Posted in Marketing & Strategy Articles, Total Reads: 7013
, Published on 17 November 2011
To cater to rising demand for luxury cars in the fast growing Indian market, India’s top car maker Maruti Suzuki has launched Suzuki's premium sedan Kizashi. The luxury sedan segment has a mere 2.8 percent of the total auto market in India, one of the world's fastest growing, but a burgeoning middle class is seen spurring demand for premium cars. With the base model of Kizashi, priced at around Rs 17 lakh it will compete with the likes of Toyota's Corolla, Volkswagen AG's Jetta, General Motors's Chevrolet Optra and Honda Motor Co's Civic.
Maruti Suzuki always positioned itself as a company which cared for the customer's pockets and has always branded its cars as fuel efficient and cost. Advertisements like "Petrol khatam hi nahi hota", “Kitna deti hai” exemplify that viewpoint. But with the growing level of disposable income in the hands of Indian consumers and an complete attitudinal change from being savings oriented to being spending oriented has brought about a luxury revolution of sorts. Every luxury brand conceivable Louis Vuitton, Giorgio Armani, Swarovski, Rolex etc has a presence in India. As for automobiles BMW, Mercedes, Ferrari, Audi, Porsche etc are making their presence felt in a big way. The luxury car market in India (entry level to mid range) is too big at the present moment for Maruti Suzuki to ignore and hence their decision to launch Kizashi.
In recent times the SX4 can be cited as an example where Maruti Suzuki was successful in promoting the brand as a quality manufacturer of entry level sedans. Before the launch of SX4 by and large Maruti Suzuki was considered primarily to be a manufacturer of small cars only small cars only. Although the moderately successful Esteem was always a significant presence in their product line consumers were more inclined to buy Toyotas and Hondas when it comes to big cars. But Maruti Suzuki was able to successfully enter into the segment with a unique strategy of its own, positioning it as the "male and muscular" car targeting mostly the stronger sex, with the punch line "Men are back" they were able to capture the imagination of young office going male populace who were bogged down by their daily mundane life. And we all know how well it worked.
But to foray into the semi luxury segment is a completely different proposition altogether. Baleno, Grand Vitara and now Kizashi, in its third attempt to enter into the semi-luxury segment in India Maruti Suzuki seems to be committing the same mistake all over again. The point that is to be pondered over here is that the segments of buyers who are shelling out that kind of money to buy a Car are not merely looking for a swanky car with high end features. Part of the price premium that they are paying is just to be associated with a premium brand like BMW, Mercedes, Audi, Porsche etc. From that perspective no matter how advanced the feature set of Kizashi is, buyers just won’t spend that kind of money and associate with a brand which is synonymous with mediocrity. Another similar type of example can be cited in the case of Hyundai Sonata. An extremely well built and feature packed car, but in terms of sales nowhere near the level achieved by the Civic or the Accord from Honda. The reason, people just wouldn't pay 15 lakh and drive a car when another car of the same brand is available for 3. Chances of Tata Aria also seem dim because of similar reasons.
Speaking of how the customer perception of a brand can affect the performance of car we can cite the example of Mahindra Voyager. Mahindra had high ambitions with the Voyager when it was launched in the Indian market in 1997 in collaboration with Mitsubishi. The car lived only for 2 years. The car was positioned as a luxury family carrier. The car had a numerous shortcomings of its own on numerous fronts – Price, Design and Service. A price tag of 5.25 lakh was considered very expensive at that time, the design was too boxy in nature for the Indian tastes and Mitsubishi being a new entrant the consumers were very sceptical about the service levels to be expected. Nonetheless the biggest factor that led to the early demise of the Voyager in 2000 was that Mahindra just could not dissociate itself from the local made and tractor manufacturer image. It would have served the company well if the car would have been launched under the Mitsubishi brand name or a separate brand altogether. Other examples in this regard could be the Tata Xenon and Premier Rio. They failed because in both the cases the manufacturers launched a car which was out of their brand purview, carrying the same brand name as their other regular offerings.
A quite similar conundrum is also faced by Honda although of a completely opposite nature. Accord, Civic, City are all market leaders in their respective segments and Jazz is also not doing badly either in the premium hatch segment. Thus Honda is facing the problem of launching a small entry level car in to the market without effecting its brand perception. Thus even after being present in the Indian market for so many years it is still to enter in the fastest growing sector in it. Only recently has Honda showcased its New Small Car Concept which is yet to be named at the Delhi Auto Expo. The car is expected to hit the Indian roads in the last quarter of 2011 or beginning next year. Although it is believed to be competitively priced in comparison to Ford Figo, Volkswagen Polo and the Toyota Etios, initial company communication suggest that the car won’t compromise with the luxury aspect associated with Honda cars in India.
Some are of the view that they should be using the Japanese name Suzuki for their branding. However, even Japanese car makers like Toyota, Honda and Nissan are more known for their quality rather than luxury. To add to that Suzuki doesn’t exactly have the brand recall enjoyed by the aforesaid companies. And this strategy certainly did not work in the Chinese market. The Suzuki Kizashi as it is called there was a failure. The company could only sell about 15,000 cars and are now relying on price discounts to increase the sales. The customers just weren’t privy to the idea of buying a luxury car from Suzuki.
From a buyer's point of view the best strategy that Maruti Suzuki can follow is the tried and tested way followed by Toyota 'Lexus', Honda 'Accura' and Nissan 'Infiniti'. The word Kizashi in Japanese means "a sign of great things to come" and this is what it should be positioned as. Rather than depicting the Kizashi as another sedan from the Maruti Suzuki stable it would serve Maruti well to launch the car under a separate brand or as a brand in itself. With BMW coming out with its 1 series shortly with a price tag of around Rs 20 lakh, and Audi also looking to follow suit the prospects of Kizashi under the present circumstances look bleak.
This article has been authored by Saikat Roy; MBA (IMT Ghaziabad) and BE (NIT Agartala)
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