Shashank Srivastava of Maruti Suzuki India on the 8-year journey of the retail network.
Maruti Suzuki's 'kitna deti hai' and 'petrol khatam hi nahin hunda' ads from the last decade reflected the Indian consumers' obsession with mileage. However, things began changing in the second half of the decade with aspirational consumers looking more for design and features. In response, the country's top passenger car manufacturer launched a separate premium retail network- NEXA. Last week, it completed eight years of operation.
Launched in 2015, the premium segment has reached over 2 million customers with over 460 showrooms in more than 280+ cities across the country. From contributing 5% in its first year of operations, NEXA now contributes 32% to Maruti Suzuki's total sales. By the end of the year (FY 23-24) it expects to increase this to 35%.
Speaking to afaqs!, Shashank Srivastava, senior executive officer, marketing and sales, Maruti Suzuki India, says that NEXA's objective for this year is to have the second highest sales in the country. This year its growth has been almost 77% so far and it is looking to clock sales of about 6,00,000 units by the end of the year. Last year, it sold about 3,69,000 units and its growth was about 45%. While its parent brand consistently stands at number one, Hyundai comes second.
One of the factors contributing to the accelerated growth is the launch of multiple new models. Launched on July 23, 2015, the brand's first launch was S-Cross, followed by Baleno. In the subsequent eight years, it has launched eight models, including Fronx, Jimny and Invicto in the last four months.
The second factor is its consistent marketing efforts to establish the brand positioning in the consumer's minds. On a long term, around 40% of Maruti Suzuki's ad spends are allocated for NEXA. However, it varies as per new product launches and brand positioning.
"Many consumers would consider Maruti for their first car, but not when they would upgrade. They had already used it in the past and also there was no real product to go up to. That changed with NEXA. The idea was to put it in the consideration set of many who would not consider Maruti cars," Srivastava says.
Network expansion forms an important part of its growth strategy and will be a focus area this year. It plans to add about 50 more outlets in 40 more cities this year.
Geographically, bigger cities have a larger density of NEXA consumers. "But as the smaller cities also see an increase in income levels, more NEXA consumers are coming in from those cities. We are tracking that and that's how we add new cities every year to the NEXA network," he explains.
"That's a major competitive edge which Maruti Arena has over its competitors. So we would like to expand it for NEXA," he explains.
Moreover, an external factor is also at play- the rise of the aspirational consumers.
"The increase in the consumer confidence, which generally comes from the economy doing better, has contributed to the rise of the new India. Auto sales are very closely related with the overall economic per capita growth. The correlation is as high as 0.98," he adds.
In fact, it is these aspirational consumers that lead to the inception of NEXA. In 2015, Maruti Suzuki's research had indicated that Indian consumers were becoming more aspirational and the buying criteria was shifting from pure functionality, based on price, fuel efficiency, maintenance, low cost of spares, etc, to design, performance, features and technology. However, instead of changing its brand positioning, it decided to have another channel for the new age consumers.
"While we thought about changing our brand positioning, we also realised that a large number of consumers still have the primary buying criteria. As the market leaders, we had our target set on achieving a market share of 50%. For this we needed to be present in all segments and appeal to both 'Bharat' and the 'New India', which is more urban, globally connected and aspirational," he shares.
A NEXA consumer is slightly older. While a Maruti Suzuki customer is about 34-35 years old, on an average NEXA consumers are around 37-38. The Monthly Household Income (MHI) is much higher- Rs 84,000 as compared to Rs 67,000 for Maruti Suzuki.
"First time buying is a little lesser in NEXA. But upgrades, replacement-buying or additional car buying percentage is pretty high. So he's also a more experienced buyer," he says.
The NEXA consumer is also more digitally savvy and has more knowledge about the products requiring a different treatment from the sales and after-sales people.
They also consume different media platforms and seek more personalised messaging. They consume more connected TV and OTT content than linear TV.
The premium brand is differentiated from Arena on the basis of its communication, the buying experience, technology and its design.
In terms of its communication, the brand associates with three key genres- music, lifestyle and travel. It is associated with the IIFA Awards, Lakme Fashion Week and NEXA Journeys, a travel show on Zee Zest.
"We follow the consumer. Through research we know that the NEXA consumer, typically has a higher affinity for these genres. So if we invest in them we are more likely to get a better ROI," he explains.
NEXA ads are also quite distinct as compared to the Arena ads. Most of them are shot in international locations and make use of the NEXA blue cars.
In terms of its design philosophy, Srivastava says it's a little bit more experimental- "crafted futurism". "These consumers are typically more experimental. As income levels increase, the propensity to experiment for different products and categories increases," he adds.
It encapsulates three major pillars- NEXpression, NEXtech, and NEXperience. NEXpression refers to its design language, for example it has a typical grill or a typical daytime running light (DRL). NEXtech is about the new technology that it brings in and NEXperience is about the consumers' buying journey.
NEXA has also digitised most of the customer interaction and has brought in initiatives like Smart Finance, an industry-first Augmented Reality (AR) car showroom and virtual test-drives. It is working on parking solutions and connected cars to use the vehicle data to give consumers a much better and safer experience.
Though not a direct contributor to sales, digitalisation has also been an important enabler to achieve good sales. Through NEXAVerse it has managed to reach customers beyond its 280 cities.
"Arena covers more than 2000 cities. However, NEXA currently doesn't have showrooms in very small areas. But there would be many customers in these areas. So for them we provide an immersive 3D experience through an Oculus. Through this we are trying to maximize our presence," he explains.
The COVID19 pandemic gave a massive boost to its digitalisation efforts. From 2016-19, the percentage of enquiries from digital platforms went up from 2% to 15%. But during the lockdown, in four months (April-July 2020), it went up from 16% to 48%.
"During COVID, there was a sudden realisation that we need to quickly convert the entire process to digital and there's no coming back. We are witnessing an irreversible change," he says.