Milestone One

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Apr 3, 2024

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Running head: MILESTONE ONE - MARUTI SUZUKI INDIA 1 Milestone One: Maruti Suzuki India- Defending Market Leadership in the A-Segment Suzette E. Sutton Southern New Hampshire University

MILESTONE ONE – MARUTI SUZUKI INDIA 2 Maruti Suzuki India Maruti Suzuki India Ltd. (MSIL) has been unchallenged in its leadership position in the Indian car market from its inception in 1983 until 2013. The company began with the vision to be “the leader in the Indian automobile industry [by] creating customer delight and shareholder’s wealth [and being the] pride of India” (Mukherjee, Mathur, & Dhar, 2015, p. 2). By 2013, MSIL’s automobiles had gained a reliable reputation that created a strong brand image which helped the organization earn the number one ranking in customer satisfaction by J.D. Power India thirteen times in a row (Mukherjee et al., 2015, p.2). Between 2008 and 2013 fierce competition from competitors like Hyundai, General Motors, Honda, and Tata contributed to MSIL losing 12% of its market share in the leading auto segment, the A-segment (Mukherjee et al., 2015, p. 1). Additional factors within the A-segment have also contributed to MSIL losing its dominance in this segment including the evolution of the Indian car market, changes in the consumer base, and shrinking dealer margins (Mukherjee et al., 2015, pp. 1-5). To move the organization forward, MSIL’s product planning department has been tasked with determining the best product to develop that includes the appropriate features that will appeal to consumers, strengthen its brand, and defend its market leadership within the A-segment. Business Problem Growth in the Indian car market has been primarily attributed to sales in the A-segment which is divided into three types of hatch vehicles: entry-hatch, mid-hatch, and premium-hatch and industry sources predicted a growth of 2.4 million units in the A-segment in the next three years (Mukherjee et al., 2015, p. 1). Organizations such as MSIL, Hyundai, and Tata Motors have been the leaders in this segment but major global players like General Motors, Ford, and Toyota have begun to introduce products in the A-segment which has fueled stronger

MILESTONE ONE – MARUTI SUZUKI INDIA 3 competition (Mukherjee et al., 2015, p. 2). While competition does fuel innovation as businesses strive to stay ahead of each other, it also can drive prices down, reduce profit margins, and sway brand loyalty. Unless MSIL changes course and reassesses its strategy, the organization is at risk of losing its competitive advantage in the Indian car market (Mukherjee et al., 2015, p. 1). Research Problem Of the three products included in the A-segment, the entry-hatch is MISL’s core competency and where the company dominates the market (Mukherjee et al., 2015, p. 14). The typical consumer for the entry-hatch is a first-time buyer who is price sensitive and usually happy with the basic features, but many manufacturers began including product features in lower-level cars that were previously only included in luxury cars as a way to gain a competitive edge which intensified the competition between products (Mukherjee et al., 2015, p. 2). The mid-hatch consumer could be a first-time buyer with the same tendencies as the entry-hatch consumer, but they could also be a buyer who is looking to upgrade. This consumer is more brand-conscious and accepts MSIL as a very good brand that projects a good image (Mukherjee et al., 2015, p. 7). While the entry-hatch is MSIL’s strongest, the overall profit margins are lower which could prevent the company from achieving its profit goals and differentiate its product from the competition. The mid-hatch has a large consumer base that has upgraded from entry-hatch vehicles, which could provide higher profit margins if a new product is targeted toward this brand-conscious consumer. The premium-hatch has a smaller base of very brand conscious consumers that that are typically looking for a secondary vehicle and an upgraded mid-hatch vehicle could fit their needs. Market research conducted by MSIL found that consumers typically base buying decisions on the total value that they receive from the car and how well it

MILESTONE ONE – MARUTI SUZUKI INDIA 4 meets their needs, however, consumers are open to new products that include additional features at a reasonable cost (Mukherjee et al., 2015, p. 5). The problem facing MSIL is that fierce competition and lack of innovation are contributing to the organization losing its dominant position in the A-segment. One way for MSIL to regain its market dominance in this segment is to combine the entry-hatch and mid-size hatch to appeal to the existing loyal consumer base and increase profit margins. This product could provide higher profit margins if priced appropriately and targeted to the brand-conscious consumer. Therefore, the research problem this study will address is whether brand-loyal consumers are willing to pay more for a lower-level product if it provides more value by including the features normally only included in a mid-level hatch. Stakeholders The key stakeholders who will be affected by the outcome of this study include the MSIL board and shareholders because they have an invested interest in the success of the company. The organization has budgeted 6 billion to determine an appropriate strategy that will retain ₹ MSIL’s competitive advantage in the Indian car market (Mukherjee et al., 2015, p. 1). This is a substantial investment that will either help the organization keep its competitive edge and improve profit margins or be left behind as competitors claim dominance in the industry. Another major stakeholder who will be affected by the outcome of this study is the product planning department because they will be making recommendations for a new product based on the information developed through this research. Lastly, the consumer is a stakeholder who will be affected by the outcome of this research. Consumers want the most value for their money and organizations strive to keep them coming back and loyal to the brand, but they will go elsewhere if they do not continue finding the value that they seek. Each of these stakeholders will be

MILESTONE ONE – MARUTI SUZUKI INDIA 5 affected by the outcome of this study whether MSIL chooses to move forward with a new product that appeals to brand-conscious consumers, or if the organization loses its market dominance in the A-segment for failure to innovate. Research Objective As previously stated, MSIL has been losing its dominance in the A-segment due to increased competition and the organization needs to determine a strategy to reclaim its position. Combining the entry-hatch with the mid-hatch could help the organization stand out against the competition if the product includes the features found most valuable to brand-loyal customers. Therefore, the research objective for this study is to determine the relationship between brand loyalty and consumer car buying habits with a focus on perceived quality. In other words, will brand-loyal consumers pay more for a lower-level product if it provides more value by including the features normally only included in a mid-level hatch? The results from this study will help guide the product planning department in making its recommendation for a new product that will help the organization reclaim its dominance in the A-segment. Research Question How do brand loyalty and perceived quality affect consumers’ willingness to purchase a car with a higher price tag? Ethical Issues All research for this study will be conducted and gathered using ethical guidelines which include protecting the rights and safety of the participants, researcher, and the team (Smyth, 2019). One issue to consider when selecting participants for this study is to ensure that unaccompanied minors are not used which is unethical and potentially illegal (Smyth, 2019). To ensure that this guideline is followed, the target audience for this study will be participants aged

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