Tuesday, September 08, 2009

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.


  1. Hi Mr. Harish,

    I am a regular reader of ur blog... Your insights are great. Congratulations for maintaining such a good blog... For marketing enthusiasts, your site is always a good read.

    With regards to Maruti Suzuki, I often ponder about the logic behind having so many cars in the same segment. You have rightly differentiated the cars on the basis of prices but I fear that is not the only criteria. When you think about Maruti Suzuki today, you get to see a lot of clutter in its offerings. For example, an Alto is definitely an improvement over an 800 but, what are the significant differences among an A-star, a Ritz and the newly launched Estilo? Swift is a little different because it is internationally proven and it is relatively on the higher end of the price range... But how differently has been Estilo positioned? Why would a customer decide to buy an Estilo or any other car in that category from Maruti over an i10?

    What I intend to say here is that Maruti is not really trying to build brands of its cars... They are actually only reaping benefits of the parent brand... Look at Honda... They are working hard to build a City, a Civic and a new Jazz... all differently... there are concentrated efforts towards that end.

    To me, in future, if Maruti wants to sustain its position in the market, it should

    1. improve the offerings of its products
    2. differentiate its hatch backs on the basis of technology, product offerings & services
    3. Concentrate on building individual brands
    4. Reduce clutter and help customers to choose...

    Would love to hear your opinions on it.


    Partha Basumatary

  2. Anonymous1:40 AM

    i don't think Maruti is making a clutter..all its offerings are pretty much different..more options only mean more choices for the consumer..I do agree to the point that maruti does not innovate a lot but i guess that is not its strength...
    But yes in case of Bajaj i do get confused by their product offerings!

  3. hi sir...its really a great article..as Maruti is adopting the strategy of line filling here..as a result it also had to lose his most valuable brand ZEN. By killing brand like..zen for its estillo, maruti affected the sentiments of many customers who purchased zen. So it has negative impact also...

  4. Anonymous10:39 PM

    Sir i have a new project assigned by our marketing mentor that we have to build whole marketing strategy of any existing product..do you help me to complete my final project..i am student of BBA...


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