Research Report on ³Customer Care Programs at Maruti´
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A RESEARCH REPORT ON ³CUSTOMER CARE PROGRAMS AT MARUTI´ A REPORT SUBMITTED TO U.P. TECHNICAL UNIVERSITY FOR THE PARTIAL FULFILLMENT OF MBA DEGREE 2008-09 Submitted to:- Submitted by:- DECLARATION I, ´ to declare that the Research report entitled ³Customer Care Programs at Maruti´ being submitted to the U.P.TECHNICAL UNIVERSITY for the partial fulfillment of the requirement for the degree of Master of Business Administration is my own endeavors and it has not been submitted earlier to any institution/university for any degree. Place: Date: 2 ACKNOWLEDGEMENT One of the most pleasant aspects of writing an acknowledgement is the opportunity to thank all those who have contributed to it. Unfortunately, the list of expression of gratitude- no matter how extensive ± is always incomplete and inadequate. This acknowledgement is no exception. First of all, I wish to express my sincere gratitude to for giving me opportunity to do research under her profound guidance. Because of her inspiring guidance, motivation, positive criticism, continuous encouragement and untiring supervision this work could be brought to its present shape. I would like to thank all of them who in one way or the other have helped me. 3 PREFACE The success of any business entity solely depends on how effectively does it utilizes its optimum resources and how soon does it make arrangements for the removal of the customer¶s grievances. Moreover, the company should always be ready to make necessary changes according to the requirement in order to attract more customers so as to maintain a substantial growth in the market. The topic given to me was: ³CUSTOMER CARE PROGRAMS AT MARUTI´ I have tried to put my best efforts to complete this task on the basis of skill that I have achieved during my studies in the institute. I have tried to put my maximum effort to get the accurate statistical data. If there is any error or any mistake in collecting the data, please ignore it. 4 5 TABLE OF CONTENTS S. No. Topics 1. Executive Summary 2. Introduction 3. Background of Indian Auto Industry 4. Company Profile 5. PEST Analysis 6. SWOT Analysis 7. Porter¶s 5 Forces Model- Analysis 8. Comparative Study of Customer Care Programs 9. Customer¶s Expectation from a Loyalty Program 10. Loyalty Program for Maruti 11. Conclusion 12. Bibliography 6 EXECUTIVE SUMMARY Undoubtedly the customer has become the King. The modern customer is armed with IT and has higher buying power. The ever-increasing expectations from products and services are a major challenge for all the players in the market. The softer issues have gained as much importance as product features in his brand decisions. There is higher propensity towards choosing brand that is befitting the self-image. The intangible offerings have gained as much importance as the tangible product features. Thus, my project was aimed at studying the customer care programs at MARUTI and its other competitors in the market. The project required collection of detailed after sales customer services and programs in these companies. For this, information was taken from various dealers of different companies followed by in-depth interviews of executives at their respective Regional/Head offices. Based on the information gathered from the various dealers of the companies, it could be analyzed that there are certain common customer care practices prevalent in the automobile industry and about the programs where some companies have a leading edge over Maruti. Loyalty programs are about developing sustainable, mutually beneficial relationships, it doesn¶t take much to keep the clients we want. All companies have to do is just exceed customer¶s expectations by a little and they will be far ahead of the competition. Thus it was followed by a survey of Customer¶s Expectation from a 7 Loyalty program, which was taken through a common questionnaire framed on certain guidelines, from the customer¶s visiting the various dealers for further queries of their products and some through random sampling. On the basis of the analysis and interpretation of the results of the survey, a layout of the loyalty program was designed which could communicate customer¶s expectation from a loyalty program and bridge the gap between the desired expectation of the people and the company. 8 Introduction Peter Drucker refers to it as ³the Industry of Industries´. It is the backbone of Petroleum, Steel and manufacturing sectors. It creates employments for thousands and gives birth to many entrepreneurs. It satisfies one of the most basic needs of a human being ± mobility. It is none other than the Automobile Industry! The global automotive industry is in a continuous state of flux with respect to technology and ownership. The American producers, once the envy of the rest of the industry are struggling while two of the Japanese firms and several European manufacturers are flourishing. It is well known fact that Automobile industry is the cornerstone of some of the most influential economies in the world like USA and Japan. Indian Automobile industry is all set to play the same role in Indian Economy. Indian Automobile today is one of the most modern, growing and vibrant automobile markets on the global map. India is second biggest two-wheeler market in the world. The four-wheeler market in India is also one of the fastest growing and most promising. No wonder, it has become a center of attraction for most of the global automobile players. As the global automotive industry matures and competition intensifies within traditional markets, it has become necessary for established companies to branch out to pursue emerging markets, and develop new niche segments. This has in turn spurred on changing relationship structures, with an 9 apparent realization by many within the industry that alliances of differing sorts may be necessary to compete effectively, allowing fierce competition to rationally coexist alongside cooperation that does not violate anti-trust legislation. 10 Background of Indian Auto Industry For forty years since India's independence from the British in 1947, the Indian car market was dominated by two localized versions of ancient European designs -- the Morris Oxford, known as the Ambassador, and an old Fiat. This lack of product activity in the Indian market was mainly due to the Indian government's complex regulatory system that effectively banned foreign-owned operations. Within this system (referred to informally as the "license raj"), any Indian firm that wanted to import technology or products needed a license/permit from the government. The difficulty of getting these licenses stifled automobile and component imports, creating a low volume high cost car industry that was inefficient, unprofitable, and technologically obsolete. The two dominant products Ambassador and Fiat, although customized to the poor road conditions in India, were based on a stale design concept (with outdated features), and were also fuel inefficient. In the 1980¶the car industry was undergoing technological stagnation and was characterized by low production volumes, high cost and low productivity. The customer had very little choice and the market was selling just around 30,000 cars per year. There was a clear need to provide a cost effective, reliable and quality car to the customers. In the early 1980's, the Indian government made limited attempts at reforming the automotive industry, and entered into a joint venture with Suzuki of Japan. The joint venture, called Maruti Udyog Limited, launched a small but fuel- 11 efficient model Maruti 800. Maruti Udyog Limited was incorporated in such a scenario as a fully owned Government Company on February 24, 1981 with a resolve to bring about expansion and technological modernization, of the automobile sector. Thus MUL when started was entrusted with the task of achieving the following policy objectives: Modernization of Indian Automobile Industry. Production of Vehicles in large volumes, which was necessary for economic growth. Production of fuel-efficient vehicles to conserve scarce resources. 12 Choice of Product and Collaborator To achieve the above objectives one of the foremost tasks before Maruti Udyog Limited was to determine the most suitable product mix and to select the most suitable foreign partner who would be willing to accept MUL¶s requirements in terms of product mix, technology transfer, and equality participation and had the required technological expertise and experience in producing high quality, reliable and fuel efficient vehicles. After extensive discussions with several major European and Japanese car Manufacturers, MUL chose Suzuki Motor Corporation (SMC) of Japan as it¶s partner in Oct. 1982, by which acquired 26% share of the equity with an option to increase it to 40%. Suzuki Motor Co (SMC) further increased its equity holding to 50% in year 1992,Converting Maruti Udyog Ltd., into a Non-Government Company with a total equity base of Rs.1322.92 million. Maruti dominates the auto industry in India. There are 9 other major manufacturers. The market is divided in various segments (Refer Appendix II). The following table shows how the Indian car industry is divided in various segments 13 14 Demand Drivers The key factors that determine demand for cars are: Household Income Levels Product Availability and Access Product Affordability Availability of Finance Infrastructure (Road) Development The prospects of Auto industry are bright as rising income levels, low passenger car ownership, declining interest rates, easier availability of financing options, ongoing road development, reduction in excise duties and the availability of multiple models in all price segments are all triggers for a high growth phase in the passenger car industry in the coming years. 15 Company Profile Maruti collaborated with Suzuki of Japan to produce cars in 1983. At this time, the Indian car market had stagnated at a volume of 30,000 to 40,000 cars for the decade ending 1983.