MARUTI WHIP

Maruti Suzuki India Limited is entering the two wheeler market of India with its environment
friendly scooter, Maruti Whip. The Japanese motorcycle manufacture Suzuki had launched
various segments of bikes and scooters in the past but was not able to make any significant
impact on the Indian market. The MSIL in India is recognized by the name of Maruti. The
company has associated the name Maruti with the two wheeler as a marketing strategy to
attract the large customer base they have in the country.
As of November 2012, MSIL had a market share of 37% of the Indian passenger car market.
The company aspires to take over the two wheeler market of the country with the help of its
existing customer base and brand value. Maruti Suzuki, the manufacturer of the first
affordable car of India is looked upon by customers as a symbol of reliability and producing
economic products.
The Maruti Whip is a scooter designed and engineered to run both on fuel as well as battery.
It is superior to its competitors both in fuel efficiency and pricing. It is a step towards
sustainable development and aims at reducing the fuel consumption in the country.
Lets have a look at the environmental factors affecting the Indian two-wheeler market.
DEMOGRAPHIC ENVIRONMENT
Population Growth:
The demographics of India are inclusive of the second most populous country in the world,
with over 1.21 billion people (2011 census). The growth rate of the population is 1.4%
annually. The government authorities have not been able to meet the infrastructure demand
of the country. Most of the cities are facing traffic problems. Shortage of parking areas in
public places as well as for the residents has increased the demand for two wheelers.
Public transportation system in most of the regions of the country is unreliable hence people
require their own vehicle for commuting from one place to other.
The two wheeler market has always been dominant in the rural areas of the country because
of narrow and broken roads which are not suitable for cars. The low price of the vehicle
attracts rural population.

Age Distribution:
The average age of an Indian is 25.9 years. More than 65% of the population is below the age
of 30 years. The aim is to target the customers in this age group. The company has designed
the vehicle keeping in check the aspirations and expectations of the Indian youth. Maruti
considers teenagers and adults up to the age of 30 as their prospective market.
Age group of 45-60 will also play a major role in sale of the two wheelers. Most of the
Indian teenagers and college going students depend on their parents for their first vehicle. As
Maruti cars have been ruling the Indian roads for over 3 decades, there is a high level of trust
for the brand among the age groups of 40-60 years. Parents will always prefer the brand
Maruti over other brands.
Educational Groups:
Maruti will focus marketing in the areas where there is a significant population of teenagers
going to high school and colleges. The company will target cities having large number of
educational institutions. Maruti Whip is fuel efficient and easy on pockets, which would
attract college and office people.
Household Patterns:
The percentage of nuclear families is increasing as compared to the joint families. Therefore
the essentiality of having a car in a family has reduced and people always welcome the
alternative of buying a two wheeler instead of a car. 70% of the families in India are nuclear
families.
ECONOMIC ENVIRONMENT
Customer Psychology:
The Indian economy is expected to grow at a fast rate in future. This will lead to increasing
purchasing power of the people. Indian consumers are very choosy and bargain for better
deals.
The brand name Maruti will play a major role in attracting customers towards there two
wheelers. Maruti Suzuki is the top automobile brand of the country. They are known for its
economic and fuel efficient car. The brand value of Maruti will play a major role on the
psychology of the customers. The Maruti two wheelers claim to be the most fuel efficient and
economic scooter of the Indian two wheeler market.
Income Distributions:
India is an industrializing economy where the growing middle class demand new type of
goods and services. The Maruti whip is the first scooter to be launched in India that runs on
fuel and has a battery backup of 5 miles with a single charge.
The Maruti Whip is one of the cheapest scooters in its segment. The starting price of the
scooter is Rs 30,000 which gives it an edge over its competitors. The pricing of the scooter is
done keeping in mind the income distribution among the population. The scooter targets the
middle class and lower middle class people with low or middle level incomes.
It has been forecasted that the number of middle income group is likely to up from about 13.3
million in 2005 to about 128 million in 2025. The number of households with lowest income
is also likely to substantially come down from 101 million in 2005 to 50 million in 2025.
This suggests that the prospective market for the two wheelers will be increasing in the
coming years and the product has a bright future.
NATURAL ENVIRONMENT
The company has invested millions in pollution control equipment and innovation. The
Maruti Whip is a step towards environment protection. The scooter runs on both fuel and
batteries. A single charge of a scooter provides a backup of 5 miles. This will reduce the
consumption of fuel which is a nonrenewable resource. Hence the company has taken a step
towards sustainable development.
TECHNOLOGICAL FACTORS
Technological Factors include environmental and natural aspects. Maruti is spending more
than 2% of their Profits on Research and development and are planning to increase the
amount. Maruti Engine Development and Testing centre will address various issues involved
in the development of engines. Some benefits of technology in production process are:-
Reducing the resource wastage
Reduced waiting time
Decreased over Production- Reduces avoidable activities of employees
Maruti is committed at all the levels to achieve high quality in whatever they do. The
Computer Aided Engineering and Computational Fluid Dynamics facilities will provide
Maruti two-wheelers with enhanced capability to capture realistic road conditions at the
design state through various simulation tools and techniques.
LEGAL & POLITICAL FACTORS
Marketing decisions are affected by development in legal environment. This environment is
related to different types of laws like MRTP, Intellectual Property Rights and Government
Policies. Sometimes these laws also create new opportunities for business.
Pre liberalization Period:
Government Protection by use of licenses
Heavy Excise Duty on bikes
Price discrimination by government
High Import Duty
Liberal Policy on foreign Participation
Post liberalization Period:
The License Raj ceased to exist
Continuous Rationalization of the excise duty regime
Reduction in Import duties
Foreign Direct Investment and Foreign Institutional Investors
Policies vary in different countries regarding import, export and manufacture of
automobiles for example use of various non-tariff barriers such as import quotas;
Countries also use policies such as free trade policy and Duty Exemption Schemes to
promote the industry
The creation of an Auto Component Technology Development Fund (ATDF) for
operating the Technology Up gradation & Development Scheme (TUDS) for Auto
Components will help auto component company access finance at reduced rates of
interest for their modernization/ up gradation / technology acquisition thereby helping
them to become more competitive.
Taxes like excise duty, road tax, insurance and charges on registration certificate of
vehicle, pollution certificate, bharat stage-4 standards also come under the purview of
the government and can be used to keep a check on the industry.
OPPURTUNITIES FOR MARUTI IN TWO WHEELER INDUSTRY
Demography
According to the 2011 census more than 50% of Indias population is below the age of 25
and more than 65% is below the age of 35. Around 2.4 crore people cross the 18 year
mark every year, hence a large amount of potential customers are being added in the
market every year. The bigger the young and working population, the greater is its need
for commutation.
Alternative means of Transport
Arguably, one of the most major threats to the two wheeler industry is the Mass
Transport System, Which fortunately for the two wheeler industry has seen a lot of
delay on the part of government.
Consumer
The IT boom and BPO revolution have increased the disposable incomes of salaried
individuals. The resultant consumption growth helps the companies reach out to the un-
penetrated households. Generally, the first vehicle a lower income household looks for is
a two wheeler.
Industry
India is Asias third-largest economy and the two wheeler industry accounts for 76%
market share in its automobile sector. The Society of Indian Automobile Manufacturers
estimates, the Indian two-wheeler industry to grow at 11-12% per annum, and the market
is expected to double every four years till 2020. According to data from Nomura and
Crisil, as many as 10 million two-wheelers were sold in India in 2011-12.
Supplier Related Factors
Over the years Maruti has had permanent and loyal suppliers. Following are the major
suppliers of MUL-Asahi India Glass, Bharat Seats, Mark Auto Industries, Machine
Plastics, Krishna Maruti. Maruti already has good relations with suppliers of existing two
wheeler companies for example:-
MINDA supplies parts to Maruti for its automobiles as well as parts to Hero Motocorp for
its two wheelers. Hence it does not need to worry much about sourcing of its raw
materials for its two wheeler.


MICRO ENVIRONMENT FACTORS
Employee factor:
People are an essential ingredient in service provision; recruiting and training the right
staff is required to create a competitive advantage. Customers make judgments about
service provision and delivery based on the people representing your organization. This is
because people are one of the few elements of the service that customers can see and
interact with. In an initiative that would help not only itself but also its competitors to get
ready-to-employ skilled manpower for the automobile industry
Maruti is planning to establish an Automotive Skill Development Institute (ASDI) for
imparting technical training, which will help in:-
Saving Time and Costs: Poor performance often results when employees dont know
exactly what theyre supposed to do, how to do their jobs or why they need to work a
certain way. Training can help solve these performance problems by explaining the
details of the job. This should reduce duplication of effort in the workplace, the time
spent correcting mistakes and the problem solving necessary to correct bad
performances
Employee Satisfaction: Job satisfaction generally increases and self-esteem improves
when employees better understand the workings of the company. Training can also
enhance morale on the job and loyalty to the company
Expectations and Needs: A successful training program consists of management
providing employees with accurate information and communication about the training
as well as a program that ensures that training is relevant to their jobs.


Shareholders
Shareholders are the owners of a business and are the ultimate decision-makers on the
direction of a company. While the management of a company has the day-to-day decision-
making power, shareholders guide the strategy, financing and selection of management of the
firm
Shareholder Effects on the Board
The board of directors also creates committees to monitor the firm and provide information
for the shareholders. The financing committee is in charge of approving the budget, taking
loans and issuing new shares. The audit committee verifies the information management
provides to shareholders by checking bank accounts and speaking with customers. The
personnel committee chooses the president and other senior management. Each of these
committees represents important tasks that the shareholders affect through the nomination of
the board members.
Maruti focuses on maintaining a good relationship with its shareholder and so it is expected
that they will be participating actively
Customers
According to Peter Drucker, the aim of business is to create and retain the customers. Hence
customer occupies the central position in the marketing environment. The marketer has to
closely monitor and analyse changes in consumer taste and preferences and catered to their
buying habits. Maruti has proved itself very well and have a large base of customers. Fuel
economy is one of the main concerns for the customers. Few services that customers are keen
on are:
Pre-sale customer service To help the customers while making the purchase decision.
Product support To provide customers with efficient after sale service to ensure continuing
satisfaction
Responsiveness to customers the ability to respond in a timely manner to the needs and
wants of the companys customers including potential customers.


Distributors/Intermediary
Supply chain & distribution plays a very important role on case of any industry. Right from
supplying raw materials to manufacturing and distribution of scooters, which is all about
creation and delivery of premium quality of vehicles to its customers at a price affordable by
the target customer, is what makes the industry popular and thus leads to its success. It
demands for an effective management of its production processes, but also intelligent
management of supply, distribution and service chains.
They are modifying their car factories and making provisions for two wheeler production and
is focusing more to open service centres in rural areas to increase demand , this will help to
save cost and reduce the delivery time.
It already has a very strong distributor network because of its leader position in small car
segment so it can easily establishing showrooms and dealer networks for scooter so that they
can easily interact with its customers.
Competitors
Competition is the biggest affecting factor in any industry. Maruti has competition mainly
from Mahindra, Hero, Honda, Bajaj, TVS as they have been in this industry for years. As
Maruti is a late comer in two wheeler industry one advantage it has is that it is aware of the
competition so it can come up with better innovation and advertising .
As Maruti has always focussed on price and quality so the competitors will always be
providing tough price competition so Maruti can face difficulty in promoting the scooter. To
compete aggressively Maruti would have to continuously cut costs and improve efficiencies.
Suppliers
Maruti has encouraged competition among suppliers for reduction in costs, it targets
reduction of components costs by 3%.Over the years maruti has had permanent and loyal
suppliers. Following are the major suppliers of MUL-Asahi India Glass, Bharat Seats, Mark
Auto Industries, Machine Plastics, Krishna Maruti. These suppliers have also affected the
environment in which MSIL is competing. Maruti is trying to switch to domestic suppliers
as they are cheaper as compared to the imported suppliers. It should choose those suppliers
who can match its growing demands and keep up with its growth and suppliers should not be
deterrent in its growth.


FUTURE TRENDS IN THE TWO WHEELER INDUSTRY
Delay in initiation of Mass Transport System on the part of the government has left a huge
void in the transport facilities for the lower strata of society which cannot afford cars.
Hence there is a huge potential for growth in the two wheeler industry in the coming
years. Also, with more than 70% of its population living in rural India and only 22%
penetration in rural regions, these rural markets sound lucrative to major players. The
other contributing factors are a combination of reasons:-
Reduced debts by government
Farm loan waivers
Low interest rates
More financial institutions offering credit
Schemes of NREGA(National Rural Employment Guarantee Act)
All the above stated factors have added impetus to the purchasing power and disposable
income of the local consumers in these regions.
Many industry experts feel that the market potential of these areas is still not fully tapped.
MARKET STRUCTURE AND MAIN PLAYERS
In terms of market share Hero MotoCorp continues to remain the distant leader with a share
of 41.5% in 6m 2013-14. The other two leading Indian OEMs too, namely, Bajaj Auto and
TVS Motor experienced decline in their respective share in the domestic two wheeler market
in H1 2013-14 compared to 2012-13. The loss of Hero MotoCorp, Bajaj Auto and TVS has
been Hondas gain as it continues to demonstrate steady gains in market share across the
board. Honda has strengthened its market share in the domestic two wheeler industry from
14.9% in 2011-12 to 22.7% in 6m 2013-14 on the strength of its strong brand, growing
distribution network and new product launches.
HERO MOTOCORP
Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer
of two - wheelers, based in India. The company became the largest two wheeler manufacturer
in 2001and continues to maintain this position till date. Two wheelers are manufactured
across three globally benchmarked manufacturing facilities, two of which are locatd in
Haryana and the third and the latest at Haridwar.
Hero MotoCorps extensive sales and service network now spans over to 6000 customer
touch points. Hero MotoCorps key strategies are to build a robust product portfolio across
categories, explore growth opportunities globally, continuously improve its operational
efficiency, aggressively expand its reach to customers, continue to invest in brand building
activities and ensure customer and shareholder delight.
BAJAJ
Bajaj Auto is the flagship company of the Bajaj Group of Companies. Bajaj Auto Limited
(BAL) is currently India's second largest two wheeler manufacturer. The core competency of
Bajaj Auto Ltd is its technology and innovation. Both DTS-i (Digital Twin Spark Ignition)
and DTS-Fi (Digital Twin Spark Fuel Ignition) are technological breakthroughs by Bajaj.
Rajiv Bajaj is thinking about a re-entry into the entry-level market, which accounts for 65%
of the bike market; BAL recently launched the 100 cc Discover T in this segment.
Bajaj Electricals has setup a manufacturing unit in China. As set up cost and export costs are
extremely cheap in China. Bajaj is not yet a global name. Considering the fact that it is one of
the oldest two wheeler companies and is doing very well in India, it should definitely target
global markets. A movement is seen in this direction since it is focusing on the British cult
bike company, Triumph as its target takeover. Triumph, given its niche positioning, cult
brand image and strong product line-up, is an attractive target for the Pune based firm.
EXECUTIVE SUMMARY
During the course of this report we have taken into account a host of environmental
factors affecting the Indian two wheeler industry such as Demographic, Economical,
Legal aspects etc.
Looking at Indias vast population, majority of which is living in rural areas with
increasing disposable income and little or no access to proper roads or public
transport, Hence looking at the huge potential our group has decided to launch a two
wheeler by Maruti.
As Maruti is a household name and is known for its economical and fuel efficient
cars we expect our product to be a huge success in the Indian market.
Our product being able to run on electricity as well as fuel will not only catch the
fancy of consumers because of being economical but will also help in preserving the
environment
With an already existing huge dealer and service centre network the company would
not have to work much on its distribution network for the two-wheelers.
The report also highlight that the future of the Indian two wheeler industry is in
tapping the unexplored rural market.
The report also lists out and gives a brief introduction about the companies that will
offer competition to our product.











SUBMITTED BY:-
PRAFUL GARG-08334
PRATEEK LONARKAR-08336
TIJEEL TARUN-08352
VIKAS PASRICHA-08355
RAHUL KUMAR-08361
SHREY BHARDWAJ-08362