MARKETING STARTEGY QUESTION PAPER

1 a). Discuss the scope and relevance of the concept of market segmentation. will the scope change with the opening of Indian economy? Illustrate how firms would be benefited in marketing their products and services by segmentation.

b) Briefly discuss the concept of positioning. What is the positioning of

i) Santro car
ii) Indian airlines
iii) Pepsi
iv) Dalda ghee


2. a) Discuss in brief the various pricing strategies used by marketers. Suggest suitable pricing strategy for

i) Software
ii) 100 cc motorcycle
iii) Luxury car
iv) Laptop

b) How is a product management organization different from the market centred organization?

3. a) Enumerate and discuss the major packaging decisions appropriate for the following

i) FMCG company

ii) Consumer durable company

b) Discuss the marketing strategies that may be used at the introductory and maturity stages of the product life cycle.

4. a) Discuss the main objectives of sales promotion. Explain some of the sales promotion methods directed at consumers, which can be used by a detergent manufacturer.

b) Discuss the role of personal selling and advertising in promotional industrial products. How does it compare to consumer product promotion?

5. a) Middlemen are parasites. This charge has been made by many over the centuries. Is this likely to be the case in a competitive economic system? Why or why not?

b) You are marketing manager of a medium sized manufacturing company. The president has just made the following statement "The distribution activity is not a concern of the marketing department. The function of the marketing department is to sell the product ... let be rest of the company handle production and distribution."

How would you reply to this statement. Discuss whether you agree or disagree with the statement and justify your answer.

6 (a) Define the term marketing. Discuss the scope and appropriateness of marketing function in satisfying human needs and wants. Given suitable examples.

(b) As a marketing manager, propose and formulate STP strategy for home fitness kit targeted at women. Discuss the base for your strategy.

7. Write short notes on any three of the following:

a) STP strategies
b) Functions of Packaging
c) Elements of promotion mix
d) Methods of sales forecasting
e) Market Intelligence

International business question paper

1. Define International business and It’s objectives.

2. What are the classification of International business?

3. What is a multinational corporation? and state It’s concept and strategy.

4. Write a brief note on ASEAN.

5. State the objectives of UNCTAD.

6. Explain dispute settlement under WTO.

7. Explain the procedure for international commercial Arbitration?

8. What is TRIMS? What are the essential features of TRIMS?


PART B — (4 *15 = 60 marks)

Answer any FOUR questions.

9. Explain the various factors influencing international business.

10. Discuss the role of NAFTA. Ec in international business of it’s member countries.

11. Briefly explain the kinds of collaboration and joint ventures.

12. Explain WTO’s structure functions and areas of operation.

13. What are the main problems faced by developing countries in increasing their exports? Discuss the role of UNCTAD in this connection.

14. Briefly explain environmental aspects in international business.

15. Explain the pull and push factors of foreign investments.

IMPORTANT MARKETING STRATEGY QUESTIONS

What is Generic startegy

• communication strategies differentiates success and faliure of a good prodict of a company. As a product manager one of the following categories. Washing machine. Credit card. Toothpaste.

solution:Define comm. strategy disuss fourth p ie. promotion than promotion strategy.
Give examples of failure of product and success of product. importance of advetisising. cad

• Value chain and supply chain are complementiing each other to enhsnce customer relationship management. Discuss with examples of LG, MAHINDRA TRACTOR, DABUR.
• Managing product portfolio expertly is important for the firm in todays competitive era. If you agree expalin how HUL and P&G apply product mix strategies to increase profitability
• Expail with examples leaders strategy & niche strategy with special examples to care industry in India

http://www.quickmba.com/strategy/porter.shtml

• Expalin the concept of value chain in different stages of PLC with examples.
• Price is a scarce resourse which a consumer exchanges firi packets of utility.
• state the objectives of pricing. Discuss variious pricing strategy with PLC & BCG matrix
• BCG model has become an integral part of business strategy for investment, franchising, market entry, joint venture for any part of the world
• Factors influencing pricing.Cost based pricing and Demand based pricing

AIRCEL INNOVATIVE MARKETING CAMPAIGN

Aircel was launched in select circles in Maharashtra early this month; and the launch was accompanied by a variety of innovations and attractive outdoor promotions.

Be it the ‘Just arrived’ boxes at the airport, the projection of the logo on the landmark Gateway of India or the IPL Scoreboard put up at the Mahim Causeway, Aircel has managed to create an unbeatable buzz.

Interestingly, a lot of its innovations are useful. For instance, the IPL scoreboard enabled commuters at the busy Mahim Causeway to keep track of the latest scores.

Recently, Aircel put up an inflated raft at Milan Subway in Mumbai, which sees a lot of flooding every year. The message simply said, "In case of emergency, cut rope".

The raft came in handy on July 13 and 14, when heavy rains lashed the city. People stranded at the subway used the raft to move around and men in Aircel branded T-shirts were also available to help commuters. The idea was appreciated so much that Aircel will now take it to Delhi and Kolkata as well.

The raft idea was conceptualised and executed by Primesite, Mudra group's OOH division, for Aircel. Aneil 'Andee' Deepak, senior vice-president, Primesite says, "The trigger for this idea was the news that Mumbai will witness the highest tides in the last 50 years and the Met Department's subsequent admission that Mumbai will flood and that they can do nothing about it, given the city's infrastructure. Aircel relishes its role as a solution provider, rather than a mute bystander. We decided to do something about it, and hence, the idea."

Andee attributes Aircel's innovative approach throughout to the fact that the brand is, quite literally, the 12th man to enter the telecom market. "If the 12th man has to make it to the team, then he has to do things that'll get people talking and innovation was the only way."

He shares that ideas will drive Aircel in OOH. The agency has even set up an 'Innovations Bank' for Aircel, where clutter-breaking ideas are being conceived and planned consistently.

For instance, Aircel branded airport placards had names of celebrities, such as Tom Cruise, which immediately grabbed people's attention. Directional signages were also put up, as was a tree-like structure, with multiple Aircel branded boxes.

Andee adds, "I've never seen as many innovations on any other brand on such a consistent basis. The circle teams at Aircel have been pushing us to raise the bar on innovations. We are trying to create 'opportunities to chat' and people are actually talking about them, so it's been quite a success."

For the record, the Aircel group is a joint venture between Maxis Communications Berhad of Malaysia and Apollo Hospital Enterprise of India -- Maxis holds a majority stake of 74 per cent.

Aircel commenced operations in 1999 and has gained a foothold in 18 circles: Chennai, Tamil Nadu, Assam, North East, Orissa, Bihar, Jammu and Kashmir, Himachal Pradesh, West Bengal, Kolkata, Kerala, Andhra Pradesh, Karnataka, Delhi, UP (West), UP (East), Maharashtra and Goa and Mumbai. It has recently gained an allocation of additional spectrum by the Department of Telecom for 13 new circles across India.

The company has over 20 million customers in the country.

Reasons for Extending the PLC

Reasons for Extending the PLC

Understanding and extending the PLC stages allows a company to fully exploit market opportunities, and defend or establish a competitive advantage through a lasting market presence. The main business reason for extending the PLC is to gain more sales through longer presence in the marketplace. The main marketing reason is since not all consumers are alike; certain consumer types will adopt a product at different stages of the product life cycle. By extending each stage of the PLC there is a better chance of exposure to the relevant consumer group. Extending the PLC should not be confused with extending the life of the product, which applies to enhanced durability, reliability or technical quality.


Strategies for Extending the PLC

The nature and type of applicable strategies to extend the PLC will vary with each stage, and the level of variation depends on the product type, market conditions, consumer audience and projected PLC timeline. It is hard to predict a transition from one PLC stage to another (because of measurement lags) and proactively react to the change with targeted action. However, through proper marketing mix design and contingency planning, it is possible to apply various product planning and product marketing strategies at the beginning of a particular stage when it
arrives. The underlying approach with any of the strategies listed below is Targeted Improvement. [ii]

Product Planning Strategies for Extending the PLC

Product Diversification - Creating different product variants.

Microsoft's family of Windows 9.x operating systems allowed the software giant to continuously extend the life cycle of this desktop computer operating system. Windows 95, Windows 98, Windows 98SE, Windows ME, Windows XP are among the better-known variants. Coca-Cola's vanilla flavored drink is an example and a variant to the venerable Classic Coca-Cola drink.

New Product Uses - Applying the core product to different uses. Apple Computer has been very innovative and successful by finding additional uses for its Macintosh computer, such as desktop publishing and strong graphics/animation capabilities. Apple's Digital Hub concept extends the Macintosh's functionality even further to serve as a center for managing multimedia files from cameras, DV recorders, scanners, and MP3 devices. [iii] On the retail side, in the world of “Consumer Packaged Goods” (CPG), Arm & Hammer had devised over several decades a multitude of deodorizing uses for their core product, baking soda.

Changing Product Layers - Altering the product features and creating different
product families. Hewlett-Packard's InkJet and LaserJet printers are examples of product families that share the same technological core. In addition are Jell-O's product families of puddings, colored gelatins, and snacks which are all based on raw gelatin.
Product Marketing Strategies for Extending the PLC

Re-Positioning - Changing the product’s perceived values and intent in the mind of the

consumer. Microsoft's Windows NT was designed as a multi-tasking, multi-threaded,
multi-functional desktop operating system. It was based on work done by Microsoft for IBM's OS/2 and in terms of its feature set resembled Unix more than it did Novell's NetWare. NetWare, a Network Operating System (NOS) and Novell's flagship product dominated the File&Print server market in the early 90's to the tune of 75% market share. Through massive and prolonged positioning efforts, Microsoft was able to persuade corporate IT departments
that Windows NT could be more than just a powerful desktop OS, and could replace NetWare as the departmental File&Print server. Novell tried unsuccessfully to shield NetWare from Windows NT by attempting to position UnixWare (Novell's Unix based OS) against Windows NT. [iv]

Co-Branding - Enhancing (or diluting) the product's brand equity by association with
another strong brand.

In an attempt to boost sales, IBM announced in 2001 a joint effort with J.D. Edwards & Company to market a specialized IBM eServer called the IBM eServer for J.D. Edwards, optimized to run J.D. Edwards' collaborative commerce software for small to medium size businesses. These types of cobranding initiatives are nearly always an attempt to capitalize on synergy between brands and products.

Re-Packaging - Literally placing the product in a new package as to revive its appeal.

This is common practice in retail markets with the introduction of new labels, different container sizes and different container types, such as Colgate's toothpaste in a tube or pump dispenser. In the computer software world, virtual repackaging is done through the introduction of a new visual GUI (Graphical User Interface) while application functionality remains relatively
unchanged.

Re-Branding - A drastic and costly measure used to disassociate the brand from the previous values with which the brand has been associated. The key concern with such a move is maintaining existing market share. For example, in 2000, IBM re-branded its eCommerce software application,Net.Commerce to WebSphere Commerce. It also re-branded its line of
servers as eServer (formerly Netfinity). This was an attempt by IBM to make a fresh entry and position itself as a competitor in the world of Unix and Intel based servers dominated by Sun Microsystems and Dell Computers. Sometimes companies re-brand themselves in an effort to build new reputation and brand equity - Datsun/Nissan vehicles, Borland/Inprise software products, and GTE/Verizon telecomm services.

Increasing Frequency of Use - Encouraging consumers to break away from traditional
molds of product usage. Chivas Regal was always considered a fine Scotch whisky to be consumed on special occasions such as weddings, or given as a gift. Through a worldwide advertising campaign, Chivas was able to increase consumption by delivering a consistent message about the brand's broader appeal.

New Markets and Segments - This strategy is an attempt to penetrate non-traditional
markets or consumer segments. Companies are able through exploratory research to discover the potential of geographically remote markets (Asia, Africa, and former Soviet Bloc) or new
consumer segments (seniors, minorities, and women). During 2001, Subaru specifically targeted women as a new automotive consumer segment, realizing their strong potential as first-owner buyers.

Pricing and Special Offers - Pricing is a positioning tool and a way to influence sales through the use of various price, payment schemes and models. Price manipulation can take place at all stages of the PLC, including the “Introduction” phase. For example, only six months after its launch in November 2001, Microsoft reduced the price of the xBox game console in North-America by about 30%.

Strategy Application within the PLC Model
Planning which product planning and product marketing strategies to apply, and when, should be part of any long-term approach. Since there are so many diverse products, markets and companies, it is difficult to provide a definitive, single methodology for strategy selection and application. However, some general guidelines can be followed to help ensure marketing mix effectiveness in promoting a PLC stage extension. Once a decision to extend a PLC stage has been made, the following elements must be factored into the planning:

• The company's product line’s business strategy - leader, follower, innovator.

• The company's marketing policies - soft or hard product launches, traditional choice of media vehicles, pricing policies, sales channels selection, etc.
• External constraints - government regulations, distribution networks, cultural
  barriers, politics, tariffs and taxes, etc.

Conclusion

Keeping a product alive for decades is a sign of successful PLC extensions, and brand/product combinations such as Heinz Ketchup, Hershey Chocolate and Gillette's Safety Razor are clear indicators of such extensions. Through consistent PLC management, a company will be able to improve products and become a marketplace leader. The role of the product marketing department is to understand the Product Life Cycle theory and identify the critical PLC stages.
This will aid the planning and execution of an effective marketing mix, designed to support business (revenue, profit) and marketing (market share, loyalty, growth) objectives.
The “PLC Model” can and has been effectively used by business managers to support decision-making at every stage of a product's life cycle. Although the “PLC Model” itself is subject to many interpretations with some advocates theorizing five or even six stages, it will always remain fairly flexible and adaptive to many product categories.
The “PLC Model” is yet another tool managers have when dealing with dynamic
and complex situations that abound in the world of proactive product planning
and product marketing.

Nano to ride on innovating marketing

Tata will sell its ultracheap new car through its own retail and electronics megastore outlets as well as auto dealerships
The Tata Nano will ride on a clutch of innovative marketing ideas when it rolls into showrooms across the country. The Rs 1 lakh car, which broke new ground in design, engineering and production processes, will opt for "cost-effective and innovative use of media," say people with knowledge of the Nano marketing strategy.
To make the car more easily accessible to people, the Tata Motors team will sell the Nano not just through Tata car dealerships across the country, but also through conventional retail outlets like Westside and Croma.
Westside is a lifestyle retail brand and Croma is an electronic megastore. Both are owned by the Tata group. Westside and Croma outlets will display the Nano and also take bookings. Also available will be a whole range of Nano merchandise like baseball caps, T-shirts and key chains, among others.
Carrying forward its vendor partnership production strategy, Tata Motors will share promotion of the Nano brand with its multiple PSU bank partners. These PSU financiers will promote the Nano brand during booking jointly with Tata Motors and on their own.
The Nano's overall marketing strategy will use conventional media in an unconventional manner. Unlike most small cars, Nano won't be big on advertising. There will be no TV campaign, only innovative use of print, radio and other media, particularly the web. The Tata team is working on Nano news in papers, Nano breaks on radio, Nano appearing in the form of messages or ticker news on TV, online Nano games, Nano chatrooms on the Net, Nano pop-ups on major websites and Nano conversation on Facebook, Orkut and blogspaces.
According to people in the ad industry with direct knowledge of the Nano's marketing strategy, the campaign will be cost-effective and innovative so that Nano becomes synonymous with anything "small, cute and brief." "The idea is to make the Nano part of our everyday lingo like 'see you after a nano,' it's a totally word-of-mouth campaign," said a person familiar with the Nano marketing strategy.
Tata Motors has appointed Rediffusion for creative content in the Nano campaign. Lodestar will handle media buying for the Rs 1 lakh car. "The Nano is a huge brand and one of the most interesting accounts in the automobile business," said the COO of a top ad agency based in Delhi. "However, it is still not clear just how big the account will be."

India Beats China to be Crowned World’s Small Car Hub

Way back in 2007, I had written about how global Automakers are targeting India to setup their small-car manufacturing units in India. Since 2007, more than 8 automakers have setup their shop here.

This is a significant achievement – and let me dig deeper on why I say this:

When it comes to Manufacturing anything from plane to paper to pin, there is no other country that can beat China at their game. Over last 40 years they have built literally thousands of such assembly lines, which churn out millions of products to supply to the world market – All this at rates that none can match. Most of you must be aware that 80% of U.S supermarkets carry Chinese goods.

India on the other hand has been providing services or “skilled labour” to carry out services across the globe. They are world beaters when it comes to outsourcing / offshoring services, but India has never been recognized as a manufacturing hub.

But now, India has proven that India’s manufacturing Industry, specifically auto-manufacturing can surpass China with its quality and low cost.

India exported total of 2.30 lakh cars, vans, SUVs and trucks between January and July 2009, a growth of 18% even as China’s exports tumbled 60% in the same period to 1.65 lakh units.

Significantly, India’s domestic Car market is less than 1/5th the size of Chinese Car Market and still it has managed to achieve this.

In last couple of years, Indian Automakers have been buzzing, especially because of successful launch of $2000 car – Tata Nano. Additionally, Tata Motors takeover of British Iconic brands – Jaguar & Land Rover – has put Indian Auto manufacturers on global map.

Perhaps, another important aspect that world is looking at is, “Made in India” tag, that stands for better quality cars than Chinese.

At the same time India’s car market is growing much faster than any other market in the world (infact, US/UK car makers have seen serious meltdowns). This provides an unique opportunity for Global Automakers to enter a growing car market as well as develop it here at High quality / low cost for global consumption.

test question papers for marketing

http://www.universalteacherpublications.com/mba/unsolved/ms06/main.htm

Levi’s to rope in more banks to fund jeans purchase scheme

Bangalore, Nov. 24

Buoyed by the response to its EMI scheme, jeanswear brand Levi’s is looking to rope in more banks to partner with it to “drive consumption of premium jeanswear” in the country.

Currently, Levi’s has partnered with HDFC Bank and Axis Bank to offer consumers a chance to pay the transaction amount using the credit card of these banks over three monthly instalments. The scheme, which was piloted in June in Bangalore, was rolled out nationally in September.

Says Mr Shyam Sukhramani, Director – Marketing, Levi Strauss India, “The EMI scheme gives access to more people to shop for a lot more. Since its launch, we have seen that the bill value on the EMI scheme is 50 per cent higher than the non-EMI transaction value using a card.

“The EMI scheme has touched 20 per cent of consumers who shop with cards at our stores. We want to get more consumers to buy into the premium segment and also upgrade their purchases to higher amounts.”

While the minimum transaction amount fixed by HDFC Bank is Rs 1,500, Axis Bank has stipulated a threshold of Rs 3,000. “When the scheme was announced, Axis Bank’s threshold was Rs 5,000. We have managed to bring it down to Rs 3,000 so that more people get access to premium wear.”

Mr Sukhramani adds, “We also want to get many banks to partner with us in this drive.” Levi’s is talking to three-four banks and is expected to make an announcement soon.

Currently, the EMI scheme is only available at Levi’s exclusive stores. Ultimately, the retailer wants to expand the scheme into departmental stores as well.

The denim market in the country is estimated at 100 million pairs. About 40 per cent of the market is in the organised sector and premium wear accounts for about 30 per cent of it. Levi’s operates in the premium segment with prices ranging from Rs 1,399 to Rs 34,000 at the upper end.

India Automobile Industry

Following India's growing openness, the arrival of new and existing models, easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers all have stirred the demand for vehicles and a strong growth of the Indian automobile industry.
Automobile Export Numbers

Category 1998-99 2004-05 (Apr-Dec)
Passenger Car 25468 121478
Multi Utility Vehicles 2654 3892
Commercial Vehicles 10108 19931
Two Wheelers 100002 256765
Three Wheelers 21138 51535
Percentage Growth -16.6 32.8
THE KEY FACTORS BEHIND THIS UPSWING

Sales incentives, introduction of new models as well as variants coupled with easy availability of low cost finance with comfortable repayment options continued to drive demand and sales of automobiles during the first two quarters of the current year. The risk of an increase in the interest rates, the impact of delayed monsoons on rural demand, and increase in the costs of inputs such as steel are the key concerns for the players in the industry.

As the players continue to introduce new models and variants, the competition may intensify further. The ability of the players to contain costs and focus on exports will be critical for the performance of their respective companies.

The auto component sector has also posted significant growth of 20 per cent in 2003-04, to achieve a sales turnover of Rs.30,640 crore (US$ 6.7 billion). Further, there is a potential for higher growth due to outsourcing activities by global automobiles giants. Today, this sector has emerged as another sunrise sector.
The data obtained from ministry of commerce and industry, shows high growth obtained since 2001- 02 in automobile production continuing in the first three quarters of the 2004-05. Annual growth was 16.0 per cent in April-December, 2004; the growth rate in 2003-04 was 15.1 per cent The automobile industry grew at a compound annual growth rate (CAGR) of 22 per cent between 1992 and 1997.

With investment exceeding Rs. 50,000 crore, the turnover of the automobile industry exceeded Rs. 59,518 crore in 2002-03. Including turnover of the auto-component sector, the automotive industry's turnover, which was above Rs. 84,000 crore in 2002-03, is estimated to have exceeded Rs.1,00,000 crore ( USD 22. 74 billion) in 2003-04.

Automobile Dealers Network in India

In terms of Car dealer networks and authorized service stations, Maruti leads the pack with Dealer networks and workshops across the country. The other leading automobile manufactures are also trying to cope up and are opening their service stations and dealer workshops in all the metros and major cities of the country. Dealers offer varying kind of discount of finances who in tern pass it on to the customers in the form of reduced interest rates.

Major Manufacturers in Automobile Industry

Maruti Udyog Ltd.
General Motors India
Ford India Ltd.
Eicher Motors

Bajaj Auto
Daewoo Motors India
Hero Motors
Hindustan Motors
Hyundai Motor India Ltd.
Royal Enfield Motors
Telco
TVS Motors
DC Designs
Swaraj Mazda Ltd
Government has liberalized the norms for foreign investment and import of technology and that appears to have benefited the automobile sector. The production of total vehicles increased from 4.2 million in 1998- 99 to 7.3 million in 2003-04. It is likely that the production of such vehicles will exceed 10 million in the next couple of years.

The industry has adopted the global standards and this was manifested in the increasing exports of the sector. After a temporary slump during 1998- 99 and 1999-00, such exports registered robust growth rates of well over 50 per cent in 2002-03 and 2003-04 each to exceed two and- a-half times the export figure for 2001-02.

EVEN GROWTH

Opposing the belief that the growth in automobile industry has catered only to the top income-stratum of society, Growth of exports of 32.8 % in the first three quarters of 2004-05, the fastest growth in volumes has come from commercial vehicles as against passenger cars.

Between 1998-99 and 2003-04, output of commercial vehicles has grown 2.8 times compared to the 2.2 times increase in passenger cars. Furthermore, two-wheeler output continues to dominate the volume statistics of the sector. In 2003-04, for every passenger car turned out by the sector, there were 7 two-wheelers produced. In the two wheeler segment, there is a greater preference for motorcycles followed by scooters, with both production and domestic sales of motorcycles increasing at faster rates than for scooters in the current and previous years. However, mopeds have registered low or negative growth. Export growth rates have been high both for motorcycles and scooters.

Research Report on "Indian Automobile Sector - A Booming Market"

In 2006-07, the Indian automotive industry provided direct employment to more than 300,000 people, exported auto component worth around US$ 2.87 Billion, and contributed 5% to the GDP.
Jun 09, 2009 – De-licensing in 1991 has put the Indian automobile industry on a new growth track, attracting foreign auto giants to set up their production facilities in the country to take advantage of various benefits it offers. This took the Indian automobile production from 5.3 Million Units in 2001-02 to 10.8 Million Units in 2007-08. The other reasons attracting global auto manufacturers to India are the country’s large middle class population, growing earning power, strong technological capability and availability of trained manpower at competitive prices. These are the major findings of our new report, "Indian Automobile Sector - A Booming Market”

In 2006-07, the Indian automotive industry provided direct employment to more than 300,000 people, exported auto component worth around US$ 2.87 Billion, and contributed 5% to the GDP. Due to this large contribution of the industry in the national economy, the Indian government lifted the requirement of forging joint ventures for foreign companies, which attracted global to the Indian market to establish their plants, resulting in heightened automobile production.
The Indian automobile market is currently dominated by two-wheeler segment but in future, the demand for passenger cars and commercial vehicles will increase with industrial development. Also, as India has low vehicle presence (with passenger car stock of only around 11 per 1,000 population in 2008), it possesses substantial potential for growth.

Key Research Highlights

- Passenger car production in India is projected to cross three million units in 2014-15.
- Sales of passenger cars during 2008-09 to 2015-16 are expected to grow at a CAGR of around 10%.
- Export of passenger cars is anticipated to rise more than the domestic sales during 2008-09 to
2015-16.
- Motorcycle sales will perform positively in future, exceeding 10 Million units by 2012-13.
- Value of auto component exports is likely to attain a double digit figure in 2012-13.
- Turnover of the Indian auto component industry is forecasted to surpass US$ 50 Billion in 2014-15.

Maruti’s 1 component 1 gram initiative – better than Tata’s Nano strategy?

Maruti is trying to reduce the weight of the small cars and is taking it by a gram per component. Reducing 1 gram per component is not much. The auto vendors face a new challenge but that’s a challenge they can meet. And, less daunting than fixing the cost of the car at 1 lakh.

Is it possible? Boeing has used composites to reduce the weight of its new 787 a.k.a Dreamliner. We don’t have to go that far. Tata Nano has used plastics at will to reduce the weight of the car.

Holistically a car has many parts and if each part weighs 1 gram less, the car would weigh many grams less. This is quite contrary to what Tata’s ambitious Nano project has tried to achieve.

Tata has chosen to locate the entire ecosystem of part manufacturing vendors around the Nano plant. This is the main cost-saver for Nano and the key factor for Nano’s success. The verdict is still out if this is a successful model or not. (Tata is compensating the vendors for re-locating from Singur to Sanand)

Maruti has chosen to not cut the costs immediately but to take it one step at a time. The benefits might not be immediate but in the long-run they will pay.

Maruti has brought in efficiencies in other thing as well. It has a dedicated car terminal at Mundra port for exports and is working on a direct railway link from Manesar assembly line to the Mundra port.

Maruti has export 70023 cars overseas last fiscal and is expected to cross 1 lakh car units next fiscal. This can be achieved by bringing in more efficiencies like it is already doing.

Along with that there should be appetite for Indian cars overseas. And guess what? They are now willing to buy Indian and Chinese cars. Great shift from fancying a American, European or a Japanese car. Don’t you think?

So, Maruti or Tata? Who has a better game plan?

PS : Did you know that more than half the cars sold in India are from Maruti?

PPS : It is important to note that I am not comparing cars but the strategy. Bringing in suppliers around you vs driving suppliers to cut costs.