Internal Assignment on Ford FigoGroup 3

Price of the car Customer Income Tastes and preferences Competitors Expectations Advertising

Determinants of Demand

Customers

First B-segment compact car Designed keeping in mind the

aspirations and needs of the young and ambitious Indian professional.  

For the middle-income group people.

On Road price is Rs. 4,30,000. Received more than 10,000 orders in less than

one month Announced 1% hike

Conclusion:This price rise is not a major one in magnitude but

may impact sales of the Figo to a small percentage; hence the demand would not decrease with same factor as the increase in price.

Price Elasticity

The percentage change in quantity demanded caused by a 1 percent change in income.

Preferred by service group and middle income group. 

Conclusion:The income and purchasing power of people is

increasing, hence, demand will increase.

Income Elasticity

Competitors (substitutes) of Ford Figo:- Maruti Ritz :- Price: Rs. 4,71,000 Chevrolet Beat:- Price: Rs. 4,55,000 Volkswagen Polo:- Price: Rs. 5,28,000 Nissan Micra :- Price: Rs. 5,59,000

Conclusion: An increase of price of any of the substitutes will increase

the demand for Figo. The price rise of Figo by 1% is not a major one in

magnitude but may impact sales of the Figo to a small percentage, but since the Ford Figo is not the only car with the increased prices, its not a major disadvantage as well

Cross Price Elasticity

1. Income Effect

Cost Price – Rs 3.7L to 5.6L

GDP Growth - 7.5%

12th 5-year plan estimated growth rate – 9%

Segmentation

Upper Middle Class

Lower High Class

Effect of Macro-Economic Variables

2. Technology

Increasing fuel prices

Alternative fuels

Hydrogen fuel cells

Electric power

Solar power

Not-so significant effect on Ford Figo as the emergence of

such technologies will only have an immediate impact on

low cost segments where Tata Nano and Maruti Alto operates

Effect of Macro-Economic Variables

3. Government Policies

Tax on knocked-down products

Ford Figo will not have any impact as it has its full fledged

production facility operating out of India base

Such a policy will affect only ultra premium sedan segment

FDI

FDI at automobile sector – 100%

Impossible for any further increase

Increased bureaucratic delays, corruption and lack of

significant reform

Effect of Macro-Economic Variables

4. Interest Rates

Consecutive hikes in interest rates

Interest rates on auto loans go up

Figo has two options : Pass on the effect to the end consumers

Bear the brunt by itself which will help to have a lead though

the margins would slightly fall but only for a shorter period of

time

Effect of Macro-Economic Variables

Figo– a relatively new product Quantitative analysis not so apt Stress on qualitative analysis– expert

opinion & market analysis Competitor plans– an indicator of broad

future trends

Methods of Forecasting

Assumption– past trend will hold good for future as well

Need strong database Equation of sales is arrived at by

minimizing the sum squared deviations The projections for Ford Figo’s sales for the

next two years exhibited in the attached excel.

Least Square Method

Microsoft Office Excel Worksheet

Tie up with banks for easy procurement of loans

Competitive market price Service network Complementary services and goodies Diesel variants Faster delivery to customers

Promotional Strategies

Abhishek Rajan (103) Avishek Singh (113) Maithilee Deshmukh (123) Nimisha Agrawal (133) Rajesh Dharmarajan (143) Swapnil Wagh (153)

Prepared By: