 wks beginning Nov Date 18.10.01 Nov. Channel Programme Day Time Spots

Seld Sat Su

n Mon

Tue

Wed Sat Sun Mon

3 4 5 6 7 10 11 12 Star Plus Kyunki Saas M-T 2230 2 Kahani Ghar M-T 2200 2 Kangan Thu 2100 2 Star Mast Movies Sun 2030 1 Star Suerhits Sat 2030 1 1 Zee TV Amanat Thu 2030 1 Bonus Natinal Ch.

Antakshari Sun 1000 2 1

Mujhe Dor Koi Khinche

Fri 2030 2

Justajoo Tue 2030 2 Sansar Sun 2030 1 1 Rishtey Sun 2130 2 1 Shree 420 Fri-

Sat 2100 3

Razmataaz S S 2000 3 1 Zee News

News at 2100 Daily 2100 6 1 1 1

News at 2230 Daily 2200 5 1 1 1 0 Bonus News at 2230 Daily 2230 2 RODP 1900-2300 Daily 1900-

2300 13 4

RODP (wkends) S S 1730-1900

6 2 2

RODP (wkends) S S 1100-1230

6 2 2

MTV RODP 0900-1200 Daily 0900-

1200 6 3

RODP 1200-1600 Daily 1200-1600

20

RODP 1600-1900 Daily 1600-1900

28 5

RODP 2300-2430 Daily 2300-2430

12 2

ESPN/SS

SA Ind Test Series Daily 16

Pull Thru-Tests Daily 144 12 12 12 12 Pull thru-ODI (Oct.) Daily 0 Star News

Tonight @ 8 M-F 2000 10

RODP 1800-2400 Daily 1800-2400

39

RODP 0700-0900 S S 0700-0900

12

ROS 0600-2400 Sun 0600-2400

25

BBC RODP 1800-2230 Mon-

Fri 1800-2330

13 4

ROS 0800-2300 Sat Sun

0800-2300

4 4

Annexure IV

Segmentation in Indian Passenger Car Market Introduction Indian automobile industry has been through a sea change in last one decade. The opening up of industry and entry of global auto giants has given Indian consumer choices which no one had ever dreamt of. Think of the times when limited options in passenger cars were offered to consumers, Ambassador and Fiat used to be the only options. With the entry of MUL, the face of the passenger car industry changed forever. MUL made use of the opportunity open to its technologically superior product and increased its capacity from 100,000 cars in FY90 to 240,000 cars in Fy96 and 350,000 cars in FY98. The opening of economy in 1993, attracted world majors who joined hands with existing auto majors, to start their operations at the earliest. This has helped in increased the number of models available to the customer from 8 to 30 and hence provided a wide choice to him. This has also helped in reducing the average waiting. Demand The demand for cars in the past was supply driven as demand did not match supply. This led to high premium and long waiting periods for the cars. But change in government policies coupled with aggressive capacity additions and upgradation of models by MUL in the early nineties led to increase in supply and subsequently reduced the waiting periods for economy cars. The demand for cars is dependent on a number of factors. The key variables are per capita income, introduction of new models, availability & cost of car financing schemes, price of cars, incidence of duties and taxes, depreciation norms, fuel cost and its subsidization, public transport facilities etc. Supply The supply of cars in Indian industry till 1991 was dependent upon the production capacity of individual players. The production of cars has increased from 42,475 units to 181,420 units from 1981 to 1991 respectively. The growth in production of cars has varied in the last three decades from just 1% in 1970-80 to 21% in 1980-90 and above 15% in 1991-96. The table below gives the production numbers of passenger cars in the past few years. Market share As the number of models and their variants increased in market, the analyst as well as the consumer became confused. From the fleet of vehicles it is a big task for customer to find out which one to choose. The bigger question is which two products are comparable and on what parameters they should be compared. The criteria for comparison could be its Price, size, engine size, passenger carrying capacity, sports utility, multi-utility vehicle etc. Most commonly used criteria is price but how much accurate it will be to analyze or group vehicles as per their price only. Performance of any manufacturer is dependent on the number of vehicles sold in a period, a manufacturer producing no of vehicles in all category will any way excel in terms of volume in comparison to someone who is present in a y specific category. This will not give us correct picture of growth of other manufacturer or growth of industry or choice of customer to any specific model class. The market shares of leading players for the month of May 2000 is as given below:

This representation might give us the impression that Maruti is leading manufacturer and Hyundai is second best but the later one is only manufacturing one or two models, which do not cater to the total market. This means that manufacture entered with their products in specific models where they have something different to offer from the leader. This has raised an issue of identifying the model categories and the number of models competing with each other. This will in other term gives us an indication of the market trends. Market segments and Vehicle positioning There are 13 manufactures in passenger car or multi utility vehicle market with 53% capacity utilization. The new players are investing heavily and building more capacities. Looking at the model range available, market as whole could be segmented as Mini cars, Compact, Mid size, Luxury categories. Market analyst however classify models based on their Engine capacity, size and price as segment A,B,C,D and E. Based upon these parameters all models currently available could be summed up as given below: We can compare various models with their segments and see how they are performing as per customers choice. S. No.

Models Manufacturer Segment Classification Length, mm

Engine cc Price (Ex showroom)

1 M800 MUL A Mini 3335 796 2.12-2.67 2 Alto MUL B Compact 3495 786-1061 3.0-3.6 3 Matiz Daewoo B Compact 3495 796 2.93-3.45 4 Santro Hyundai B Compact 3495 999 3.3-3.98 5 Zen MUL B Compact 3495 996 3.4-4.88 6 Wagon R MUL B Compact 3495 1061 3.3-4.82 7 Indica Tata B Compact 3660 1405 3.22-4.17 8 Uno Fiat B Compact 3689 1242 2.97-4.4 9 Palio Fiat B Compact 3763 1200-

1500 3.49-4.99

10 Esteem MUL C Mid Size 4075 1298 4.90-6.10 11 Ambassador HM C Mid Size 12 Ikon Ford C Mid Size 4140 1587 5.05-6.97 13 Sienna/Week

end Fiat C Mid Size 4100 1242-

1697 5.21-7.83

14 Corsa/Swing GM C Mid Size 4056 5.72-6.97 15 Accent Hyndai C Mid Size 1495-

1527 5.56-7.28

16 Baleno/Altura MUL C Mid Size 4225 1590 7.78-8.34 17 City Honda C Mid Size 4250 1343-

1493 6.31-8.95

18 Lancer Mitsubishi C Mid Size 4290 1468 7.09-9.98 19 Cielo/Nexia DMIL C Mid Size 4482 1498 5.07-6.37 20 Astra GM C Mid Size 4239 1468 7.25-9.36 21 Sonata Hyundai D Luxury 4745 11.9-13.3 22 Accord Honda D Luxury 4810 14.95-15.75 23 Octavia Skoda D Luxury 4511 15.0 24 Mondeo Ford D Luxury 4705 25 Mercedes ‘E’ Benz E Super Luxury 4818 18.0-35 26 Mercedes ‘S’ Benz E Super Luxury 5000 50.0-

Segment A and B There is wide variety of models in B segment however in A segment market is dominated by M800 and Omni. The entry-level barrier set by M800 by virtue of its quality and most competitive price is the starting point for the competition. No other manufacture is actually interested in breaking this barrier. M 800 is therefore a winner is its segment A and only shares A segment with its buddy ‘Omni’ though Omni is also considered in MPV category. The market share and volume in A segment given below shows that the market is declining and drifting towards next segment. Segment 97-98 98-99 00-01 01-02 A Volume 20694 18645 22624 16632 Share 64% 58% 44% 35% The market share for segment B which is a Niche segment is growing rapidly and has reached 51% in last four years. This shows that there is a swift competition in B segment and more new players are entering into this segment. Segment 97-98 98-99 00-01 01-02 B Volume 7569 9735 23290 23911 Share 23% 30% 46% 60% This trend is characterized by two main factors. One is the urban society is upwardly mobile so they would life to differentiate themselves from. M 800 category. Consumer in this segment would like to stand out and would like to get noticed. Secondly the increase in come of urban population and easy finance options. The net household income in this category is increasing and choice of purchase is made by the whole family. The shift in this segment is also obvious from the new launches from MUL, FIAT and TATA. Alto, Wagor R, Palio and Indica V2 are designed to lure the customers in this segment. The consumer in this segment are mostly professional in double income category, self employed, company executive (who get company loan) and new rich class (business). The Geographically the Segment B Class owners are mostly from Metro and cosmopolitan cities of North and western region. If we look on the study done in understanding the trend in income levels for instance. Ten years back, the country embarked on a policy of economic liberalization. Since then it has been seen that households have moved up the income ladder with the number of households in the lower income groups actually declining. According to the NCAER, from FY93 to FY96, the proportion of low-income households has declined rapidly than in the pre-reform period. In absolute terms, 10 mn households graduated outside the low-income group. At the same time, the proportion of households in the high-income group went up. Comparing the distribution of households (%) in the various income groups in the pre-reform and post-reform periods. Annual income (Rs.) at FY96 prices

Income group

FY90 FY96

Urban Rural Total Urban Rural Total Less than 25,000 Lower 37.1 67.3 58.8 27.9 57.2 48.9 25,001-50,000 Lower

Middle 34.8 23.9 26.9 34.9 29.0 30.7

50,001-77,000 Middle 17.9 7.1 10.1 20.3 8.6 11.9

77,001-106,000 Upper Middle

6.5 1.2 2.7 9.6 3.1 5.0

More than 106,000 High 3.8 0.5 1.4 7.3 2.0 3.5 Source: NCAER According to NCAER study if a household saves 35% of its income to pay for annual loan installments, fuel and maintenance charges, then the annual income will have to be around Rs. 260,000 for a new car and Rs. 150,000 for a second-hand car. Study shows that the number of households under these two income brackets was 1.4mn and 3.1mn respectively in FY96. These income categories grew at a CAGR of 17% and 15% between FY93 and FY96. The market share of segment B and A is nearly 87% of the total car market. The verdict is segment B is growing and will eat away most of the share of segment A. So new players are positioning them in higher end of segment B. Emerging C segment In Mid size segment, the race is also hotting up; Ford IKON, Esteem, Accent and Corsa have shared the market. No one is a clear leader and at some point or other Ikon and Esteem are competing with each other. Average monthly sales are approx. 600 - 800 vehicles. The marketing in this segment is basically on luxury and style. Price of the vehicles range from 5.0 lakh to 10.0 lakhs so there is wide variety again in this segment. Honda city and Mitsubishi Lancer are competition at the higher end and sharing the market equally. Others like Siena, Corsa and Nexia are not doing better. Segment 97-98 98-99 00-01 01-02 C Volume 3982 3635 5191 7011 Share 12% 11% 10% 15% This segment is also promising and growing steadily. Though the volumes are low but the profit margins are higher. That is way most of the dealers in this segment share their margins with customers and do aggressive sales promotion. All models available in this segment are characterized by high quality, style, comfort and modern technology. Maruti has to upgrade its Esteem model to keep pace with others and regular cosmetic changes has become promotional feature. Servicing and customer satisfaction is the one of the main factor to lure and retain customers. Customers in this segment do not associate themselves with any brand and quickly shift their loyalties if not served well. This is mainly because they have money to try out new models and demand for more. Market in this segment mainly gives customers status and recognition. Income of customers in this segment is not a constraint or a factor guiding new purchases and spending slightly more if something extra is offered is accepted well. Manufactures get sufficient margins but overall volumes in this segment is low. Luxury Class-D and E segment The luxury segment is slowly coming up with the entry of Sonata from Hyundai, Octavia from Skoda and Accord from Honda. Most of the manufacturers in this segment are actually going for CKD/SKD imports. The price range of the models being offered are in the range of 12-18 lakhs. The characteristics of the models offered are high quality, status, comfort, high price and international brand image. Mondeo and Vectra from Ford would soon be joining this segment. Volumes would be low so marketing here is mostly target oriented. The positioning of the vehicles are such that market is limited to affluent people are big corporate houses only. Drive in true luxury is the main promotional feature. Vehicle in this category is sold because of its high price tag, more is the price higher (though

limited) would be the number of customers. In E class, Mercedes is actually targeting specific customers and contact their customers personally. Marketing approach here is truly target oriented. MUV and UV Multy utility vehicles and utility vehicles is another segment, which is mainly marketed on passenger carrier. Maruti Omni is the leader in sales in this segment. There is actually some disagreement in actually considering Omni as a contender of this category. As per size, price and engine capacity it’s a ‘A’ segment vehicle. Tata Sumo and Qualis are other two leaders in utility vehicles and their USP is Diesel run engine. These vehicles are mainly used for tour, travel, taxi or mass travel. Passenger carrying capacity here is 6-8 per vehicle. Versa a news entrant in this category has been launched to give a luxury edge to this segment. However it’s a petrol driven vehicle so operational cost could be factor on which consumer preference will be based on. Conclusion From the data and study it is clear that the passenger market is too much vibrant and growing. Sales, particularly in the small car segment, will drive passenger car sales in the near term. With developments in the small car segment acquiring a degree of stability in terms of price competition, the action is shifting to the mid-size car segment. Sales in this segment will pick up as new models come in and income levels rise but it is still some time till it comes anywhere close to the economy sized segment. References: India Infoline.com, Auto India, Motor Trend, Journals from Society of Automobile of India, AIAM journals, NCAER reports, Maruti Udyog database.