Marketing Strategies in maruti suzuki PDF

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Marketing Strategies Project...

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A Research Report ON

“MARKETING STRATEGIES” OF

An internship project report Submitted in Partial Fulfillment of the requirements of

Bachelor of Business Administration (Mr. K.C. Gupta from Maruti Suzuki)

Submitted By:

Submitted To:

Harshit Ahuja

Payush

Roll No. 16BBA037

Asst. Professor

Reg. No. 1613110187

GITAM, Haryana

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT BAHADURGARH, KABLANA, HARYANA AFFILIATED TO MD UNIVERSITY, ROHTAK HARYANA 124001

Session:- 2016-2019

DECLARATION I undersigned hereby declare that the project report entitled “Marketing Strategies of Maruti Suzuki” written and submitted by me to the Ganga Institute of Technology and Management Bahadurgarh, Kablana, Haryana, Greater Noida under the guidance of Mr. Payush is my original work and the conclusion drawn there in are based on the material collected by myself.

Signature of student

This is to certify that the above statement made by candidate is correct to the best of my knowledge

Signature of supervisor

Acknowledgement It is high privilege for me to express my deep sense of gratitude to all those faculty members who helped me in the completion of the project. My special thanks to Mr. Payush for helping me in the completion of project work and its report submission. Last but not the least my special thanks to the faculty of Ganga Institute of Technology and Management Bahadurgarh, Kablana, Haryana for their kind co–operation and providing me with all the necessary documents needed and guidance during the time of project completion.

PREFACE In the field of Marketing, it was an excellent experience that what we use to study during our BBA life, get chance to use it in market. In practice life it was little bit hard task during the implementation of the funds of marketing. As my focus was on the marketing strategy of the company, which it uses, meanwhile I also learn the behavior of consumer and their perception that how they react in market. People reacts differently at different situations that is I noticed here in reality in the terms of marketing aspects.

4Ps of marketing is being used by the organization, the different strategy formulation according to change of the market situation, different human resources utilization techniques, updating of the account, using relevant data or updated data in Research Methodology, the challenge task of good Production in less time while controlling the Quality and delivering the product all these fundamental approaches are being utilized in well and planned manner. Beside these all things the different science and art tools used in the formulation of the report. The challenge 50 programme organized by Shinichi Takeuchi, former head of Suzuki’s Kosai facility in Japan, sent to one of the Suzuki’s most profitable subsidiaries, Maruti Udyog, as Director (production) in Oct 2001.In may 2002,plan has been made to aim at increasing the productivity at Gurgaon plant by 50% and reducing cost by 30%.It was a milestone achieved to much extend by breaking all previous plan and prove to be much competitive at that year for the rivals.

The Padagogy use to implement by the organization helps in different ways for the company to capture a heavy market share in the Indian automobile industries.

CONTENT S. no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14

TOPIC

PAGE

Introduction Theoretical Framework Objective of case study Research Methodology Company Profile Observation and Analysis Findings Limitation Conclusion Suggestion and Recommendation Appendix Questionnaire Bibliography References

INTRODUCTION Maruti Suzuki India Limited was established in Feb 1981 through an Act of Parliament, to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. Suzuki Motor Company was chosen from seven prospective partners worldwide. This was not only due to their undisputed leadership in small cars but also to their commitment to actively bring to MSIL contemporary technology and Japanese management practices (which had catapulted Japan over USA to the status of the top auto manufacturing country in the world). A license and a Joint Venture agreement were signed between Govt of India and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982. The

objectives of MSIL then were: Modernization of the Indian Automobile Industry, Production of fuel-efficient vehicles to conserve scarce resources, Production of large number of motor vehicles which was necessary for economic growth.

COMPANY PROFILE

In more ways than one, the year 2011-12 was a watershed year for Maruti Suzuki India Limited (MSIL). The company has consolidated and initiated a new growth momentum. There have been several developments, of which it is useful to begin with three.  First, driven by renewed vigor and aggression in the market, Maruti recorded its highest ever sales of over 4.72 lack vehicles in the domestic & export markets which resulted in gross sales revenue of Rs.112,840 million — a growth of 25.8 per cent over 2009-10. It is the highest top-line growth in the last seven years.

Second, this high sales growth, coupled with significant improvements in operational efficiencies, has translated into much higher returns on investment. Earnings per share (EPS) more than trebled from Rs.9.14 in 2010-11 to Rs.21.77 in 2007-08.  Third, the Government of India divested a majority of its shares through an initial public offer(IPO) and made way for greater participation from you — the shareholders – in the fortunes of India’s leading passenger car manufacturer.

In a nutshell, therefore, 2009-10 marks the beginning of a new journey for your company, as it restructured itself in the face of stiff competition and entered a new high growth phase. The sharp revival in the Indian economy — from 6 per cent GDP growth in 2010-11to 8.8 per cent in 2011-12 — has definitely assisted your company in increasing revenue. This is the highest GDP increase recorded by India since the advent of economic liberalization, and the country has become one of the fastest growing economies of the world .This has considerably increased per capita disposable income which, coupled with much easier availability of significantly cheaper consumer finance, has driven automobile sales. Historically, the fortunes of automobile industries across the globe are strongly correlated with macro-economic parameters and the performance of the industrial sector. Chart A plots growth in GDP, industry, passenger vehicle (PV) sales volumes and total automobile sales volumes – and emphasizes this correlation. In 2011-12, the Indian passenger car and multi-utility vehicles market finally reached efficient scales of nearly a million. Although the improved economic environment helped growing automobile sales, it was not a totally smooth drive for the Indian automobile industry. An increase in the number of players and models has resulted in fierce competition — driving down prices across all segments. The industry also witnessed significant rise in prices of key raw materials like steel, rubber and plastics. Thus, profit margins were under pressue.

Maruti has always believed in size and spread. When the Indian automobile industry was reconciled to around 40,000 cars in early 1980’s, MSIL was the first company that

aspired to sell 100,000 cars a year. The aspiration of being the market leader with high sales volume continues to be intrinsic to your company’s philosophy. This belief has held the company in good stead during 2011-12 — where the strategy of pushing volume growth resulted in higher margins due to the positive effects of better capacity utilization. Improved operational efficiencies, which are largely due to the transfer of technology, systems and work culture from (MSIL) majority shareholder. Suzuki Motor Corporation (SMC) — has also contributed to the improved returns on investments. In 2010-11, the company has had record growth in bottom-line and return on investments. Here are some numbers.  Net profit margin (PAT/total income) increased from 2 per cent in 2011-12 to 5.6 per cent in 2010-11.  Return on average capital employed (ROCE) increased from 9.9 per cent in 2007-08 to 22.3 per cent in 2008-09.  Return on average net worth (RONW) increased from 5.2 per cent in 2007-08 to 16.5 per cent in 2008-09.  Earnings per share (EPS) increased from Rs.5.14 in 2007-08 to Rs.18.77 in 2008-09, while cash EPS increased from Rs.17.79 in 2007-08 to Rs.38.39 in 2010-11. MSIL also witnessed a key structural change during 2008-09. The company was originally set up as a joint venture between the Government of India (GOI) and SMC to provide the average Indian with a reliable and affordable car. Today, 20 years hence, MSIL has come a long way from charting the initial growth of the Indian automobile industry to becoming one of India’s leading business organizations -which has also promoted overall industrial growth through its linkages with vendors. GOI played a key role in supporting Maruti’s growth. In 2010-11, GOI divested a bulk of its shares in the company to the public.

GOI offered 72,243,300 equity shares, which is 25 per cent of the company’s share capital, for sale to the public through the book-building route. Even in a somewhat bearish stock market, the issue was fully subscribed within three hours of its opening. In fact, it was over subscribed nearly 10 times at the floor price. Encouraged by the overwhelming response, GOI exercised the green-shoe option, and offloaded an additional 10 per cent of the issue size (equivalent to 7,224,300 equity shares).

Thus, MSIL is now a listed company in Indian stock exchanges (Bombay Stock Exchange & National Stock Exchange) with Suzuki Motor Corporation having 54.2 per cent share ownership. Today, GOI owns 18.3 per cent of MSIL’s ordinary shares, while 27.5 per cent is in public hands. MSIL is a company which is constantly reinventing itself in a sector that is on the move. In the course of the following sections, we shall discuss markets, operations and financials of Maruti during 2008-09, and analyze the rapid external and internal transformations in its business. All data pertaining to markets is based on figures released by Society of Indian Automobile manufactures.

THEORETICAL FRAMEWORK The Revolution Maruti created history by record production in 13 months. On 14 December 1983, the then Prime Minister of India, Mrs. Indira Gandhi, handed over the keys of the first car to Mr. Harpal Singh of Delhi. Volume targets were routinely exceeded, and in March 1994, it became the first Indian company to produce over one million vehicles, a landmark yet to be achieved by any other car company in India. Maruti is the highest volume car manufacturer in Asia, outside Japan and Korea, having produced over 3.5 million vehicles by December 2001. Maruti is one of the most successful automobile joint ventures, and has made profits every year since inception till 2000-01. In 200001, although we generated operating profits on an income of Rs 92.5 billion, high depreciation on new model launches resulted in a book loss. We are again on track for profits in 2001-02, with a profit of Rs 300 million in the first half. In this period, sales were increased by 5.3%, against an industry decline of 6.1 %. We revolutionized the wav Indians looked at cars. "No other car company so completely dominates its home market" - (The Economist). Despite there being 11 companies now in the passenger car market, Maruti holds about 60 % of the total market share. MSIL is also the first and only car company in the world to lead its home market in terms of both market share and in the JD Power Customer Satisfaction study (JD Power Asia Pacific 2000 India Customer Satisfaction studies).

Transfer of Technology

Every minute two vehicles roll out of the Maruti Plant. It is therefore imperative that the transfer of contemporary technology from our partner Suzuki is a smooth process. Great stress is laid on training and motivating the people who maintain the equipment, since the best equipment alone cannot guarantee high quality and productivity. From the beginning it was a conscious decision to send people to Suzuki Motor Corporation for on-the-job training for line technicians, supervisors and engineers. This helps them to imbibe the culture in a way that merely transferring technology through documents can never replicate. At present 20 % of our workforce is trained under this program. Our Ethos Our employees are our greatest strength and asset. It is this underlying philosophy that has molded our workforce into a team with common goals and objectives. Our Employee-Management relationship is therefore characterized by: Participative Management, Team work, Kaizen, Communication, Information sharing, and an open office culture for easy accessibility to implement this philosophy. We have taken several measures like a flat organizational structure i.e. there are only three levels of responsibilities ranging from the Board Of Directors, Division Heads to Department Heads. Other visible features of this philosophy are common uniforms (at all levels), and a common canteen for all. This structure ensures better communication and speedy decision making processes. It also creates an environment that builds trust, transparency and a sense of belonging amongst employees. Maruti eyes Global Pie, to be R&D Hub for Suzuki New Delhi: With the enhanced backing of Suzuki, Maruti Udyog is gearing up to become a global scale player and will be a R&D centre for Suzuki cars outside Japan. Becoming a global player is the resurgent theme of Maruti's future strategy in the post-privatization phase as listed in the IPO offer document filed with SEBI. In terms of manufacturing processes or quality systems or even R&D, the flavor is global. Clearly, the company wants to build on its leadership in the domestic market and make a place for itself in the global arena. After sharp gains in productivity and quality in the past two years, the company wants to further improve its operating efficiencies by cutting costs by 30% and enhancing productivity by 50% and align itself with Suzuki's Kosai plant in Japan by year '09-

10. On the quality front, while Maruti was amongst the first automobile manufacturers in the world to receive the ISO 9001:2000 certification, it wants to go further and adopt Suzuki's global customer audit index. But the biggest shift is in the area of R&D. Although Maruti has gained from its expertise in localization of components, it now wants to take R&D to another plane where it can become Suzuki's centre for cars in Asia, outside Japan. In fact, it has recently acquired the capability to conduct minor and major face lifts to its products and upgrade products in terms of technology or features. To reduce initial investment on models, Maruti may outsource dye from other than Japan, such as Taiwan, which are often less expensive. Maruti's initiatives are based also on its recent success in the export market. It sold nearly 24,000 units of the Alto in Europe last fiscal and its overall exports were up by a whopping 163% over the previous year.

Its global ambitions are also now nurtured by the backing of Suzuki Motor Corporation. The prospectus makes this point by Sayin2 that as a subsidiary of Suzuki, Maruti has "access to globally respected technology in the small car segment.” Even while maintaining the overall global theme, Maruti wants to leverage its local advantage. Its promise of providing customers a "wide range of Maruti branded services at different stages of ownership" is at par with other global manufacturers. It lays great emphasis on these Maruti branded services like insurance, finance and preowned cars, and believes that this "360 degree customer experience" will secure repeat purchase and increase revenue of the sales network. In supply chain initiatives as well, Maruti's reference is to the world wide purchase system fostered by General Motors. Through this, it could make a select few of its vendors the sole suppliers for Suzuki products in several countries. Our focus will continue to be the small car: Jagdish Khattar From a loss of Rs 269 crore in 2000-01, after being written off by many analysts, Maruti has bounced back: its 800 model is as popular as ever, new launches are

picking up. Jagdish Khattar, managing director Maruti, spoke to Vinay Pandey on Maruti's transformation. Excerpts: Maruti's turn around: To understand Maruti today, you need to go back to 1993 when liberalization took place and foreign manufacturers were allowed to come. Maruti should have taken proactive measures then. But between 1995 and 1998 our shareholders (the government and Suzuki) had differences. Decisions that should have been taken in the mid-90s to prepare for competition got delayed. In June 1998, we decided to increase our capacity by one lakh vehicles and to introduce four or five new models, which arrived a year and a half after our competitors', who gained from this. Two, investments that should have been done over five years were done in 24 months in a hurry to launch new models. So, localization was low, the yen was strong, prices were market-determined, depreciation increased, and we ran into losses. That's when you got the feeling Maruti was in trouble. But internally, it was a very good wake up call, which did a lot of good to us. We brought out models, localized faster, cut costs massively. So even when everyone thought we were in trouble, we were confident that we'd bounce back. Our market share went down to 61%, but we've now stabilized around 58-59%. We took off a bit late, had lot of catching up to do, which we've done. Role of M800: People say 800 is old and so on. But go on the road and see someone on a two-wheeler, wife and two children, in rain, in winter, in summer. Is he going to be bothered about power windows and steering, or does he wish to be in a car and be comfortable?

Today we're selling air-conditioned 800s at Rs 2.2 lakh. Many people buying AC 800s may not have an AC at home. So, look at the tremendous role it is playing. India's car penetration is six per 1,000; Pakistan and Sri Lanka are at 12. Thailand is at 200, Japan and America are over 500-600. What I'm saying is that there's still a huge gap. If our motorization has to increase, we can't do that by selling expensive cars. We need to make cars more affordable. Therefore, a narrower gap between two-wheelers

and entry-level cars is what's required. It should also have good performance, no compromise on quality, fuel-efficient and low on maintenance. The 800 fits the bill. The Alto can't replace the 800 today because the volume and price at which 800 is selling, we can't sell Alto at that. Yes, once we get costs under control, we'll position the Alto between segments A and B. We'd like to have a car from the entry level to Rs 3-3.5 lakh at every Rs 20,000- Rs 25,000 difference. Success of new models: Historically, Maruti's new models never start with a bang. I joined Maruti in 1993 when Zen was introduced and we found it hard to sell initially. We had to reduce our production plan drastically, but then after a year or two it caught on. And look what it is today. So, initially there's skepticism, then some people buy and share their experience. About 60-70% of our sales take place by referral. I'm not saying marketing is unimportant, but there's nothing more effective than a present owner giving a good chit to prospective buyer. We're seeing the same effect with Wagon R, which is doing really well now. Versa is slightly different. When we decided on Versa, in 1998, the government had announced that in April 2002 the administered price mechanism (APM) for oil would be abolished. The gap between petrol and diesel prices would have then been negligible. Versa came, but APM remained. Now there is n...