Maruti Udyog Ltd.

Introduction
Maruti Udyog Ltd. was established as a government company in February 1981
with the following objectives:
Modernization of Indian Automobile industry.
Production of fuel efficient vehicles to conserve scarce resources.
Production of large
growth.

number of motor vehicles which has necessary for economic

A License and a joint venture agreement was assigned with Suzuki Motors company
of Japan, in Oct. 1982, by which Suzuki acquired 26% share of the equity , with an
opinion to increase it to 40% , Suzuki Motors Corporation further increased equity to
50% in the year 1992, converting Maruti Udyag Ltd. Into a non government
company . Marutis total equity is Rs. 1322092 million.
The mission of the company is as under:

COMPANY MISSION
To provide a wide range of modern, high quality fuel efficient vehicles in order to
meet the need of different customers ,both domestic and export market.

Competitors
Before Maruti came into existence, the Indian automobile
characterized by technological and very slow volume growth.

industry

was

The entry of Maruti changed the industry scenario completely. Maruti introduced
international class products in quick succession, and increased production and sales
at a very fast pace. This growth in market size, couple with the introduction of new
technology, enabled Maruti revolutionize the Auto components industry. For the first
time, the Indian automobile industry could boast international standards of products
and processes. Customers could buy a car built to international standards at a
reasonable price.
Was evident in the companys success in the export market. Till date, we have
exported over 100,000 cars to various countries including France, Germany Italy
and the UK among others.

Given below is a brief overview of the competition ---both existing and imminent.
We have only included those companies, which appear to be serious about setting
up a car project.

Manufacturer
DCM Daewoo
DCM Daewoo
Hindustan
Motors
Hindustan
Motors
PAL
PAL
M&M
M&M
Sipani
Sriram (SIEL)

Foreign Partner
Daewoo
Daewoo

Model(s)
Cielo
Tico

Introducti
on
Jul'95
1998

General Motors

Opel Astra

Jun'96

Mitshubhishi
Peugoet
FIAT
Ford
Ford
Rover
Honda

1997
Sep'95
Apr'96
Sept'96
1998
Apr'94
1997

TELCO

Mercedes Benz

TELCO
TELCO
Hyundai

Mercedes Benz
None
None

Lancer
Peugeot 309
Uno
Escort
Fiesta
montego
Civic
Mercedes
E220
Mercedes
E250D
Tata India
Elantra/Accent

Hero Motors

BMW

BMW 3811

Eicher

Volkswagen

Skoda Felicia

May'1996
May'1996
1997
1998
FIPB
cleared
Dicussion
on

MARKET SHARES IN THE AUTO INDUSTRY

Year

MUL

PAL

HM

TELC
O

M&M

1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94

1%
22%
37%
52%
51%
52%
52%
55%
56%
60%
59%

32%
28%
23%
17%
18%
19%
20%
20%
17%
9%
10%

34%
24%
18%
14%
14%
14%
13%
11%
10%
12%
11%

1%
2%
3%

33%
26%
22%
17%
17%
15%
14%
13%
16%
17%
17%

PAL
PEUGEOT
DAEWOO
-

DCM

1994-95
1995-96

63%
62%

9%
5%

9%
7%

5%
7%

15%
14%

3%

2%

SALES
Domestic
To meet the demand of our cutomers and to provide them with excellent after sales
Service, we hav developed an extensive marketing and after sales service network
comprising 123 dealers, 161 sales outlets (covering 93 cities), 194 dealer
workshops and 868 Maruti authorized Service station besides 204 sapre parts
outlets including 15 MGP shoppe (boutiques) and 26 stockists (covering 421 cities)
in india, (as on 31.10.97).
EXPORTS
Maruti has exported over 1.6 lac vehicles to more than countries (till Oct.
1997.)75% of these vehicles have been sent to Europe.
Marutis export markets are:
Africa
Lebanan
Algeria
Angola
Cameroun
Centrafique
Congo
Malwai
Zambia
Djibouti
Egypt
Mauritious
Ethiopia
Madagascar
LATIN AMERICA
Argentina
Uruguay
Carirbean Island
Malta
Chile
El Salvadar
Poland
French Poly
Romania
Nicaragua
Panama
Peru
Paraguay

Nigeria
Reunion
Rwanda
Senegal
Tanzania
Uganda
Gaban
Ivory Coast
Kenya
Mozaambique
Zimbabwe

Europe
Slovenia
Netherlands
Slovakia
Belgium
Germany
Macedonia
Norway
Spain
France
Portugal
Austria
Greece
Cyprus
Czechoslovakia

Asia
Bhutan
Israel
Jordan
Bangladesh
Nepal
Sri Lanka
Sudan
Syria
Turkey
Yemen
Top Importers
Poland
Italy
Switzerland
Latvia
Croatia
Bolvia
OCEANIA
Australia
New Zealand
South Pacific
Island

Denmark
Hungary
Iceland
U.K.
Lativa
Netherlands
Romania

Strategies Used by Maruti: From the introduction it is clear that Maruti has been
increasing its market share continuously. The main reason behind this progress does
Maruti use real understanding of consumers need and strong strategies. Maruti has
been using following strategies:
New Product Development Strategy: Maruti has been using the new product
development strategy since 1984, when they launched Omni, after M-800. In April
1986, Maruti launched new model of Maruti-800, Maruti 1000(Oct. 1993), followed
by Maruti 800 model with some modification of the latter. After M-1000 they
launched Maruti Zen in Oct, 1993.
Its positive features are new facia and interior trim, easy to read instrumentation,
superbly finished switchgear, fine driving position and well supported saets. Its
chunky, polyurethane, three spokes steering wheel offers meatier grip than Maruti
800 or 1000 does. The widescreen falls forward of the facia, creating a roomy
impression. The headroom is upped: allowing for a more upright sitting stance and
its rear is roomier than 800s.
Zen has stop speed of 150km per hour with five gears and engine fitted with a one
liter, four cylinder motor.
Its most interesting technical highlight is its engine. It is lighter than the smaller
engine of the Mrauti 800 due to its aluminum block, which also boasts of three
times better thermal conductivity than cast iron. This improves heat transfer, which
is important for performance, efficiency and emission. Zen also features electronic
ignition, which affords consistent performance, hence lower emission. Besides,
there should be fewer maintenance problems, as there are no contact breather
points.

After Zen MUL launched three versions of Esteem LX, VX & AX in Nov 94,
Nov95 and June 96 respectively.

One of the most striking characteristics of the Esteem series is the carefully
designed interior. There is a particular emphasis on features, which add to driving
ease. A cosole box of Knickknacks. Magzine pockets for the front seats. Climate
control provided by highly efficient AC. And for the winter chill, a cabin heater. The
Esteem AX with state of-the- heart japanease Automatic Transmission gives you
incomparable ease of driving. No clutch. No constant changing of gears. Just start
and roll. The Esteem AX and VX are equipped with power streering, which enables
effortless handling of the wheel.
Afer Esteem (LX, VX, AX), Maruti launched Zen Automatic (Oct96), Gypsy
King (Nov96), Omni (E) (Dec96), New Maruti 800(Sep96), the 1998
Esteem (Oct 97), Zen VX (July98), Zen D (Aug.98).
The aim of using this strategy is strengthening Marutis competitive position.
Low Pricing Strategy: Maruti Udyog has been in monopoly in Indian Car market. It
has large share, the market is highly aware of Maruti cars, the market is price
sensitive, and there is some potential competition. Maruti has adopted this strategy
that low price will encourage rapid product acceptance. Company also believes that
the market demand is highly sensitive price but minimally sensitive to promotion.
Tjis strategy makes sense when market is large. Maruti has large market share and
its low price strategy suits to Indian customers. In India, still most of the cutomers
belong to middle class and they are unable to purchase cars with high price i.ie.
Cielo, Tata Safari, etc.
Product Positioning Strategy: Positioning is not so much what the product
actually is, but rather how a company wants its target consumers to perceive the
product. The position occupied by MARUTI is that of trust, innovation and world
class technology. This stems from the number of cars that Maruti has put on Indians
roads, the continuous upgradation of Marutis service and products, and its success
in the international market. to reinforce this position Maruti uses the line BUILDING
TRUST WORLDWIDE with the companys logo in all its communication.
Maruti currently has six models in the market. Each of these is targeted at a
particular consumer segment, and is positioned accordingly.
The position occupied by each model and targeted customers are described below:
Maruti-800 Reliable, economical and easy-to-drive small car
The Maruti 800 is not just Indias largest selling, fuel efficient and economical car.
With technology well adapted to suit Indian condition, its freedom on wheel to
millions of people in India. So, drive out to destination of your dream.
Targeted Customers: Customers who are buying their first purchase, working
ladies from upper and middle class families.
The Product by-Line: Freedom within your reach
Omni: Spacious car for multi purpose use.
All the space you ever needed. Found in the Maruti Omni. Fill it with family, friends,
and laughter.

And rejoice in the freedom of your own space.

Targeted Customers: Omni has been presented as a family car and more
emphasis is given on SPACE it provides for the family. Customers targeted for Omni
are Middle and Upper class families, Traders, Taxi-operation and hospitals using as
an ambulance.
The product by line: Travel in space.
Gypsy: Rugged all terrain vehicles.
Explore new territory. Tread new paths. Discover new frontiers. In the legendary
four wheels drive marque. With superb manoeuvnability, smooth handling raw
energy. Packed into a sleek, yet rugged frame. Making Gypsy the ideal vehicle for
the pursuit of adventure. Whether ploughing through dirt tracks, or cruising the city
street. The rael emotion behind the word Gypsy is that is keeps on travelling, as do
Gypsies. It never stops. It can accumulate itself with any type of environment.
Targeted Customers: Targeted customers are young, adventurous men of Indi,
Army, Police Force and Hospitals.
The product By-Line: This is Gypsy in everyone.
Maruti-1000: Luxurious family car in sensible price.
Luxury and economy. Never before have the two come together so stylish. In one
body. That of the Maruti 1000. Because value is important on the journey of life.
Targeted Customers: Targeted Customers are professional, business class
families, Upper class women doing business or service.
The product By-Line: Thinking big. You can afford it.
Zen: International class car for driving pleasure.
When your life is a celebration, your car has got to be a Maruti Suzuki Zen.
Experience the exhilaration of Indias raciest car. And rediscover the joy of dirving.
Targeted Customers: Zen has been positioned as world car not only an India but
abroad also. Targeted customers are people working in corporate and big
companies. Psychologically it fulfils their need of recognization, and it is an
international car. Aa Zen gives you adult experience, targeted customers are well
experienced personalities in their areas. These customers generally belong to age
group of 35 to 45 years. Zen also targets internationally cutomrs from Netherland,
Germany, Italy, Belgium, Greece, and so on. Maruti gives more emphasis on the
exports of Zen to other countries because it has wider market in foreign countries.
The product By-Line: Zen the adult experience.
Esteem: Internationally popular, upmarket luxury car of comtemporary
design.
Smooth, the way your life is powerful, the way you are. Internationally the way youe
dealings are. The Esteem, Its designed with your mind. It has been positioned as
luxury on India roads. Luxury that is affordable.

Targeted Customers: Targeted Customers are business class people, upper

upper middle class customers and professional working in multinationals
and big companies.
The product by-line:
(a)For Esteem AX, VX, LX, Much more than luxury.
(b)For Esteem 1998 Move ahead in luxury.
Network Extensions Strategy: Maruti has a large network of dealership and
service stations. As many competitors are entering the Indian auto market, Maruti
has decided to increase its network as much as possible. So that more and more
customers would be able to reach to purchase points. Through large network of
showroom Maruti is aiming to beat its competitors.
Availability Strategy: Maruti has adopted this strategy for enhancing availability
of spare parts anywhere in India. The spare part division operate through the
network of dealers, as well as through Maruti genuine part stockist and MGP retail
shops. The SPD, through various well time strategies, has achieved a sales turnover
Rs. 277 corers in 1997-98 as against Rs. 83 corers in 1993-94, at a cumulative
annual growth rate of 34.94 percent.

Flooding Metro Cities Strategy: As many new competitors are entering Indian
Auto market, Maruti has adopted a new strategy of flooding metro cities with Maruti
cars. Foreign companies first target Metro cities to launch their products. Thus it
become very essential for maruti to make its position strong in these cities.

Point of purchase information: Mrauti has tied up with CIti bank to promote its
sales through providing finance at easy terms.

Free Gifts: Recently Maruti has started free gift scheme for Maruti Esteem. It
gave free Polarid Camera with purchase of Maruti Esteem. This offer was valid
till 30th August, 1998. Free gift scheme has also been started for Zen-D.

New for Old: Recently Maruti has started this scheme first in Chennai that
drive in your old car (any model) abd drive out with a new car Maruti (any
model) Cholamandalam Investment & Finance Company Ltd. , Chennai.

Sponsored this scheme: You could enjay this opportunity in mela orgainised
by this company on 12th & 13th Set. 1998 in cheenai. Maruti is planning to
organize such event in different parts of India. Some other schemes for Zen
D are free test drive, immediate delivery of Zen-d, exciting free gifts.

Different dealers follow different promotional strategies.

QUESTION
1. Critically analyse the sales strategies of Maruti Udyag Ltd.
2. Identify the major strengths and weaknesses of M/s Maruti Udyag Ltd.