final B2b project

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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.

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INDUSTRY ANALYSIS

I_{ndian Automotive} I_{ndustry is vibrant and upcoming with global standards of quality, commitment to}

delivery and internationally competitive prices. I_{ndia is the right destination for outsourcing of Auto}

components. Past few years have seen quantum leap in the I_{ndian Automotive manufacturing sector.}

Although figures at the close of the year 2005 are not available with me, as yet, but, based on SI_AM

(Society for I_{ndian Automobile Manufacturers) indicators, the year is expected to close with.}

TYPE OF VEHICL_E _MFG. IN₂₀₀₅

(MILLI_O N₎

____________

PASSE N_GERC_ARS _1.70

C_OMMERCI_AL_VEHICL_ES _0.30

LI_GHTC_OMMERCI_AL_VEHICL_ES _0.20

THREE WHEEL_ERS _0.50

TWO WHEEL_ERS _9.00

I_{ndia is the 4th largest car market in Asia (after Japan, Korea &}C_{hina. For commercial vehicles, it holds}

5th spot in the world. Whereas, for 2-wheelers,I_{ndia is the second largest market, next only to} C_hina,

with both countries accounting of over 50% of global two wheeler production and sales. The Tractor segment is also making steady progress inI_ndia.

G

_{ROSS 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

I_{t 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

C_{O2 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. I_{mportantly, 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 2007-08 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.

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research capabilities, building a large capability of brain power, a large outlay in using I_T, C_{AD 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 NI_{DO and A}C_MA.

G_{ROWTH DRIVERS OF INDIAN AUTOMOBILE MARKET}

y Rising industrial and agricultural output y Rising per capita income

y Favourable demographic distribution with rising working po pulation & middle class Urbanization.

y Increasing disposable incomes in rural agri-sector

y Availability of a variety of vehicle models meeting diverse needs and preferences y Greater affordability of vehicles

y Easy finance schemes

y Favourable government policies y Robust production

COMPETITION

According theHistory 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 I_{ndustry 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 I_{ndustry was flooded with foreign automobile companies, especially those of Japan and}

Germany.

The current trends of the Global Automobile I_{ndustry reveal that in the developed countries the}

Automobile I_{ndustries are stagnating as a result of the drooping whereas} _{car markets} _{the Automobile} I_{ndustry 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 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.

y 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 C_ommercial

Vehicles (M&HC_{Vs) registered growth at 65.91 percent and} L_ight C_{ommercial Vehicles (}LC_Vs)

grew at 29.68 percent.

y 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. y Two wheelers registered a growth rate of 27.22 percent in 2010 (April-August). Scooters,

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MAJOR AUTOMOTIVE PLAYERS IN INDIA

Companies

Segments

Ashok L_eyland LC_{Vs, M&H}C_{Vs, buses}

Asian Motor Works M & HC_Vs

Bajaj Auto Two and three wheelers

BMW I_ndia C_{ars and MUVs}

Daimler C_hryslerI_ndia C_ars

Eicher Motors LC_{Vs, M & H}C_Vs

Fiat I_ndia C_ars

Force Motors MUVs andLC_Vs

Ford I_ndia C_{ars and MUVs}

General MotorsI_ndia C_{ars & MUVs}

Hero Honda Motors Two wheelers

Hindustan Motors C_{ars, MUVs and}LC_Vs

Honda Two wheelers, cars and MUVs

Hyundai Motors C_{ars and MUVs}

Kinetic Motor Two wheelers

Mahindra & Mahindra Three wheelers, cars, MUVs,LC_Vs

Maruti Suzuki C_{ars, MUVs, MPVs}

Piaggio Three wheelers,LC_Vs

Royal Enfield Motors Two wheelers

Skoda Auto I_ndia C_ars

Suzuki Motorcycles Two wheelers

Swaraj MazdaL_td LC_{Vs, M & H}C_{VSs, buses}

Tata MotorsC_ars _MUVs, LC_{Vs, M&H}C_{Vs, buses}

Toyota Kirloskar C_{ars, MUVs}

TVS Motor C_o _{Two wheelers}

Volvo I_ndia _{M & H}C_{Vs, buses}

VolkswagenI_ndia C_ars

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COMPANY PROFILE

Maruti Suzuki isI_{ndia¶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 I_{ndian government and 54.2% by the Suzuki of Japan. The} I_{ndian Govt. held an}

initial public offering of 25% of the company in June 2003. As of 10 May 2007 government of I_ndia

sold its complete share to I_{ndian financial} I_{nstitution. With this govt. Of}I_{ndia 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 KeiC_{ar which at that time was the only}

modern car available in I_ndia. I_{ts 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 inI_{ndia 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

I_{ndia selling over 7, 30,000 cars annually. Maruti 800 till 2004 was the} I_{ndia¶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. C_{urrently 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 I_{ndian market the term ³Maruti´ is}

commonly used to refer to this compact car model. Till recently the term ³Maruti´ in popular I_ndian

culture inI_{ndia, Hindu¶s lord Hanuman is known as ³Maruti´ was associated with Maruti 800 model.}

Maruti Suzuki has been the leader of theI_{ndian car market for over two decades.}

I_{ts 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

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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 I_{ndia are Maruti Suzuki cars. The company is a subsidiary of Suzuki}

Motor C_{orporation, Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is owned by public and}

financial institutions. I_{t is listed on the Bombay Stock Exchange and} N_{ational Stock Exchange in}I_ndia.

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. I_{n all, over six}

million Maruti Suzuki cars are on I_{ndian 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 (C_BU),

remaining all models are manufactured in Maruti Suzuki's Gurgaon Plant.

Suzuki Motor C_{orporation, 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.

N_{early 75,000 people are employed directly by Maruti Suzuki and its partners.}I_{t has been rated first in}

customer satisfaction among all car makers in I_ndia

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 obsession

y Fast, flexible & first mover y Innovation & creativity y Networking & partnership y Openness & learning

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MARKETIN

G

_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 MarutiInsurance

y Maruti Finance y Maruti True Value y Maruti Driving School y N2 N Fleet Management y 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. C_{hange 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 Z_{en 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. I_{t 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 I_{T to manufacturing. A new Vehicle Tracking System improved efficiency on the shop floor}

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Distribution Network:

Maruti Suzuki I_{ndia 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 I_{ndia. 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. C_{oupons 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.

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SWOT OF THE COMPANY

Maruti ranked highest in customer satisfaction with after-sales service. I_{t is known for true value,}

driving school, authorized service station, insurance (2002), genuine assessories.

STRENG_THS:

y Distributor network, brand loyalty, Japan technology and S ervice distribution y After sales service

y Cost-effective

y Low maintenance, low price y High fuel efficiency

y Their customer base, market share & reliability.

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 I_{ndia. So it has become a low cost model. Wonder why SX4 & Vitaras are not}

selling?? Ask this question to yourself. I_{f 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 Improve 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 inIndia. y Price high of raw material

y Small car competition

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G

_OIN

G

_{TO MARKET: MANA}

G

_IN

G

_{THE SALES FORCE}

As part of our project work we have visited 2 showrooms in NC_{R region. One is situated in Gurgaon}

and other in Faridabad.

Showroom Address:

G_urgaon: _{Maruti Suzuki Showroom Business Tower, opposite to Audi showroom}

Sector 54, Gurgaon (Haryana)

Faridabad: TC_{S Maruti,} N_ear N_{eelam cinema} NI_{T , Faridabad ( Haryana)}

SALES HIREARCHY OF THE SHOWROOM

FINDING_S:

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: (G_urgaon)

y General Manager ± 1 y Sales Manager ± 2 y Assistant Sales- 4 y TeamLeader ± 4 y TeamCapitan ± 6 G

_{eneral Manager}

Sales Manger

Assistant Sales Manager

Team Leader

Team Captain

Sales Executive

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

y General Manager ± 1 y Sales Manager ± 2 y Assistant Sales- 6 y TeamCapitan ± 8 y Sales Executive ± 10

COMPENSATION

C_{ompensation 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 thecompany y SalesManager-20-25thousand

y AssistantSales 15-18thousand y Team Leader9-12thousand y Team Capitan  6-10 thousand y SalesExecutive5-8thousand

BeingS_alary was samein both the showroom, therewas slight diff erent in thepayment of captain and

executivei.e. they werepaid low ascompared toGurgaon.

INCENTIVES:

A_{ll inc}entiveshavebeen decided by company only.

 If asalesperson achieves 85%of total target then he/shegetsan incentiveof Rs.700.

 If asalesperson achieves 85%of total target then he/shegetsan incentiveof Rs. 1000.

 If asalespersonsalesmorethan8carsthen hegetsan incentiveof Rs. 1000.

 S_{pot inc}entive- In thiscaseRs.500 hasbeen given to those employeeswho areabletosell an oldstock.

They are committed to perform these activities:

y Havetoestablish long termrelationship with customer.

y Giveinformation about promotional off ers and otheroff erstoexisting customer. y Try tosell oldstock.

y Give relativeinformation to all thosecustomerswho visit the showroom.

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F_{ew thing which find in} F_{aridabad showroom was :}

T_h_e_{y w}_ere _{having a} _s_y_s_t_e_{matic plan. Wh}_e_{n you} _e_nt_er _in _s_how_r_{oom th}_ere _i_s _a _re_c_e_{ption. You hat}_e

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

she call forthe executivethey have a complete detail whichexecutive isbusy and which isf ree.T_his is

to avoid the unconvinced faced by costumerinsearching forthe executive.

TRAININ

G

_{& DEVELOPMENT}

y Annual Training Plan - AllLevels

y Training customized to meet Organisational Objectives

y Topics selected based on Vision, Values & Departmental, Feedback of Company-wide Managers y Competency Mapping to identifyIndividual Training Needs

y Technical Training on latest Technologies abroad at SMC, Japan y STRO NG FOCUS O N TRAININGINITIATIVES

-

Build a Learning Organisation

-

Continuous Value Additions to Professional Skills

-

Customised Training

-

Training to the personnel of Business Partners

OVERSEAS TRAININ

G

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 SMCTraining 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.I_{t is based on KRAs & target s.}

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SWOT OF THE AUTOMOBILE INDUSTRY STRENG

THS:-- I_{t 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

- I_{ndustry by and large (baring a few dynamic e xamples) have low research and development capability,}

but, over coming it very fast.

- I_{ndustry 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:

- I_{mports from FTA Regime}C_{ountries, 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. I_{t 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 makeI_{ndia 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.

I_{n 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.

I_{ncrease 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

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final B2b project

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

INDUSTRY ANALYSIS

ROSS TUNROVER OF THE AUTOMOBILE INDUSTRY IN INDIA

COMPETITION

DOMESTIC SALES

MAJOR AUTOMOTIVE PLAYERS IN INDIA

Companies

Segments

COMPANY PROFILE

PRODUCT OFFERED

COMPANY VISION

MARKETIN

G

CHANNELS

Pricing Strategies:

Advertisement:

Distribution Network:

Promotion:

SWOT OF THE COMPANY

OIN

TO MARKET: MANA

IN

THE SALES FORCE

eneral Manager

Sales Manger

Assistant Sales Manager

Team Leader

Team Captain

Sales Executive

COMPENSATION

INCENTIVES:

TRAININ

& DEVELOPMENT

-

-

-

-

OVERSEAS TRAININ

APPRAISAL & REWARD

FUTURE HOLD OF AUTOMOTIVE INDUSTRY

_{ROSS TUNROVER OF THE AUTOMOBILE INDUSTRY IN INDIA}

_CHANNELS

_OIN

_{TO MARKET: MANA}

_IN

_{THE SALES FORCE}

_{eneral Manager}

_{& DEVELOPMENT}