final B2b project

REPORT ON MARUTI SUZUKI

EXECUTIVE SUMMARY The automobile market is very wide and too the competition. As one of the fastest growing sector  globally with the increase by 26% compare to previous sales, Maruti Suzuki capture 45% of domestic car market. Maruti Suzuki has been one of the renowned names in the automobile sector. Maruti Suzuki has come up with various models with their pricing factor, so it opens option for various people according to their  spending ability. The aim of our project was to find out methods they are using for their business sales and source of income. Apart from that how they segmenting their customer base and sales pattern, what trends are followed? The report has been prepared after screening out the available data through secondary sources as well as the emphasis was given on the primary sources where we have asked the manager of the showroom to give details about how their working environment, convert sales and other things that leads to Maruti as most preferable for customer.

1  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

INDUSTRY ANALYSIS Indian

Automotive Industry is vibrant and upcoming with global standards of quality, commitment to delivery and internationally competitive prices. India is the right destination for outsourcing of Auto components. Past few years have seen quantum leap in the Indian Automotive manufacturing sector. Although figures at the close of the year 2005 are not available with me, as yet, but, based on SIAM (Society for Indian Automobile Manufacturers) indicators, the year is expected to close with. TYPE OF VEHICLE MFG. IN 2005 (MILLIO N)  ____________  PASSE NGER CARS 1.70 0.30 COMMER CIAL VEHICLES 0.20 LIGHT COMMER CIAL VEHICLES THREE WHEELERS 0.50 TWO WHEELERS 9.00 India

is the 4th largest car market in Asia (after Japan, Korea & China. For commercial vehicles, it holds 5th spot in the world. Whereas, for 2-wheelers,India is the second largest market, next only to China, with both countries accounting of over 50% of global two wheeler production and sales. The Tractor  segment is also making steady progress in India. GROSS

TUNROVER OF THE AUTOMOBILE INDUSTRY IN INDIA

Year (IN USD MILLION) 2004-05 20,896 2005-06 27,011 2006-07 34,285 2007-08 36,612 2008-09 38,238 It may be the favorite whipping boy of environmental lobbies, but the automobile industry is increasingly taking steps to cut down energy consumption and reduce load of greenhouse gases like CO2 while producing vehicles in order to fall in line with principles of sustainable development.

With a target of achieving the best possible manufacturing methods, leading co mpanies like Maruti, Tata Motors, Honda and Hero Honda have been taking steps to make manufacturing processes clean and lean. Importantly, the cut in energy usage comes even as these companies increase production capacity manifold. Maruti, the country¶s biggest car manufacturer, has achieved sizeable reduction in energy and water  consumption as part of its µgreen initiatives¶ campaign. Energy consumption at its facilities during 200708 was lower by 26% as compared to energy consumption levels at the beginning of the decade. Maruti, that has factories at Gurgaon and Manesar in Haryana, has reduced usage of power and water just when its production capacity is fast moving to wards the one million mark. To achieve ambitious performance target, the Indian Auto Components Industry is creating strong foundations in operational performance to meet global bench marks on cost, delivery, quality, customer  satisfaction, instilling continuous improvement capabilities in technology &productivity, up gradation of  2  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

research capabilities, building a large capability of brain power, a large outlay in using IT, CAD and upgraded Tool Room capabilities. All this is being done in close co-operation with the Govt., Technologically advanced customers, outsourced technology partners, Research Organizations, in-house capabilities, and support from U NIDO and ACMA. GROWTH y y y

y y y y y y

DRIVERS OF INDIAN AUTOMOBILE MARKET

Rising industrial and agricultural output Rising per capita income Favourable demographic distribution with rising working po pulation & middle class Urbanization. Increasing disposable incomes in rural agri-sector  Availability of a variety of vehicle models meeting diverse needs and preferences Greater affordability of vehicles Easy finance schemes Favourable government policies Robust production

COMPETITION According the History of Automobile Industry US, dominated the automobile markets around the globe with no notable competitors. However, after the end of the Second World War in 1945, the Automobile Industry of other technologically advanced nations such as Japan and certain European nations gained momentum and within a very short period, beginning in the early 1980s, the U.S Automobile Industry was flooded with foreign automobile companies, especially those of Japan and Germany. The current trends of the Global Automobile Industry reveal that in the developed countries the Automobile Industries are stagnating as a result of the drooping whereas car markets the Automobile Industry in the developing nations, such as, I ndia and Brazil, have been consistently registering higher  growth rates every passing year for their flourishing domestic automobile markets.

DOMESTIC SALES y

y

y

y

Passenger Vehicles segment in 2010 (April-August), grew at 33.88 percent over same period last year. Passenger cars grew by 34.32 percent, utility vehicles grew by 22.56 percent and multi  purpose vehicles grew by 50.68 percent in April-August 2010 over same period last year. The overall domestic sale of commercial vehicles segment registered growth of 44.75 percent in 2010 (April-August) as compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered growth at 65.91 percent and Light Commercial Vehicles (LCVs) grew at 29.68 percent. During 2010 (April-August), three wheelers sales recorded a growth rate of 20.15 percent. While  passenger carriers grew by 23.84 percent and goods carriers grew at 5.46 percent in this period. Two wheelers registered a growth rate of 27.22 percent in 2010 (April-August). Scooters, mopeds and motorcycles grew by 44.45 percent, 24.18 percent and 24.41 percent respectively.

3  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

MAJOR AUTOMOTIVE PLAYERS IN INDIA Companies

Segments

Ashok Leyland

LCVs,

Asian Motor Works

M & HCVs

Bajaj Auto

Two and three wheelers

BMW India

Cars

Daimler Chrysler India

Cars

Eicher Motors

LCVs,

Fiat India

Cars

Force Motors

MUVs and LCVs

Ford India

Cars

and MUVs

General Motors India

Cars

& MUVs

Hero Honda Motors

Two wheelers

Hindustan Motors

Cars,

Honda

Two wheelers, cars and MUVs

Hyundai Motors

Cars

Kinetic Motor

Two wheelers

Mahindra & Mahindra

Three wheelers, cars, MUVs, LCVs

Maruti Suzuki

Cars,

Piaggio

Three wheelers, LCVs

Royal Enfield Motors

Two wheelers

Skoda Auto India

Cars

Suzuki Motorcycles

Two wheelers

Swaraj Mazda Ltd

LCVs,

Tata Motors Cars

MUVs, LCVs, M&HCVs, buses

Toyota Kirloskar 

Cars,

TVS Motor Co

Two wheelers

Volvo India

M & HCVs, buses

Volkswagen India

Cars

Yamaha Motor India

Two wheelers

M&HCVs, buses

and MUVs

M & HCVs

MUVs and LCVs

and MUVs

MUVs, MPVs

M & HCVSs, buses

MUVs

4  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

COMPANY PROFILE

Maruti Suzuki is India¶s number one leading automobile manufacturer and the market leader in the car 

segment both in terms of volume of vehicle and revenue earned. Until recently 18.28% of the company was owned by the Indian government and 54.2% by the Suzuki of Japan. The Indian Govt. held an initial public offering of 25% of the company in June 2003. As of 10 May 2007 government of  India sold its complete share to Indian financial Institution. With this govt. Of  India has no longer stake in Maruti Udyog. Maruti Udyog Limited (MUL) was established in February 1981, though the actual production was

started in 1983 with the Maruti 800 based on the Suzuki Alto Kei Car which at that time was the only modern car available in India. Its only competitor was Hindustan Motor¶s Ambassador and the Premier  Padmini were both around 25 years out of date at that point.Through 2004 , Maruti Suzuki had   produced over 5 Million vehicles. Maruti Suzuki is sold in India and various several other countries depending upon export orders. Models similar to Maruti Suzuki (but not manufactured by Maruti udyog) are sold by Suzuki Motors corporation and manufactured in Pakistan and other south Asian countries. The company annually exports more than 50,000 cars and has an extremely large domestic market in India

selling over 7, 30,000 cars annually. Maruti 800 till 2004 was the India¶s largest selling compact

car ever since it was launched in 1983. More than a Million unit of this car have been sold worldwide so far.

Currently

Maruti Suzuki Alto tops the sales chart and Maruti Suzuki Swift is the largest selling car 

in A2 segment. Due to large number of Maruti 800¶s sold in the Indian market the term ³Maruti´ is commonly used to refer to this compact car model. Till recently the term ³Maruti´ in popular  Indian culture in India, Hindu¶s lord Hanuman is known as ³Maruti´ was associated with Maruti 800 model. Maruti Suzuki has been the leader of the Indian car market for over two decades. Its

manufacturing facilities are located at two facilities Gurgaon and Manesar south of Delhi. Maruti

Suzuki¶s Gurgaon facility has an installed capacity of 350,000 units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 100,000 units per year 

5  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

and a Diesel Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a co mbined capability to produce over 700,000 units annually. Apart from sales and service network, it is cost of ownership that makes Maruti a successful leader.

More than half the cars sold in India are Maruti Suzuki cars. The company is a subsidiary of Suzuki Motor  Corporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is owned by public and financial institutions. It is listed on the Bombay Stock Exchange and National Stock Exchange in India. During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti Suzuki cars are on Indian roads since the first car was rolled out o n 14 December 1983.

PRODUCT OFFERED Maruti

Suzuki

offers

15

models, Maruti

800, Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift

DZire, SX4, Omni, Eeco, Gypsy, and Grand Vitara. Swift, Swift DZire, A-star and SX4 are manufactured in Manesar, Grand Vitara is imported from Japan as a completely built unit (CBU), remaining all models are manufactured in Maruti Suzuki's Gurgaon Plant. Suzuki Motor  Corporation, the parent company, is a global leader in mini and compact cars for three decades. Suzuki¶s technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient.  Nearly

75,000 people are employed directly by Maruti Suzuki and its partners. It has been rated first in

customer satisfaction among all car makers in India

COMPANY VISION ³The leader in the automobile industry, creating customer delight and shareholder wealth; A pride of India.´ Their core values lies in: y

Customer

y

Fast, flexible & first mover 

y

Innovation

y y

obsession & creativity

 Networking

& partnership

Openness & learning

6  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

MARKETING CHANNELS Marketing in automobile industries is lot about providing service before the competitors settle down with cheap & even better alternatives and also before the consumer perceives your product lack desired features. Maruti Suzuki has been the leader in the car market. As a specialist of small cars, they have been changing their marketing pattern according to the customer requirement and situation. Maruti Suzuki  provides few extra services along with dealing in cars. y

Maruti Authorised Service Station

y

Maruti Insurance

y

Maruti Finance

y

Maruti True Value

y

Maruti Driving School

y y

 N2 N

Fleet Management

Maruti Genuine Accessories

The buyer is gaining intelligence day by day, he wants everything from his/her car irrespective of the   price point, today buyer of an entry level car also expects style, more features, safety, mileage and is also value conscious. He is not ready to compromise on anything. Change that we see is today¶s consumer is that they don¶t want cheap pr oducts they want products which deliver better value  proposition. Infact, The increasing level of income of urban people, the small cars were not considered to be luxury item any more. To gain back its lost share Maruti launched Zen, Alto and WagonR.These small segment car gained huge response for consumers. Maruti also launched aggressive promotional policy to promote them like announcing Zen as the worlds car´.

Pricing Strategies: Pricing strategy helps both its customers and Maruti. Maruti offers a different model just at a price difference of around Rs. 10,000 for cars ranging between Rs. 3.25 lakhs to Rs. 4.50 lakhs. It offers five different cars in this range and different versions/models of each car. Due to so many options, most of  the time customers have an option within their budget or around their budget. The impressive sales and profits were the result of major efforts within the company. Maruti does that  by working with vendors, assuring them that for every drop in price, volumes will go up. Maruti is now encouraging its vendors to develop R&D capability for specialized components. Based upon such activities, product competitiveness in the market will further increase. Maruti also made strides in applying IT to manufacturing. A new Vehicle Tracking System improved efficiency on the shop floor  and enhanced quality control.

7  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

Advertisement: Maruti Suzuki has had several memorable advertising campaigns. Maruti has always tried to bind emotional relation with people and their commercials always convey an emotional message to the customer. They made a slogan ³Count on us Maruti 800 one of the popular campaign says it is a middle class family car that fits to their small budget and its tag line itself justify it ³ Change your life ¶¶ . Another successful campaign has been the ³Petrol khatam he NHI hunda made for Alto. It has very subtle way of telling the people. The advertisement was where a Punjabi family with small son playing with Maruti toy and car was covering huge distance without adding more fuel to it. In this commercial through emotion they tried to show mileage factor of car. This way they have targeted the segment of  market.

Distribution Network: Maruti Suzuki India is currently focusing its distribution network to setup stock patio in different parts of the country to reduce delivery time to customers, while it looks to boost its sales force. Maruti Suzuki has two state-of-the-art manufacturing facilities in India. Both manufacturing facilities have a combined  production capacity of 1,000,000 vehicles annually. Maruti has around 15000 dealers who are catered to by the sales executives. The orders are collected by the sales executives and passed on to the nearest depot. The depots are fed by regional warehouses. These depots maintain a minimum order quantity which is arrived at from the monthly demand forecast. The material is dispatched from the depot in the name of the dealer. Generally some orders of the same region are clubbed together and dispatched in trucks. Finally the truck is unloaded and the small orders of the dealers are dispatched to them. The sales executives are also responsible for the collection of  outstanding.

Promotion: The company has been concentrating more on sales promotion than on advertising. Sales promotion can  broadly be divided into two categories: 1. Scratch cards that are provided with every model. There are a number of gifts and schemes on the larger packs. Coupons and free gifts are offered on packs of more than 10 kgs. The company also offers a large number of services to the customers to assist them in their buying decisions. These services are offered on the company¶s website to make it accessible to a very wide range of customers. 2. As part of the company¶s policy, huge emphasis is given on trade promotion. The dealers and contractors who are a part of the distribution chain are given special attention. The most popular  schemes include cash discounts, foreign trips, gifts such as refrigerators etc for dealers who succeed in meeting or exceeding pre-determined sales targets. The company also organizes regional dealer meets regularly.

8  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

SWOT OF THE COMPANY Maruti ranked highest in customer satisfaction with after-sales service. It is known for true value, driving school, authorized service station, insurance (2002), genuine assessories. STRENGTHS: y

Distributor network, brand loyalty, Japan technology and S ervice distribution

y

After sales service

y

Cost-effective

y

Low

y

High fuel efficiency

y

Their customer base, market share & reliability.

maintenance, low price

WEAKNESSES y

Low

Resale value

y

Low

engine capacity

y

Their brand building. They have built an image from 1983/84 that they provide cheapest, affordable cars in India. So it has become a low cost model. Wonder why SX4 & Vitaras are not selling?? Ask this question to yourself. If you have 300 Rupees budget for a pen, will you buy a Reynolds or a Parker? Maruti is like Reynolds!

OPPORTUNITY y

High end car segment

y

Overseas market

y

I mprove handling

y

Add extra features to small segment cars

y

Attracting youth

y

Export small cars

y

Infrastructure,

network, past performance.

THREATS y

Fuel price

y

Global manufacturer's presence in India.

y

Price high of raw material

y

Small car competition

y

Ever changing customer's taste, purchasing power 

9  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

GOING TO MARKET: MANAGING THE SALES FORCE As part of our project work we have visited 2 showrooms in  NCR region. One is situated in Gurgaon and other in Faridabad. Showroom Address: Gurgaon:

Maruti Suzuki Showroom Business Tower, opposite to Audi showroom

Sector 54, Gurgaon (Haryana) Faridabad: TCS Maruti,  Near  Neelam cinema  NIT , Faridabad ( Haryana) SALES HIREARCHY OF THE SHOWROOM General Manager

Sales Manger Assistant Sales Manager Team Leader Team Captain Sales Executive FINDINGS:

We found that the hierarchy was same in both the showroom, but in Faridabad there are few things which in found quite interesting. Which is explained given below: Sales Force Structure: (Gurgaon) y

General Manager ± 1

y

Sales Manager ± 2

y

Assistant Sales- 4

y

Team Leader ± 4

y

Team Capitan ± 6

y

Sales Executive ± 8 10

 IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

While In Faridabad there are more no of team leader. Rest of the process of sales force structure is similar to Gurgaon one. . This depend how big the showroom is. y

General Manager ± 1

y

Sales Manager ± 2

y

Assistant Sales- 6

y

Team Capitan ± 8

y

Sales Executive ± 10

COMPENSATION Compensation

is such a matter that been decided by the company and circulated and followed by all showrooms. By asking we got to know some facts like: y

General Manager  decided by the company

y

Sales

y

Assistant Sales

y

Team

y

Team Capitan 

y

Sales

Manager - 20-25 thousand  15-18 thousand

Leader  9-12 thousand 6-10 thousand

Executive  5-8 thousand

Being Salary was same in both the showroom, there was slight diff erent in the payment of captain and executive i.e. they were paid low as compa red to Gurgaon.

INCENTIVES: All

incentives have been decided by company only. 

If a sales person achieves 85% of total target then he/she gets an incentive of Rs.700.



If a sales person achieves 85% of total target then he/she gets an incentive of Rs. 1000.



If a sales person sales more than 8 cars then he gets an incentive of Rs. 1000.

 Spot incentive- In this

case Rs. 500 has been given to those employees who are able to sell an

old stock. They are committed to perform these activities: y

Have

to establish long term relationship with customer.

y

Give information about promotional off ers and other off ers to existing customer.

y

Try

y

Give relative information to all those customers who visit the show room.

y

Need

to sell old stock. to sell car insurance and additional automobile parts like music system, seat cover, etc

also. 11  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

Few

thing which find in Faridabad showroom was :

They

were having a systematic plan. When you enter in showroom there is a reception. You hate

registered yourself their, will be asking you your name, address, phone number, purpose.

After

that

she call for the executive they have a complete detail which executive is busy and which is f ree. This is

to avoid the unconvinced faced by costumer in se arching for the executive.

TRAINING & DEVELOPMENT y

Annual Training Plan - All Levels

y

Training customized to meet Organisational Objectives

y

Topics selected based on Vision, Values & Departmental, Feedback of Company-wide Managers

y

Competency

y

Technical Training on latest Technologies abroad at SMC, Japan

y

STRO NG FOCUS O N TRAINING INITIATIVES

Mapping to identify Individual Training  Needs

-

Build a Learning Organisation

-

Continuous

Value Additions to Professional Skills

-

Customised

Training

-

Training to the personnel of Business Partners

OVERSEAS TRAINING Training held in co-ordination with SMC, Japan and AOTS (Assoc. for Overseas Tech. Scholarship)(covered 1600 employees under t he various schemes) y

6 months SMC Training for Technicians - OJT in SMC, Japan (2 batches/yr of 50 each)

y

9 months Javada Training for Press, Tool & Die Specialists - Design & Maintenance

y

AOTS Managerial Training (4-10weeks) for Manager & above - Managerial Best Practices

y

AOTS Technical Training (3.5 to 6 months) for Supervisors & above - Technological Knowhow

y

R & D Training (2 yrs.) - Research on new Technologies

APPRAISAL & REWARD Appraisal is the essential function to motivate their employees followed by every Maruti showroom and company. It is based on KRAs & target s. While reward is given on the basis of performance, their productivity & Profit-linked Incentive Schemes

12  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

SWOT OF THE AUTOMOBILE INDUSTRY STRENGTHS:- It is globally cost competitive - Adheres to strict quality controls - Has access to latest technology. OPPORTUNITIES:- May serve as sourcing hub for global automobile majors. - Significant export opportunities may be realized throug h diversification of export basket. WEAKNESS - Industry by and large (baring a few dynamic e xamples) have low research and development capability,  but, over coming it very fast. - Industry is exposed to cyclical downturns in the auto motive industry. - Most component companies are dependent on global majors for technology. THREATS - Pressure on prices from OEM¶s continues: - Imports from FTA Regime Countries, in certain component segments are a threat to local industry. - Smaller players who do not upgrade to global standards would get extinct.

FUTURE HOLD OF AUTOMOTIVE INDUSTRY The automotive industry is one of the largest and most multinational of all industries. It is a key indicator of economic growth and a major contributor to the gross domestic product (GDP) of several Member States and the EU. On a global level, the assets of the top ten multinational automotive enterprises represent 28% of the assets of the world¶s top 50 companies, 29% of their employment and 30% of their total sales. To accelerate and sustain growth in the automotive sector, Automotive Mission Plan (AMP) 2006-2016 has been prepared in order to make India a global automotive hub. The Automotive Mission Plan (AMP) 2006-2016, aims at doubling the contribution of automotive sector in GDP by taking the turnover to USD 145 billion and providing additional employment to 25 million people by 2016 with special emphasis on export of small cars, MUVs, two and three wheelers and auto components. In

recent times, this industry has been gaining more attention from car manufacturers. An average automobile manufacturing company spends thousands of dollars on electronic devices for every vehicle. Increase in using electronic devices in automobiles is reflected in the form of entertainment systems, security features and safety devices. As prices of fuel have increased, there is an increasing need to switch on alternate sources of fuel. Water  is one best source of energy. Researchers have proved that water can run cars. Scientists also claim that energy extracted from water can be used instead of fuel. Water mixed with normal gasoline is another  alternate solution. Automobile industry is trying hard to discover other technologies for reducing all these costs. 13  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

CONCLUSION

14  IILM INSTITUTE FOR HIGHER EDUCATION 

REPORT ON MARUTI SUZUKI

15  IILM INSTITUTE FOR HIGHER EDUCATION