Juan Isaza

Southern New Hampshire University

9-1 Final Project: Research Report

9-1 Final Project: Research Report 2

Introduction

Maruti Suzuki India Ltd. (MSIL), a subsidiary of Suzuki Motor Corporation Japan, has

dominated the Indian automotive industry, particularly in the “A-segment”, since 1983.  The

Indian Car market has been primarily driven by this particular segment; which is composed of

four categories: van, multi-utility vehicle (MUV), sport utility vehicle (SUV), sedan, and hatch. 

The hatch segment in particular is divided into three segments: the premium-hatch, mid-size

hatch, and the entry-hatch segments.  Thus, MSIL has dominated the market, the company has

seen its market share decline from 61% to 49% within the six years in between 2008 and 2013—

mostly due to fierce competition.  (Mukherjee, Mathur, & Dhar, 2015). 

Research Problem and Stakeholder

The entry-level hatch segment is one that is not thoroughly understood by the consumer

due to its technological complexity. The annual salary for entry-level car consumers has reduced

from $600,000 INR to $300,000 INR (Mukherjee, Mathur, & Dhar, 2015). However, The Indian

economy has continued to steadily grow over the past five years and is expected to continue this

growth (Becker & Nagporewalla, 2010). Thus, making the average consumer in this particular

segment more cost conscientious.

The consumer base in the entry-level hatch segment is one that is evolving. The entry-

level hatch segment was considered to be a “consumer pull driven product” in 2003, but by 2013,

the segment had evolved to a “channel push driven product” (Mukherjee, Mathur, & Dhar,

2015). This poses a challenge for MSIL, as competition only keeps getting fiercer in the A-

segment. Competitors such as: the Hyundai i10, the General Motors Beat, the Hyundai Eon, and
9-1 Final Project: Research Report 3

the Honda Brio, are each taking their own piece of the market share; whist MSIL’s market share

declines (Mukherjee, Mathur, & Dhar, 2015).

In response to the decline in sales, MSIL chose to reassess its strategy in the efforts of

sustaining its market position (Mukherjee, Mathur, & Dhar, 2015). To sustain its dominance in

the A-segment, MSIL sought a product roadmap. The company would invest approximately $6

billion INR into the introduction of a new product. Normally, the designing, developing, testing,

and producing of a new vehicle requires 4 to 5 years. However, the team of MSIL felt that this

determined plan of action was a necessary effort to sustain its dominance—such dominance is of

extreme importance for MSIL (Mukherjee, Mathur, & Dhar, 2015).

MSIL’s team feels that the main critical components for the success of any product are to

accurately target the right consumer segment; and, to design appropriate features and benefits for

any particular segment. With the current robust growth in the car industry in India, it is clear;

any new automobile entering the market would have to demonstrate clear and consistent

differentiators to be able to compete (Mukherjee, Mathur, & Dhar, 2015).

The current product dilemma is one that ought to be dealt with. However, MSIL must

consider its stakeholders when making a decision; hence, any changes would have direct effect

on them. In the current case of MSIL, its internal stakeholders are its employees, managers,

board of directors, and investors. The external stakeholders are those who are not within the

business itself, but are entities who are affected by the company’s performance; such as,

consumers, regulators investors, suppliers, government entities, and the overall society of India.

Much is at stake. MSIL must strive to generate quality products whilst attracting new consumers

and maintaining its untarnished reputation (Boundless, 2016).

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Research Question and Objective

This research study is performed to analyze whether MSIL should consider redesigning

its current A-segment options. It is understood that consumers do not have a solid understanding

of the entry-level hatch segment’s technological complexity (Mukherjee, Mathur, & Dhar, 2015).

The misunderstanding could serve as an opportunity to introduce a new model. Should MSIL

introduce an entry/mid-hatch option?

According to the case study, it is not possible to design one product catering to the needs

of consumers belonging to different segments—MSIL doesn’t have to. It can just create a new

segment by offering an entry/mid-hatch option. One of the dilemmas in the choice of production

is the implication of trade-offs—more power, less fuel efficiency (Mukherjee, Mathur, & Dhar,

2015). An entry-mid-hatch option would maximize MSIL’s trade-off efforts by offering a

quality vehicle, with extra features, but at an affordable prize. Thus, allowing MSIL to offer a

product that attracts cost-conscientious consumers; hence, an entry/mid-hatch vehicle attracts

those who seek a mid-size hatch at an affordable price, and it attracts those looking for an entry-

hatch with extra features. The research objective is to analyze whether MSIL should offer an

entry-mitch-hatch option by using qualitative and quantitative data.

Ethical Issues

Company information should always stay private and not be shared. The personal

information of any individual; whether a customer of MSIL or not, should never be provided.

The performed study analysis uses company information gathered from the case study: Maruti

Suzuki India: Defending Market Leadership in the A-segment. All information that is

confidential will remain confidential. No information shall be shared with any other companies
9-1 Final Project: Research Report 5

or the public. The study analysis will always abide to all legal and professional standards. All

information used is open to the public; therefore, no written consent is required. Names of

individuals will not be utilized—all information used is for research and educational purposes

only.

Review of Literature

The prognosis of the Indian automotive industry is a healthy one. The rising prosperity,

low car penetration, and increasing affordability, make this industry a very attractive one for

automotive companies (Becker & Nagporewalla, 2010). However, it is not so easy to tap into

this particular industry. With a general public that perceives Indian brands to be better in terms

of value for money (Prasad, 2014) and word of mouth being the most influential factor when

purchasing a car (Malhotra, Nandi, & Mukherjee, 2012), it is very difficult for new-comers to

make a strong and quick impact. The general public of India places strong value in the brand of

a vehicle. Four broad factors are strongly considered while purchasing a small vehicle in India:

(1) anesthetics of vehicle, (2) overall cost (3) space, and (4) trust and reliability of brand

(Malhotra, Nandi, & Mukherjee, 2012).

It is currently being seen that small compact cars are losing ground to other premium

hatchback models and compact sedans. Asia’s third-largest automotive market is currently

undergoing a change in consumer behavior. The domination of small cars is fading away and

being replaced by bigger models (Chauhan, 2013). Price is no longer such a strong roadblock for

premium hatchbacks (Thakkar, 2015).

A research study which has faced this challenge and could potentially be replicated and

applied to this research study is the study which analyzes the customer satisfaction level of the
9-1 Final Project: Research Report 6

i10 Hyundai. Hyundai is another organization which has faced similar problems in terms of

tapping into the A-Segment. One of their newest models, the i10 Hyundai, is an entry/mid-hatch

vehicle. M. Ganesh and K. Soundarapandiyan reveal through their study how successful the

entry/mid-hatch vehicle has been. According to their study, out of 150 participants, 60% of

respondents whose income was less than $ 5 lakhs INR have owned this car. The factors found

to be most influential for customers switching over to the Hyundai i10 were: stylish, comfort,

technology, space, and interior (Ganesh, & Soundarapandiyan, 2011). A whopping 100% of

consumers have agreed that the i10 is the best value for their money (Ganesh, &

Soundarapandiyan, 2011). It is needless to say that the i10 has become one of the most sold

vehicles in India (Car Trade, 2013).

Limitations and Biases

There is a strong cultural bias in this research study as all studies are focused on the

Indian automobile industry. Therefore, the results of the study may not be applied to other

research studies. Most of the data utilized will be information provided by MSIL and any

information which is open to the public. There is much more existent data that could be utilized

but is unbeknownst.

Research Design and Methods

Information gathered for the primary data utilized in this study derives from the case

study; which provides information deriving from MSIL’s company materials. The information

provided has been organized to understand each segment’s consumer. Secondary data has been

gathered from journals, internet sources, and from the organization. This information is
9-1 Final Project: Research Report 7

extremely important as it allows the understanding of the consumer’s needs. And, how to widen

the target audience.

Entry-level hatch Mid-level hatch Premium-hatch

Most are buying for the first First-time buyers but also Already has owned a car for

time. buyers looking to upgrade to minimum 3 years; buying

more expensive product out additional car or replacement.

of necessity.
Very cost-conscientious; fuel Concerned with social status Vehicle helps build social

efficiency concerned. and projecting identity. status.

Annual household income Annual income of 400,000 – Annual income of 400,000 –

300,000 – 500,000 INR. 800,000 INR. 1 million INR.

30-34 years old with family 25-30 years old, unmarried, 30-45 years old, nuclear

of 1-2 children. no children if married family with husband, wife,

and 1-2 children.

Car is for convenience and Car is for recreational

utilized for basic travel needs. purposes.

Usually is satisfied with basic Brand conscientious, not Very brand conscientious.

features, has already owned a necessarily seeking a

motorcycle, which is used in contemporary brand.

addition to the bought

vehicle.
Initiated to MSIL since Accepts MSIL as a very good Looks for international

childhood; aspired to have a brand; acceptable from the brands to project a

MSIL since childhood. perspective of image contemporary image.

association.
9-1 Final Project: Research Report 8

(Mukherjee, Mathur, & Dhar, 2015). 

The BCG matrix model allows for a basic understanding of the overall performance of

each model. Understanding which are the best performers and poorer performers allow for a

better suggestion of a future model. Exhibit 1 provides information on each vehicle, which

segment they belong in, their price range, and their specific attributes. Moreover, it provides

additional information which can be added to the BCG matrix of MSIL. The profile of existing

A-Segment consumers in India (exhibit 6) will also be utilized. This chart provides quantity data

on each type of consumer. Such data is extremely helpful in understanding the consumer. The

product development choices (exhibit 13) is also extremely informational and will be utilized in

this study. The table includes information that will allow the analyzation of factors such as, the

strategy behind each product, the limitations of each product, the value proposition of each

product, and the competition of each product; as well as the price and target market.  This

information will aid in finding the sweet spot for the proposed product. 

Independent Variable

The chart below contains information gathered from the qualitative data shown in page 7

(age-range) along with the information given in exhibit 6 (average age in years). As shown

below, MSIL’s Premium-Hatch level vehicle reaches the widest age range (30 to 45 years old);

correspondingly, the Entry-Hatch level reaches an age range between 30-34 years old, and the

Mid-Hatch between 25-30 years old. Thus, MSIL is currently attracting consumers in their mid-

30’s (34 is the median). The age is the independent variable for it explains the dependent

variable (the levels in the A-Segment and their price range).

Segment Average Age in Years Age Range

Entry-Hatch 37 30-34
9-1 Final Project: Research Report 9

Mid-Hatch 36 25-30
Premium-Hatch 34 30-45

Dependent Variable

The information utilized for the dependent variable derives from Exhibit 1 (the level of

the vehicle and its corresponding price range) and Exhibit 6 (monthly average household

income).

Segment Price Range

Entry-Hatch 200,000 – 300,000 INR
Mid-Hatch 300,000 – 400,000 INR
Premium-Hatch 400,000 – 550,000 INR

Segment Less than 50,000 INR 50,000 – 75,000 INR

Entry-Hatch 21% 63.4 %
Mid-Hatch 17% 71.6 %
Premium-Hatch 11% 77.8 %

The data in the charts suggest that a cross between the entry-hatch and the mid-hatch

should have a starting price range starting at 300,000 INR.

Ethical Consideration

All information gathered in this study is open to the public and used for educational

purposes only. Individual information is not utilized and is not shared. Information gathered for

this study derives from the Case Study. The authors, Jaydeep Mukherjee, Gaurav Mathur, and

Nikhil Dhar wrote this article in the efforts of providing material for educational purposes. It is

not intended to illustrate either ineffective or effective handling of management. Names have

been disguised along with any other identifying information in the efforts to protect
9-1 Final Project: Research Report 10

confidentiality. The information in this case study may not be digitized, photocopied,

transmitted or otherwise reproduced by any means of any form without the permission of the

copyright holder (Mukherjee, Mathur, & Dhar, 2015). 

Data Analysis

Figure 1: Percentage of MSIL first time buyers within the A-segment, the type of vehicle

bought, and correspondent income levels.

A-Segment MSIL Consumers

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
First-time Buyer Income > ₹75,000 Income < ₹50,000

Entry Mid Premium

First-time buyers are not reluctant to pay more to get more, as 59% of Mid-hatch buyers

are first-time buyers. Moreover, 50% of Premium-hatch buyers are also first-time buyers.

Table 2: One-Way ANOVA

Anova: Single Factor

SUMMARY
Groups Count Sum Average Variance
0.56666666
First Time Buyer 3 1.7 7 0.003433333
0.70933333
Income > ₹75,000 3 2.128 3 0.005217333
Income < ₹50,000 3 0.49 0.16333333 0.002533333
9-1 Final Project: Research Report 11

ANOVA
Source of Variation SS df MS F P-value F crit
0.24057377 8.76683E-
Between Groups 0.481147556 2 8 64.53159275 05 5.14325285
Within Groups 0.022368 6 0.003728

Total 0.503515556 8

The results of the One-Way ANOVA show that the sum of MSIL consumers of incomes

greater than ₹75,000 per month are higher than the other groups. This result signifies that this

group is greater than the others. Thus, more consumers belong to the group of income

>₹75,000. In addition, the results show F > Fcritical, which leads to the rejection of the null

hypothesis. It can be concluded that mean values of these groups are significantly different.

MSIL consumers are conscientious consumers. The smaller group is the <₹50,000. Thus,

suggesting that the new vehicle can be priced higher than the entry-hatch.

Figure 3: Average Price of MSIL A-Segment Vehicle VS Average Age of MSIL Consumers

Average Price VS Average Age

500,000 475,000

450,000
400,000
350,000
350,000
300,000
250,000
250,000
200,000
150,000
100,000
50,000
0
33.5 34 34.5 35 35.5 36 36.5 37 37.5

It is of surprise that the younger consumer is spending more on a new vehicle than the

older consumer. The average age for the average price of ₹475,000 is 34 years old. However, it
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is important to keep in mind that vehicles of less value are sometimes purchased as additional

vehicles.

Table 4 : Motivation for A-Segment Cars Purchased From Maruti Suzuki (%) (Mukherjee,

Mathur, & Dhar, 2015). 

First Vehicle Additional Vehicle

Entry-hatch 60.7 24.5
Mid-hatch 59.1 17.4
Premium-hatch 50.3 24.5

Both the entry-hatch and the premium-hatch vehicles are bought 24.5% of the times as

additional vehicles. The older consumer may sometimes buy a vehicle of less value; however,

24.5% of the times that the older consumer buys the cheaper vehicle, it is because the consumer

is buying an additional vehicle. Therefore, it can be concluded that the younger consumer is not

opposed to buying a vehicle of more value. Thus, suggesting that the entry/mid-hatch option

price tag should not scare away consumers.

Table 5: One-Way ANOVA

ANOVA: Single Factor

SUMMARY
Groups Count Sum Average Variance
Average Age 3 107 35.66666667 2.333333333
Average Price 3 1075000 358333.3333 12708333333

ANOVA
Source of
Variation SS df MS F P-value F crit
1.92566E+1 1.92566E+1 0.00531055 7.70864742
Between Groups 1 1 1 30.30544161 2 2
2541666667
Within Groups 1 4 6354166668
9-1 Final Project: Research Report 13

2.17982E+1
Total 1 5

After performing a One-Way ANOVA utilizing the groups Average Age and Average

Price, it can be concluded that the average age of MSIL consumers is 36 years. In addition, it

can be concluded that the average spending is ₹358,000. Thus, suggesting that pricing the new

entry/mid-hatch vehicle should remain around this price; which, is of higher value and would be

more expensive than the entry-hatch (price range for the entry-hatch is ₹200,000 – ₹300,000).

Future Work

Though the Indian Car market is different from those others around the world, it would

be beneficial to see how an entry/mid-hatch vehicle has performed in similar markets. The study

performed highlights that the average consumer strongly considers the anesthetics, the cost, the

space, and reliability of the vehicle when purchasing the vehicle (Malhotra, Nandi, & Mukherjee,

2012), but it does not highlight exactly what features are preferred. It would be beneficial to

know what exact features are preferred. This study is also limited in that it does not provide a

proposed design for a cross-over of an entry and mid hatch vehicle. Thus, we know that the

consumer would spend more for more, we do not know what that more looks like when

combining two segments. Thus, suggesting much work to be done in the overall design of the

vehicle.

Conclusion and Recommendations

The cross-over of an entry-hatch and mid-hatch vehicle may lead first-time consumers to

spend more when purchasing their first vehicle. However, consumers are more inclined to
9-1 Final Project: Research Report 14

purchase when they recognize more value for their money (Ganesh, & Soundarapandiyan, 2011).

Price is no longer a blockage for hatch-vehicles of more value (Thakkar, 2015). Therefore, an

entry/mid-hatch vehicle would strongly compete against other premium hatch vehicles. It is of

surprise that the younger consumer is spending more. Thus, the suggested entry/mid-hatch

vehicle should appeal to consumers between the ages of 25-45 years, as that is the age of MSIL

consumers. Stakeholders may find the pricing of the vehicle of concern. Thus, the price would

have to be more than the entry-hatch and less than the mid-hatch. Creating a cross-over between

the entry-hatch and the mid-hatch could potentially sway consumers away from buying the mid-

hatch and going for a little less by purchasing an entry/mid-hatch. However, offering this extra

vehicle would only increase the portfolio of MSIL, which shows that MSIL is catering to its

consumers. Moreover, the entry/mid-hatch vehicle would also sway customers away from

buying an entry-hatch and spending more on a, entry/mid-hatch vehicle. This may cause the

elimination of one of the segments. However, it is seen that the entry is performing poorly and

research shows that consumers place a strong value in the brand of the vehicle and they want

more for their money (Malhotra, Nandi, & Mukherjee, 2012).

9-1 Final Project: Research Report 15

References

Becker, D., & Nagporewalla, Y. (2010). The Indian Automotive Industry. KPMG.

Boundless. (2016, June 22). Business Stakeholders: Internal and External - Boundless Open
Textbook.

Chauhan, C. P. (2013, April 22). Micro Cars like Alto, Nano & Others Losing Sheen in India as
Buyers Prefer Sedans, Crossovers.

Car Trade Editorial Team. (2013, December). Reasons Behind the Success of Hyundai Grand
i10.
9-1 Final Project: Research Report 16

Ganesh, M., & Soundarapandiyan, K. (2011). I10 Hyundai Chennai Customers: Satisfaction
Level. SCMS Journal of Indian Management,78-89.

Malhotra, G., Nandi, A., & Mukherjee, A. (2012). An Empirical Research on Consumer
Behaviour towards Small Car Segment in Indian Market. Business Perspectives and
Research,1(1), 37-46.

Mukherjee, J., Mathur, G., & Dhar, N. (2015, December 17). Maruti Suzuki India: Defending
Market Leadership in the A-segment.  Ivey Publishing.

Prasad, S. (2014). Consumer Perception & Attitudes Towards Foreign Automobile Brands in
India. ICFAI Business School,5(4).

Thakkar, K. (2015, September 24). Price no more a roadblock for premium hatchbacks.