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An Study On Product Life Cycle Of Maruti 800

Chapter No: 1 An Overview Of an Maruti Udyog.

1.1 1.2 1.3

Introduction. Objectives. Vision and Mission.

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An Study On Product Life Cycle Of Maruti 800

1.1

Introduction: Maruti Udyog Limited:

Maruti is India's largest automobile company. The company, a joint

venture with Suzuki of Japan, has been a success story like no other in the annals of the Indian automobile industry. Today, Maruti is India's largest automobile company. This feat was achieved by the missionary zeal of our employees across the line and the far-sighted vision of our management. The Company Mission: To provide 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.

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An Study On Product Life Cycle Of Maruti 800

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 Maximizing Shareholder's value Being a responsible corporate citizen At Maruti, they have a clear perspective on manpower. They see it as a unique resource, in the sense that optimal productivity of other resources depends largely on the way human resources are utilized. The basic philosophy of management that underlies the Maruti culture is that all employees of the company should be molded into a team which then strives as one, to achieve commonly shared company goals and objectives. To make this philosophy tenable, the Company takes several initiatives. Inputs are sought from employees at all levels. They believe that everyone should contribute to the formulation of company policies, goals and objectives. Secondly, at Maruti, they encourage leadership in the best sense of the word. According to us, a leader is one who must be impartial, must have the ability to rise above his own subjectivity, and, most importantly, must practice what he preaches. They understand that the process of creating a sense of belonging that all employees can identify with is a lengthy one. To ensure that this translates into concrete reality, they have taken several simple but specific and well thought out measures. The first step in this direction has been the introduction of a common uniform for all employees. Another measure is the creation of a common canteen where all employees have lunch, stand in common queues, and sit on the same table. Common toilets, common transport and similar facilities for all levels of employees are other measures that reinforce their emphasis on genuine equality in the workplace. At Maruti They do not believe in the notion of organizational hierarchies. As a matter of fact, the management structure and systems in Maruti have been designed to promote decentralization of authority. Maruti has a horizontal
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management structure with only four functional levels of responsibility to facilitate quicker decision making. Another focus area of the Maruti culture is the maintenance of a smoothly functioning communication network. Maruti believes that communication channels between labour and management cannot simply consist of having a labor representative on the Board of the Company. They have faith in the ability of labour to effectively participate in management and make constructive suggestions. To encourage this, they ensure that there is a thorough dissemination of information at all levels, through newsletters or via a letter from the Chief Executive to all employees. Meetings with the Union are held regularly, and programs being contemplated by the Company are discussed with the Union. The Sahyog Samiti, a collection of representatives of non-unionized employees, training programs in Japan, Quality Circles, productivity-linked incentive schemes, and an ethos of discipline and teamwork, all contribute to the Maruti culture. Several measures of performance have made amply clear that Maruti has established a truly healthy work culture. They have met all project and performance targets since inception. Their productivity levels are constantly improving. The Company has had good labour relations with employees from the very beginning, and they have been successful in the export market. Yet, the Maruti culture is one that does not believe in resting on its laurels. They adhere to the spirit of Kaizen, which states that constant improvement is always possible. The most basic tenet of productivity that they hold dear is that " Today should be better than Yesterday and Tomorrow should be better than Today". Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament, to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. Suzuki Motor Company was chosen from seven prospective partners worldwide. This was due not only to their undisputed leadership in small cars but also to their commitment to actively bring to MUL contemporary technology and Japanese management practices (which had catapulted Japan over USA to the status of the top auto manufacturing country in the world).
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A license and a Joint Venture agreement was signed between Government of India and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982.

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An Study On Product Life Cycle Of Maruti 800

1.2

Objectives:
The objectives of MUL then were: Modernization of the Indian Automobile Industry. Production of fuel-efficient vehicles to conserve scarce resources. Production of large number of motor vehicles, which was necessary for economic growth.

1.3

Core Value:
Customer Obsession Fast, Flexible and First Mover Innovation and Creativity Networking and Partnership Openness and Learning

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An Study On Product Life Cycle Of Maruti 800

Chapter No: 2 An Overview of a product life cycle.

2.1 2.2 2.3 2.4

Introduction to Product life cycle .Stages Of Product Life Cycle. Problems with product life cycle Theory. Graphical Represtation Of a PLC curve

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An Study On Product Life Cycle Of Maruti 800

2.1

Introduction To Product Life Cycle:

The theory of product life cycle was the first introduced in the 1950s to

explain the expected life cycle of a typical product from design to obsolescence. Writing in marketing Tools, Carole Haden observed that the cycle is represented by a curve that can be divided into four distinct phase: Introduction, Growth, Maturity, and decline. The goal to maximize the products value and profitability at each stage. It is primarily considered a marketing theory.

2.2

Stages Of Product Life Cycle: Introduction:

The establishment stage is characterized by low growth rate of sales as the product is newly launched in the market. Monopoly can be created, depending upon the efficiency and need of the product to the customers. Firms usually incur losses rather than profit turning this stage. If the product is in the new product class, the users may not be aware of its true potential. In order to achieve that place in the market, extra information about the product should be transferred to consumers through various media. The stage has the following characteristics: 1. Low competition. 2. Firm mostly incurs losses and not profit. 3. Promotion goes highs. When a new product is introduced, market gain tends to be very slight. Marketing costs may be high, and it is unlikely that there are any profits.

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An Study On Product Life Cycle Of Maruti 800

Growth:
The Growth stage is where your product starts to grow. In this stage a very large amount of money is spent on advertising. You want to concentrate on telling the consumer how much better your product is than your competitors' products. Growth comes with the acceptance of the innovation in the market and profit starts to flow. If the monopoly exists, companies can experiment with new ideas and innovation in order to maintain the sales growth .The growth stage exhibits a rapid increase in both sales and profits, and this is the time to try and increase your product's market share.

Maturity
The third stage in the Product Life Cycle is the maturity stage. If your product completes the Introduction and Growth stages then it will spend a great deal of time in the Maturity stage. During this stage sales grow at a very fast rate and then gradually begin to stabilize. The key to surviving this stage is differentiating your product from the similar products offered by your competitors. Due to the fact that sales are beginning to stabilize you must make your product stand out among the rest. Aggressive competition in the market results in profits decreasing at the end of the growth stage thus beginning the maturity stage. In addition to this, the maturity stage of the development process is the most vital.

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An Study On Product Life Cycle Of Maruti 800

Decline:
The decline stage is where most of the product class usually dies due to low growth rate in sales. A number of companies share the same market, making it difficult for all entrants to maintain sustainable sales levels. Not only is the efficiency of the company an important factor in the decline, but also the product category itself becomes a factor, as the market may perceive the product as "old" and may not be in demand. It is not always necessary that a product should go through these stages. it depends on the type of product, its competitors, scope of the product, etc. and free from tax perks, and life people. The duration of each life cycle phase can be controlled, to some extent. The phase that can be controlled in particular is the maturity phase, in which steps can be taken to ensure that it lasts longer than what it initially was going to. Some of the known tactics used in extending the maturity phase are: by adding or updating the features of a particular product. by using different pricing approaches to attract consumers that use a different brand. by advertising to encourage people that have never used a product in the category to try it and therefore gain new customers.

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2.3

Problems With The Product Life Cycle Theory:

While the product life cycle theory is widely accepted, it does have critics who say that the theory has so many exceptions and so few rules that it is meaningless. Among the holes in the theory that these critics highlight: There is no set amount of time that a product must stay in any stage; each product is different and moves through the stages at different times. Also, the four stages are not the same time period in length, which is often overlooked. There is no real proof that all products must die. Some products have been seen to go from maturity back to a period of rapid growth thanks to some improvement or re-design. Some argue that by saying in advance that a product must reach the end of life stage, it becomes a self-fulfilling prophecy that companies subscribe to. Critics say that some businesses interpret the first downturn in sales to mean that a product has reached decline and should be killed, thus terminating some still-viable products prematurely. The theory can lead to an over-emphasis on new product releases at the expense of mature products, when in fact the greater profits could possibly be derived from the mature product if a little work was done on revamping the product. The theory emphasizes individual products instead of taking larger brands into account. The theory does not adequately account for product redesign and/or reinvention.

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2.4

Graphical representation:

Succesful new product may not last for ever, during its life. Sales/profit generated for by-product may vary.

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Variance depends on market demand for product changing needs level is described by demand cycle curve such as:

M D G2 Demand G1 E Time

E = Emergence. G1 = Accelarating Growth. G2 = Decelerating Growth. M = Maturity D = Decline

Demand may also decline due to a change in technology. Based on demand for a product it may be possible to create a concept that provide a insights of the product competitive dynamics. This is called Product Life Cycle.

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An Study On Product Life Cycle Of Maruti 800

Chapter No: 3 An Study On Product Life Cycle Maruti 800

3.1 3.2 3.3 3.4 3.5

Introduction Stage. Growth Stage. Maturity Stage. Decline Stage. Graphical Representation.

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An Study On Product Life Cycle Of Maruti 800

3.1

INTRODUCTION STAGE OF MARUTI 800: ( 1983 1986 )

Over 2.5 million Maruti 800s have been sold since its launch in 1983. The

same car is sold in Pakistan as the Suzuki Mehran with a much older 1980s era Suzuki SS80 carburetor based engine. The car comes in different versions including one with air conditioning and one without. It was launched in December 1984 with almost 100% imported components. The first car to be sold in India was purchased by Harpal Singh, an Indian Airlines employee from New Delhi, who won the ownership rights to the car competing against other prospective owners, through a lucky draw and was handed over the keys of his dream machine by the then Prime Minister Mrs. Indira Gandhi. The original 800 was based on the SS80 Suzuki Fronte, but a modernized version using the body of the second generation Alto (SB308) was presented in 1986. After a full model change in 1986, the 800 has undergone some minor face lifts but overall it still remains the same as it was on introduction. Maruti 800 was a joint effort between maruti and Suzuki motors of Japan. The first maruti 800 was sold for a price of rs.48000/. After twenty six years the same car costs some two lakhs. Since its first launch, maruti 800 has undergone minor face lifts. The first face lifts in 1986, when a new maruti 800 was introduced into the consumer market. When the product is introduced, sales will be low until customers become aware of the product and its benefits. Some firms may announce their product before it is introduced, but such announcements also alert competitors and remove the element of surprise. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the firm is likely to incur additional costs associated with the initial distribution of the product. These higher costs coupled with a low sales volume usually make the introduction stage a period of negative profits. During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. In the introduction stage, the firm seeks to build product awareness & develop a market for a product.

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The impact on the marketing mix is as follows:

Product :- Branding & quality level is established & intellectual property protection such as patents & trademarks are obtained. Pricing :- The pricing strategy maybe one of low penetration pricing to build market share rapidly, or high skim pricing to recover development costs. Distribution :- It is selective until consumers show acceptance of the product. Promotion :- It is primarily aimed at innovators & early adopters. Marketers seek to build product awareness & to educate potential consumers about the product. Example: Maruti 800, A star.

3.2

GROWTH STAGE ( 1987 1996 )

The features added were air condition and music system. After a decade only the second facelift occurred i.e.in 1997, a change was made in the structure but was not welcomed by consumers. Maruti 800 is the second largest Indian production car which is next to ambassador. Since its launch twenty seven lakhs unit were contributed. It has been the most common sites on Indian roads for more then two decades. It has undergone technological up gradation for more than three times. Consumers were offered with fuel efficiency and reliability which attracted more masses towards this car. In the growth stage, the firm seeks to build brand preference & increase market share.

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The impact on the marketing mix is as follows:

Product :- The product quality is maintained and additional features & support services maybe added. Pricing :- The price is maintained because the firm enjoys increasing demand with little or no competition. Distribution :- Sales channels are diversified & increased as demand increases & consumers start accepting the product more & more. Promotion :- It is aimed at a broader audience.

Strategies Applied By Maruti Udyog Ltd:

Focus on customer care has become a key element for Maruti Increased Maruti service stations every 25km on a highway To increased market share, launched new car models, concentrated on marketing and institutional sales. Become a ideal car for woman drivers as first car was easy to drive and park in the Indian sub-continent

Example: Swift, Zen Estilo

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An Study On Product Life Cycle Of Maruti 800

3.3

MATURITY STAGE: ( 1997 2002 )

Within a few months of its launch, the Maruti 800 became the largest selling car in India, a title it has held for every month since then, till the month of May 2004, when its stable-mate Alto led it by a few hundred units. Like all success stories, it is difficult to point out one single factor that has been responsible for the car's success, but several factors stand out, including: The Maruti 800 is the cheapest car in the Indian market. With India being a largely price-driven market, the 800 has become an entry point for first time car buyers. Price difference between Maruti 800 and its nearest rival used to be about INR 50,000-100,000, which is 25-50% of the 800's price. The Maruti 800 makes an excellent entry-level car. It is good value for money and yet comes with basic amenities like air conditioning, coil-sprung rear suspension and bucket seats in the front. Indian legislation has also ensured that there are three-point seat belts all around. Over the last twenty years the 800 has established a reputation for being trustworthy and reliable. The Maruti 800 is simple and basic and yet sophisticated enough to meet the requirements of safety and comfort.

Maruti has the largest network of dealers in India, which means that the 800
has the widest reach.

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Strategies Followed By Maruti Udyog Ltd:

Pricing Strategy Catering To All Segments Car priced at Rs. 1, 87,000/- is the lowest offer on the road Offering One Stop Shop To Customers Or Creating Different Revenue Streams Developed different revenue stream in the form of Maruti Insurance, Maruti Finance, MDS, N2N Repositioning Of Maruti Products Introduced new facelifts model based on market responses or consumer feedbacks or the competitors moves Customer Centric Approach Successfully shed off the public sector laid back attitude image and the customer friendly approach in the organization Dealers and employees are answerable to each and every customer complain Call center brings Maruti to closer to its customer Commited To Motorizing India Partnership with State Bank Of India organized finance to small towns enable people to buy cars in Rs. 2599/- scheme

Example: Alto, Wagon R

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At maturity, the strong growth in sales diminishes. Competitors may appear with similar products. The primary aim at this stage is to defend market share while maximizing profits.

3.4

DECLINE STAGE ( 2002 2010 )

After ruling the Indian automobile industry for more than 25 years, Maruti is now facing severe competition from not only domestic but also international competitors (post liberalization). Things have now undergone a sea change in these last 25 years. Maruti 800 which led to the ladder of success in 1980s has now become a reason to worry. It is the only car in the Maruti basket of passenger cars, whose sales has dropped from 2009 to 2010 by 29.8%. Seeing the fall in the sales of the car and inability at the companys part to comply with the engine efficiency and pollution standards, the company announced to scale down its production in Feb 2009 and then later in the same year, it decided to phase out Maruti 800 completely seeing its poor performance in the market. Maruti 800 as a product has already reached its decline stage in the Product Life Cycle (PLC). Its expected that by December 2011 or January 2012, Maruti Suzuki would finally be stopping the production of the Maruti 800. Sources suggest that Maruti would be coming with a replacement to 800 with another car built on Alto, which would be hitting the roads by 2012. Sales of Maruti went down drastically from 1,51,976 units in the year 2000 to about 69,553 in 2007 Buyers attracted by high end luxuries small cars Sales volume is heavily beaten by competitors like Hyundai i10, Maruti Suzuki swift, Chevrolet Spark In 2008-09 experienced sales of only 11,288 units Major competitor Tata Motors launch Tata Nano smaller car yet offer more space than the Maruti 800 Tata Nano has come up to cater middle class and lower middle class

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Maruti has decided not to infuse new technology or an engine into Maruti 800 from April 2010 They will pull out the Maruti 800 from the Indian Metros which will effect the emission norms Sell will continue in semi urban and rural areas till the new emission norms reach these places

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3.5

Graphical Represtation:

Chart Title
200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Unit Produced Sales 1983 -1986 1987 - 1990 1991-1994 1995-1998 1999 - 2002 2003-2006 2007-2010

1983 1986 Unit Produced Sales 48000 852

- 1987 1990 20269

- 19911994 27529

19951998 31314

1999 2002 80000

- 20032006 151976

20072010 69553

63763

105000

189061

180000

99500

11288

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Stage

Characteristics 1. Costs are very high 2. Slow sales volumes to start

1. Market introduction stage

3. Little or no competition 4. Demand has to be created 5. Customers have to be prompted to try the product 6. Makes no money at this stage 1. Costs reduced due to economies of scale 2. Sales volume increases significantly 3. Profitability begins to rise

2. Growth stage

4. Public awareness increases 5. Competition begins to increase with a few new players in establishing market 6. Increased competition leads to price decreases 1. Costs are lowered as a result of production volumes increasing and experience curve effects 2. Sales volume peaks and market saturation is reached 3. Increase in competitors entering the market

3. Maturity stage

4. Prices tend to drop due to the proliferation of competing products 5. Brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Industrial profits go down 1. Costs become counter-optimal 2. Sales volume decline

4. Saturation decline stage

and

3. Prices, profitability diminish 4. Profit becomes more a challenge of

production/distribution efficiency than increased sales

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3.6

Repositioning of the company:

Maruti s Strategy to come up with new models & Surprise Marketers: The company is aiming at sales of one million cars per year in 2010. Investment in new facility and in R&D. Strategies to achieve the ambition sales goals. In addition, the company will launch a series of new product to be able to attend the one million sales target. It plans to launch 5 new models in the next five years to meet the needs of Indian customers this will be over and above face lifts of any existing model and launch of new variants. To sell one million cars in a year, the company will have to expand the network of sale outlets as well as service workshop across the country. This process, which gathers pace in recent years, is likely to accelerate in the next few years. Beside increasing the number of outlets, the company will also revamp the quality of infrastructure and service at these outlets. The changing Auto Industry After year 2000,(and 2003 to be more precise) there was a change in automobile market which where due to -1. The government has reduced regulation on the industry and more foreign players were invited.2. Banks and other financing companies started providing car loans at reasonable interest rate. The changing Auto Industry THE MAJOR FAULTS Impacts

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The Indian consumer now started buying the mid-size cars rather than small cars ,the luxury cars also gained popularity, SUVs also started coming in the market. The increasing level of income of urban people ,the small cars were not considered to be luxury item any more. THE MAJOR FAULTS The MUL depended more on its M800 model, so when in late 1990s the new players like when Matiz, Santro and Indica came into the market with more space and better comfort ,at same price, then Maruti lost a major share of market. Maruti Suzuki was far behind in luxury and SUV car ,the other player like GM, TATA, Mahindra , Mitsubhisi and Toyota were already established in the market ,so replacing them was not easy.

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Chapter No: 4 Conclusion:

When we study the full history of Maruti Udyog then we say that it is the most popular then other in India. Maruti Udyog understands the people needs and provide the vehicle for the person. Maruti target all class people and he provides the car to all class people. When 1983, the Maruti Company started these time he offer only one car but today he offered 14 model of car. And people satisfied his car. As a consumer point of view when you think that the purchase the car then first company in my mind is Maruti Udyog. Why because he provide the all types of car. So lastly we say that Maruti Udyog over all performance is good. And due to this case he rich the first position of car market in India.

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An Study On Product Life Cycle Of Maruti 800

Bibliography
www.google.com www.scribd.com www.marutiudyog.com Name of the Book: Marketing Management 13th Edition Author : Philip kotler

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