1. THE PRICING DILEMMA OF MARUTI
UDYOG LIMITED
Presented By
Prateek Chhapadia
Sukhendu Mandal
Manish Gupta
Bharat Sahu

2. CASE SUMMARY

Since 1985, Maruti Udyog ltd. Has been the market leader
in the passenger car segment in India. Maruti800 had the
distinction of being the largest selling car model in India
since its launch in December 1983.

Market leader in the car segment, both in terms of volume of
vehicles sold and revenue earned . 18.28% of the company
is owned by the Indian government, and 54.2% by Suzuki of
Japan.

In March 2003, MS sold 20,687 units of M800, the highest
ever sales by any single model in a month.

3. CONTD. . .

For few months of M800 performed well but gradually Alto
another MS product began eating share. Alto took over
M800’s position as largest selling car with sale of 10,373
units over M800’s sale of 10,016 units.

Alto was priced very competitively i.e. 20,000-30,000
difference with that of M800. Although Alto was priced a bit
higher, its sales boosted effecting the sales of M800.

Industry analysts began to anticipate that Mr. Jagdish
Khattar then CEO of Maruti Suzuki will opt to discontinue
M800 but later on he clarified the industry that it is a rumor
and the production will continue. They now have two models
in the entry level segment with the coming of Alto.

4. TARGETING
Vitara
• 15-30 lakhs
Baleno,SX4
Zen, wagon R, Versa,
Swift
Maruti800, Alto, Omni
• 5-10 lakhs
• 3-5 lakhs
• Below 3
lakhs
• Maruti was introduced targeting the middle class.
• Its target segments are well depicted in its Product
Pyramid
profit model.
•Targeting was based on a variety of factors such as style,
color, price preference, features etc.

5. STRATEGIES

6. STRATEGIES

Caters to all segment and has a product offering at
all price points.
Their pricing strategy is to provide an option to
every customer looking for up gradation in his car.
CREATING DIFFERENT REVENUE STREAMS
 Maruti Finance
 Maruti Insurance
 Maruti Driving School (MDS)


7. CORPORATE STRATEGIES: STABILITY
Maintaining status quo due to limited
environmental opportunities for gaining
competitive advantage.
 Few employees will have opportunities for
advancement.
 Critical that management identify key
employees and develop specific HR retention
strategies to keep them.


8. PROMOTION AND DISTRIBUTION

Tied up with SBI which offered a loan of Rs 1,60,000 for a
tenure of seven years at an equated installments of Rs
2,599. Interest rate was at 9.5%.

Tied up with State bank of Patiala to offer schemes where
installments were payable every six months after Rabi and
Kharif harvest in Punjab.

“Viataar” and the “True Value” scheme was conceptualised.

9. PRICING STRATEGY

Despite, increase in sales tax and higher cost the price was
reduced to Rs 2,12,446. The Euro I M800 model was priced
at Rs 1,98,979. The prices were slashed by Rs 15,000 and
Rs 18,000 for some variants in 2002.

The price of Alto was also reduced by Rs 23,000 to create a
new customer base for segment between A1 and A2.

Alto standard(Euro II) cost Rs 2,64,407 about 28,000 more
than M800(Euro II) offering a variety of features

10. SALES OF MARUTI’S MODELS IN DIFFERENT
SEGMENTS (2003-2004)
Segment
Models
AprilJune
April 03March 04
2003
2004
YOY%
A1
M800
40,774
31,874
(-22.0)
1,67,561
C
Omni, Versa
13,879
14,755
6.0
59,526
A2
Alto,Wagon R,
Zen
32,885
59,201
80.0
1,76,132
A3
Baleno,Esteem
3,132
4,075
30.0
14,173
90,670
1,09,905
21.0
417,392
851
1,409
74.0
3,555
Total
Passenger
Car
MUV
Gypsy, Vitara

11. REPOSITIONING OF MARUTI PRODUCTS

Whenever Maruti’s brand grew old or its sales started
dipping ,it made the following efforts in the same field:
Omni – interiors & exteriors,Omni cargo,& CNG Omni
Versa – slashed prices by decreasing engine power
Esteem – new look to boost sales
Baleno – price slash from 1999 (7.2lacs) to 2003 (5.46)
WagonR – modifications in engine and sporty look
Zen- Modified 4 times and special editions
Maruti 800-Introduced modified accessories .

12. SWOT ANALYSIS OF MARUTI SUZUKI
Strength
Established distribution and
aftet sales network.
Understanding Of Indian
Market.
Brand Image.
Experience and know-how in
technology.
Increasing purchasing power of
the Indian Middle class.
Government Subsidies.
Tax Benefits.
Prospective buyers from the
two wheelers segment.
Opportunities
Weaknes
s
Lack of Experience with foreign
market.
Comparatively new diesel cars.
People resistant to upper level
models.
Competition from second hand
cars and Tata Nano.
Threats from chinese
manufacturers.
Threats

13. CURRENT MARKET SHARE OF DIFFERENT
COMPANIES

14. Q1- MARUTI IS THE MARKET LEADER IN THE PASSENGER CAR INDUSTRY IN
INDIA. COMMENT ON THE RATIONALE BEHIND INTRODUCING SEVERAL
PRODUCT MODELS AND THEIR VARIANTS AT DIFFERENT PRICE POINTS. HAS
THIS STRATEGY HELPED THE COMPANY TO RETAIN ITS MARKET LEADERSHIP?
EXPLAIN

Rationale behind the strategy of introducing several product
models and their variants at different price points has helped
the company to retain its market leadership to a greatest
extent. Although the market share is decreasing it is still the
market leader and will be for the coming decade at least.

Product life cycle plays a very important role in introducing
several models at different price.

As we can see that M800 was in its growth stage and it went
on a maturity stage during 2004.

15. CONT. . .

A company whose product are dominating the market will
always think about retaining leadership.

In this case company launch a new product in time and
position it when the existing products are in maturity stage.
So that by the decline stage comes for the existing product,
there will be an all new product ready in the market which
will preserve the company’s image.

The same strategy was taken up in case of M800 and Alto.

16. CONTD. . .

M800’s sales were highest ever i.e. 20,687 in March 2003
and performed well till mid 2004 when Alto took its position
of highest selling model.

Because faster the sales, faster it will depreciate.

Gradually the product life of M800 was nearing to an end in
2010 era with the customers demanding more and more
features and new design at a considerably low price.

So the company finally discontinued M800 and re-launched
it as Maruti Alto 800 in April 2012.

17. Q2- MARUTI SUZUKI REDUCED THE PRICES OF ALTO TO REPOSITION IT
AS ENTRY LEVEL CAR APPEALING TO THE URBAN CONSUMERS. DO
YOU THINK THIS PRICING STRATEGY BENEFITED THE COMPANY? WAS
THEIR A NEED A TO REPOSITION ALTO TO CATER TO A1 SEGMENT IN
WHICH MARUTI SUZUKI WAS NOT FACING ANY COMPETITION ?

Yes, this pricing strategy benefited the company. But
according to our findings the company could have waited for
another 2 year to reposition Alto in A1 segment.

The company was not facing any competition, still risk
cannot be taken in a volatile market where a leader can lose
its leadership to its competitor for a wrong decision. The
repositioning was needed but as we told above company
could have waited at least 2 years because the sales were
really showing good numbers.

18. CONTD. . .

According to our findings if the repositioning would have
come late then M800 would have sold an average of 11,000
units till 2005 and than gradually decline.

But if Alto is taken into picture it was existing in the Indian
market for a long time and if the company had waited for
another 2 years for Alto to be repositioned, consumer would
not have shown interest in Alto as it had already entered into
its maturity stage.

Conclusion for this question would take the company’s
decision as correct from our side.

19. Q3- IN THE LIGHT OF DECREASING SALES AND CONSUMER
PREFERENCE, WHAT WILL BE THE FATE OF M800 IN NEAR FUTURE?
GIVE SUGGESTIONS TO REVIVE THE DECLINING SALES OF MARUTI’S
FLAGSHIP PRODUCT.

The fate will be the same for M800 as it happens for every
product.
1983
1983-2003 2003-2008 2008-2012

20. SUGGESTIONS TO REVIVE DECLINING SALES OF
MARUTI800.





A whole new positioning strategy keeping the image intact of
the older one.
Indigenization of more than 95%, by doing this the cost will
come dome by another 10,000.
Banking Schemes with more flexible options for payments of
installments.
Reviving the features according to the youths.
Targeting age group of 18-35 by positioning Maruti800 as a
youth product because youth dives the market now a days.