Marketing Management I
Assignment 1
Marketing Myopia

Myopia refers to nearsightedness or shortsightedness. Marketing myopia refers to the myopia shrouding the vision of certain companies or industries. It occurs when the company/industry focuses mainly on selling its products and services, instead of paying attention to the needs of the consumers. They concentrate their efforts on selling, instead of marketing their product. They tend to ignore the adage, “the Customer is King”, which more often than not results in disastrous consequences.

The concept of Marketing Myopia is applicable to Indian companies as well. Many Indian companies historically have failed to define their purpose from the consumers’ point of view. These firms have focused more on producing their goods and services and then finding customers to sell them to, instead of getting to know the consumers’ needs and then producing goods to meet those needs. The situation was made worse by the licensing era and closed Indian economy till 1991, which led to little competition for firms. This resulted in customers having to buy products of only those companies, which created a high demand for their products.

One Indian company that suffered from marketing myopia and paid a heavy price for it is Hindustan Motors (HM). It was founded in 1942 by Mr. B.M. Birla, and was the producer of the Ambassador and the Contessa cars.

Hindustan Motors: The History

The Ambassador began production in 1958, and was based on the Morris Oxford, a British car. It was an extremely popular car in the Indian market for several decades. It had a constantly growing market, initially due to the prestige associated with the car, and later due to the growing affluence of the population, and was helped by the fact that its only rival till 1983 was the Premier Padmini. There was a long waiting period to acquire an Ambassador, and the company was reaping huge profits, without having to focus on consumer needs. Also, Hindustan Motors did not invest money in R&D and did not try to improve its cars’ features. . There was a ready market for their product, and they just had to produce their car for it to be sold.

1983: Maruti Suzuki enters the market

However, the situation changed n 1983, with the introduction of the Maruti 800 by Maruti Suzuki. Consumers now had another car to choose from, and the 800 was like a breath of fresh air in the Indian automobile industry. It ate into a huge chunk of the Ambassador’s market share, as Indians now preferred this feature-packed family car.

Hindustan Motors did take some initiative to ward off the threat posed by the Maruti 800 by launching its own luxury car, the Contessa, in 1983. It included a number of high-end features, and was targeted at affluent buyers looking for a luxury option. In addition, HM were also helped by the fact that the Ambassador was the only Indian car with a Diesel variant. During that time, the difference between the price of Petrol and Diesel was significant, and a lot of price-sensitive consumers preferred it to the 800. Due to its spacious size, it also became a popular choice amongst taxi operators. Lastly, a very significant market for the Ambassador was the Government. It was the first choice for most bureaucrats, and the Government accounted for over 16% of the total sales. These factors combined to mitigate the effect of the introduction of the Maruti 800 in the Indian market.

1991: The beginning of the end

In 1991, the Indian economy was liberalized, and the Indian markets were opened for Foreign Direct Investment. In due course, a number of new automobile companies entered the market, and the consumers had a lot of options to choose from. The pursuers now became the pursued, and foreign companies supplied better cars at cheaper prices. These cars were packed with features, and the parents companies put in efforts to market their products in a new market. All these factors were missing in the Ambassador and the Contessa, and the money-wielding consumers gladly shifted base to other brands.

Where Hindustan Motors lost the plot

As discussed by Theodore Levitt, Hindustan Motors made the grave error of taking its customers for granted. They were under the belief that their growth was assured by an expanding and more affluent population, and belief that there is no competitive substitute for the car industry. These conditions were coupled with the fact that the Indian economy pre-liberalization did not have major rivals for them within the industry, and that the Ambassador was the vehicle of choice for Government officials.

Over the course of 5 decades, the Ambassador was never changed drastically. There were only cosmetic changes made to the car, and from 1958 till 2000, only 3 upgrades were made. The company never tried to keep up with the changing market environment by varying the looks of its cars, or offering better features that might attract customers by choice and not due to a lack of choice.

Hindustan Motors also made the surprising decision of not varying their price to increase sales. Currently, the price of the Ambassador starts at Rs. 4.2 lakhs, which is sufficient to buy a feature-packed and trendier sedan offered by other companies. There are also several hatchbacks being made available to the consumers at cheaper prices. Hence, even today, the company is not focusing on the needs of the Indian consumer, who are sensitive to price, mileage, features and status.

Hindustan Motors has also been dealt a huge blow by the shifting of allegiance on the part of the taxi operators, and Government officials. Government officials started shifting to better and safer cars ever since Atal Bihari Vajpayee started using a BMW 7-Series Sedan as his official car as Prime Minister. HM has lost a huge chunk of its customers, since they failed to focus on their needs, and adapt accordingly. They could have leveraged on their history of being the unofficial car provider to the Indian Government by coming up with new models that would satisfy their needs. Taxi operators have also moved on to the Tata Indica and Toyota Innovas to provide better service to their consumers.

They stopped production of the Contessa in 2002 following low demand, and it seems like the Ambassador will be going down the same path soon at this rate. The decision by HM to continue production of the Ambassador and not invest in R&D to launch a new car has been a surprising one. That being said, one positive step that HM has taken has been to enter into a Joint Venture with Mitsubishi in 1998 in India. However, in our opinion, the Mitsubishi brand is more apparent to the consumers, and most people do not know about the JV.

Hence, Hindustan Motors have failed to respond to the consumer needs and market changes. Globally, cars like the Toyota Corolla, Volkswagen Beetle, Buick Regal have been in the market for decades, and have adapted to the customer and industry demands to have strong sales figures even today. Closer to home, the Maruti 800 also managed to attract new customers over the years by keeping itself relevant in the market. Hindustan Motors have unfortunately been unable to capitalize on their brand value, and the automobile giant of yesteryears has now been reduced to a miserable entity in the current car market.