Itz the magic called Ritz, after many other hitz...

IIPM - Admission Procedure

Maruti Suzuki is upbeat about the semi-urban and rural markets. But it has bigger plans... Shinzo Nakanishi, MD, Maruti Suzuki India, live & exclusive...

4Ps B&M: How is Ritz different from the other models selling under the same segment? Is it BS-IV compliant?
SN: The Ritz combines modern European design, the sporty feeling of the Swift, the latest in engine technology and Suzuki’s globally acclaimed expertise in compact cars. Ritz further reiterates parent Suzuki Motor Corporation’s commitment to bring global car models with a contemporary design, style and next generation fuel-efficient, environment-friendly engine technology for its customers in India. The Ritz will be made available with the latest K12M engine in the Indian market. With Ritz, Maruti Suzuki has fulfilled the promise of offering at least one new product to the Indian consumer, every year. We now have eight cars in the A2 category including the Ritz. With the Ritz, we are offering a first BS-IV compatible vehicle from Maruti’s stable for the Indian consumer. Moreover, we are launching it much before the guidelines are made mandatory in the country. Globally, the Splash has been an instant hit and we are hoping for a similar response from the Indian market for the Ritz.

4Ps B&M: Don’t you think the Ritz will eat up your own market share in the A2 category. WIll it negatively affect your company by attracting the Swift buyers?
SN: No, it will rather expand the overall market in the A2 category. This is something that Maruti Suzuki has been doing for a long time now. Like when we launched the new Zen when WagonR was already in the market, some people thought it will not work; but it carved out a new market for itself in the industry. India is a compact car country, yet of a diverse nature where no two consumers think alike. In fact, with Ritz, we wanted to give the consumers a choice within the Maruti Suzuki brands. There is no denying that Ritz has been made on the Swift platform but unlike Swift, Ritz is a family car and is targeted at an altogether different platform. In fact, we believe that there will be no cannibalisation and it will carve a different segment for itself, rather than negatively hammer Swift’s market share.

4Ps B&M: Do you expect the new Ritz to outsell Maruti Swift?
SN: No, we do not expect to do so with the Ritz, but we do expect it to become a market leader in the segment it operates. Swift has already become an iconic product in the time frame of four years...

4Ps B&M: Have you set any production or sales target for the new Ritz model?
SN: No. We haven’t decided on any production or sales target. Rather, we have all the capabilities needed to meet the demand, and we will supply as much as the market wants.

4Ps B&M: But there is still a long waiting period for Swift and Swift DZire. How are you planning to deal with that?
SN: We have already increased our capacity of producing diesel engines to 2,00,000, and by the end of this year, we are planning to take the figure further to 3,00,000. In total, we have a capacity of producing one million units and we usually keep the break-up of production very flexible. In fact, a 10-15 day waiting period doesn’t hurt the company or doesn’t take the customers away. Rather, it makes the company much more efficient, for in any case, blocking up inventory doesn’t make any business.

4Ps B&M: Can you throw some light on the pricing of the Ritz?
SN: Ritz will be available in five different variants i.e. three in petrol i.e. the LXi, VXi, and ZXi and two in diesel i.e. the LDi and VDi. The Ritz will be available at an introductory price of Rs.3.9 lakh for an LXi and Rs.4.99 lakh for a VDi.

4Ps B&M: This seems quite interesting as Splash is available at a much higher price point in the European markets. How did you manage to pull the price down?
SN: Well, the common use of the Swift Platform and the high localisation i.e. 95% has empowered us to introduce Ritz at a much lower price point than expected in the country.

4Ps B&M: Splash is also available with a 1L engine in the European countries. Why have you not introduced the same in the Indian market?
SN: Ritz will be available in a 1.2L engine in India, and that’s because we thought that the 1L engine was unsuitable for the Indian market.

4Ps B&M: Why haven’t you introduced any ZDi variant for the Ritz in India?
SN: That wouldn’t have made sense as the price in that case would have been too high!

4Ps B&M: Are you planning to phase out any product out of the Indian market?
SN: Honsestly, we have no plans to phase out any existing model from the Indian market.

4Ps B&M: But there were rumours doing the rounds sometime back about Maruti phasing out the Maruti 800 and Omni?
SN: That’s not true. We are not phasing out the Maruti 800 or Omni. Rather, the engineers are working on making them BS-IV compliant.

4Ps B&M: With the launch of SX4, everyone expected Maruti to shift its focus from small cars. So does the launch of A-star and Ritz signify that Maruti is again changing focus to the small car segment?
SN: We never shifted our focus from the small car segment. Rather, with the SX4, we expanded our portfolio and entered a segment where we wanted to improve our grip.

4Ps B&M: What are you expectation with the new government?
SN: The government helped a lot to deal with the last dull phase in the automotive market. Then whether it be the excise cut or the petrol price going down, it surely helped many players to sustain in the second half of 2008. And with the new government, I do not expect anything going back. If they can provide more help, everyone will be more than happy.

4Ps B&M: Is Maruti Suzuki planning a hybrid for the country?
SN: If Maruti Suzuki brings a hybrid in the country, it will be through Suzuki Motor Corporation, Japan. The current hybrid that Suzuki has is a big car but they are working on developing a smaller hybrid. Let them develop and then we will think about bringing the same into the Indian market. Interestingly, there are many more options for the Indian market in the form of electric cars, CNG and LPG. We are looking at launching some CNG variants, but that will only happen after it gets a nationwide presence. Apart from that, we are working on a National Hybrid Project with the government to develop hybrids for the country in association with M&M and Tata Motors.

4Ps B&M: How was the company able to post a mind-blowing growth in the last fiscal when the other autocos were suffering?
SN: In times of a slowdown, people actually do not prefer taking any risk. They prefer purchasing brands on which they have full trust, and in the automotive market, Maruti Suzuki comes on top on these grounds. Moreover, we saw the slowdown affecting urban areas of the country, so we instead moved aggressively into the rural and the semi-urban market, which helped a lot to cope up with the slowdown. The revenue contribution from the rural markets shot up to 9% this year, compared to 3.5-4% last year.

4Ps B&M: The next five years... Where do you see Maruti?
SN: I want to see the company continuously lead the auto industry in the country and keep the overall market share more than 50%.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
2300 IIPM students get jobs
The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School
Detail of all IIPM branches
IIPM set to beat economic slowdown
IIPM Admission Detail
IIPM, GURGAON

First-mover’s disadvantage

IIPM, GURGAON

Or call it the fast-follower’s gain. Many think that in the race to produce the world’s cheapest car, Tata Motors has a clear advantage; it’s the first to enter the fray, it has forced others to follow suit, and it will retain a dominant market share for a long time to come. It did it in the small diesel car category by being the first and ruling the roads for years. Even today, Indica is a big challenger to Maruti and Hyundai in the compact segment.

But then, think again, and think out of the box. Several studies have now proved that “there were plenty of industries, where the first movers got killed.” Richard B. Mckenzie of the University of California has shown that failure rates across traditional industries for first-moving pioneers were 71%, and they had a meagre market share of 6%. Even in the field of technology, where first-movers invariably have an edge, studies have shown that their success wasn’t dependent on technological progress; in fact, other factors played a larger role in determining their outcomes.

Here are a few examples of first-movers’ failures globally. On June 4, 1924, the ten millionth Model T Ford left the Highland Park factory. But, by 1926, the sales of this path-breaking model had plummeted, and it was out of production the next year. It was America’s first ever cheap car. In the 1960s, v Excel was the first patented spreadsheet software. But the market changed rapidly by the 1980s, and Lotus became the new spreadsheet standard. The same happened with CP/M, the first operating software that none of the readers may have even heard about. We have all been either ‘Gated” by Microsoft or ‘Linuxed’ by the free developers.

As a 2006 edit in 4Ps B&M read: “So which was the first company to introduce shaving blades? Not the current world leader Gillette, but the extinct Wilkinson Sword. Browsers? Obviously not Microsoft with their number one Internet Explorer, but the ‘over the hill’ Mosaic. Search engines?

Surprisingly, not Google, but the laggard Yahoo! Supermarkets? Not at all the giant Wal-Mart, but the King Kullen Grocery Company. The first liquid soap? A thoroughly unheard of Minnetonka. VCRs? You wouldn’t even have imagined the name of Ampex. The first hybrid car? Not Toyota with its world beating Prius, but Renault. The first computer? Neither HP, Apple, IBM, nor Dell; but Micro Instrumentation & Telemetry Systems (phew). Video games? Not the numero uno Sony, with its Playstation series, but the well-forgotten Atari….. Refrigerators, televisions, cell phones, cameras, banking, watches – the downfallen first movers’ list is never ending.”

In the small car space, there are several second and third-movers, who are gearing to steal the thunder, or rather the accelerator, from Tata. Skoda has launched Fabia, a premium model in the compact segment. Maruti Suzuki has showcased A-Star and Splash, which are likely to be priced between the Alto and Swift. Ford has decided to invest $500 million in India to launch a small car. And don’t forget about Bajaj Auto, Honda, Renault and Nissan, and many others, who have similar dreams.

Still we at 4Ps B&M think that Ratan Tata can easily shift into the fifth gear from here. It may take him a couple of years, but he will be way ahead of his competitors in this race to sell small cars in India and overseas markets. His first advantage is that he has created a new market, he has dared to tap into new set of consumers, decided to design, develop and manufacture a product for the ‘bottom of the pyramid’. He has opened the floodgates for millions to own and drive a car.

The second advantage that Tata Motors has is that he has managed to convert its engineering skills into making an innovative product(s). It has managed to slash costs that no one thought was possible. This was despite the fact that costs (including manpower) have risen tremendously ever since Tata conceived of his ‘dream’ project. The third advantage is that Tata Motors has forced other competitors to think differently. Now, firms can talk about a people’s car.

If Indica (diesel) changed the way an Indian consumer thought, the Nano will force him/her to act (and now buy). And if the Nano becomes a big hit, it will make Tata a global super hero.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Read these article :-
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global
The Indian Institute of Planning and Management (IIPM)
IIPM Campus