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Marketing Management Project

Project Title: Creation of the Premium Bus Segment in India by Volvo


Product:-Volvo 9400

Contents
Acknowledgement................................................................................................................... 3
Executive Summary........................................................................................................... 3
EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project


Problem Statement............................................................................................................ 4
Situation Analysis............................................................................................................... 5
Volvo Marketing Plan for 9400 XL....................................................................................... 6
Brand performance and Position in the market:.................................................................7
Key opportunities and challenges for the brand.................................................................7
Business Strategy and Marketing Objectives- 2014-15......................................................8
Volvo Financial data........................................................................................................... 8
Volvo 9400 XL competition................................................................................................. 9
Volvo vs Tata Divo............................................................................................................ 12
Volvo vs Scania Metrolink................................................................................................. 12
SWOT Analysis................................................................................................................. 15
Market demand analysis and Forecast for FY 2015-16.....................................................16

Acknowledgement
EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project


The study of this report is intended to understand the current marketing plan for
Volvo buses in luxury segment in India and forecast the plan for next financial year as
part of the course requirement for the Marketing Management in the 1st quarter of
the Executive Post Graduate Program (EPGP-07) from IIMK under the guidance of Prof.
Joffi Thomas.

Executive Summary

In the year 2001, Volvo Buses entered Indian market.


First time Indian passengers witnessed a world class air conditioned intercity
coaches as public transport.
The Volvo 9400 is an intercity coach designed in Europe and built in India at Volvo
Buses facility at Hosakote, Bangalore.
These Buses perfectly suited for long distance intercity operations, ideal for
excursions as well as short trips for city tourism.
The Volvo 9400 also features Volvo disc brakes with EBS (Electronic Brake System)
which offers excellent braking performance and rapid, gentle and controlled
braking.
The current Volvo model 9400 6x2 multi-axle takes the intercity coaches
performance to the next level.
Volvo 9400 XL is an advanced transport solution for operators and passengers.
Current situation many international players are eyeing to capture the market
share in India with ultra-luxury intercity transport solutions.

Problem Statement
Volvo Buses see a dip in market demand for their luxury buses in recent years, deliveries
during 2012-2013 were only 237 buses from R&D center located in Bangalore R&D
center 28% lower than the previous year. Order intake for the next 2014 Q1 also has
witnessed a declined trend for intercity buses by 16%.

EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project


The recently launched Volvo 9400XL buses with D9B 340 257 kW (340 hp) @ 1900 rpm
output offers greater performance and occupancy level. This segment of intercity
transport is launched in 8.5 M INR which 25% higher than closest competitor TATA Divo
(price 6.6 M INR). Ashok Leyland iT09 also competes Volvo 9400 XL on Indian roads but
in lesser price point at 2.2 M INR. Scania Metrolink and Mercedes-Benz 3 axial luxury
coaches also join the public transport intercity market segments, creating challenge for
Volvo to retain market capture.
Cheaper price of flights and multiple ticket quotas declared by Indian railways also
making impact on intercity travel by roads.
Volvo Global Group declares 9% decline in sales to SEK 272.6 billion (299.8) against
last year which reduces the investment opportunity in emerging markets and leads to
the cost cutting and product reformation. Volvo India observed restructure in operating
margin which reduces the operating cost in the center. Volvo Group is looking for
extensive product renewal in current year and moving away from large segment buses to
medium segment buses.
Volvo buses early entry to Indian market helps to capture major market share of 74%
which has been reduced by 2% from the previous year.
Safety Concerns: Recent Accidents
Volvo, manufacturers of thousands of buses running on Indian roads, said the blaze that
charred to death 45 passengers on the Bangalore-Hyderabad bus, might have been
caused by a fuel tank explosion.

45 killed as speeding bus headed to Hyderabad catches fire


Two Gruesome Bus Accidents In India Put Spotlight On Bus Maker Volvo

Situation Analysis

EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project

EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project

Volvo Marketing Plan for 9400 XL


Brand History
Volvo is one of the world's largest manufacturers of buses and bus chassis. Volvo Buses'
product programme comprises city buses, intercity buses and tourist coaches, and
services in the areas of financing, servicing, vehicle diagnostics and traffic information
systems.
Volvo Buses has approximately 7900 employees worldwide, with production activities in
Europe, North and South America, Asia and Africa.The head office is in Sweden,
Gothenburg, where product planning and product development are primarily
concentrated.
Volvo Buses also has a wide-ranging distributor network for aftermarket services with
servicing and spare parts distribution at 1 200 workshops located in over 80 countries.
Volvo launched its new range of buses comprising the city buses and coaches, aimed at
interstate routes and cities. They expanded range of Volvo buses in India including its
premium feature enriched segment 9400 XL which is expected to address Volvos recent
fear over losing market share to its competitors. The Volvo 9400 XL is campaigned as
EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project


the drive quality of life with its enhanced safety features and performance. Volvo
expects more than 50% sales coming from Asian market in future years and hence it is
primarily targeting Indian public transport market. Volvo 9400 XL is going to be show
cased in Delhi Auto Expo while launching the buses later in time. Volvo is marketing its
new product as the instrument to cater to the local needs of emerging market. Unlike its
predecessors this segment is going to be the value segment with 20% cheaper than
previous segment so intercity buses.
Passenger comfort and driving safety being the key agenda of the product development,
this bus is developed with multiple unique features. Electronically controlled brake
system (EBS) which further amplifies the safety for 9400 6X2. Volvo 9400 XL offers low
noise and vibration-free interiors with ergonomic seats and a perfect climate controlled
environment. Roof mounted air conditioning system and heat insulated window take the
passenger comfort to next level.
This ultra-luxury bus is going to be launched in 13 cities in India including 4 metros and
other tire I, tire II cities to increase awareness of the company and products.

Brand performance and Position in the market:


Volvo 9400XL is the first multi-axle in India and has raised the industry Standards again.
Within a year since its introduction, it has become the bestselling coach in the country,
leading across all elements - comfort & safety for passengers and offering the best in
transport economy for the fleet operators. With advanced features like electronic
suspension, electronic brakes, the latest
Generation engine management system among other industry-leading features, the
Volvo 9400XL has set the standards once more. India is progressing and Volvo Buses will
continue to ensure that the future is safer and friendlier for all - drivers, passengers,
customers and everyone associated.

Key opportunities and challenges for the brand

Redefined efficient bus travel with high vehicle uptime, ride comfort, transport
economy, a flexible and versatile design that offers reliable, safe and profitable
transport solutions.
It translates into increased revenues and improved transport economy and for
the passengers it means an even more comfortable ride on long distance
travel.
Market share of 82 per cent in premium coaches.
EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project

Expensive compared to the competitors.


Localization of parts only till 35-40%.
Low penetration in Indian cities.
Few skilled drivers.

Business Strategy and Marketing Objectives- 2014-15

Increase
Increase
Increase
Increase

localization to reduce cost, source engines from its Pithampur plant .


the city operations to 15.
the number of trained drivers to 25000.
the presence of buses to 5000+

Volvo Financial data


Operating Income and Operating margin
Volvo Group's operating income amounted to SEK 7,138 M (18,069).Operating income for the
Industrial Operations decreased to SEK 5,616 M compared with SEK 16,573 M in the
preceding year. The Customer Finance operations' operating income rose to SEK 1,522 M

(1,496).

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Marketing Management Project


Net Sales
Net sales for the Volvo Group decreased by 9% to SEK 272,622 M in 2013, compared
with SEK 299,814 M in the preceding year.

Volvo 9400 XL competition


Table II: Comparing marketing plan of the selected brand with close
competition
Elements of
Marketing Plan
Brand performance
and Position in the
market
(Compare Sales,
market share
(category
/segment), growth
over years),
profitability)

Volvo 9400 XL
76% Market
share
Monopoly in
Inter-City
Market
segment
20 coaches
from 2001 to
5000 in Dec-11

Tata Divo
Launched in
Dec 2011.
150-200
units
annually.

Scania
MetroLink
Scania is
also a
Swedish
manufactur
er and is a
tough
competitor
for Volvo in
European
market.
Entered
Indian
market in

EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project


2013
Key opportunities
and challenges for
the brand
(outcome of
situation analysis)

Tap Tier II and


tier III markets
where still the
market is ruled
by Non-Luxury
segment.
Maintain the
monopoly in
Luxury Bus
segment which
they got as
party of first
mover
advantage.

Increase
the
production
and
promotion.
Provide
better
services
and comfort
Fight for the
remaining
competition
and
gradually
compete
with Volvo.

Business Strategy
and Marketing
Objectives- 201415

Increase
localization to
reduce cost,
source engines
from its
Pithampur
plant
Increase the
city operations
to 15.
Increase the
number of
trained drivers
to 25000.
Increase the
presence of
buses to
5000+

Increase
their
production
and meet
the target
of selling
150-200
buses
annually.
Tata Motors
will also
launch
multi-axle
Divo in
fiscal 2014.

Promotion
and fight
for market
place.
Increase
their
production.
Can use
the
advantage
to compete
with Volvo
being a
successful
competitor
to it in
European
market.
Target of
1,000
selling
buses per
year in the
Indian
market
within the
next five
years and
employee
about 800
people at
this facility.

Current
Marketing
Strategy
Target Segment(s)
EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project


( share of brand in
different targeted
consumer
segments)
Positioning
Statement
Marketing
Program
Product & brand
Management
(analyse product
mix; product/brand
extension
decisions in the
past)

Luxury Segment

Luxury Segment

Luxury Segment

Volvo 9400 XL
Volvo 9400
Volvo 8400 (Low
Floor)
Volvo introduced
9400XL as a brand
extension strategy
Introducing a 14 Ft
bus in India.

Tata Divo
Tata Starbus Ultra
Tata Introduced
DIVO as a product
line extension
strategy

Scania Metrolink
Scania Citywide

Promotions:
promotion mix,
spends (analyse
successful /not so
successful
campaigns for
insights)

It ran commercials in
film theatres.

Scania entered
into India market
with a JV with L&T
for Trucks. And
further extended
their product line
to enter the bus
segment in 2013.
Privided 2 buses
to KSRTC for a
trial run

Before launching the


B7R in 2001, it
sought driver and
passenger feedback.

Volvo imported two


Volvo B7R inter-city
buses from Hong
Kong and Singapore,
and sent them out on
a six-month
demonstration drive
West and South India

PAN India

South India

Pricing Strategy
(brand extension,
variants and
pricing)

78 Lakhs

66 Lakhs

85 Lakhs
(approx.)

Future prospects of

High Growth Potential

High Growth

High Growth

Place: Channel
share

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Marketing Management Project


the brand
(Growth potentialHigh, Medium,
Low- Why?)
&efforts required in
attaining business
objectives

To expand its
presence in the
country, the
company has also
launched Volvo
9100 coach for
routes that cater
specially to tier-II
and -III cities.
Localization to
reduce the
manufacturing
cost
Pay per use
model/ leasing of
Buses
Plant capacity is
5000 units/year
as against the
current production
of 600 units/years
15% of the
aftermarket cost
goes as good will
and can be
optimized by
educating
customers

Potential

Potential

Increase
product
awareness by
Promotions
through
advertisements
Product
differentiatorlow cost as
their USP
Leveraging
long term
TRUST factor in
Indian market
for future
growth

Increase
product
awareness by
Promotions
through
advertisement
s
Product
differentiatorQuality
product, Brand
value
Free demo
buses to
increase brand
awareness

Volvo vs Tata Divo


The second-largest bus manufacturer in the world after Daimler Benz is aiming for a 50%
market share by 2015 in the super luxury bus segment, where Volvo rules with a 60-70%
market share.These buses cost between Rs60 lakh and Rs90 lakh.Tata Motors launched
Divo, priced at Rs66 lakh (ex-showroom Thane) for the western region.
We are looking at a scooping up half of this market in three years, said Ashish Tondon,
head - marketing - buses for Tata Motors.
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Marketing Management Project


Growth in the bus segment is seen flat this fiscal due to slower orders from state
transport undertakings under the Jawaharlal Nehru National Urban Renewal Mission.
According to Society of Indian Automobile Manufacturers Association, the industry sold
43,000 buses this year.
However, luxury coach segment has been growing in double digits with orders coming
from private fleet operators. The overall super luxury segment remains a niche market
as of now with 40-50 buses sold in a month or 600 buses a year.
Tata Motors is planning to sell around 150 in the first year and 500 down the road.
Though we are little late to enter this segment, we are hopeful that a Tata brand will
work in our favour, said Ravi Pisharody, president - commercial vehicles business unit
for Tata Motors.
According to the company, Divo is priced at least 10% cheaper than existing products in
the market. To further expand the super luxury bus range, Tata Motors is also planning to
launch a multiaxle super luxury coach by fiscal 2014. The company showcased the
product during the Auto Expo in Delhi in January this year.
Tata Motors offers value for money on their luxury buses. It can surely be a tough
competitor in this segment, said an analyst from PINC Research. Along with Divo, Tata
Motors also launched Starbus Ultra for the intra-city requirements. The company
launched Divo in December last year for the Northern region.

Volvo vs Scania Metrolink


Scania Metrolink is a premium multi-purpose coach from the Swedish manufacturer for
medium and long-distance travel, specially designed to meet the needs of both the
driver and the passengers.
The Inter-city luxury bus segment in India is long-dominated and completely
monopolised by Volvo for more than a decade. Volvo entered the market in 2001 to mark
the beginning of a new era -with true bus chassis concept, low floor city buses, multiaxle coaches, and host of comfort and safety. There was hardly a direct substitute for its
likeness, but Indian buses with the expertise of local bus body builders have flared so
well that costly Volvo could hardly penetrate beyond the periphery of the market.
Mercedes Benz does offer series of luxury intercity buses in the single rear axle (4x2)
configuration, as does Isuzu Motors, but both are comparatively new to the market and
are gradually gaining momentum. At least in the past few years, escalating market
standards and consumer requirements have resulted in more takers for Volvo buses. Now
Scania is here to test the sector. The Volvo 9400 finally gets a strong rival. In fact,
Metrolink is the only rival to the 9400 in the 14-metre, multi-axle (6x2) segment in India.
The coaches are assembled from CKD units with localisation of 30% initially. Let us
explore both of them in detail.

Engine and Output


The Metrolink coaches are powered by Scania's 13-litre 6-cylinders turbo-charged DC 13
diesel engine, producing a max power of 410 bhp @ 1900 rpm and max torque of 2000
Nm @ 1000-1350 rpm. The engine is coupled with an 8-speed fully automatic Opticruise
gearbox, a build-in retarder and an inter-cooler. It is Euro-III compliant and is capable of
EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project


running in Ethanol ED95 fuel configuration i.e a fuel mixure of 95% ethanol and 5%
ignition improver (often used in modified diesel engines). In fact, the company claims
that its entire engine lineup is compatible with ethanol and bio-diesel. Scania has also
started trial runs of Ethanol powered city buses at the city of Nagpur.

Scania's Driver Seat

While Volvo 9400 has in its rear a comparably smaller 9-litre 6-cylinders D9B diesel
motor that is Turbo-charged and Intercooled, with a build in retarder. The max output
values are 340 bhp of power and 1600 Nm of torque. It comes with a 6-speed mannual,
fully synchronised gearbox. The motor is Euro-III compliant as well. It is to be noted that
Volvo has not updated its engine offering for a fairly long time owing to its monopoly and
high sales. I don't think it can be that lethargic anymore!

Dynamics
The hydraulic power assisted steering system with a circulating ball-and-nut type
steering gear enables small turning circle (considering its length) for both the buses. The
9400 has a turning radius of 10.5 metres while the Metrolink has a little larger radius at
12.5 metres. Ground Clearance for both the coaches is 270 mm. Pneumatic (Compressed
Air) suspension is a standard features in all wheels with almost same configuration in
both 9400 and Metrolink.
The Metrolink has a speed limiter at 90 kmph, while the Volvo can touch a top speed of
100 kmph. Sophisticated suspension system with multi-axle configuration lends a
balanced center-of-gravity and superior high speed stability for the buses.

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Marketing Management Project

Safety
This class of luxury coaches are loaded with safety features, which are desperately
absent in every others buses on our roads. Of course you pay too much for these luxury
liners, but considering the instances of highway accidents by intercity buses and their
massive death tolls, we have to understand its importance. Because every buses carry
almost same amount of passengers, and even our modern low-cost Tata and AL buses
are capable of reaching a max speed of 100 kmph on open highways. So vulnerability is
indeed the same for every intercity buses.
Both the Metrolink and the Volvo 9400 enjoy disc brakes in all wheels, ABS and Electronic
Braking System, Electronic Stability Programme, Electronic stability programme, Hill
Hold, and seat belts. In addition, the Metrolink gets Traction Control and reversing
camera. Since both the coaches are built on a strong frame upon ladder-frame chassis,
roll-over protection is much better than a typical custom-built coaches. Radial tube-less
tyres in both the coaches ensure better road grip and stability.

Comfort

Unlike cars, these coaches comes with variety of optional packages. Buyers can choose
among accessories like curtains on windows, reading lights, gangway lights, LED
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Marketing Management Project


Screens, DVD player, Radio/USB, Speakers with sub-woofers, Refrigerator, Lavatory in
both the models. Air conditioning is standard. Scania comes with Radio, 2 LCD screen in
front and middle as standard.

Neutral

Ok, I lied. It isn't a 'Swedish Clash' in true sense. In fact there is nothing like Swedish or
German or American! Every automobile of our times are "Global" is strict sense. Volvo is
now owned by Geely (a Chinese firm) and earlier by Ford. Scania now belongs to VW
group. But it's little exotic to use such phrases of nationalities and to exploit stereotypes
associated to them, and so media loves to do so. I'm too!

Don't ask me Scania or Volvo. It isn't that


simple to answer. Truly, I haven't even taken a ride in the new Metrolink. Even more, I
don't even have a proper driving license for CVs to sit behind their wheels to say which
drives better! And even if I get one soon, damn it - they cost almost 100 lakhs, who's
gonna give a free drive so easily? But the whole point is that we have got a new liner in
the segment, the only rival to the Volvo 9400. That's lot!
And to the question of which looks better, that I was deliberately trying to avoid, again, it
is not like cars to comment. Buses are boxy and tall, there is no big deal here! But I like
the use of black tone in the face and the panels of the Metrolink. The rear design is also
little different. I'm bored of Volvo's looks, so why not consider newbie??

SWOT Analysis
EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project

Market demand analysis and Forecast for FY 2015-16

EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project

From the above exhibit it is clear that the demand for luxury buses in India will
be 7479 units in 2015 -16. As Volvo is the market leader we could estimate
companys sales target to be 65% of the market demand. Hence the projected
volume should be 4681 Units.

EPGP07 - Indian Institute of Management - Kozhikode

Marketing Management Project


Reference:http://wagenclub.blogspot.in/2014/09/scania-metrolink-vs-volvo-9400swedish.html#sthash.FzhJUF6g.dpuf
http://bangalore.citizenmatters.in/articles/4710-in-bangalore
http://planningcommission.nic.in/aboutus/committee/wrkgrp11/wg11_roadtpt.pdf
www.volvobuses.com/SiteCollectionDocuments/VBC/india/BUS%20STOP%20NEWS
%20ISSUE_01-2011.pdf
http://www.motorindiaonline.in/buses/volvo-buses-remains-unchallenged/
http://www.dnaindia.com/money/report-with-cheaper-divo-tamo-aims-at-volvo-1662514

EPGP07 - Indian Institute of Management - Kozhikode