Maruti Suzuki: Addressing the end-to-end customer value chain
With over 50 percent market share in passenger cars, the three-decade-old Maruti-Suzuki pretty much rules the road in a rather fragmented Indian automobile market. How about having every second product in the market of your brand? That’s what the venerable Indo-Japanese joint-venture has managed to do, with all its bureaucracy and legacy?
The answer lies in the way the company has managed to address existing and emerging customer needs across the value chain, from learning how to drive a car to selling your used car. This case elucidates the customer-centricity approach the company has adopted to lead and retain its position as a market leader.
What better than the following statement from the arch-rival Hyundai, where the India chief Y.K. Koo notes
I think №1 or №2 is not our priority. But, volume-wise, Maruti is definitely №1 because they have 1.7 million units and we are at 7 lakh (700,000). So, volume-wise and factory-wise, we cannot compete; we cannot overtake.
It is not to propose that Maruti-Suzuki has the best product (read, the car) at a given price point, but rather the answer lies well beyond the car. It’s the service ecosystem that the company has managed to build and enhance over the years that serves the various customer requirements across the value chain. That’s taking a leaf from the Buyer Utility Map as advocated in the bestseller Blue Ocean Strategy.
Here’s a simplified display of the Buyer Utility Map, where the idea is to offer value to the customer across the value chain, that transcends purchase and use of the product. I call this the ‘Across the value chain’.
Think of the various stages a typical customer goes through, before, during, and post the product engagement. Each stage could be a source of value add, and differentiation. In the case of Maruti-Suzuki, it’s not just the product, but the series of interventions that have helped it defend itself from the onslaught of competition, including those with deep R&D expertise.
Let’s being with the moment the customer decides to buy a car.
Even with over 1800 dealership outlets across 1450 cities in India, why did Maruti have to open its own front-end in terms of Nexa? It was all about offering the customer a superior buying experience. Building a high-end car in the form of Ciaz or Breeza is one thing, but making the customer own one is quite another, and that’s where the company went downstream and that too at the high-street. The result, a good product delivered in a unique style. This followed expanding the services and adding premium services at the Nexa to engage customers further. Why didn’t other car companies think of it even after almost three years of Nexa being around?
If you don’t know how to drive the car still. They have the Maruti Driving School in a market that is highly unorganized and nowhere near perfection in terms of services. Launched over 10 years back, these School offer state of the art facilities and sufficient commitment for a customer to own a Maruti. Such setups may not crank huge money but certainly helps engage the customer well ahead of the purchasing choice.
If money is a concern, the company helps one through Maruti Finance, since 2002, and then with Maruti Insurance, launched in 2002, not just capture a share of the wallet, but the entire spending on driving. Once again, each of such entities need not make money for the company, but rather creates sufficient exit barriers for a customer.
In a market notorious with counterfeits, used components, and a largely unorganized garages and repairmen network, introducing branded parts through Maruti Genuine Accessories and Maruti Genuine Parts, has helped the company garner trust and engagement with the customer. These aren’t just brands, but reasons for customers to remain engage with the company. The garages get a huge business, the company gets a steady stream of revenues, and the customer has peace of mind. Once again, other companies seem to have missed the point here.
The N2N Leasing and Fleet Management Services is another instance of the company expanding itself from a product setup to services one. This coupled with customer loyalty enhancers like Autocard, launched in 2006, have helped further enhance the stickiness.
Lastly, the venerable Maruti True Value, launched in 2001, continues to give customers a viable and reliable choice in an overcrowded seconds market. Several of such moves really look ahead of time. And yet, several competitors fail to take a leaf from the narrative.
The management lesson, however, is to look beyond the product to the customer value chain, for differentiation often happens at the margins. Also, a case in point of seemingly foreign concepts finding a space in India.
Read more about creativity and design thinking in my book, Design Your Thinking.
