The Maruti Suzuki India Case Study

The data presented in this section is from the Maruti Suzuki India case study (Mukherjee, Mathur, & Dhar, 2015). Descriptive statistics give an overview of the findings from the research to influence preliminary decision-making. The first statistic finding is on the BCG matrix, which provides a general view of the best performing products for MSIL as shown in the figure below.

Table 1: BCG Matrix for MSIL

Estimate market portion

High Low

Car Industry Progression High

Low

[Star vehicle models]

Wagon R.

Swift

Ritz

[Question Mark vehicle models]

A-Star

Zen Estilo

[cash cow vehicle models]

Alto

[Dog vehicle models]

The interpretation of the BCG matrix as noted in the figure above is that MSIL has more chance of growing its revenue by focusing on the products under the [star] segment and the [cash cow] segment. It must also find ways of moving products in the left [question mark] quadrant to the right. Products in the right quadrants have significant brand recognition and revenue generation capacity for the firm.

The following graph shows a comparison of the motivation for A-segment car purchasing by buyers from Maruti Suzuki in percentages.

Table 2: A-segment car purchasing motivation

The figure above confirms that most consumers buy from Maruti Suzuki’s A-segment cars are looking for the “first vehicle” in all the three categories. However, there is a difference between the “entry-hatch” segment and the “premium-hatch” segment. In the former segment, the motivation to purchase an additional vehicle from Maruti Suzuki is higher than the motivation to go for the replacement vehicle. In the latter, the motivation to go for the replacement is slightly higher than that of getting an additional vehicle.

The “entry-hatch” category includes Alto model, which according to the BCG matrix is a cash cow or a major revenue earner for the company. The “mid-hatch” category includes the Wagon R, Zen Estilo, A-Star, while the “premium-hatch” category includes the Swift and Ritz models. The two models, A-Star and Zen Estilo, highlighted as question marks in the BCG matrix also fall into the same “mid-hatch” category, where the motivation for purchase graph shows a significant difference between buyers opting for a replacement car from Maruti Suzuki or going for an additional vehicle. Furthermore, the category also recorded the lowest percentage, 17.4%, of motivation for purchasing additional vehicles.

The following graph compares MSIL performance and overall Indian market performance. It confirms that MSIL sales growth mimic those of the market.

Figure 1: MSIL and India sales performance

The following graph shows the year-wise market share trends in the Indian market.

Figure 2: Market share performance of car sellers in India

The graph above shows a consistent distribution of market share for the primary vehicle selling companies in the country. However, there was a significant change in the volume of market share for MSIL, Mahindra, and Mahindra Ltd. In the 2011/12 and 2012/13 years compared to the previous three years. In the former case, there was a dip in market share while in the latter case; there was a rise in sales. Nonetheless, MSIL remained the market leader.

The demographic profiles of buyers of A-segment cars in India show that the average family size remains constant across the three vehicle categories while the average age in years declines as you move towards the premium-hatch class and away from the entry-hatch category. The Rs 50,000 to Rs 75,000 category has the most number of buyers, and as income rises, the choice of the car moves from the entry-hatch to the premium-hatch options.

Figure 3: Demographic profiles of A-segment buyers

Inferential Statistics

Table 3: Multiple correlation results

avg. age in years

% less than Rs 50,000

% of Rs 50,000 -- Rs 75,000

Avg. family size

% of First time buyer

% of self-employed

% of middle management

% of professional

% of Govt. employee

first vehicle

additional vehicle

replacement

Avg. age in years

1.00

% less than Rs 50,000

1.00

1.00

% of Rs 50,000 -- Rs 75,000

-0.96

-0.98

1.00

Avg. family size

0.42

0.36

-0.17

1.00

% of First time buyer

0.99

0.97

-0.91

0.57

1.00

% of self-employed

-0.56

-0.50

0.32

-0.99

-0.69

1.00

% of middle management

-0.76

-0.80

0.90

0.27

-0.64

-0.11

1.00

% of professional

0.19

0.11

0.08

0.97

0.34

-0.92

0.50

1.00

% of Govt. employee

0.19

0.11

0.08

0.97

0.34

-0.92

0.50

1.00

1.00

first vehicle

0.98

0.97

-0.90

0.59

1.00

-0.71

-0.62

0.37

0.37

1.00

additional vehicle

-0.19

-0.11

-0.08

-0.97

-0.34

0.92

-0.50

-1.00

-1.00

-0.37

1.00

replacement

-0.85

-0.89

0.96

0.11

-0.76

0.05

0.99

0.35

0.35

-0.74

-0.35

1.00

The multiple correlation computations access the relationship between the 12 variables associated with selection of three A-segment vehicle categories namely entry-hatch, mid-hatch, and premium-hatch. The calculation using Microsoft Excel output data as shown in the figure above. The table shows a strong negative correlation between the % of Rs 50,000 -- Rs 75,000 category and the first vehicle purchase motivation from MSIL [r=-0.90]. However, there was a strong positive correlation between the % of Rs 50,000 -- Rs 75,000 category and the replacement vehicle purchase motivation from MSIL [r=0.96]. The data shows that rise in pay encourages replacement vehicle motivation compared to the first vehicle.

Meaning of the Results

The results of the correlational analysis in the inferential statistics imply that the Indian market has characteristics of new car buyers being in the Rs 50,000 bracket and when their incomes increase, they prefer to replace the vehicle rather than opt for additional cars.

Discussion of Ethics of Analyzing Data

A major ethical issue arising from the analysis of secondary data is the return of consent. The analysis does not interact with the primary source of the data and therefore does not have a chance to ask for consent to the particular participation in research (Politano, Walton, & Roberts, 2017). Researchers can overcome the concern by ensuring that reported and analyzed data remains anonymous. Furthermore, the issue of adequacy and relevancy of data might arise when relying on secondary data sources during the analysis. A new problem here is that the motivation for collecting the original data might not be for answering the question presented in the ongoing analysis (Tripathy, 2013). The researcher must scrutinize secondary data sources to confirm that the right ethical procedures led to the gathering and presentation fo the data. Furthermore, seeking permissions and approvals from relevant research ethics bodies is essential before proceeding with the data analysis.

Conclusion and Recommendation for Action

Summary of Research Findings

The research findings from the descriptive and inferential statistics show first vehicle sales are prevalent in the entry-hatch category for people income earners of less than Rs 50,000. On the other hand, the replacement motivation is highest among the Rs 50,000 -- Rs 75,000 category of buyers in India. Furthermore, the findings confirm that Maruti-Suzuki lost a significant market share in the 2011/12 and 2012/13 period. Its most problematic A-segment vehicle category is the mid-hatch that has the non-performing A-Star and Zen Estilo vehicle models.

Explanation of Ways to Address Research Problem

The potential solution to the problem is to look at the conditions leading to the underperformance of the mid-hatch category and to find ways of increasing profit margins for the entry-hatch category and the premium-hatch category.

Recommendations

The data findings confirmed that the additional vehicle motivation is the least impactful reason for going to get a new car in the Indian market. Meanwhile, first vehicle and replacement vehicles are the most motivating factors. Therefore, the company should focus its marketing strategies on selling the entry-hatch category vehicles to the first-vehicle target audience while shifting its premium-hatch marketing initiatives to accommodate both high-income earners who select these models as their first vehicles, and the overall market that eyes these models for replacement choices. It can introduce new marketing campaigns in the next year based on the recommended reorganization to see an improvement in revenues in the short term.

Recommended Strategies for Handling Potential Question and Concerns of Stakeholders

One of the major concerns of stakeholders will be market share leadership. Findings show a decline in overall market share. Another interest from shareholders will be the ability of the company to convert its non-performing car models into best-selling models. Consumers will also intend to see and experience innovative practices and reduced maintenance or increased reliability for the company’s cars.

The company could address the questions and concerns from stakeholders by shifting its marketing segmentation strategy (Arnett & Wittmann, 2014). The shift will redefine the target market for the company to adhere to only the entry-hatch and premium-hatch models while also focusing on all income categories among other demographic characteristics. The second strategic response will be to introduce incentives for first-time buyers to trade in their vehicles when replacing them. The strategy will ensure that there is an overall positive brand-building outcome for the company as more people trade-in entry-hatch for premium-hatch cars in line with rising incomes. Furthermore, the trade-ins will ensure that the company retains much of the second-hand market availability of its vehicles and re-sale them to first vehicle buyers than earn a significant profit margin in comparison to that obtained from new vehicle sales.

Recommendations for Additional Research

Additional research should focus on the breakdown of vehicle model sales per model against the identified demographic variables as used in this research. The analysis will allow the company to identify specific business environment metrics for car sales that could influence its trade-in program options and its market segmentation preferences.

References

Arnett, D. B., & Wittmann, C. M. (2014). Improving marketing success: The role of tacit knowledge exchange between sales and marketing. Journal of Business Research, 67(3), 324–331. https://doi.org/10.1016/j.jbusres.2013.01.018

Mukherjee, J., Mathur, G., & Dhar, N. (2015). Maruti Suzuki India: Defending market leadership in the A-segment. Richard Ivey School of Business Foundation.

Politano, P. M., Walton, R. O., & Roberts, D. L. (2017). Introduction to the process of research: Methodology considerations. Charleston, SC: Hang Time Publishing, Ltd. Co.

Tripathy, J. P. (2013). Secondary data analysis: Ethical issues and challenges. Iranian Journal of Public Health.