Marketing And Management For Maruti Suzuki

Profitability

Discuss about the Marketing and Management for Maruti Suzuki.

Motor vehicles have enhanced independence and mobility for individuals and families in Australia. Australian Market is one of the largest markets for passenger car. The car market is worth over $160 billion dollars in terms of annual turnover.  Having employee base of over 400,000, the automotive industry boosts of its domestic manufacturing facilities which contributes to the economy of the country at large. Automobile industry has undergone a lot of changes with the advancement in technology and the desire for comfort. The impact of this is that the companies have to work very hard to meet the preferences of the customers. The industry is highly competitive and such competition will probably intensify as new entrants flood the market as well as worldwide consolidation and globalization. The industry takes the lead in innovation given that it invests much on research and development. MARUTI SUZUKI is a subsidiary of Suzuki Motor Corporation and the latter a greater stake in the company. MARUTI SUZUKI was the first company to undertake mass production and selling of cars in Australia. It is recognized for bringing revolutionary changes in the Australian automobile industry. It has its headquarters in New Delhi and is current among the market leaders in the larger Asian region.

Generally, automobile industry is a fast-paced in terms of growth. This is attributed to market saturation and high market penetration level. Suzuki and other companies compete for a market whose growth is very fast. As a result, every firm is working hard to gain bigger market share. The industry has experienced an oscillatory growth due to shifts in the economic conditions across the globe as well as the effects of globalization. Prior to 2008 recession, automobile industry has a steady record of growth. However, the recession which increased the level of unemployment also affected the amount that consumers would spend on normal goods including cars. Looked at in general terms, the overall sales of passenger cars have remained steady throughout 2016 (). The seasonal fluctuations are leveled off by global variance in purchase. MARUTI SUZUKI has put strategies in place to ensure that the organization maintains as steady growth despite the changes in the industry.

Market’s profitability helps companies to evaluate the suitability of a market for targeting and positioning. Apart from being a saturated and challenging industry, automobile industry is affected by many other factors including competition, pricing, and lifestyle. These factors adversely affect the sales prospects in the industry which ultimately impacts on the profitability of the industry.

Macro Environment

Currently, most major manufacturers getting out of Australia with Toyota and Holden scheduled to close down by 2017. This makes the Australian market not viable for mass production of cars from scratch. MARUTI Suzuki has the greatest share. 2012 Data on overseas production showed that the company has received a total of 1,834,000 units, which was 102.9% compared earlier years. Global production also experienced a great increase. The total domestic sales for surged by 10% to a volume of 5,210,000 units. Furthermore, the Australian government offered subsidies for acquisition of environmentally-friendly models for the first half of 2012 fiscal year. These subsidies stimulated demand to a level that the sales volume went beyond five million units.   The company exports more than 50,000 cars annually and commands a larger domestic market of over 730,000 cars annually. Close to half of the cars sold in Australia are Maruti cars.

Macro environment refers to the external factors that have both direct and indirect influence on the operation of the entire business in the country or within an industry. Being that MARUTI SUZUKI operates in a highly competitive industry market, it has to keep guard against losing it market share. However, the company prides in its large scope of operation. The company is also affected by other external forces that determine its success in the market this include political, economic, social, technological, environmental, legal factors. For further analysis of the above factors and how each affects MARUTI SUZUKI refer to appendix 1.

Automobile industry is one of the industries in Australia with intense competition since it has mature market. However, Suzuki and Toyota are main leaders taking the major share of the market. The major competitors have creating a cutthroat environment which makes it hard for new entrants to gain substantial share. The industry is characterized by efficient production, high product quality, and reasonable pricing which requires extensive resources and this keeps away potential entrants that can add into the competition strength (Gulati, Nohria, & Zaheer, 2000). Competition from both local and foreign brands has been a threat to Suzuki since a portion of its markets share is flipping away.

Being one of the leaders in the industry, Suzuki boosts of readily available distribution channels. Their brand dominates the shelves of major distribution stores within the country. One of the competitive strategy that Suzuki has been using since time immemorial is product differentiation (Maruti Suzuki Limited, 2008). Driven by the desire to capture the spirit of individualism, Suzuki has come up with products with unique styles for different people.

MARUTI SUZUKI	TOYOTA
Strengths ·      Market Leader in passenger vehicle segment ·      Strong and efficient distribution channels/ networks ·      Focus on developing new vehicles to tap more buyers ·      Greater market share (commands 45% of the passenger vehicle) ·      Large network of dealers and after sales services in the entire country. ·      Strong Brand Value and Loyal Customer Base. ·      Good product lines with good fuel efficiency ·      Pioneers in sales of secondhand vehicles ·      Enhanced revenue from after sale services	Strengths Distinctive competency focusing of consumer loyalty. Combination of technology and fitness in the products Products in both mid- and premium range Extensive reach through departmental stores, specialty retailers, company-owned stores, and licensees.
Weaknesses Younger generation developing greater affinity for foreign brands such as Nissan and Volkswagen Less exploration in the SUV segment as compared to its competitors. Disharmony between the company’s labor union and the management. Low interior quality inside the vehicles.   Wavering profitability. It concentrates on youths and young adults only while ignoring other population Lack of store serving females Overdependence on sportswear sales.	Weaknesses Poor marketing Low level of differentiation Less exploration in the mini and mid range vehicles. Wavering profitability in the industry

Nature of Competition in the Industry

Suzuki faces stiff competition from Toyota, Ford, and Honda. However, Suzuki has a competitive advantage based on its focus on product differentiation (Maruti Suzuki Limited, 2008). Secondly, the company has shifted into embrace the sense of individualism by releasing products with individual style. They also work on embracing fashion together with development of new products. According to Porters model, there are three main variables that can assist a company to outperform their competitors in the market (Trefis Team, 2013; KINETICS, 2015). They include focus, overall cost leadership, and differentiation. For example, if all the products available in the market are the same then the company that offers lower costs would have a competitive advantage. Porters further states that product differentiation is vital when products are similar in the market (Trefis Team, 2013; Bonoma, 1985). Automobile industry is a free market characterized by differentiated oligopoly behavior. There are local and international manufacturers offering cars of different types, design, and capacity.  For example, Mercedes, Audi and BMW offer high class cars with unique characteristics in every model. Hyundai, Nisan, and Maruti offer middle class cars which have different positioning. The products are differentiated through technology, styling, pricing, design, and after sale services. Even though competitors exist in the market, each of them has a unique differentiation strategy (Bonoma, 1985; Dunning, 1996).  

The vehicles are slightly different hence there is need for continuous development of new products. This is what has continually given Suzuki an advantage over its competitors. Suzuki has worked to introduce new products that consumers cannot overlook and this adds into its brand strength. As a result, Suzuki has managed to maintain its leading position in the international industry environment (Maruti, 2011).

MARUTI SUZUKI provides cars across varied segments. It provides 15 brands with over 150 variants (Arasu, 2013). The company expanded its manufacturing capacity in 2013 up to a level of 17.5 million (Maruti Suzuki Limited, 2013). The main market segment for Suzuki include Mini, Compact, Midrange, executive, premium, and luxury. MARUTI SUZUKI has employed the STP approach in segmentation. After segmenting, a segment (s) is chosen for targeting and products are positioned in a manner to resonate with the target market (MARUTI SUZUKI Inc. 2010). Maruti Suzuki provides cars for the new generation and the changeable lifestyle. They are constantly employing new technologies and apply them to products. Maruti Suzuki has a strategy of catering for all segments by offering products at all price points. The company offers affordable cars in all the segments (luxury, family, and sporting) (Maruti Suzuki Limited, 2013)

Strengths

MARUTI SUZUKI uses demographic segmentation to reach out to consumers of different age groups, gender, generation, occupation, and life-cycle stage. Primarily, MARUTI SUZUKI often targets all people through increased quality, production and other customer centric ventures. The company serves both male and female equally. Recently, MARUTI SUZUKI has launched into products along lines of young professionals. MARUTI SUZUKI does not use race, ethnicity, social class, or religion. However, it uses variables such as income and education given the high price of its products (Maruti Suzuki Limited, 2013).

Geographically, MARUTI SUZUKI has the highest market is India, Australia, and then Western Europe followed by China. In these regions, the company focuses on urban areas where population densities are high.  The company is working very hard to ensure their cars fits the needs of the Australian market (Maruti Suzuki Limited, 2008).  

In behavioral segment, MARUTI SUZUKI is often concerned more on how the products make the consumers to feel (Kotler, & Armstrong, 2013). In other words, the athletic sportswear should make athletes enjoy being athletes. MARUTI SUZUKI uses this type of segmentation to gain customer loyalty which guarantees the company an increase in sales and expansion of the market share. For instance, the implementation of game theory often makes customers to disregard rational thinking while making decisions and follow their feelings (Kotler, & Armstrong, 2013). Customer loyalty is vital for companies that operate in competitive industries like that of MARUTI SUZUKI and other companies. The company can only excel when they provide the consumers with choice quality and innovation (Arusa, 2013).

MARUTI SUZUKI also targets people with specific lifestyle and personalities, particularly people who have great interest in sports. The marketing strategy adopted by MARUTI SUZUKI is intended to create a feeling that goes beyond the product. Sports have a way of influencing personalities and lifestyle. Ideally, most of MARUTI SUZUKI’s product targets various individuals depending on regions and continents.  The primary target of MARUTI SUZUKI products is personalities that desire comfort in their transport (Maruti).

Every market segment requires unique marketing program without which a company may not maximize the potential yields in the segment. Primary segment, for example, provides a framework or a basis for promotion, offers, prices, a combination of various variables and distribution channels. It is the primary segment that gives the company the impetus required for success or any action taking in the secondary segments. Primary segments provide necessary insights for justifying marketing strategy, planning, and development.  Majority of the consumers of MARUTI SUZUKI products are the sportsmen. They form the primary segment of the Company. MARUTI SUZUKI reaches this segment through collaboration with teams, sponsorship, and college athletic for product support (Sharmah, 2012). As a result, the company is able to reach many consumers who are more likely to purchase the company’s products. The company pays close attention to the sportsmen more than other people who are also likely to purchase the same products.

Weaknesses

MARUTI SUZUKI is primarily concerned with passenger cars. Within this segment, there are different designs depending on people’s preference. Thus MARUTI SUZUKI has to segment its market in different categories in specific regions. Using STP approach (Segmentation – Targeting – Positioning), an organization uses the primary segment as target market and position products based on requirements of the primary segment. The primary segment provides the criteria for developing marketing program and positioning strategy. In the case of MARUTI SUZUKI, sports are the main segment areas. Thus marketing programs are aligned with specific people in every region. Primary segment also provides a place for undertaking probability survey and projecting the same to the entire market (Jones, Rees, Hall, & Tang, 2005).   

In MARUTI SUZUKI, the primary segment is likely to take high level of involvement which translates to high risk purchase and is typical expansive. For example, decisions such as choosing design of goods. The design for passenger cars and other products is highly dependent on primary segment (Kotler, et al 2005). Apart from aligning with business goals and organizational capabilities, the design of products must take into account the preferences of the target segment. In this case, MARUTI SUZUKI focuses on customer preferences and current technology. Another major decision making that requires extensive involvement of the primary segment is quality management. In this case, MARUTI SUZUKI works very hard to make sure that they meet the consumer expectations regarding the quality of product.

The decision involving location strategy must incorporate the primary segment. The physical location of an organization must be in proximity with the target market, suppliers, and employees. In the case of MARUTI SUZUKI, the decision on the physical location of production facility is based on the costs and nearness to the target market. For example, because of the cheap labor in Southeast Asia, MARUTI SUZUKI has most of the suppliers ailing from the region. The marketing environment is subject to external forces that influence marketing management and the ability to develop and sustain healthy connections with the target market. MARUTI SUZUKI engages formal analysis in understanding the needs and wants of a specific market segment.

The accessibility, measurability, and viability of the segment affect the decision on whether the products and services offered for the segment are relevant to the distribution channels and their cost effectiveness. The primary segment must be sustainable. In that, it should be able to show long lasting effects (Epstein, Buhovac, & Yuthas, 2010).

References

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Dunning , J.H. (1996). The Geographical Sources of the Competitiveness of Firms: Some Results of a New Survey. Transnational Corporations, 5(3), 1–29

Gulati, R., Nohria, N., & Zaheer, A. (2000). Strategic Networks. Strategic Management Journal, 21, 203-215.

Jones, S.C., Rees, L., Hall, D. & Tang, A. (2005). Using market segmentation theory to select target markets for sun protection campaigns.

KINETICS, H. (2015, March). Five competitive forces in sport business environments. Retrieved from https://www.humankinetics.com

Kotler, P. et al (2005). Principles of Marketing. UK: Pearson Education.

Kotler, P., & Armstrong, G. (2013). Principles of marketing (15th ed.). Englewood Cliffs, N.J.: Prentice Hall.

Maruti Suzuki India Limited. Maruti Suzuki Limited. (2008). Annual Report 2007-08, Maruti Suzuki Limited.

Maruti (2011), Maruti Suzuki Ltd website. Available at:https://www.marutisuzuki.com/about-us.aspx

Maruti Suzuki Limited. (2013). Annual Report 2012-13, Maruti Suzuki Limited

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Sharmah, P. (2012). Maruti Suzuki Limited. From slideshare https://pdf.marketpublishers.com/bac_swot/maruti_suzuki_india_ltd_swot_analysis_bac.pdf

Singh, N. & Salwan, P. (2015). Contribution of Parent Company in Growth of its Subsidiary in Emerging Markets: Case Study of Maruti Suzuki. Journal of Applied Business and Economics, Vol. 17(1)