Automotive industry Essay Example for Free

Automotive industry Essay Maruti Suzuki India Limited generally famous as Maruti is an ancillary company of the Japanese automaker Suzuki Motor Corporation. It has a market share of 44.9% of the Indian passenger car market as of March 2011. Maruti 800 and Alto are their entry level cars. Ritz, A-Star, Swift, Wagon-R, Estilo are their hatch back models. DZire SX4 are Maruti’s Sedan class models. Eeco and Ertiga are Maruti’s C segment class. Grand Vitara is their Sports Utility Vehicle which is directly imported from Japan. Maruti is the 1st company in India to turn out and sell more than a million cars. Maruti Udyog Limited is renamed as Maruti Suzuki India Ltd on 17th September 2007. Maruti companies head quarter is in Nelson Mandela Road, New  Delhi. The company was customary in 1989; however the actual production commenced in 1983 with their Maruti 800. Till 2004 Maruti 800 was the India’s largest selling packed in car ever, since it was launched in 1983. More than a million units of this car have been sold worldwide so far. Maruti imports diesel engines for all their diesel cars from Fiat motors. Maruti’s manufacturing plants are located at two amenities Gurgoan and Manesar south of Delhi. Gurgoan plants installed capacity is of 9, 00,000 units per annum and Manesar plant with a capacity of 5, 00,000 units per year and a diesel plant with an annual capacity of 1, 00,000 engines and transmissions. Maruti has 933 dealerships crossways 666 towns and cities in all states and union territories of India with 2,946 service stations (inclusive of dealer workshops and Maruti Authorised Service Stations) in 1,395 towns and cities all over India. It has 30 Express Service Stations on 30 National Highways across 1,314 cities in India. Service is a major source of proceeds to the company. Most of the service stations help many stranded vehicles on the highways by sending across their repair man to the vehicle. 1.2 Definition Of Marketing According to American Marketing Association (AMA) Board of Directors, Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value of customers, clients, partners, and society at large. Dr. Philip Kotler defines, marketing as â€Å"the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services†. 1.3 Customer Perceived Value Customer Perceived Value (CPV) is the distinction between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. 1.3.1 Customer Perceived Value of Maruti Suzuki with reference to Holbrook Model Typology of Customer Value Holbrook (1994 p. 27) asserted â€Å"Value is an interactive relativistic preference experience†. Based on this Holbrook proposed a typology of consumer value having three different dimensions: Extrinsic/Intrinsic: The consumer perceives value in using or owning a product or services as a means to and end versus an end in itself. Self-oriented/Other-oriented: The consumer perceives value for the consumer’s own benefit as against the benefit of others. Active/Reactive: The customer perceives value through direct use of an object as against apprehending, appreciating or responding to an object. These three dimensions give rise to eight types of customer value Extrinsic Intrinsic Self-oriented Active Efficiency Play Reactive Excellence Aesthetics Other-oriented Active Status Ethics Reactive Esteem Spirituality Thus for a company like Maruti it would be very apt to use this model considering that the products that Maruti Suzuki has to offer fits in quite easily in different dimensions as presented in the typology. 1.3.2 Customer Perceived Value of Maruti Suzuki with reference to Monroe Model Monroe (1990, p. 46) observes, â€Å"Buyers perceptions of value represent a trade-off between the quality or benefits they perceive in the product relative to the sacrifice they perceived by paying the price† Monroe has expressed the concept of customer perceived value as the ratio between perceived benefits and perceived sacrifice: Customer Perceived Value= Perceived Benefits ________________ Perceived Sacrifice According to Monroe perceived benefits has a positive influence on consumers perception of product value at first, and later on it may influence consumers purchase intentions. In contrast, perceived sacrifice first has a negative influence on consumers perception of product value, and later on it may influence consumers purchase intentions. Perceived Benefits Here the benefits include customers’ desired value, e.g., quality (Monroe, 1990). Sacrifices, on the other hand, include monetary (price) (Dodds, et al., 1991) and non-monetary (time, effort) (Cronin, et al., 2000) considerations. Therefore, value includes three key factors: (1) quality, (2) price, and (3) convenience (Lemon, et al., 2001), where convenience is the time and effort expended by the customers (Cronin, et al., 2000) In context to Maruti, the customer’s desired value is the quality of the car and services rendered there off. Whereas the sacrifices include the price of the car, maintenance cost, etc. 1.3.3 Customer Perceived Value of Maruti with reference to Woodruff’s Model A Value-Hierarchy Model Woodruff (1997) proposed that â€Å"Customer value is a customer’s perceived preference for and evaluation of those product attributes, attribute performances and consequences arising from use that facilities achieving the customer goals and purposes in use situations.† (p146) Accordingly the customer value hierarchy suggests that customers conceive of desired value in a means-end way. Basically it can be known as a system to run businesses throughout the country by understanding customer’s goal and satisfaction over it (Lister, n.d.) Desired Customer Customer Satisfaction Value with Received Value Customer’s Goals and Purposes Desired Consequences in Use Situations Desired Product Attributes and Attribute Preferences Starting at the bottom of the hierarchy, customers start to think about products as bundles of specific attributes and attribute performances. While purchasing and using a product they form desire or preferences for a certain attribute based on their ability to facilitate achieving desired consequence experiences. Looking down the hierarchy from the top, customers use goals and preferences to attach importance to consequences. Also the customer’s use situation plays a critical role in evaluation as well as in desires. Maruti Suzuki, being an automobile manufacturing company faces a lot of competition. Thus such a model would be very essential for their company. 1.3.4 Consumer perceived value of Maruti with reference to Zeithaml Model Means-End Model An adaptation of a model first proposed by Dodds and Monroe (1985), Zeithaml with her study in 1988 about price, quality and value towards consumers defined this into the concept of Means-End model. (Source: Means-End Model, Zeithaml, 1988) 2. Value Proposition Definition of ‘Value Proposition’ A business or marketing speech that summarizes why a customer should buy an item for consumption or use a service. This statement should prove a potential buyer that one meticulous product or service will add more value or better solve a problem than other like offerings. Companies use this statement to target customers who will benefit most from using the company’s products, and this helps maintain an economic moat. The ideal value proposition is concise and appeals to the customer’s strongest decision-making drivers. Companies pay a high price when customers lose slight of the company’s value proposition. 2.1 Value Proposition of Maruti Suzuki ‘Way of Life’ is the Value Proposition of Maruti Suzuki. As India is a country where comfort is vital while travelling, Maruti has always been the first option. As mileage is a big criterion with cars for Indians, Suzuki proves to be better than quite a few other names in cars as its vehicles have a higher mileage; for example Swift gives 22km/ltr while if you compare a Honda City gives around 12-13 km/litre. 2.2 Mission Vision of Maruti Suzuki The Company Mission To make available a wide range of modern, high quality fuel efficient vehicles in order to meet the need of different customers, both in domestic and export markets. The Company Vision We must be an internationally competitive company in terms of our products and services. We must retain our leadership in India and should also aspire to be among the global players. Their focus is on: Building a continuously improving organization adaptable to quick changes Providing value and satisfaction to the customer Aligning and fully involving all our employees, suppliers and dealers to face competition Maximising Shareholder’s value 2.3 Target Market Definition of target market: A specific group of consumers at which a company aims its products and services. Maruti Suzuki has adopted a focused approach and wisely created segments within a large market to promote their cars. Lower Income Group- Maruti 800, Alto  Middle Income Group- Wagon-R, Swift, Swift DZire, Ritz High Income Group- Maruti Suzuki Kizashi, Suzuki Grand Vitara Suzuki Grand Vitara would obviously have no takers amongst the lower income group. 2.4 Market Attractiveness Market attractiveness is a term that describes the profit possibilities available in a given market or industry. The more attractive a market is, the higher the potential profits. Companies in the process of considering entires into new industries or markets conduct a number of analyses to determine whether or not such a move would be good for the business. One such analysis is a market attractiveness analysis, conducted to find out if entering a particular market or industry would be profitable and how much the company could potentially earn. The automobile industry is a huge and diversified market. It can be divided into different segments each satisfying different needs of the customers. These different segments can be classified as: SUV’s, Sedans, Hatchbacks, C segments etc. This gives an automobile company ample amount of opportunities. Maruti Suzuki  is prevalent in all of these segments and is considered as one of the premium brands in all of these segments. In this very market other than the different segments of automobiles also is the service rendered by the company to the customers. Thus the market is as attractive as one would hope for giving Maruti Suzuki a chance to make the most of it.