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A PROJECT REPORT ON

STUDY OF DOMESTIC AND INTERNATIONAL MARKETING STRATEGIES OF


RENAULT DUSTER

SUBMITTED BY
MR. KAUSHIK GANWANI
ROLL NO: 1615512
M.COM SEM- 4
(BUSINESS MANAGEMENT)
ACADEMIC YEAR: 2016-17

UNDER THE GUIDANCE OF PROJECT GUIDE


PROF. SHREE VARAHAN

SUBMITTED TO UNIVERSITY OF MUMBAI


MULUND COLLEGE OF COMMERCE
S N ROAD, MULUND (WEST)
MUMBAI 400080
Declaration from the Student

I, KAUSHIK GANWANI Roll No. 1615512 STUDENT OF MULUND


COLLEGE OF COMMERCE, S.N.ROAD, MULUND (WEST) MUMBAI-
400080, STUDYING IN M.COM PART-2 HEREBY DECLARE THAT I
HAVE COMPLETED THE PROJECT ON STUDY OF DOMESTIC AND
INTERNATIONAL MARKETING STRATEGIES OF RENAULT DUSTER

UNDER THE GUIDANCE OF PROJECT GUIDE PROF. SHREE VARAHAN


DURING THE ACADEMIC YEAR 2016-17. THE INFORMATION
SUBMITTED IS TRUE TO THE BEST OF MY KNOWLEDGE.

Date: 05-04-2017

Signature
Place: MUMBAI
CERTIFICATE

I, PROF. SHREE VARAHAN, HEREBY CERTIFY THAT MR. KAUSHIK


GANWANI Roll No. 1615512 OF MULUIND COLLEGE OF
COMMERCE , S.N. ROAD, MULUND (WEST) MMBAI- 400080 OF
M.COM PART- 2 (BUSINESS MANAGEMENT) HAS COMPLETED HIS
PROJECT ON STUDY OF DOMESTIC AND INTERNATIONAL MARKETING
STRATEGIES OF RENAULT DUSTER DURING THE ACADEMIC YEAR
2016-17. THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO
THE BEST OF MY KNOWLEDGE.

Project Guide Principal


PROF. SHREE VARAHAN MRS.PARVATHI VENKATESH

Co-coordinator External Examiner


PROF. S.A PAWAR SIR

ACKNOWLEDGEMENT
I WOULD LIKE TO EXPRESS MY SINCERE GRATITUDE TO PRINCIPAL OF MULUND
COLLEGE OF COMMERCE DR. (MRS.) PARVATHI VENKATESH, COURSE CO-ORDINATOR
PROF. S.A. PAWAR AND OUR PROJECT GUIDE PROF. SHREE VARAHAN, FOR PROVIDING
ME AN OPPORTUNITY TO DO MY PROJECT WORK ON STUDY OF DOMESTIC AND
INTERNATIONAL MARKETING STRATEGIES OF RENAULT DUSTER. I ALSO
WISH TO EXPRESS MY SINCERE GRATITUDE TO THE NON-TEACHING STAFF OF OUR
COLLEGE. I SINCERELY THANK TO ALL OF THEM IN HELPING ME TO CARRYING OUT
THIS PROJECT WORK. LAST BUT NOT THE LEAST, I WISH TO AVAIL MYSELF OF THIS
OPPORTUNITY, TO EXPRESS A SENSE OF GRATITUDE AND LOVE TO MY FRIENDS AND
MY BELOVED PARENTS FOR THEIR MUTUAL SUPPORT, STRENGTH, HELP AND FOR
EVERYTHING.

PLACE: MUMBAI

SIGNATURE

DATE: 05-04-2017

SR.NO CHAPTER
Declaration from the Student
Certificate
Acknowledgement
1 About Renault
2 Renaults Business Objectives
3 Strategies adopted by Renault in France
4 Background of Renault for Indian Market
5 Marketing Strategies of Renault in India
6 Dusting off the Competition - Conclusion
Bibliography

About Renault
Renault is a French Automobile giant. Its models are highly awarded, having won the coveted
European Car of the Year award 6 times in the last 40 years along with numerous national-
level awards in Spain, Australia, Ireland, the United States, Denmark, and elsewhere. It
commenced its India operations in terms of sales from mid-2011 in partnership with its global
partner Nissan Motor Company, having signed a Memorandum of Understanding (MOU)
with the Government of Tamil Nadu in February 2008 to set up a manufacturing plant in
Oragadam near Chennai. This marked their second innings in India after having endured a
flop stint earlier. It is, as of today, the largest European brand in the Indian car market, en
route to closing 2016 with a market share of 5 per cent.

The Renault Duster is a compact Sport Utility Vehicle (SUV) which uses the proven and
potent 1.5-litre dCi K9K diesel engine, churning out maximum power output of up to 110PS.
Having been launched on the 4th July, 2012 in India, it has gone on to spellbind the industry
and consumers alike. The model has won several prestigious awards (more than 29) including
the eminent Indian Car Of The Year (ICOTY) 2013. It has changed the way India looks at
SUVs with cranking the sales figures to the tune of 140,000 plus since launch. Priced in the
8-14 lac range, it is currently available in 12 different variants, out of which 10 are diesel
(including All-Wheel Drive system option) and 2 are petrol.

Renaults Business Objectives


When French automotive behemoth first entered India, it was through a joint venture with
Mahindra & Mahindra. It bet big on their maiden product offering Logan a mid-sized
sedan that was launched in 2007. But the car, with its pass looks and costly pricing, failed to
woo the Indian consumers. The magnitude of failure was such that Renault ended up calling
off the joint venture in 2010. Its brand name took a colossal hit in India. Therefore, the
purpose was clear to re-establish Renaults image in India, and also to rebuild its footprint
in the country from the scratch. And, so the models Fluence and Koleos were launched in
May and September of 2011 respectively. These were basically positioned as image drivers.
The next to get introduced was the Pulse in January 2012, aimed at further resurrecting its
image and importantly to lead sales, although it was also positioned as a premium offering.
However, none of these models could hit well on the sales chart. Hence, Renault needed a
volume driver. And, thats when the Duster came in the picture with Renault identifying a
gap in the SUV segment in the price range of 8-12 lacs. Hence, they conducted various
studies and researches to really understand the Indian consumer. They had to be bang-on this
time. They came to know that the Exterior design was a critical factor in the purchase. People
looked-for an SUV with rugged, butch looks but at the same time with the comfort and fuel
efficiency of a sedan. Riding on this came the Indian version of the Duster. However, Renault
knew that this was not enough and that they had to go further. The segment consisted of the
Mahindras and Tatas which offered butch SUVs. But, they were unrefined and coarse while
completely lacking the coolness (apart from lacking the engineering finesse and fuel
efficiency too). Also, Renault could envision the cut-throat competition as well (at the very
least knowing that the rebadged Duster would be launched by Nissan as Terrano according
to their alliance). And, so the most important aspect became the cool quotient and the
urbaneness that had to be attached

Therefore, the purpose was clear to re-establish Renaults image in India, and also to
rebuild its footprint in the country from the scratch. And, so the models Fluence and
Koleos were launched in May and September of 2011 respectively. These were basically
positioned as image drivers. The next to get introduced was the Pulse in January 2012,
aimed at further resurrecting its image and importantly to lead sales, although it was also
positioned as a premium offering. However, none of these models could hit well on the sales
chart. Hence, Renault needed a volume driver. And, thats when the Duster came in the
picture with Renault identifying a gap in the SUV segment in the price range of 8-12 lacs.
Hence, they conducted various studies and researches to really understand the Indian
consumer. They had to be bang-on this time. They came to know that the Exterior design was
a critical factor in the purchase. People looked-for an SUV with rugged, butch looks but at
the same time with the comfort and fuel efficiency of a sedan. Riding on this came the Indian
version of the Duster. However, Renault knew that this was not enough and that they had to
go further. The segment consisted of the Mahindras and Tatas which offered butch SUVs.
But, they were unrefined and coarse while completely lacking the coolness (apart from
lacking the engineering finesse and fuel efficiency too). Also, Renault could envision the cut-
throat competition as well (at the very least knowing that the rebadged Duster would be
launched by Nissan as Terrano according to their alliance). And, so the most important
aspect became the cool quotient and the urbaneness that had to be attached

Hence, Renault needed a volume driver. And, thats when the Duster came in the picture
with Renault identifying a gap in the SUV segment in the price range of 8-12 lacs. Hence,
they conducted various studies and researches to really understand the Indian consumer. They
had to be bang-on this time. They came to know that the Exterior design was a critical factor
in the purchase. People looked-for an SUV with rugged, butch looks but at the same time
with the comfort and fuel efficiency of a sedan. Riding on this came the Indian version of the
Duster. However, Renault knew that this was not enough and that they had to go further. The
segment consisted of the Mahindras and Tatas which offered butch SUVs. But, they were
unrefined and coarse while completely lacking the coolness (apart from lacking the
engineering finesse and fuel efficiency too). Also, Renault could envision the cut-throat
competition as well (at the very least knowing that the rebadged Duster would be launched by
Nissan as Terrano according to their alliance). And, so the most important aspect became
the cool quotient and the urbaneness that had to be attached

People looked-for an SUV with rugged, butch looks but at the same time with the comfort
and fuel efficiency of a sedan. Riding on this came the Indian version of the Duster. However,
Renault knew that this was not enough and that they had to go further. The segment consisted
of the Mahindras and Tatas which offered butch SUVs. But, they were unrefined and coarse
while completely lacking the coolness (apart from lacking the engineering finesse and fuel
efficiency too). Also, Renault could envision the cut-throat competition as well (at the very
least knowing that the rebadged Duster would be launched by Nissan as Terrano according
to their alliance). And, so the most important aspect became the cool quotient and the
urbaneness that had to be attached with the vehicle. Thats what established the premise for
its entire marketing for the model, which came to ultimately overpower the engineering
excellence (which is the best-in-segment) in the success story of the Duster.

Strategies adopted by Renault in France and other Western European


Countries:
How Renault's low-cost Dacia has become a 'cash cow'

Sold under the Dacia brand in Europe, the Duster small SUV (shown) retails for 12,000 to
19,000 euros, but badged as a Renault in Brazil it retails for 21,000 to 27,000 euros.

Automotive News Europe


Once considered a risky bet, Romanian automaker Dacia has become Renault's global profit
machine.

Europeans think of Renault's Dacia lineup as cheap, entry-level models that compete with
used cars for sales.

But Dacias are built and sold around the world, often badged as Renaults and sold for
handsome prices and profits.

For 2012, Renault expected that sales of its low-cost M0 platform would total 950,000 to 1
million units, up from 813,000 in 2011. Of those, nearly two-thirds will carry Renault badges,
while the rest will sell as Dacias.

"Dacia is really a cash cow for the company," said Renault Chief Operating Officer Carlos
Tavares in an interview with Automotive News Europe.

Fat margins
Renault does not report individual results for its brands, but Morgan Stanley estimates that
Dacia has an operating margin of 9 percent, which is more common for premium automakers.

That's good news for Renault, whose global automotive unit in the first six months of 2012
reported an operating margin of only 0.4 percent.

"There seems to be a common misconception that average sales price for the Dacia business
are extremely low, in the range of about 8,000 euros," said Laura Lembke, a financial
analysts at Morgan Stanley in London. That is not the case. Dacia models branded as
Renaults in international markets sold at least for 20 percent more than Dacia-brand models
in Europe, Lembke said.

In Brazil, Renault sells the Duster small SUV for 21,000 to 27,000 euros, compared with a
price range of 12,000 to 19,000 euros as a Dacia in Europe, Lembke estimates.

In Europe, Dacia upset the established order with no-frills models that significantly undercut
the competition. For the first time, customers on tight budgets could buy new vehicles with
three-year warranties at used-car prices.

When the first Logan sedan launched in 2004, Dacia was unknown outside Romania, its
home. Now, annual sales in the European Union have grown to 250,000 units, according to
the European industry association ACEA. Dacia has become a global brand, with sales in 36
markets.

Schweitzer's bet

Dacia is a bet that Renault placed 13 years ago, part of an ambitious expansion plan hatched
by former CEO Louis Schweitzer.

In 1999, Schweitzer acquired Dacia, an obscure, nearly defunct Romanian company. The deal
was overshadowed by Renault's alliance that same year with Nissan, which was nearly
bankrupt at the time.

Schweitzer had a plan in mind. Under Renault, Dacia's first product was the Logan compact
hatchback, which debuted in 2004.

The Logan was priced at 5,900 euros higher than Schweitzer's 5,000 euro target, but still
the cheapest modern car available in eastern Europe. Dacia subsequently introduced in
western Europe a better-equipped Logan that started at 7,500 euros.

In a European market plagued by price wars, Dacia doesn't need big discounts. Tavares said
that most Dacia customers don't even ask for a discount because they want to avoid the stress
of bargaining.

The brand also has one of the lowest dealer margins in the region, approximately 5 percent of
the retail price.
Dacia can do this because its dealers are not required to build their own stores. Instead, they
share showrooms with existing Renault dealerships.

Global production

Renault has successfully transplanted its rock-bottom price strategy to emerging markets all
over the world. Renault builds the M0-based vehicles in 11 assembly plants in eastern
Europe, Russia, Africa, South America and India.

Dacia started sales in the UK and Ireland last year by exporting a right-hand-drive version of
the Duster built in Chennai, India.

Despite its low price, the M0 architecture can be customized so that the cars it underpins will
meet consumer tastes in different markets.

In India, for example, the Duster has a second climate control unit in the rear compartment,
along with two reading lights.

"Being able to fine-tune the characteristics is an important part of the edge we have over our
competitors," said Arnaud Deboeuf, chief of Renault's entry-level models.

Rivals say the Dacia business model works because its M0 platform uses old Renault
technology that has been fully amortized. Morgan Stanley's Lembke agrees, adding that M0-
based vehicles are built exclusively in countries with low labor costs.

"While a worker receives an hourly wage of 34 euros in France, 30 euros in Germany and 20
euros in Spain, it is only one-third of that in eastern Europe," Lembke notes.

And in Morocco, where Renault opened its new Tangiers assembly plant, workers earn less
than 4 euros an hour.

More models

Eight years ago, Dacia started out with the Logan sedan. Two years later, the Logan-based
MCV wagon joined the lineup. Then the brand added the Sandero subcompact, Duster small
SUV, Lodgy compact minivan and Dokker, a car-derived van.

It took eight years to add those models. Phase II won't take as long.

At the Paris show last September, Dacia unveiled the second generation of the Logan,
together with the new Sandero hatch and its highly successful Stepway variant.

The new models offer more style and more content for the same price.

In France, the redesigned Logan sedan retails for the same 7,700 euros as the previous model,
while the Sandero is priced like its predecessor at 7,900 euros.
Moreover, the new models have optional equipment such as multimedia systems and cruise
control that one might not expect in a budget car.

"We will remain true to Dacia's basic goal: a no-frills, practical car," Deboeuf said.

Given the uncertainties of Europe's market, Deboeuf says it's too early to offer a specific sales
target for 2013. But he did say that Dacia will sell more vehicles this year recession or no
recession.

"So far, we have always sold more cars than the year before since the launch in 2004,"
Deboeuf said. "Why would that be different in 2013?"

Whether or not sales are strong this year, Dacia appears likely to strengthen its grip on the
entry-level market. Rival global automakers have not mounted a vigorous challenge to Dacia
in this segment yet. Tavares says he is not surprised. "We are 10 years ahead," he said. "For
others it won't be easy to catch up."

What Dacia can teach consumer brands?


Flourishing in a flat market, Dacia is a textbook example of reverse innovation.

Reinventing a brand

One of the most complex tasks a company can undertake:


To do so, while eliminating any risk of damage to the core brand, is trickier still. Yet Renault
has managed these twin challenges skillfully with Romanian car maker Dacia since it
acquired the company in 1999.

Dacia named after the Dacians, the countrys early habitants was one of the industrial
bastions of Romanias Communist regime. Founded in 1966, the company dominated its
home market but made little impact in the West, where cars from the Eastern bloc were
regarded as cheap but unreliable. In the 1980s and 1990s, its core products were licensed
versions of cars such as the Renault 12 and so, when the French automotive giant was
looking to launch value-priced passenger vehicles in Eastern Europe, Dacia was a logical
acquisition.

The first thing Renault did was modernize the Dacia factory in Mioveni, as part of a 2bn
(US$3bn) investment. Before the acquisition, the plant was making 85,500 cars with 26,500
workers. By 2014, it was producing 340,000 cars with 14,000 staff.

Vehicles produced by Dacia primarily Logan, Duster and Sandero are now so successful
that they are sold by Renault and other brands in markets across the globe. The Logan, the
2004 entry-level model that was the first big launch for the revitalized Dacia, was conceived
at Renaults R&D HQ in France (though responsibility for R&D has since shifted to
Romania.) Aiming for a target price of US$6,000, Renault took a stringent cost-to-design
approach, using fewer parts than a typical Western car, offering a limited range of exterior
color options, redesigning the windshield to reduce production and installation costs, and
creating a vehicle that was easy to maintain.
The launch strategy focused on a product that could be scaled up or down to suit particular
markets. In Germany, for example, it made the exterior more appealing with the use of
metallic paint, enabling it to charge a higher price and improve its margins. In France, the
Sandero model doesnt have air conditioning, power locks or a radio as standard, but its listed
price is US$10,560, significantly cheaper than comparable models from koda and Vauxhall/
Opel. To suit emerging markets, the Logan has a fuel filter, higher ground clearance and a
battery that survives extreme weather.

Dacias bosses had a clear picture of their prospective customers: people who bought a used
car, a very small European vehicle or a cheap Asian import. For these car owners, space,
reliability and price were paramount, so Dacia stressed how much space buyers got for their
money and reassured them about quality with guarantees, frequent checks and satisfaction
surveys. Its marketing strategy was different too. Initially eschewing TV advertising, Dacia
developed a cool, no-hype vibe that suited a target audience motivated by value for money.

Renaults investment in Dacia was considerable but, just in case the reinvention didnt
succeed, it introduced Dacia into new markets as a completely separate brand. The strategy
has clearly worked. The companys price advantage has proved particularly effective in a
European market bedeviled by recession, debt and unemployment, and where overall car
sales have flat lined. In 2014, the European Automobile Manufacturers Associations figures
show that Dacias sales soared by nearly 24% to 359,141 in the EU. Established Western car
makers have not found it easy to develop products for and sell into emerging markets.
Dacia has proved that there is another way.

Jan-Benedict Steenkamp, professor of marketing at the Kenan-Flagler business School in


North Carolina, says: Dacia is the best example of a car developed for emerging markets
that has been introduced into developed markets and proved to be a real success. They were
far ahead of other manufacturers.

Key learnings

Four tips for executives

Price is paramount Dacias ruthless focus on economy has given it a price advantage
of more than 30% over some rivals. As Steenkamp says: There is a global segment of
people who are solely focused on value for money.

Low price doesnt mean low quality. As one of Dacias marketing chiefs put it:
Low cost is beautiful, thats why we all buy from IKEA and women buy from
H&M. And why supermarkets such as Aldi and Lidl are growing so fast.

Be clear about your pricing strategy. In an industry where discounts are common
practice, Dacia sticks to its prices. What it does do, like the budget airlines, is offer a
menu of prices according to customer requirements.

Reverse innovation can work. With Dacia, Renault reduced its cost to launch (which
can be around US$1bn for a new model) and designed an affordable model that
appealed to emerging and developed markets. Because Dacia sells through Renault
dealers, its success has created new opportunities for the parent group.

Background of Renault for Indian Market

Many Western companies have taken advantage of the resource available in India and
the willingness of Indian states and the federal government to encourage investment in some
of its more rural areas. The global automotive sector has seen India as a potential market and
hub for manufacturing cars to export to other Asian nations. All the major Japanese
automakers have invested in India, as well Renault, Volkswagen, and Volvo. India is now the
sixth largest manufacturer of cars in the world, making nearly four million cars a year and in
Asia is third behind Japan and South Korea.
No other car in recent times has created the sensation the Renault Duster has done in
the Indian automotive industry. This predominantly European car has won over the Indian
consumer. It has turbo-charged the compact sport-utility vehicle segment and revived the
fortunes of Renault India.
Problem Arrangement

1. What is the history of Renault?

2. How has Renault developed in India?

3. What is market share of Renault in India?

4. What are the market sstrategies of Renault in India?

History of Renault
Renault S.A. is a French multinational vehicle manufacturer established in 1899. The
company produces a range of cars and vans, and in the past, trucks, tractors, tanks,
buses/coaches and autorail vehicles. In 2011, Renault was the third biggest European
automaker by production behind Volkswagen Group and PSA and the ninth biggest
automaker in the world by production in 2011.
The Renault corporation was founded in 1899 as Socit Renault Frres by Louis
Renault and his brothers Marcel and Fernand. Louis was a bright, aspiring young engineer
who had already designed and built several models before teaming up with his brothers, who
had honed their business skills working for their father's textiles firm. While Louis handled
design and production, Marcel and Fernand handled company management.
The first Renault car, the Renault Voiturette 1CV was sold to a friend of Louis' father
after giving him a test ride on 24 December 1898. The client was so impressed with the way
the tiny car ran and how it climbed the streets that he bought it.
In 1903, Renault began to manufacture its own engines inasmuch as until then it had
been purchasing them from De Dion-Bouton. The first major sale was in 1905 to the Socit
des Automobiles de Place, which bought Renault AG1 cars to establish a fleet of taxis. These
vehicles would eventually be used by the French military for transporting troops
during World War I which earned them be known as "Taxi de la Marne." By 1907, a
significant percentage of the taxis circulating in London and Paris had been built by Renault.
In 1908 the company produced 3,575 units, becoming the largest car manufacturer in France.
The brothers recognised the publicity that could be obtained for their vehicles by
participation in motor racing and Renault made itself known through achieving instant
success in the first city-to-city races held in Switzerland resulting in rapid expansion for the
company. Both Louis and Marcel Renault raced company vehicles, but Marcel was killed in
an accident during the 1903 Paris-Madrid race. Although Louis Renault never raced again,
his company remained very involved, including Ferenc Szisz winning the first Grand Prix
motor racing event in a Renault AK 90CV in 1906. Louis was to take full control of the
company as the only remaining brother in 1906 when Fernand retired for health reasons.
Fernand died in 1909 and Louis became the sole owner, renaming the companySocit des
Automobiles Renault (Renault Automobile Company).
The Renault reputation for innovation was fostered from very early on. At the time,
cars were very much luxury items, and the price of the smallest Renaults available being
3000 francs reflected this; an amount it would take ten years for the average worker at the
time to earn. In 1905 the company introduced mass-production techniques, and Taylorism in
1913. As well as cars and taxis, Renault manufactured buses and commercial cargo vehicles
in the pre-war years. The first real commercial truck from the company was introduced in
1906. During World War I, it branched out into ammunition, military airplanes and vehicles
such as the revolutionary Renault FT tank. The company's military designs were so
successful that Renault himself was awarded the Legion of Honour for his company's
contributions to the war. The company also exported their engines overseas to American auto
manufacturers for use in such automobiles as theGJG which used a Renault 26 hp or 40 hp
four-cylinder engine.
Headquartered in Boulogne-Billancourt, the Renault group is formed by the namesake
Renault marque and subsidiaries Automobile Dacia from Romania and Renault Samsung
Motors from South Korea. Renault has a 43.4% controlling stake in Nissan of Japan, a 25%
stake in AvtoVAZ of Russia and a 1.55% stake in Daimler AG of Germany. Renault also
owns subsidiaries RCI Banque (providing automotive financing), Renault Retail Group
(automotive distribution) and Motrio (automotive parts). Renault Trucks, previously Renault
Vhicules Industriels, has been part of Volvo Trucks since 2001. Renault Agriculture became
100% owned by German agricultural equipment manufacturer CLAAS in 2008. Renault has
various joint ventures, including Turkish Oyak-Renault and Iranian Renault Pars. Carlos
Ghosn is the current chairman and CEO and the French government owns a 15 percent share
of Renault.
As part of the RenaultNissan Alliance, the company is the fourth-largest automotive
group. Together Renault and Nissan are undertaking significant electric car development,
investing 4 billion (US$5.16 billion) in eight electric vehicles over three to four years from
2011. The company's core market is Europe. The company is known for its role in motor
sport, and its success over the years in rallying and Formula 1.
The following are some of the Renault factories spread across several countries in the
world. Manufacturing subsidiaries outside France.
1. Avtoframos (Russia).
2. Oyak - Renault (Turkey), a joint venture between Renault and Oyak (Turkey's Armed
Forces Pension Fund), established in 1969.
3. Renault Argentina (Argentina).
4. Renault do Brasil (Brazil).
5. Renault Espaa (Spain).
6. Renault Industrie Belgique S.A. / Renault Industrie Belgi N.V. (Belgium).
7. Renault Med (Morocco), a subsidiary operating the Renault - Nissan Alliance factory in
Tangier.
8. Renault Mxico (Mexico, cars manufactured in the Nissan's Aguascalientes plant).
9. Renault Pars (Iran), a joint venture established in 2004 and owned by Renault (51%) and
Iran's Industrial Development Renovation Organization (IDRO) (49%).
10. Renault South Africa (South Africa, cars manufactured in the Nissans Rosslyn plant).
11. Revoz (Slovenia).
12. Sofasa (Colombia).
13. Somaca (Morocco).
14. Oragadam (India), a joint venture between Renault and Nissan.

Renault Development In Indian Market

Renault India Private Limited is the Indian subsidiary of Renault S.A. of France, with
its headquarters in Chennai. The company has production facilities in Chennai,Tamil Nadu.
Renault India Private Limited was established in October 2010.
In 2005, Renault established a 51:49 joint venture with Mahindra & Mahindra
Limited to form Mahindra Renault Limited. In May 2007, the joint-venture launched the
Renault Logan, produced at a manufacturing plant in Nashik, Maharashtra. But the car with
its dated looks and high pricing failed to strike a chord with Indian consumers. Initially, the
Logan met with considerable success but sales slipped with competition against newer
models from Maruti Suzuki, Tata Motors, and Toyota.
Such was the scale of the failure that it ended up killing the joint venture in 2010.
Renault's brand name took a massive hit in India. Ironically, the Logan's failure laid the
foundation for the success of Renault's compact sport-utility vehicle (SUV) Duster.
After its break-up with Mahindra & Mahindra, Renault chose to go alone. It set up
aRs 4,500 crore factory at Oragadam near Chennai along with its global partner Nissan Motor
Company. The facility caters to the needs of Nissan and Renault. But the Logan debacle
continued to haunt the company. The first few products it rolled out from the new plant were
positioned as "image drivers". It launched premium sedan Fluence in May 2011 and premium
SUV Koleos that September. Both were assembled at the Oragadam plant from imported kits.
Its next offering was the Pulse, a compact car launched in January 2012. The Pulse was a
cross-badged version of Nissan's Micra, and was also positioned as a premium offering.
Renault's focus on resurrecting its image in India and consequent premium offerings meant
poor volumes in a country that prefers value for money.
Renault desperately needed a "volume driver" to shore up its operations. It identified a
gap in the SUV segment. "There were SUVs costing Rs 20 lakh and above manufactured by
global players and those priced from Rs 6 lakh to Rs 10 lakh produced by Indian companies.
We saw an opportunity there," says Armelle Guerin, Director, Product Planning at Renault
India. The company launched the Duster priced between Rs 8 lakh and Rs 12 lakh in July
2012.
The Duster took the Indian market by storm. It fuelled the segment of compact SUVs
and grabbed a 23 per cent market share within a year. The Duster's success was such that
Renault had to triple production within months of its launch from seven per hour to 20 per
hour. Today, one in three cars produced at the Oragadam plant is a Duster. That is not all. The
Duster today accounts for 86 per cent of Renault India's production, 81 per cent of its sales
and 100 per cent of its exports. How did a predominantly European car win the hearts and
minds of difficult Indian customers?
The answer lies in what Renault India did in the 24 months following its decision to
bring the Duster to India. The Duster was Renault's first 'real' offering in India after the
Logan. "The Logan's failure reminded us of the importance of understanding the customer,
getting the product right and positioning the Duster correctly at the time of the launch," says
Marc Nassif, Managing Director, Renault India.
The company went back to the drawing board to understand the Indian customer. It
identified a focus group of about 200 people whose profile matched the potential buyer of the
Duster. It then short-listed 30 families from this focus group across five Indian cities for an
ethnographic study spread over two months. During this period members of the product
development team lived with their target customers to observe them, understand their lives
and needs. They also spent time with the customers to know what they liked and did not like
about their vehicles.
The study threw up 41 modifications that the European Duster needed. Guerin says
the exercise enabled the company to understand what a car should have to meet an Indian
customer's needs. "We understood that a critical purchasing factor of a car in India is the
exterior design," she says. "People loved an SUV with rugged looks that stood out in a crowd,
but at the same time wanted it to operationally perform like a sedan - easy to drive and
[offering] good fuel efficiency."
There were other lessons as well. The study revealed that Indian consumers liked a
strong dose of chrome on their cars, especially the exterior. They liked body-coloured
bumpers. Inside the car they preferred a dual-tone interior, and wanted the switches for power
windows on the door rather than in the central console. Since a good proportion of Indian
cars are chauffer-driven, the rear seats needed special treatment. Indians preferred inclined
seats for greater comfort. Rear air-conditioning was critical and so was the armrest, a mobile
charger and a reading light. Some storage space was also welcomed.
The European Duster did not have these attributes. Renault made several changes in
the car to suit Indian conditions. These included reinforcing the suspension to tackle rough
Indian roads and offering a higher ground clearance. It added more brackets to the car's doors
as they tended to be used roughly. The engine was tuned to meet the quality of the fuel in
India and deliver high efficiency of at least 20 km per litre. The tuning of the engine was
done in Paris; the company shipped diesel from India to get the tuning right.
Of late, Sawhney's job has become a trifle difficult. SUV sales - like auto sales in
general - have slumped in recent months. Enhanced competition from rivals such as Ford's
compact SUV EcoSport is chipping away the Duster's market share (it dropped to 20 per cent
in July). Nassif, for his part, has a different challenge now. The Duster has resurrected
Renault's brand image in the country, and Nassifrealises the company needs to capitalise on
the car's success. "The Renault brand cannot sustain in India only on the Duster. We will need
more products," he says. Renault India needs many more Duster-like successes.

Problems Faced by Renault in India:


1. When Renault first entered India through a joint venture with Mahindra & Mahindra, was
put high expectations on its maiden product offerings Logan (midsize sedan) was launched in
2007. But cars with high performance and price fails to strike a chord with Indian consumers.
The price is very expensive is not accepted by Indian consumers

2. Attributes dominated European cars, the Duster is not attractive to the Indian consumer.

3. Sales of SUVs - such as car sales in general - have slumped in recent months.
Increased competition from rivals such as the Ford EcoSport compact SUV Duster chipping
away market share (it dropped to 20 percent in July).

Solution for Problems Faced Renault in India:


1. After its break-up with Mahindra & Mahindra, Renault chose to go alone. It set up a Rs
4,500 crore factory at Oragadam near Chennai along with its global partner Nissan Motor
Company. The facility caters to the needs of Nissan and Renault. Renault's focus on
resurrecting its image in India and consequent premium offerings meant poor volumes in a
country that prefers value for money. Very expensive prices cant be applied in India because
India is still a developing country so the price should be adjusted to the economy of Indian
society.

2. Renault company must be able to adapt to the needs and wishes of the people in Indian the
companies have to modify the design of the car.
Points observed by Renault in its favour in India:

1. The people of India like SUV with a rugged appearance that stands out in a crowd, but at
the same time wants to perform operations such as sedans - easy to drive and offers good fuel
efficiency.

2. Indian consumers like a strong dose of chrome on their cars, especially the exterior. They
also like body colored bumpers.

3. In the car they prefer dual-tone interior, and want to switch to the power window in the
door rather than in the center console.

4. Because a good proportion of India chauffer-driven car, the rear seat that requires special
care.

5. India tend to be preferred seats for greater comfort.

6. The need for air conditioning and so Rear armrest, mobile chargers and reading lights.
Some storage space is also required.

7. The Duster has raised the image of the Renault brand in India, and Nassif realized the need
to capitalize on the success of the company car. "The Renault brand can not sustainin India
only on the Duster. We will need more products," he said. Renault Duster like Indianeeds a
lot of success. To cope with the competition then companies must innovateproducts according
to the needs and desires of Indian consumers.

Why Renault Chose India?

Indian economy is the ninth largest economy in the world by gross domestic product(GDP)
and the third largest nominal balance based on the ability to shop (PPP). The country is a
member of the G 20 and BRICS members. In 2011, GDP PPP per capita of India stood at $
3,703 (IMF), which makes it was ranked 127 in the world. Thus theireconomic income
belonging to the lower middle class.

India is the worlds 12th biggest economic power. Between 2005 and 2007 it posted steady
economic growth of over 9%, and GDP per capita has doubled in the space of ten years. The
car market is growing by around 10% a year, attracting the attention of many vehicle
manufacturers. Indias middle classes total more than 350 million people, all of whom are
potential buyers, and their numbers are continuing to grow.

India is one of the second biggest country in Asia by area and populous after China. In terms
of population, India is the second largest country in the world. By 2025, India will be the
biggest country in terms of population. Western markets like the European Union and the
United States are set to benefit from a 1.15 plus billion population in India. The population
will continue to grow also in terms of disposable income and consumption of Western
products.

Most Populous Nations By 2050

Products of Renault in India


Renault has been at the forefront of revolutionising the automobile industry by delivering
comfortable, stylish and efficient automobiles. With many eye catching inventions such as
The Gearbox, The Sedan, The Turbocharger, The Hatchback and The MPV, Renault has not
just changed the way the world travels, but also the way the world looks at automobiles. With
a global presence, it has succeeded in becoming the travel companion of choice for millions.
Now, with 5 enviable cars, Renault aims to revolutionise the Indian automobile market. A fact
that's reinforced by its growing dealer network and increasing customer base. In just 2 years,
Renault has amassed multiple awards including the much cherished 2013 Manufacturer of the
Year award. With a continuing emphasis on R&D, Renault is on track to change the way
India drives, for the better. Product of Renault in India is :
1. Duster
The explorer in each one of us finds a match. The Renault Duster is an embodiment of a bold,
sporty and masculine character. International styling and design add to its distinctive identity
on the road while the premium leather interiors enhance the pleasures of travel.

2. Fluence
The Renault Fluence wastes no time in taking your breath away. Stylish and fluid contours
give it a seamless and uninterrupted flow that's difficult to replicate. Inside and out, the
Fluence is designed for one purpose to redefine status.
3. Pulse
The Renault Pulse comes with sporty and dynamic styling. But at the heart of the Pulse lies
its 1.5 litre diesel engine matched with a 5 - speed manual transmission which provides zippy
performance as well as low CO2 emissions. Fun is being pleasantly surprised every time you
drive and the Pulse delivers every single time.
4. Scala
The Renault Scala is a perfect blend of sophistication and dynamism. With its long
proportion, soft and sweeping silhouette, the vehicle projects an image of energy and
elegance. Step into the new Renault Scala. Step up in life.
5. Koleos
Think elegance with a wild side. Behind the smooth and sophisticated lines, there is power
just waiting to roar. An imposing front grille, refined chrome details - this is an exceptional
SUV any way you look at it. Through its distinctive design, the new Koleos proudly displays
elegance and raw power in one package.

Renaults Competitors in India


Now a days, India becoming a largest auto market in the world. It mean, there are more
automotive industries over there. Start from the company build a factory over there or they
only offer their products over there. Renault is one of the company that build its factory in
India, it located in Oragadam near Chennai. Renault become success in SUV segmentation
with its Duster. Not only Renault wants to success in India, but there so many company too,
like foreign company and local company. The foreign companies such as : Hyundai Motor,
Ford, General Motor, Toyota, Honda, Yamaha. And the local companies such as : Tata motor,
Mahindra & Mahindra. Among those competitors, the closely competitor in SUV
segmentation is Ford. Ford product EcoSport.
The Ford EcoSport boasts of stylish exteriors and tons of features, it should be a hit on face
value alone. A new segment has emerged in India and is seeing tremendous growth. The
compact SUV space has till now been dominated by Renaults Duster but a new rival is on
the horizon. You have probably seen the Ford EcoSport multiple times already as the
American automaker unveiled the vehicle almost 18 months back at the 2012 Auto Expo.
While the first generation Ford EcoSport was launched way back in 2003, the second gen
model only went on sale last year (in Brazil). Localization has been the reason for the delay
and the Ford EcoSport uses 70% local content, which will help the company in aggressive
pricing of their Urban SUV. The EcoSport is the most ambitious project at Ford India and the
company believes the EcoSport is a game changer for both Ford India and the Indian
automobile industry.
Price OTR Mumbai: Rs. 10.21 lakhs (EcoSport Diesel Titanium), Rs. 12.73 lakhs (Duster 85
PS RxL Option) Both these compact SUVs offer an excellent alternative to similarly priced
sedans. Ford EcoSport or the Renault Duster, a question which has been lingering in the
minds of prospective compact SUV buyers since a very long time now. Both vehicles were
unveiled at the same time but the Ford EcoSport has taken a good one year plus to hit
showrooms after the Duster was unleashed by Renault in the Indian market. Delay aside, both
the Renault Duster and Ford EcoSport are arch rivals not only in India but even globally.

Market Strategies of Renault in Indian Market


The following are ways in which the company Renault to win the hearts of Indian consumers.
1. To enter the Indian market, Renault use Joint Venture Strategy.

Renault first entered India through a joint venture with Mahindra & Mahindra, it
placed high hopes on its maiden product offering Logan - a mid-sized sedan launched in
2007. But the car with its dated looks and high pricing failed to strike a chord with Indian
consumers. Such was the scale of the failure that it ended up killing the joint venture in 2010.

2. The Low Price Strategy.

When Renault realized that the high price is not a success in India as sales of its first product
Logan, then they see the opportunities in the Indian market is a global player offering SUV
for Rs 20 lakh and for Indian companies offer SUV priced between Rs 6 lakh and Rs 10 lakh,
so the next product Renault Duster, which is lower than the price offered by previous
products that between Rs 8 lakh - Rs 12 lakh. If we compare the price of products with
Renault SUV (Duster) and SUV product prices by global players, the difference is very far
away. With the low price strategy of The Duster took the Indian market by storm. It triggers
the compact SUV segment and achieved a market share of 23 percent within one year.

3. To adapted with Indian culture, Renault use Study Ethnography strategy.


Ethnography is research designed to explore cultural phenomena. An ethnography is a
means to represent graphically and in writing the culture of a group. The resulting field study
or a case report reflects the knowledge and the system of meanings in the lives of a cultural
group. Companies must understand the Indian customer with focus groups identified about
200 people who fit the profile of potential buyers Duster. Then selected 30 families from the
focus groups in five cities in India to spread ethnographic study of more than two months.
During this time period the product development team members live with their target
customers to observe them, understand their lives and needs. They also spend time with the
customer to find out what they like and dislike about their vehicles.

4. To modify a car, Renault identify strategies 3F

o Fast (adaptation to the needs of India must take place within 12 months)

o Frugal (limited budget), and

o Fantastic (without compromising on quality).


Managing Director, Renault Nissan Technology & Business Centre India, whose team
executed changes to the car. Three teams - product development team, Renault design studio
in Mumbai and a team of engineers - began working as a small company in India Renault.
Nassif, MD India, is empowered to accelerate decision making. The Duster successful
because it is the right product at the right time in the right segment at the right price.

Renault India Private Limited Analysis

Parent Company Renault SA and French Government

Category Sedan, Hatchback, SUV

Sector Automobiles

Tagline/ Slogan Drive the change

USP Strong Hold on European markets

STP

Segment SUV, Hatchback, Sedan Segment of Car users

Target Group Businessmen, Young executives, Families

Positioned as a car manufacturing company which


offers wide range of cars to select form starting from
Positioning super-mini car to MPVs

Product Portfolio

1. Renault Koleos
2. Renault Fluence
Brands 3. Renault Scale
4. Renault Duster
5. Renault Pulse

SWOT Analysis

Strength 1. Wide customer base and loyalty in Indian markets


2. One of the Largest automobile group with Nissan
collaboration
3. Offers wide variety to choose from including
sedan, SUV and hatchbacks
4. Available in over 110 countries with a workforce
of over 125,000
5. Actively involved in global motorsport events as
teams and sponsors
6. Strong brand associations with Nissan , Mahindra
etc helped in global reach

1. Despite European popularity, lacks penetration in


Asian and growing markets
Weakness 2. Cases of recall of cars slightly affected brand
image

1. Invest in hybrid and future cars


2. Develop and sustain strong partnership with
Opportunity national car manufacturers
3. Extend the distribution and servicing network to
increase market penetration

1. Competitive car manufacturers


2. Innovative features introduced in competitive care
which leads to product differentiation
Threats
3. Competition with national car manufacturers who
enjoy increased market penetration as well as brand
awareness
Market Share of Renault in Indian Market

The Indian automobile industry is the tenth largest in the world with an annual production of
approximately 2 million units. Indian auto industry, promises to become the major
automotive industry in the upcoming years and the industry experts are hopeful that it will
touch 10 million units mark. Indian automobile industry is involved in design, development,
manufacture, marketing, and sale of motor vehicles. There are a number of global automotive
giants that are upbeat about the expansion plans and collaboration with domestic companies
to produce automobiles in India. The market share of the automotive industry in India is
dominated by Maruti Suzuki with 45.28 percent. Renault still be in a position eighth with
3.16 percent. Renault is a follower of the Indian market in the automotive industry. The data
below shows the market share the Indian car company.

Sales Figures Current


Rank Company Apr13 Mar13 Feb13 Market
Share

1 Maruti Suzuki 90523 107890 97955 45.28%


2 Hyundai 32403 33858 34002 16.21%
3 Mahindra 20749 25847 23421 10.38%
4 Tata Motors 11570 12347 10613 5.79%
5 Toyota 9007 19452 12756 4.51%
6 Honda 8488 10044 6510 4.25%
7 Chevrolet 8196 9006 7106 4.10%
8 Renault 6314 8232 6723 3.16%
9 VW 4566 6506 5810 2.28%
10 Ford 4003 5271 4490 2.00%
11 Skoda 1934 2079 1947 0.97%
12 Nissan 1239 2125 1948 0.62%
13 HM-Mitsubishi 520 725 815 0.26%
14 Fiat 391 462 202 0.20%

Grand Total 199903 243844 214298 100.00%


Case Connected With Chapter In International Business Books
The Cultural Environments Facing Business
This chapter to learn about to discuss the problems and methods of learning about cultural
environments, to explain the major causes of cultural difference and change, to examine
behavioral factors influencing countries business practices, to examine cultural guidelines for
companies that operate internationally. Cultural is as we just said, culture consists of specific
learned norms based on attitudes ,values, and beliefs, all of which exist in every nation.
Connection with this cases is , cultural Indian society is a different with Europe that Indian
consumers liked a strong dose of chrome on their cars, especially the exterior. They liked
body - coloured bumpers. Inside the car they preferred a dual-tone interior, and wanted the
switches for power windows on the door rather than in the central console. Since a good
proportion of Indian cars are chauffer - driven, the real seats needed special treatment.
Indians preferred inclined seats for greater comfort. Rear air-conditioning was critical and so
was the armrest, a mobile charger and a reading light. Some storage space was also
welcomed. To meet the wishes and needs of the Indian consumer. Renault Company did an
ethnographic study of more than 2 months in five cities in India. Ethnography is a research
designed to explore the phenomenon of budaya.Etnografi a means to graphicallyrepresent the
culture and writing groups. The resulting field studies or case reports reflect the knowledge
and sistemmakna in the life of a cultural group.
The Economic Environment
This chapter to learn about the economic environments of foreign countries and markets can
help managers predict how trends and events in those environments might affect their
companies future performance there. Factor conditions, or production factors, include
essential inputs to the production process such as human resources, physical resources,
knowledge resources, capital resources, and infrastructure.
Connection with this cases that Indian community's economy is still low, so that the people of
India can not accept products with high prices. india also including the developing countries.
can be seen from the failure of its product offerings with the high prices of the Mahindra
Renault joint venture. When Renault realized that the high price is not a success in India as
sales of its first product Logan, then they see the opportunities in the Indian market is a global
player offering SUV for Rs 20 lakh and for Indian companies offer SUV priced between Rs 6
lakh and Rs 10 lakh, so the next product Renault Duster, which is lower than the price offered
by previous products that between Rs 8 lakh - Rs 12 lakh. If we compare the price of
products with Renault SUV (Duster) and SUV product prices by global players, the
difference is very far away. With the low price strategy of The Duster took the Indian market
by storm. It triggers the compact SUV segment and achieved a market share of 23 percent
within one year.
International Strategic Management
Connection with this cases, to modify a car, Renault identify strategies 3F
Fast (adaptation to the needs of India must take place within 12 months)
Frugal (limited budget), and
Fantastic (without compromising on quality)
Strategy adopted by the French maker- Renault in India

Renaults strategy has been clear to make the Duster an even more solid proposition, to
achieve the cool quotient and the urbaneness to make it the volume driver. Enter the
Gang of Dusters.

The Gang of Dusters, launched in August 2013, is a special initiative by Renault which
organises expeditions to bring together like-minded, adventure-seeking Duster owners.
Traversing across some of the most breath-taking landscapes in India in the Duster, the Gang
of Dusters is a gateway for those who want to go off the beaten path. Its an opportunity to
interact with and befriend fellow adventure enthusiasts. And as Renault likes to put it
Gang of Dusters is more than just a community. Its an experience where memories are
made.. The GoD is in perfect sync with their latest TV commercial which encourages people
to get on the highway and explore uncharted territories with the Duster. The customers
registered in the GoD are also presented with some unique offerings beside the adventure
trips:

Special offers on paid services, accessory fitment, value added services, wheel
alignment, insurance renewal, et cetera.

Complementary services including car wash, general check-ups, AC performance,


engine coating and more.
Third party vendors (like Autocar, Ebay, Yatra, Fab Furnish, et cetera) discount
coupons.

Renault decided to use the Digital platforms and importantly the Social Media to make Gang
of Dusters a great success. They categorically targeted the Youth and those young at heart
Duster owners (and potential buyers) by creating a robust community on Facebook,
generating great traction on Twitter with #GangOfDusters, and a dedicated website. Going a
mile further, yet again, they launched a dedicated App for the Duster which featured the GoD
apart from other functionalities. The entire Digital ecosystem of GoD thrives on their core
strategy.

Renault Dusters Apps Screengrab


GoDs Websites Screengrab

Recently, in 2015, Renault Gang of Dusters became the title sponsor of the MTVs Roadies
X4 in a deal pegged at 10-12 crores. Interestingly, the show, which is hugely popular
among the youth, had been associated with Hero for 12 years. For the first time in its history,
the gangs and gang leaders will be seen driving the Renault Duster in the digital and
television series. It was loud and clear, Renaults idea to paint the Duster in the shades of
coolness and urbaneness. And, boy, have they not been successful!

MTVs Roadies X4

Results Achieved
The Gang of Dusters has become extremely popular with more than 40,000+
customers in the gang.

The GoD has undertaken and completed 14 expeditions already, covering various
locations in India. There are many upcoming trips as well.

The Duster App has more than 50,000+ downloads, the Facebook page has more than
9100+ likes, the Twitter #GangOfDusters has extensive interactions.

Renault has sold more than 140,000+ Dusters in the country.

What Renault has essentially created, while achieving phenomenal sales, is a healthy,
passionate community of Duster owners. A community which goes on expeditions creating
new relationships and memories. A community which has a cool quotient!

Learnings

The concept of creating a community of a product owners is not new or revolutionary. A lot
of manufacturers in other industries have also attempted similar things. In fact, Mahindra has
a community of Mahindra owners called Purple Club which offers almost similar privileges
to that of the Gang of Dusters. However, it is nowhere as active and thriving as the GoD (the
Great Mahindra Escape under the Purple Club barely has 700 likes!). This is clearly due to
the fact that Mahindra has not tapped the potential of Digital elements to create anything like
GoD. Hence, the coolness evades it. The new entrant in the segment Hyundai Creta,
which was launched last year, and the Dusters cousin Terrano does not even have a
community like that of GoD! The entire activity undertaken by Renault has borne fruits and
will continue to do so.

Of all the things that can be learnt, the importance and ever-growing need of Digital
Marketing tops the list. The way Renault utilised the Digital ecospace toward achieving their
objectives is the primary thing. It lets you know lucidly the potential of Digital Marketing, of
the significant things it can achieve! How it can make a great product even greater (and
cooler!)!

Renault India Private Limited is the Indian subsidiary of Renault S.A. of France, with its
headquarters in Chennai. The company has production facilities in Chennai,Tamil Nadu.
Renault India Private Limited was established in October 2010. With 5 enviable cars, Renault
aims to revolutionise the Indian automobile market. Renault company in India managed to
captivate the hearts of the people of India with modify the design interior and exterior of the
car. The duster is a product of renault in accordance with the wishes and needs of the people
of India against a car.
The Duster succeeded because it is the right product at the right time in the right
segment at the right price. Very expensive prices cant be applied in India because India is
still a developing country so the price should be adjusted to the economy of Indian society.
It is a product that delivers a strong valuefor-money proposition of price, convenient
handling and mileage:
A marketing achievement
The Duster's success is more of a marketing achievement than the result of
engineering excellence. Renault's strategy indicates a coming of age for the car
industry in India with focus on customer-centric product development and use of
consumer insights to drive engineering. Renault identified a gap in the market and
used the customer voice to develop an appealing product.

Though the market has matured considerably in the last decade, cars remain an
aspirational product bought more for their image than only for their functionality. This
is more so with an SUV. If customers were rational and made an objective comparison
of costs and benefits, an SUV might not be a good choice except when the terrain
demands it. SUVs are big, unwieldy, difficult to manoeuvre in cities, high on
maintenance, and less fuel efficient. It is psychology and not economics that drives
SUV buying. SUVs do provide functional benefits such as more space, off-roading
capabilities, more power, and flexibility of use. But many customers never go off
road. Renault has understood this consumer psychology. The Duster is designed with
flared wheel arches, muscular body, roof rails, raised suspension and big tyres - all
visual indicators to create the right image. Also, being small, it removes many
limitations of a typical large SUV. The end result is a product that delivers a strong
value-for-money proposition of price, convenient handling and mileage.

The Duster has opened up a new category which will attract considerable competition.
The newness will wear off and the success that has put a large number of Dusters on
the road will dilute the novelty of its looks. Keeping the product fresh by perhaps a
mid-life facelift should be a priority. Also, heavy use on Indian roads tends to take its
toll on cars. Problems like rattles, niggles, mechanical and electrical failures cannot be
wished away, and so a robust service support is necessary. Renault has to invest
considerably in the service channel to support a volume selling product. This will
finally decide whether the customers who flocked in will remain loyal to Renault.

The competition in the category will only intensify, with Ford being the first to come
with EcoSport, and other brands sure to follow: RajatWahi, Partner, Consumer and
Retail, KPMG
Get the 5Ps correct
The Renault Duster's success, in my opinion, can be attributed to the following
factors:

1) Category growth: Growing demand for SUVs thanks to a number of launches by


both Indian and foreign car makers, as is the case in most markets.

2) Competitive pricing: Almost all SUVs had been priced above Rs 15 lakh, with
most foreign models priced above Rs 25 lakh, creating a sweet spot at Rs 10 lakh and
below, where the Duster is perfectly priced.

3) Safety: Given the bad traffic in most cities and horrendous accidents we see every
day, the safety features of SUVs score higher versus sedans, as the perception is that
they are safer, especially for families with children.

4) Increased road travel: The poor quality of roads and highways, and increased road
travel by families for holidays and leisure makes SUVs very desirable.
5) Image: The macho image of SUVs and the perception they can be used on rugged
terrains, although most people may never do any off-roading, makes them a hit.

6) Fuel economy and high price of petrol: This created a strong demand for fuel-
efficient diesel cars.

All these factors, along with focused advertising and best-in-class after-sales service,
have made Duster the top-selling SUV for the past few months, showing that even in
a depressed market, if the brands get the 5Ps (product, price, promotion, place and
people) correct, consumers will reward them through increased off-take.

The competition in the category will only intensify, with Ford being the first to come
with EcoSport, another SUV offering very good value, and other brands are sure to
follow. For Renault to continue with the success, it must focus on the elements that
made Duster a hit - best-in-class after-sales service, competitive pricing (not
necessarily the cheapest), understanding the needs of its consumers by continuing to
connect with them, and offering very competitively priced service and spares - an area
where most brands seem to fail.

Dusting off the Competition! (Conclusion)


No other car in recent times has created the sensation the Renault Duster has done in the
Indian automotive industry. This case study looks at what contributed to the car's success.
When French automotive giant Renault first entered India through a joint venture with
Mahindra & Mahindra, it placed high hopes on its maiden product offering Logan - a mid-
sized sedan launched in 2007. But the car with its dated looks and high pricing failed to strike
a chord with Indian consumers. Such was the scale of the failure that it ended up killing the
joint venture in 2010. Renault's brand name took a massive hit in India. Ironically, the
Logan's failure laid the foundation for the success of Renault's compact sport-utility vehicle
(SUV) Duster.

After its break-up with Mahindra & Mahindra, Renault chose to go alone. It set up aRs 4,500
crore factory at Oragadam near Chennai along with its global partner Nissan Motor
Company. The facility caters to the needs of Nissan and Renault. But the Logan debacle
continued to haunt the company. The first few products it rolled out from the new plant were
positioned as "image drivers". It launched premium sedan Fluence in May 2011 and premium
SUV Koleos that September. Both were assembled at the Oragadam plant from imported kits.
Its next offering was the Pulse, a compact car launched in January 2012. The Pulse was a
cross-badged version of Nissan's Micra, and was also positioned as a premium offering.
Renault's focus on resurrecting its image in India and consequent premium offerings meant
poor volumes in a country that prefers value for money.
Renault desperately needed a "volume driver" to shore up its operations. It identified a gap in
the SUV segment. "There were SUVs costing Rs 20 lakh and above manufactured by global
players and those priced from Rs 6 lakh to Rs 10 lakh produced by Indian companies. We
saw an opportunity there," says Armelle Guerin, Director, Product Planning at Renault India.
The company launched the Duster priced between Rs 8 lakh and Rs 12 lakh in July 2012.

The Duster took the Indian market by storm. It fuelled the segment of compact SUVs and
grabbed a 23 per cent market share within a year. The Duster's success was such that Renault
had to triple production within months of its launch from seven per hour to 20 per hour.
Today, one in three cars produced at the Oragadam plant is a Duster. That is not all. The
Duster today accounts for 86 per cent of Renault India's production, 81 per cent of its sales
and 100 per cent of its exports.

How did a predominantly European car win the hearts and minds of difficult Indian
customers?

The answer lies in what Renault India did in the 24 months following its decision to bring the
Duster to India. The Duster was Renault's first 'real' offering in India after the Logan. "The
Logan's failure reminded us of the importance of understanding the customer, getting the
product right and positioning the Duster correctly at the time of the launch," says Marc
Nassif, Managing Director, Renault India.

The company went back to the drawing board to understand the Indian customer. It identified
a focus group of about 200 people whose profile matched the potential buyer of the Duster. It
then short-listed 30 families from this focus group across five Indian cities for an
ethnographic study spread over two months. During this period members of the product
development team lived with their target customers to observe them, understand their lives
and needs. They also spent time with the customers to know what they liked and did not like
about their vehicles.

The study threw up 41 modifications that the European Duster needed. Guerin says the
exercise enabled the company to understand what a car should have to meet an Indian
customer's needs. "We understood that a critical purchasing factor of a car in India is the
exterior design," she says. "People loved an SUV with rugged looks that stood out in a crowd,
but at the same time wanted it to operationally perform like a sedan - easy to drive and
[offering] good fuel efficiency."

There were other lessons as well. The study revealed that Indian consumers liked a strong
dose of chrome on their cars, especially the exterior. They liked body-coloured bumpers.
Inside the car they preferred a dual-tone interior, and wanted the switches for power windows
on the door rather than in the central console. Since a good proportion of Indian cars are
chauffer-driven, the rear seats needed special treatment. Indians preferred inclined seats for
greater comfort. Rear air-conditioning was critical and so was the armrest, a mobile charger
and a reading light. Some storage space was also welcomed.

The European Duster did not have these attributes. Renault made several changes in the car to
suit Indian conditions. These included reinforcing the suspension to tackle rough Indian roads
and offering a higher ground clearance. It added more brackets to the car's doors as they
tended to be used roughly. The engine was tuned to meet the quality of the fuel in India and
deliver high efficiency of at least 20 km per litre. The tuning of the engine was done in Paris;
the company shipped diesel from India to get the tuning right.

In early 2011 the company conducted a customer clinic in New Delhi to validate its learning.
It put the prototype of the European Duster, after the necessary changes, alongside rival cars
in a price range of Rs 7 lakh to Rs 12 lakh, and asked a few potential customers and car
experts for their views. All of them had to also sign a confidentiality agreement with Renault.
"What we got was a 'wow'," recalls Guerin. "The feedback we got showed us that we were on
the right track."

The company then set to make actual changes in the car. "We identified a 3F strategy - Fast
(the adaptation to Indian needs must happen within 12 months), Frugal (on limited budget)
and Fantastic (with no compromise on quality)," says Karim Mikkiche, Managing Director,
Renault Nissan Technology & Business Centre India, whose team executed the changes to the
car. Three teams - the product development team, Renault's design studio in Mumbai and a
team of engineers - began to work as a small company within Renault India. Nassif, the India
MD, was empowered to speed up decision making.

"We realised early that to achieve the 3F objectives we needed the modifications to be done
locally with a local team. That helped. We executed the changes in 12 months, within budget
and ended up with a product people love," says
Nassif.
"Such
a

success would not have been possible if the


modifications were done in Paris."

No doubt, there were challenges. Paris refused to accept the set time frame of 12 months and
termed the budget proposed too low. Some modifications were discouraged as it involved a
lot of engineering (rear air-conditioning) or structural changes to the car (inclined rear seats).
"We had to convince them that these were needed to offer the best product to the consumers
here," says Nassif.

When the car finally hit the market, Nassif was proved right. Today, more than 60,000
Dusters are running on Indian roads. "The Duster succeeded because it is the right product at
the right time in the right segment at the right price," says SumitSawhney, Executive Director
for Sales and marketing at Renault India.

Abdul Majeed, Partner and Leader for automotive practice at consulting firm
PricewaterhouseCoopers India, says global car majors are realising that customer voice in
product development is critical. "Renault has tasted success because it took the pains to
understand the Indian customer," he says.
That means they adopted 5P and 3F in the right way. The next challenge to Renault India is to
provide strong after sales service and offering very competitively priced service & spares.

Of late, Sawhney's job has become a trifle difficult. SUV sales - like auto sales in general -
have slumped in recent months. Enhanced competition from rivals such as Ford's compact
SUV EcoSport is chipping away the Duster's market share (it dropped to 20 per cent in July).
Nassif, for his part, has a different challenge now. The Duster has resurrected Renault's brand
image in the country, and Nassif realises the company needs to capitalise on the car's success.
"The Renault brand cannot sustain in India only on the Duster. We will need more products,"
he says. Renault India needs many more Duster-like successes.
Bibliography

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http://www.digitalvidya.com/blog/how-renault-india-made-an-suv-
cool-a-case-study-on-the-gang-of-dusters/
http://www.wseas.us/e-library/conferences/2010
http://www.emeraldinsight.com/doi/abs
http://www.business-standard.com/article/companies/renault-plans-
aggressive-india-strategy