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An Overview of the Indian Automobile Market:

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. For Hindustan Motors and
Premier the GOI directed as to what type of vehicle to manufacture. This affected the
growth of the industry significantly. The demand for cars in the 1960 was 15714 units
and in the next two decades this rose to 30989 units only resulting in an annual growth
rate (AGR) of 3.5%. In the 1980s, the GOI felt the need to introduce an affordable small
car, targeting the Indian middle class. As manufacturing a small and affordable car
required better technology than was available indigenously, the government tied up with
the noted Japanese company, Suzuki. The government formed a joint venture with Suzuki
and founded Maruti Udyog Limited (MUL). It held 74% and Suzuki got 26% equity
stake in MUL. In 1983, MUL launched the „Maruti 800', priced at Rs 40,000.

Over the years, the situation has improved significantly. Towards the end of last decade
the situation seemed to be brightened. In the new millennium the scenario has only
changed for the better. The total number of automobiles manufactured by Indian auto
industry, throughout financial year 2006-07 was close to 1.5 million. The chart on the
next page shows gradual growth in the sales of cars in Indian market.

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Still there are a few shortcomings as India is still considered to be a developing country.
If India is to become a global automotive production and sales hub, the focus areas are:

 A better transportation infrastructure;

 Improved product quality;
 More skilled workers;
 Changes in labor and tax regulations;
 An increase in the scale of exports of automotive companies.
 Intellectual property protection
 Improve transportation infrastructure – highways, ports and country's infrastructure, and
oil supply are possible inhibitors to the growth of the domestic automotive market.
 Quality, scale and resources for support services for export - managing global supply
chain logistics, resources to support potential global warranty claims.
 High quality research and development.

India‟s automobile sector consists of the passenger cars and utility vehicles, commercial
vehicle, two wheelers and tractors segment. The total market size of the auto sector in
India is approximately Rs 540 billion. An approximate market share of the segments of
the automobile industry is depicted by the pi chart.

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The Indian automobile industry has witnessed the average annual growth of 10-15% over
the last decade or so. With the incremental investment of $35-40 billion, the growth is
expected to double in the next 10 years. The current growth rate indicates that by 2012
India will overtake Germany and Japan in sales volumes. The Indian automobile industry
is currently experiencing an unprecedented boom in demand for all types of vehicles.
This boom has been triggered primarily by two factors:

1. Increase in GDP, per capita income, disposable incomes and standard of living of middle
class Indian families has a major effect on the auto industry.
2. The Indian government's liberalization measures such as relaxation of the foreign
exchange and equity regulations, reduction of tariffs on imports, and banking
liberalization that has fueled financing-driven purchases. Especially, recently,
government has liberalized the investment norms for the auto sector. Local content
requirements and export obligations have been scrapped, and minimum investment
requirements also have been diluted. Import duties on vehicles and parts have been
gradually coming down. Several state governments also offer attractive incentives, such
as sales tax relaxations and concessional land, to potential investors.

The automobile industry is fairly concentrated now, as in most of the segments two to
three players have cornered a major chunk of the total sales. In passenger cars segment,
Maruti Udyog Limited, Tata Motors and Hyundai Motors control around 85 percent of
the total annual sales. Similarly, in the two wheelers segment, the sales volumes of Hero
Honda, Bajaj Auto and TVS Motors constitute around 80 percent of the total sales. The
following pi chart shows the market shares of different car makers in 2004.

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In spite of increasing completion, the market share of Maruti increased to 54% in 2006.
The following chart shows the monthly market share (2007-08) of 3 major auto players in

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Overall Manufacturer Unit Volume based Rankings (2008-2009)

1. Maruti - 722,144.
2. Hyundai - 244,107.
3. Tata - 231,540

The Indian small car market is witnessing the highest growth at present. Highest selling
hatchback is the Maruti Suzuki Alto. The Hyundai i10 with 106,110 and a 137% growth
receive special mention.

Indian economy is developing at a rapid pace and the number of educated young people
well versed with computer and internet is also increasing. This creates a knowledgeable
customer base for car companies. The competition is tougher than ever because the
customers are only a few clicks away from sharing knowledge about rivals and
comparison with them. Car market in India is sure to experience growth and rise for the
fact that India now operates as a nodal point for various car manufacturers which are
originally foreign companies but have rested their faith on India as a car manufacturing
ground with man power easily available and a changing demography with huge potential
customer base.

Rational Behind Suzuki’s Going Global:

In 1909, Michio Suzuki founded the Suzuki Loom Company in the small seacoast village
of Hamamatsu, Japan. Though it started earlier, the company started focusing on car
manufacturing since beginning of 1950s. Right from the beginning, the company was
known for its innovation and was doing great business in the domestic market. But the
company soon realized that to expand significantly it needs to tap the global market
starting production facilities in different countries. Deciding to go global is not easy,
because it needs proper planning and training to sustain in a market which is completely
unknown to the managers. The company has to understand the tastes and preferences of
the customers, and has to have a sound knowledge of the country‟s legal issues and
business culture. Still there are enough reasons for Suzuki Motor Corporation to go

 The cars produced by the company are certainly of international standards. In the western
world there is high demand for cars. Being developed countries there will be chances of
making higher profit.

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 With economies of scale the production cost per car comes down. Serving bigger markets
can help the company in this way.
 Though the Japanese market is quite big, still there is a chance of saturation in the market
lading to sharp decline in sales. To reduce the dependency on one market the company
decided to go abroad.
 Going to developing countries have certain benefits. The cost of labor is low leading to
low production cost. This is why it entered several markets through joint ventures.

These are the main reasons why the company enterd global markets following a waterfall

Maruti Suzuki India Limited:

It is the leading four-wheeler automobile manufacturer in South Asia. Suzuki Motor
Corporation of Japan holds a majority stake in the company. It was the first company in
India to mass-produce and sell more than a million cars. It is largely credited for having
brought in an automobile revolution to India. It is the market leader in India and on 17
September 2007, Maruti Udyog was renamed Maruti Suzuki India Limited. The company
headquarter is in Gurgaon, Haryana.

Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament,
to meet the growing demand of a personal mode of transport caused by the lack of an
efficient public transport system. It was established with the objectives of - modernizing
the Indian automobile industry, producing fuel efficient vehicles to conserve scarce
resources and producing indigenous utility cars for the growing needs of the Indian
population. A license and a Joint Venture agreement were signed with the Suzuki Motor
Company of Japan in Oct 1983, by which Suzuki acquired 26% of the equity and agreed
to provide the latest technology as well as Japanese management practices. Suzuki was
preferred for the joint venture because of its track record in manufacturing and selling
small cars all over the world. There was an option in the agreement to raise Suzuki‟s
equity to 40%, which it exercised in 1987. Five years later, in 1992, Suzuki further
increased its equity to 50% turning Maruti into a non-government organization managed
on the lines of Japanese management practices.

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Maruti created history by going into production in a record 13 months. Maruti is the
highest volume car manufacturer in Asia, outside Japan and Korea, having produced over
5 million vehicles by May 2005. Maruti is one of the most successful automobile joint
ventures, and has made profits every year since inception till 2000-01.

Maruti‟s history of evolution can be examined in four phases: two phases during pre-
liberalization period (1983-86, 1986-1992) and two phases during post-liberalization
period (1992-97, 1997-2002), followed by the full privatization of Maruti in June 2003
with the launch of an initial public offering (IPO).The first phase started when Maruti
rolled out its first car in December 1983. During the initial years Maruti had a profit of
Rs. 17 mn without any tax obligation. From such a modest start the company in just about
a decade (beginning of second phase in 1992) had turned itself into an automobile giant
capturing about 80% of the market share in India. Employees grew to 2000 (end of first
phase 1986), 3900 (end of second phase 1992) and 5700 in 1999. The profit after tax
increased from Rs 18.67 mn in 1984 to Rs. 6854.54 mn in 1998 but started declining
during 1997-2001.

During the pre-liberalization period (1983-1992) a major source of Maruti‟s strength was
the wholehearted willingness of the Government of India to subscribe to Suzuki‟s
technology and the principles and practices of Japanese management. Large number of
Indian managers, supervisors and workers were regularly sent to the Suzuki plants in
Japan for training. Batches of Japanese personnel came over to Maruti to train, supervise
and manage. Maruti‟s style of management was essentially to follow Japanese
management practices.

The Path to Success for Maruti was as follows:

(a) Teamwork and recognition that each employee‟s future growth and prosperity is
totally dependent on the company‟s growth and prosperity.

(b) Strict work discipline for individuals and the organization.

(c) Constant efforts to increase the productivity of labor and capital.

(d) Steady improvements in quality and reduction in costs.

(e) Customer orientation, creation of a customer-focused value proposition, a cogent

reason why the target market should buy the product.

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(f) Long-term objectives and policies with the confidence to realize the goals.

(g) Respect of law, ethics and human beings. The “path to success” translated into
practices that Maruti‟s culture approximated from the Japanese management practices.

In spite of being the market leader, Maruti has not been exempted by the stiff competition
posed by other important players. Over the years the competition has only intensified.
Not only from the incumbents and new entrants other competitive forces, other sources of
pressures are also putting pressure on this giant. The following diagram depicts the way
how different forces work on the company according to Porter’s model.
Threat from the new players: Increasing

Most of the major global players are present in the Indian market.
Financial strength assumes importance.
Access to distribution network is important.
Lower tariffs in post WTO may expose Indian companies to threat of

Strength of consumers:

Increased awareness
Strength of among consumers has
suppliers: Low Rivalry within the
industry: High
expectations. Thus
A large number the ability to innovate
of automotive There is keen
competition in is critical.
select segments Product
(compact and mid differentiation via
Automotive new features,
players are size segments).
New multinational improved
rationalizing performance and
their vendor players may enter
the market. after-sales support is
base to achieve critical.
consistency in Increased competitive
quality. intensity has limited
the pricing power of

Threat from substitutes: Medium

With consumer preferences changing, inter

product substitution is taking place (Mini cars
are being replaced by compact or mid sized Page | 8
The Maruti 1000:
With the growth in economy, the Indian consumers’ preferences were slowly changing.
The market already had plenty of hatchbacks in the early 1990s. The market was still
dominated by Maruti 800. But at the right time Maruti was able to understand the pulse
of the market. The consumer was looking for an Indian mid-sized car and was ready to
spend a little bit extra for this. The Maruti 1000, made by Maruti Udyog was the first
ever contemporary sedan-type car launched in India. The car (which Suzuki sold in other
countries as the Cultus/Swift/Geo Metro with a 1.3 L or 1.6 L engine) was introduced in
India in October, 1990. Sold at Rs. 3.81 lakh, it was back then the costliest car released in
the Indian market. The 850 kilogram car came with a 970 cc engine whose output was
just 45bhp. Initially the consumers were very excited about the advent of a car which had
a look completely new to the Indian market. This “luxury” car was flooded with
application right from the beginning. But with time, the car was proved to be
underpowered and the engine was too weak for the car. The fuel efficiency was not
satisfactory for certain customers. From 1993, the sales started to decline after a steep rise
in the year 1991-92. In 1994 it was discontinued when an upgraded version of the car,
with more powerful engine, was released and renamed the Maruti Esteem.

Maruti Suzuki Esteem

Maruti Esteem replaced the Maruti 1000 in 1994 after detection of some shortcomings of
the Maruti 1000. Though it was actually an upgraded version, Maruti decided to market it
as a completely new offer to the Indian consumers.

A Few Features of Esteem:

What set Maruti cars apart from its competitors at that time was firstly the fact that such
high performance vehicles were offered at very competitive prices which seemed to
attract a considerable number of people with a limited budget. By that time Maruti cars
were known to be highly fuel efficient and needed low maintenance cost and as far as the
price conscious Indian customers are concerned this was a key factor in determining the
worth of a car.

The car was available in a number of variants such as the Esteem LX, LXi and the top of
the line VXi. The source of power for the vehicle is its 4 inline cylinder 16 valve petrol
engine that gives a displacement of 1298 cc. This engine is set to give a decent maximum
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power and a respectable torque. The set of suspensions on the Maruti Esteem give it
flexible maneuvering and stability. This has made a really versatile car that can be taken
on cross city road trips as well as inner city traffic. The car can easily fit in five adults
with utmost comfort and adequate leg room for each. The front seats can recline and
slight to get into the best position. The car also featured a boot light and a factory fitted
air conditioner to keep things cool and a heater to warm up in the winters. It also came
with power windows and remote operated fuel tank lid and trunk lid. The power was
considerably more than its predecessor, 85bhp @ 6000rpm.

The followings are some striking features in Esteem some of which were there from the
very beginning and some were added in later versions.

 Chrome plated front grille

 Tubeless tires
 Body colored bumpers
 Pockets on both front doors and front seats‟ back
 Convenient lighting system in centre, driver's cabin and trunk
 Power steering (in LXi & VXi variants only)
 Plush fabric upholstery
 Molded floor carpets

Maruti esteem was available in various colors,

 Superior White
 Silky Silver Metallic
 Icy Blue Metallic
 Metallic Wine Red
 Metallic Pearl Silver
 Midnight Black Metallic

Identifying the segment:

The first and foremost challenge for Maruti was to identify the group of customers who
share similar sets of wants and need and share similar tastes and preferences. To identify
the potential customers for Maruti Esteem the market had to be properly segmented. The
Indian market can be categorized under clustered preferences as far as cars are
concerned. There are separate segments ranging from a vast customer base wanting to
own a Maruti 800 to a small customers residing in a niche wanting to own an Audi or

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BMW. Maruti has positioned itself intending to serve the larger segments in terms of
number of potential customers.

Cars priced up to

~ 5 lakh Maruti


Cars priced between ~5

& 10 lakh Cars priced
over 50 lakh

Cars priced between Cars priced

~10 & 20 lakh between 40 & 50

Cars priced between

~30 & 40 lakh
Cars priced between
~20 & 30 lakh

In the above diagram, the Indian car market is segmented based on the price of cars.
Actually the basis of this segmentation is the disposable income of the consumers and
their potential to spend on a car. The potential customers differ in each segment. But in
any two adjacent segments are not completely separated. Any two neighborhood
segments overlap because the potential customers at the fringes may switch to any of the
segments and can buy a car which is priced either on the higher side of the lower price
segment or on the lower side of the higher priced segment. This switching is mainly a
trade-off between the requirements and the price. In Indian scenario as the prices go up,
the potential customer base goes down.
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The segment served by Maruti Suzuki is portrayed in the above diagram. The company
positioned its car, Esteem in the 2nd segment. It is one of the lower priced cars in the 5-10
lakh segment. With the advent of Esteem, people who were looking for a mid-sized car
but had to be satisfied with a smaller car, were able stretch their budget a little bit to
switch to the new segment to buy Esteem to meet their needs.

The car was targeted mainly to families with 4-6 members. This family car was
advertised as big car as it can accommodate 6 persons including the driver. The potential
customers belonged to the educated people of the society and with family income of
middle to upper-middle class standard.

Indian consumers are very price sensitive. This is the reason why price elasticity is so
high in the car market. For this reason, Esteem was priced so low, so that customers do
not feel apprehensive to buy car belonging to the higher segment. Though at the time of
launch, there were no direct competitors, eyeing to the future entry of lots of sedans,
Esteem was priced just to surpass the breakeven point. The C segment car was priced at
Rs. 5-6.10 (ex-showroom), much affordable for an upper-middle class family.

Product Life Cycle:

Maruti Suzuki Esteem was launched in the year 1994. The first of its kind in India,
Esteem witnessed a steep growth facilitated by the faith of the Indian customer on the
Maruti brand. When it was slowly phased out and the production was terminated on
December 2007, it raised many eyebrows because Esteem had been one of the most
trusted names in Indian passenger car market. The main reason cited by many analysts,
for it being phased out was loss of appeal to the changing customer perceptions. It was in
the market for about 14 years and its sales have fluctuated a lot at different phases of its
life cycle. The table summarizes the number of units sold of Maruti Esteem in the Indian

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Sales Figures of Maruti Suzuki Esteem:

Financial Year Number of Units Sold

1994-95 11000

1995-96 30000

1996-97 23000

1997-98 17000

1998-99 16000

1999-00 16000

2000-01 11000

2001-02 12000

2002-03 11000

2003-04 11000

2004-05 21000

2005-06 21000

2006-07 23000

2007-08 18000

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Product Life Cycle Curve:

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Introduction Stage:
Maruti has always been an anticipative marketer. It rightly anticipated the Indian market
and knew what this market will be looking for in near future. In 1994 this market leader
came up with yet another innovative offering for the Indian consumers in the name of
Maruti Esteem. Esteem was actually the rebadged version of already existing Suzuki
Cultus, but was new to the Indian market.

Ansoff Matrix

Existing Products New Products

Product Development

Market Penetration

Market Development Diversification

In the form of Esteem a new product was offered in the existing market; this places the
product in the Product Development Strategy quadrant of the Ansoff Matrix. The main
goal was to make Esteem secure a distinctive place in the minds of the target customers.
As stated earlier, the features in Esteem were certainly unique at the time of its launch.
Thus it was able to create a Point-of -Difference and the customers were able to strongly
relate to the name Esteem and they knew that there is nothing available in the market
which can compete with its uniqueness. The challenge of creating a POD was
successfully executed by Maruti not only by product development but also by keeping its
price at an affordable level and made the customers feel that they can own something
they have dreamt about. To make the POD successful the consumers should be convinced
and must find the POD believable. Customers at the beginning were a little bit

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apprehensive about Esteem because they knew that Maruti Esteem was an updated
version of Maruti 1000 which definitely had some shortcomings.

In the 1st year of launch, the sales were little above 11000 units. This was obvious
because during the introduction stage Esteem had to go past certain hurdles. First hurdle
was to deal with any technical problem. Only a few risk taking early adopters buy a car
as soon as it is rolled out, others fear of some technical difficulties during the introduction
stage. They wait for other users to use and give positive feedback. Esteem had to go
through the introduction phase to overcome this customer inertia. Filling the dealer
pipeline was not a major issue for the market leader because they already had a few cars
in the market doing business quite impressively. Maruti, even in the year 1994 enjoyed
brand equity. This was the main reason why this pioneer had to go through the
introduction phase only for one year. The scenario changed in the next year when the
sales grew rapidly.

Growth Stage I:
This stage followed the introduction stage and was typically marked by rapid climb in
sales. During the financial year 1994-95 the sales were constantly increasing in each
month and at the end of the year it stood tall at almost 30000 units.

The main reason for witnessing rapid growth and becoming a star product in such a short
time was overcoming customer inertia. Buying a car is a costly proposition. Only
commercial advertisement is not always very successful in attracting a customer enough
so that he buys the car, word of mouth communication channel plays a vital role. The
late adopters heard the positive feedback from the users about Esteem and also based on
their belief on the Maruti brand name people started buying the car.

To sustain its growth Maruti Esteem was being promoted quite aggressively. The target
customers of Esteem were educated families. The penetration level of television is high
in this segment. Esteem reached a broad spectrum of their target customers with this most
powerful advertising medium. Magazines and newspapers can provide much detailed
product information and was very appealing to the educated customer base. As the
product was new, detailed information was much needed and the print media
successfully fulfilled the need.

The growth stage was reached earlier than anticipated. Marui, at this stage did not adopt
any specific strategy to boost up sales. Though during this stage Esteem did not come up

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with any of its new variants or any attractive offer, the sales were high serving the huge
customer base.

Decline Stage I:
Just like the unprecedented growth, the decline was also not expected so quickly. In the
very next financial year i.e. in the year 1996-97 the sales were down by about 25% to just
below 23000. In the following years the sales continued to drop until it reached 11000 in

Decline phase was a result of Esteem‟s entry into the Competitive Turbulence phase.
From the year 1995 to 2000, host of new entrants started their business in this market.
Most of the leading global players entered India attracted by the growing market. Also
the success of Suzuki itself gave confidence to other players.

Opel Astra Mitsubishi
Corsa Lancer

Ford Hyundai
Ikon Accent

Honda Daewoo
City Cielo

Honda Hyudai
Accord Santro
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The diagram shows some of the tough competitors hindering the growth of Maruti
Esteem. Though all the cars did not belong to its segment they posed tough competition.
The Indian customers were exposed to host of world class car makers like General
Motors (entry 1994), Ford (1995), Honda (1995), Hyundai (1996), Toyota (1997), Fiat
(1997) etc. These cars started rolling out cars belonging to all segments. The sedan,
which was provided by Maruti only in the form of Esteem, was being now produced by
auto giants of different nations. The high profile launch of Ford Ikon and Hyundai Accent
took the gas out of Esteem. The entry of the fully loaded Tata Indigo also made the life of
this brand very difficult. The car from its position as a market leader in the C segment
became “An entry level sedan". The launch of Baleno in the segment further weakened
the position of Esteem in the hierarchy. Baleno was launched at the premium end of the
segment but the price cut and dealer offers put Baleno at the same league as the Esteem
which led to cannibalism. As time went ahead, the affordability of Indians also increased
and they were ready to pay more to own a car of a company of stature like Honda or GM.
In this shakeout stage esteem was struggling for survival because it had nothing new to

Maturity phase I:
The sales of Esteem in terms of units, did not change much during the financial years
2000-01 to 2003-04. Though the sales volumes did not change much, the revenue
generated came down. The reason for this was aggressive price cut to check the slump. In
2002 Maruti cut esteem price by Rs. 40000. Though this was not enough to increase the
sales volume, the product seemed to mature at this low level.

Esteems upgradation in year 2000, when it received an all-aluminum 1300cc MPFI

engine was unable to make any difference. Seeing gradually declining sales Maruti
Udyog introduced a diesel engine option for the Esteem saloon in 2002. This effort went
in vein as well. With sales touching the low of 11000 units which was same as the
introduction level sales, the challenge in front of the company was to decide weather to
continue with the product or to phase it out. At that point of time, Indian scenario was
such that market penetration index was low indicating potential for substantial growth
potential. The company, eyeing the market potential, decided to retain the product in the

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market. During this stage Maruti sensed that it is slowly losing its Point-of-difference and
becoming just another car. Esteem lost its appeal and was no more recognizable in the
midst of more attractive looking and modernized sedans. Maruti felt the need to invest in
R&D for betterment of Esteem. It again started to invest in advertisement. The effect of
these efforts was visible during the next year when Esteem appeared in a completely new
avatar. This sea change was brought about for the first time in 10 years since its launch.

Growth Stage II:

Esteem was a good package; hence the company was not sure as to the USP or the Point
of Differentiation. Whether it was power or comfort or looks or quality, this confusion
was evident in the ads of Esteem during the nineties and early in the new millennium.
While the competing brands had their own USP's
Ford Ikon focused on Power
Indigo on Value
Fiesta on Looks etc.
the confused positioning diluted the brand equity of Esteem and made it look like a
second cousin to Ford Ikon. The value proposition of Esteem was challenged by Indigo
and the overall comfort and drive quality was challenged by Hyundai Accent.

2004 saw the reincarnation of Esteem .The entire car got a new look. Taking cues from
Baleno, the car was changed completely. The company embarked on a new positioning
“Fall in Love Again" on an emotional platform. The car looked better and was a welcome
change from the old much seen look of Esteem. Car market leader Maruti Udyog Limited
unveiled in Chennai the new, upgraded Esteem. It came in a refreshing new front styling,
with a new bonnet, multi-reflector clear headlamps, new bumper and new chrome grille.
The rear has been redesigned with multireflector, clear tail lamps and new boot garnish.
Besides, its plush new upholstery, silver finished dashboard garnish and controls, a
sportier speedometer, chrome-tipped parking lever and metal finished gear lever, made
for refined interiors. The new Esteem also came with tubeless tires unlike its previous
model. Unlike most of the western world, where variety in color of cars is not given
much importance by the car buyers, Indian consumers are always looking for attractive
colors in cars. The new Esteem was offered in a new metallic color: Fawn Mist. It
continued to be available in Silky Silver, Pearl Silver, Aqua Blue, Midnight Black and

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Superior White. Maruti engineers have worked closely with suppliers to improve
productivity and quality, resulting in this delightful deal to the compact sedan customer.

The new look was quite successful and was able to boost sales to 21000 units in 2004-05
up by about 90% from the previous financial year.

Maturity Stage II:

During the financial years 2004-05 to 2006-07, the sales did not change much and can be
reasonably identified as the 2nd maturity stage. Even at this
stage the level of competition was high and to remain active in
the market Esteem had to be promoted constantly. Esteem
changed its strategy of promotion as “Fall in Love Again"
because much time has passed since the appearance of the new
look of Esteem. 2005-2006 saw the brand striking the “Big
Idea" .The new positioning was formulated. The brand was a
Big Car-- Big on mileage, Big on Power etc. The campaign had
the common theme of a father and daughter with the daughter
discovering the “Bigness” of the new esteem. The brand was
now revealing its true self. The tagline says “Welcome to the Big World”. This
promotion push helped Esteem to retain its sales.

Decline Stage II:

Dilemmas such as maintenance, spare part availability, service competitions reaction in
filling the market gap are some issues that increase the complexity of the decision process
to withdraw a product from the market. Often companies retain a high price policy for
the declining products that increase the profit margin and gradually discourage the “few”
loyal remaining customers from buying it. Though Maruti was not into a price hike, it
slowly moved its focus from Esteem. This is because of the fact that it was becoming
impossible to sustain in the market with such an old car when market was still flooded
with new offerings from competitors.

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Chevrolet Fiat
Aveo Petra

Chevrolet ESTEEM Tata

Optra Indigo


Along with the competitors mentioned in the previous diagram, some new competitive
cars posed threat to the existence of Esteem.

Maruti decided to discontinue its production from December 2007 and was continuing
sales till stocks lasted in 2008. Maruti finalized the decision by making announcement
that it was going to replace Maruti Esteem by Maruti Swift Dezire. With this an era of
first luxury car of India ended.

There are some major product life cycle management techniques that can be used to
optimize a product‟s revenues in respect to its position into a market and its life cycle.
These techniques are mainly marketing or management strategies that are used by most
companies worldwide and include the know-how of product upgrade, replacement and
termination. To comprehend these strategies one must first make a theoretical analysis of
the model of product life cycle.

The Product Life Cycle of Maruti Suzuki Esteem shows a very short introduction stage, a
steep growth and then a sharp decline before reaching maturity at a low level. It again
showed a growth to a lesser extent than the previous one, then a maturity period lasting
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for a shorter period than the previous one and lastly declined before being out of the
market. The 1st half of the life cycle of this product resembles a standard Growth-Slump-
Maturity pattern. But the presence of a second cycle with all of the stages with smaller
magnitude and duration indicates that this product life cycle can also be categorized
under a standard Cycle-Recycle pattern.

The analysis of the Product Life Cycle showed us how a company can manage its product
and depending on the stage of the product in the PLC decides product strategy to be
competitive in the market as well as withdrawing it from the market when the product
does not add value to the company.

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