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Case Study On Suzuki Samurai: Course: Strategic Marketing (EMB620)
Case Study On Suzuki Samurai: Course: Strategic Marketing (EMB620)
Prepared By
.....
Submitted To
Dr. Riad Mahmud
North South University
Table of Contents
Preface................................................................................................................... iii
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Preface
As a part of a case study of Strategic Marketing (EMB-620) Course, this formal repot
has been prepared. The whole report covers on the case analysis of the positioning
strategy of Suzukis new entrant into the U.S. automobile market with the Suzuki
Samurai brand. All the analysis & explanation have been written in this report on the
basis of the provided case information.
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Though it is close to exclusive distribution that is characterized by high margin, high profit
and low volume, Mazza adopted with an opposite view. The company aimed to gain market
response for its high quality with low price advantage. Thus their strategy was to sell high
volume with low profit margin.
Engage a strong dealership bigger than traditional based on the belief that quick dealer
profitability would be key to successas a dealers sales opportunities grew, so too would
the financial commitment and overhead.
Dealerships selected with trading areas that encompassed zip codes with high
concentrations of households that fell into Suzukis target market.
Cost efficient product (almost half the traditional one) to attract & catch the customer quickly.
Focus on early entry (Before Hyundai Motor Company of South Korea and Zavodi Crvena
Zastava (Yugo) of Yugoslavia,)
Introduce several unique vehicles into the U.S (the always something different car company)
Establishing its own presence in the U.S automobile industry for independence
(collaboration with GM is not guaranteed to continue)
NEW PRODUCT DESIGN: (SJ413) for customer attractiveness & product modification for
overcoming import barrier for big quantities.
Chose to introduce the Samurai into California, the nations largest automobile market, and
Florida and Georgia, where Japanese import sales were higher then the U.S. average
PRODUCT DIFFERENTIATION: To grab different market segment by two different products,
a convertible and a hard-top.
2. What are the three major positioning options (as per industry
practice) according to a vehicles physical characteristics? What
are the pros and cons of positioning the Samurai in each of these
segments individually?
Before Suzuki could enlist dealers, it had to decide how to position the Samurai to
consumers. The position it chose would help define the vehicles target market which, in
turn, would influence ASMCs preferred dealer locations.
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CONS:
There seemed to be a problem of whether the positioning could generate the
envisioned sales volume.
The market for sport utility vehicle was relatively small. In 1984 it was less than 3% in
the U.S market. The goal was to build as annual sales of 30,000 units within 2 years
of its introduction. To achieve this it was required to exceed the combined 1984 sales
of all imported sport vehicles.
COMPACT PICKUP TRUCK:
The second option, positioning the Samurai is as a compact pickup truck.
PROS:
It would tap a market two and one-half times the size of that for compact sport utility
vehicles.
It had the advantage that Japanese trucks sold well in the U.S accounting for 54% of
total 1984 compact pickup trucks.
It had the high level of US consumers acceptance.
The Samurai could be used as a truck when purchased without back seat or when its
back seat was folded up.
The price was set at the retail price to keep it in comparison with Japanese imported
trucks. Thus the positioning strategy would only indicate uniformity with other truck
prices but rather uphold a serious, practical, male-targeted tough truck.
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CONS:
To penetrate as a new company, price is one of the factors to attract customers. But it did not
have any price advantage over other similar cars.
SUBCOMPACT CAR:
The third option is to position the Samurai as a subcompact car. Samurai advertising copy
should emphasize the vehicles looks. The message to consumer would be Why buy a
Toyota Tercel or a Nissan Sentra when, with the same amount of money, you can buy a
much cuter vehicle, the Samurai?
PROS:
Positioning the Samurai as a subcompact car would open up the largest of the three
possible markets.
A trend had been developed that professional like lawyers, doctors drove it to their
offices leaving their Mercedes at home.
The Samurai boasted an average 28 miles per gallon in combined city and highway
driving, was priced lower than many subcompact cars, and offered more versatility.
Those
who
were
shopping
for
an
economy
car
could
consider
it.
Thus the positioning strategy should give emphasis upon looks and style of the car.
CONS:
If it was positioned as a car then it might not meet the expectations of the consumers
because the Samurai was built on a truck platform, its ride was stiffer and less
comfortable than the least-expensive subcompact cars
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be un-positioned in the market to cover all three possible segments; compact sport utility
vehicle, compact pickup truck and subcompact car.
ADVANTAGES OF UNPOSITIONING:
Larger Target Customers:
Due to un-positioning Suzuki Samurai American Suzuki Motor Corporation (ASMC) gets the
opportunity to target the entire potential consumers segment. The Un-positioned Suzuki
Samurai will appeal the users of pick up truck, subcompact cars and sports utility vehicle.
That ensures higher consumer acceptance by offering a car for various needs.
Customer satisfaction:
If each consumer is allowed to personally define the Samurai, this would lead to greater
similarity between the vehicle's promise and its delivery if Suzuki told customers what the
Samurai was; by clearly defining the image of the vehicle.
Higher Profitability:
As un-positioning will target a larger customer segments, it will definitely increase sales and
thus add larger profit to the company's income statement also. Thus this strategy is perfectly
compatible with company's goal that is to establish ASMC as a major car company in the
US.
Threat to Competitors:
Un-positioning will offer a car with different purpose. It will also serve the purpose of versatile
transportation. The broader appeal of the car can reduce its competitors sales and thus can
guarantee sales more than 6000 units in the first six months. So, in the mean time,
competitors' sales might deteriorate.
DISADVANTAGES OF UNPOSITIONING:
Losing of present Customers:
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Suzuki Samurai already had its brand appeal as a rugged utility vehicle in Canada. The
stylish looking little jeep along with its stylish looks made the car popular as the utility jeep to
handle driving in rain, snow and off-road. The jeep is popular for going to fishing, camping
and skiing. So, if other consumers start to use it as subcompact car or pick up truck, it will
lose its brand image.
It might also happen that the present consumers might reject the jeep with different appeals.
Thus losing customers will be a greater loss.
Loosing Potential Market:
The other possibility is if Samurai SJ 413 could try to be the niche in the "Tough-Little-Cheap
Jeep" segment they might land up as a market leader in that particular segment. So, the
company needs to sacrifice the possibility of being number one in the niche market by
accepting the "Un-positioning" strategy.
Trouble for the Sales People:
Due to un-positioning strategy sales people will suffer for explaining the various use of the
car and it will be difficult for them to emphasize upon one particular need to the buyers.
If two buyers with different perceptions contact one salesman at a time, the salesman need
to be expert enough to sell two cars for two different reasons at one single time.
Increased Confusion:
Confusion will arise among consumers if Suzuki avoid positioning. People usually use
vehicles that they feel as the car for their own convenient. So, when they see that the car is
also meant for different segment of people, obviously they will be confused. Thus sales
might dropped out. The advertising agency wanted the car to be positioned as "antidote to
traditional transportation" and thought an "alternative to small-car-boredom".
Therefore, un-positioning could therefore attract buyers from all three-vehicle segments. But,
in the long run the company needs to highlight a more specific need to motivate the
consumers to purchase Samurai SJ 413.
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Although there are disadvantages regarding un-positioning the car but the 80-20 rule is more
applicable here. As the vehicle has every characteristic to attract every possible market
segment, adoption from any of the segments would get the job done.
CUSTOMER SERVICE STRATEGY: Customer Service strategy should also be planned
among the organizations, dealers and customers. In the modern world of business it is very
hard for a single organization to run with the technology, financial constraint, access to
market etc alone. So, Suzuki should take measures to build strategic alliance with potential
companies in US. Relationship among dealers and customers are also important. Customer
satisfaction and after sales services are two major issues that can play effective role in
positive attitude and perception towards Samurais success.
BRANDING: As Samurai is a new product in the market it should build a strong brand image
among the potential customers. The matter to consider is Suzuki, the maker of Samurai, is
not new in the market and already it has a place in customers mind. The strategy that Suzuki
should take is to make efficient use of that identity to make the new brand stable and
reliable.
DISTRIBUTION: Suzuki can go for vertical integration system for distribution. Vertical
Integration dominates the retailing sector. A primary feature of it is the management of the
distribution channel by one organization. The firm that is the channel manager directs
programming and coordination of channel activities and functions. Operating rules and
guidelines indicate the functions of responsibilities of each participant. Management
assistance and services are supplied to the participating organizations by the firm that is the
channel leader. ASMC can also practice competitive channel strategy simultaneously to
increase sales of Samurai. Addition intensive may be offered to sell certain numbers of
Samurai to each dealer in this regard.
PRICING: As Suzuki already fixes price of the Samurai, there is very low option to offer any
pricing strategy for this car. But still price can be used in various ways in the marketing
program positioning strategy. These are: Price may be used as a signal to buyer because
the price of Samurai is visible to the buyer and provides a basis of comparison between
brands. It may be used to position the brand as a high-quality product at a less price. It may
be used as an instrument of competition. In the US market all of the similar cars are selling
at $8000 - $13000 while Samurai is priced at $5995.
So, undoubtedly it is a competitive factor. It may be used to improve financial performance of
the company also. And productivity, expansion, investment etc. mostly depends on financial
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performance. The low price of the Samurai can be used as penetration pricing strategy to
capture greater share of the market. Penetration pricing reflects a long-term perspective in
which short-term profits are sacrificed in order to establish sustainable competitive
advantage.
At the same time Samurai can enjoy the advantages of one-price strategy also that includes
administrative convenience, easier pricing process etc.
PROMOTION AND ADVERTISING: The advertising and promotion budget of ASMC for the
first six month is $2.5 million. Typically an automobile manufacturer spent 77% of its
advertising dollars on television ads, 10% on print ads, and 3% on highway billboards. The
print ads were to run in both general-interest magazines and enthusiast magazines. To
establish Samurai as a car of customers' perception, a comprehensive/integrated promotion
strategy is badly required. The objective of this strategy for Samurai should be as follows:
Creating or increasing buyer awareness of the car Influencing buyer attitude toward
the company Suzuki and the brand Samurai.
Achieving increases in sales and market share for specific customer or prospect
target.
Generating repeat purchase of the car.
Encouraging trial of the car.
Attracting new customers with existing Suzuki clients.
Encouraging long term relationship.
Suzuki should follow the integrated marketing communication to integrate the promotion
tools because, marketing communication programs are comprehensive. Advertising,
personal selling, publicity, direct marketing, sales promotion are all considered in the
planning of marketing communication. The messages delivered by all media are the same or
supportive of a unified theme. Marketing communication programs are targeted. The public
relation programs, advertising programs, and dealer/distributor programs all have the same
or related target markets. Marketing communication programs coordinated execution of all
the communication components of the organization.
Suzuki may also apply sales promotion activities to the following groups to achieve its goal
of selling designated number of Samurai. These are:
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Promotion to consumer targets: consumers may be offered free servicing for certain
time period, or some gifts with the purchase.
Promotion to industrial/sports team target: Discounts may be given for big orders
from such organizations.
Promotion to channel members: Intensive or bonus may be announced to the
channel members for selling certain number of vehicles.
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