Brand Update : Zen RIP (1993-2009)

One of most popular Indian auto brands has been laid to rest. Maruti Zen is dead. On August 25, Maruti announced the launch of new Estilo. The Zen brand name has been taken off. Now there is only Maruti Estilo. ( Read news report here)

It is a sad moment for all brand enthusiasts. Zen was a wonderful brand. A brand which personified sportiness and performance. The old Zen owners still swear by the brand . The jelly bean shape, roomy interiors and the peppy performance gave Zen an unique identity.It was surprising to see Maruti messing up this wonderful brand and finally killing it .

Zen Estilo was launched in December 2006. The car is a refurbished version of an outdated Japanese car MR Wagon. The entire product was different from the old Zen. Maruti chose to use Zen as the primary brand and Estilo as the subbrand for the new product. The strategy was to retain the brand equity of Zen to drive the sales of the new product. But the strategy backfired.

In a way killing the Zen brand will be good for Estilo. For Estilo, association with Zen was a liability. Interms of style or performance, older Zen and Zen Estilo was miles apart. Those who checked out Zen Estilo expecting the same performance and sportiness of old Zen were visibly disappointed. Estilo was a different car with a different brand personality. Launching Estilo as Zen Estilo actually created a negative impact for the car because Estilo was more of a style oriented girlish car compared to the sporty Zen. Now Estilo is an independent brand and can develop its own persona. The new Estilo comes with a new look and a new K-Series engine.

It is sad that a wonderful brand like Zen was being killed without being fully utilized .

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Zen

Marketing Funda : Line Filling

Marketing Practice Reader Balaji asks a very pertinent question about the series of brand launches by Maruti Suzuki in the hatchback segment. He asks :

"

I want to know about New product development in automobile industry especially in Maruti.They are launching different small cars.Is it really makes a profit for them.Can you give the explantion with example.Introducing new car in the small car segment(Maruti) makes confusion among the customers that which car to buy /which is best?.Is really they are benefiting or just in order to compete with other company they are introducing the new product ? "

Maruti Suzuki is following the product line strategy of Line Filling. Line Filling is a strategy where the company introduces new products within the same( existing) price range.

Maruti Suzuki recently launched a series of brands in the hatchback segment. A look at the price ranges of hatchback brands of Maruti will give you a clear picture of Line Filling.

Maruti 800 - Rs 2,00,000 - Rs 2,12000

Maruti Alto - Rs 2,22,000 - Rs 2,70,000

Maruti Estilo - Rs 3,17,000 - Rs 3,98,000

Maruti Wagon R - Rs 3,18,000 - Rs 4,32,000

Maruti A Star - Rs 3,40,000 - Rs 4,12,000

Maruti Ritz - Rs 3,89,000 - Rs 5,10,000

Maruti Swift - Rs 4,06,000 - Rs 5,20,000

( All prices are Ex-Showroom Cochin)

Source : Marutisuzuki.com)

The overlap is diagrammatically represented below.

From the price ranges, it is evident that there is a significant overlap among various brands.The question is why Maruti chose to bring out products with similar price ranges. Another question is whether this overlap will create cannibalization among these brands.

There are several reasons for such a line filling strategy. According to Prof. Philip Kotler, firms adopt this strategy for

a. Incremental Profits

b.Satisfy Dealers who complain about lost sales because of missing items in the line

c.Utilize existing capacity

d.Try to become a full-line company

e.Try to plug holes to keep the competitors away. ( Source Marketing Management ,11 edition)

In the case of Maruti, more than one reasons prompt it to fill the line. Maruti Suzuki has tremendous brand equity in the Indian market. Hence having a full line catering to all segments of consumers offers tremendous advantage to the company.

There are customers (like me) who would like to buy a car from Maruti. Having various offerings at various price points keeps that customers happy and make them stick to the company. If I want to upgrade to a bigger car, I have a choice or a A star or a Wagon R or a Ritz or a Swift. In such a scenario, I may not go in to a competitor's product.

Another reason for Maruti's line filling is to keep out the competitors. The company is facing lot of competition in the hatchback segment. At the lower end Nano may give Alto and 800 a run for its money. Santro, i10 and Spark is giving tough competition for mid-range hatchbacks and products like Fabia, Palio,Punto,i20 are giving competition at the higher segment of the hatchback market. Hence to keep the market share intact , Maruti is keeping a full line of brands covering various price points.

When there are brands which has similar price points, it is natural that some sort of cannibalization will happen. When Ritz was launched, it definitely took away some customers of Swift. But Maruti can be happy that the customer has bought its product rather than that of its competitor.

Regarding the profits, Maruti is one of the lowest cost producer in the automobile industry. This low cost base enable the firm to make a profit irrespective of cannibalization.

One of the critical factor that a firm should consider while line filling is the Differentiation. There has to be a just-noticable difference between the offerings other wise consumers will get confused . In the case of Maruti brands, there is a clear differentiation either interms of design or performance between these brands.

Line Filling is the strategy adopted by Maruti Suzuki to retain its grip in the Indian market. But in the Indian Automobile industry , may be only Maruti can do it.

Brand Update : Wagon R

Wagon R is one of the largest selling brands in the Indian car market. The brand is currently in its maturity stage and Maruti is all set to put Wagon R again into the growth path. The brand has roped in Madhavan as the brand ambassador . The brand hopes that the endorsement from the star will create a new growth path for it.

Watch the TVC here : Wagon R

Wagon R is a highly relevant product for Indian consumers. I have spoken to many Wagon R users and all of them have high regards for this vehicle. Even though the product is a globally " Outdated" vehicle, for Indian consumers the brand has remained very useful. One of the major factors that drive this brand's sales is its usability. The car is easy to drive and extremely comfortable and is virtually trouble-free thanks to the Maruti Reliability.

When the product reaches the maturity stage, marketers change its marketing mix elements to rev up the sales. In the case of Wagon R, Maruti chose to change its promotions. The choice of Madhavan as the brand ambassador will give an added thrust to the brand equity of Wagon R. The brand is feeling that it is not realizing its potential fully in the southern market. Madhavan is expected to boost the brand sales in the southern markets. ( related report)

It is also interesting to see how the brand has used Madhavan in its communication. Madhavan is being used as a model in the TVC rather than as an endorser. Here Madhavan is being used as a character in the TVC plot. He is being cast as an entrepreneur in the ad.One of the reasons cane be that if Madhavan acts as an endorser, no one will believe that he uses a Wagon R. So it makes sense to cast him as a character rather than as an endorser.

Wagon R retains its core positioning as a smart choice car and has a new slogan " Smart Ideas lead the world " . The brand retains its tagline " For a Smarter Race ".
The new campaign is pushing the idea that Wagon R is a smart choice for the consumers. Indian consumers seems to like that idea.
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Wagon R

Maruti Eeco : Happiness Family Size

Brand : Maruti Eeco

Company : Maruti Suzuki Ltd

Brand Analysis Count # 440

Maruti has launched a new Multi Purpose Vehicle - Eeco. Eeco is the rebirth of the Late Maruti Versa. Versa was a big flop despite the high profile celebrity endorsements from Amithabh and Abhishek Bachchan. Maruti messed up that

practical car with a ridiculous pricing.

And what a way to come back.

Eeco is built in the same platform of Versa. The brand has the famed KB series of engine that powers the new Maruti offerings like the Ritz. The company also squeaked the exteriors of the old Versa, discarded the high roofing and added little more graphics in its new avatar.

More than anything else, it is the price that makes Eeco a potential winner in the ever value conscious Indian market. Priced from Rs 2,60,000 - Rs 3,10,000, the brand comes in a mouth watering price . At this price,Eeco is a winner from the word " Go".

Maruti Eeco fills an important gap in the automotive market. There exist a need for a entry level vehicle that can carry a large family . The small cars can never satisfy that need. Infact most of the cars are ideal for a family size of 4. Eeco is fulfilling that need and that too at a irresistible price.

Eeco is priced at a premium to Omni. Omni , although found takers in the Indian market suffered because of concern of security and lack of comfort. The future of Omni is bleak since the van cannot be fitted with A/C and A/C is becoming a part of the expected product.

Eeco offers all these comforts. It has an A/C variant and comes in 7 seater & 5 seater offerings. For a large family , Eeco makes immense practical sense. Backed by Maruti reliability, Eeco is expected to boost up this new segment of entry level MPVs. Eeco will be popular both at rural and urban markets.

I expect this brand to create a new segment of entry level MPV . Eeco will definitely cannibalize Alto, Omni and to a certain extent Wagon- R by luring large families into it. But more than the limited cannibalization, this is a product that Indian families were waiting for. The predicted success of Eeco will also open up a new market segment for comfortable mini vans. Now we have only have such large carriers at the premium segments like Innova. Eeco has the potential to disrupt the market structure . Most car makers assume that the typical family structure in India is of the size 4 and thus turning a blind eye towards many large families. Eeco can change the way automakers look at this segment .

The brand has the tagline " Happiness , Family Size " . Eeco is running a tvc across various channels. The ad is very basic and nothing much to talk about. It does't need a highly creative ad for such a wonderful offering.

The only factor that Eeco will have to deliver is the promise. If Eeco as a product performs on parameters like comfort, A/C cooling, safety, stability and mileage, it is a winner.

Related Brand

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K Series Engines : Leaner Meaner Fitter

Brand : K Series
Company : Maruti Suzuki

Brand Analysis Count #450

Marketing Practice Blog has reached another milestone of 450 brand analysis. Let me take this opportunity to thank my readers whose constant feedback was a source of inspiration for me. The next obvious target is 500.

I am happy to mark this achievement with a very interesting brand - K Series Engines from Maruti Suzuki.

K Series is a classic example of Ingredient Branding. Professor Kevin Lane Keller defines Ingredient Branding as a special case of Co-Branding which involves creating brand equity for materials, components or parts that are necessarily contained within other branded products.

Although Professor Keller defines Ingredient Brands as a brand from one company which is an ingredient/component in a host brand from another company.But recent marketing practices has shown that ingredient branding can be done by the host company itself .
So ingredient brands can originate from the same company or from different companies. For example HP computers powered by Pentium Microprocessors is where ingredient brand Pentium is owned by a different company ( Intel) . Hence it is a case of co-branding.

In this case of K series, the ingredient brand is owned by the company itself. So theoretically it cannot be termed as a case of Co-branding.

K Series was launched in 2008 . The launch was to counter the much touted Kappa engine to be launched by Hyundai. K series engines also conformed to the tougher emission norms that came into force from April 2010.

Branding engines is not new in the Indian market. Bajaj Auto was a pioneer in branding its DTSI technology and reaped tremendous benefits in terms of differentiation. Maruti is trying to replicate Bajaj's success in the four wheeler market.

K series has been a success and the company has produced more than 3 lakh units in 18 months time. K Series engine is fitted in the new generation models like Swift, Swift Dzire, Ritz ,A star and new Wagon R. The first model to come out with this engine was A Star.

K Series engine is claiming to be more fuel efficient offering better control and ride quality. Maruti has invested some amount of money for the promotion of this ingredient brand. This is rather unique marketing practice seen in India because most of the other car makers having ingredient brands does not resort to exclusive ingredient brand promotion. There will be mention of the engine in the product ad but no campaigns exclusively for the engine.

The brand was launched with the ad featuring the marathon runner. Watch the ad here : K Series ad.

The ads could have been much better and more creatively done. The campaign lacks the " Aha " factor and only helps to create a brand awareness .How ever the company needs to be applauded for this type of branding. K series has adopted the tagline " Leaner, Meaner, Fitter" which sums up the brand promise.

The reason for Maruti going for ingredient branding is simple. Engines are now largely becoming commoditised. Now we see same engine in different car brands from different makers. For example, some models of Tata Motors, Fiat, Swift carry the same engine. When engines become a commodity, marketers have to look for other powerful differentiators. Hence ingredient branding comes to help. Ingredient brands are protected by the firm and creates its own identity in the mind of the customers. So K Series engines provide the much needed sustainable differentiation for Maruti.

According to reports, Maruti is planning to have K series engines for all its models. When the competition in the market has increased substantially for Maruti, such smart moves will help retain its leadership position in the Indian market.

Brand Update : The New Rejuvenated Wagon R

One of India's best selling car brand got better. Recently Maruti Suzuki launched the new Wagon R in the Indian market. The new spruced up model features the famed K Series engine and with a brand new look.

Wagon R has been a run away success since its launch in 1999. So far the company has sold around 8.8 lakh units of Wagon R (source). Infact Wagon R is the second largest selling car brand ( annual sales ) from Maruti's product portfolio.

Wagon R operates in the A2 segment of Indian car market which is witnessing most of the competition in recent times. Most of the car majors are viewing this segment seriously and some of the new brand launches like Chevrolet Beat and Ford Figo has been highly welcomed by the consumers.
This intense competition has prompted Maruti to relaunch the upgraded version of Wagon R with a new engine and renewed look. It is interesting to note that Wagon R recently launched a high profile brand campaign featuring the Celebrity Madhavan.

Maruti have aggressively responded to the competition from Chevy and Ford by keeping the price point of the new Wagon R at the range of Rs 3.5 lakh - 3.85 lakh. Maruti has taken the risk of cannibalizing other brands like Estillo and A Star. The rejuvenation is also a part of Maruti to take the brand from the Maturity stage of the lifecycle stage to the growth path.

The new launch is expected to give much needed boost to the brand. Wagon R is still relevant in the Indian market. The users have vouched for the comfort and drive-ability of this car in the urban jungle. The company feels that the brand still have lot of steam left in it.

The company is calling the new Wagon R as the Blue Eyed Boy. The brand has retained Madhavan as the brand ambassador in the new avatar also.

Most of the auto review comparing Wagon R , Figo and Beat has rated the competitors as better than Wagon R. But what will be driving this brand will be the Maruti endorsement . Although Chevy and Ford have established themselves in the Indian market, Maruti still holds tremendous brand equity among Indian consumers. But competitors are not sitting idle. When Chevy launched Spark to take on Alto, it ran a highly successful campaign guaranteeing Zero maintenance cost for three years. That gave lot of boost to the sale of Spark.
Wagon R in a way offers less risk for the discerning Indian consumers compared to the new entrants in terms of cost of maintenance, spares , service etc. That will help Wagon R hold on to its pivot position atleast for now.

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Wagon R

Maruti A Star : Stop @ Nothing

Brand : A Star
Company : Maruti Suzuki India Ltd

Brand Analysis Count : # 490

A Star was an ambitious brand for Maruti Suzuki India Ltd ( MSIL). The brand was expected to consolidate the massive leadership position of MSIL in the A2 segment of Indian passenger car market. The brand was also expected to penetrate into the highly lucrative demographic market of young Indians.

Launched in 2008, A Star was a global car made in India. The brand was touted as a World Strategic Model and was the first car to be fitted with the famed KB series engine. The brand was expected to fit in between Zen Estillo and Ritz priced around Rs 3.5 lakh to 4,.5 lakh.A1 and A2 segment ( together called as Small Car Segment ) constitutes around 80% of the Indian passenger car market.

A Star was launched with two objectives - to tap the export market and also to launch a model in the premium A2 segment. The first objective was met through a series of strategic alliances with Nissan and Volkswagen. The grand plans for the Indian market however hit a rough patch over these years with A Star failing to impress the Indian consumer after the initial enthusiasm

.

The brand started its journey with an aspirational note positioning itself as an aspirational- loaded- young- car for the successful ones.The brand was also a highly eco-friendly car that met the toughest European emission standards. The brand roped in Farhan Akther as the brand ambassador and adopted the tagline " Stop @ Nothing ". Farhan Akthar was reigning hot with his movie Rock On and A Star tried to capitalize on Farhan's image as a cool successful young man.

Watch the ad here : A Star Farhan 

The brand was projecting itself as a sports car for the youth and was one of the first car brands to show car stunts in their campaigns - Watch another ad here

Despite these attempts to position the car for the youth, the sales started sliding and was not meeting the expectation of the company. One of the major complaint about A Star was the space. Although the car was rated high on drive quality, the interiors was totally cramped even had less space than Alto. The back seat virtually was too crampy and as one of the reviewer commented - the car is suited for a bachelor . This single disadvantage threatened the entire life of the brand coupled with the fact that A Star was launched during the beginning of recession. It is an irony that Zen Estillo sold more car than A Star because it was more spacey although less modern.

In 2010, the brand faced another blow interms of a recall because of a fuel leak. The recall dented the image of A star as a unreliable car. 

To counter the sales decline, A Star tried to change the promotional strategy by adopting a functional thrust to the messages than the earlier emotional take. The brand also began to talk about A Star consumer profile inorder to boost it image as a car for youngsters who believe in themselves. Watch the ad here

2010 also saw a slew of product innovations for A Star. The brand launched an automatic version which was very well received by the consumers. Another innovation was the introduction of personalization option for A Star. The brand launched Wrapping kits using which consumers could personalize their car. The kits was pricey at around Rs 16000 which scared many consumers away from that option. 

2011 was the year when the brand got really aggressive and bold . The brand is currently running a campaign which talks about Whakypedia which is A Star's dictionary of commonly used terms like Stepney ,censored  test drive , etc. The brand uses the tagline " New Definitions for New Generations " for this campaign.

The ads definitely bring lot of youthfulness and energy to the brand and after the campaigns, there are lot of  A Stars on the road ( discounts too are a reason). But the brand's product deficiencies cannot be masked by smart campaigns. 

A Star will do well as a first car for youngsters. The brand will fit those customers who cannot afford a Swift or a Ritz but would love to have a reliable car ( predominantly Maruti choosers). Beyond that , A Star will not be able to impress a family man solely because of lack of space. 

Maruti Suzuki Stingray : My Thing ,Everything

Brand : Stingray
Company : Maruti Suzuki

Brand Analysis : #532

Maruti Suzuki recently launched another brand in the crowded Indian hatchback market. The new brand is Stingray. The launch has created a hell lot of confusion in the branding of the new car. While most of the media has touted the new brand as a variant of Wagon-R , actually the company intended it as a brand separate from Wagon-R. But media killed that scheme. If you look at the campaigns and the brand micro-site, Maruti had intended to position this brand differently from Wagon-R.

Wagon-R has been one of the best-selling models of Maruti. All though the looks were not the best, it was one of the most practical cars especially for city drives. Launched in 1999, the brand had sold a phenomenal 12.77 lakh units till date.

Maruti had tried to push the car through its life-cycle through incremental product and design changes. The latest was the " Blue-eyed Boy" campaign in 2010. However, the intense competition has somewhat pushed Wagon-R behind. According to ET, the brand was now in the fourth position in the segment ( link).

According to reports, Stingray was first launched in Japan as a sportier variant of Wagon-R. 

Stingray is targeting the younger crowd. The brand is positioned as a cool car that have it all. The ads typically is trying to convey hip & cool attribute. Watch the ad here : Stingray

The new trend in the market seems to be the mad rush to attract the youngsters. Tata Nano is the new entrant in the mad rush with their new " Awesomeness" campaign.

The tagline of Stingray is " My thing, Everything" which in a way is trying to be everything that an young consumer needs.Stingray is priced premium over the Wagon-R. The starting range of Stingray starts with Rs 4.09 lakh while that of Wagon-R is Rs 3.5 Lakh.

What is interesting about this brand is the unique situation that it fell into. The brand tried to distance itself from Wagon-R but media has forced the label of Wagon-R Stingray into it. One cannot wish away the power of association. The new brand looks very very similar to Wagon-R so one cannot blame for this association. Similar issue is there with Vista which was launched as a new brand but is strongly associated with Indica.

I am not implying that the company doesn't know that such a kind of association will happen, its commonsense that it will happen. But its interesting that media explicitly put Stingray as an extension of Wagon-R without blinking an eye. 

The association with Wagon-R is good for Stingray because of the immense equity that Wagon-R enjoys in the market. Maruti feels that the life-cycle for Wagon-R will slowly move to the decline stage . So there needs to be a replacement for this bestselling car. By launching the new product without the endorsement of Wagon-R, Maruti hopes that the young consumer will not consider it as a " Old and Dated " brand and over a period of time, Stingray will have a position distinct from Wagon-R and in future will takeover the position of Wagon-R.

Maruti Estilo : RIP ( 2009-2013)

Finally  Estilo is dead. From a sub-brand ( Zen Estilo) to an independent brand and finally to a dead brand, Estilo never had a good run in the Indian market primarily because it tried to step into the iconic place of its predecessor- Maruti Zen.

The fault was not  with the product but with the messy brand experiments and the lack of giving proper positioning of Estilo. The primary error was made when Maruti decided to brand the new car  which replaced Zen as Zen Estilo. While the intention was to keep the Zen brand alive, the main issue was that the new product did not share any commonalities with the outgoing Zen. That created unwanted dissonance in those who expected the same peppy personality of the original Zen.

To be fair to Estilo, the car was spacious and good. But Maruti never was able to give a space for Estilo in its crowded product portfolio. It was to fill the gap between Alto and Wagon- R but was not able to quite do it effectively. Consumers viewed it as a compromise primarily because of the perception. Maruti was also not keen of giving any sort of promotional push to the brand neither was any thought on the positioning of Estilo. 

So when there was an option , consumers stopped looking at Estilo as an option. 

With the death of Estilo, the legacy of Zen has completely ended.

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Zen RIP ( 1993-2009)