Maruti Suzuki has always been the unprecedented leader in the Indian car market, largely due to its fleet of budget friendly cars. But due to its perceived image as a budget player it always failed at selling its premium models in India. This trend made them to do the complete revamp of their Marketing Strategy and come out with a brand new distribution channel called the NEXA.
So what is NEXA?
NEXA is a newly launched retail channel from Maruti Suzuki, from which it sells premium car models. NEXA store experience offers a greater level of sophistication and is based on the principles of exclusivity, pampering and listening to the consumer. The launch of NEXA stores was just what the doctor ordered for improving Maruti’s image perception and attracting new segments in the market. It became successful as more than half (fifty-one per cent) of the car buyers from NEXA were not pre-existing car owners of Maruti Suzuki.
Why is designing a Marketing Channel important?
Place is an element of the Marketing mix which can be related to as a way of transporting and storing goods, and then enabling the consumers to access it in the most convenient way by designing a proper distribution system. It is very important for the product to be available at the right time and at the right ‘Place’. This could be achieved by having a proper Marketing channel system in place.
Goals of a proper distribution channel or retailer for improved logistics Marketing strategy are:
- Careful selection of place for display and exhibition of product and its different features and functions.
- Having a proper environment for product display.
- Properly trained and qualified staff.
- Continuing proper assessment of the retail channel, analyzing the problems and trying to fix them continuously.
- Distribution channel can be of three types i.e wide , selective or exclusive.
Exclusive distribution channel is a great example of a mutual understanding and contractual arrangements in-between distribution channel/retailer and manufacturer. In this type of channel, the distributor is only allowed to carry one supplier’s product and follow its directions. It is beneficial to the retailer also as they obtain exclusive rights to distribute products of a prominent brand and gain preferential support and assistance from supplier in relation to day-to-day management matters and merchandise.
How is franchising useful?
Franchising is a type of business association in which an upstream firm, the franchiser, goes into legally binding associations with downstream firms, the franchisees, who work under the franchiser’s exchange name and for the most part with the franchiser’s direction and guidelines. A franchise store or retail outlet has to be designed according to the organizational leader i.e. franchiser’s wishes.
How Maruti applied these concepts in designing NEXA?
NEXA is a great example of how franchising and designing a proper distribution channel can work wonders. With countless customer feedback and surveys, they analyzed need for launching premium car. There was a great marketing scope in India for consumers who valued personal care, warmth , exclusivity and attention in their car buying and ownership experience. Maruti brought together people, technology, showroom ambiance and processes to deliver the desired experience and achieve their mission to sell premium car models by doing these:
- Opening exclusive dealerships which sell only a few premium car models e.g. S-Cross and Baleno.
- Highly trained ‘relationship managers’ that cater to all the demands and queries of the customers.
- All showrooms opening throughout India have to follow some specific guidelines and criteria thus turning car buying from NEXA into a total franchise experience.
- The showrooms are equipped with iPads and Apple TVs displaying every aspect of the car in a modernized way.
- Smartphone app to book servicing appointments, service history, check service history, emergency support, accessory purchase, etc.
- Black and White monochromatic colour theme for all NEXA franchise outlets.
Possibilities of some conflicts happening with existing dealerships?
Conflict happens when one business partner feels that the other partner is impeding the attainment of goals in some way or the other.
Channel leadership could be summarized as the actions taken by the channel leader to direct the marketing policies and strategies of its channel partners. So,the distribution channel’s efficacy and long-term survival are greatly affected by the leader’s using correct behaviors to motivate its channel partners to coalesce and perform at a superior level.
Maruti is exercising channel leadership in a perfect way to avoid any conflicts with its current retailers. It pays its existing dealerships a referral fee of INR 15000 for coordinating a customer to nearest NEXA dealership ,if they wish to buy a NEXA model. As the amount of investment needed to open a new NEXA dealership is sky-high, not all its current retailers are able to open a NEXA showroom. So, the referral fee and the servicing of these cars being done at existing dealerships has avoided any conflict for now.
What does the future hold for NEXA?
NEXA is on the right path with over 100,000 vehicles sold in a year. But having to go to regular dealers to get their car serviced is affecting its customers. Maruti is focusing on making these NEXA dealerships self-sufficient in the future, so that people can get a premium experience in getting their cars serviced in NEXA outlets. Some new premium car launches are also in the pipeline. Moving forward, the future seems bright for NEXA.