suzuki motor corporation business report

8/11/2019 Suzuki Motor Corporation Business Report

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Suzuki Motor

Corporation

usiness report


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Executive summaryThe main purpose of this report is to evaluate the appropriateness SMC city car for

its target segment. In 1920th, Suzuki Loom manufacturing.co automotive business was first

established. On October 1990, the companys name was renamed to Suzuki Motor

Corporation (SMC). SMC operates in 22 countries with 35 main production facilities.

Today, the company is still known as SMC, a Japanese multinational corporation thatmainly operates in manufacturing automotive product that includes motorcycles, cars,

electro senior, motorized wheelchairs, outboard motors and other automobile parts. In this

report, the writer will focus more on SMC car category and focus one the type of product

that is offered by SMC, which is small city car. To complete the report, the writer gathers

sources from primary data and secondary data. The writer interviewed the sales person of

Suzuki Swift from Suzuki outlet in Jakarta via telephone and received information the

consumer satisfaction review. The secondary data are collected from several academic

journal such as Journal of Marketing, Journal of Consumer research and etc, sources from

online websites such as Suzuki Motor Corporation website, and other relevant websites, andalso Marketing textbook. Based on the consumer survey, the author analyze that customers

buying decisions are mainly influenced by Swift features, especially fuel efficiency.

However, several customers experience engine problem and authorized Suzuki maintenance

are not able to detect the problem. Therefore, SMC must provide additional training for the

authorized maintenance of Suzuki in Indonesia so that the maintenance would be able to

provide solution to the problem related with Swift car.


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1.Introduction

1.1 Purpose of the report

The main purpose of this report is to evaluate the appropriateness SMC city car for the

target segment.

1.2 Background information

In 1920

th

, Suzuki Loom manufacturing.co automotive business was first established. OnOctober 1990, the companys name was renamed to Suzuki Motor Corporation (SMC). Today, the

company is still known as SMC, a Japanese multinational corporation that operates in

manufacturing automotive product which includes motorcycles, cars, electro senior, motorized

wheelchairs, outboard motors and other automobile parts.

SMC operates in 22 countries with 35 main production facilities. The company provides

variety of cars to cater different segments. Up to now, there are 15 brands and over 150 variations.

These are Maruti 800, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR,

Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4, Swift DZire and

Kizashi. In 2011, it is estimated that the company sold more than 1.27 million vehicles, with

revenue of US$6.79 billion.

1.4 Methodology

To complete the report, the writer gathers sources from primary data and secondary data.

The writer interviewed the sales person of Suzuki Swift via telephone and received information the

consumer satisfaction review. The secondary data are collected from several academic journal such

as Journal of Marketing, Journal of Consumer research and etc., sources from online websites such

as Suzuki Motor Corporation website, news websites and relevant websites, and also Marketing

textbook that is written by Kotler.

1.5 Limitations

The main limitations of the report are the word limit and time constraint.

1.6 Assumptions

All the content of the report are based on facts, past performance and figures gathered from reliable

sources.


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2. Industry, Market ,Product Category and Type of Offer

Automotive industry can be defined as pertaining to the design, operation, manufacture, or

sale of automobiles. (Dictionary, n.d). In 1967, Indonesia government restricted entry foreign

imports by imposing heavy tariffs in the range of 275 per cent. This policy remained until 1993 and

led Indonesias automotive industry to be left behind. Afterward, government restriction laws began

to reduce and high demand of automotive products has driven Indonesias automotive industry

drastically. (RF(Okamoto, Sjoholm, 2000). Today, Indonesia one of the biggest consumer

consumption in South-East Asian economy. In 2011, the sales of the car were 870,000 units.

According to Indonesias Automotive Manufacture Association, Indonesias car sales increases

62.4% year on year. In 2011, Suzuki contributed 6.75% of the car sales market in the economy,

which was equivalent to 9,194 units of car. (Suzuki Motor Corporation,2011).

SMC is a Japanese multinational corporation that operates in manufacturing automotive

products, which includes motorcycles, cars, electro senior, motorized wheelchairs, outboard motors

and other automobile parts. (Suzuki Motor Corporation,2011)

In this report, the writer will focus more on SMC car category and focus one the type of

product that is offered by SMC, which is city car. (Suzuki Motor Corporation,2011)

3.Marketing environment factors:

The marketing environment consists of micro and macro-environment.

3.1 Microenvironments

In order to provide value effectively to the target market, SMC has implemented 3 of the

elements of micro-environment. (Kotler,2010)

3.1.1 Marketing intermediaries

SMC used several marketing intermediaries, which are physical distribution firms, reseller,

distributor and also financial intermediaries. Firstly, physical distribution firms move goods from

the warehouse of SMC that is located in Japan to Indonesia. Next, PT.Suzuki Indomobil Motor that

represent SMC agent would enable SMC and the distributor transaction to be easier. Then, the

distributor which is PT.Suzuki Indomobil Sales buy and resell the product to dealers. One of the

main dealer is Restu Mahkota Karya Group. (Suzuki Motor Corporation,2011)

3.1.2 Customers

Everyone is unique, therefore, SMC select target customer that are large enough to enable

them to create profit and designing their product according to their customer preferences. SMC

select to cater customer aged between 25-35 because. SMC target the market is the middle-incomegroup who are earning 20 million per month. (Coleman,1983)

Therefore, Swift stylish design and good performance is developed to meet Customers in

this age group. (Suzuki Motor Corporation,2011)

3.1.3 Competitors

Swift main competitor is Getz because both of them have several close characteristics. In

terms of dimensions, engine installations, engine ignition and fuel, type of steering and fuel

capacity tank. Swift and Getz have very slight insignificant difference. Swift and Getz are also

priced very similar to each other. Hyundai Getz are priced between 154-179 millions where asSuzuki Swift are priced between 174200 millions. (Suzuki Motor Corporation,2011) (Hyundai

Motor Company, 2011).


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In buying decision making, customers would select the product that offers them the best

value. Customer would compare price against benefit that they would receive from the product.

Getz has better boot and user-friendly touches, however, Swift have more competitive features such

as faster maximum speed, better torque power performance and also fuel efficiency. In the car test,

it is reflected that Swift has better fuel efficiency compared with Getz. Swift is constantly1.5 kpl

superior to Getz in every environment, relatively because of its long gearing. For the Getzs 10.4

kpl in the city, the Swift returns 11.5 kpl. For 14.5 kpl on the highway from the Getz, swift result is

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The figure below would show the comparison between Swift and Getz. (Hyundai Motor

Company, 2011) & (Suzuki Motor Corporation,2011)

Price

Swift Swift 1.5 GT3 (A) Rp201.200.000

Swift 1.5GT3(M) Rp190.100.000

Swift 1.5ST(A) Rp187.100.000

Swift 1.5ST(M) Rp176.100.000

Getz Getz LS A/T 3 doors Rp.179.000.000

Getz SG A/T Rp.171.000.000

Getz SG M/T Rp.154.000.000

Technical specification

Swift 1.5ST(M) Hyundai Getz

Engine

Tank Capacity 4 cylinder 4 cylinder

Max power 87.5bhp at 6000 rpm 82.9bhp at 5500 rpm

Max torque 11.53kgm at 4500 rpm 11.8kgm at 3200 rpm

Installation Front, transverse, front-wheel drive. Front, transverse, front-wheel drive.

Steering

Type Power assisted rack and

pinion

Power assisted rack and

pinion

Maximum speeds (KPH/rpm) 169/4700 165/5680

Fuel Economy

City(kpl) 11.5 10.4

Highway(kpl) 16.2 14.5

3.2 Macro-environments

SMC examined 3 major components of macro-environments, these are demographic,

economic, technological and cultural.

3.2.1Demographic environment.

3.2.1.1 Age structure of the population

Swift car was designed to cater customer who are aged 25-35 because people in this age range tend

to be young couples that are enthusiastic for travelling in quick rides in the city. Swift car also have

small dimensions that is perfect to cater married couples with small family that enjoy convenience.

(Suzuki Motor Corporation,2011)


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3.2.2 Economic environment

3.2.2.1 Economic situation and changes in income

According to the survey conducted by Indonesian central bank, Indonesias booming

economy had revolved many low-income classes to middle income class and also made middle-

class group better off. The 2011 survey revealed that Indonesias middle class was 60.9%, this

income group earned net income above 20.4 million rupiah per year. . (The Indonesian Central

Bank,2011).

This economic situation affected SMC car sales, In 2011, the car sales rise to 9,194 from 8,743

units of car In 2010. (Suzuki Motor Corporation,2011)

3.2.2.2 Cultural and Technological environment

As SMC found out that their customers are more aware about global warming, SMC

responded by introducing direct diesel injection system engine to swift. This engine has efficient

combustion, higher torque and cleaner emissions.It has a five-step multi-injection technology that

makes the car run more smoothly than other cars. It also has a Double Over Head Camshaft that

gives the engine a quick run. With these features, Customer would strongly influenced purchase

Swift. (Suzuki Motor Corporation,2011)

4. Three levels of product

4.1Core productThe problem-solving services or core benefits that consumers are really buying when they

obtain a product. (Kotler,2010)

In the case of swift, the core product is transportation from one place to another. Another

alternative of transportation is public transport, by using swift instead of public transportation, the

user would have the benefit of convenience. The user would have the choice to select when and the

route to the destination.

4.3 Actual product

A products part, styling, features, brand name, packaging and other attributes that

combine to deliver core product benefits.(Kotler,2010)

Customer would select to purchase Suzuki swift because of the brand that would reflect the user

status. The stylish design of swift also attracts the customers. Besides that, Swift car have a lot of

wonderful features such as electronic power steering, low wind noises, and powerful 1.3L engine.

SMC also offer swift car with both automatic and manual transmission. Besides that, consumer can

also pick different variety of color of car polish. (Suzuki Motor Corporation,2011).These productfeatures are made to satisfy the customer needs and wants.

4.4 Augmented product

Additional consumer services and benefits built around the core and actual products.

(Kotler,2010)

When consumers purchase Swift, they also expect other services. Therefore, SMC provide

several augmented products. Before they purchase the product, SMC provide test drive. Other Parts

of augmented product offered to consumer when they purchase new car is 3 years warranty, free

delivery and also after-sales service. (Suzuki Motor Corporation,2011)


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5. Elements that influence consumer behavior

Consumer decision on purchasing power is strongly dominated by two types of factor. The

first type of the factor internal influences, this is mainly made up of psychological and personal

factors. Another factor is external influences; these are typically consisted of cultural and social.

(Kotler,2010)

5.1Psychological factors

Marketers use the study of psychology to help them in predicting buyer behavior.According to the study of psychology, the five major psychological factors that influence the

purchasing decision choices are motivation, perception, learning, attitudes, and personality and self

concept. (McCrae, Costa, 1987)

5.1.2Motivation

Needs is defined as states of felt deprivation. A need turns into a motive after it is triggered to

plenty level of intensity. According to Maslow, human needs are ordered in a hierarchy. In

sequence of importance, they are physiological needs, safety needs, social needs, esteem needs and

self-actualization needs. (Maslow, 1970)

The theory proposed that human tends to fulfill the most significant need first.

Therefore, Suzuki advertises Swift to the customer by including actor that is aged the same as the

customer in the advertisement. This is done to trigger customer sense of belongings and esteem.

(Suzuki Motor Corporation,2010)

5.1.3Perception

How people react to particular condition is determined by their perception. Therefore, two

people with almost identical motivation in matching situation are likely to act differently. People

can have different perceptions of the identical inducement due to three different perceptual

processes, which are selective exposure, distortion and retention. (Murray, 1991).

Suzuki has taken three of these perceptual concepts into account to create their

advertisements. Advertisements of Suzuki have always focus on their core strength in terms of

providing excellent service network and mileage. Each of SMC ads started with little of

exaggeration and ends with hilarious punch line. (Suzuki Motor Corporation,2010).These elements

used in SMC ads had been successful in attracting customer attention and retention. In addition,

most of SMC ads dont contain any conversation. Therefore, SMC ads successfully stand out from

others, customer selective distortion is minimized.

5.1.4 Learning

People learn from experience. People that have purchased Swift car before would have learntfrom the experience. If the experience is pleasant, then probability of the user to use the car will be

more and more. However, customer might also react differently, customer might examine city car

marketed by another brand such as Hyundai and notices distinct features and perhaps familiarize

with Hyundai. Therefore, SMC marketers establish demand for swift by increasing customer

awareness of the product distinctive features such as the car stylish and sporty design. This is done

to attract new customers to purchase Swift. Not only that, SMC has also reflected good

performance, Suzuki Swift was nominated as the car of the year (2011) award on prestigious

Automotive Researchers and Journalists Conference of Japan in. This would make Swift car buyer

believes that they have made good decision and would be more likely to repurchase the car in the

future.


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5.1.5 Personality and self concept

One of the most practical concepts that are implemented by SMC to analyze consumer

preference for particular brand or product is personality. SMC strongly believe that the customers

tend to select brands that have identical personality with them. SMC has identified that Swift target

market tend to be urban vibrant couple who love travelling on quick rides. Therefore, the car was

branded Swift with the tagline of Youre the fuel to support the the peppy characteristics of the

customer. (Suzuki Motor Corporation,2010)

5.2 Personal factors

Personal factors also have a great impact on buyers decisions. Personal factor mainly

consists of the buyers age and life cycle stage, occupation and economic situation.(Kotler,2010)

5.2.1Age and life-cycle stage

Different age group has different lifestyle, taste and preference. After these elements are

reviewed, Swift car was developed. Swift car was designed to cater customer who are aged 25-35

because people in this age range tend to be young couples that are enthusiastic for travelling in

quick rides. Swift car also cater married couples with small family that enjoy convenience. Swiftcar also have small dimensions that is perfect to cater married couples with small family that enjoy

convenience.

5.2.2 Economic situation

According to the survey conducted by Indonesian central bank, Indonesias booming

economy had revolved many low-income classes to middle income class and also made middle-

class group better off. The 2011 survey revealed that Indonesias middle class was 60.9%, this

income group earned net income above 20.4 million rupiah per year. This economic situation

affected SMC car sales, in 2011 the car sales rise to 9,194 from 8,743 units of car in 2010. (The

Indonesian Central Bank,2011).

5.2.3 Culture

SMC marketers strongly believe that culture is one of the crucial influences on customers desire and

general behavior. SMC identified that there has been cultural swift towards increased awareness

about the global warming. With the advancement of technology, SMC has been successful to

respond customer desire by introducing direct diesel injection system engine to swift. This engine

has efficient combustion, higher torque and cleaner emissions. This technology increases both

products quality and performance. As a result, customers are more likely to be influenced to

purchase Swift. (Suzuki Motor Corporation,2011)

5.3 Social factors

Social factors also impact the buying behavior of consumers. The important social factors

are: reference groups, family, role and status. Therefore, it is very important for Suzuki to take them

into account when designing their marketing strategies. ( Kotler, 2010)

5.3.1 Roles in the buying process and Family and household

Extensive research has displayed that family is considered to be the most important

influence on consumer buying decision. One report suggests that even though women compromiseonly 40% of drivers, they have the power to influence 80% of car purchasing decision. SMC

understands that the member of the family would affect the customer buying decision. Therefore,


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SMC conducts advertising that include members who are likely to initiate the purchasing such as

wives and children on Swift advs. (Suzuki Motor Corporation,2011)

5.3.2Groups

Friends, families, celebrity are several groups that can influence a persons behavior. One of

the most influential groups is an opinion leader. Opinion leaders are the people who bring influence

on others views and purchasing behavior of the product. (Zaichkowsky.L.J)

Opinion leader plays an important role on in influencing customer behavior. The followingstatement illustrates the importance of opinion leader; If you need to reach 2 million people then

you just need to reach the right 2000 in the right way and they will help you reach 2 million.

SMC have persistently attempted to reach the opinion leader by conducting car show in Jakarta

International Expo every year, advertising Swift detailed features on famous local car magazines

every month such as auto car and etc. (Suzuki Motor Corporation,2011)

6. Brand

The brand Suzuki originated from the founder last name. The founder full name is Michio

Suzuki. The brand was represented by the S logo of Suzuki, which was introd uced in 1954. Thelogo is compromised of blue and red color. Red color in the logo depicts enthusiasm and dynamism.

On the other side, Blue color portrays strength and harmony. This logo lasted for more than five

decades. Therefore, it is known as the most iconic and memorable car logos ever created. This logo

also significantly involved in facilitating the victory of the brand history by illustrating the company

capability in strong visual sign. (Suzuki Motor Corporation,2011)

In addition to be the parent company, SMC is also one of the leading manufacturer

worldwide. With the company brand history and the tag line, Way of life, customers have

perceived SMC as one of the finest car manufactures who persistently develop quality cars and

motorcycles appropriate for everyday use. (Suzuki Motor Corporation,2011)This enable SMC to launch several product lines successfully. (Aaker, Keller, 1990)

One of its product lines is Swift. With the use of simple and meaningful brand name of Swift and

the tag line Youre the fuel, the image is created in customer perceptive is the meaning of the

word Swift. (Suzuki Motor Corporation,2011)

It is important that the customer perceive the brand as intended as this would impact the

product sales dramatically.


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7.Consumer Survey

The consumer survey consists of 9 questions. This consumer survey information was

obtained from Suzuki salesperson. He conducted the consumer survey to 50 people who have

purchased Swift. All of the people who answered the survey was from the city of Jakarta.

1.

Consumer preference: Diesel or Petrol?

Particulars No.of respondents Percentage(%)

Petrol 18 36

Diesel 32 64

Total 50 100

2.Features that Influence consumer buying SwiftParticulars No.of respondents Percentage (%)

Price 15 30

Product features 20 40

Brand 7 14

Service 8 16

Total 50 100


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3.Where did you purchase your Swift?

Particulars No.of respondents Percentage (%)

Through advertisement 12 24

Dealer 18 36

Showroom 10 20

Pre-owned car 10 10Total 50 50

4. Customer satisfaction on Swift engine

Particular No.of respondents Percentage(%)

Very good 10 10

Good 16 16

Average 5 20

Not good 11 22

Can't say 8 32

Total 50 100


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5.Customer satisfaction on Swift mileage

Particulars No.of respondents Percentage (%)

Yes 30 60

No 20 40

6. Customer satisfaction towards Swift safety features

Particulars No.of respondents Percentage(%)

Very good 10

Good 17 16

Average 12 20

Can't say 11 22

Total 50 100


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7 .Will Suzuki charge higher price for Swift in the future?

Particulars No.of repondents Percentage (%)

Yes 19 38

No 15 30

Cant say 16 332

Total 50 100


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8. Will change in feature of Swift increase your satisfaction?

9. Customer trend in purchasing new car

Particulars No. of respondents Percentage(%)

1-3 Years 18 36

3-5 Years 11 22

5-10 Years 15 30

More than 10 years 6 12

Total 50 100

Particulars No. of respondents percentage(%)

Yes 26 52

No 13 26

Cant Say 11 22

Total 50 100


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8.Analysis of current offer in relation to the needs and wants of the target market

Based on the customer survey, the following analysis are made:

The customers are more satisfied with the Diesel model of Swift because there has been cultural shift

towards greater awareness on reducing pollution. Therefore, more of Diesel types are purchased.

Most of the customer claimed that the strongest influence of purchasing Swifts is the product

features especially the fuel efficiency. Thus, Swift car sales are mainly due to the quality it offered. Most customer prefer purchasing car directly to dealer because it dealer offered them range of

benefit such as 3 year warranty, convenience, availability and good after sales service.

26% of the customers were satisfied with Swift, however, 22% stated that Suzuki engine was not

good. 22% of them experienced engine problem on Swift car, they complained that the engine

stopped an in the middle of the road and can only be turned on after few seconds. However, when

they service the car to the authorized Suzuki maintenance, the maintenance said there is no problem

regarding the engine.

60% of the customers are satisfied with the mileage of swift where as 40% of the customers are not

satisfied. Most Swift car users used their car in urban areas, therefore, the difference of the

satisfaction might be due to their own perceptions.

None of the customer complained about the safety features. However, 22% of the customers have

little knowledge on the safety features and could not provide any comments.

38% of the customers believe that Swift price would be maintained, as it is one of the features that

influence customer-purchasing decision. However, 32% of the customers oppose this opinion

because they predict that Swift features would be increased and Suzuki would need to increase the

price to cover the research and development cost. Other 30% did not comment anything.

52% of the customers stated that they would be more satisfied if there are modifications on Swift.

26% of the customers are highly satisfied, therefore, modification on Swift would not affect their

satisfaction, and where as 22% of the customers did not provide any opinion.


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9. Recommendations

After analyzing the customer survey, the following recommendations are made:

Customers have complained that they have experienced engine problem. Therefore, it is very

important for SMC to detect the engine problem and develop solution for the engine problem.

SMC must provide additional training for the authorized maintenance of Suzuki in Indonesia so that

the maintenance would be able to provide solution to the problem related with Swift car. SMC must increase advertising and also reach more opinion leaders to change the perception of the

customers who are not satisfied with the product mileage.

Customers are very eager to have modification on Swift. Therefore, SMC should conduct research

and development to enhance the quality of the product to increase customer satisfaction.


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suzuki motor corporation business report

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