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Maruti Udyog Limited - Marketing

Essay by   •  June 24, 2011  •  Case Study  •  3,625 Words (15 Pages)  •  2,058 Views

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EXECUTIVE SUMMARY

The above report using Maruti Udyog Limited (MUL) as an example focuses on the marketing strategy based on environmental and competition factors. MUL entered Indian car industry in low price segment with its most successful variant Maruti 800 which is still the market leader. Hence MUL capitalised Indian car market by catering the bigger section of society i.e. Middle class by giving them worth of their money and making Maruti800 a truly family car. It captured the leader position as earlier the only other competitor was Hindustan Motors. After 1991 liberalisation it faced a stiff competition but still it remained on the top by making continuous innovation in its car models. With the passage of time MUL entered the other income segments by offering models like Grand Vitara, Esteem which readily captured the market given the already brand name set by MUL. To enhance the service facilities it became the first Indian company to come with concept of call centre for internal and customer services.

MUL quickly adapted to new IT environment by going for latest technologies like SAP enabling an efficient system follow in operation and distribution. MUL became the first company in India to come with company fitted CNG kits in variants thus benefiting the natural environment and pocket of the consumer.

For a decade-and-a-half now, Maruti has been racing against itself on a racetrack called India. One of the largest markets in the world and one of the few showing an increase in the number of cars sold. It is a leader in the small car segment holding 54% market share in Indian followed by Hyundai Motor India with 21% market share, Tata Motors with 17%, General Motors with 3% and others with 5% market share.

With 84% market share at one time, Maruti never had to sell its cars, rather people had to buy them. But with the change in different environmental (macro & micro) forces and advent of globalization, this scenario is no longer visible. This has made it imperative for Maruti to redefine itself with the changing market forces and maintain its numero uno position. Strategies practiced by Maruti Suzuki to cope with the huge competition prevailing in the market are:

* Launching of latest models. E,g Swift, Ritz, A-star

* Latest Technology. E.g the engine of the Diesel Swift

* In-house financing

* Maruti True Value

Objective - To analyze the operating environment and competition in a small segment car industry from the perspective of Maruti as the Market Leader.

Product - Small Segment Cars Category - Durables

Product Definition - Small segment cars have a 1.2 litre petrol engine or a 1.5 litre diesel engine. This generally includes two segments:

* Segment A - Price below Rs. 3,00,000.

* Segment B - Price between Rs. 3,00,000 and Rs. 5,00,000.

The various macro and micro environments affecting the car industry are -

MACRO ENVIRONMENT

1. Demographic environment

* Population Age mix - India has the highest portion of population below 35 years, 70% (potential buyers). They are more looks and trend oriented. So Maruti, has come out with models like A-star, and Ritz, its major selling brands are Wagon-R and Swift.

* Gender - The Indian society is said to be a predominantly male society. However, more and more females are buying cars for various necessities. They need small, easy to maneuver cars. Maruti has introduced small cars with power steering like Zen Estillo and Ritz in trendy shades especially for young fashionable girls, to cater to female needs and taste.

* Literacy - Literacy is increasing in India. Educated people are very critical and demanding about the products they purchase. Maruti is increasing awareness about its different products, safety features, technology used and implemented via different mass communication media like news papers, television, etc to be more approachable to consumers.

Expected Changes - As small cars are mainly for family and personal purpose so safety features like Anti braking system, electronic assist and air bags will be introduced in the base version of models by all car manufacturing company.

2. Socio-Cultural environment - Society shapes the beliefs, values and norms that largely define consumer tastes and preferences. In recent times, consumer satisfaction has gained greater attention within the context of the paradigm shift from transactional marketing to relationship marketing. Several J.D. Power studies have highlighted the correlation between consumer satisfaction and product quality. Satisfaction with quality relates to several aspects: ability of the product to meet personal and family expectations, reliability of the product, satisfaction with price charged, perceived value, quality consistency and effective communication. Product replacement cycles have reduced from seven-eight years to three years. Earlier a Class I consumer who would rather save, now spends confidently. In the past, rural consumers were conservative and averse to debt. But now they don't hesitate to take a loan to pay for a house or consumer durables.

Expected Changes - Customization of cars from design to last inch detail by customers as per their need and taste will be the next big move.

3. Economic environment - The purchasing power of consumers depends on current income, prices, savings, debt and credit availability. India's economy is growing since 1991, ever since the government relaxed controls on industry and commerce. India is growing at 6.7% after the global recession faced recently. Despite recession the sales of Maruti have increased due to the smart marketing strategy by them through which they have targeted the rural sector. The decrease in the cost of buying has given a boost to consumer spending. Maruti as a leader has a new set of consumers to cater to the needs of, for maintaining its leadership in the market.

Expected Changes - In the future, with the accelerated growth of the economy and increased consumer needs, the car demand is expected to grow in times to come. This will lead to economies of scale, lower cost of production and a major portion of population demanding cars.

4. Natural Environment - Green vehicle is the need of the hour. The emission norms have been tightened from time to time to address the environmental concerns and health hazards arising from vehicular

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