Maruti Udyog Limited: International Marketing

Debasish Sahoo | Roll 17098 | CBBS Make-up Assignment

GP:
1. Understand the International Marketing Strategy of Maruti and Critique the same
2. Understand and Critique the strategy to enter Italy
3. Identify the role of customer variables in the success of the strategy

Q1. Understanding the International Marketing Strategy of Maruti

First, we will analyse the reasons for which they decided to go international:
1. Sticking to the choice of small car: due to government policies in India and several other countries,
requirement of success in auto industry and the market requirements (both domestic and international)
2. Become export oriented and a net foreign foreign exchange earner in longer run: to receive govt
attention to itself and the auto industry (change unfavourable existing policies, duties, etc)
3. Reaching target production sales for small and medium car segment: domestic market potential was
inadequate for breakeven and hence volumes were seeked from foreign markets
4. Consumer preferences for small cars worldwide: with lower prices and operating costs
5. Continuous upgradation in product quality and improvements: through interaction with foreign
markets
6. Leveraging the brand of Suzuki: one of the largest share-holder in small car segment worldwide

Overall Strategy and Critique

1. Decided to be a net foreign exchange earner and major exporter in the long run. This move was well
thought of because:
a. Initial foray into this small-low price car segment by ML was unsuccessful leaving no competition
in the domestic market in this segment.
b. Competition from government as govt had planned to establish medium car/truck facilities
producing 1.4 lakhs vehicles per annum.
c. Being a successful major foreign exchange contributor would eventually draw attention of govt
towards them and to the auto industry, and further would bring out favourable policies for the
industry, making the market more lucrative to play upon.

2. Export only basic vehicles and their adaptations to the international market
High investment in design and development of a new vehicle at that time acted as a deterrent for MUL.
This was wise because:
a. huge cost savings
b. MUL didn’t have previous international exposure unlike Suzuki, so making newer models for
international markets, given the huge costs, was too riskier. Through this model they could gain
experience of being an international player and then produce newer models in the future.
c. Proof of concept of acceptance of current model as a global car, satisfying not only domestic but
foreign markets.
3. Targeting countries with markets and preferences similar to domestic
Europe, both East and West, had auto markets and preferences similar to India and hence gave a higher
probability of success. Some important factors which played to MUL’s benefit are:
a. Higher homologation requirements In these countries – smoother and efficient operation
handling
b. Most extensive variety of car makers of the world – favourable auto market to compete in with
good customer understanding about the cars
c. Higher customer’s demand requirement – better customer understanding, more scope for
differentiation and hence success
d. Separate market identity for each country and requirement of unique marketing campaign –
better scope of competitive advantage for a new/niche player

4. International Marketing to be done in collaboration with Distributor’s Strength and Market

requirements
All support for marketing and promotions were provided to distributors for the marketing of MUL cars.
This was helpful because distributors of the company had the best knowledge of the market trends,
customer preferences and best potential areas/time of sales. However, one drawback could be the
dependence of marketing campaigns on the level of expertise and enthusiasm of the distributors for the
sales.

5. Port facilities for exporting the cars: Ports had to be selected which offered good parking spaces at the
both points of loading and unloading were important for ease of logistics.

6. Planning new markets

Country Identification
MUL came up with categorization which grouped the international countries into 4 main groups,
depending upon market characteristics, geo-political environment, homologation requirements, and
terms of agreement with Suzuki. This helped MUL prioritize their markets and ensured non-over-lapping
and take a good customized pro-active approach in the 4 groups.
Broad Strategy
This included country specific strategies depending on bi/multilateral agreements, market situation,
competition and aftersales service situation. The extensive market research done to arrive at these
strategies ensured the right approach is taken for the specific country. In many situations, special efforts
were made to make important steps for success like developing the after-sales service scenario of the
country, timely component supplies and ensured payments in hard currency. Other markets also provided
the learning opportunity of making MUL cars more quality stringent and newer ways of distribution
channel systems.
Product Adaptation
Different countries have different geographic, legislative, customer and other special requirements which
are very vital for product acceptance. MUL ensured that it offered the necessary adaptations to their
model depending on the country/region they were targeting. It was also felt necessary by the distributors
who gave further accessories to suit their regional customers, which in turn reinforces the fact about
product adaptation.
Product Testing
MUL ensured that their cars were thoroughly tested for market quality acceptance, right from their
production units. This was necessary step because non-acceptance to standards would result in inability
to sell your products in those markets. Extensive efforts were by MUL in this section.
Distributor Selection
This was one of the important focus areas for MUL because they heavily depended on their distributors
for marketing their cars. Demand from distributors was not an issue die to MUL’s growing brand name.
MUL imposed strict guidelines in selecting their distributors so that their visions are in line with MUL and
they had the technical capability of handling their products.
Launch Plan
As discussed earlier, MUL collaborated extensively with their distributors for their launching and gave their
full support to the distributors for successful launch of their campaigns.

Q2. Understanding the strategy to enter Italy

1. Market Selection: Although Europe seemed non-lucrative at that time due to larger markets for
passenger cars, more homologation requirements, local manufacturing of high technology and
intense competition in both local and imported auto players, MUL in consultation with SAC, decided
to try the market to find out if they were successful, keeping a vision for long run. They did receive a
good response from the trade fairs, increased positive attitude from distributors and positive
responses from sample car units, and thus they were sure of entering the market. Their approach of
knowing the response towards their product was very good and authenticate too, because they dealt
directly with professionals in trade fairs and distributors (customer market expert).
2. Distributor as Autexpo: Autexpo was the perfect distributor because of the wide network of
dealerships, previous association and positive attitude towards Suzuki cars and good technical and
financial image. Autexpo benefited from the deal because the small car complemented its range of
cars sold. A win-win situation for both the parties.
3. Adaptations to local requirements: Autexpo had the knowledge of regional customer preference and
aspired benefits and hence could contribute positively in bringing out suitable adaptations for the
Maruti 800 car for the people of Italy, be it accessories or the various (three) categories of cars or
their colour offerings.
4. Launch: Although priced at a lower value, Maruti 800 was positioned as a small luxury vehicle and
both these properties complemented each other and was well received by the customers.
5. Good Reviews and wider acceptance: from both industry experts and customers reinforced their
choice to enter Italy. They were leading on 4 out of 5 customer values compared to the competitors.
6. Sustainability in the long run:
a. Inability to provide essential kits on time by SMC: In order to cope up with the rising demand for
their car, MUL need to improve its lead time in procuring essential kits from SMC for Italy-specific
cars. It can achieve this through:
1. Better forecasting and early intimation of requirement
2. Procurement of parts from other SMC warehouses located closer
3. Set up its own production for the special kits required, which would cater to many
European and other country cars in future. This would reduce dependency on SMC for the
major requirement.
b. Rising high competition: Effective strategies to gain advantage in the cut-throat competition. The
worse situation would be when players would be involved in price wars which would lead to
everyone’s losses
c. Matching capacity with target: To meet 9000 sales target for Maruti 800 for the upcoming year,
MUL needs to invest in capacity increase or more focus on Maruti 800 productions. Given MUL
agreement with SMC for a new small model car and Suzuki’s target on passenger car segment
production in Hungary, these vision differences may not align with the vision for increased sales
in Italy and Europe market. Exiting Italy and Europe market is not an option because the market
potential is good, so the only option left is to increase focus for production for Europe and Italy
market, either through inhouse manufacturing of essential parts/kits, opening new
manufacturing plants in Europe or having better coordination with SMC for parts requirement
delivery.
Q3. Identifying the role of customer variable for success of the industry
1. Customer Preference: Small/medium/large(passenger) cars
2. Economic Power: Disposable income of the customers to afford a car. Car can still be considered as
a luxury in many countries and having a car is seen as an aspiration
3. Economic state of the Country: External factors like Inflation, unfavourable government regulations
like high taxes and duties, higher interest rates, low financing options, etc
4. Customer preference for attributes of the car
i. Size/Volume
ii. Aesthetics
iii. Price/Economical
iv. Operational costs (mileage, maintenance, Ease of maintenance, etc)
v. Functioning
vi. Performance
vii. Safety/Security
viii. Added accessories/benefits
ix. Brand Value
All these customer variables play a very important role in forming the purchase decision for a customer,
among many other external facors.