Maruti Suzuki in Indian Premium Car Segment Free Essays

string(25) " tag associated with it\." MARUTI SUZUKI amp; INDIAN PREMIUM CAR SEGMENT Interim Report – Marketing Management INTRODUCTION: Indian automobile industry currently contributes 5% to India’s current GDP of $1. 4 trillion. The projected size in 2016 of the Indian automotive industry varies between $ 122 billion and $ 159 billion including USD 35 billion in exports. We will write a custom essay sample on Maruti Suzuki in Indian Premium Car Segment or any similar topic only for you Order Now This translates into a contribution of 10% to 11% towards India’s GDP by 2016, which is more than double the current contribution. We can safely assume the passenger car market as a whole grows in the same phase if not more than mentioned above. Passenger cars have sub classifications with in them and they are as follows: SEGMENTATION OF INDIAN CAR MARKET: As per SIAM (Society of Indian Automobile Manufacturers) The classification of segments are done as per length of the vehicle, (Passenger car segment) 1. A1 – Mini – Up to 3400mm (M800, Nano) 2. A2 – Compact – 3401 to 4000mm (Alto, wagon r, Zen,i10,A-star,Swift,i20,palio,indica etc) 3. A3 – Midsize – 4001 to 4500mm (City,Sx4,Dzire,Logan,Accent,Fiesta,Verna etc) 4. A4 – Executive – 4501 to 4700mm (Corolla,civic,C class,Optra,Octavia, etc) 5. A5 – Premium – 4701 to 5000mm (Camry,Eclass,Accord,Sonata,Laura,Superb,etc) 6. A6 – Luxury – Above 5000mm (S class,5 series etc) 7. B1 – Van – Omni, Versa, Magic etc 8. B2 – MUV/MPV – Innova, Tavera, Sumo etc 9. SUV – CRV, Vitara etc A segment, B segment etc. were used earlier. But now the segmentation in India is done on the basis of length. Maruti Suzuki India Limited, the leading passenger cars producer, currently holds a market share of about 45% in the passenger vehicles segment. The dominant share of the current 45% has primarily come from passenger cars that belong to the Mini/Compact hatchback or midsize sedan. As Maruti Suzuki started its operations in 1981 the needs of the country’s automotive industries were affordable/entry level cars which Maruti very successfully catered to. But very recently the executive, premium and luxury segment cars are growing more than 20% every year which is higher than the growth of the compact passenger cars. Here is a data which reiterates the growth of premium segment cars in India. The data shows the number of cars whose price is in the range of 15lakh to 30 lakh. Model| 2004/05| 2006| 2007-08| 2008| 2009| 2010| 2011| Skoda superb| Na| 769| 586| 694| 541| 2078| | BMW 3 series| -| -| 946| 1,075 (FY09)| 1,155| 2,220 (Jan-Nov)| | Audi A4| -| -| 102| 1,050| 1,658| 3,003| 4,210 (Q1-Q3)| Mercedes c class| 785| 883| 1,127| 1,765| 1,607| 5,109 ( Jan-Nov)| 3,233 (Jan-May)| The above data clearly shows there is a strong growth in the premium segment that is being seen in the Indian passenger segment. So how far can Maruti Suzuki, a pioneer in small car segment, address the changing trends of Indian car market. Can it replicate the success of small car sales in to the premium segment also? In order to identify the needs and the values of the luxury class and their views and expectations on Maruti entering premium car segment we conducted the following interviews which are given below INTERVIEWS WITH POTENTIAL CUSTOMERS: INTERVIEW 1: What is your profile? I am Prakhar Sharma. I am an electronics engineer and had been working for BEL for the last one year. At present I am a student in IIM Bangalore. Do you own a sedan? If yes, which car? My father would be the rightful owner of the cars that we possess. He is a Government officer. We currently own a SX4 petrol version. It is the ‘fully loaded’ petrol version, and we own it for over a year. Do you own any other car? We do own a Maruti 800, which is around 20 years old. Apart from that, my father has his office car as well. We thought about buying a new car because the Maruti 800 was very old. What are the various factors you considered before you bought the car? Generally when a person is looking to buy a sedan, it is his second or third car purchase. There are various factors people consider while buying a car. Personally, the factors I feel that influence my choice are Style, Power, Ergonomics and driving experience. This is of course taking into account that certain minimum requirements are met by the cars in this category. What other cars did you compare with before buying the SX4? There are a number of options available in this price range. We had basically zeroed down up on SX4 and Honda City. The Honda City is a really good car as well. The best thing I liked about it was the experience. It is extremely smooth with a feather touch power steering. The design and interiors are really nice as well. What made you choose the SX4 over the Honda City? We had a fixed budget assigned towards the car, with a flexibility of around 1 lakh. Within that budget the two cars I really liked was SX4 and Honda City. However, the Honda City base model would cost us as much as the SX4 fully loaded model (with all features already installed). So we felt that it was better value for money, and went along to buy the SX4. Apart from that, some other factors which influenced our decision was that maintenance costs of Maruti is very low, spare parts are readily available and don’t really cost that high either. If you are looking to upgrade to a higher end sedan, would you go for a Maruti again? Say Kizashi? If I assume that I do not have any budget constraints, then I probably would not go for a Maruti. The new Kizashi seems good as far as design and technical specifications are concerned, but the name Maruti has a perception attached to it. Maruti is the car that was trusted by your parents and grand-parents, it is the car that almost every Indian owns. If I want to own a high end sedan, I would want to show it off as well. I feel that would not be possible with the Maruti tag associated with it. You read "Maruti Suzuki in Indian Premium Car Segment" in category "Papers" It does not have that association of exclusivity. So I would rule out Maruti in the first place and go for a brand which is not possessed by too many people. INTERVIEW 2: What is your profile? I am Vaibhav Singh, I graduated from IIT Kanpur. Currently am a PGP-I student at IIM Bangalore. Prior to joining IIMB I worked at National Instruments for almost 3 years. Do you own a car now? If yes what is the car Yes, I own a Maruti 800. What are the facts you like and dislike about your current car? I feel a sense of safety in case of Maruti mainly because it’s a trusted brand especially in India. Secondly it’s low on maintenance and its spares are readily available. Also Maruti has a strong service network. What I don’t like about Maruti, I get confused as there are many cars in the same segment and it’s very difficult to select. Do you have any other cars in the family? Which one do you like comparatively? Yes we also own a Ford Figo. I like Figo over Maruti 800 as it is newer and has many more features. Are you planning to upgrade your car now? What are the key features you look for in the car? I may upgrade after in a couple of years from now and mostly to a sedan. The key features I will look for would be i. Brand value. How it’s perceived in the market. ii. Quality iii. Price iv. Features If Maruti comes up with a new car would you be willing to consider it? Why or why not? I will mostly not consider Maruti as my option. The reason is that I associate Maruti with low cost so there is a brand disconnect. I would rather consider a Honda or Toyota. What do you think about the new car Maruti has launched Kizashi? When I saw the car it was portrayed as a sports sedan but I think the looks could have been better. Basically, I don’t perceive Maruti car as a sports sedan. When a car is that expensive it should also add status which I think Maruti does not add. What can Maruti do so that you will consider it as an option? I think what most other companies have done by separating the brand specific for luxury cars, Maruti should do something similar. If possible leverage on some brand that concentrates on luxury segment alone. If not anything else, they should atleast use just ‘Suzuki’ and not ‘Maruti Suzuki’ to launch a car in targeted segment. Finally what are the two main reasons why you will not buy a Maruti in the luxury segment? 1. There will not be any status enhancement 2. I do not associate Maruti with high performance. I only think it is low cost and reliable. INTERVIEW 3: What is your profile? I am Shobhit Agrawal from Delhi. I completed my graduation from St. Stephen’s College. Currently am a PGP-I student at IIM Bangalore. Do you own a car? If yes, which? Yes, we own a Volkswagen Polo for over a year. We also own a Maruti 800 but it’s not in a major use now. What you like and dislike about your current car? We bought Polo because it was one of the better cars in terms of performance in that price range. We preferred a top-end version of hatchback over a low-end version of a bigger car. Polo has many features and most importantly we wanted a car that is new and different from the ones generally present in society. So Polo met most of our needs. There’s nothing specific which I don’t like so far. If you want to upgrade your car in future what will it be to? What are the key features you would look for in the car? If I upgrade my car in future, it might be to a sedan. Key features I would consider are i. Performance (engine) and mileage ii. Value for money – The car should be ergonomically comfortable, it should have good features, better quality and good interior design amp; aesthestics iii. Brand – It should make a statement. iv. It should also have a good dealership network and servicing network. Suppose you would want a luxury sedan, and Maruti launch cars it that segment. Would you consider Maruti as your option? Why or why not? As I mentioned the key features I would be looking for in a new luxury sedan car, If I feel that a Maruti sedan meets my requirements, I may consider it as my option. But since such an investment is considerably large and highly infrequent, brand will also play an important role in selection as it is a status symbol. What’s your view about Maruti Suzuki SX4 and Kizashi compared to competitors in their segment? When I see SX4 against Honda City, SX4 seems to be lower in class although it is not. Similarly if I compare Kizashi with Accord or Camry, Kizashi seem to be slightly lower. This I think is mainly because people associate Maruti with small cars than sedans and luxury cars. What do you Maruti lacks to be in luxury sedan segment? What should it do? I think Maruti lacks an image of luxury car maker. It is generally associated with small cars owing to its leadership in that segment. In order to be more successful, Maruti will have to develop expertise and capability to compete in that segment. SURVEY ANALYSIS So from the discussions with the consumers we have come to the following conclusions regarding whether they would prefer to buy a Maruti in the sedan segment the following conclusions can be drawn. 1) The major reason is that Maruti is associated with a low cost car. It is a very trusted brand as many of the people interviewed were either owners or had owned a Maruti car in the past and were very satisfied with the product. However the brand is not associated with a status symbol so people upgrading will most probably not prefer a Maruti even if the product and the price is same of competition. 2) Another reason for non-acceptance is that there a real as well as perceived difference between the competitors and Maruti. When we compare higher end cars by Maruti with others in the segment, it fails to beat the established standards by other brands. For e. g. In a 2. 4 Lit engine car segment, it is perceived by the consumers that Toyota and Honda cars will have a superior engine than Maruti’ s engine. Also they are perceived to provide a better quality in terms of aesthetics to the buyer. For this reason, even though, Maruti Suzuki SX4 was launched in the same segment as Honda City, it was always considered to be lower than City. 3) One reason for people not to consider the car is that they feel the resale value will not be good. As many people in these segments buy cars and switch between 3-5 years resale value is an important consideration and this is where Maruti lags behind a lot compared to a Honda or a Toyota SOME POINTS WERE ALSO IN FAVOUR OF MARUTI: ) Most of the people have already owned a Maruti and were very satisfied with the product and have a high opinion of its after sales service and cheaper spare parts so they think that compared to the others the maintenance cost will be low. Therefore after analysing the 4 interviews we can come to the conclusion that Maruti cannot be seen as a status symbol that most people upgrading to higher end cars look for. However this se gment is growing at a very fast rate compared to the average industry so this is a segment Maruti cannot afford to ignore. The advertisements and promotions for their latest car Kizashi also could not generate much excitement among the customers like what Mahindra Scorpio’s advertisements did so this could be one area they could look at. So the key questions going ahead for us will be: * Maruti has enter the segment with its current brand the following table shows the specifications of Maruti Kizashi and its competitors Technical Specification and Pricing * As shown in the table above even with similar specifications and competitive pricing Kizashi was not able to catapult its sales figures as done by Accord (3324 units– 2005-06) and Camry (794 units– 2005-06). So the burning question is does it need a new brand either fully made by themselves like Toyota did with Lexus or should they come into collaboration or acquire a luxury brand and enter into the market * Will Maruti be able to use the current distribution channel to effectively market the cars? With the same dealership network having two types of customers, one targeting an entry level hatchback and the other targeting a luxury sedan served effectively? Or will they need a new dealership network for high segments cars for specific target consumer which can be a costly affair. How to cite Maruti Suzuki in Indian Premium Car Segment, Papers