Launch of VERSA

Whether the glass is half empty or half full, All depends on the attitude of the thinker. The most adverse market
conditions that can ever happen. On going recession, further worsened by a battery of products offered by other
manufacturers who are not only fierce competitors but also have reputation of being giants in world automobile
arena. For any manufacturers this could be an ideal situation to consolidate its resources and to wait patiently till the
worst is over.

But this is what makes the leaders different. MUL saw an opportunity in this situation. It was the time to take lead
innovate and offer a product which is not only unique but also offers all together new and totally untapped concept of
MPV in the Indian market.

It was the time chosen by MUL not only to launch a new model but also to carve out a new segment in Indian
Automobile market, now know as MPV. It was VERSA. The 1300 cc MPFI. 7/8 seater urban car with a strong heart
delivering 82 Horses at peak. Equipped with single/twin AC systems Y unique space management system.

Here we need to analyze the entire sequence of events pertaining to launch of VERSA by MUL in the light of
Marketing Concepts.

Product Development Strategy

The market research led to the conclusion that Maruti stable is full of products nearly competing with each other for a
price difference of RS. 30000. While other manufacturers were busy launching, promoting & sustaining slumped sale
of C&D segment luxury sedans with below cost price tags, MUL opted for something which was innovative, creative
& totally new concept of MPV. The product chosen for launch was absolutely new to Indian market, be it the
features, styling, comfort, space management system or engine positioning.

The basic idea was to introduce some thing for medium/big size urban and sub-urban joint families, which usually
spill out the currently available Cars with seating capacity of 4 to 5 persons. It was also well thought strategy to keep
it distinct from MUVs like SUMO, QUALIS etc, which are largely caters to commercial taxi segment.

The Target Segment:

The upper middle class large/joint families were the principal target segment. Their needs were very different from
nuclear families. They want to remain together move together, share the joy & sorrows of life together. The vehicle
opted must have enough space, comfort & flexible enough to suit their changing occasional needs. Market research
revealed that this was the segment totally un-addressed. A self driven vehicle with seating capacity of up to 8
persons, easily convertible to 5 seater, essentially equipped with enough power and air-conditioning, and having
elegant looks was the best fit in this segment.

This segment is capable enough to pay the price between Rs. 5 to 7 lakhs therefore can afford a vehicle with C
segment features.

The target customers also included people desiring to upgrade from Wagon R to a vehicle equally spacious, more
luxurious & fit for MPV profile. Other users could be luxury rent a car segments.

The Product:

VERSA has all the features as identified by Mkt. research & preferred by target segment.

About the Body:

VERSA will be offered in three variants, including two deluxe (8 seater) and a super deluxe version (7 seater). The
MPV will come equipped with a metatesh engine that is smooth and responsive, a dynamic safety surround system,
Maruti’s True Response Electronic Power Steering and a tight turning radius that makes it suited for city driving.
VERSA will have a cable operated gearshift, resulting in lower vibration and silent operation.

The Soul:

The VERSA has a maximum power output of 82@6000 rpm., maximum torque of 102 Nm (104 k gm)@3000 rpm
and excellent suspension 1300cc heart engine mounted beneath the driving seat, generating peak power equivalent
to 82 horses. Engine mounting was specially designed to prevent vibrations to prevent vibrations and engine
generated heat from transmitting inside the car.

Also Convenience & Safety:

The safety and security features include a collapsible steering column, side & front compact beams, seat belts and
child-proof lock on sliding doors and windows. The DX and the SDX have an un-laden weight of 975 kg while the
DX2 weighs 985 kg.

Note: All features & technical details annexed (Annexure-1)

The Marketing Campaign:

All the three communication channels including Electronic & Print Media were utilized to run the pre-launch and post
launch campaign of VERSA. Inline with ongoing trend of involving celebrities to promote the product, top celebrities
of the country Amitabh Bachchan and his son Abhishek were also roped in.

Why have we chosen the Bachchans as brand ambassadors for Versa?

(In their own words)

The product that we are seeking to introduce will change the motoring landscape of the country. It will be the first
Indian Multi Purpose Vehicle or MPV. The popularity of MPVs has grown in the developed world. With changing
lifestyles, people want both luxury and space in their vehicles. MPVs are built on this concept.

And yet against is no surprise that MUL is responsible for bringing about a change in the Indian market. This product
marks the beginning of a segment of vehicles that is the rage in the developed automotive markets of the world. It is
a happy amalgam of space and ‘driveability’. Add to that, contemporary, ergonomic interior and a cabin that makes
both driving as well as riding a pleasure.

Given this background, we were on the lookout for a personality that would amplify this message about the product.
We were seeking a personality or a set of personalities who would ‘fit’ with the product.

We found in Amitabh and Abhishek Bachchan the perfect fit with the message that we wanted to convey to the
consumer. Not only do they symbolize the quintessential good values of being Indian, they are also part of the ‘new’,
energetic India. They represent the change that India is going through, adopting the new (dynamics between a father
and son) while keeping the ‘Indian’ values of respect intact. Their relationship is almost the perfect blend of growth
and change in harmony. Their togetherness is marked by a respect for individually.

In signing the Bachchans we have a combination of Youthfulness and stature. Which both the individuals bring to the
brand. What the Bachchans depict is not limited to them alone. It is something that is happening in almost every
contemporary Indian household.
The campaign was launched for full 2 weeks before the launch and was continued during the later months. Initially it
took lot of efforts to communicate the message due to new product & the matching market strategy to the target
audience till the TV commercials were released. The lesson was that print media was not enough to create visual
image of a vibrant product with needs dynamic image in the minds of target audience. It was electronic media which
won the battle for MUL.

Launch Logistics:

Before the product could be launched in Mumbai, it was ensured that select dealerships in all metros and A class
target cities were having the product in their showrooms for display. Rides were also scheduled at select dealers in
metros. The intention was to make product visible & available for test drive in target cities.

The exercise was completed almost 10 days ahead of launch. All the concerned dealerships were advised to
organize VERSA road shows immediately after the launch to ensure continuity in promotion efforts, till the product
was visible on roads. Marketing division felt that on road visibility of product shall further boost the market opinion
about the product.

Sales Target:

Considering the unfamiliarity of the product for Indian market and the most competitive product category, the initial
sales target for the current years were set at lower tone. The company intends to sell only 3500 vehicle till March
2001.

The results:

The company has already sold 800 plus vehicles since 24th Oct, 2001 the launch day. The careful planning &
promotion of product has resulted in outright interest among the target segment. The Versa has already outsold its D
segment vehicles the Baleno & Altura combined. Maruti Udyog Limited has once again proved that the future
belongs to those who dare to innovate and offer customer oriented products irrespective of market conditions or state
of economy. In fact, such organizations create markets and influence economy in their favor thereby they are
recognized as leaders.

While announcing the launch of the versatile VERSA, Director (Marketing and Sales) of Maruti Udyog, J Sugimori,
Said. “Maruti’s first vehicle in the 21st Century is a response to changing lifestyle demands in the country. VERSA
will bring to India the international way of traveling together. Maruti has successfully brought new categories at
products into the domestic masrket and VERSA is yet another effort in this direction.”
 Annexure I

Technical Specification:

MANUFACTURER MARUTI SUZUKI WEIGHTS & DIMENSIONS

MODEL VERSA MODEL VERSA
VARIANT DX/SDX VARIANT DX/SDX
ENGINE Overall Length 3675mm
Type Petrol
1C4V-SOHC Overall Width 1475mm
Fuel System MPI
Overall Height 1905mm
Cylinders Four
Wheelbase 2350mm
Cubic Capacity 1298cc
Kerb Weight 945kg
Maximum Power 81.6bhp@6000rpm Ground Clearance 170mm

Maximum Torque 10.4 kgm@3000rpm Seating Capacity 8/7

TRANSMISSION
Gears 5 Sp M/T

STEERING
Turning Radius 4.5m
TYRES 155/80 R 13
 Annexure II

Sub: Versa -the television commercial

Since the introduction of Versa on 24 October 2001, the customer response to test drives have been overwhelming.

With Versa, a new category of vehicles is being introduced in the Indian Auto market. This category is the Multi
purpose vehicle (MPV) category. MPVs a popular category internationally and every leading global car manufacturer
boasts of a MPV in their product range. The MPV’s are the most versatile vehicles on the road, they offer a car-like
ride & handling and the luxury of space.

After the news media coverage and newspaper ad campaign, we now enter the next phase of start of Television
commercial from 10 Nov. 2001. These TV commercials will further increase curiosity in this new luxury car- Versa
and the new category- MPV.

The television commercial to be aired from Today brings together the magic of Amitabh and Abhishek Bachchan for
the first time. The advertising campaign designed by Lowe Lintas highlights the concept of two luxury cars in one.

The ads for VERSA give you a glimpse of the father-son chemistry, which would positively, stand out in the flurry of
celeb endorsements. Racy repartee between the two sets the pace and feel of the campaign. Quips like, “Yaar
tumhari gaadi mein driver ki awaz bahut aati hai” from Amitabh to Abhishek (The driver in this scene) is guaranteed
to bring a smile to your face.

The VERSA advertising campaign is targeted at both the generations. Amitabh settles for the luxury of space
whereas Abhishek goes for the driving pleasure. It builds on the comfort, luxury, elegance and stature of the VERSA
leveraging the aura of Amitabh Bachchan whereas Abhishek Bachchan revs up the ad campaign personifying the
power, performance and driving pleasure of the VERSA.

Enclosed is the schedule for first two weeks of the VERSA TV commercial. Subsequent schedule will also be shared
with all.
 Annexure III

Caption Maruti Udyog Ltd.

Brand Versa
Caption Spin
Duration 40”
Period 2 wks beginning Nov
Date 18.10.01
Nov.
Channel Programme Day Time Spots Sat Su Mo Tu Wed Sat Sun Mon
Seld n n e
3 4 5 6 7 10 11 12
Star Plus Kyunki Saas M-T 2230 2
Kahani Ghar M-T 2200 2
Kangan Thu 2100 2
Star Mast Movies Sun 2030 1
Star Suerhits Sat 2030 1 1

Zee TV Amanat Thu 2030 1

Bonus Natinal Ch. Sun 1000 2 1
Antakshari
Mujhe Dor Koi Fri 2030 2
Khinche
Justajoo Tue 2030 2
Sansar Sun 2030 1 1
Rishtey Sun 2130 2 1
Shree 420 Fri- 2100 3
Sat
Razmataaz SS 2000 3 1

Zee News at 2100 Daily 2100 6 1 1 1

News
News at 2230 Daily 2200 5 1 1 1
0
Bonus News at 2230 Daily 2230 2
RODP 1900-2300 Daily 1900- 13 4
2300
RODP (wkends) SS 1730- 6 2 2
1900
RODP (wkends) SS 1100- 6 2 2
1230

MTV RODP 0900-1200 Daily 0900- 6 3

1200
RODP 1200-1600 Daily 1200- 20
1600
RODP 1600-1900 Daily 1600- 28 5
1900
RODP 2300-2430 Daily 2300- 12 2
2430
ESPN/S SA Ind Test Series Daily 16
S
Pull Thru-Tests Daily 144 12 12 12 12
Pull thru-ODI (Oct.) Daily 0

Star Tonight @ 8 M-F 2000 10

News
RODP 1800-2400 Daily 1800- 39
2400
RODP 0700-0900 SS 0700- 12
0900
ROS 0600-2400 Sun 0600- 25
2400

BBC RODP 1800-2230 Mon- 1800- 13 4

Fri 2330
ROS 0800-2300 Sat 0800- 4 4
Sun 2300
 Annexure IV

Segmentation in Indian Passenger Car Market

Introduction

Indian automobile industry has been through a sea change in last one decade. The opening up of industry and entry
of global auto giants has given Indian consumer choices which no one had ever dreamt of. Think of the times when
limited options in passenger cars were offered to consumers, Ambassador and Fiat used to be the only options. With
the entry of MUL, the face of the passenger car industry changed forever. MUL made use of the opportunity open to
its technologically superior product and increased its capacity from 100,000 cars in FY90 to 240,000 cars in Fy96 and
350,000 cars in FY98. The opening of economy in 1993, attracted world majors who joined hands with existing auto
majors, to start their operations at the earliest. This has helped in increased the number of models available to the
customer from 8 to 30 and hence provided a wide choice to him. This has also helped in reducing the average
waiting.

Demand

The demand for cars in the past was supply driven as demand did not match supply. This led to high premium and
long waiting periods for the cars. But change in government policies coupled with aggressive capacity additions and
upgradation of models by MUL in the early nineties led to increase in supply and subsequently reduced the waiting
periods for economy cars.

The demand for cars is dependent on a number of factors. The key variables are per capita income, introduction of
new models, availability & cost of car financing schemes, price of cars, incidence of duties and taxes, depreciation
norms, fuel cost and its subsidization, public transport facilities etc.

Supply

The supply of cars in Indian industry till 1991 was dependent upon the production capacity of individual players. The
production of cars has increased from 42,475 units to 181,420 units from 1981 to 1991 respectively. The growth in
production of cars has varied in the last three decades from just 1% in 1970-80 to 21% in 1980-90 and above 15% in
1991-96. The table below gives the production numbers of passenger cars in the past few years.

Market share

As the number of models and their variants increased in market, the analyst as well as the consumer became
confused. From the fleet of vehicles it is a big task for customer to find out which one to choose. The bigger
question is which two products are comparable and on what parameters they should be compared. The criteria for
comparison could be its Price, size, engine size, passenger carrying capacity, sports utility, multi-utility vehicle etc.
Most commonly used criteria is price but how much accurate it will be to analyze or group vehicles as per their price
only.

Performance of any manufacturer is dependent on the number of vehicles sold in a period, a manufacturer producing
no of vehicles in all category will any way excel in terms of volume in comparison to someone who is present in a y
specific category. This will not give us correct picture of growth of other manufacturer or growth of industry or choice
of customer to any specific model class.

The market shares of leading players for the month of May 2000 is as given below:
This representation might give us the impression that Maruti is leading manufacturer and Hyundai is second best but
the later one is only manufacturing one or two models, which do not cater to the total market. This means that
manufacture entered with their products in specific models where they have something different to offer from the
leader. This has raised an issue of identifying the model categories and the number of models competing with each
other. This will in other term gives us an indication of the market trends.

Market segments and Vehicle positioning

There are 13 manufactures in passenger car or multi utility vehicle market with 53% capacity utilization. The new
players are investing heavily and building more capacities. Looking at the model range available, market as whole
could be segmented as Mini cars, Compact, Mid size, Luxury categories. Market analyst however classify models
based on their Engine capacity, size and price as segment A,B,C,D and E. Based upon these parameters all models
currently available could be summed up as given below:

We can compare various models with their segments and see how they are performing as per customers choice.

S. Models Manufacturer Segment Classification Length, Engine cc Price (Ex

No. mm showroom)
1 M800 MUL A Mini 3335 796 2.12-2.67
2 Alto MUL B Compact 3495 786-1061 3.0-3.6
3 Matiz Daewoo B Compact 3495 796 2.93-3.45
4 Santro Hyundai B Compact 3495 999 3.3-3.98
5 Zen MUL B Compact 3495 996 3.4-4.88
6 Wagon R MUL B Compact 3495 1061 3.3-4.82
7 Indica Tata B Compact 3660 1405 3.22-4.17
8 Uno Fiat B Compact 3689 1242 2.97-4.4
9 Palio Fiat B Compact 3763 1200- 3.49-4.99
1500
10 Esteem MUL C Mid Size 4075 1298 4.90-6.10
11 Ambassador HM C Mid Size
12 Ikon Ford C Mid Size 4140 1587 5.05-6.97
13 Sienna/Week Fiat C Mid Size 4100 1242- 5.21-7.83
end 1697
14 Corsa/Swing GM C Mid Size 4056 5.72-6.97
15 Accent Hyndai C Mid Size 1495- 5.56-7.28
1527
16 Baleno/Altura MUL C Mid Size 4225 1590 7.78-8.34
17 City Honda C Mid Size 4250 1343- 6.31-8.95
1493
18 Lancer Mitsubishi C Mid Size 4290 1468 7.09-9.98
19 Cielo/Nexia DMIL C Mid Size 4482 1498 5.07-6.37
20 Astra GM C Mid Size 4239 1468 7.25-9.36
21 Sonata Hyundai D Luxury 4745 11.9-13.3
22 Accord Honda D Luxury 4810 14.95-15.75
23 Octavia Skoda D Luxury 4511 15.0
24 Mondeo Ford D Luxury 4705
25 Mercedes ‘E’ Benz E Super Luxury 4818 18.0-35
26 Mercedes ‘S’ Benz E Super Luxury 5000 50.0-
Segment A and B

There is wide variety of models in B segment however in A segment market is dominated by M800 and Omni. The
entry-level barrier set by M800 by virtue of its quality and most competitive price is the starting point for the
competition. No other manufacture is actually interested in breaking this barrier. M 800 is therefore a winner is its
segment A and only shares A segment with its buddy ‘Omni’ though Omni is also considered in MPV category.

The market share and volume in A segment given below shows that the market is declining and drifting towards next
segment.

Segment 97-98 98-99 00-01 01-02

A Volume 20694 18645 22624 16632
Share 64% 58% 44% 35%

The market share for segment B which is a Niche segment is growing rapidly and has reached 51% in last four years.
This shows that there is a swift competition in B segment and more new players are entering into this segment.

Segment 97-98 98-99 00-01 01-02

B Volume 7569 9735 23290 23911
Share 23% 30% 46% 60%

This trend is characterized by two main factors. One is the urban society is upwardly mobile so they would life to
differentiate themselves from. M 800 category. Consumer in this segment would like to stand out and would like to
get noticed. Secondly the increase in come of urban population and easy finance options.

The net household income in this category is increasing and choice of purchase is made by the whole family. The
shift in this segment is also obvious from the new launches from MUL, FIAT and TATA. Alto, Wagor R, Palio and
Indica V2 are designed to lure the customers in this segment. The consumer in this segment are mostly professional
in double income category, self employed, company executive (who get company loan) and new rich class
(business). The Geographically the Segment B Class owners are mostly from Metro and cosmopolitan cities of North
and western region.

If we look on the study done in understanding the trend in income levels for instance. Ten years back, the country
embarked on a policy of economic liberalization. Since then it has been seen that households have moved up the
income ladder with the number of households in the lower income groups actually declining. According to the
NCAER, from FY93 to FY96, the proportion of low-income households has declined rapidly than in the pre-reform
period. In absolute terms, 10 mn households graduated outside the low-income group. At the same time, the
proportion of households in the high-income group went up. Comparing the distribution of households (%) in the
various income groups in the pre-reform and post-reform periods.

Annual income (Rs.) Income FY90 FY96

at FY96 prices group
Urban Rural Total Urban Rural Total
Less than 25,000 Lower 37.1 67.3 58.8 27.9 57.2 48.9
25,001-50,000 Lower 34.8 23.9 26.9 34.9 29.0 30.7
Middle
50,001-77,000 Middle 17.9 7.1 10.1 20.3 8.6 11.9
77,001-106,000 Upper 6.5 1.2 2.7 9.6 3.1 5.0
Middle
More than 106,000 High 3.8 0.5 1.4 7.3 2.0 3.5
Source: NCAER

According to NCAER study if a household saves 35% of its income to pay for annual loan installments, fuel and
maintenance charges, then the annual income will have to be around Rs. 260,000 for a new car and Rs. 150,000 for
a second-hand car. Study shows that the number of households under these two income brackets was 1.4mn and
3.1mn respectively in FY96. These income categories grew at a CAGR of 17% and 15% between FY93 and FY96.

The market share of segment B and A is nearly 87% of the total car market. The verdict is segment B is growing and
will eat away most of the share of segment A. So new players are positioning them in higher end of segment B.

Emerging C segment

In Mid size segment, the race is also hotting up; Ford IKON, Esteem, Accent and Corsa have shared the market. No
one is a clear leader and at some point or other Ikon and Esteem are competing with each other. Average monthly
sales are approx. 600 - 800 vehicles. The marketing in this segment is basically on luxury and style. Price of the
vehicles range from 5.0 lakh to 10.0 lakhs so there is wide variety again in this segment. Honda city and Mitsubishi
Lancer are competition at the higher end and sharing the market equally. Others like Siena, Corsa and Nexia are not
doing better.

Segment 97-98 98-99 00-01 01-02

C Volume 3982 3635 5191 7011
Share 12% 11% 10% 15%

This segment is also promising and growing steadily. Though the volumes are low but the profit margins are higher.
That is way most of the dealers in this segment share their margins with customers and do aggressive sales
promotion.

All models available in this segment are characterized by high quality, style, comfort and modern technology. Maruti
has to upgrade its Esteem model to keep pace with others and regular cosmetic changes has become promotional
feature. Servicing and customer satisfaction is the one of the main factor to lure and retain customers. Customers in
this segment do not associate themselves with any brand and quickly shift their loyalties if not served well. This is
mainly because they have money to try out new models and demand for more. Market in this segment mainly gives
customers status and recognition. Income of customers in this segment is not a constraint or a factor guiding new
purchases and spending slightly more if something extra is offered is accepted well. Manufactures get sufficient
margins but overall volumes in this segment is low.

Luxury Class-D and E segment

The luxury segment is slowly coming up with the entry of Sonata from Hyundai, Octavia from Skoda and Accord from
Honda. Most of the manufacturers in this segment are actually going for CKD/SKD imports. The price range of the
models being offered are in the range of 12-18 lakhs. The characteristics of the models offered are high quality,
status, comfort, high price and international brand image. Mondeo and Vectra from Ford would soon be joining this
segment. Volumes would be low so marketing here is mostly target oriented. The positioning of the vehicles are
such that market is limited to affluent people are big corporate houses only. Drive in true luxury is the main
promotional feature. Vehicle in this category is sold because of its high price tag, more is the price higher (though
limited) would be the number of customers. In E class, Mercedes is actually targeting specific customers and contact
their customers personally. Marketing approach here is truly target oriented.

MUV and UV

Multy utility vehicles and utility vehicles is another segment, which is mainly marketed on passenger carrier. Maruti
Omni is the leader in sales in this segment. There is actually some disagreement in actually considering Omni as a
contender of this category. As per size, price and engine capacity it’s a ‘A’ segment vehicle. Tata Sumo and Qualis
are other two leaders in utility vehicles and their USP is Diesel run engine. These vehicles are mainly used for tour,
travel, taxi or mass travel. Passenger carrying capacity here is 6-8 per vehicle.

Versa a news entrant in this category has been launched to give a luxury edge to this segment. However it’s a petrol
driven vehicle so operational cost could be factor on which consumer preference will be based on.

Conclusion

From the data and study it is clear that the passenger market is too much vibrant and growing. Sales, particularly in
the small car segment, will drive passenger car sales in the near term. With developments in the small car segment
acquiring a degree of stability in terms of price competition, the action is shifting to the mid-size car segment. Sales
in this segment will pick up as new models come in and income levels rise but it is still some time till it comes
anywhere close to the economy sized segment.

References: India Infoline.com, Auto India, Motor Trend, Journals from Society of Automobile of India, AIAM
journals, NCAER reports, Maruti Udyog database.