Speed Breakers Galore - Maruti
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Case Details:
Case Code : MKTG001
Case Length : 7 Pages
Period : 1998 -2001
Pub Date : 2001
Teaching Note : Available
Organization : Maruti Udyog limited
Industry : Automobiles
Countries : India
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
The Stumbling Blocks
Till October 1998, MUL enjoyed a market share of 83.6%. Reacting to the increasing number of players, Khattar commented, "Obviously, our market share will decline with the entry of new manufacturers and models in percentage terms, but not in actual volumes."...
The Industry Strikes Back
The Indian car market of the early 21st century was a burgeoning one with over 127 models on the roads, and many more in the pipeline.
Increased competition had radically transformed the market, manifested clearly in carmakers' pricing strategy overhaul.
Manufacturers were breaking the conventional rules of auto pricing by moving from cost-based to value-based pricing and the market soon became a buyer's market...
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About Price Reduction
The fact that 82% of the Indian market was accounted for by cars priced below Rs 4.30 lakh, proved how strongly price influenced volumes. Moreover, with domestic car sales dropping by 15.01% in November 1998 over November 1997, manufacturers had to turn towards price to resuscitate demand...
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Much ado about nothing?
As the Indian automobile market moved from monopoly to free competition, marketshare comparisons from the old era seemed to have lost relevance. The alarm over MUL's declining marketshare somehow did not seem fully justified.
In its hey-days, huge waiting lists for its products ensured that Maruti's marketshare was directly linked to the supply side of the equation. In other words, if MUL had an 80% share of the market, that was also its share of the total industry capacity. |
By the late 1990s, things changed radically with over 12 car manufacturers having a presence in the country, with a total capacity of about 1,250,000 cars, of which MUL produced about 400,000 (33%)...
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