A

RESEARCH REPORT
ON

CUSTOMER 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

Customer 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:

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.

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 customers 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: CUSTOMER 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.

TABLE OF CONTENTS

S. No.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Topics Executive Summary Introduction Background of Indian Auto Industry Company Profile PEST Analysis SWOT Analysis Porters 5 Forces Model- Analysis Comparative Study of Customer Care Programs Customers Expectation from a Loyalty Program Loyalty Program for Maruti Conclusion Bibliography

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 doesnt take much to keep the clients we want. All companies have to do is just exceed customers expectations by a little and they will be far ahead of the competition. Thus it was followed by a survey of Customers Expectation from a 7

Loyalty program, which was taken through a common questionnaire framed on certain guidelines, from the customers 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 customers expectation from a loyalty program and bridge the gap between the desired expectation of the people and the company.

Introduction

Peter Drucker refers to it as the 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

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.

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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 1980the 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-

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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.

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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 MULs 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 its 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

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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.

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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. The company reached a total production of one million vehicles in March 1994, becoming the first Indian Company to cross this milestone. It crossed the two million mark in 1997. In 2001, it launched new businesses True value, Maruti finance, Maruti Insurance and N2N. In 2003, the company listed on BSE & NSE after its public issue. Maruti consolidated its competitive position by launching various models other than Maruti 800. In 1984, Maruti introduced a utility vehicle, Omni that could seat up to eight people. The low value added tax on Omni made it the cheapest personal transportation vehicle in India. The Omni was inexpensive to run and was popular with taxi operators and large families. In 1985, another utility vehicle Gypsy, designed for tough road conditions, was launched. In 1990, Maruti introduced a 3-box car, Maruti 1000. In 1993, it introduced a more upmarket model, the Zen. A 1300 cc engine, up-market model, Esteem, followed this, which was the replica of Maruti 1000 (which was replaced) with more power and a new exterior. The Maruti 800, the Omni, the Zen and the Esteem became market leaders in their respective segments. In 1994, Maruti became the first Indian company to reach a cumulative production of one million vehicles. It took only another three years for Maruti to cross the two million mark in 1997. In 1997-98,

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Marutis overall market share was 83.1%. With the emergence of global player in the Indian Automotive industry Maruti has seen a Loosing market share

70 60 50 40 30 20 10 0 1999 2000 2001 2002 Maruti Udyog Hyundai TELCO

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Market Share 2003

7%

3% 3% 16%

51% 20%

Maruti Ford

Hyundai General Motors

Tata Others

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COMPANYS VISION

Maruti Udyog Limiteds Vision for the future is to be:

The Leader in the Indian Automobile Industry, Creating Customer delight and Shareholders wealth; A pride of India.

Maruti Udyog Ltd. is the largest car manufacturer and also has a 50% market share in the passenger car segment. It has reached this position through sound planning and effective implementation of its strategies to achieve the desired goals. Maruti Udyog Ltd. is customer centric organization. It plans to offer a "360-degree customer experience," continuing to launch new products and reduce costs to offer more competitive products. With the ever increasing competition with the opening of the economy and falling market share of MUL, the company is now focusing on consolidating its position and has set three main objectives:

To continue to expand the size of the Indian small car market by strengthening and expanding its dealer network and making automobile financing available at competitive rates.

To strengthen its leadership position in the small car segment of the Indian market.

To continue to benchmark itself against improving global manufacturing, marketing and other practices and standards, strive to increase customer

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satisfaction through quality products and new initiatives, and promote the financial strength of its sales network

The company has also expanded through forward integration into related service sectors of Insurance, Finance and Corporate lease and fleet Management services. It has also entered the pre-owned car market through True Value. All these expansions are expected to increase the shareholders wealth over a long run.

Corporate Strategy

The companys strategy revolves around its Core Values of :

    

Customer Obsession Fast, Flexible and First Mover Innovation and Creativity Networking and Partnership Openness and Learning

The Overall strategy of MUL may be divided into four broad categories:

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Maruti Udyog Ltd.

Mission The Leader in The Indian Automobile Industry, Creating Customer Delight and Shareholder's Wealth; A pride of India

Finance

Customer

Human Resource

Operations

Business Strategy of MUL

The broad business strategies of Maruti Udyog Ltd are as follows:

      

Maintain and Enhance Product Range Increase Reach and Penetration Secure Repeat purchases by Offering a 360 Degree Customer Experience Continue to benchmark manufacturing with global manufacturers Continue to reduce cost to offer more competitive products Achieve Cost Reduction through Higher Productivity Lowering the Cost of Ownership

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Customers and Marketing

Maruti has been rated top in customer satisfaction by JD power for five years in a row. Maruti currently tops in four out of the five CSI (Customer Satisfaction Index) factors of JD Power Survey that determine the service satisfaction of the customers. It also reveals that 26 per cent of Maruti owners rate the service provided beyond their level of expectation, as compared to just 18 per cent for the industry. The company has also topped the Customer Sales Index (CSI) and the Sales Satisfaction Index (SSI), with the cut-throat competition in automobile sector it was an achievement to score 124 in CSI against the industry average of 118. The company is customer driven and customer feedback is valued to a great extent.

The companies Key Marketing Objectives are:

 

Increase Reach and Penetration Secure Repeat purchases by Providing 360 Degree Customer Experience.

Customer Relationship Management:

The focus of Maruti is to achieve customer delight with its Customer Relationship Management. Maruti Udyog Ltd, the Company has to identify the Target Base to Add value through CRM. For Maruti the Target Base are the Two-wheeler owners; Customers taken away from the competition and Services sector. The next step is to

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evaluate the current databases and identify those who are potential customers of the company and start building a relationship. Maruti also worked Oil companies to identify the two-wheeler owners who are potential of owning a four-wheeler. The people is also an important factor in CRM, Maruti has incorporated Customer Obsession as a part of its Core Values and trains its employees to manifest the same. The company also has an interactive website www.Marutiudyog.com which helps Maruti to be in touch with its customers directly.

Positioning and Branding:

Maruti has a different positioning for each of its product. Inspite of Umbrella Branding very few ad campaigns have been launched in view of image building or promoting Corporate Brand. The 2599 Campaign, Service Station in Ladakh, and the Marutis Fuel Efficient Car Campaign used a rational appeal. The company also uses Emotional Appeal to lure its customers. The hottest little car campaign, Esteems fall in Love Again Campaign is examples of use of emotions in the Ads.

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Pricing:

Even after 20 years of being in the Market no competitor has managed to sell a car cheaper than Maruti 800. Maruti sets its prices on the basis of Competitor Analysis. Its prices are often lower than what others have to offer. The cost reduction and high levels of efficiency in Maruti helps it to keep the product cost low thereby giving a tough competition to its competitors.

Performance Measurement:

The performance of Maruti can be measure through various parameters. Various external audits and surveys help Maruti evaluate its performance. Other performance measure can be Market share, growth in the Sales, Response to Sales promotion etc. The feedback of the customer is the most important tool to measure performance of an organization. The recommended Customer Perspective for Maruti Udyog ltd will be as follows: Customer Perspective

Key Success Factor Customer Acquisition   Customer Development 

Performance Measure Customer Feedback Sales Customer Feedback

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 Customer Equity   Customer Retention  

Profits and Returns Customer Feedback Repeat Purchases Database Analysis Repeat Purchases

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Value Chain Integration

Maruti has been the market leader in the passenger car segment for the past several years and has been reaping the benefits of being the single player in Indian Passenger Car Industry. This situation also led to having good margins in the product sale and full capacity utilization of the plant facilities. The market size also had been increasing continuously with two digit percentage growths. However, with the Competition coming in, and with the passenger car market itself not increasing in size, Marutis market share, and margins and hence the profits from manufacturing activity alone are under severe pressure. This is the typical scenario globally also wherein mature markets like USA and Japan the manufacturing business, on a standalone business, is undergoing severe pressures on bottom lines. In this kind of a background, in order to maintain its supremacy in the passenger car market and to increase its revenues and profits, Maruti decided to venture into new service oriented businesses, which could be developed as natural spin off from its core business of manufacturing. It would also strengthen its brand image as a provider of complete mobility solution for its customers. To develop this idea, Maruti engaged M/s A.T. Kearney as consultants (Phase I). Preliminary analysis A.T. Kearney, with support from Maruti, indicated that Maruti captures a limited portion of the vehicle life cycle spend towards only sale of car, with a potential to capture another almost equivalent portion. It found that global auto majors successfully tap this potential in different ways in various markets. A number of business options were generated and

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examined, leading to selection of four potential businesses for Maruti to venture into viz.

 Auto Finance  Insurance Distribution  Corporate Leasing and Fleet Management  Pre-owned Cars Business

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NEW INITIATIVES AT MARUTI UDYOG LIMITED

1. Maruti Insurance

In an effort to become a complete car company, Maruti has entered the car insurance business as well. Maruti Insurance is the brand name under which Maruti has tied up with Insurance Companies to provide better Insurance Services to its Customers. Maruti has tied up with 4 Insurance companies i.e. Bajaj Allianz, National Insurance Company, Royal Sundaram and New India Assurance Co. Ltd. to provide Insurance Services. Benefits of Maruti Insurance Near Cash-Less accident repairs: All Maruti dealers will provide the customer with near cash-less repairs in their claim settlement. This means that the customer would not have to pay to the dealer for the repair charges to the extent it is payable by Insurance Co. Seamless services across nation: The customer can get all the services like buying new policy, effecting renewals, endorsements and claims at any Maruti authorized dealer outlet across the dealer network spread all over India.

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Faster & Fair Claim settlement: With Maruti Insurance there are no hassles like Insurance Co. is not giving fair claim settlement. Whatever is payable by standards is admissible by Insurance Co. Easy settlement of claims with no follow-ups: There would not be any need of the customer's personal involvement with the surveyor or Insurance Company, nor would the customer have to worry about salvage disposal in the process of settlement of claims. All this will be taken care of by the dealer. Repairs at Authorized Dealer workshops: After an accident, the damaged vehicles are repaired at the Authorized Dealer workshops that are equipped with the best facilities and infrastructure. This would lead to quality repairs with Maruti Genuine spare parts and trained mechanics with Maruti Insurance the customer need not compromise on the quality of repairs and thus health of the car, by going to smaller roadside workshops. Dealer Assisted towing facility: Towing assistance would be provided, for getting the vehicle to the dealer workshop, in case of accidents where the vehicle has been rendered immobile. Easy transfer of No claim bonus: No matter which Insurance Company the customers' vehicle was previously insured with, his no claim bonus earned on previous policy would be easily transferred to Maruti Insurance policy that a customer is buying at the time of renewal.

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Instant Policy issuance: No longer would the customer need to wait for the policy document, which sometimes takes months to get delivered from the Insurance company. With MI, the policy is issued through Internet and it is instantaneous. Faster refunds and cancellations & Policy Verification: Maruti Insurance is completely driven by IT systems and thus it is possible to have a faster response time for cancellations and refunds compared to other Insurance companies. At the time of payment of claims also, the policy and premium credit verification is instant. This adds to both Dealer and Customer comfort.

2. N2N Fleet Management Solutions

This business provides complete fleet solutions to corporate and institutions. Marutis new N2N Fleet Management Solutions for companies takes care of the AZ of your automobile problems. Our services include end-to-end backups/solutions across the vehicles life: Leasing, Maintenance, Convenience services and Remarketing. When you lease a fleet from us, you get vehicles in prime running condition plus an attractive lease EMI. We also take responsibility for the reliability

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and performance of your entire fleet throughout the lease period. Our state-of-the art maintenance services ensure that your vehicles are in excellent shape and give a great ride each time you are on the go.

Besides Fleet Solutions for company owned cars, Maruti also offers this service for employee-owned cars.

N2N Benefits

    

A wide range of cars to choose from. Maruti 800 to Baleno Altura. Low Investment. Value-based residual EMI Tax benefits. Lease rentals can be shown as revenue expenditure. N2N maintenance. Saves time and money N2N remarketing. Ensures speedy and efficient resale of the old fleet.

3. Maruti Finance

Maruti has partnered with the leading Finance companies in India to provide highly attractive Finance deals to its customers through its dealers. Maruti Finance is the program under which these deals are being offered exclusively to customers of Maruti vehicles. The service is being extended across the country in a phased manner. Maruti has tied up with 6 finance companies to form a consortium. This consortium comprises Citicorp Maruti, Maruti Countrywide, ICICI Bank, HDFC Bank, Kotak Mahindra and Sundaram Finance.

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Best Interest Rates Maruti Finance offers the best rates of interest. The installment schemes are designed to suit your convenience and other requirements. Value Added Services Extended warranty Maruti Finance gives you the privilege of extended warranty that goes up to four years. This means four years of hassle-free maintenance. You can get up to 30% discount on extended warranty under Maruti Finance. Loans for Insurance and Accessories Loans for insurance and accessories are built into the EMI's, keeping the whole deal simple and hassle free.

Maruti Countrywide

Maruti Countrywide was set-up when GE Capital, HDFC and Maruti Udyog Limited formed a captive finance company in 1995. A professionally managed company we share the ideals and work culture of the parent companies.

Citicorp Maruti Finance

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Citicorp Maruti Finance Limited was formed when Maruti joined hands with Citibank in May 1998 Located in 52 cities we are the first company that provides services to finance the purchase of secondhand cars nationally.

SBI- Maruti

The country's largest bank and the largest carmaker have joined hands to make affordable car finance available to more and more people across the country.

4. Maruti True Value

Maruti has taken its first steps in the pre-owned car business under the brand name of Maruti True Value. Using their technological expertise, network support and the experience they have gained in the last 18 years, the company ensures the customers gets great value and completes the transaction zero hassles. While buying, selling or exchanging a pre-owned car, going to the right place is all-important, customers can take chances with the local roadside mechanic or depend forever on friends and colleagues or gamble with classified advertisements or fix up a deal with the smalltime used car dealer. Or, they could simply choose to enjoy all the advantages of dealing directly with India's most trusted car company. In our endeavor to provide customer Quality, Reliability, Transparency and Convenience, Therefore they ensure that whenever customers come to Maruti True Value to buy, sell or exchange a pre-

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owned car, you get nothing but the full value for your dealings, with your eyes closed

5. Anytime Maruti

Maruti Suzuki has also set up state-of-the-art call centers (operational in Delhi, Gurgaon, Mumbai, Chennai, Bangalore and Hyderabad) Branded Anytime Maruti, this 24 hour help-line clarifies all doubts and queries regarding Suzuki any time of the day or night.

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PEST Analysis

POLITICAL

ECONOMIC

  

Foreign exchange rate Fluctuation Initiatives of De-regularization Stringent environmental regulations.

 

8% average GDP. Shift of manufacturing to low cost countries.

Decline in interest rates for car finance.

New and liberal automobile policies. 

84% car market of A and B segment.

 

Reduction of tariffs on imports. Banking liberalization that has fueled financing-driven purchases.  

Reduction of GOI role in production. Increase in disposable incomes and standards of living of middle class Indian families.

Poor road infrastructure

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SOCIAL

TECHNOLOGY

    

Living styles are changing Shift towards Nuclear family. Income level of Consumer. Unexploited rural sectors Pre owned market larger than new car market.

Latest technology of Competitors.

 

Better infrastructure. Fuel technology (Petrol, Diesel, CNG, Hybrid Vehicles).

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SWOT Analysis

STRENGTHS WEAKNESSES    Extensive product port folio Quality products Formidable distribution and after-sales network.   Integrated manufacturing facility Strong vendor base and higher rate of localization  Skilled labor and experienced management     Capital commitment to vendors First mover advantage Largest market share Economies of Scale achieved due to large volume.  No product competitors in A segment yet.  Leading CSI index 5 yrs in a row         Suzuki (SMC) Extensive control on Maruti Udyog (MUL) Substantial dependence on Suzuki No major successful product in diesel category. Delays in launch of new models. Weak R&D (only for vendors). No strong competition in D segment category. Lack of product design capability No product in D segment.

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OPPORTUNITIES

THREATS

  

Market development through exports Strengthen R&D base. Promotion of True value Schemes (Increase outlets).

Market share declining due to increase in competition.

Global competition (Highly competitive environment)

Vertical integration (Going down streaming).

 

Competitors new technologies Decrease in market share due to shift to bigger cars (Lack of model in C&D segment)

Restructure capital structure (Long term loans for R&D).

Diversification down the value chain.

 

Increase in cost of raw materials. New and liberal automobile policies.

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Porters 5 Forces Model Analysis of Maruti

Porter's "Five Forces of Competition " model views the profitability of an industry as determined by the five sources of competitive pressure. These five forces of competition include three sources of "horizontal" competition - competition from substitutes, the threat of competition from entrants, and competition from established producers - and two sources of "vertical" competition - the bargaining power of suppliers and buyers. The following summary is a view of the Maruti Udyog Ltd. from these five angles leading to the expected changes in the coming years in the underlying structure of the Indian passenger car industry.

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Threat from Suppliers:

Suppliers are the business partners that provide you with parts or solution in a car, which the company makes. Suppliers come in to picture as the company outsources the part or a problem to the supplier and he is required to provide with equipment, which will be used in the car. Now it is basically a partnership in which both the parties benefit from the business fit and competencies of each other. But it can be sometimes that the part is critical and there are very few suppliers, which provide that part. So in that case the supplier has more power as compared to the company

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and can dictate terms in terms of product and price. Thus company has to depend on that supplier for its critical component. The basic rule to avoid such situation is to always have more than one supplier for all the critical components The various important suppliers of Maruti are; Sona Koyo Steering Systems, Denso, Delphi, Mico-Bosch etc.

Diminishing Supplier Power:

One of the key trends observed in the global auto industry is the significant increase in outsourcing of car parts. In India, the development of the auto ancillary industry has also brought in this phenomenon. However, the large number of competitors for supplying each part implies that in the coming years, supplier power will diminish to a large extent except for suppliers who have almost monopolistic powers like MicoBosch. The success of lean production at the industry level depends not only on the efforts of the assemblers, but also on the suppliers and on institutional and cultural factors. The bargaining power of suppliers of some components is high, because of capacity constraints. This makes them accept only large orders, and therefore makes it difficult for assemblers to implement JIT. Also, there is an increasing shift towards reduction in vendor base for a car company, which means that the chosen suppliers also have to make substantial financial investments to enhance the quality of their products. Moreover, the lowering of tariffs will expose the Indian automobile ancillary industry to fierce competition from better-quality imports. All these factors will lead to a situation where the automobile manufacturer will have substantial 41

bargaining power with the suppliers in terms of quality and pricing of the product. Supplier power in the automobile industry will diminish greatly in the coming years due to the large number of competing suppliers, threat of cheaper and better-quality imports, and an increasing trend towards reduction of a car company's vendor base. Also Maruti has been continuously reducing the no of mail suppliers, which shows that it has strength over majority of its suppliers. Currently the main suppliers of Maruti are approximately 230, which Maruti further plans to reduce to 180

Threats of New Entrants

The current auto scene of Indian auto is very vibrant and all the major auto companies are in India and many more are going to enter. So Maruti has a threat of entry from all the automakers as they launch new models, which will start competing with the car models of Maruti. GM, which is the biggest automaker in the world, has plans to bring new 5 models in the Indian car market. Moreover many companies like Porsche, Volkswagen, BMW are also planning to make intrudes into the Indian automobile industry so the competition is going to increase as they come with newer and superior models. New entrants can set themselves apart by offering new safety and comfort features that are not currently offered in the Indian market. They can also leverage their low production run (lean) capabilities to stay profitable despite the low production volumes.

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Capital Requirements:

All the car companies are taking advantage of Indias low cost manufacturing. Many of the companies have plans to make India as their global hub for manufacturing and R&D hub. So the capital requirement is not a problem as all the companies see investment in India as their long-term investment and they are investing in new plants or modification of old plants to take the production quantity or quality up. The company has recovered Maruti being an early entrant in to the Indian car market has a lot to gain from it as the cost of manufacturing is the lowest because of all the initial investment. The company enjoys high margin as compared to the automakers, which have just now entered the Indian market.

Economies of Scale:

The more you produce, the more cheaper it gets because the fixed cost element gets divided into more no. of units. Thus more you produce, the cheaper it will get to produce the next unit. MUL's relatively large production volumes offer scale economies in production and distribution, which pose formidable barriers to entry. Maruti with its production volumes of over 250,000 enjoys scale economies in production, distribution, and service that are hard to challenge. It has also

established a solid supplier-base. All the new carmakers will basically start form low production capacity and will increase with time so it will take time for them to reach the scale at which they can enjoy the economies of scale. 43

Absolute Cost Advantages:

Apart from economies of scale, Maruti has a cost advantage over entrants simply because they entered earlier. Absolute cost advantages often result from the acquisition of low-cost sources of raw materials and resources. It will also result from the learning curve of the company as it has been there in the market for long and has upper management which has scene the market evolve and know the inns and outs of car market. Maruti's presence in the car industry since 1984 gives it considerable cost advantages over the new entrants. Not only are its plants highly depreciated and its cars highly indigenous as compared to its competitors, it has a wide distribution and services network, which will require mammoth resources to replicate. The Indian assemblers, typified by Maruti, have built a formidable distribution and after-sales network. They also have an established supplier base, which gives them cost and delivery time advantages, especially in light of import tariffs and currency exchange rate fluctuations/ devaluations. Although liberalization of the Indian economy has reduced the impact of government policy as an entry barrier, the car industry still enjoys high entry barriers due to huge capital costs involved in setting up efficient plants and numerous cost advantages enjoyed by Maruti

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Product Differentiation:

The product offerings of Maruti are well tested and tried by the people, and they have differentiated them selves as durable low repair cars, giving value for money. The Maruti has a wide distribution and repair network which acts as a differentiated offering to the customer. Maruti 800, which has no competition right now. So if GM comes up with a entry, segment car which it plans to do soon, will put Maruti in state of stiff competition as sales will decline because of customers will have 2 options of buying an entry level car.

Threats of Substitute

The lack of adequate public transportation system coupled with the fact that the electric or hybrid cars are still in the developmental stage means that the Indian car industry faces minimal competition from substitutes. For Maruti, public transport is a major substitute. For E.g. Delhi metro is a threat to sale of cars, but it has been observed in mature markets like US and UK, if the public transport is good then people instead of buying entry level cars shift to the next segment, as it is perceived to be superior than entry level cars. The rational behind this buying behavior is, since the car is not going to be extensively used why buy a basic functional car, why not buy a good car.

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Developmental Stage of Electric Cars:

All the major car manufacturers in the world are currently developing electric cars or hybrid cars to reduce pollution in the coming years. However, these technologies will require considerable length of time to become commercially feasible in developing nations. For eg: Toyota Prius is the one of the best selling model of Hybrid cars currently in market.

Rivalry between Established Competitors

Highly Concentrated Industry:

The Indian car industry is highly concentrated with Maruti itself accounting for about 60% of all sales. The lack of competition in the economy segment to Maruti 800 has given the company considerable power. Its dominance in this segment gives it the power to cross-subsidize its models in the other segments. However, this scenario is changing over the last few years, Since none of the foreign companies can match the price of Maruti 800 for a similar car, they are preferring to operate in a segment which values attributes other than just price. With the higher end of the market likely to generate high margins, these companies plan to slowly move down the scale to a smaller car in course of time to take MUL head-on on price. This explains to some extent the fact that all new entrants are avoiding the sub-compact car segment. Secondly, the used or second-hand car market in India is likely to become more organized in future. The car dealers will themselves deal with used 46

cars. This could put a question mark on the prevalent assumption that a large number of current two-wheeler users in India will graduate to a Maruti 800 in future with higher incomes. The scenario in the economy segment could be similar to that in the premium segment currently with intense price competition. The competition

between firms in the car industry is expected to intensify considerably as newer companies will start reducing Maruti's dominance of the market. The expected significant over-capacity in the industry, increasing working capital needs, and high exit barriers coupled with low differentiation between models especially in the economy segment will put downward pressure on prices and profitability of companies. Many of these new firms will not enjoy the scale economies and relationships with suppliers that Maruti does, so they have decided not to challenge Maruti at its price of under Rs.2,00,000 in the smaller car segment. Most are planning to produce between 20,000 and 50,000 higher-end vehicles. The stiffest competition is building up in the mid-sized car range (1,300 cc and above), where several of these multi national and Indian companies are planning to go head-tohead. Some of the entry barriers faced by automobile companies in India are relatively high levels of import duties, a nascent ancillary industry, and product modifications required for relatively poor road conditions and high levels of heat and dust. Companies with a developed vendor base might try to create entry barriers by putting pressure on their suppliers not to work with new entrants. New entrants will have to deal with uncertainty of demand, different and evolving customer needs, a relatively poor supplier base, a market crowded with competition and industry wide capacity shortages. 47

Higher Switching Costs

Since car prices are high compared to incomes, the life of automobiles tends to be longer than in developed countries. This means a high cost of switching for the consumer, and this represents a significant entry barrier. However as the used car market develops, this factor might not be so significant.

Bargaining Power of Buyers

In the mass consumer markets prices are not negotiable and are market sensitive. Similarly in the case of Maruti the prices are not negotiable from consumer point of view but from the pressure from the competitors. So for Maruti, the consumer has a power of choice and can choose from the products of Maruti and its competitors, any one which is giving the customer better value for money. So to have loyal buyers Maruti will have to provide a value proposition for its products which has to be superior

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Buyers Price Sensitivity

Car buyers in India are extremely price-sensitive especially in the economy segment. Although it is too early to judge the three new small cars and Maruti's response to it, we can expect the price competition to intensify since buyers would be more willing to switch while intense competition among the companies would require them to generate volumes. The power relationship between automobile companies, dealers and customers is going to change substantially as the industry moves from supply constrained sellers' market to a demand driven buyers' market. Thus dealers and customers are going to acquire greater power.

Relative Bargaining Power

Gone are the days when the Indian car buyer had to buy one of the 30,000 Ambassadors or Fiats, which were produced. The penetration of satellite television has globalized the Indian customer. The Indian consumer is no longer satisfied with outdated Models but expects the latest global launches. For Eg the global launce of Hyundai Tucson (SUV) and a new offering from Maruti Swift.

From a small shed for a dealership, the shift is towards huge dealerships that not only offer complete range of services for the car but also make sure that the customer has a replacement vehicle so that they may not become immobile. Many companies have mobile squads to take care of the car if it breaks down on the road. The entry of global players has re-defined the dealer-customer relationship in India. Maruti has

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been in the forefront of this revolution and has been ranked as no one company in customer satisfaction for the last 5 years by JD Power.

Availability of Easy Financing

The entry of numerous car companies has brought along with it a massive increase in the availability of cheap finance for the Indian consumer. This has led to fierce competition among the car companies and has even led to free gifts being doled out to buyers to lure them to purchase a particular car. Maruti finance and insurance are an endeavor to provide to customer a one-stop shop in which the company provides not only a car but a solution.

Used Car Market

The used car market is still in the nascent stage in India as compared to the developed nations like United States, which has a thriving, used car market. Secondly, the used or second-hand car market in India is likely to become more organized in future. The car dealers will themselves deal with used cars. It is expected that a used Accent or Astra will be priced close to a new Maruti 800. This could put a question mark on the prevalent assumption that a large number of current two-wheeler users in India will graduate to a Maruti 800 in future with higher incomes. The scenario in the economy segment could be similar to that in the premium segment currently with intense price competition. A thriving used car market reduces the ownership period of cars and helps in increasing demand for new cars. Recently, Mercedes Benz in India was offering discounts of 30-35% for 50

sparingly used E220s as it had decided to phase out this model. Maruti true value show rooms are an endeavor in this side by Maruti and are only one of its kind giving it a first movers advantage. Since Maruti has a big customer base Maruti will be able to make this business model a success, as it is not a money making model it is a service to its customers but still money has to be made so as to sustain the business model which Maruti does.

The entry of the global car manufacturers has transferred the balance of power into the hands of the buyer. The Indian car buyer is not only extremely price conscious, but also wants the highest value and service. Huge dealerships, member clubs, mobile squads, and replacement vehicles are just some of the sops being offered to the customer. The availability of cheap financing and maturing of the used car market will also increase the choices for the consumers. With many new models waiting to be launched, the Indian car buyer will only have more power to choose and dictate terms to the dealer. The new multinational companies are trying to revolutionize the concepts of car delivery and after-sales service in India, and are coming out with several innovative retailing ideas to win customers. Customers are demanding more voice in the options they want and the cars they buy. This in turn will force dealers to be more customer-oriented. The emerging system of `customer pull translates to empowering the customer and creating a genuine symbiosis between the customer, the dealer, and the automaker.

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Conclusion

Although it is possible to predict with some confidence the qualitative impact of individual structural changes, there are difficulties, first, in predicting the quantitative impact of structural changes, and second, in predicting the aggregate effect of simultaneous structural changes that have conflicting effects on profitability. The Indian car industry is still in a nascent stage. The economy car segment accounts for the majority of the cars sold. The market is growing at about 25% for the last three years. In the highly price sensitive market, reduction of prices because of lower duties and taxes and progressive indigenization, and rising middle class incomes are likely to further increase industry growth rate. Penetration in rural and semi urban areas is extremely low and could provide fresh markets. Its products enjoy good reputation in fact, Indian automotive industry observers credit Maruti for the rapid improvement in quality and supplier capability in this industry. Maruti being the largest carmaker of India is all set to enjoy this advantage, which makes the profit margins higher.

However, as the economy picks up steam again and the Indian market matures, the car industry will also climb up the learning curve. The industry has virtually no competition from substitutes at least for the next decade. High entry barriers due to high capital costs are also a positive indicator for the existing car manufacturers. However, the intense competition between firms and increasing bargaining power of

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the buyers indicate towards intensifying competition and depressing profitability. It will also lead to an increasing need of working capital for these companies who will be faced with longer credit periods and higher inventory holdings. The diminishing power of the supplier industry will help the industry in improving the quality of car components and getting longer payment periods. The key to success in the Indian car market will be offering good-quality cars that offer value for money, run innovative marketing campaigns to attract potential buyers, and offer excellent after-sales service.

The number of persons per car is 200, which is very large compared to other emerging markets like Korea and Brazil, which have about 12 persons per car. There is therefore a very huge untapped market. Some of the strengths of the industry are low labor costs, supportive government policies and trained manpower. Major weaknesses are a small and fragmented ancillary industry, poor infrastructure, low level of diffusion of lean manufacturing, improvements needed in quality and productivity, and lack of product development capabilities. The opportunities that the industry offers are a large untapped market, and a possible production base for exports. Companies, which have a range of vehicles in all the segments of the market like Maruti, will be at a significant advantage due to their ability to cross-subsidize models. But, one thing is clear - The great Indian car wars have just started and whichever company wins, the final winner will be THE INDIAN CUSTOMER

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COMPARATIVE STUDY OF CUSTOMER CARE PROGRAMS

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INTRODUCTION

Historically customer service has been seen from a narrow perspective where the primary role of the customer service is concerned with providing quality products and services. The challenge now is to keep pace with the ever-changing expectations of individual customers amid new channels and new technologies. Since customers are more aware and have more options, their expectations are different. Now they go to producers, who don't just deliver what they promise but also make them feel special. So your job doesnt end with just selling the product. In fact, now, more than ever, it has become imperative that organizations understand their customers better, and use this understanding to build superior products and provide prompt services around changing customer needs. And to build abiding relationships, that extend beyond the product to the organization as well.

Today, ongoing change rules the market place. Terms like market segmentation, consumer expectations and behavior, distribution channels and service are being redefined, all the time. The only permanent factor is the customer, and abiding relationships with the customers alone can buffer the shock of change. So only the organizations that nurture customer relationships can survive product obsolescence, overcome the onslaught of superior competitors and still manage to maintain bottom-lines.

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After sale service is the clichd description of the function. The customer today is looking beyond just fixing the problems. The service experience, ambience and the expertise are sought after. 24-hour breakdown service is not uncommon. The potential entrant needs to look at this function in larger perspective. It should be customer care rather than mere After Sale Service. Raison de entre of this function should be customer delight. Fixing the automobile should merely be the way to achieve it. This approach would mean higher investments in workshops. More importantly a fresh approach to the intangible softer issues of the customer relationship is recommended It is concerned with building of financial bonds, social bonds (which offer personalized service delivery) and structural bonds (which emphasize provision of quality services that are valuable the clients and not readily available with competitors which helps the customers to resist the temptation from the competitors) with customers and the other markets or groups to ensure long term relationships of mutual advantage.

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RESEARCH METHODOLOGY

Objective of the Study

Maruti Udyog Limited is the leading player in the small car segment in the country. Of the late with the entry of many multinational players it has been facing intense competition and shrinking margins. Historically customer service has been seen from a narrow perspective where the primary role of the customer service is concerned with getting the right products at the right place at right time and the focus is much on distributors and logistics view points.

The new vision of customer service places it in a much broader context as a multi dimensional issue with an impact on relationships with specific target groups across a broad range of company activities. After all, after sales service is as important as selling a car. It helps establish a longer relationship with the customer. Hence this project was undertaken with a view

To study the Customer Care Programs of Maruti and its competitors at its various dealers in NCR region.

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Research Design

Nature of the study

The aim of my project is to have a comparative study of Customer Care Programs of Maruti and its competitors at the various dealers across NCR region. This would help us in knowing the customer care practices across the competitors, and thus we would be able to analyze that where does Maruti stands amidst it competitors in terms of customer care practices, and how can we create a competitive edge over its competitors, ultimately providing better services to its customers. In order to accomplish this purpose we will use Descriptive study, which comes under Conclusive research, based on the details provided by the various dealers across the city.

Data Collection

Primary Sources: Data was collected through in depth interviews carried on with Sales Executives and Relationship Managers at different dealers and Regional offices of Maruti and its competitors comprising of Tata, Hyundai, and Ford, across the NCR region. No structured questionnaire was used for collecting information on Customer Care Programs, as data to be collected was not standardized.

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Data was collected through secondary sources like:

Study of competitors processes.

Various Websites and Auto Magazines.

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HYPOTHESIS

The major competitors of MARUTI are HYUNDAI, TATA, and FORD, thus only these three companies were taken for conducting a comparative study of Customer Care Programs at their respective dealers and Regional/ Head Offices across the NCR region.

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Customer Programs at TATA

Membership clubs INDICA CLUB & INDIGO CLUB.

To add a whole lot of fun and excitement to customers life, TATA has launched the exclusive Indica and Indigo Clubs. They believe that our relationship with customers has just begun. And one forum to keep our relationship going from strength to strength is the Indica Club. To become an Indica club member all customers have to do is fill in the membership form and submit it to TATA. Whats more, membership to this club is ABSOLUTELY FREE! Which means customers doesnt have to spend any money or time. What customers get in return is a whole load of exciting offers and discountsall for free! And right at their home. All they need to do is, sit back and enjoy all the amazing offers they will be sending to customers regularly.

Here how the excitement starts Customers will receive an Indica Club card with their name endorsed on it plus, a surprise welcome gift to the club. And after that, exciting offers, invitations to mega events and film festivals etc. etc all through the year all for free.

The Indica Club flagged off its first round of activities in May 2000 with some amazing offers from Braun, Mahindra Holidays, Westside, The Economist, The

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Planet Kids, Readers Digest, exclusively for Indica Club members and their families! Followed by Tanishq, Zodiac, Kenwood Music System, and the list continue. And the response was overwhelming. They have even launched an exciting Movie Fest with AXN, where Indica Club members can attend the screening of 28 action packed films absolutely free! More and more Indica owners are enrolling for membership to the club everyday.

After the sale, THANK YOU cards to its customers for patronizing their products.

At the time of sale, photograph of the customer with their car, this is mailed later to the customer.

Customer Feedback Forms which are mailed by the customers directly to TATA Motors for reviewing sales and service performance and satisfaction of the customers.

 

Anniversary and Birthday Cards to its customers. After the service, the dealer personally enquires you through tele calling about the satisfaction level.

CRM was one of the major initiatives embarked on five years back but only began putting in an IT system in 2003. In an effort to ensure a consistent and high level of service to end-customers, Tata Motors decided to put in standardized practices across its entire distribution channel of some 500 dealers in 1,500 locations in India. The Siebel system that Tata Motors

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implemented encompasses all dealer transactions. Invoice creation, job card opening, campaign and order management are all done with Siebel .If a white car is sold from a dealer in any of those 1,500 locations, the product line head would know, so they have visibility of pipeline and retail sales, even down to the sales executive. The company finds this useful, for example, in a marketing campaign with a target of 10,000 vehicles, and where these numbers cascade down to the dealers and subsequently to the sales executives.   Into a very nascent stage regarding the development of CRM related activities. More into satisfying customers through quality products and services rather than building onto relationships.  No loyalty program at the moment, but expected to launch within next 3-4 months.   Largely focusing onto Customer Care activities than CRM. All customer support activities are handled by Customer Care Department only.

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Customer Programs at HYUNDAI

      

Thank You! Cards to its customers for patronizing their products. Free Service Camps Free On Road Service During Warranty for 2 yrs. Anniversary and Birthday Cards to its customers Buy back of used cars through associates. Extended Warranty Programs. Privileged Members more than one Hyundai Car owners offered, Special Discounts. Loyalty Benefits.

More stress on relationship building through financial bonds, special discounts, etc.

Different clubs according to product category offering varied special promotional and entertainment schemes (soon to be introduced across the country). Terracan. Sonata & Elantra Accent, Getz & Santro

Constant interaction with its new customers, enquiring and ensuring, product and service satisfaction. After the sale of car, customer is contacted within 72 hrs to enquire about sales satisfaction and performance of the product.

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After 1 month, Customer Feedback form is sent to the customer, which is mailed directly to the company informing his satisfaction levels with the product and services offered to him right from the time of enquiry till the time of delivery of his car.

Service Reminder System 30 days Mails. 15 days Telephone calls.

Transparency in Labour service charges across various cities, which are distinguished as Group-1 (Mumbai), Group-2 (Ahmedabad, Delhi, Gurgaon, Bangalore, Pune etc.) and Group 3 (Agra, Kanpur, Jammu etc.). According to officials at Hyundai, having such a transparent service charge system across the nation ensures satisfaction in the minds of the customer. He is more confident of getting his car serviced at authorized dealers, since he is well aware of the service charges for various activities which are directly enforced by the company, thus the fear of being overcharged by a particular dealer is not there, as the charges prevalent are same across a particular city. Thus all this leads to more and better customer interaction, paving a way for good customer relationships.

Also have a dedicated CRM department, largely focusing onto Customer care activities.

For Test Drive the vehicle is sent to the customers premises according to his convenience, freeing him from the hassles of coming to the dealership.

No Loyalty Program yet, but expected to launch in next quarter.

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The present focus is on capturing market share through establishing financial bonds with its customers rather than putting more insight into value added services.

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Customer Programs at FORD

 

DCRC Dealership Customer Relationship Center. Customers meet every quarter o New customers are invited. o Tips on car driving, maintenance, etc.

Proactive approach towards customers needs. Customer Relationship Executives meeting customers at their premises, according to their convenience, o To obtain feedback. o To fix problem if any. o To ensure more satisfaction.

First company to start the activity of visiting customers premises, till date covered 124 corporate houses like Dabur, Glaxo, HCL etc.

 

Effective interaction with customers through mailers and SMS. Every month some event is organized. o Summer camp, Free A/C check up. o Monsoon camp, check up of cars wipers, other parts etc. seasonal problems.

 

24 hrs. Help line for customers queries. Ford assured Buy/Selling of used cars.

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Separate Customer Care Department for Grievances handling. After delivery of car, customer is called after 3 days to enquire about the satisfaction of the product and the services.

   

Pick up and Drop facility for car servicing from customers premises. Anniversary & Birthday cards to the customers. Acknowledgement of customer queries, complaints etc. within 24 hrs. Service reminder system. 15 days Mail 7 days telephone.

CVP- Customer View Point, feedback from customers about products and services, suggestions for improvement etc. CVP Audit Awards to customers for their valuable suggestions.

  

Exchange loyalty bonus on purchase of new cars ranging from Rs.10,000-15,000. Extended Warranty Programs. For Test Drive the vehicle is sent to the customers premises according to his convenience, freeing him from the hassles of coming to the dealership.

Ford India Limited has launched a unique web-based customer relationship initiative offering its customers direct connectivity to the company. Aptly named 'My Ford', the initiative offers Ford India customers a personalized and secure web page through www.myford.india.ford.com that will manage all aspects of their vehicle ownership experience.

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A very high level of hospitality in attending its customers. Customers served with tea or coffee during their interaction with the Executive irrespective of the deal being finalized or not.

Blue Oval Club Membership Program Also known as FORD CarGainz Program Privilege Points program, every customer who opts for an extended warranty scheme for Ford vehicle is liable to become the member of this club and can avail the benefits. This program ensures that you get rewarded for maintaining your car well. Every time you get your car serviced or purchase Ford Gear (accessories) at authorized Ford Dealerships, you earn points that can be redeemed for a range of premium Ford services, Ford Gear and Ford spares.

These are the points you can earn: Bonus Points: Every time you avail of the prescribed Periodic Maintenance Service, you earn Bonus Points. Service Points: When you service your Ford vehicle at an authorized Ford Dealership, you earn 1 service point for every Rs.100 you spend on Spares / Labour / Ford Gear. Loyalty Points: You can earn these points for continued ownership and availing of the prescribed Periodic Maintenance Services at authorized Ford Dealerships. These points can be redeemed only on trade in for a new Ford vehicle.

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Car Ownership End of Year 1 End of Year 2 End of Year 3 End of Year 4

Loyalty Points Earned 2000 2000 2000 2000

Cumulative Points 2000 4000 6000 8000

One can redeem these points once you complete 6 months of membership and accrue a minimum of 500 points. The validity of the program is 5 years from

the date of first sale of the Ford Vehicle, points accrued will be valid for one year beyond this period.

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Customer Programs at MARUTI

More focus on regular customer interaction through various events organized over a regular period of time like Road Shows, Summer Camps, and Free Check up camps, Maruti Suzuki Auto Cross etc.

 

Birthday and Anniversary cards to its customers. At the time delivery of vehicle, customer is presented with a Bouquet of flowers, a coconut and a box of sweets.

Dealers offering Free Replacement A/c car at no extra cost, whenever they repair your accidental car.

Regular customer interaction after the sale of product till 1 month ensuring and enquiring about the satisfaction levels of product and services.

A very high level of hospitality in attending its customers. Customers served with tea or coffee during their interaction with the Executive irrespective of the deal being finalized or not.

MARUTI released THANK YOU ads in the print and electronic media for patronizing their products. It goes to show that unless you show your customer that you care for them, they are not going to care for you.

Anybody who owns MARUTI can register as part of an extended family of Maruti owners and know the names of other owners living nearby.

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Loyalty Bonus of ranging from Rs.5000- Rs.10,000, during exchange of an old car.

 

Extended Warranty Schemes. Maruti also has a Maruti On Road Service, round the clock for its customers during the warranty period.

Confidential customer feedback forms which are mailed to Maruti stating about the satisfaction level of services and the product.

Maruti partnered with Wipro for "Real Time" Dealer Management System, first of its-kind Information Network System implementation in India in 2003. This system provided benefits to their dealerships and to customers. Dealerships have access to updated information from Maruti and a real time view of their operational processes that helps them manage their businesses better. The DMS issues alerts to dealerships whenever they are falling short of performance norms in various areas such as level of customer complaints handling and sales. More importantly, it enables the Dealer CEOs to proactively monitor their various Key Performance Indicators to effectively manage their businesses. This would include inventory, sales, inquiries and debts. The system assists dealerships in customer retention and help build lasting relationships. As far as customers are concerned, they are benefited from the 'single face of Maruti' irrespective of the dealership. This should help raise customer service levels and enhance the quality of management at dealerships. The DMS is a centralized solution with all Dealerships logging onto a Central Data Center where the Application is hosted.

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The system, apart from dealer integration with a central database, also serve as a knowledge repository from where dealerships can access information on customer schemes, product features and price lists.  A toll free number providing 24 hr. customers care facilities, with call centers located in Gurgaon and Chennai. Highly customer responsive, getting back to customers within 24 hrs of reporting a complaint.  360-degree view of their customer because they have centralized database. Sales divisions and customer service centers all have their own databases, with effective means for creating a complete customer-information composite. Data from all customer touch-points is combined into a centralized customer database.  Increased Customer interaction through True Value Car Mela at every weekend at most of the dealers.    Service Reminder system through mailers and tele calling. Insurance renewal reminder system. MUL sent out invitation to celebrities inviting them to test drive BALENO at their convenience and at a place of their choice. They identified their audience, interacted by sending out mailers and then customized the experience of testdriving.  MARUTI Udyog has made a renewed foray into company-owned service stations and has drawn up plans for enhancing its reach in this segment nationwide. A network of service stations, under the brand name Maruti Service Masters (MSM), is set to come up across the country in the next few months. These

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service stations are one-stop shops to meet all vehicle needs of Maruti car owners. An important reason why MUL is looking at an additional service channel is because of the enormous potential that still exists in spite of the company's existing network. Maruti dealers were constantly upgrading their workshop facilities and were adding more workshops as they had realized the importance of service in retaining customer loyalty. After all, after sales service is as important as selling a car. It helps establish a longer relationship with the customer. Of the total 3.2 million Maruti vehicles on the country's roads, only about 54 per cent is currently serviced by MUL dealer workshops and Maruti authorized service stations. The move has been undertaken by MUL, through its joint venture company, J J Impex, which controls the first MSM outlet in Okhla. J J Impex, is a joint venture of MUL and Sumitomo Corporation of Japan, with Maruti Countrywide Finance holding a minority share.  Recently Maruti has launched its Mobile Service Shops, which is a vehicle fitted with tools and equipment to wash and vacuum-clean vehicles, service them and also conduct minor repairs. It will make it more convenient for Maruti customers to get their cars serviced at their own convenience.  Maruti Driving School (MDS) has been established with the goal to provide the best motor driving training in the country. The purpose is to impart not just better driving skills but also better awareness towards overall road safety. Backed by Indias no. 1 car manufacturer Maruti Suzuki MDS is dedicated to making Indian roads safer by helping learners become smart and responsible motorists.

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Maruti Udyog ranks highest in automotive sales satisfaction, according to the J.D. Power Asia Pacific 2004 India sales Satisfaction Index (SSI) study. The study, now in its fifth year, examines satisfaction of new-vehicle buyers with the sales and delivery experience at two to six months of ownership. Maruti is the only brand in the Indian automotive industry to have consistently improved its ranking in the SSI over the past five years, Maruti dealers are the most consistent in meeting customer expectations, even with Maruti's challenge of being one of the highest-volume sellers in the industry. As a result, nearly one-third of all Maruti customers are highly satisfied with their sales experience (JD Power Asia Pacific Study 2004).

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Analysis of the Comparative Study

Maruti provides a 360-degree experience to its customers, with its foray into the Value Chain Integration. The customers who are associated with Maruti or would be associating with Maruti are far off from the hassles that they generally would have to face like Selling/Buying of Used Cars, Insurance, Finance, etc. Although dealers of other competitors also provide customers with Selling of their used cars, Finance options, Insurance, but none of the offer is authenticated from the company rather all these are dealers offerings, thus the satisfaction level of customers is comparatively high when an offering is directly from the company. This provides Maruti a competitive edge over its competitors.

All these new initiatives at Maruti provide enhanced customer touch points, which would help us in building the customer repository thus, helping us in back-end CRM operations.

Most firms lack a 360-degree view of their customer because they have no centralized database. Billing departments, sales divisions and customer service centers might all have their own databases, with no effective means for creating a complete customer-information composite. To effectively implement a sound customer loyalty strategy, data from all customer touchpoints must be combined into a centralized customer database, whereas

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Maruti follows this practice of having centralized database from the entire customer touch points.  Anybody who owns MARUTI can register as part of an extended family of Maruti owners and know the names of other owners living nearby. This is a unique program, which is not offered by any of its competitors.  Maruti has lost the opportunity of being a pioneer to launch a loyalty program in the Indian automobile industry, as a part of its customer retention strategy. Ford has already capitalized on this opportunity and has become the first company in the Indian car industry to launch a Loyalty program by the name of Car Gainz  Maruti also has a very transparent Labour and Service charge schemes across the country, but it is not disclosed to the customers through the Internet or other channels.  Most of the customer care activities that are being performed by the competitors (Hyundai, Tata, and Ford) are a part of regular practice at all of the Maruti Dealerships.  Maruti is also the first company to start Mobile Service Vans, which could provide its customers entire servicing experience that too according to their convenience.

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CUSTOMERS EXPECTATION FROM A LOYALTY PROGRAM

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INTRODUCTION TO LOYALTY INDUSTRY

Who said, Money Cant Buy You Love? A useful metaphor, though, to help understand the true concept behind customer loyalty. Loyalty programs are about developing sustainable, mutually beneficial relationships. Price incentives can generate a short-term sales uplift but will not engender long-term loyalty. Customer loyalty has long been recognized as essential, whereas (electronic) customer loyalty systems are still relatively young.

Businesses in the new millennium are more competitive than its ever been. There will be even more channels to market, even more opportunities for customers to purchase, even more offers and inducements, and even more opportunities for customers to switch. As customers expectations continue to rise, and businesses repeatedly fail to meet them, the focus has moved away from acquisition to retention. Some customers are inherently loyal and predictable and some are more profitable than others the best need to be identified and kept, and the worst left to bounce from one new competitor offer to the next. In this new age of customer flexibility a pure incentive scheme will not substitute a valued product. The customer will demand the best. Building and maintaining loyalty in this on-line/ off-line world will be even harder because the competition is just one click away.

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The cost of making a new customer is nearly 5 times that of retaining an existing one. No wonder then, that in todays world of decreasing margins, increasing competition and ever changing business environment, corporate success depends on an organizations ability to build and maintain loyal and valued customer relationships. The four main business drivers for Loyalty programs are: Gaining customers Increasing customer loyalty Changing customer behavior Getting information about customers

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RESEARCH METHODOLOGY

Objective of study

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. In the present market scenario, the transition from products to brands is complete. The intangible offerings have gained as much importance as the tangible product features. Monitoring customer satisfaction periodically is also very critical Resources and efforts put behind these activities should be considered as investment on the brand for ultimate success. Customer Loyalty Program is a visible declaration that you are dedicated to keeping your customers, and physically demonstrates that you value their business, but what is more important is to know that what does your customer values the most in your offerings and apart from this what more he expects out of the companys programs. Hence this project was taken with a view

To find out the Customers Expectation from a Loyalty Program.

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Research Design

Nature of Study

The aim of my project is to have knowledge about the customers behaviour towards the companys customer care program and find out what a customer actually expects out of a loyalty program. This would help us in knowing the consumers attitude towards our offerings and accordingly we can bridge gap between the companys offerings and what customer actually expects out of the company.

The project undertaken was primarily explorative in nature, thus Explorative research was used to isolate key variables and relationship for further analysis, which helped in developing alternative course of action. Based on the collected data, an analytical study was carried out to find and understand the customers attitude towards our offerings and find a solution to accommodate customers expectation. Surveys were conducted with the help of questionnaires, as it will provide an indepth knowledge about customers behaviour. While investigating the behaviors and preference of people, many other related issues, though not obvious would also get answered.

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DATA COLLECTION METHOD

There are different sources through which we can collect our necessary data. The various sources through which we have collected the data can be divided into two parts:

 Primary method

The data, which is collected at first hand either by the researcher or by the person so authorized for the purpose of this study is known as primary data. Their exist various sources, through which primary data can be collected. Some of them, which we have used for this study, are:

Questionnaires

The type of questionnaire is of - Structured and non-disguised in nature. This is because no special skill is required on the part of researcher to work on such a questionnaire. Thereby leading to less of mistakes by the researcher himself/herself.

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 Secondary method

It is that data which is already available as a starting point. This data obtained both internally as well as externally.

can

be

INTERNAL SOURCES

The internal source had been ours institute i.e Greater Noida Institute of

Technology.,Greater Noida, library were we referred various books.

EXTERNAL SOURCE

y y y

Websites Magazines Newspapers

 Sample Size - 100 people ( comprising of existing customers of Maruti and New Prospects.)

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QUESTIONNAIRE

EXPECTATIONS FROM A LOYALTY PROGRAM

Dear Respondent, I am a Management Trainee undertaking this survey and would be greatly thankful to you for your kind co-operation in helping me in filling this questionnaire. Information provided by you would be kept confidential and would be used for research purpose only.

1. How many cars do you have? a) 1-2 b) 3 and more c) none

2. How many cars do you have from Maruti? a) One of them c) All of them b) Two of them d) None of them.

3. Since how long you have been associated with Maruti? a) 0-1 yrs b) 1-3 yrs c) 3-5 yrs d) More than 5 yrs.

4. How do you consider Maruti in terms of post-sales services and interaction with its customers? a) Very Good b) Good c) Average d) Poor

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5. Are you a part of any loyalty program for any company? a) Yes b) No

6. How do you get aware about the loyalty program for any company whose products you purchase? a) Friends c) Promotional activities by the company b) Advertisements d) After purchase

7. Do you engage in more number of purchases for being a part of the loyalty program? a). Yes b) No c) Cant say

8. How important is it for you to be a part of any loyalty program of a company? a) Very Much d) Not so important b) Somewhat e) Not at all c) Depending upon the benefits

9. Do you expect your loyalty program to be more advantageous in terms of monetary benefits? a) Yes b) No

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10. Do you consider yourself related to the company when you are a part of its loyalty program? a) Yes b) No

11. Do you want to be a part of a loyalty program if it charges you an application fee? a) Yes b) No

12. If Yes, How much amount you would like to pay in order to become a member of a Loyalty Program? a) Rs.0-50 b) Rs.50-100 c) Rs.100-200 d) More than Rs.200

13. How much according to you should be the durability/existence of a loyalty program? a) 0-3 months c) 9-18 months b) 3-9 months d) more than 18 months.

14. In your loyalty program how would you rate the importance of various parameters of the program in driving you to be a part of it? (6 being the highest in rating) a) Redeemable points b) Ease of redemption 87

c) Durability of program d) Application fee e) Transferability f) Points exchange with other companies

15. Rate the importance of parameters in earning you good benefits from the loyalty program? (6 being the highest in rating)

a) Redeemable points b) Ease of redemption c) Durability of program d) Application fee e) Transferability f) Points exchange with other companies

16. Do you keep track of the credit points/redeemable points of the loyalty program? a) Yes b) No

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17. Rate the importance of following benefits according to you from a Loyalty program (7 being the highest)

a) Cash discounts/Monetary benefits b) Value added services c) Frequent customer interaction d) Special privileges in terms of services. e) Loyalty benefits in future transactions. f) Entertainment activities. g) Customized products and services

18. Apart from the parameters mentioned, what more according to you is important in driving customers to become a member of a loyalty program?

____________________________________________________________

19. According to you what more is expected out of a loyalty program?

_____________________________________________________________

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20. If you are a member of any loyalty program, are you completely satisfied with the benefits and services? a) Yes b) No

21. If Not satisfied, what are the reasons for your discontentment?

__________________________________________________

NAME

: __________________

AGE

: ____

CAR MODEL

: __________________

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RESEARCH ANALYSIS

1. Peoples Association with MARUTI.

Association with MARUTI

12% 22% 28%

38%

0-1 yrs.

1-3 yrs

3-5 yrs.

more than 5 yrs.

2. Maruti in terms of post-sales services and interaction with its customers

Post - al s
12%

rvic s
24%

26% 38% V er G G A er e

3. Are you a Part of any loyalty program for any company?

91

Poor

Part of a Loyalty Program

32%

68%
Yes N

92

4. Awareness about the loyalty program for any company whose products you purchase

Awar n ss about Loyalty Progra

24 18

30

28

Friends dvertisements Pr m otional ctivities y company After P rc ase

 

5. Engage in more number of purchases for being a part of the loyalty program

More purchases o be a part of Loya ty Progra

 

38

34

yes

can't say

93

28

6. Importance to be a part of any loyalty program of a company.

To be a part o a Loyalty Progra

10 16 16

22 36

Very c Depending pon enefits Not at All

   

Somewhat Not so Important

7. Loyalty program to be more advantageous in terms of monetary benefits.

Mo et ry Be efit more Im ort

8%

82%

Yes

No

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8.

Related to the company when a part of its loyalty program.

Feel elated to t e
28

o pany

72

Yes

No

9.

Part of a loyalty program if it charges an application fee.

Applic ti n F

34% 66%

Yes

95

10. Amount would like to pay in order to become a member of a Loyalty Program
ount of pplication Fee
! !

6
!

16

0-50

50-100

100-200

More t an 00

11. The durability/existence of a loyalty program

Dur bilty of Loy lty Progr m

6% 8% 48%
"

28% 0-3 Months 9- 8 Months

"

3-9 Months More than 18 Months

96

74

12. Track of the credit points/redeemable points of the loyalty program

Kee Re ord of Reedem ble Poi t

32% 68%

Yes

No

13. In your loyalty program how would you rate the importance of various parameters of the program in driving you to be a part of it? (6 being the highest in rating) i. Redeemable points ii. Ease of redemption iii. Durability of program iv. Application fee v. Transferability vi. Points exchange with other companies.

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Im orta ce i

rivi g ou o e a art of oyalty rogram

466

500 450 400 350 Cumulative S ore 300 250 200 150 100 50 0
Redeemable Points

346 314 280

346

348

A ppli ation Fee

Parameters
&

Redeemable Points D rability of Program Transferability

%

98

Ease of redemption Appli ation Fee Points exchange with other companies

14. Rate the importance of parameters in earning you good benefits from the loyalty program? (6 being the highest in rating) i. Redeemable points ii. Ease of redemption iii. Durability of program iv. Application fee v. Transferability vi. Points exchange with other companies

Im ort

e i e r i g Good Be efit from Progr m

378 360 320 278 376

Loy lty

400 350 300

Cumul ti e S ore

388

250 200 150 100 50 0

' (

Redeemable oints
'

u rability of Transferability rogram

P r meter

Redeemable oints urability of rogram

) ) 0

Ease of redemption
1

pplication Fee oints exchange with other companies

99

Transferability

15. Rate the importance of following benefits according to you from a Loyalty program (7 being the highest) i. Cash discounts/Monetary benefits ii. Value added services iii. Frequent customer interaction iv. Special privileges in terms of services. v. Loyalty benefits in future transactions. vi. Entertainment activities. vii. Customized products and services

Important Benefits from a Loyalty Program

600

540
500

472 424 400 360 324

Cumulative core

400

300

268

200

100

0
4 2

Cash discounts

100

65

Cash discounts Frequent ustomer interaction Loyalty benefits in future transactions Customi ed products and ser i es
65 6 7

Benefits Value added ser i es Special pri ileges in terms of ser i es Entertainment acti ities
65

Frequent ustomer interaction

Loyalty benefits in future transactions

Customi ed products and ser i es

RESEARCH FINDINGS

After the conducting a detailed survey of customers expectation from a Loyalty program, I had following inferences from the same:

1. More than 65% of the people rate Maruti as above average in Post Sales Services and its interaction with its customers. 2. When asked about that whether they are a part of any loyalty program or not, 68% people said that they are not a part of any loyalty program yet. Since the buyers of cars were not absolutely acquainted with the concept of loyalty program, thus there was a difficulty in explaining the concept behind it, what actually it is and how being a part of it could be beneficial for them 3. When asked about the awareness of the Loyalty program, around 30% of the people said that they get awareness through the advertisements in the print media and 28% said through promotional activities by company like mailers, newsletter etc. 4. 34% respondents said that they make more purchases in order to be a part of a loyalty program whereas 28% refused to do the same. 5. 38% of the respondents said that the importance to be a part of any loyalty program depends largely upon the benefits that are attached with it, whereas 16% of them said that they consider it very important to be a part of a loyalty program for any company irrespective of the benefits. Thus a company needs to make

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awareness about the benefits attached with a loyalty program at the time of promotional activities. 6. 82% of the respondents said that they want a loyalty program to be more advantageous in terms of monetary benefits. 7. 72% of the respondents find themselves related to a company when they are a part of a loyalty program of any company. 8. When asked about whether they would like to be part of a Loyalty program if it charges an application fee, there was a very big NO by 66% of the respondents. 9. If an application fee is to be charged, what should be the approximate fee, 74% of the respondents said between Rs.0- 50 and meager 4% of them said above Rs.200. 10. 48% of the respondents feel that the durability of the loyalty program should be more than 18 months. 11. On the analysis of importance of parameters in driving customers to be a part of a loyalty program, Application Fee scored the maximum score of 466, with Point exchange with other companies as second most important parameter with a score of 348, Transferability and Durability of program were the third most important parameters both at a score of 346. Redeemable points were the least important parameter in driving customers. 12. Important parameters in earning good benefits from a loyalty program, Points exchange with other companies scored highest with 388, Durability of program was up next at 378 points with Transferability following the suit at 376 points.

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Application fee was the least important parameter in earning good benefits from a loyalty program. 13. When asked about keeping the track of their redeemable points, 69% of the respondents said that they do not keep a track of their points. 14. Important benefits from a Loyalty program: Cash Discounts scored the highest 540, Preference for Customized products and Services was second with 472, then Value added services followed the suite with a score of 424, Entertainment activities were the least expected out of a loyalty program with a meager score of 268. The other factors that lead to redemption inertia and low participation levels vary a lot. Well, at a broad level it's often down to insufficient attention being paid to the construction of the rewards catalogue. But more specifically, the main reasons are:



Little or no excitement value

Rewards catalogues often fail because they don't excite the minds and emotions of the audience they're aimed at.



Not enough variety

This is a problem that customers faced when associated with other loyalty programs. A catalogue that contains only one or two items in each redemption level provides very little choice and leads to certain redemption inertia



Width of reward intervals

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Another thing that's often overlooked is the width of the redemption interval; in other words, what are the points gap between different items in the catalogue? If insufficient attention is paid to the reward intervals, it will lead to irritation for program members, as well as large unusable points balances in their accounts (a high 'breakage' level).



Minimum Accrual Points

This is another major problem that customers encountered with a loyalty program, is setting up of very high minimum accrual points.



Long Redemption Period

The time required to redeem the points accumulated is observed to be another factor hindering the customers driving to be a part of a loyalty program, for ex: Minimum membership of 1 yr in certain cases is required before you can redeem your points. The whole issue of points breakage is a typical example of where some loyalty program providers consistently get it wrong. If you make points hard to redeem or expire them after two years you shouldn't be surprised to see very little positive bottom-line impact from your loyalty program because for the consumer you've destroyed the very reason to participate in the program in the first place i.e. the value of the reward.

6. Program Rules should be Simple so that it could be easy for a common man to actively participate and reap the benefits of a loyalty program

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The most important success factor for a loyalty program is the reward must connect the consumer to the brand and motivate the consumer to earn the reward in the first place. Too often loyalty program providers fail to create a unique and compelling reward for the target audience or set the threshold to achieve rewards too high or create unnecessary barriers to redemption. Not surprisingly this results in consumer apathy towards the program and hence no positive change in their attitudes and behavior for the business a lose/lose situation.

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LOYALTY PROGRAM FOR MARUTI

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INTRODUCTION

Looking at the motor trade, if the lifetime value of car buyers is taken into account, it becomes obvious that their loyalty is extremely important. Car buyers generally used to be inherently loyal - a 'Chevy man' always bought a Chevrolet; a 'Ford man' always bought a Ford. Often, that trend even ran throughout entire families. But such blind '100% loyalty' is now much less common. There are several reasons for this: With a few exceptions, cars are less differentiated. Cars of similar price tend to have pretty similar looks, size, performance and reliability; National pride has in many cases been taken out of the equation. Globalization of the industry has led to the same car being sold under different badges in different countries; Different manufacturers commonly share many elements of the same car (e.g. the engine, or the body platform); Last, but not least, build quality has improved to the extent that most cars are equally reliable and long lasting.

Loyalty is strategic and about the long-term retention of the organizations most valuable asset its CUSTOMERS.

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About Loyalty Programs

Today, loyalty programs are ubiquitous. There are more than 1 billion people worldwide enrolled in loyalty programs, and in some industries such as airlines and hotels, loyalty programs have become one of the most critical means by which companies manage their customer relationships.

Several broad definitions of Loyalty exist, including:

The commitment of customers to a particular brand or company.

The extent to which your customers continue with key loyalty behavior when competitors offer more attractive prices, products, and/or services.

Loyalty is a positive belief in the value that a company provides, leading to increased purchases over time.

Loyalty should not be confused with customer satisfaction. While loyalty is built on satisfaction, organizations can have satisfaction without loyalty. Customer loyalty is a results measure that includes expectations of future behavior. Thus, when designing a rewards program to build loyalty, it is critical to think about how to

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encourage true, long-term customer loyalty and not just meeting customer satisfaction.

The popularity of loyalty programs has led numerous companies to offer loyalty programs that simply mimic the program offered by the leader in their industry. Rather than providing a competitive advantage, this strategy simply creates a competitive stalemate, while driving up expenses due to the cost of maintaining the loyalty program. The key point is that a company must design its loyalty program to create competitive advantage today and in the future. Incentives programs have been successfully implemented in nearly every major industry imaginable. They can be used in any environment where a customers purchasing behavior is measured. The best incentive marketing fosters a sense of excitement and generates awareness of your company and product. A good incentive program should also have a clear, consistent message and concrete, measurable objectives. Do we know if our customers are loyal and how can we increase their loyalty? That's the aim of a customer loyalty program. A customer loyalty program is a portfolio of research techniques and action programs designed to assess customers' attitudes towards our organization or company and to take action to improve their opinion. Both quantitative and qualitative research efforts are needed to capture the full breadth of information needed to assess and improve.

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Loyalty programs are known for some of their more obvious effects - such as increasing spend (and therefore customer lifetime value), and better retention - but they can also achieve a number of other things that impact the company's business strategy, operational efficiency, human resources policy, and more. Some of the benefits of a loyalty program are:

         

Customer acquisition, Up-selling and cross-selling, Intelligent de-selection (getting rid of unprofitable customers). Winning back defected customers, Selection of new outlet locations, Reducing advertising costs, Stock planning and merchandising, Getting competitive responses right first time, Setting pricing policies, Building lasting relationships.

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Benefits of Loyalty Programs

A properly executed loyalty program can deliver significant, long-lasting benefits to the host company in the areas of customer knowledge, product and service differentiation, customer retention, and profitability.

Greater Customer Knowledge

A loyalty program enables a company to gain detailed knowledge about its customer base with the customers consent; customers actually want to provide transaction and detailed profile information to ensure that they receive the full benefits of being a member in the program. In B2C industries, loyalty programs enable companies to match their faceless customer purchase data (what was bought, when, at what store) with special customer profile information, which can then be used to create targeted marketing promotions or redesign services around high-value customers needs.

Increased Customer Retention

A well-honed loyalty program improves customer retention rates by increasing a members switching costs, which are costs that a member would bear in order to switch to a competing provider. These costs can include decreased service and the time and resources required to build a new relationship. The higher a member s

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switching costs, the more likely that member is to remain loyal. However, if the loyalty program offers a unique set of benefits that a competitor could not easily duplicate, it would be much less tempting for members to switch.

Companies use their loyalty programs to create these switching costs by:  Leveraging in-depth member profile and transaction data to create unique offers and product/services that a competitor, who does not know as much about the member, cannot match   Providing targeted service consistently across all channels By using the personalized data provided by their loyalty program, companies can create a win-win relationship with their members that cannot easily be replicated by their competitors.

Differentiated Service and Brand Equity

Most companies do not want to compete on price. Even those whose business models are initially predicated upon providing the lowest-cost service often and that they must focus on providing value beyond price as they mature, their costs rise, and new upstarts beat them on price. Companies can create this additional value by moving away from generic, one-product- meets-all-requirements to targeted products and services that address their customers unique needs. A loyalty program provides this detailed information on transactions, demographics, and personal preferences

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required to successfully identify the unique groups among a company s customer base and then design products or services that meet those segmented members needs.

It is critical to note that customers are typically willing to pay for those products and services that do a better job of meeting their under-served needs. It is value, rather than price, that defines a good deal for these customers. Brand equity, which is achieved by providing highly valued, well-differentiated products and services, is the corner- stone of loyalty. It is the additional value that customers believe a company provides relative to its competitors that encourages loyalty to the host company and makes customers potentially willing to pay more for its products and services.

Improved Profitability

All of the benefits discussed to this point lead to a loyalty program s key goal and most important metric of success, improved profitability, Greater profits are a result of:

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Profitable customer retention Higher prices paid for unique products/services Increased average purchase size Decreased marketing and systems costs Decreased unsold expired inventory

Increasing customer retention significantly improves a company s profitability.

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Marketing with SMART CARDS

Smart cards are not new. They have long been a technical solution looking for a problem. Their use in relationship marketing is a potential application that is being explored by a number of organizations as they strive to get ever closer to their customers. The key feature here is the smart cards ability to hold information about the cardholder, which becomes available to sales personnel at the point of use to assist them in delivering a service uniquely tailored to the individual. The potential storage capacity of smart cards is much greater than magnetic stripe cards. Now, as well as the central data warehouses of customer information, the data can also be stored on the smart card itself, which the customer carries with them.

All the above-mentioned features (security, storage, and multi-purpose) are linked. As the number of applications on a single card increases so does the need for more storage capacity and the higher level of security needed to prevent data stored for one retailer being accessed by a competing retailer etc Unlike magnetic stripe cards where the data stored is limited to the customers number and name, a smart card can hold a wealth of information, including:  Personal attributes, including likes/dislikes, inside leg (and other) measurements etc.  Purchasing behavior, including spend, frequency and even the contents of previous shopping baskets.

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Response history - which promotions are of interest, what turns them on, what makes them spend more, visit more often etc.

Personal attributes are available from the usual sources (registration forms, lifestyle databases etc.), which can be loaded on the card on issue. Purchasing data is accumulated and stored as the card is used. Spend and visit history enables a customers worth to be assessed and any changes in activity patterns to be identified. From details of products purchased in the past, cross-selling and trading-up opportunities can be identified. The activity can differ according to each of the three categories of data mentioned previously (personal, purchase, response) depending upon the objectives of the campaign. All activity should be personalized, which helps to build stronger relationships. Examples are:

 

A thank you for being a customer triggered on a birthday or anniversary A thank you for your business triggered by the level of cumulative spend or frequency

Promotions to encourage increased spend: extra points for transaction spend above the customers average plus x%

Promotions to encourage increased frequency: extra points for the nth visit in a period

Cross-selling of a related (or new) product

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About VOYAGE-Loyalty Program

The VOYAGE - Loyalty Program is an initiative designed specially for you. This unique Program is our way of saying that you are special to us. It is part of our effort to build and strengthen the relationship between us that begins when you start using our products. As the just over five million current users, the Loyalty Program opens for you a world full of exciting rewards and benefits. And with its presence in over 300 authorized Maruti Dealerships and 1500 Service Centers, no matter where you go, you will always find a friend in us.

Benefits

 Special discounts on spares and free services for your car along with attractive gifts at various milestones. This is our way of making sure that every time you come to us for servicing your car, you take away more than just the benefit of world class servicing in our automated workshops!

 An effort to be in constant touch with you through our quarterly newsletter, "Borne Voyage" will give you an insider's view to our company, Maruti Udyog Ltd. along with the latest happenings in the MULs family.

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 If you are an active member of the Loyalty Program and use your card regularly, you could get the chance of being invited to special events like Musical nights, Movie screenings, Award shows, etc.

Rewards and Points

All these amazing rewards and benefits come to you as you earn points in the Loyalty Program. Once you become a member, you will earn points for a host of regular transactions that you conduct even now at your local Maruti authorized Dealership or Service Center. These include:

   

Purchase of Maruti genuine spares Purchase of accessories Servicing of your car Bonus points on: Free Service Paid Service Referrals i.e. recommending a friend to purchase a Maruti product.

So all you have to do to earn points & rewards is just keep maintaining your Maruti car, buy genuine Maruti Spare Parts and accessories and we'll give you one point for every rupee you spend.

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Elite Club and Treasured Rewards

This unique club has been introduced for those members who get their cars serviced regularly from authorized Maruti Service Centers. The Elite Club membership not only identifies the member as special for the MUL family, but also brings in some added benefits like:

30% discount on Labour 7.5% discount on spares, till the validity of the Card

Criteria of Selection

Points: At least 10,000 reward points.

Transactions: Minimum of 8 service transactions in 2 years of membership.

Beyond 2 years of membership, at least 4 transactions every year.

Introducing Treasured Reward

The MUL Treasured Rewards will be available at 8 prescribed milestones beginning from 1.25 lakh points and ending at 3 lakh points, with each milestone at a gap of 25,000 points. In other words, the new milestones are placed at 1.25 lakhs, 1.5 lakhs and so on till 3 lakhs

Each time a member reaches a milestone a Car Privilege Voucher of Rs. 5000/- will be given to him. This voucher may be used to avail a discount on the purchase of a

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new Maruti car. This voucher is transferable and can be given to friends or relatives who may be planning to buy a new Maruti car.

Under the Rewards Program, the elite customers would be issued Gold Card, distinguishing them from the rest. The gold card members would be offered a cobranded card with a Visa power, so that they could use it as a credit card.

To enroll for the Program:

If you are 18 years or above of age and are the owner /user of a Maruti car, just Visit your nearest Maruti dealership/Service Center and fill in the application form

  

Attach 2 card size photographs. Pay the enrollment fee. Collect your receipt cum temporary Maruti Card.

Your personalized Maruti Smart Card will be with you within 4 weeks

How to use your card Always remember to carry your Maruti Card with you when you visit a Maruti authorized dealership/service center.

Every time you do a transaction at a Maruti showroom/workshop, the dealer would reward points into your Card. You are eligible to accumulate points,

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against purchase of spares, accessories, and service and by referring friends to purchase a Maruti car.  Do not forget to get your card swiped against the purchases you made or amount you spent at each transaction.  On the accrual of every 25,000 points you would be entitled to a special gift, free tickets to movies and much more.   Do collect your rewards as soon as you reach the specified milestones. Please note that points do not become zero after a gift collection in the Card Program and you can keep collecting gifts as you reach a particular milestone.  The Service Record Sheet would help you get a 'Car Service Certificate', which can be very useful at the time of your car resale.

One can redeem these points once you complete 6 months of membership and accrue a minimum of 2500 points. The validity of the program is 5 years from the date of first sale of the Vehicle, points accrued will be valid for one year beyond this period. Application Fee:  Free for the customers who have been associated with Maruti since more than 5 years.   Free for the customers who have more than 2 cars from Maruti. New customers will have to pay Rs.50 as one time registration fee for the loyalty program.

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With the launch of a Smart Card based loyalty program, Maruti would be able to capture extensive information about its customers leading to a strong customer database providing details about the purchase patterns, customer profile, and many more. Moreover customers are far from the hassles of keeping a record of their redeemable points, as all the details would be on the card itself which a customer could easily take note of during each transaction he makes. This card could also be co-branded with some renowned financial organization so you have the option of making payments for your services through this card.

We can launch this VOYAGE Loyalty program in coalition with other partners, as they are attractive, because they offer clear benefits to both the program partners and the consumer. For the partners they offer reduced capital outlay, reduced operational expenses, and a larger reachable database of customers. For the customers they offer faster points accumulation and redemption as well as a wider variety of rewards. The advent of smart card technology should also make it possible to overcome some of the infrastructure requirements of an online real-time scheme. It would be possible to set-up a hybrid scheme with a mixture of online and offline points accumulation and redemption. In fact, it would be possible to design a scheme as an offline real-time solution. The cards would store the participants' transaction and points history, and the terminals would record transaction data and upload it to the host at the end of each day

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(midnight rollover) via modem or transport card. With a city-based scheme, even the transport card solution should still make it possible to have the host updated daily; the data would only need to be collected from POS locations within a single city. Redemption would be catalogue based, and would be offline and online. The program would still have main sponsors - these could be found in traditional sectors such as fuel retail, financial services and telecommunications. Thus the scheme would have probably two main sponsors, and retail partnerships would join based on a "many retail partners per sector with exclusivity by city district or local council area basis". This will necessarily make the master partnership agreement more complex, but I believe that it would work and still provide the advantages for each partner, whilst ensuring a large base of earning locations for the consumer.

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Launch a Prepaid Maintenance Plan Having a strong prepaid maintenance program is an important feature to achieving high customer loyalty and critical to ensuring greater sales, both new and used. A maintenance program drives customers back to your dealership, as well as generates quality trade-ins, higher grosses on repeat business, better CSI and ultimately increased customer loyalty. When a customer has a prepaid maintenance plan, it ensures that he or she is visiting your dealership at least three times per year, or nine times or more over the life of the car's ownership. During that time, a long-term relationship is being developed. However, the dealership receives other valuable benefits such as generating vehicle maintenance records on their car and exposing your customers to new vehicle models for potential future sales. And, when he or she is ready for a trade-in, you know the history of the vehicle and have a happier customer, as well. This plan when implemented effectively can:

Assist with making cultural changes in the service drive that will help increase sales and retention rates.

Results in a bond between your dealership and service drive customers.

It is important to know that satisfaction doesn't build customer retention. Relationships build customer retention. Having the tools and the training in place on the service drive to build on those relationships and sell the value of the products

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makes a tremendous difference in the percentage of satisfied customers who come back for additional products and vehicles from the dealer. We can club this program with the loyalty program, at an extra cost to our customers. Through this program we can grant special benefits and discounts to customers who purchase the Car Care maintenance plan. Some of the features of a good Car Care program include: Service menus: As the customers present the maintenance plan, the managers detail the additional benefits customers receive for making the purchase. The same service menus are posted on boards in sales and service to reinforce the program benefits and coverage. Price reductions for Club members: Maruti can offer special pricing for Club members and posts it prominently on the menu brochures and boards. For example, the cost for 5,000 km maintenance runs Rs.500 for Club members and Rs.750 otherwise. We can also offer a 10 percent discount on parts and labor for Club members on work the plan doesn't cover. Special Car Care Club perks: Rs.200 extra value on a customer's trade-in value. Car Care Club members also receive free one-day rentals when the shop must keep a customer's vehicle overnight, and they arrive in the service drive without an appointment and get express treatment. We can also set up a separate Car Care Club window at the cashier, which draws inquiries from non-Club members. Custom coupons: Another opportunity that can benefit both the company and the customer is the use of receipt coupons, or custom coupons, as part of our gift card

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program. You can use these coupons to drive customers to locations that need an increase in traffic. Or better yet, make your coupons applicable to certain times of the day when traffic isn't as high as you'd like it to be. For example, many restaurants are finding this an effective way to drive traffic to days of the week or times of the day that are not traditionally strong for them. Giving customers a free appetizer or dessert is a great marketing investment for creating a busy restaurant during traditionally slow periods. Thus cost of providing free gifts to customer is highly reduced when you tie up with any such company.

Make Your Customers Feel Special!!

You might be tempted to groan as you assume that this is just another party that will detract from the work at hand in your company. In fact, celebrate Customer Service Week with five objectives in mind, all of which will directly impact your bottom line. They are:

1. Boost morale, motivation and teamwork in your customer service department.

2. Reward your frontline reps for the important work they do all year long.

3. Raise company wide awareness of the important role customer service plays in your organizations success.

4. Thank other departments for their year long support.

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5. Let your customers know about your companys commitment to customer satisfaction.

We need to continually let our customers know we care about them. We need to keep in touch, write to them, send them information and occasionally 'phone them. When they contact us we need to make sure we sound warm and friendly, pleased to hear from them, efficient and maybe even look and sound like we're fun to do business with. It's not a lot different from our personal relationships. If we don't keep telling the people close to us how much we care and keep writing and 'phoning, then we shouldn't be too surprised if they leave us one day. Use logic and emotion to keep your customers. Give them the best products and service and give great value for money. However, always remember, your competitors will be doing much the same thing. The difference will be determined by how you communicate with your customers on an emotional level, either face to face, on the 'phone, by letter or email.

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CONCLUSION

Exceed clients expectations at all times. Go the extra mile and it will pay off for you time and time again. Your clients will feel good about spending their money with you over and over again. Consumers are no longer settling for poor or average service. They have choices and exercise their options to spend their money with whoever provides them what they want and gives them exceptional customer service too. Keep the competition back over your shoulder. They don't have to be in the distance, just as long as they are behind you. Exceeding your clients expectations only takes a little bit of effort, but it can do a lot for your sales. The new car market is declining for original equipment manufacturers (OEMs) and their dealers. Competition is increasing. Dealer margins are shrinking. Lots are overflowing with inventory. Customers can now order a customized vehicle with upscale options from virtually any automaker. But they can't request superior, proactive customer service. That's why customer relationship management (CRM) is gaining momentum. Today, OEMs and dealers compete over customer ownership by gathering specific data. But they need to combine their intelligence to be more effective. Customer Lifetime Value analysis as the focus for a company's operation provides a sustainable growth model for your business. The emphasis is then firmly on market share rather than profitability. The implementation of a customer-loyalty-centric approach through a Customer Loyalty Program is straightforward. It delivers a

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positive feedback loop to your customers; to keep them behaving in the way you want them to. This virtuous circle creates a self-refining set of tools and behaviors to deliver steadily growing profits, contented customers and a rising asset value. "Customer equity is one of the key success factors for the future of the automotive industry. Organizations who fail to focus on customer needs to enhance customer loyalty and build brand equity will lose control. By understanding customer needs, manufacturers and their sales channels can move profitably beyond customer satisfaction, increase shareholder value, and ultimately leave their competitors behind.

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BIBLIOGRAPHY

Websites

y y y y y y y y y y y y y

www.marutiudyog.com www.cars.tatamotors.com www.hyundai.co.in www.loyaltylogic.com www.blonnet.com www.domain-b.com www.agencyfaqs.com www.dmdirect.com www.kpmg.com www.india.ford.com www.bnet.com www.crm2day.com www.loyaltyprograms.com

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Articles

1. Vishvanath Kulkarni, On a Smooth Road, Financial Daily, Wednesday Jan 30, 2002, Available from http://www.blonnet.com/ew/2002/01/30/stories/2002013000230300.htm 2. Maruti earmarks nearly 0.3 per cent of its turnover as IT spend available form http://www.globalsuzuki.com/globalnews/2003/0425.html 3. Maruti procurement goes global, Friday, September 03, 2004, Available from http://www.indiacar.net/news/n7143.htm 4. N. N. Sachitanand, What makes Maruti tick?, The Hindu, Monday, Nov, 2003. 5. K. Giriprakash., Smart planning leads to drop in car inventory levels; Businessline. Chennai: Aug 25, 2004. pg. 1

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