Ritz Pricing Strategy Makes Hyundai See Red

Published: 12th June 2009
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The two biggest car manufacturers in India - Maruti and Hyundai are fighting pitched battles over positioning of their hatchbacks. These two companies have the maximum number successful small cars in the country. Even as Maruti offers eight small cars in India, all created by Suzuki, the Korean car manufacturer Hyundai offers four hatchbacks like the Santro, i10, Getz Prime, and i20.



Other car manufacturers too are launching their small cars this year. Honda Motors is launching the premium hatch Jazz, the first small car from the stable. Fiat is bringing in its second small car Grande Punto in this month and Skoda is launching a mini car by the end of this year.



Meanwhile, Maruti and Hyundai seemed to be locked in a battle for positioning their small cars. The new war seems to have been sparked off after the launch of Maruti Suzuki Ritz. The pricing and the optional features were decided under a strategy to eat into the market share of the other brand. The hatchback is positioned between Hyundai i10 and i20.



Auto analysts say that Maruti Suzuki Ritz neatly fills in the gap between Hyundai i10 and i20. It was cleverly devised by Maruti Suzuki to eat into the market share of the rival company. As Ritz is bigger in dimensions compared to i10 and comes with a diesel engine option, it is considered a better bet. Ritz is smaller than the i20 and there too the pricing helps Maruti fight Hyundai. This interesting occurrence has led many people to assume that Ritz rivals Hyundai i20.

However, Hyundai denies any competition between the car models saying Ritz is nowhere near i20. In the overseas markets, Hyundai i10 is compared to Splash(as Ritz is known in overseas markets) and not to i20.



Maruti Suzuki has clarified that it positioned Ritz by taking into account the position of Swift hatch. Swift has been the fastest selling model in the Maruti stable ever since it was launched. Technically, Ritz was very similar to Swift and positioning the new car alongside the highly successful model would have cast a shadow on it.



Hence, Maruti Suzuki created a new pricing strategy which helped it steer away from Swift. Maruti officials claim that, the new pricing strategy incidentally fell into the category between two Korean cars. Hyundai, has three products like i10, i20 and Getz prime which do not overlap each other and allow each enough place to showcase their merits.



It is not the price along but also the advertisement campaigns which are a sources of trouble between the two companies. Maruti Suzuki has also launched a new advertising campaign for Ritz, called 'Live the Moment.' Hyundai campaigns highlight individual comfort and cool quotient. The i20 is shown as an uber cool style statement for urban youth. These campaigns have worked for Hyundai i20, as it reported sale of 2850 units in the month of May alone. The numbers are expected to move up when the diesel version launches by the end of this year.



Auto analysts say that the shrinking gap between two car models is forcing car manufacturers to highlight their differences rather than their merits. The two car manufacturers are setting into motion a new trend in the auto industry.



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