MAJOR FACTORS INFLUENCING BUYING BEHAVIOR

Cultural Social Culture Subculture Social Class Reference group Family Roles and statuses Personal Age and lifecycle stage Occupation Economic circumstances Lifestyle Personality and self-concept Psychological Motivation Perception Learning Beliefs and attitudes Buyer

Rogers model for the adoption and diffusion of innovations CURVE

Innovation Adoption

The

innovation adoption curve of

Rogers is a model that classifies adopters of innovations into various categories, based on the idea that certain individuals are inevitably more open to adaptation than others. Is is also referred to as Multi-Step Flow Theory or Diffusion of Innovations Theory.

Innovators Brave people, puling the change. Innovators are very important communication. Early Adopters Respectable people, opinion leaders, try out new ideas, but in a careful way. Early Majority Thoughtful people, careful but accepting change more quickly than the average. Late Majority Skeptic people, will use new ideas or products only when the majority is using it. Laggards Traditional people, caring for the "old ways", are critical towards new ideas and will only accept it if the new idea has become mainstream or even tradition. The diffusion of innovations curve (innovation adoption curve) of Rogers is useful to remember that trying to quickly and massively convince the mass of a new controversial idea is useless. It makes more sense in these circumstances to start with convincing innovators and early adopters first. Also the categories and percentages can be used as a first draft to estimate target groups for communication purposes. Diffusion research focus was on five elements: 1) the characteristics of an innovation which may influence its adoption; 2) the decision-making process that occurs when individuals consider adopting a new idea, product or practice; 3) the characteristics of individuals that make them likely to adopt an innovation.

TARGET MARKETING
Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing is the selection of customers you wish to service. The decisions involved in it are Which segments to target How many products to offer Which products to offer in which segments

There are three steps to targeting: Market segmentation Target choice Product positioning

One of the first things you need to do is to refine your product or service so that you are NOT trying to be 'all things to all people. Next, you need to understand that people purchase products or services for three basic reasons:

To satisfy basic needs. To solve problems. To make themselves feel good.

The next step in creating an effective marketing strategy is to zero in on your target market. Target marketing is one of corporate America's most effective business strategies. The idea is to increase sales by first identifying, and then targeting smaller, yet more profitable customer groups within the total market.

Four Ways to Identify Target Markets 1. Geographic: The location, size of the area, density, and climate zone of your customers. 2. Demographics: The age, gender, income, family composition and size, occupation, and education of your customers. 3. Psychographics: The general personality, behavior, life-style, rate of use, repetition of need, benefits sought, and loyalty characteristics of your customers. 4. Behaviors: The needs they seek to fulfill, the level of knowledge, information sources, attitude, use or response to a product of your customers. One of the best ways to identify your target market is to look at your existing customer base. Who are your ideal clients? What do they have in common? If you do not have an existing customer base, or if you are targeting a completely new audience, speculate on who they might be, based on their needs and the benefits they will receive. Investigate competitors or similar businesses in other markets to gain insight. TARGET MARKETING

Who are your best customers? Where should you direct your marketing activities? Where and how should you allocate your advertising and promotional efforts?

Target Marketing, provides Focus for your business. It helps to establish critical Operational goals and defines what must be done to achieve them What Customers Want Marketing is more than an activity, it is an attitude Instead of trying to get customers to buy what the firm likes to make, or happens to have on hand, the marketing oriented firm tries to produce or sell what its customers want which can be sold at a profit.

Do not simply throw out everything that you now have and replace goods or production machinery with completely new items. HOWEVER, AS YOU ANALYZE YOUR MARKET AND CUSTOMER PROFILES, AND SO GAIN AN UNDERSTANDING OF THEIR WANTS, DESIRES, AND PERCEIVED NEEDS, YOU CAN BEGIN TO REORIENT YOUR BUSINESS OVER TIME TO TAKE BEST ADVANTAGE OF THESE NEW INSIGHTS. CONSIDER BOTH THE SHORT TERM AND LONG-TERM IMPLICATIONS OF DEVELOPING AND IMPLEMENTING THE RIGHT TARGET MARKETING STRATEGY FOR YOUR BUSINESS.

Customer Attitudes For a long time, people have believed that advertising can be used to change people's minds about what they want. This is an incredibly difficult process at best, and an extremely expensive one. Because of these two factors, it is a process that smaller firms simply cannot afford to pursue. Instead, it is much more productive for any size firm to tune in to target customer attitudes as they currently exist. Once they have identified the actual prevailing attitudes, they can begin to organize company resources needed to constructively address and satisfy these attitudes the key question is, "What are the existing customer attitudes?" With this as an objective, developing an understanding of existing customer attitudes becomes essential, and their identification becomes an important part of the marketing process. Once these customer attitudes, needs or preferences are identified, the entire firm can then organize itself to satisfy these needs as completely and efficiently as possible.

Target Marketing

MARUTI CULTURE
Their employees are their greatest strength and asset. It is this underlying philosophy that has moulded their workforce into a team with common goals and objectives. Their EmployeeManagement relationship is therefore characterized by:

Participative Management. Team work & Kaizen. Communication and information sharing. Open office culture for easy accessibility

To implement this philosophy, they have taken several measures like a flat organizational structure. There are only three levels of responsibilities ranging from the Board Of Directors, Division Heads to Department Heads. Other visible features of this philosophy are an open office, common uniforms (at all levels), and a common canteen for all. This structure ensures better communication and speedy decision making processes. It also creates an environment that builds trust, transparency and a sense of belonging amongst employees. For Investors: Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the Indian car market for about two decades. Its manufacturing plant, located some 25 km south of New Delhi in Gurgaon, has an installed capacity of 3,50,000 units per annum, with a capability to produce about half a million vehicles. The company has a portfolio of 11 brands, including Maruti 800, Omni, premium small car Zen, international brands Alto and WagonR, off-roader Gypsy, mid size Esteem, luxury car Baleno, the MPV, Versa, Swift and Luxury SUV Grand Vitara XL7. In recent years, Maruti has made major strides towards its goal of becoming Suzuki Motor Corporation's R and D hub for Asia. It has introduced upgraded versions of WagonR Zen and Esteem, completely designed and styled in-house.

Maruti's contribution as the engine of growth of the Indian auto industry, indeed its impact on the lifestyle and psyche of an entire generation of Indian middle class, is widely acknowledged. Its emotional connect with the customer continues. Maruti tops customer satisfaction again for sixth year in a row according to the J.D. Power Asia Pacific 2005 India Customer Satisfaction Index (CSI) Study. The company has also ranked highest in India Sales Satisfaction Study. The company's quality systems and practices have been rated as a "benchmark for the automotive industry world-wide" by A V Belgium, global auditors for International Organisation for Standardisation. In keeping with its leadership position, Maruti supports safe driving and traffic management through mass media messages and a state-of-the art driving training and research institute that it manages for the Delhi Government. The company's service businesses including sale and purchase of pre owned cars (TrueValue), lease and fleet management service for corporates (N2N), Maruti Insurance and Maruti Finance are now fully operational.. These initiatives, besides providing total mobility solutions to customers in a convenient and transparent manner, have helped improve economic viability of The company's dealerships. The company is listed on Bombay Stock Exchange and National Stock Exchange. MUL is a Board-managed company. Currently the directors on the Board are:

Mr Shinzo Nakanishi, Chairman Mr Jagdish Khattar, Managing Director Mr Hirofumi Nagao, Joint Managing Director Mr Shinichi Takeuchi, Joint Managing Director Mr Kinji Saito, Director (Marketing and Sales) Mr Osamu Suzuki, Director Mr R C Bhargava, Director Mr S V Bhave, Director

Mr Kumar Mangalam Birla, Director Mr Amal Ganguli, Director Ms Pallavi Shroff, Director Mr Manvinder Singh Banga, Director

INTERNATIONAL BUSINESS
In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since its first export in 1986. Europe is the largest destination of Marutis exports and coincidentally after the first commercial shipment of 480 units to Hungary in 1987, the 300,00 mark was crossed by the shipment of 571 units to the same country. The top ten destinations of the cumulative exports have been Netherlands, Italy, Germany, Chile, U.K., Hungary, Nepal, Greece, France and Poland in that order. The Alto, which meets the Euro-3 norms, has been very popular in Europe where a landmark 200,000 vehicle were exported till March 2003. Even in the highly developed and competitive markets of Netherlands, UK, Germany, France and Italy Maruti vehicles have made a mark. Though the main market for the Maruti vehicles is Europe, where it is selling over 70% of its exported quantity, it is exporting in over 70 countries. Maruti has entered some unconventional markets like Angola, Benin, Djibouti, Ethiopia, Morocco, Uganda, Chile, Costa Rica and El Salvador. The Middle-East region has also opened up and is showing good potential for growth. Some markets in this region where Maruti is, are Saudi Arabia, Kuwait, Bahrain, Qatar and UAE. The markets outside of Europe that have large quantities, in the current year, are Algeria, Saudi Arabia, Srilanka and Bangladesh. Maruti exported more than 51,000 vehicles in 2003-04 which was 59% higher than last year. In the financial year 2003-04 Maruti exports contributed to more than 10% of total Maruti sales.

MARUTI ALL INDIA SALES 3 YR TREND

Segment A1 (Mini - Hatchback) A2 (Compact - Hatchback) A3 (Mid Size) A4/A5/A6 (Exec./Prem./Luxury) C (Van Type) Passenger Cars - MUL Passenger Cars - Total Industry MUV (Utility Vehicles) Passenger Vehicles - MUL Passenger Vehicles - Total Industry 2003- Growth 2004-05 Growt 2005-06 Growt 04 h h 17% 116,262 -31% 89,223 -23% 167,56 1 47% 271,280 54% 335,136 24% 176,13 2 28% 8% 14,173 29,637 109% 31,939 NA NA NA NA NA NA 59,526 417,39 2 758,12 3 3,555 420,94 7 901,15 0 15% 65,019 28% 482,198 26% 885,029 12% 5,204 28% 487,402 24% 1,050,2 46 9% 66,366 16% 522,664 17% 948,669 46% 4,374 16% 527,038 17% 1,129,3 16 2% 8% 7% -16% 8% 8%

MARKET SHARE

2005-06 Market Share-Segment A2

TATA 20%

MARUTI 59%

HYUNDAI 21%

2005-06 Market Share-Segment A3

HYUNDA I 16% MARUTI 17% TATA 20% FORD 14% GM 6%

OTHERS 7%

HONDA 20%

2005-06 Market Share-Passenger Cars

HYUNDAI 17% TATA 16% HONDA 4% FORD 3% GM 1%

TOYOTA 1% OTHERS 3%

MARUTI 55%

COMPETITION MODELS SEGMENT

A1 (Mini - Hatchback) A2 (Compact Hatchback) A3 (Mid Size) Maruti Competition

M800 Zen, WagonR, Alto, Swift Esteem, Baleno

A4/A5/A6 (Exec./Prem./Luxury)

Hyundai - Santro & Getz; Tata Indica & Palio; GM - Corsa Sail Hyundai - Accent; Tata - Indigo & Petra; Honda - City; GM - Corsa, Optra, & Aveo; Ford - Ikon, Fusion, & Fiesta Hyundai - Elantra & Sonata; Honda Accord; GM - Vectra; Ford - Mondeo; Skoda - Octavia & Superb; Toyota Corolla & Camry; Daimler Chrysler C,E, & S Class; Mitsubishi - Pajero; Hyundai Terracan & Tucson; Ford - Endeavor; Toyota - Prado & Innova; Nissan - X Trail; Honda - CRV; GM - Forrester & Tavera; Tata - Sumo & Safari; Mahindra - Jeeps, Scorpio, & Bolero

C (Van Type) MUV (Utility Vehicles)

Omni, Versa Gypsy, Grand Vitara

BUSINESS STRATEGY
They intend to continue to focus on the small car segment, while offering products in most segments of the Indian passenger car market. They aim to achieve their principal objectives by pursuing the following business strategies: Maintain and enhance their product range: They intend to utilize Suzukis expertise in small car technology to produce new variants of their existing models and to upgrade their products with contemporary technology and features. Increase reach and penetration: They plan to continue to utilize their extensive sales and service network to increase the reach, in terms of geographical spread, and penetration, in terms of sales volumes, of their products across India. Increased availability of automobile finance: They continue to seek opportunities to expand the size of the Indian passenger car market, especially in the small car segment, through facilitating easy availability of automobile finance. To that end, they have recently entered into an agreement with the State Bank of India. Secure repeat purchases by offering a 360 degree customer experience : On the basis of their belief that securing repeat purchases from an existing customer requires less expenditure than acquiring a new customer, they aim to provide customers with a onestop shop for automobiles and automobile-related products and services. Continue to benchmark their manufacturing capabilities: They plan to continue to benchmark our manufacturing capabilities with the most efficient car manufactur ing facilities of Suzuki and its subsidiaries. Continue to reduce costs to offer more competitive products: Cost competitiveness has been, and continues to be, central to their strategy as the leading manufacturer in the small car segment to expand the size of the market by offering competitively priced, high quality products. The components of this strategy are: Higher levels of localization Vendor participation in cost reduction

Cost reduction on warranties Reduction in initial investment cost Reduction in number of vehicle platforms Achieve further cost reduction through higher productivity

Lower cost of ownership: Through their business strategies, they seek to reduce the consumers cost of ownership of their cars, which comprises the cost of purchase, the cost of fuel and maintenance, including spare parts and repairs, during the life of the vehicle, insurance, and resale value.

SALES NETWORK
Dealers: They offer their products to the customer through a network of 178 authorized dealers with 243 sales outlets across 161 cities. They believe that this is the largest network of dealers amongst car manufacturers in India. Their dealers employed more than 3,500 sales executives. They are linked to their sales network through their secure extranet-based information network. The sales of their spares, accessories and automobile-related services such as insurance and finance serve as additional sources of revenue for our dealers. They believe that the availability of these related products and services at sales outlets also helps to attract customers to the outlets and promotes sales of their cars. Agreements with dealers: They generally appoint a limited number of dealers for a certain geographical territory. Their dealers provide services to customers suc h as predelivery inspection of vehicles, sales of cars, after sales service, supply of spare parts and other services that promote sales of cars within the territory for which they are appointed. They have the right to sell their products and services through other dealers or intermediaries in any territory, whether or not one of their dealers is already established in that territory. Their dealers are required to maintain their outlets in accordance with their specifications and employ well-trained sales staff. Their agreements with their dealers usually have terms of five years. These agreements are generally renewable for successive terms of three years, by mutual agreement. The agreements typically permit termination by either the dealer or them with si x months prior notice. Enhancing dealer performance: Their central office in Delhi, their regional offices and their area offices monitor and assist their dealer network. They have nine regional offices, five area offices and 187 sales and marketing personnel. They follow the performance of their dealers and frequently suggest improvements. In order to assist their dealers in enhancing their performance and capabilities, they have introduced a concept of Balanced Scorecard. Using this tool, they seek to measure the performance of a dealership in several areas of operations, including sales, service, spares and accessories,

financial management and management systems. They reward dealers who perform well on the Balanced Scorecard with a cash payment at the end of the fiscal year. They believe that the Balanced Scorecard serves as an effective incentive for dealers to enhance their performance. Dealer training: They have established standard operating procedures, showroom ambience and service quality standards for dealerships. They provide periodic training through their training centres located at their manufacturing facility and at Chennai, Kolkata, Guwahati and Pune. They have trained more than 2,600 and 3,400 dealer sales personnel. Their subsidiary, True Value Solutions Ltd., provides value-added services, such as manpower recruitment and training, to their dealers.

AFTER-SALES SERVICE
Network As on date there are 342 Maruti dealer workshops and 1,545 Maruti Authorised Service Stations, or MASSs, covering 898 cities in India. In addition, 24 -hour mobile service is offered in 38 cities under the brand Maruti On-road Service. They intend to extend this service to an additional 25 cities over the next three years. As a b enchmark for dealers with respect to service quality and infrastructure facilities, they have launched service stations under the brand Maruti Service Masters, or MSMs, in three locations in India. They have service stations on 30 highways in India under the brand Express Service Stations. To promote sales of their spare parts and the availability of high quality, reliable spare parts for their products, they sell spares under the brand name Maruti Genuine Parts, or MGP. These are distributed through their dealer network and through authorised sellers of their spare parts, to whom they refer as stockists. Many of their MASSs are at remote locations where they do not have dealers. In order to increase the penetration, in terms of sales volumes, of their products in these remote areas, they are exploring opportunities to integrate some of the MASSs into the sales process in order to increase sales of their cars and related products and services such as spares and accessories, insurance and financing.

Genuine Accessories They have also entered the business of marketing car accessories under the brand name Maruti Genuine Accessories, or MGA, through their dealership network. They seek to provide customers with the opportunity to customize their vehicles wit h accessories such as music systems, security systems, car-care products and utility products. Warranty and Extended Warranty Program They offer a two-year warranty on all their vehicles at the time of sale. Their dealers are required to address any claim made by a customer, in accordance with practices and procedures prescribed by them, under the provisions of the warranty in force at that time. The dealers subsequently claim the warranty cost from them. They analyse warranty claims from dealers and either claim the cost from vendors, in the case of defective components, or bear the cost ourselves, in the case of manufacturing defects. They offer an extended paid-warranty program marketed under the brand, Forever Yours for the third and fourth year after purchase. They have entered into arrangements with insurance companies to cover the costs of warranties offered under this program. The extended warranty program is intended to maintain the dealers contact with the customer and increase the revenue generated from sale of spares, accessories and automobile-related services. An effort is made during the period of the extended warranty to encourage the customer to exchange his existing Maruti car for a new Maruti car, or upgrade to a new Maruti car.

NEW BUSINESS INITIATIVES

As the largest manufacturer and leader in the small car segment, they continually seek new ways to utilize their vast car parc, range of products and extensive sales and service network to expand the size of the passenger car market in India. They have recently launched new initiatives to develop the market for automobile insurance, automobile finance, leasing and fleet management, and pre-owned cars. They aim to provide customers with a one-stop shop for automobiles and automobile-related products and services, and build on their wide customer base and extensive sales and service network to make available to their customers a wide range of Maruti-branded services at different stages of ownership, which they refer to as the 360 degree customer experience. Atithi Devo Bhava: One-stop shop Inspired by the spirit of India. Atithi Devo Bhava, in Sanskirit, means a guest is like God. It captures the Indian tradition of honouring guests. It's also the inspiration for the welcome youll receive at a Maruti Suzuki dealership, and the caring relationship they share with those who drive their cars. At Maruti Suzuki, you will find all your car related needs met under one roof. Whether it is easy finance, insurance, fleet management. services, exchange Maruti Suzuki is set to provide a single window solution for all your car related needs. That's why they have Maruti True Value, the best place to buy and sell reliable used cars. Maruti Finance an agglomeration of the biggest finance companies in In dia brought together by Maruti Suzuki to ensure that the dream car is within everyone's reach. Similarly, Maruti Insurance brings together some of the biggest names in the car insurance industry to provide insurance solutions to every type of car consumer. Then, finally, there is N2N, which offers fleet related solutions.

Target Segment To reach to rural and lower middle class consumers. They begin with small concentrated markets appealing to local culture and aspirations of the targeted area Strategy THEIR STRATEGY IS TO CAPTURE THE RURAL MARKET BY EMPLOYING WOMEN WHO BELONG TO THEIR LOCAL COMMUNITY THROUGH WHICH THEIR PRODUCT CAN REACH TO LOCAL CONSUMERS. THEIR STRATEGY IS TO PROVIDE WORK FOR WOMEN TO CREATE AWARENESS AMONG CONFINED CONSUMERS

Process
They started with Project Shakti in which their basic aim is to educate a rural person about their products through women who belongs to their own local community and who can communicate well in their language with them. In this way many educated women get work in rural sector and on the other hand HLL Corporate Social Responsibility (CSR) also increases towards society by introducing educative programs for the benefit of the rural sector

Mode of Communication
They reach to customers by giving advertisements in the T.V. or through radio, through wall painting, or through promotional activities like weakly haats, mela or local bazaars and most importantly, their policies were flexible and they could adapt to fast changi ng marketing situations. Through Internet, E-mail usage, communication media like telephone and mail facility this mode of communication is possible to a great extent. ITCs extensive

India-wide distribution network enables its greeting cards reach over 12,000 multi brand outlets in over 700 cities across the country. In the last three years , 10,000 greeting card designs have reached these outlets with the help of ITC's web-enabled e-commerce model Communication Model ITC markets

Opportunity
These days consumers are looking for convenience and instant gratification. Communication media like the telephone and e-mail facilitate communication to a great extent. But many greeting card sites are moving from a 'free' to a 'pay' mode. This could be an emerging revenue earning opportunity for content providers.

Threats
'Expressions' which is a competitor of ITC in this segment is currently the second biggest greeting card brand in India with a market share of 20 per cent. ITC has a five per cent share in the stationery market. The greeting card market in India is estimated to be around Rs. 250 crore in terms of yearly consumer spent. The unorganized sector in the greeting card market will be close to 40 per cent. The organized sector, controlling 60 per cent of the market, is divided between ITC, Archies and Hallmark. While Archies has licensing agreements with international greetings brands