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A case study

on

Change in marketing strategy of Cummins India ltd

Submitted by

APARNA PANDEY

NSB Bangalore

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Contents

1. Abstract 1

2. Company profile 2

3. Growth of company 3

4. Cummins in India 4

5. Companies mission vision and values 5

6. Objective of the study 6

7. Basic change 7

8. Cummins strategy 9

1. Domestic market share leadership. 10

2. Through lens of the customer 12

3. Customer loyalty 13

4. Export. 14

5. Low cost producer (six sigma). 15

6. Mergers and joint ventures 15

7. Performance management. 16

9. Conclusion 16

10. Recommendation 17

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ABSTRACT

In the recessionary period to sustain in the environment every company has to evaluate its

strategies and formulate new strategies to maintain its brand and position.

Cummins India ltd is one of the company which has done the evaluation and reformulation of its

strategies to overcome by the problem of declining the sales.

Earlier the Cummins India ltd has its policies and approaches which was PROFIT oriented.

While due to the change in scenario its has change its policies to CUSTOMER oriented

approaches.

Here is the detail of Marketing strategies adopted by Cummins India ltd to retain the market

share.

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Company profile.

Cummins India Limited (CIL) is a 51 percent subsidiary of Cummins Inc. USA, the world’s largest

independent diesel engine designer and manufacturer above 200 HP.

Set up in 1962 . Today, CIL is India’s leading manufacturer of diesel engines with a range from 205

hp to 2365 hp and value packages serving the Power Generation, Industrial and Automotive Markets.

CIL also caters to the growing market for gas and dual fuel engines.

Different sectors of Cummins

Cummins Power Generation Business is the market leader in the Diesel and Gas power

systems. We are a single window provider for complete energy and power solutions, offering

top-of- the-line products (diesel & gas) and services. We have partnered India’s growth for over

four decades with over 25,000 MW of installed captive power across various industry sectors

like telecom, construction, IT/ITES, realty, hospitality, textiles, auto & auto ancillaries, food

processing, govt., pharma, gas and manufacturing.

Cummins Industrial Business is the market leader in Diesel and Gas engines in the range of 65

to 2,700HP. These engines power a variety of mobile and stationary equipment used in various

applications like Construction, Mining, Compressor, Fire & Industrial Pumps, Rail, Marine,

Oilfield and Defense.

Cummins Automotive Business caters to the growing automotive segment in India. We supply

B series Euro III, ISBe Electronic, Stoichometric as well as lean burn Natural Gas, C and L

series engines for On-highway applications.

Cummins Sales and Service India provides products, packages, services and solutions for

uptime of Cummins equipments. We are engaged in the business of sale of engines, and

providing after-sales services to engines and generators manufactured by Cummins. CSS

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provides complete business solutions including after-market support to customers in India, Nepal

and Bhutan.

Growth of Cummins

Cummins Headquarters, located in Columbus, Indiana

Today, Cummins is a multinational Fortune 500 company that operates and serves customers

around the globe. At the same time, Cummins retains strong ties to its Indiana home, where the

Company's headquarters remain. Publicity alone could not carry the Company; Cummins

needed reliable products and a sound business organization. In 1933, the company released the

Model H, a powerful engine for transportation that launched the company's most successful

engine By the 1950s, America had embarked on a massive interstate highway construction

program, with Cummins engines powering much of the equipment that built the roads and

thousands of the trucks that began to roll down them. Truckers demanded economy, power,

reliability, and durability, and Cummins responded. By combining lab-based research and field-

based trials, including dramatic performances at the Indy 500 races,

As Cummins continued to grow its business in the United States; the Company also began

looking beyond its traditional borders. Cummins opened its first foreign manufacturing facility in

Shots, Scotland, in 1956 and by the end of the 1960s, Cummins had expanded its sales and

service network to 2,500 dealers in 98 countries. Today, Cummins has more than 5,000 facilities

in 197 countries and territories.

Cummins is no longer just an engine business, but a global power leader with more than $14

billion in sales in 2008. We are a family of inter-related, yet diversified businesses that create or

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enhance value as a result of doing business with each other or having those relationships.

Cummins in India

1962

- The Company was incorporated on 17th February, at Pune. The Company manufacture

internal combustion engines in particular diesel engines of all sizes and capacities, reciprocating

piston engines, gas turbine engines, gasoline engines, etc. The promoters of the Company were

Kirloskar Oil Engines Ltd.

- 38,250 shares allotted to Kirloskar Oil Engines, 75,000 shares to Cummins Engine Co. Inc.,

USA and 36,750 shares to the public during May 1962.

1966

- Cummins Diesel Sales and Services (India) Ltd., became a wholly Owned subsidiary of the

Company.

1988

- During the period, manufacturing facilities for luxury and airbus were established. Also,

production of hi-tech import substitution components/assemblies commenced.

1998

- Effective September 10, the name of the Company was changed from Kirloskar Cummins Ltd.

to `Cummins India Ltd.'

- The Cummins Engine Company Inc, USA, is the world's largest independent manufacturer of

diesel engines above 200 HP and is recognized for its expertise in emissions, fuel efficiency and

electronics.

- Cummins India Ltd., a joint venture since 1962, is the only company in the country to offer a

range of engines in diesel, gas and dual fuel models, it has produced more than 140,000 engines

so far.

- Cummins India Ltd., a 51 per cent subsidiary of Cummins Engine Company of US is currently

clocking heavy volumes at the Mumbai Stock Exchange.

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Our Vision

Making people's lives better by unleashing the Power of Cummins.

That simple, yet ambitious, statement serves as the guiding vision for Cummins and its

38,000 employees.

The Company takes pride in manufacturing engines, generators, filters and related products that

serve the varied needs of its customers worldwide. To do that, Cummins unleashes the

power of its employees: Their energy and commitment make it possible for the Company to

maintain a leadership position in the markets it serves.

Cummins also recognizes that with its role as a corporate leader comes a responsibility to help

improve the communities in which employees work and live. It is a responsibility the Company

brings to life through its actions and the activities of its employees.

Our Mission

� Motivating people to act like owners working together.

� Exceeding customer expectations by always being first to market with the best

products.

� Partnering with our customers to make sure that they succeed.

� Demanding that everything we do leads to a cleaner, healthier, safer environment.

� Creating wealth for all stakeholders.

Our Values

� Integrity. Strive to do what is right and do what we say we will do.

� Innovation. Apply the creative ingenuity necessary to make us better, faster, first.

� Delivering Superior Results. Exceed expectations, consistently.

� Corporate Responsibility. Serve and improve the communities in which we live.

� Diversity. Embrace the diverse perspectives of all people and honor with both dignity

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Objective of the study:

Why Cummins India ltd has adopted new strategies?

So by the history and detail of the company it is clear what it produce and to whom it serves.

It is a US based company as we know recessionary period is going on in Us as well as in other

countries.

Cummins India Limited was one of the leading diesel power generation sets (gensets)

manufacturers in India catering mainly to corporate customers. In the late 1990s, the company's

revenues and profits came down due to economic recession in the country.

Cummins realized that relying solely on the quality and performance of its gensets and catering

to corporate was no longer enough in the tough economic conditions. Hence, instead of

providing regular gensets models to all the customers, it modified the engine features slightly to

suit the special needs of each customer like farmers, hospitals and small retailers, to name a few.

As well as the renewing its products it has adopted various customer oriented approaches to

satisfy their customers need which is commonly said as the marketing strategies of Cummins to

get a stable position in terms of market share in recessionary environment.

What was the basic change?

A shift from PROFIT ORIENTED APPROACH to CUSTOMER ORIENTED APPROACH

Earlier it was

Profit oriented approach

Customer oriented approach

Top level management

focused on profit(revenue)

operation management

Demand of costumoers

Demand of

customers

customers satisfaction and

feed back(customers

support excellence.)

What was the basic change?

A shift from PROFIT ORIENTED APPROACH to CUSTOMER ORIENTED APPROACH

approach

Top level management

focused on profit(revenue)

operation management

Demand of costumoers

strategic level

management

production

level

management

sales and

revenue

generation

customers satisfaction and

feed back(customers

support excellence.)

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A shift from PROFIT ORIENTED APPROACH to CUSTOMER ORIENTED APPROACH

production

management

sales and

revenue

generation

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Cummins strategy:-

There are some specific strategies have been adopted by Cummins India to sustain in global

economy crisis.

These strategies are in specifically marketing perspective.

These are:-

8. Domestic market share leadership.

a. Customer support excellence.

b. Through the lens of the customer.

c. Repair event cycle time reduction.

d. Customer focused six sigma.

9. Through lens of the customer

a. Customer experience.

b. Every thing speaks.

c. Creating a wow.

d. Set customer and employees up for success.

e. Transparency.

10. Export.

11. Low cost producer (six sigma).

12. Performance management.

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Domestic market share leadership

The first of our pronged strategy is to sustain and grow the market share leadership we have built

in India over the last forty seven years. Our future rests in the hands of our customers. This

strategy has been devised keeping their success paramount.

Customer Support Excellence (CSE)

CSE is basically customer focused programmed to enhance the productivity and efficiency.

Different industries run different type of program for CSE.

By Cummins director’s speech CSE:-

The initiative of Customer Support Excellence (CSE), which inculcates in every employee the

practice of placing our customer first and providing real value to our customer. I also shared

three ways in which we planned to accomplish this –

Through the Lens of the Customer (TLC),

Repair Event Cycle Time Reduction

and Customer Focused Six Sigma.

This year, taking the initiative forward, we have established our Customer Experience

Philosophy and a set of Customer Experience Standards, to help align and accelerate our

customer focused journey of becoming a truly customer centric organization. We have aligned

the Customer Experience Philosophy with the Company Vision of Making peoples lives better

by unleashing the Power of Cummins.

The standards by which we measure the success of our customer service initiatives are:

Safety

– The safety and well being of our customers and employees is our first priority.

- Create and maintain a safe working environment

- Take care of and report any unsafe condition immediately

- Use all required safety equipment every time

- Follow all our safety policies and procedures

- Alert customers to any safety issue that may arise

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Accuracy

- We do the job right. We perform with precision and ensure error-free interactions with each

customer.

- Listen carefully to ensure true understanding of the customers needs

- Pay attention to every detail of the transaction or work process

- Provide correct and complete information – know where to obtain correct information

if needed.

- Ensure the customers thorough understanding of the transaction

Responsiveness

- We are accessible to our customers and always ensure that their experience with us is efficient

and timely.

- Acknowledge all customers promptly

- Demonstrate a sense of urgency and agility in addressing the customers needs

- Manage customer expectations through effective communication

- Keep all commitments - notify customers immediately regarding any unforeseen issues

Partnership

- We care about the long-term success of each customer and strive to build trust- based

relationships.

- Treat every customer with courtesy, respect, and dignity

- Look at each customer interaction as an opportunity to build trust with the customer

- Constantly learn about customers and help them identify their needs

- Always be on the lookout for ways to further assist each customer in achieving their

objectives

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The success of TLC hinges on the following four concepts:

- Looking through the lens of the customer - This is a simple, yet profoundly important

concept to truly understand how customers experience what we do and how changing our

perception and processes can influence their overall experience positively

- Everything Speaks - This describes our physical environment as seen by the customer, and

forces us to re-examine every detail from a physical facility appropriateness standpoint

- Creating a Wow - Making sure that the way we deliver customer experience is special by

implementing a consistent Customer Experience Philosophy and a set of Customer Experience

Standards

- Set customers and employees up for success Capable processes must be engineered in place

to ensure consistent and Positive customer experiences that build customer loyalty.

Customer loyalty and experiences

Customer loyalty may be a one-time program or incentive, or an ongoing group of programs to

entice consumers. Buy-one-get-one-free programs are very popular, as are purchases that come

with rebates or free gifts. Another good incentive for achieving customer loyalty is offering a

risk free trial period for a product or service.

Cumin does a very interesting thing that they have found a customer improvement teams which

does their job accordingly from directors word it can be explained like:-

Customer Experience Improvement Teams have been formulated at each of our businesses and

functions, to help identify customer experiences and take improvement actions. Moments of

truth that were captured through the customer experience mapping exercises have identified a

few areas of improvement, which we are committed to addressing.

While CSE is certainly relevant to employees who come in direct contact with external

customers, it is also as relevant to employees who are servicing other employees (internal

customers).

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One more important step taken by Cummins was

Voice of Customer (VOC).

Under this initiative, each month, our Distribution Business invites a customer to our premises

to address abroad group of cross-functional managers. Thereafter, our employees along with the

involved OEM and Dealer teams work on translating the customer feedback received, into an

actionable plan with measurable improvements. As is the case with any problem resolution in

our Company, Six Sigma is used as the primary approach for making improvements.

Exports

While the domestic market contributes to a major portion of our revenues, a significant part of

the pie relies on exports, which make it our second strategy to focus on. The relatively low cost

and high talent base that we have in India, creates huge opportunities for the entire range of our

products and services in overseas markets, using our parents distribution channels.

Low cost producer

The third strategy is to be 6 Six Sigma a low cost Producer in the segments in which we

operate. To enable this, our primary approach and tool is Six Sigma. During the financial year

2008-09, we completed 248 Six Sigma projects, which resulted in annualized savings of Rs. 76

crores. The year saw a significant increase in the commitment demonstrated by our employees to

the Six Sigma methodologies, evident from the substantial increase in the number of Master

Black Belts to 12, Black Belts to 34 and Green Belts to 1500 across our Group Companies. Our

commitment to our customers is reflected from the fact that out of the total number of projects

completed during the year, over 35 were Customer Focused Six Sigma (CFSS) projects where

the project leader is an employee of our customer. Further, to reduce the Total Cost of

Ownership of our direct material spend, we undertook over 50 Supplier Focused Six Sigma

(SFSS) projects. We view Six Sigma as a very strategic tool. Not only does it help improve

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processes that lead to zero defects, but also helps build leadership skills across the organization

and improves the culture to one that departs from biases and opinions, to analysis and data based

decisions.

Great place to work

We believe that an organizations leadership quality and work culture determine the

performance of the Company to a very large extent. Hence we see Great Place to Work not just

as an HR initiative, but as a crucial business strategy. I am pleased to convey that our Company’s

guiding principles (Vision, Mission, Values) are firmly embedded in the DNA of our employees.

The first and most important initiative under the Great Place to Work strategy is Leadership

Excellence. We continue to invest heavily in improving leadership skills of our employees at all

levels. 300 employees were trained this year in our global Leadership Development System

modules on setting the aim, coaching for development, championing change and valuing

diversity. We are enhancing our mentoring program and in the process have established nearly

100 mentor-mentee relationships this year. Furthermore, in order to enhance talent and help our

employees take up bigger roles in the organization, we have partnered with management

institutes like SP Jain and the Kelley School of Business at the Indiana University, where we

sponsor management programs all Cummins employees, individually and collectively. Our

Company’s initiatives in the area continue to be channelized through our trust, Cummins India

Foundation (CIF), whose efforts continue to converge into the three areas of higher education,

energy and environment and local community infrastructure development.

These were the different strategies applied by Cummins India ltd for the marketing and servicing

their customer effectively to get more productivity.

Along with these Cummins India ltd has also done some significant work in market which can be

classified in to mergers and joint ventures.

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Mergers:

Cummins India Ltd (CIL), manufacturer of diesel and natural gas engines for power generation,

industrial and automotive markets, has merged of two of its wholly owned subsidiaries Cummins

Sales and Service India Ltd (CSS) and Cummins Auto Services Ltd (CASL) with itself.

Over the last few years, Cummins has been strategically working towards integrating its

businesses to build a stronger, more unified brand. Since it was acquired in 1967, CSS has been

engaged in the sale of engines, and in providing after sales services to Cummins engines and

generators. It provides complete business solutions including aftermarket support to customers in

India, Nepal and Bhutan. CASL was established in 2000 for retailing parts and accessories, and

provides a comprehensive maintenance and service solution for commercial vehicles plying on

the Indian highways.

Joint ventures:

• Cummins Research and Technology India Limited (CRTI) started in 2003, at Pune. It is a

joint venture between Cummins Inc. and Cummins India Limited, providing world class

mechanical engineering design and analysis for Cummins Technical centers. Analysis

includes structural and computational fluid dynamics as well as systems modeling and

simulation.

• Cummins Exhaust India Limited: (CEIL)

The sales and other income of CEIL, a 50:50 Joint Venture between Cummins Filtration

Inc., U.S.A. and your Company, for the year ended March 31, 2008, was Rs. 478

million (Rs. 48 crore) as compared to Rs.339 million (Rs. 34 crore) during the previous

year (41% higher). CEIL Board of Directors have recommended a dividend of 105 % for

the year ended March 31, 2008. The paid-up share capital of CEIL is Rs. 40 million.

CEIL is engaged in the business of manufacture and sale of exhaust silencers and

mufflers for Internal Combustion Engines.

• Valvoline Cummins Ltd (VCL), a joint venture between Valvoline International, USA,

and Cummins Diesel Sales and Service (India), a wholly owned subsidiary of Cummins

India,

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Other strategies

1. Risk management

Cummins has established a department to take care of risk available in market and

to find the solution regarding that.

2. Internal control system and its adequacy check.

To check the adequacy of the control system one team has been formed which

take cares of these issue.

3. Comparative analysis of financial performance Vs operational performance.

The one new thing done by Cummins was they started comparative analysis

between their financial performance and operational performance by these

evaluation the money flow can be cleared easily.

4. HR development and industrial relationship.

5. Performance and competency management.

Here Cummins has started appraisal of their employees and send them for further

training required for the employees performance improvement.

Conclusion

As we know due to the change in the economic environment and recession Cummins India was

declining its sales and revenue. By the adoption of above strategies and in change in the product

line its revenue has been increased by 30%.

In present scenario still US economy is in recessionary phase which has laid on bad impact in all

business processes but by taking the above measures Cummins India is in a stable condition and

getting its desired revenue.

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Financial analysis

As by the graph it is clear that after adopting these strategies Cummins productivity has been

increased.

Basically this study has cleared that in the monopoly market Cummins has faces problem in

recessionary period and by the customer oriented marketing strategy its revenue has been

increased.

So it can be conclude that the sales can be decline by profit oriented approaches

but by customer oriented approach the sales will always raise.

Area of improvement and our recommendations;-

1. Cummins has not consider the marketing web2.0 concept which can help it to

CSE (customer support excellence).

2. Comparison with competitor’s strategies.

3. Get a separate department for CRM (customer relationship management).

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