Marketing In Recession:maruti Suzuki

MARKETING PLANNING IN RECESSION AUTOMOBILE SECTOR MARUTI SUZUKI

GROUP 2: Abhishek Kumar(332) Gaurav Kumar(334) Jaybind Kumar Jha(328) Kumar Saurabh(368) Nilesh Sinha(359) Rahul Vani(362) Shambhavi Pandey(345)

Sector Analysis-The Passenger Vehicle Industry ØSaddled with large excess capacity ØThe four major segments : economy, mid-range, premium and luxury ØCaters more to the urban population of India, directly linked to disposable income ØThe critical success factor changed from price to price-value ØApart from individuals (personal vehicle owners), the demand also comes from taxi operators, transport operators & government/private organisations or institutions for their employees etc ØThe ability of carmakers to pass on cost increases to customers in the form of price hikes is likely to become very difficult in the slowdown ØThe penetration of imported new cars following the removal of quantitative restrictions (QRs) to be restricted to premium niches ØThe threat from second-hand cars is considerably limited

Major Players Stiff competition among the market players , domestic as well as global

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Maruti Udyog Ltd. Hyundai Motor India Ltd. Hindustan Motors Ltd. Daewoo Motors India Ltd. Fiat India Ltd.

Ø Ford India Ltd.

Dominated by a large number of market players including domestic as well as joint ventures between domestic

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Honda Siel Cars India Ltd. Telco Mahindra & Mahindra Ltd. General Motors India Ltd. Toyota Kirloskar Motors Ltd. Premier Automobiles Ltd. Mercedes Benz India Ltd.

Maruti Suzuki Ø Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned – a people’s car for the middle class India Ø Until recently, 18.28% owned by the Indian government, and on May 10, 2007, it sold its complete share to Indian financial institutions Ø The parent company, is a globally renowned for its mini and compact cars for three decades, its technical superiority, power and performance into a compact, lightweight engine that is clean and fuel efficient Ø Maruti has been labelled as an “employer of choice” for automotive engineers and young managers Ø The company vouches for customer satisfaction

Zen Estilo

Maruti Suzuki 800

Esteem

Alto

Versa

SX 4

Omni Grand Vitara

AStar Swift Baleno

Marketing strategies of Maruti prior to recession • Undisputed leader until 1998 • In response to liberalization -it redesigned and introduced new models, shifted focus to customers • Covers all price points – caters to every passenger car customer • One-stop shop, different revenue streams • Brand facelifts • Cost Leadership, operational efficiency and productivity

Consumer Trends SALIENT FEATURES: Ø Increasing young population Ø Rising GDP and per capita income Ø Changing lifestyle THE CONSUMER CLASS: 1) The Urban class 2) The Semi Urban class 3) The Rural class THE RISE OF SEMI-URBAN CLASS Ø Saturating megacity market Ø Growing semi-urban tier II cities Ø Better performing market in recession

Consumer Trends Contd… THE EMERGING RURAL MARKET: Ø 742 million people Ø Rs. 8,000 Crores estimated market Ø Improving Infrastructure. Ø Rural Literacy from 36% to 59% Ø Low rural, a marketing opportunities. Ø Rural marketing in recession

THE FUTURE OF CONSUMER CLASS: Ø Positive long term demand Ø Supportive recent quarter data Ø Consistent 6% and above projected Ø GDP growth

Consumer Trends Contd… THE FUTURE OF CONSUMER CLASS: Ø Further increase in youth population covering 65% of total population by 2015 Ø Increasing share of consumers and reducing share of destitute

Market Segment Analysis Based on economic strata, the Indian auto consumer segment can be sub divided in to 5 categories: Ø Ø Ø Ø Ø

Economy Mid Range Luxury Premium Super Premium

Segment wise market share in 2008

Power Price Segmentation

Consumer Preferences

Consumer Preferences Contd…

BCG Matrix – Maruti Suzuki

Impact Of Recession on Maruti Sales figures(In Units) :

Analysis and Inferences from the sales data: Ø Severe impact on C segment and A2 segment cars. Banks are reluctant to finance car purchases in the wake of subprime crisis. Ø Partial impact on A1 segment(sales of M800 has been declining for the last few years on account of other reasons as well). Ø Very less or no impact on A3 segment cars. Ø SX4 was launched in May 2007 and DZire in March 2008.Both the cars are runaway success ever since they have been launched in India and they have kept the A3 segment unaffected. Ø Overall, recession has adversely impacted the passenger car segment as A2 category comprises a significant part of the passenger car segment.

Responses to Recession by Maruti Ø Deferred buying by customers. Ø Focus on untapped potential of rural market. Ø Provision of discount purchase. Ø Targeting the government employees.

General changes in marketing practices across the sector Ø More emphasis on rural markets. Ø Financial assistance. Ø After sales services.

SOME MORE MEASURES IN RECESSION Ø One component one gram Ø Tapping export market –Launch of A star model Ø Cost effective channels of marketing a) Internet b) Social network & Promotional events c) Video sharing Services

Conclusion & Learnings Important factors while preparing a marketing plan in times of recession: Ø Research the customer Ø Maintain marketing spending Ø Adjust product portfolios Ø Support distributors Ø Adjust pricing tactics Ø Emphasise core values

References: Øwww.marutisuzuki.com Øwww.economictimes.com Øwww.ncaer.org Acknowledgements: ØMr. Shailesh Rao Dev, Head, Supply chain,M&R ØMr.Manoj Agarwal,Head,Supply Chain,Maruti Gurgaon

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