Case Study on Suzuki Samurai

Course: Strategic Marketing (EMB620)

Prepared By .....

Submitted o Dr. Riad Mahmud North South University

Submitted on 2!t" September 200#

Table of Contents

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Preface
As a part of a case study of Strategic Marketing (EMB-620) Course, this for a! repot has "een prepared# $he %ho!e report co&ers on the case ana!ysis of the positioning strategy of Su'uki(s ne% entrant into the )#S# auto o"i!e "asis of the pro&ided case infor ation# arket %ith the Su'uki Sa urai "rand# A!! the ana!ysis * e+p!anation ha&e "een %ritten in this report on the

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1. What is Suzukis marketing strategy in the U.S?

$o eet the dyna ic arket de and, Su'uki changes its po!icy any ti es# At first they otor cyc!e) %ith vertical

entered in the )S

arket as e+porter of a sing!e product (on!y

integration# ,n -.6/ Su'uki "egan e+porting e+c!usi&e i porter and distri"utor of Su'uki

otorcyc!es to the )nited States %here it otorcyc!es# $hen it "egan to e+port u!ti

esta"!ished a %ho!!y o%ned su"sidiary, )#S Su'uki Motor Co pany, 0td#, to ser&e as the products and out sources its one "rand1 ,n -.23, 4enera! Motors (4M) purchase 56 of Su'uki and he!ped the co pany a su"co pact car for the )S success %ith Sprint sho%ed Su'uki that a arket# $he car, na ed arket# 4M7s Che&ro!et Sprint, %as the first entry into the continenta! )S auto o"i!e

arket e+isted for its cars in the continenta! of arket o&er ti e# Su'uki had no guarantee

)nited States# $hen Su'uki ($he a!%ays so ething different car co pany) p!anned to introduce se&era! uni8ue &ehic!es into the )S that 4M %ou!d "e %i!!ing to o%n presence in )#S auto o"i!es industry# SE ECT!"E #!ST$!%UT!&'1 Su'uki(s goa! %as to esta"!ish itse!f as a a9or car co pany arket the &ehic!es# $herefore, Su'uki decided to esta"!ish its

in )#S# $o achie&e this goa!, Ma'aa, :ice ;resident of ASMC (A erican Su'uki Motor Corporation)( adopted the step of Con&incing prospecti&e dea!ers to "ui!d separate sho%roo s for the Sa urai# $hen he designed a dea!er agree ent that re8uired prospecti&e Sa urai dea!ers to "ui!d an e+c!usi&e sa!es faci!ity for the Sa urai# $he faci!ity had to inc!ude a sho%roo , sa!es offices, custo er %a!king and accessory disp!ay area# Ser&ice and parts cou!d share a faci!ity %ith a dea!er(s other car !ines, "ut a ini u of t%o ser&ice sta!!s need to "e dedicated to Su'uki, echanics# <e8uired dea!ership to disp!ay ini u of three sa!es anager and one genera! office c!erk had to %hich had to "e operated "y Su'uki-trained peop!e , t%o ser&ice technicians, one 4enera!

specific signs and outside the sa!es office and in the ser&ice sta!!s# A

"e dedicated to the Su'uki dea!ership# $he "o!d points a"o&e are i!!ustrating the fact that the co pany fo!!o%ed the se!ecti&e distri"ution (c!ose to e+c!usi&e distri"ution)# ,t a!!o%ed the co pany to achie&e higher profita"i!ity, dea!er !oya!ty, greater sa!es support and a!so higher degree of contro! o&er the retai! arket# arketing &aria"!e that generates

)$!C!'* )& !C+ ,&$ #E- E$S 1 ;rice is the on!y re&enue#

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$hough it is c!ose to e+c!usi&e distri"ution that is characteri'ed "y high

argin, high profit arket

and !o% &o!u e, Ma''a adopted %ith an opposite &ie%# $he co pany ai ed to gain &o!u e %ith !o% profit argin#

response for its high 8ua!ity %ith !o% price ad&antage# $hus their strategy %as to se!! high

Engage a strong dea!ership "igger than traditiona! "ased on the "e!ief that 8uick dea!er profita"i!ity %ou!d "e key to success=as a dea!er(s sa!es opportunities gre%, so too %ou!d the financia! co it ent and o&erhead#

>ea!erships se!ected %ith trading areas that enco passed 'ip codes %ith high concentrations of househo!ds that fe!! into Su'uki(s target arket#

Cost efficient product (a! ost ha!f the traditiona! one) to attract * catch the custo er 8uick!y# ?ocus on ear!y entry (Before @yundai Motor Co pany of South Aorea and Ba&odi Cr&ena Basta&a (Cugo) of Cugos!a&ia,) ,ntroduce se&era! uni8ue &ehic!es into the )#S (the a!%ays so ething different car co pany) Esta"!ishing its o%n presence in the )#S auto o"i!e industry for independence (co!!a"oration %ith 4M is not guaranteed to continue) 'EW )$&#UCT #ES!*'. (SD/-3) for custo er attracti&eness * product o&erco ing i port "arrier for "ig 8uantities# Chose to introduce the Sa urai into Ca!ifornia, the nation(s !argest auto o"i!e arket, and odification for

?!orida and 4eorgia, %here Dapanese i port sa!es %ere higher then the )#S# a&erage )$&#UCT #!,,E$E'T!-T!&'. $o gra" different products, a con&erti"!e and a hard-top# arket seg ent "y t%o different

/. What are the three ma0or 1ositioning o1tions 2as 1er in3ustry 1ractice4 accor3ing to a vehicles 1hysical characteristics? What are the 1ros an3 cons of 1ositioning the Samurai in each of these segments in3ivi3ually?
Before Su'uki cou!d en!ist dea!ers, it had to decide ho% to position the Sa urai to consu ers# $he position it chose %ou!d he!p define the &ehic!e(s target turn, %ou!d inf!uence ASMC(s preferred dea!er !ocations# arket %hich, in

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)&S!T!&'!'* ST$-TE*+1 ;ositioning is p!acing a "rand in that particu!ar part of the arket %here it %i!! recei&e a fa&ora"!e reception co pared to co peting products# ?ro the point of &ie% of 0eonard ;ear!stein, president and CEE of keyeF donnaF pear!stein ad&ertising agency, positioning is,G $he uni8ue %ay %e %ant prospects to think a"out a product#G >oug!as Ma''a, :; of ASMC %anted a fresh approach for his co pany7s ne% product# So he ga&e the responsi"i!ity to that ad&ertising agency, %hich had no e+perience in de&e!oping ca paign for auto o"i!es# After accepting the offer, ;ear!stein and his associates scanned the industry practice for auto o"i!e ad&ertising# $hey found out that the industry practice %as to position &ehic!es according to their physica! characteristics# $hey a!so found out that Sa urai SD/-3 %ere as fo!!o%s1 ;osition as a com1act s1ort utility vehicle# ;osition as a com1act 1icku1 truck ;osition as a subcom1act car# $he pros and cons of positioning the sa urai in each of these seg ents indi&idua!!y are gi&en "e!o%1 C&5)-CT S)&$T UT! !T+ "E6!C E1 $he ost o"&ious position for the sa urai is as a sport uti!ity &ehic!e# ,t !ooked !ike a G iniost ad&ertising %as featureF "enefit or price a9or three positioning options for oriented# Based on its physica! characteristics, the

9eepG and had /-%hee! dri&e capa"i!ity# ;<ES1 $he features atched e+act!y %ith the attri"utes of co pact sport uti!ity &ehic!e#

>esigned to dri&e %e!! off road# ;ositioning as a sport uti!ity &ehic!e is consistent %ith the sa urai7s heritage# $he Sa urai %as s a!!er and !ighter than the other &ehic!es# ;raising of foreign o%ners "ecause of sa urai7s re!ia"i!ity# ,t had the a"i!ity to go any%here %here !arger &ehic!es cou!d not# Ease of repair#

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 S a!!er and !ighter than the other &ehic!es# ,ts price and si'e ade it distinct fro a!! other sport uti!ity &ehic!es in the )#S#

arket# ,t %as so!d "e!o% the price of the other &ehic!es# ,ts $5,995 suggested retai! price %as %e!! "e!o% the other &ehic!es( H-0,000 to H-3,000 price range# $hus the positioning of Sa urai as sport uti!ity &ehic!e so!e!y concentrated on the !o% price and its a"i!ity to s8uee'e through p!aces %here "igger &ehic!es cou!d not go# ,t needed to "e ad&ertised as a I$ough !itt!e cheap Deep#G

CEJS1 $here see ed to "e a pro"!e en&isioned sa!es &o!u e# $he arket for sport uti!ity &ehic!e %as re!ati&e!y s a!!# ,n -.2/ it %as !ess than 36 in arket# $he goa! %as to "ui!d as annua! sa!es of 30,000 units %ithin 2 years the )#S of %hether the positioning cou!d generate the

of its introduction# $o achie&e this it %as re8uired to e+ceed the co "ined -.2/ sa!es of a!! i ported sport &ehic!es# C&5)-CT )!C7U) T$UC7. $he second option, positioning the Sa urai is as a co pact pickup truck# ;<ES1 ,t %ou!d tap a &ehic!es# ,t had the ad&antage that Dapanese trucks so!d %e!! in the )#S accounting for 5/6 of tota! -.2/ co pact pickup trucks# ,t had the high !e&e! of )S consu er(s acceptance# $he Sa urai cou!d "e used as a truck %hen purchased %ithout "ack seat or %hen its "ack seat %as fo!ded up# $he price %as set at the retai! price to keep it in co parison %ith Dapanese i ported trucks# $hus the positioning strategy %ou!d on!y indicate unifor ity %ith other truck prices "ut rather upho!d a serious, practica!, a!e-targeted tough truck# arket t%o and one-ha!f ti es the si'e of that for co pact sport uti!ity

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CEJS1 $o penetrate as a ne% co pany, price is one of the factors to attract custo ers# But it did not ha&e any price ad&antage o&er other si i!ar cars# SU%C&5)-CT C-$1 $he third option is to position the Sa urai as a su"co pact car# Sa urai ad&ertising copy shou!d e phasi'e the &ehic!e(s !ooks# $he uch cuter &ehic!e, the Sa uraiL ;<ES1 ;ositioning the Sa urai as a su"co pact car %ou!d open up the !argest of the three possi"!e arkets# A trend had "een de&e!oped that professiona! !ike !a%yers, doctors dro&e it to their offices !ea&ing their Mercedes at ho e# $he Sa urai "oasted an a&erage 22 dri&ing, %as priced !o%er than $hose %ho %ere shopping for i!es per ga!!on in co "ined city and high%ay ore &ersati!ity# consider it# an econo y car cou!d any su"co pact cars, and offered essage to consu er %ou!d "e IKhy "uy a oney, you can "uy a $oyota $erce! or a Jissan Sentra %hen, %ith the sa e a ount of

$hus the positioning strategy shou!d gi&e e phasis upon !ooks and sty!e of the car# CEJS1 ,f it %as positioned as a car then it ight not eet the e+pectations of the consu ers

"ecause the Sa urai %as "ui!t on a truck p!atfor , its ride %as stiffer and !ess co forta"!e than the !east-e+pensi&e su"co pact cars

8. What are the 1ros an3 cons of the 9Un:1ositioning; strategy?

U')&S!T!&'!'* ST$-TE*+1 )n-positioning is 9ust the opposite of positioning# ,t is offering a sing!e product to the entire arket#

Each person can define the product in his or her o%ns %ay and can rationa!i'e the purchase decision in his or he o%ns ter s# ;ear!stein Ad agency suggests that Sa urai SD /-3

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shou!d "e un-positioned in the

arket to co&er a!! three possi"!e seg entsM co pact sport

uti!ity &ehic!e, co pact pickup truck and su"co pact car# -#"-'T-*ES &, U')&S!T!&'!'*1 0arger $arget Custo ers1 >ue to un-positioning Su'uki Sa urai A erican Su'uki Motor Corporation (ASMC) gets the opportunity to target the entire potentia! consu ers seg ent# $he )n-positioned Su'uki Sa urai %i!! appea! the users of pick up truck, su"co pact cars and sports uti!ity &ehic!e# $hat ensures higher consu er acceptance "y offering a car for &arious needs# Custo er satisfaction1 ,f each consu er is a!!o%ed to persona!!y define the Sa urai, this %ou!d !ead to greater si i!arity "et%een the &ehic!e7s pro ise and its de!i&ery if Su'uki to!d custo ers %hat the Sa urai %asM "y c!ear!y defining the i age of the &ehic!e# @igher ;rofita"i!ity1 As un-positioning %i!! target a !arger custo er seg ents, it %i!! definite!y increase sa!es and thus add !arger profit to the co pany7s inco e state ent a!so# $hus this strategy is perfect!y co pati"!e %ith co pany7s goa! that is to esta"!ish ASMC as a )S# $hreat to Co petitors1 )n-positioning %i!! offer a car %ith different purpose# ,t %i!! a!so ser&e the purpose of &ersati!e transportation# $he "roader appea! of the car can reduce its co petitor(s sa!es and thus can guarantee sa!es co petitors7 sa!es ore than 6000 units in the first si+ ight deteriorate# onths# So, in the ean ti e, a9or car co pany in the

#!S-#"-'T-*ES &, U')&S!T!&'!'*1 0osing of present Custo ers1

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Su'uki Sa urai a!ready had its "rand appea! as a rugged uti!ity &ehic!e in Canada# $he sty!ish !ooking !itt!e 9eep a!ong %ith its sty!ish !ooks ade the car popu!ar as the uti!ity 9eep to hand!e dri&ing in rain, sno% and off-road# $he 9eep is popu!ar for going to fishing, ca ping and skiing# So, if other consu ers start to use it as su"co pact car or pick up truck, it %i!! !ose its "rand i age# ,t ight a!so happen that the present consu ers ight re9ect the 9eep %ith different appea!s# $hus !osing custo ers %i!! "e a greater !oss# 0oosing ;otentia! Market1 $he other possi"i!ity is if Sa urai SD /-3 cou!d try to "e the niche in the G$ough-0itt!e-Cheap DeepG seg ent they ight !and up as a arket !eader in that particu!ar seg ent# So, the arket "y co pany needs to sacrifice the possi"i!ity of "eing nu "er one in the niche accepting the G)n-positioningG strategy# $rou"!e for the Sa!es ;eop!e1 >ue to un-positioning strategy sa!es peop!e %i!! suffer for e+p!aining the &arious use of the car and it %i!! "e difficu!t for the to e phasi'e upon one particu!ar need to the "uyers# ,f t%o "uyers %ith different perceptions contact one sa!es an at a ti e, the sa!es an need to "e e+pert enough to se!! t%o cars for t%o different reasons at one sing!e ti e# ,ncreased Confusion1 Confusion %i!! arise a ong consu ers if Su'uki a&oid positioning# ;eop!e usua!!y use &ehic!es that they fee! as the car for their o%n con&enient# So, %hen they see that the car is a!so eant for different seg ent of peop!e, o"&ious!y they %i!! "e confused# $hus sa!es ight dropped out# $he ad&ertising agency %anted the car to "e positioned as Gantidote to traditiona! transportationG and thought an Ga!ternati&e to s a!!-car-"oredo G# $herefore, un-positioning cou!d therefore attract "uyers fro in the !ong run the co pany needs to high!ight a consu ers to purchase Sa urai SD /-3# a!! three-&ehic!e seg ents# But, oti&ate the

ore specific need to

<. What strategy =oul3 you recommen3 for the Suzuki Samurai in the U.S?

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$EC&55E'#E# ST$-TE*+1 ,n reco %e are going to suggest so e co fo!!o%s1 Market $argeting ;ositioning <e!ationship >istri"ution ;ricing ;ro otion and Ad&ertising

ending the strategies for Su'uki Sa urai in )SA,

ents a"out so e of the strategic issues# $hese are as

5-$7ET T-$*ET!'*1 Su'uki %ants its Sa urai to se!! e+tensi&e!y in the )S target arket it shou!d fo!!o% e+tensi&e targeting strategy#

arket# So to

$he car shou!d not "e for any specific Su'uki7s Marketing Strategy in the )#S# seg ent "ut for a!! %ho needs a car# ,t %i!! a+i i'e the sa!es of the car and thus %i!! increase re&enue and profit# Moreo&er, it is !ike!y to "ui!d custo er a%areness and eagerness to "uy a Sa urai in e&ery potentia! car "uyer# $here are !ess risk as the research sho%ed that there is huge de and for the ear!ier econo ica! (Both ode! and the arket %as preferring the Dapanese &ehic!e as they %ere ensured a"out the 8ua!ity of Dapanese product and these &ehic!es %ere i!eage and price)#

)&S!T!&'!'*1 $hree a!ternati&es, inc!uding sport uti!ity &ehic!e, co pact pick-up truck, and a su"co pact car, are entioned ear!ier to position Sa urai a ong the c!ients "ut research arket share ind# And that sho%s that custo ers percei&e the car in different %ays# $o achie&e higher and sa!es it %i!! "e un%ise for Su'uki to i pose any perception on consu ers e+c!ude !arge groups of potentia! "uyers# ?ro

is %hy it shou!d a&oid positioning the Sa urai as a specific type of &ehic!e so as not to the research the agency found out that a young or young-at-heart person is a prospect for Sa urai# Any sport uti!ity "uyer can "e attracted "y 9ust !ooking at the &ehic!e, it can "e percei&ed as an a!ternati&e to du!! auto o"i!es for s a!!-car "uyers and s a!! truck purchaser %ere "uying the than i port su"co pact cars# to use as cars

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A!though there are disad&antages regarding un-positioning the car "ut the 20-20 ru!e is app!ica"!e here# As the &ehic!e has e&ery characteristic to attract e&ery possi"!e seg ent, adoption fro any of the seg ents %ou!d get the 9o" done#

ore arket

CUST&5E$ SE$"!CE ST$-TE*+1 Custo er Ser&ice strategy shou!d a!so "e p!anned a ong the organi'ations, dea!ers and custo ers# ,n the arket etc a!one# So, Su'uki shou!d take odern %or!d of "usiness it is &ery hard for a sing!e organi'ation to run %ith the techno!ogy, financia! constraint, access to easures to "ui!d strategic a!!iance %ith potentia! a9or issues that can p!ay effecti&e ro!e in co panies in )S# <e!ationship a ong dea!ers and custo ers are a!so i portant# Custo er satisfaction and after sa!es ser&ices are t%o positi&e attitude and perception to%ards Sa urai(s success# %$-'#!'*1 As Sa urai is a ne% product in the a ong the potentia! custo ers# $he not ne% in the re!ia"!e# #!ST$!%UT!&'1 Su'uki can go for &ertica! integration syste distri"ution channe! "y one organi'ation# $he fir progra for distri"ution# :ertica! anage ent of the anager directs shou!d take is to arket it shou!d "ui!d a strong "rand i age aker of Sa urai, is ind# $he strategy that Su'uki

atter to consider is Su'uki, the

arket and a!ready it has a p!ace in custo ers ake efficient use of that identity to

ake the ne% "rand sta"!e and

,ntegration do inates the retai!ing sector# A pri ary feature of it is the that is the channe!

ing and coordination of channe! acti&ities and functions# Eperating ru!es and that is the

guide!ines indicate the functions of responsi"i!ities of each participant# Manage ent assistance and ser&ices are supp!ied to the participating organi'ations "y the fir increase sa!es of Sa urai# Addition intensi&e Sa urai to each dea!er in this regard# )$!C!'*1 As Su'uki a!ready fi+es price of the Sa urai, there is &ery !o% option to offer any pricing strategy for this car# But sti!! price can "e used in &arious %ays in the progra positioning strategy# $hese are1 ;rice arketing ay "e used as a signa! to "uyer "ecause ay channe! !eader# ASMC can a!so practice co petiti&e channe! strategy si u!taneous!y to ay "e offered to se!! certain nu "ers of

the price of Sa urai is &isi"!e to the "uyer and pro&ides a "asis of co parison "et%een "rands# ,t ay "e used to position the "rand as a high-8ua!ity product at a !ess price# ,t "e used as an instru ent of co petition# ,n the )S at H2000 - H-3000 %hi!e Sa urai is priced at H5..5# So, undou"ted!y it is a co petiti&e factor# ,t ay "e used to i pro&e financia! perfor ance of ost!y depends on financia! the co pany a!so# And producti&ity, e+pansion, in&est ent etc# arket a!! of the si i!ar cars are se!!ing

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perfor ance# $he !o% price of the Sa urai can "e used as penetration pricing strategy to capture greater share of the %hich short-ter ad&antage# At the sa e ti e Sa urai can en9oy the ad&antages of one-price strategy a!so that inc!udes ad inistrati&e con&enience, easier pricing process etc# )$&5&T!&' -'# -#"E$T!S!'*1 $he ad&ertising and pro otion "udget of ASMC for the first si+ onth is H2#5 i!!ion# $ypica!!y an auto o"i!e anufacturer spent NN6 of its aga'ines# $o ad&ertising do!!ars on te!e&ision ads, -06 on print ads, and 36 on high%ay "i!!"oards# $he print ads %ere to run in "oth genera!-interest aga'ines and enthusiast esta"!ish Sa urai as a car of custo ers7 perception, a co prehensi&eFintegrated pro otion strategy is "ad!y re8uired# $he o"9ecti&e of this strategy for Sa urai shou!d "e as fo!!o%s1 Creating or increasing "uyer a%areness of the car ,nf!uencing "uyer attitude to%ard the co pany Su'uki and the "rand Sa urai# Achie&ing increases in sa!es and target# 4enerating repeat purchase of the car# Encouraging tria! of the car# Attracting ne% custo ers %ith e+isting Su'uki c!ients# Encouraging !ong ter re!ationship# arketing co unication to integrate the pro otion arket share for specific custo er or prospect arket# ;enetration pricing ref!ects a !ong-ter perspecti&e in profits are sacrificed in order to esta"!ish sustaina"!e co petiti&e

Su'uki shou!d fo!!o% the integrated too!s "ecause, p!anning of arketing co persona! se!!ing, pu"!icity, direct arketing co

unication progra s are co prehensi&e# Ad&ertising, arketing, sa!es pro otion are a!! considered in the essages de!i&ered "y a!! edia are the sa e or unication progra s are targeted# $he pu"!ic

unication# $he

supporti&e of a unified the e# Marketing co or re!ated target the co Su'uki arkets# Marketing co

re!ation progra s, ad&ertising progra s, and dea!erFdistri"utor progra s a!! ha&e the sa e unication progra s coordinated e+ecution of a!! unication co ponents of the organi'ation# ay a!so app!y sa!es pro otion acti&ities to the fo!!o%ing groups to achie&e its goa!

of se!!ing designated nu "er of Sa urai# $hese are1

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 ;ro otion to consu er targets1 consu ers ti e period, or so e gifts %ith the purchase# ;ro otion to industria!Fsports tea fro such organi'ations# ;ro otion to channe! channe!

ay "e offered free ser&icing for certain ay "e gi&en for "ig orders ay "e announced to the

target1 >iscounts

e "ers1 ,ntensi&e or "onus

e "ers for se!!ing certain nu "er of &ehic!es#

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