Consumer Durables Marketing

InputsBy KrutikaNaik PintuBhardwaj PoonamTrivedi AntilaCheta KunalKhandagale

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LG Electronics Q3 global sales soar to $11.2binancia pegged at 15% - F urables growth l Chronicle

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Durable cos expect Rs 15,000 crore salesre b loans a umer st cons ere Zero int ack

Introduction ADurablegoodorahardgoodisagoodwhichdoes notquicklywearout. Morespecifically,ityieldsservicesorutilityovertime ratherthanbeingcompletelyusedupwhenusedonce. Theseproductsarehardgoodsthatcannotbeusedupat once.

TypesofConsumerDurables

OverviewDemandforconsumerdurableshasincreasedsignificantly CharacterizedbytheemergenceofMNCs MajortargetisthegrowingmiddleclassofIndia Bargainingpowerofsuppliersinconsumerdurablessector islimitedduetothreatofimportsandintense competition. Someoftheentrybarriersinconsumerdurablessector aredistributionnetwork,capital,andabilitytohire purchases. Demand is seasonal and cyclical Competition among players is on the basis of difference in prices and well-acknowledged brands.

SWOTAnalysisofConsumerDurables Sector

ChallengesandOutlook

GrowthDrivers

MajorHurdles

Riseindisposableincome Availabilityofnewervariantsof aproduct Productpricing Availabilityoffinancing schemes Riseintheshareoforganized retail Innovativeadvertisingand brandpromotion Festiveseasonsales

Threatfromnewentrants, especiallyglobalcompanies Rivalryandcompetition Potentialmarketsremaining yetuntapped Threatfromsubstitute products/services Customerpowerwithrespectto availabilityofchoice

Passenger Cars

SmallCarMarketinIndia:Overview IndiaisthefourthlargestcarmarketinAsia.

Passengercarscomeingreatvariety.

Availableinallrangeseconomicalandluxurious.

SmallcarmarketinIndiaisincreasingbyleapsandbounds.

Substantialshareofaround70%oftheannualcarproductioninIndia.

Governmentisalsomullingtoboostthesmallcarsector.

TataMotors,MarutiUdyogLimited,Mahindra&Mahindra,etcarethe leadingIndianmanufacturers.

ForeignplayerssuchasHyundai,Honda,Fiat,Ford,Toyota

GrowthintheSector Atpresenttheindustryisenjoyingagrowthrateof14 17%perannum Domesticsalesgrowthat12.8% Growthrateispredictedtodoubleby2015 Currentgrowthrateindicatesthatby2012Indiawill overtakeGermanyandJapaninsalesvolumes Industryisconsistentlyfocusingontheautomobile exports. Liberalizedpoliciesofthegovernment

WhysmallcarsarepreferredinIndia? Fuelefficientwhencomparedtomidsizeorluxurycars. Congestedroadsandsmalllanes. Compactandcanbemaintainedprettywell Reliableintermsoflifeandalsoresalevalue

SpeedMotorsPvt.Ltd. ExecutiveSummary

SpeedMotorsislaunchinganewlowcostcar,theMINTin Indianmarkets.Wewillcompetewithexistingcompaniesby offeringavehiclewithbetteramenitieswhilekeepingtheprice affordable. Wearetargetingtherapidlygrowingmiddleclasscustomers whodesireaslightlybetterlowcostcaraswellasbusinesseswho desiretoaddlowcostcarstotheircurrentfleets. Our main objective is to capture between 6-7% of the Indian market share with first year sales of 100,000 cars. Our financial objective is to achieve $700 million in revenue the first year and to keep losses at less than $150 million. We foresee breaking even midway through our second year of production.

SpeedMotors:SituationAnalysis

SpeedMotorswasfounded1yearagobyfivebusinesspartners withautomotiveindustryexperience.Theyareabouttoenterthe excitinglowcostcarmarketinIndia,wherecompetitionisstartingto heatup. ThesizeandbuyingpoweroftheIndianmiddleclassisrapidly increasing,butpricestillremainsthemaindriverwhenpurchasinga vehicle.Approximately1.5millionnewsmallcarsaresoldinIndia eachyearandTata,Indiasleadingvehiclemaker,islookingtocapture asizablechunkofthatmarketwiththeirrecentintroductionofthe TataNano...asubcompactcarcostingonly$2,500. Topositionourselvessuccessfullyinthismarket,Royalis targetingcustomerswhomaywantalowcostcarthatisanotchabove theTataNano.Wealsoplantoofferoptionalfeaturesthatarehighly valuedbypotentialcustomers.

SpeedMotors:MarketAnalysis

SpeedMotorsmarketconsistsofcustomerswhoarelooking foralowcostcarbutwantsomethingalittlebetterthanwhatthe priceleaderoffers.Italsoconsistsofcustomerslookingforoptions thatallowthemtocustomizetheirvehicletosomedegree.In addition,wewillbemarketingtobusinesseslookingtoaddlowcost carstotheirfleetsandconcentratingonfillingallordersinatimely manner. Lowcostcarcustomerscurrentlyhaveverylittletochoose fromasfarasoptionsgo.Wewillofferourcustomersthestandard optionsforlowcostcars(color,A/C,etc.),butintendtodifferentiate ourselvesbyofferingoptionsaboveandbeyondthenorm...options suchasairbags,MP3players,woodendashboardsetc.

Targeted Segment

Customer Need

Corresponding Feature/Benefit Airbags, tubeless tires Seating for 5, large trunk space

Comfort Middle Class w/Children. Safety Space (Families)

Young Middle Class

To be in style Network with tech toys

Multiple color schemes MP3 player

Business

Service Safety Desirable Rental Car Fuel Efficient

Airbags, tubeless tires Fuel Efficiency LPG, CNG options

SpeedMotors:SWOTAnalysis

SpeedMotors:Competition

Analyzingthemarketsituationfollowingareourmain competitorsinthepassengercarsegment:

SpeedMotors:Competition

SpeedMotors:MarketingObjectives

Ourmainmarketingobjectiveistofocusonthecustomers' wantsandneedsand,atthesametime,offeravarietyofoptionsthat somecustomersmaywant.Thiswillallowustoeffectivelyinfluence andpersuadethecustomertopurchasefromus. Thereasonwedecidedtolaunchalowcostcaristofacilitate familiestotraveltogether.TheIndianmarketisrapidlychangingto wherepeoplecanaffordacarandspendtimetogether.Itvirtually freesthemfromaworldofovercrowdedtrains,precariousrickshaws, taxistheycantaffordandpackedbuses. WewanttoprovideaCar4All,whichisaffordable,yetbuilt tomeetsafetyrequirements,emissionnormsandfuelefficiency standards.Everypersonwhohasadesireforavehiclewilllookto Minttofulfillthisneed.

SpeedMotors:TargetMarkets

Thelowcostcarisclearlyintendedforthemasses;forthe firsttimecarbuyerinIndiaahugemarketdespitetheincreasing numberofcarsintheurbanandsemiurbanareas.

Our target markets would be :

SpeedMotors:MarketingMix

Place WewilldistributetheMintbydevelopingprivatedealershipsallover thecountryinurbanandsemiurbanareas. Wewillappointdistributioncommitteesineachstatewhichwill approvedealershipownershipviafinancialbackgroundchecksand otherverificationmethods Our goal is to provide at least one dealership in each district area We will also use these dealerships to provide maintenance services and auto parts

SpeedMotors:MarketingMix

Promotion Advertisement in auto magazines & news paper

Auto expos Hoardings Display in malls Awareness through car & Bike show Sponsoring car for cricket tournament

SpeedMotors:MarketingMix

Price TheMintwillbepricedatanaverageof$7,000percar Wefeelthatthispriceindicatesastrategyofestablishingourselves intheupperendofthelowcostcarsegment. WeintendtomaketheMintourcheapestmodelsothatwhenwe expandourlineofcars,theywillbepricedhigherthantheMint.

SpeedMotors:MarketingMix

ProductSpeedMotorswillofferthefollowingstandardfeaturesoneveryMint:Childsafetyreardoorlocksystem

Powerlocks Overheadlamp Frontandrearspeakers Ashtray A/C Heater Powersteering Powerwindows

Remotefueldooropener Remotetrunkopener Reardoublefoldingseat Frontairbags Choiceofstandardpaintschemes Cellphonecharger Tubelesstires Seatingfor5people Largetrunkspace

Optionsinclude:Sunroof Sportpaintscheme MP3player

Alloywheel Premiumspeakers LPG/CNGkits

SpeedMotors:FinancialObjectives Ourmainobjectiveistocapturebetween6and7%oftheIndian marketsharewithfirstyearsalesof100,000cars. Ourfinancialobjectiveistoachieve$700millioninrevenuethefirst yearandtokeeplossesatlessthan$150million. In our third year of production, our objective will then be to enter the European and US markets. With current safety, fuel efficiency and emissions standards, we would need to make upgrades with additional air-bags, side-impact beams, catalytic convertors and better fuel efficiency which would add $1000 to the cost of the vehicle. At $8000 the Mint would still be far cheaper than any compact in these markets.

SpeedMotors:Controls Wehavedevelopedroutineauditsthatwillmonitorproductquality atourproductionfacilitiesaswellassurveystomeasure customersatisfaction. Wehavealsoputtogetherareportingsystemthatwillbeplacedat maintenancefacilitiesthatwilltrackmaintenanceissueswith ourvehicles. Inadditiontothesemonitoringtools,wewillcloselytrackmonthly salesandexpenses,beingmindfulofanydeviationfromtheplan andtakingappropriatecorrectiveaction.

SpeedMotors ControlsMarketingOrganization

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