M.com I (Sem II) 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. 1 M.com I (Sem II) 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. 2 Secondly. At Maruti They do not believe in the notion of organizational hierarchies. they encourage leadership in the best sense of the word. they have taken several simple but specific and well thought out measures. the management structure and systems in Maruti have been designed to promote decentralization of authority. 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. The first step in this direction has been the introduction of a common uniform for all employees. to achieve commonly shared company goals and objectives. To ensure that this translates into concrete reality. According to us. Inputs are sought from employees at all levels. They understand that the process of creating a sense of belonging that all employees can identify with is a lengthy one. the Company takes several initiatives. and. Common toilets. As a matter of fact. suppliers and dealers to face competition Maximizing Shareholder's value Being a responsible corporate citizen At Maruti. and sit on the same table. To make this philosophy tenable. a leader is one who must be impartial.M. must have the ability to rise above his own subjectivity. most importantly. stand in common queues. must practice what he preaches. Another measure is the creation of a common canteen where all employees have lunch. goals and objectives. in the sense that optimal productivity of other resources depends largely on the way human resources are utilized. common transport and similar facilities for all levels of employees are other measures that reinforce their emphasis on genuine equality in the workplace. They believe that everyone should contribute to the formulation of company policies. Maruti has a horizontal 3 . they have a clear perspective on manpower.com I (Sem II) 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. They see it as a unique resource. at Maruti. 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". training programs in Japan. Maruti believes that communication channels between labour and management cannot simply consist of having a labor representative on the Board of the Company. through newsletters or via a letter from the Chief Executive to all employees. which states that constant improvement is always possible.M. Their productivity levels are constantly improving. Several measures of performance have made amply clear that Maruti has established a truly healthy work culture. Quality Circles. and they have been successful in the export market. a collection of representatives of non-unionized employees. Yet. They have faith in the ability of labour to effectively participate in management and make constructive suggestions. the Maruti culture is one that does not believe in resting on its laurels. productivity-linked incentive schemes. 4 . To encourage this. Another focus area of the Maruti culture is the maintenance of a smoothly functioning communication network. 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).com I (Sem II) An Study On Product Life Cycle Of Maruti 800 management structure with only four functional levels of responsibility to facilitate quicker decision making. all contribute to the Maruti culture. Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament. Suzuki Motor Company was chosen from seven prospective partners worldwide. and an ethos of discipline and teamwork. The Company has had good labour relations with employees from the very beginning. They adhere to the spirit of Kaizen. Meetings with the Union are held regularly. and programs being contemplated by the Company are discussed with the Union. they ensure that there is a thorough dissemination of information at all levels. They have met all project and performance targets since inception. The Sahyog Samiti. to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. com I (Sem II) An Study On Product Life Cycle Of Maruti 800 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. 5 .M. Flexible and First Mover Innovation and Creativity Networking and Partnership Openness and Learning 6 . Production of fuel-efficient vehicles to conserve scarce resources. Production of large number of motor vehicles. 1.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 1.M.3 Core Value: Customer Obsession Fast. which was necessary for economic growth.2 Objectives: The objectives of MUL then were: Modernization of the Indian Automobile Industry. 3 2.4 Introduction to Product life cycle .2 2.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 Chapter No: 2 An Overview of a product life cycle. Graphical Represtation Of a PLC curve 7 .Stages Of Product Life Cycle. 2. Problems with product life cycle Theory.M.1 2. The goal to maximize the product’s value and profitability at each stage.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. Promotion goes highs.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 2. When a new product is introduced. The stage has the following characteristics: 1. 2. Marketing costs may be high. 3. Writing in marketing Tools. Growth. Firms usually incur losses rather than profit turning this stage. and it is unlikely that there are any profits. 8 . Carole Haden observed that the cycle is represented by a curve that can be divided into four distinct phase: Introduction. Maturity. the users may not be aware of its true potential.M. Firm mostly incurs losses and not profit.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. Low competition. depending upon the efficiency and need of the product to the customers. market gain tends to be very slight. extra information about the product should be transferred to consumers through various media. If the product is in the new product class. and decline. Monopoly can be created. In order to achieve that place in the market. It is primarily considered a marketing theory. 2. Growth comes with the acceptance of the innovation in the market and profit starts to flow. Due to the fact that sales are beginning to stabilize you must make your product stand out among the rest.The growth stage exhibits a rapid increase in both sales and profits. The key to surviving this stage is differentiating your product from the similar products offered by your competitors.com I (Sem II) 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. and this is the time to try and increase your product's market share. 9 .M. In addition to this. the maturity stage of the development process is the most vital. If the monopoly exists. Aggressive competition in the market results in profits decreasing at the end of the growth stage thus beginning the maturity stage. companies can experiment with new ideas and innovation in order to maintain the sales growth . Maturity The third stage in the Product Life Cycle is the maturity stage. During this stage sales grow at a very fast rate and then gradually begin to stabilize. If your product completes the Introduction and Growth stages then it will spend a great deal of time in the Maturity stage. You want to concentrate on telling the consumer how much better your product is than your competitors' products. com I (Sem II) 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. its competitors. It is not always necessary that a product should go through these stages. Some of the known tactics used in extending the maturity phase are: • by adding or updating the features of a particular product. 10 .M. • by using different pricing approaches to attract consumers that use a different brand. The phase that can be controlled in particular is the maturity phase. and life people. Not only is the efficiency of the company an important factor in the decline. to some extent. • by advertising to encourage people that have never used a product in the category to try it and therefore gain new customers. but also the product category itself becomes a factor. A number of companies share the same market. scope of the product. in which steps can be taken to ensure that it lasts longer than what it initially was going to. it depends on the type of product. The duration of each life cycle phase can be controlled. as the market may perceive the product as "old" and may not be in demand. and free from tax perks. etc. making it difficult for all entrants to maintain sustainable sales levels. 3 Problems With The Product Life Cycle Theory: While the product life cycle theory is widely accepted. which is often overlooked. the four stages are not the same time period in length. The theory can lead to an over-emphasis on new product releases at the expense of mature products. There is no real proof that all products must die. thus terminating some still-viable products prematurely. 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 does not adequately account for product redesign and/or reinvention. Some products have been seen to go from maturity back to a period of rapid growth thanks to some improvement or re-design. it does have critics who say that the theory has so many exceptions and so few rules that it is meaningless. The theory emphasizes individual products instead of taking larger brands into account. Critics say that some businesses interpret the first downturn in sales to mean that a product has reached decline and should be killed.M. Some argue that by saying in advance that a product must reach the end of life stage. 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. it becomes a self-fulfilling prophecy that companies subscribe to. 11 .com I (Sem II) An Study On Product Life Cycle Of Maruti 800 2. 12 .M. Sales/profit generated for by-product may vary.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 2.4 Graphical representation: Succesful new product may not last for ever. during its life. com I (Sem II) An Study On Product Life Cycle Of Maruti 800 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. Based on demand for a product it may be possible to create a concept that provide a insights of the product competitive dynamics. G2 = Decelerating Growth. 13 . This is called Product Life Cycle.M. G1 = Accelarating Growth. M = Maturity D = Decline Demand may also decline due to a change in technology. M.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 Chapter No: 3 An Study On Product Life Cycle Maruti 800 3.3 3.5 Introduction Stage.1 3. Decline Stage. Growth Stage.2 3.4 3. Maturity Stage. Graphical Representation. 14 . Since its first launch. but a modernized version using the body of the second generation Alto (SB308) was presented in 1986. Some firms may announce their product before it is introduced. the 800 has undergone some minor face lifts but overall it still remains the same as it was on introduction. sales will be low until customers become aware of the product and its benefits.1 INTRODUCTION STAGE OF MARUTI 800: ( 1983 – 1986 ) Over 2. These higher costs coupled with a low sales volume usually make the introduction stage a period of negative profits. After twenty six years the same car costs some two lakhs. an Indian Airlines employee from New Delhi. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters.5 million Maruti 800s have been sold since its launch in 1983. During the introduction stage. but such announcements also alert competitors and remove the element of surprise.M. The same car is sold in Pakistan as the Suzuki Mehran with a much older 1980s era Suzuki SS80 carburetor based engine. maruti 800 has undergone minor face lifts. The first face lifts in 1986. the primary goal is to establish a market and build primary demand for the product class. The first car to be sold in India was purchased by Harpal Singh.48000/. the firm seeks to build product awareness & develop a market for a product.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 3. when a new maruti 800 was introduced into the consumer market. The car comes in different versions including one with air conditioning and one without. 15 . In the introduction stage. through a lucky draw and was handed over the keys of his dream machine by the then Prime Minister Mrs. The original 800 was based on the SS80 Suzuki Fronte. During the introductory stage the firm is likely to incur additional costs associated with the initial distribution of the product. After a full model change in 1986. The first maruti 800 was sold for a price of rs. When the product is introduced. It was launched in December 1984 with almost 100% imported components. Maruti 800 was a joint effort between maruti and Suzuki motors of Japan. who won the ownership rights to the car competing against other prospective owners. Indira Gandhi. Consumers were offered with fuel efficiency and reliability which attracted more masses towards this car.2 GROWTH STAGE ( 1987 – 1996 ) The features added were air condition and music system. It has been the most common sites on Indian roads for more then two decades. 3.in 1997.The pricing strategy maybe one of ‘low penetration pricing’ to build market share rapidly. 16 . Example: Maruti 800.It is selective until consumers show acceptance of the product. the firm seeks to build brand preference & increase market share. a change was made in the structure but was not welcomed by consumers.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 The impact on the marketing mix is as follows: Product :. It has undergone technological up gradation for more than three times. A star. After a decade only the second facelift occurred i. Distribution :.e.M. or ‘high skim pricing’ to recover development costs. In the growth stage.It is primarily aimed at innovators & early adopters.Branding & quality level is established & intellectual property protection such as patents & trademarks are obtained. Maruti 800 is the second largest Indian production car which is next to ambassador. Since its launch twenty seven lakhs unit were contributed. Pricing :. Promotion :. Marketers seek to build product awareness & to educate potential consumers about the product. concentrated on marketing and institutional sales.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 The impact on the marketing mix is as follows: Product :.M. Pricing :. Promotion :. Zen Estilo 17 .The product quality is maintained and additional features & support services maybe added. Become a ideal car for woman drivers as first car was easy to drive and park in the Indian sub-continent Example: Swift.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.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. Price difference between Maruti 800 and its nearest rival used to be about INR 50. With India being a largely price-driven market. a title it has held for every month since then.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 3. Indian legislation has also ensured that there are three-point seat belts all around.3 MATURITY STAGE: ( 1997 – 2002 ) Within a few months of its launch. Maruti has the largest network of dealers in India. which is 25-50% of the 800's price. The Maruti 800 is simple and basic and yet sophisticated enough to meet the requirements of safety and comfort.000-100. which means that the 800 has the widest reach. the Maruti 800 became the largest selling car in India. the 800 has become an entry point for first time car buyers. It is good value for money and yet comes with basic amenities like air conditioning. 18 . when its stable-mate Alto led it by a few hundred units. The Maruti 800 makes an excellent entry-level car. including: The Maruti 800 is the cheapest car in the Indian market.M. it is difficult to point out one single factor that has been responsible for the car's success. but several factors stand out. till the month of May 2004. Like all success stories. coil-sprung rear suspension and bucket seats in the front.000. Over the last twenty years the 800 has established a reputation for being trustworthy and reliable. scheme Example: Alto.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 Strategies Followed By Maruti Udyog Ltd: Pricing Strategy – Catering To All Segments Car priced at Rs. Wagon R 19 . 1. MDS.M. Maruti Finance. 2599/. 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. 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. 8%. which would be hitting the roads by 2012. Maruti Suzuki would finally be stopping the production of the Maruti 800. Things have now undergone a sea change in these last 25 years. Sources suggest that Maruti would be coming with a replacement to 800 with another car built on Alto. Seeing the fall in the sales of the car and inability at the company’s part to comply with the engine efficiency and pollution standards. It’s expected that by December 2011 or January 2012. It is the only car in the Maruti basket of passenger cars. it decided to phase out Maruti 800 completely seeing its poor performance in the market. the strong growth in sales diminishes.976 units in the year 2000 to about 69. Maruti 800 as a product has already reached its decline stage in the Product Life Cycle (PLC).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 20 . The primary aim at this stage is to defend market share while maximizing profits. Maruti is now facing severe competition from not only domestic but also international competitors (post liberalization).com I (Sem II) An Study On Product Life Cycle Of Maruti 800 At maturity. Chevrolet Spark In 2008-09 experienced sales of only 11.4 DECLINE STAGE ( 2002 – 2010 ) After ruling the Indian automobile industry for more than 25 years.51. whose sales has dropped from 2009 to 2010 by 29. Maruti Suzuki swift.M. the company announced to scale down its production in Feb 2009 and then later in the same year. 3. Sales of Maruti went down drastically from 1. Maruti 800 which led to the ladder of success in 1980s has now become a reason to worry.553 in 2007 Buyers attracted by high end luxuries small cars Sales volume is heavily beaten by competitors like Hyundai i10. Competitors may appear with similar products. M.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 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 21 . 1987 1990 20269 .M.5 Graphical Represtation: Chart Title 200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Unit Produced Sales 1983 -1986 1987 .com I (Sem II) An Study On Product Life Cycle Of Maruti 800 3.20032006 151976 20072010 69553 63763 105000 189061 180000 99500 11288 22 .19911994 27529 19951998 31314 1999 2002 80000 .2002 2003-2006 2007-2010 1983 1986 Unit Produced Sales 48000 852 .1990 1991-1994 1995-1998 1999 . Competition begins to increase with a few new players in establishing market 6. Demand has to be created 5. Slow sales volumes to start 1. Increase in competitors entering the market 3. Little or no competition 4. Saturation decline stage and 3. Costs are lowered as a result of production volumes increasing and experience curve effects 2. Growth stage 4. Sales volume increases significantly 3. Sales volume decline 4. Costs become counter-optimal 2. Profitability begins to rise 2. Costs reduced due to economies of scale 2. profitability diminish 4. Makes no money at this stage 1. Public awareness increases 5. Industrial profits go down 1. Maturity stage 4. Brand differentiation and feature diversification is emphasized to maintain or increase market share 6. Costs are very high 2. Profit becomes more a challenge of production/distribution efficiency than increased sales 23 .com I (Sem II) An Study On Product Life Cycle Of Maruti 800 Stage Characteristics 1.M. Increased competition leads to price decreases 1. Customers have to be prompted to try the product 6. Market introduction stage 3. Prices. Sales volume peaks and market saturation is reached 3. Prices tend to drop due to the proliferation of competing products 5. The government has reduced regulation on the industry and more foreign players were invited. the company will also revamp the quality of infrastructure and service at these outlets. which gathers pace in recent years. is likely to accelerate in the next few years. Strategies to achieve the ambition sales goals. To sell one million cars in a year. This process. 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. the company will have to expand the network of sale outlets as well as service workshop across the country. In addition. The changing Auto Industry After year 2000.M.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.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 3. Banks and other financing companies started providing car loans at reasonable interest rate.2. Beside increasing the number of outlets.(and 2003 to be more precise) there was a change in automobile market which where due to -1. the company will launch a series of new product to be able to attend the one million sales target. The changing Auto Industry THE MAJOR FAULTS Impacts 24 . Investment in new facility and in R&D. so replacing them was not easy. SUV’s also started coming in the market.at same price. then Maruti lost a major share of market.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 The Indian consumer now started buying the mid-size cars rather than small cars . THE MAJOR FAULTS The MUL depended more on its M800 model.the small cars were not considered to be luxury item any more.the other player like GM. so when in late 1990’s the new players like when Matiz.M. Mahindra .the luxury cars also gained popularity. TATA. Mitsubhisi and Toyota were already established in the market . Santro and Indica came into the market with more space and better comfort . Maruti Suzuki was far behind in luxury and SUV car . 25 . The increasing level of income of urban people . As a consumer point of view when you think that the purchase the car then first company in my mind is Maruti Udyog. Maruti target all class people and he provides the car to all class people.M.com I (Sem II) An Study On Product Life Cycle Of Maruti 800 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. When 1983. So lastly we say that Maruti Udyog over all performance is good. Why because he provide the all types of car. And people satisfied his car. the Maruti Company started these time he offer only one car but today he offered 14 model of car. And due to this case he rich the first position of car market in India. Maruti Udyog understands the people needs and provide the vehicle for the person. 26 . scribd.google.marutiudyog.com www.com www.com Name of the Book: Marketing Management 13th Edition Author : Philip kotler 27 .com I (Sem II) An Study On Product Life Cycle Of Maruti 800 Bibliography www.M.