Maruti Service Strategy

Q 1 Is Maruti's strategy of banking on "Service" instead of "sales" a smart decision? Why?

Ans.

1. The new Decision is more complicated. It revolves around the total lifetime value of a car.

2. If a buyer spends Rs 100 on a car during its entire life, one-third of that is spent on its purchase. Another third went into fuel. And the final third went into maintenance.

3. Maruti was getting only the first one-third of the overall stream. As the Indian market matured, customers began to change cars faster. Eg. if a car is going to see three users in, say, a life span of 10 years, how can I make sure that it comes back to me each time it changes hands

4. Maruti has changed gears to take a big share of this final one-third spent on maintenance.

5. Maintenance market has a huge market potential.

6. For this they are conducting free service workshops to encourage consumers to come to their service stations. Maruti has increased its authorized service stations.

7. Every regional office is having a separate services and maintenance department which look after the growth of this revenue stream.

8. In fiscal 2012-13, Maruti Suzuki's service network serviced over 17 million cars, including accidental repairs. This was an increase of 5% over the previous year. The service business is expected to increase by 8% this fiscal and almost 20% over the next three years, with Maruti's service load expected to hit 20 million vehicles by 2015-16.

Q2.  Can Maruti's "service" be considered as its key differentiators from the other car brands?

Ans. 1. A car may be affordable to buy, it may not necessarily be affordable to maintain , as some of its regularly used spare parts may be priced quite steeply. Not so in the case of Maruti. It is in the economy segment that the affordability of spares is most competitive and that is where maruti shines.

2. Maruti Scores the highest across all parameters : Least problems...