strategic marketing presentation

7/29/2019 Strategic Marketing Presentation

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Seedhe Sadhe-Akshay

Still pondering-Ankit

Diamond lawyer-Deepshikha

Muscle Man Gaurav

Spinner- Guru Ms. Grp4- IreneStu-co-Ishmeet

Cant seeMitika? Cofee with Namita

Rowdy Guneet Broom-Wroom

Harnek Happy Harsh OMGHimanshu Bouncing Jayanth

Strategic Marketing- Indian Automobile Industry

Section C

Group 4


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Group 4 Sec C

____________________________________________


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Value disciplines model ofMichael Treacy and Fred Wiersema describes

three generic value disciplines. Any company must choose one of these

value disciplines and act upon it consistently and vigorously.

Treacy and Wiersema argue in their book The Discipline of Market Leadersthat any company must choose to excel in one value discipline, where it

aims to be the best - in the world preferably. This does not mean the other 2

dimensions should be completely neglected, but rather that the company

should aim to be merely 'OK' in these other two disciplines:

3 softly defined strategy zones of 1. Product Leadership2. Ops Excellence

What is Product Leadership?

Product Leadership is characterized by products that are the best in their

market and highly valued by customers.

The dimensions of Product Leadership are:

Capability maturity

Intellectual leverageResponsiveness

Time-to-market

High margins in a short time frame.
http://www.valuebasedmanagement.net/leaders_treacy.htmlhttp://www.valuebasedmanagement.net/leaders_treacy.html


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Concurrent engineering

The Traditional Waterflow Model VS Concurrent Engineering

The figure on the left here shows the traditional waterfall model wherein

the process flow is sequential.

In concurrent engineering, on the right

the process flow occurs simultaneously thereby reducing costly design

changes at a later time and improving the time to market.


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Why Product Leadership?

One pointer:

The company should possess the

necessary infrastructure and the

management should not be risk averse.

A classic example is TATAs Nano & Ace.

There was no such a concept of 1 tonnervehicle and they found out this

opportunity, took some risk launching the

product and now they are the market

leaders in that segment

The Auto industry needs to b Very strong in innovation and brand

marketing, operating in dynamic markets.

The principles of a product leadership enterprise are:

Encouragement of innovation a culture that fosters experimentationand innovation and rewards product or service improvement;

Risk-oriented management style management that allows

the enterprise to take risks and reap the rewards of new ventures;

Recognition that the enterprises current success and future prospects

lie in its talented design people and those who support them; and

Recognition of the need to educate and lead the market in the use and

benefits of new products or services.


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Competitive Advantage of Countries in

Auto Industry

Time to Market

Japan originally built an automotive industry at home, but

had to seek lower cost production factors in Southeast Asian

nations, Mexico, and Brazil.

Germany had to relocate much of its mass manufacturing

to Eastern Europe, to secure lower production costs. HMC in Turkey -1997, in India 2000 -2007, China - 2002-

Advantages?

Availability of inexpensive, high-quality labor and proximity

to the Middle East and Western Europe.

Nations attempt to overcome their

inefficiencies relative to other countries,

via

modernization,reduction of excess capacity,

training, and upgrading human resource

skills.

They chose their Time to Market

accordingly


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Early1900s

U.S and other automobile manufacturers were focused on delivering products tocustomers

Henry Ford propounded the concept of mass production leading to cost reductions

1950s

Asian auto manufacturers began to develop and establish their leadership statusworld over by focussing on process streamlining and supply chain efficiencies

Development of JIT and Kaizen Principles of Manufacturing

Subsequen

tly

Manufacturers in other parts of the world realized the significant benefits ofbuilding operational efficiencies in order to be able to compete in a globalizedmarket

PresentDay

Maintaining operational efficiencies has become a basic requirement for survival inthe automobile industry

Increased focus on product in order to be able to differentiate oneself in a highlycompetitive market

Operational Excellence


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Making the work environment more efficient and effective bycreating a team atmosphere, improving everyday procedures,ensuring employee satisfaction and making a job more fulfilling,less tiring and safer.

Elimination of waste, quality control, standardized work and theuse of efficient equipment.

Kaizen

Lean is the set of "tools" that assist in the identification and steadyelimination of waste. As waste is eliminated quality improves while

production time and cost are reduced. Tools like Value Stream Mapping, Five S, Kanban, poka-yoke

Lean

Manufacturing

Parts are moved through operations from step-to-step with no WIP inbetween either one piece at a time or a small batch at a time.

Highly capable processes

Highly repeatable processes Equipment with very high (near 100%) uptime

One-Piece floor

Manufacturing

It requires that equipment, resources and labor are made availableat the right amount and at the time.

Just-in-timeproduction

Tools of Operational Excellence


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Maruti Suzuki hasdifferentiated itself with

superior aftersales servicesand continues to be the

market leader

Hyundai and other playersfollowed suit by building

them over time/piggybacking on

established players

networks.

Maruti Suzuki was the firstto provide financial

assistance, offering theconvenience of a one-stopsolution to the customer

Today, most manufacturersoffer this service via tie-upswith financial institutions

Ford was the first

manufacturer to start saleof cars on the Internet

Manufacturers areconstantly coming up with

novel ways to simplify thebuying process, which isn'tmuch of a deterrent anyway

Companies that sell

popular cars bank onquick delivery times

People can be indifferentto waiting times as well,

as seen in the case ofRoyal Enfield

Customer Intimacy


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Maruti Suzuki startedproviding test drives in

India

Every manufacturerprovides Test drives,

today some even offerfree cars to lucky test

drivers

Manufacturers likeMaruti Suzuki pioneered

pre-owned car sales

Other players like Toyotafollowed suit, now even

new players likeVolkswagen is also

planning to start one

The price that the customer will incur for high customer

intimacy is a deterrent for most potential customers.

There is however a small segment willing to pay thisprice, Rolls Royce and Maybach.

Customer Intimacy


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Take an historic example where Fisher body(supplier) had an

exclusive contract to supply body parts for the cars of General

Motors. In the 1920s there was a sharp increase in demand

that exceeded all expectations that were held at the time and

Fisher Body used this unforeseen development to hold up

General Motors, amongst others, by increasing the price for

the additional parts produced.

The hold up problem in automobile industry

results from many situations where oneparty can holdup the other for the value of

the commitment between the two.

Hold Up


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Hold Up

In the past few years, large hikes in petrol in India has dampened

the sales of petrol cars, which has pushed companies to introduce

diesel engines and spend more on R&D.

Hold Up

Laws of land, taxation and government regulations sometimes

subvert the value to be delivered. For example: Singur land case

resulted in huge delays and the loss of investment in establishing

and moving to Gujarat. Also The Maharashtra government'sdecision to withdraw VAT has put a question mark on Chakan-

Talegaon auto hub.

JIT is a hold up by the auto industry on the autoancillaryindustry. Under investment in R&D, cartelization etc are reverse

hold up techniques of the auto suppliers


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Slack has been found to be more commonwith bigger companies with some being

Market leaders in their industry. Eg: Theclassic case of Maruti Suzuki in India whosemarket share has fallen to 37.76% now asagainst 44.64% in 2010

Bureaucratization, culture, complexity, size,poor information gathering have been foundto contribute to slack

Threat of Slack


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In the case ofMaruti, slack can be attributed to:

Threat of Slack

(HR,workcu

ltureissue)

The infamouslabor unrest atits Manesarplant in 2012forcing theplant lockoutfor a month

(po

orinformationgathering)

Caught unawarewith growingconsumerinclination towardsdiesel cars with itsentry level petrolcars not performing.

Eg: Estilo, Ritz, Alto

800 proving to be adud

Complacency,narrow viewgiven itsmarketleadership


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Tetra Threat Model

Imitation: Threat second to Substitution

Honda Civic entered the sedan segment in 1988 and since then has been very similar toToyota Corolla; from engine, power and dimensions to interiors, price and safety.

Both have been neck to neck competitors on the best sellers list for long.

They Keep coming up with minor changes/improvements which other imitates soon.

Had one of them not been there it is obvious the other would have enjoyed higher sales.

THEN (1988) NOW (2012)

How Companies dealt with Imitation in Auto Industry

Bajaj (DTSI patent) Though it lost case to TVS, it stopped TVS from using the

technology for 4 years PulsarKeeps upgrading its models frequently and enjoys dominance in Indian two

wheeler market

Maruti went for scale with Omni and captured the Indian market but could not fightback when Tata entered the segment with a similar model Magic.

Marutisretaliation with series of small cars like Wagon R, Alto, Swift, A-Star & Ritzas competition increases for its 800 model.


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Strategies to sustain in global markets

AggregationGlobal car makers target many

countries similar indemographics and markets like

North American, SouthAmerican and European

markets. They launch the same

models in all the countriesbelonging to the same market

simultaneously

Adaptation

Many car companies expandtheir markets by the means ofacquisition and joint ventures.

Examples Renault andMahindra, Renault and Nissan,

Suzuki adapted to Indianmarket by the means of JV withMaruti Udyog Ltd. which is one

of the most successfulautomobile companies in India.

ArbitrageCar companies till recent times

launched their new cars inwestern markets and later inthe Indian market. However

times have changed and nowmany model launches coincide

with the global launches.

Many companies manufacturecars in low cost centers like

India, China and export thesecars to other markets.


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Strategies for Declining/Stagnant Industries

Green Cars NissanLeaf & Chevys Bolt

highly being pushedto create new Image,

same being supportedin markets like US

China seeing newmarkets for large

SUVs to reflect socialstatus. Daimler &Mitsubishi clearly

leading to meet theneeds.

Toyota and Audicame up withautonomous

vehicles, in thewake of the pushby Google on its

driverless car.

Toyota envisagedtheir safety tag bybringing features

like adaptiveheadlights, pre-collision systemand continues to

work onimprovement of

safety features.

Land Rover have astrategy of producing

only large SUVs forwhich they are know

and they stick tothese market.

Rolls Royce onlytargets rich

businessmen and topexecutives and their

selling strategy is stillthe same for their

market

Ford- With one ofthe worst Fuel

efficiency recordstrying to go

green predicting

the future.

Volvo slowlychanging its taglinefrom Luxury cars to

Value cars tocontinue

demandingpremium.


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We have been trying to

avoid these since longIts High time we

ANSWER!


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What? We Sure could have done that.

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