Renewed channel strategy appeals to both first-time, premium buyers
to both first-time,
Market leader grows share,
sustains double-digit growth
Randhir Singh Kalsi
Senior Executive Director
Marketing and Sales
Randhir Singh Kalsi heads Marketing and Sales at Maruti Suzuki India Ltd. Having driven the brand to annual double-digit growth and around 50 percent market share, he is preparing for the future by transforming the brand’s distribution channels to serve both first-time and premium buyers.
THE CATEGORY AND COMPANY
What important trends are shaping the automobile category in India?
India offers a large growth opportunity in the automobile sector. Current automobile penetration is still very low. A new India is emerging with dual-income families and with ready access to affordable financing. There is a large population of young people interested in buying a car and that number keeps growing. Automobiles are thus a reflection of upward social mobility and have huge aspirational value. We are seeing strong growth not just in cities but in rural areas as well. When one couples this with macroeconomic factors like the government’s focus on road infrastructure, low inflation rates, and better employment opportunities, the future looks extremely optimistic.
What about the shift to other types of mobility that often concerns car brands?
The mass transportation system in India still has a long way to go. A personal vehicle remains the most desirable mode of transport. Having said that, urban India is slowly embracing shared mobility like many parts of the world. But it will be some time before we reach a stagnation point in automotive growth.
Given all the positive economic and demographic factors, how is the company growing?
Maruti Suzuki has been in India now for over 37 years and we’ve grown by understanding the pulse of the Indian consumer. Today, we have the third-generation Maruti Suzuki customer in our showrooms. When we started way back in the 1980s, our aim was to introduce international standards and benchmarks in the automotive industry. Our focus was on our cars and on our technology. From there, we moved to providing mobility solutions including service, finance, and insurance. Our third phase of growth is coming on the back of great customer experience. In the past five years, we have increased our market share from 39.5 percent to 50 percent with double-digit growth every year.
Where are you now in this progression of meeting changing customer needs?
We’ve been changing ourselves and our offering to meet the changing needs of the Indian customer. As India grows, new middle-class benchmarks and standards get created. While one part of India continues to grow and embrace the Maruti Suzuki promise, there is another India that had begun to grow out of our brand; tagging it “my dad’s brand.” This happens to many successful brands across the world.
Instead of fighting this trend, we decided to embrace it and introduced a new premium retail channel called NEXA. In a market where everyone was focused only on the product, we changed the game by focusing on a great and pampered customer experience. Soon after we launched three years ago, we began to see customers who never had Maruti Suzuki in their consideration set, in our NEXA showrooms.
Who is the customer for the NEXA showroom?
Fundamentally, from what we’ve seen, our NEXA customer is an experienced car buyer, or at least comes from a car-owning household. He or she knows what they want and does their homework. They are the digital-first customers, who often make up their mind before visiting the showroom. They are used to a single relationship manager at their banks and expect the same at the showroom. They expect professionalism and knowledgeable staff and they expect to be treated with respect and courtesy. These are people who’ve traveled widely, and their benchmark of hospitality and customer experience has been defined by luxury hotels and international airlines. At NEXA, we’ve challenged ourselves to appeal to this customer and exceed his expectations.
Having introduced a new premium image with the launch of the NEXA showrooms a few years ago, how do you keep reinforcing the impact?
That is always the biggest challenge for any brand. Any differentiator today becomes a qualifier tomorrow. Also, the competition tries to jump in on the bandwagon and attempts to copy any successful model. To provide a premium customer experience, our biggest differentiators are our people through whom we deliver the great experiences.
Having said that, we continuously work on creating new standards and introduce new practices. We want NEXA to grow from just offering a retail experience to offering a lifestyle experience through fashion, music, and travel.
NEXA has had a huge impact on the Maruti Suzuki brand, driving up its modern, exciting and premium image. We have recently re-conceptualized our original retail channel and have re-launched it under the Maruti Suzuki Arena brand. We have modernized our pre-owned car brand, True Value, and have brought professionalism and expertise to a largely unorganized market.
With these new channels and retail experiences, and our exciting new range of cars and technology, we are upping the game every day.
How does the profile of the NEXA customer compare with the profile of the Arena customer?
As I said, NEXA customers are experienced car buyers. Arena customers are largely first-time buyers. That tends to make NEXA customers more discerning, more focused on customer service. They know what they want and seek to close a sale quickly. Arena customers want to spend more time to understand, feel comfortable, and negotiate longer. They seek friendliness and comfort. What we’ve realized however, is that both customers are equally demanding in their own way.
Based on your experience with the new NEXA showroom, do you see brand opportunity in India today shifting from building market share to commanding a premium?
India is a very diverse country with a large population across varied social and economic groups. That makes every segment a viable business target. Today a five-star hotel and a small café are equally crowded on a weekend. Similarly, in the automotive business, India has a huge customer base that is moving up from a two-wheeler to a first car. We are selling more than 500,000 cars every year at this entry level. At the same time, we are also selling 300,000 cars every year to the young Indian looking to make a statement and seeking a vehicle that is an extension of his personality. While the first segment seeks value, the second segment seeks personalization.
In the near future and for some time to come, we believe both segments will be growing equally fast and be equally important for us. So, for us, it’s not one or the other—but both, as we continue to build market share and create premium value.
In what other ways are you responding to your consumer research?
Along with our focus on experience, we are equally focused on design and technology. We began to give more attention to design when we noticed, through our research, how important this was to the new Indians who are today aligned with their global counterparts. Long gone are the days when India could afford to be a generation behind other countries in design and technology. The digital world has thrown open customer expectations. We are democratizing technologies like automatic driving, hybrid technology, and our Boosterjet, which maximizes fuel efficiency. Many of our models can also run on compressed natural gas, a technology we pioneered in India.
At a corporate level we also take our commitment to environment very seriously. Whether this be through exploring alternate environment-friendly fuels or implementing best environment practices in our manufacturing plants and service centers.
How extensively do you segment the consumer market?
Our aim in Maruti Suzuki is to reach a customer segment of one, where we can personalize and cater to each individual customer. In the meantime, we are extremely targeted in our marketing and communication efforts through micro segmentation. Our sales executives reach out to micro-segments like farmers in an area expecting bumper crops because they are likely to have more cash in hand. Similarly, we target government employees about to get a salary hike. That is how we stay relevant, focused, and targeted.
How are the brand building strategies that guided Maruti Suzuki’s great success changing as India changes?
The approach is changing from “one-to-many” to “one-to-one.” We are adopting a customer first approach to media. Which means we are not wedded to a media platform, but we stay relevant for the customer. As our customer goes digital, we are shifting our media approach from offline to online. We are making more use of social media.
Over the years we have observed our walk-ins have gone down, but our sales have been fine. The first moment of truth for a large number of customers was happening on their laptop or mobile, before coming to the showroom. We are gearing up for this world, to understand the customer before he even enters our showroom.
For the rural markets, we have one of India’s best outreach programs. One-third of our sales come from rural areas where we do a lot of events. We have 15,000 rural dealer executives who are extensively familiar with particular villages: the people, harvest timings, and other relevant aspects of local life.
It sounds as if the role of the dealer is important, compared with other markets, so how do you help dealers represent the brand effectively?
Our dealers are part of our family. We work very closely and very deeply with them. We work with them and take on board their point of view. We work with them to identify and hire people, to train and establish clear procedures that drive sales and hold brand values. We spend time not just with the dealers but also with their families. We aid in their financial management and even have programs that help in succession planning. We’ve helped create new revenue streams for them so that they can grow beyond new car sales. A happy and motivated dealer team is critical to our success and to ensure a high level of customer satisfaction.
How do you use social media, especially because people are more skeptical today?
We generate a lot of content and engage in conversations. While all others talk about market share and mind share, we are actually trying to win the heart share of the customers. We have a MyNEXA club. The members add content. We’re on Facebook and Twitter. Activities are happening all the time. Finally, it is important to stay relevant and continuously evolve. We ensure that in any of our thoughts or deeds we never get into the arrogance of a market leader. We believe in transparency towards all stakeholders. If there is a problem, we announce a recall. The customer feels that the company is accepting its mistake.
How else do you engage customers?
The involvement of the customer is important today. We involve the customer in creating cars for themselves. We introduce new models with an initiative called “i Create.” We provide the customer with accessories and the customer can personalize his car with design elements like body graphics. He can walk into the showroom and customize his car on a tablet with the help of a showroom executive. He makes a statement—I created this car. We’ve had success with the “i Create” program with two models and we’ll extend the program to more models.
Is having a Japanese parent a brand-building advantage?
The Japanese lineage brings with it huge reputation and credibility in India in terms of quality and technology. And justifiably so. To deliver on that quality we have processes and systems that are rooted in the Japanese work culture. We are today exporting 10 percent of our production and our Japanese heritage does play a big role in that.
What’s your view about the brand’s responsibility to help India’s development?
As a leading company in India, and not just in automotive, we take our corporate responsibility very seriously. Whether it’s through job creation, rural upliftment programs around our manufacturing hubs, making our roads safer, or through introducing environment-friendly technology, we have a very clear responsibility.
We have adopted about 73 industrial training institutes where we invest in upgrading their infrastructure and align their curriculum with the auto industry requirements, so the students become employable in the industry. We have sponsored campaigns for seat-belt use to improve road safety. Our driving schools, with state-of-the-art simulators, teach responsible driving and are an integral part of our business. We have introduced the concept of dry washing to clean cars at our service centers that save around 5.5 million liters of water a month. At our factory and our offices, we focus on the Three Rs of environmental responsibility—Reuse, Reduce, and Recycle.
How do you maintain the trust of consumers, even as they become more skeptical?
Brands tend to lose their value if they do not change continuously and fulfill customer aspirations. If a brand claims to be aspirational but doesn’t stay aspirational then trust weakens, and another brand takes that space. In earlier times, brands could stake claims and still get away with them even when they couldn’t live up to those claims. But today, technology is playing a role and the customer is more informed and globally aligned. So, brands need to be careful about making any claim.
The biggest asset that we have is our customer’s trust. Maruti Suzuki today is one of the most trusted names in India. And we have earned that trust by constantly meeting and exceeding customer expectations, through our products, our technology, and our brand. Today, people see through things. They read reviews, they search on the Internet. So, the only way to build and keep the trust of the customer is by staying honest.
At Maruti Suzuki, we are committed to our values and live by them every day. You can’t fake trust. While customers are becoming more skeptical, they are also becoming more knowledgeable. They understand better what’s right and what’s wrong.