Marketing strategy for Chevrolet Spark Marketing Management I ² Project Report

Submitted to: Prof. Prem Purwar

Submitted by: Sarin Bhaskaran Shivkumar Swaminathan Shreyas Dhamdhere Soumen Das Souvick Paul 25090 25099 25100 25101 25102

Table of Contents
Executive Summary ................................................................................................................................. 1 Automotive industry in India.................................................................................................................... 2 Growth Drivers for auto industry in India ............................................................................................. 2 Segments of the Indian Auto market........................................................................................................ 3 Consumer market segmentation .......................................................................................................... 3 Market segmentation by automakers ...................................................................................................... 7 Classification based on product specification ....................................................................................... 7 Classification based on Design of Car ................................................................................................... 7 Classification Based on price ................................................................................................................ 7 New Product Development ...................................................................................................................... 9 Need to develop a new product ........................................................................................................... 9 Use of a new product ........................................................................................................................... 9 New product classification ................................................................................................................... 9 New Product Planning........................................................................................................................ 10 Stages in new product development .................................................................................................. 10 Factors for success of a new product ................................................................................................. 11 Reasons for failure of launched products ........................................................................................... 12 Challenges in new product development ........................................................................................... 12 Use of new product development for managing product lines ........................................................... 12 Key Factors Influencing Purchase ........................................................................................................... 14 Going Green : Fuel Efficiency Takes Centre Stage .............................................................................. 14 New product development in GM s perspective................................................................................. 14 General Motors India ............................................................................................................................. 16 GM- Daewoo Matiz ............................................................................................................................ 16 Global Marketing ............................................................................................................................... 17 Why GM-Daewoo Matiz failed? ......................................................................................................... 18 Pricing ................................................................................................................................................... 19 Factors considered for pricing a new product..................................................................................... 19 Pricing Strategies ............................................................................................................................... 20 Key Players in Indian Market.................................................................................................................. 22

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.............................................................................................................................................................................................................................. 26 3 ....................................................................................................................... 25 Hyundai Motors India Ltd.................................................................................................................................................................... 23 General Motors .......................................................................................................................................................................................................................................................................................................................................... 26 Ford India Limited ................. 23 Ford India Limited ............................ 23 Interacting with Customers............. 23 Hyundai Motors India Ltd............................................. 23 Tata Motors .................................. 23 Maruti Udyog Limited ..............................................................................................................................................................Identifying End Customers ......................................................................................................................................................................................................................... 25 General Motors .................................................................................. 25 Tata Motors ............... 25 Maruti Udyog Limited ........................................

new product development. One factor that could help the companies in the marketing of their product is by knowing and creating a personality for their brands. This report is categorized into parts. deals with introduction of Automotive industry in India. customer behaviour analysis. Key players. This way these companies will be able to find their share in the ever-expanding Indian market pie. New product development on GM s perspective(why Matiz failed and how product and pricing modification helped it to get success after re-launching it as Chevrolet Spark). Bentley. attractiveness of automotive market. various segments of the auto market. Analysis of the product and pricing models in depth helps the new car manufacturers and the existing carmakers to find out the possible gaps between the customer expectations and the present market offerings. and BMW all set to venture in the Indian markets. . Audi. Further competition is heating up in the sector with a host of new players coming in and other like Porsche. the passenger car sales have increased at the rate of 38% per annum in June 2006-07 over the corresponding period in the previous year. This report attempts to answer how product and pricing helps to create brand personality of selected cars in India.Executive Summary The automobile industry today is one of the most lucrative industries. How the carmaker uses these factors to develop their new product or improves their existing product. Pricing. key factors consumer considers while making decision of buying a car/ how consumer behaviour helps automaker in developing successful new product. Mercedes. This personality sketching will help in knowing what a customer (or a potential customer) thinks about a given brand of car and what are the possible factors guiding a possible purchase. Due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes.

Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 3 broad categories: Cars. Volkswagen. With the growth of transportation system the Automotive Industry of India is also growing at rapid speed. Then in the year 1985. occupying an important place on the 'canvas' of Indian economy. European and Indian companies all holding significant market shares. The only car with the latest technology then was the Maruti 800. General Motors. a powerful alliance which changed the face of the Indian roads. two-wheelers and heavy vehicles. It became very popular because of the low price. Daimler-Chrysler. the Governmentt of India in collaboration with Suzuki motor corporation of Japan formed Maruti Suzuki . American. the Indian passenger vehicle industry was for long dominated by Ambassadors and the Premier Padmini s. Toyota and Ford.Automotive industry in India Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898. The Indian automobile industry has matured over the years and is now highly comptetitive with major Japanese. the Automobile Industry of India has come a long way. has become a hot destination for global auto players like Volvo. following the liberalization and various tax reliefs. high fuel efficiency and good reliability. Indian auto industry. Global players have either entered or are eyeing India as a strategic target for future development A well developed transportation system plays a key role in the development of an economy. With HM establishing the first automobile factory way back in 1948. Since then the market has grown with over 20 manufacturers and hundreds of models and variants. Growth Drivers for auto industry in India 2 . which is currently growing at the pace of around 18 % per annum. Korean. and India is no exception to it.

These common characteristics allowed developing a standardized marketing mix for all customers in that segment. Climate: . The customers can be segmented based on: a. who makes a market. This report attempts to analyze and understands how Indian carmaker have successfully segmented the market and how they are leveraging these segmentation to introduce new product and grow their market share. 1) Geographic Segmentation Potential customers are in a local. 3 . There are different factors contributing for varying mind set of consumers. 3. resources and behaviours. marketers usually divide or disintegrate the market into a number of sub-markets/segments. consumer (the end user). They brought the necessary changes in the product to suit to the particular segment. regional or national marketplace segment. c. We would analyze how consumer market is segmented and on what basis automaker segment the market. With proper segmentation carmakers could look at the differences among the customer groups and decide on appropriate strategies/offers for each group. And. Consumer market segmentation 1. In order to capture this heterogeneous market for any product.Segmentation as per climatic condition or weather. Region: . 4. Population density: . preferences.Segments of the Indian Auto market The market for any product is normally made up of several segments. Geographic location is a major factor in segmenting target markets for automakers since their customer needs are varied for different region. A market after all is the aggregate of consumers of a given product. are of varying characteristics and buying behaviour. Psychographic Segmentation. Since it is virtually impossible to cater for every customer s individual characteristics. state. Behaviouralistic Segmentation. d.Segmentation on the basis of population density such as urban / sub-urban / rural etc. Size: . 2. carmakers grouped customers to market segments by variables they have in common. Every buyer has individual needs.Segmentation on the basis of size of a metropolitan area as per its population size. Demographic Segmentation.Segmentation by continent / country / state / district / city. Geographic Segmentation. b. It is thus natural that many differing segments occur within a market. These strategies then helped them in dividing the markets for conquering them. This segmentation helped the carmaker to increase their profit by tapping the market through adapting the offer to that segment.

the Oldsmobile at affluent families. 40 different market segments in which it would present with its vehicles. Higher ground clearance to make the car compatible to the rougher road surface in India. sports-oriented. it has targeted the Pontiac at active. Stiffer rear springs to enable negotiating the ubiquitous potholes on Indian roads. a. Matiz is some of the dominant players in this segment. e. Changes in cooling requirement. As Indian motorists use horn far more frequently than the European where the horns are located on the lever. Maruti Zen. fun-car for young professionals. 2) Demographic Segmentation In this type of segmentation. the Chevrolet at price-conscious young families.5 lakh.5 to 3 lakh. young couples. more conservative couples. 4 . b. Compatibility of engine with the quality of fuel available in India. Tata Indica. c. For example. Income & Purchasing power (dominant factor) . Age (dominant factor) . f. family car for young families. etc. Modifications such as: a. Preferred price range is between Rs 3 to 4. Location of horn buttons on the steering wheel.Ford has gained useful insights through segmentation and adapted its offer to suit the Indian target market. For the Indian segment Ford made some changes in its cars in comparison to their European version. With the launch of Tata Nano with a price range of 1lakh the outlook of this segment has changed. Competition in this segment is extreme in Indian market.Example of Ford: . b. Higher resistance to dust. d. Car manufacturers offer a product range that caters for the needs of all phases of a customer life cycle: first car for early teens.Segmentation is done on the basis of age of person. Example of General Motors:GM has identified about 40 different customer needs and correspondingly. Examples of different car segments based on purchasing power are: Budget car segment It is the largest segment in Indian market. with greater airflow to the rear. the customers are segmented based on the following factors. Santro. This segment is sometimes referred to as the small car segment. and the Buick at older.Segmentation is done on the basis of income level of a person and purchasing power of the customer. Fiat Uno. Maruti 800 and Omni are the dominant players in these segments. Compact car segment It lies between budget car and family car. Here the entry level starts from Rs 1.

Ford Escort. Super luxury saloon segment Buyer in this segment looks for a real super premium segment car. Rover Montego. Many businesses offer products based on the attitudes. Attitudes e.Family car segment The purchasing capacity of buyers of this segment is somewhat higher than that of the budget and compact car segment. Audi 6. g. Universities. Maruti Esteem. Family Size. f. In India cars that are sold in India as Budget Car and Compact Car do not meet their purpose. that they turn to the family car segment . Gender (dominant factor):-Product can be segmented for male and female. The desire for status. Price ranges between Rs 6 to 8 lakh. Interests c. Activities b. BMW are the players in this segment. Mitsubishi Lancer. Premium car segment This segment represents the buyer who require true world class luxury car. beliefs and emotions of their target market. Opinions d. h. Occupation. Psychographic Segmentation includes variables such as:a. d. Daewoo Cielo. Family life cycle. Honda City. c. High School. E-250. Religion. A seller of luxury items would appeal to an individual's desire for status symbols. and Opinions (AIO) surveys are one tool of measuring lifestyle. Interests. 5 .Primary. e. Audi 1800. Obviously. Values Activities. 3) Psychographic Segmentation Psychographic Segmentation groups customers according to their life-style and buying psychology. this is a tiny segment in the Indian context. Nationality. Honda City. Price ranges between Rs 4. College. i.5 to 6 lakhs. especially in term of space. Mercedes Benz E229. They are the factors that influence your customers' purchasing decision. Education . Secondary. Opel Astra etc are some of the major cars in this segment. enhanced appearance and more money are examples of psychographic variables. and HM Contessa belongs to this segment.

Marketers often find practical benefit in using buying behaviour as a separate segmentation base in addition to bases like geographic. Benefit sought: . Occasion: .Quality / economy / service / look etc of the product. Usage rate: . e. The primary idea in buyer behaviour segmentation is that different customer groups expect different benefits from the same product and accordingly.Hard core loyal / split loyal / shifting / switches. It is because there is some distinction between buyer s characteristics that are reflected by their geographic. Variables of buyer behaviour are:a. Brand Loyalty: . g. f. User status: .Holidays and occasion stimulate customer to purchase products. c. Since all Segmentation is in a way related to buyer behaviour. d.Regular / potential / first time user / irregular /occasional. one might be tempted to ask why buyer behaviour-based segmentation should be a separate method. Readiness to buy. and psychographics. they will be different in their motives in owing it and their behaviour in buying it. demographics. Attitude toward offering: .Heavy user / moderate user / light user of a product.4) Behaviouralistic Segmentation Markets can be segmented on the basis of buyer behaviour as well. demographic and psychographic profiles. b. and their buying behaviour.Enthusiastic 6 .

The D segment is slightly blurred. They are classified as a softroader (without proper SUV-off-road credentials and mean for only city use) or a real sports utility vehicle with a low-ratio gear box. Alto 800. 3 Lakhs y Maruti 800. Ikon (based on the Fiesta hatchback). Hyundai Santro) Compact Plus (Maruti Swift. The Lower D segment comprises of Chevrolet Optra. Chevrolet Tavera) Classification Based on price Based on price. Maruti Swift. Examples: Zen. Bigger three box cars with 1800 CC or more engines come into play here. D and E segments. A two box car (with an engine compartment and a passenger compartment) with an engine lower side of 1000 CC is termed as A segment car. Wagon R and the Santro Xing. the cars available in the Indian auto market can be classified into the following segments. Example: Maruti 800. Then there are cars such as the C class Mercedes which falls between the lower and upper D segment cars. Alto. The proper D segment will have the Honda Accord. Typically. Hyundai Getz. E segment cars are more luxurious and offer better levels of trim and equipment. Siena (based on the Palio hatchback) and the Corsa sedan (based on the Cors hatchback) are thus classified. Then there is SUV segment. Ford Ikon) Premium Sedan ( Ford Fiesta. these cars will have a 2000 CC or bigger engine.Market segmentation by automakers Classification based on product specification According to the engine size and overall length of the car. Classification based on Design of Car y y y y y y Compact ( Maruti 800. Bigger two box cars with engine above 1000 CC and below 1300 CC can be termed a B segment car. Rs. C. Chevrolet Spark) Sedan ( Hyundai Accent. which do not fall into these classifications. Chevrolet Spark Small three box cars. These cars have engines that vary from 1300 CC to 1600 CC. market is segmented into A. Chevrolet Optra) Super Premium Sedan ( Toyota Corolla) Utility Vehicles ( Toyota Innova. Omni y Reva 7 . Tata Indica. Toyota Camry and Opel Vectra. most of the time hatchbacks with added boots form the lower C segment. Toyota Corolla and to some extent Skoda Octavia. B.

Gypsy y Ford Icon & Fiesta y Tata Indica. Esteem. 911 Carrera & Cayman S y Toyota Prado Above Rs. SLK. Tavera y Hyundai Accent. Innova y Tata Safari y Honda City Rs. 3-5 Lakhs y Ambassador y Hyundai Santro. 8 . Indigo Rs. 15-30 Lakh y Maruti Suzuki Grand Vitara y Hyundai Sonata Embera. Spark y Maruti Zen. 5 Series & 7 Series y Mercedes E Class. Versa. Continental GT & Flying Spur y Rolls Royce Phantom y Maybach *The segregation is made on Ex-Showroom price of base models. A8 & TT y BMW X5. Elantra y Maruti Baleno y Toyota Corolla. 1 Crore y Bentley Arnage.Rs. S Class. Optra. 30-90 Lakhs y Audi A6. Cayenne. 10-15 Lakhs y Ford Mondeo & Endeavour y Chevrolet Forester y Skoda Octavia Classic & Combi y Honda Civic & CR-V Rs. Terracan & Tucson y Mitsubishi Pajero y Audi A4 y Honda Accord y Mercedes C Class y Toyota Camry Rs. Wagon R. Getz y Chevrolet Opel Corsa. SL & CLS-Class y Porsche Boxster. 5-10 Lakhs y Chevrolet Swing.

y To maintain competitive advantage. test and consider the viability of products which are new to the market in order to ensure the growth or survival of the organization.This type of new products are new to the world called as innovative products. Flat screen TV etc are the examples of innovative products. y A product significantly broadens the market for an existing product. It can be diversified into new markets and appealed to new segments. y To fill a gap in the market. New product classification New product can be classified into six categories which are as follows:a) Major innovations: . It makes better use of the organizations.New Product Development New Product Development is a process which is designed to develop. because Tata is an existing brand but they newly entered in the Tele-communication lines as Tata Indicom. y To defeat rivals. Its necessities are as follows:y To add product portfolio. y To maintain/increase market share. y An old product introduced in a new market. y To bring new customers. y To replace declining products. iPod. y To take advantages of a new products. Firm s reputation can be maintained by new product. y An old product packaged in a different way. 9 . Use of a new product New products can be used to increase or to defend market share by offering more choice or updating older products.When a company enters in an existing market segment the product is new to the company. y An old product marketed in a different way. y To keep up with rivals. y The product adapts and replaces an existing product. New product can be described as follows:y The products open up an entirely new market.Tata Indicom from Tata. For examples. New products help to improves relations with distributers.TV. Need to develop a new product New Product Development is the major component of the firm s product policy. b) New product lines: .

Sometimes new product ideas emanate just as a matter of happening . Tata is providing similar features in low cost which was never even thought of in car industry. When a company adds new products to its existing product line extensions. Generating New Product Ideas: New products ideas may emanate from customers. Turning of ideas into Tangible products that consumer perceive as being valuable comes under concept development.Additions to product line to supplement the firms existing product lines. Testing of new products process with a group of consumers to find out if the concept 10 . screening of products takes place to spot good ideas and drop poor ones as soon as possible. It improved the product in ragards to maintainability. Each of these stages requires careful planning. In this stage. The more attractive looking ideas pass on to the concept testing stage.When an already existing product is targeted towards a new market segments is known as Repositioning. e) Repositioning: . In this stage firm assess its current product portfolio and also assess the opportunities and threats. Civic by Honda is the best example for product line extension. General Motors has developed Chevrolet Spark on the same architecture as of Daewoo Matiz. marketability and profit potential and given ideas rating according to marketing production and strategic factors takes place. Stages in new product development New product development in respect of intrinsically new products goes through these important stages. R & D staffs and salesmen are also sources of new product ideas. Idea Screening: The second stage of new product development is idea screening. Concept Development and Testing: This stage is the detailed version of new product idea stated in meaningful consumer terms.c) Product line extension: . The firm then determines the type of products which would be best fit with the corporate strategies. including the market research group and external research organizations. d) Product improvements: . f) Cost reductions: . We can have an example of Chevrolet Spark.When a company improves or revises its existing product then it is also a new product. Ideas are also checked for technical feasibility. Let us discuss them one by one. New Product Planning New product planning is a strategic stage. dealers. Consumers problem are the most fertile ground for the generation of new product ideas. We can have a best example for cost reduction is Tata Nano. financial viability and marketability. For this as we can see today Dairy milk is more focusing on adults for its chocolates with tagline of Pappu pass ho gaya . in-company sources. The business analyzes the product to evaluate its demand.New product is modified to provide similar performance but at a lower cost are cost reductions.

Marketing Strategy Development: From the stage of concept development and testing new product travels to the stage of market strategy development. Only little get success. the new product. Formal market research is also carried out to assess the products market potential. with the support of the chosen marketing mix. profit and return on investments from new ideas and projecting probable costs and sales to see. production processes. the success is short lived. Business Analysis: Business analysis is the next stage. is actually launched and marketed in a small but representative market where consumer reactions can be assessed and marketing mix checked and adjusted. materials. properly executed launch y Top management backing y Market attractiveness the product should be aimed at attractive markets y Resources must be in place y Speed and timely 11 . It gets to this stage when all the previous steps are favorable signals . will profit reach the firms target.Timing is critical for success and the product has to be well targeted and positioned. It estimates potential sales. Developing the product concept into physical product to ensure that the product idea can be turned into a workable product. In this stage an initial marketing strategy is designed for a new product based on the product concept. the company takes the decision to go in for large scale manufacturing and marketing the product. Test Marketing: In test marketing. the firm develops the product as such. This stage is of special importance in the new product development process because several vital decisions regarding the projects are taken based on the analysis done at this stage. quality and safety. costs and the profit projection for a new product to find out whether these factors satisfy the firms objective. Factors for the success of a new product are as follows: y Development of a new superior product y Differentiation from rivals y Well conceived. in many cases. This stage has a special importance when totally new products are being planned for introduction. R&D turns the idea into product. they die out after the initial boom. Factors for success of a new product Many new ideas do not reach the market at all. This stage is the review of the sales. Commercialization/Product Launch: At this stage. Actual Development of the New Product: In this stage. This stage is concerned with design. breakeven point. income.have strong consumer appeal or not is concept testing.

y Bring new ideas to market ahead of the competition to grow revenue and market share. In larger companies it is important that a cross-functional NPD team be assembled to control the overall workload going through the NPD system for the duration of a specific project. The rationale for these is as follows: y Neglect of market research y Inaccurate market research y Poor marketing after launch y Poor distribution y Product performance below expectation y Product too complex y Unforeseen products y Market not ready for the products y Inadequate support for the market Challenges in new product development Companies coming up with innovative market offerings often face challenges which we can discuss with help of these points: y Develop innovative products that capture the imagination of consumers to retain existing customers and attract new ones. In today's competitive global market. The only way to accomplish all these objectives is to radically rethink the way new product introductions (NPI) are managed. companies need to accelerate new product development and reduce product cost. New products which manage to react the market after years of preparation and works get failed. y Achieve global development excellence and efficiency by leveraging core competencies of the value chain to increase profit margins. on-cost and quality product delivery. Use of new product development for managing product lines Managing product lines is an essential part of any company s NPD efforts.y y Quality Market driven on customer focus Reasons for failure of launched products It is found that new products suffer from a high attrition rate. commitment and buy-in and by ensuring that projects are managed efficiently. Management can facilitate innovation by providing support. innovative products are not enough. y Effectively manage the global manufacturing supply chain to ensure on-time. To compete effectively. Top 12 . y Integrate regulatory compliance into product lifecycle processes to reduce business risk and sell products in global markets.

This information can then be used to: y y y y y y y y y y y y Develop an NPD management system Allocate resources and management support Set up a team/allocate staff Identify opportunities for new products (idea generation) Screen and prioritize ideas Conduct feasibility studies Develop the concept Prepare a business case Develop the product Promote and launch the new product Monitor and measure performance of product.management support in particular from the CEO or owner/manager is a critical success factor in NPD. project and team Continually improve your NPD system 13 .

Chevrolet. Demographic factors such as age and gender account for some variances. Holden. Vauxhall and Wuling. fuel economy and additional warranty coverage. Additional warranty coverage is important to consumers who are furthest away from the point of purchase. Biodiesel vehicles are the second most common. Cadillac. GM and its strategic partners produce cars and trucks in 34 countries. Opel. For example.Key Factors Influencing Purchase When it comes to making their final decision about which vehicle to buy. and sell and service these vehicles through the following brands: Buick. New product development in GM s perspective General Motors Company General Motors Company. compared with 2006. although the oldest consumers are somewhat more likely to be seriously thinking about buying an alternative-fuel car. J. safety. although sales are expected to continue to grow. and proposed legislation to increase fuel efficiency and reduce CO2 emissions. Only few people currently own an alternative-fuel vehicle but there are many who are planning to buy or thinking seriously about buying one. sale of hybrid vehicles increased by 35% in 2007. safety. older consumers tend to put more emphasis on reliability and safety than do younger. However. one of the world's largest automakers. Those in the 50-plus age group are also more concerned with environmental issues and fuel economy. The most common type of alternative-fuel vehicle are gas and electric hybrids.000 people in every major region of the world and does business in some 140 countries. traces its roots back to 1908. The alternative-fuel market remains in transition and it s still too early to tell how it will ultimately shake out. GM employs 235. environmental issues. GM Daewoo. For example. Current ownership of fuel-efficient and alternative-fuel vehicles tend to be quite consistent across gender and age groups. The difference is most pronounced for cash-back incentives. Going Green : Fuel Efficiency Takes Centre Stage Fuel efficiency and environmental issues have moved to the forefront in consumers minds and in automotive industry forums thanks to factors including global warming. low financing.D. With its global headquarters in Detroit. the number declines as consumers get closer to actually buying the car. followed 14 . The interest in so-called green vehicles is increasing. fluctuating gasoline prices. Women tend to rate most of the factors as more important than do men.S. consumers focus on factors such as reliability. This reflects the fact that consumers will narrow down the factors that really matter to them as they get closer to the point of purchase. GMC. GM's largest national market is the United States. The numbers for alternative-fuel vehicles are lower. Power and Associates analyzed that U. and price and fuel economy.

2009. GM's OnStar subsidiary is the industry leader in vehicle safety. and references to prior periods in this and other press materials refer to operations of the old General Motors Corporation. Canada. the United Kingdom. General Motors Company acquired operations from General Motors Corporation on July 10. security and information services. Brazil. 15 . Russia and Germany.by China.

It is also called as Chevrolet Matiz. all this cuteness was lost when compared with the competition. 45 kilometers northwest of Vadodara. Pontiac Matiz G2. GM bought the holdings of Hindustan Motors and GM India became a 100% subsidiary of General Motors Corporation of USA. the Matiz was originally designed by Italdesign Giugiaro and has been facelifted twice. incorporated in 1994 as a 50-50 joint venture company with the C. In India. The engine was packaged tightly to provide a great deal of front leg room and was throughly refined in its behaviour. In February. Even the rear of this car was cute to look at. in the western state of Gujarat. FSO Matiz. GM strengthened its presence with new product launches Chevrolet Optra in 2003. The Daewoo Matiz started 16 . 1999. The Santro. Spark falls in B segment with 1000cc engine). Chevrolet Exclusive. The Matiz had won the Best City car in the 1998 World's Most Beautiful Automobile competition and it drews involuntary smiles from even the wierdest of cretin. UZ Daewoo Matiz. and Holden (Australia) holds 14 percent. Pontiac G2. Chevrolet Joy. Matiz offered good value for money. the market share of GM India has gone to nearly 5%. Chevrolet Taxi 7:24 Chronos. GM APH LLC currently holds 86 percent of voting shares. In 1994. Available solely as a five-door hatchback with two engine configurations. and replacing the Daewoo Tico. Pontiac Matiz.000-square-meter plant near Halol. became a fully owned subsidiary of GM in 1999 when GMAC bought the remaining shares. However. we will analyze about how GMDaewoo developed new product called Matiz and why did it failed. The existing GM India plant was originally built by Hindustan Motors. The Matiz was developed by GM Daewoo. Repositioning and Cost reduction.Daewoo Matiz The Matiz was a city car produced by the South Korean automaker GM Daewoo that has been marketed worldwide since 1998. Birla Group of Companies. GM repositioned it into different segment in India (Matiz was in A segment with 800cc engine. The company was restructured in 1999 and was converted from a Public Limited company to a Private Limited company. Then how GM identified the drawback and modified accordingly and re-launched the product with the name of Spark. The SPO business was integrated with the main business in the same company in 2000.General Motors India General Motors India. scores over most features over the Matiz except in the looks department. GM. This re-launch of GM-Spark can be classified as Product improvements. Chevrolet Tavera (Multi Utility Vehicle) in 2004 and Chevrolet Spark in 2007. The Chevrolet Forester and Opel Vectra are sold as CBUs (Completely Built in Units) and as imported from Japan and Germany respectively Considering the above mentioned facts for new product development . Chevrolet Tavera and Chevrolet Spark. Nevertheless. GM India entered into a 50% Joint Venture partnership with Hindustan Motors and modernized the 45. With sales volume going up.K. The plant produces the Chevrolet Optra. an immediate competitor.

The 2006 model was renamed to Pontiac Matiz G2. y In Argentina. y y y Europe y From 1998 until 2004. The Matiz was originally launched with just a 0. The exterior design was based on the Lucciola. the Matiz was imported by Daewoo distributors between 2002 and 2005 and then GM Colmotores began to assemble and sell it branded as Chevrolet Spark. In 2005.production in 1998 and sold in South Korea and many European markets with the code name M100. It is currently manufactured by Nexus Automotive under the name Chevrolet Joy. It was also sold as Pontiac Matiz and Pontiac G2. y In the Dominican Republic it is sold as the Chevy Spark. At the beginning of 2005. In 2008 the 0. the Polish Matiz started to be sold under the marque FSO (FSO Matiz). CKD kits have been supplied UzDaewooAuto. as well as the other South Korean models of General Motors. it was released under the name Chevrolet Spark. y In Colombia. to be built and sold in Uzbekistan. 17 . The car became the best selling Daewoo model in Europe for the next four years. New models of Matiz are sold as Chevrolet Spark. a taxi version called 7/24 was launched.8 L 3-cylinder engine. but from 2008 it is sold through Chevrolet dealers. the car was initially introduced as Chevrolet Exclusive in 2003. In 2006. In 2007. it took the Chevrolet marque. it was sold under Chevrolet Matiz II.8 L was revised to fall below the 120g/km level. In fact.8-litre gasoline engine and the transmission were carryovers from the Daewoo Tico. which obtained autonomy. both models were distributed and marketed by Suzuki Motor Corporation. however with the 2001 model-year revisions a 1. Latin America y In Mexico.cylinder was added to the upper models of the range. Poland and Romania respectively. The 0. Its Curb weight was 847 kg (1867 lb). Ecuador and Peru it is sold as the Chevrolet Spark. y In Paraguay. The Matiz was available in one body style: a five-door hatchback. y Since 2000. the Matiz was introduced to the market in 2003. In India. From 2001 until 2006. Also sold is the Chery QQ. Global Marketing Asia y From 1998 until 2001. In 2006. In the Philippines.0 L 4. the Matiz was sold in Europe under the Daewoo badge. it took the Daewoo marque. FSO and Rodae. the Matiz was available during the years 1999-2000 through the Grey Market. In Pakistan. it was initially sold as Daewoo Matiz. thus qualifying for the UK's £35 road tax band and no London Congestion Charge. General Motors India relaunched it as the Chevrolet Spark in 2007. it was launched in 1999 as the Daewoo Matiz. a Fiat Cinquecento concept by Italdesign Giugiaro which had been rejected by Fiat. the Matiz was sold in Japan under Chevrolet Matiz.

Daewoo collapsed. Hyundai s determination and Daewoo s lack of it. every process is very important for a new product. It had lots of problems with the cooling system and suspension. a car to be in. which had fully loaded as well as midrange and basic versions Its design was allegedly copied outright by Chinese manufacturer Chery's QQ. The Matiz formed a protective shell around the passengers to protect them in case of serious accidents. were comfortable and held much space for a car of its size. When the car was launched it was overpriced by Daewoo. This created very bad impression on public. the Matiz had won international acclaim .UK Motor Show.It had a Multi-Point Fuel Injection system. it was sure. The Matiz also met the Euro II norms. Let us see why Matiz failed:y The main problem was the Matiz' positioning. They had launched ONLY a fully loaded variant at 4 lacs in Mumbai. The car was never properly customised for India faulty fuel pumps. Matiz definitely left some part of new product development that is why it failed. With a seating capacity of upto five people and five doors. It was not much powerful for highways. etc.got bent very fast and wore out the tyres even faster It was most difficult to repair.Why GM-Daewoo Matiz failed? Designed by Giorgetto Guigiaro. it got tremendous success. 18 .3kg-m. and when it was just about to overtake. because aesthetics overtook convenience inside the bonnet y y y y y y y y y Matiz failed but after this a new car launched by Chevrolet Spark (built on the same architecture and platform) which was the just modifications of Matiz. It is the main part which is very important to think upon where would be the new product will fail. Its wheel rims were awful . In spite of these specialities Matiz Failed.'Most Beautiful Automobile' Milan Show & 'Best Small Car' . The car conformed to European Safety Regulations. They suddenly brought down their prices by Rs 1 lakh. The car ran on a 796-cc engine that produces 52bhp with a torque of 7. Thus. The interiors were not cluttered. The Matiz was the only car in India to have successfully passed the stringent 40% Offset Frontal Crash Test. Matiz price was later on corrected and the sales gap to Santro was coming down fast. Compare that to the Santro and Zen.

in a price-sensitive market like India. This enables the consumer to gain a holistic view of the value of a product or brand and then make the purchase decision. For this. total cost of ownership and several other parameters (e. The demand curve can be estimated by conducting market research. Therefore.Pricing In the marketing mix. 19 . The advancement of technology has taken us back to an era of negotiated pricing. eBay). if a luxury hotel chain suddenly reduces their prices drastically. This decision is taken based on the market segment that the product is aimed at. The pricing is done in such a way as to maximise purchases by the target group. price is the one element that directly generates revenue. the price determines to a great extent. competitors etc. Some of the factors that need to be considered in pricing are described below. Google Analytics). The market dynamics would be greatly affected by the competitors response to any pricing decision. rather than being based simply on the cost. Finding the right price is a decisive factor in the success or failure of a product. the firm should consider the income levels and spending patterns of the target group.g. The price of the product should also be decided based on the value of the brand. price has to be set with the context of the entire marketing mix.g. It can be changed quickly unlike product features or promotion strategies. it is essential for a company to leverage the information available to it to ensure that the product is offered at the optimum price. The internet offers several options for the consumer to compare the available products in terms of features. Environmental factors The firm should also keep in mind environmental factors like the government. At the same time. Therefore. then it will affect the perceived value of their brand. but at the same time leads the consumer to believe that he is getting value for the money that he is spending. the firms are able to access high quality data about consumer behaviour and preferences through the various services offered on the highly connected web space (e. the market share gained by the product. their preferences etc. Positioning The price of the product depends on how the company wants to positions it. Factors considered for pricing a new product The following factors should be looked into while deciding the price with which a new product must be launched. which maximises profit. An important point to be considered while pricing is the reaction of competitors. It is no different in the automobile sector as well. For example. prices. Particularly. Demand Curve The pricing has to be done considering the effect that the price would have on the demand curve.

However. the firm sets a high price for the product. The high price tends to attract new competitors into the market. Savoy etc. The cost of marketing and manufacturing are kept at a minimum. the price can be increased to improve profitability. 20 . Penetration Pricing In this strategy. The quality is also low in terms of the number of features. The four broad strategies that firms use are explained below. Once market share is achieved. This is usually followed by luxury brands like Concorde. to capitalise on the uniqueness of the product as compared to other alternatives. the advantage is not sustainable. and the price inevitably falls due to increased supply.Pricing Strategies There are a variety of strategies that a firm could follow in pricing. the price is set at a very low level in order to gain market share. Economy Pricing This is a no-frills low price. The quality of the product is high although the cost is low. Low Price Low Quality High Quality High Price Premium Pricing In this pricing strategy. This approach is used when there is a competitive advantage over other players in the market. Price Skimming In this strategy. the company charges a high price because it has a substantial competitive advantage.

the highest priced model of Spark.993 Comparative prices of base models of segment B cars It can be observed from the table that Chevrolet Spark is priced lower than all the major competing products in its segment.GM uses several of these strategies for various products under the brand Chevrolet.000 along with financing options. the prices may be hiked to improve profitability.33. GM is employing a penetration pricing strategy to gain market share in the case of Spark.791 3. In fact. In addition to pricing the car aggressively.5 lakh rupees. Thus. The prices of the base models of Spark as compared to the other cars in segment B are shown in the table below. This strategy might have been used because there were many established players in the segment when Spark was launched. 21 . which is only about 7% higher than the price of Maruti Swift s base model. comes at around 4.804 4.22.19. with all features including airbag. especially during festive seasons. The features offered by Spark are at par with (and in some cases even better than) its peers. when it gains sufficient market share.55. Chevrolet Spark Maruti Swift Maruti A-Star Hyundai i10 3. The last such offer included a discount of Rs.. At a later point in the future.55.050 3. GM also runs discount offers frequently.

including the 100. Has established India as one of its manufacturing bases in the world. Is planning to invest heavily to boost exports from India Has vision of capturing 10 % share of the Indian passenger car market by 2010 Suzuki s JV in India and the largest passenger car manufacturer in India One of the leading players in the Indian premium cars segment One of the leading players in the Indian premium cars segment One of the leading players in the Indian premium cars segment.000 car The third largest passenger car manufacturer in India and one of the largest exporters of vehicles.Key Players in Indian Market The largest player in the Indian industry and launched new and exciting products in the Indian markets. GM entered the small car segment by re-launching the Matiz One of the largest players in the UV / MUV segment The 2nd largest CV manufacturer in India 22 .

They have therefore. backed by the leader brand. addition to HMI's extensive product portfolio. to anticipate and fulfill their needs.which is a true sign of enjoying customer confidence. is a step in the same direction and is a cutting-edge. which offers great value for money products to its customers. auto finance. in just 6 years of HMI's young life. they need to continuously work on building their corporate reputation while aggressively positioning their products.Identifying End Customers Maruti Udyog Limited According to the officials of MUL. scaled up state-of-the-art manufacturing capacity. In order to strengthen their position further in the Indian market. Maruti offers auto insurance. assurance and convenience. Ford India Limited According to the officials of Ford India has reaffirmed its commitment to enhancing the purchase and ownership experience for its customers with the rollout of Ford Brand@Retail concept across the 23 . This also enables them to extend their relationship with the customer beyond the point of purchase to the entire ownership life cycle. General Motors According to the officials at General Motors is positioned as a mature and responsible car manufacturer. For the first time. the new initiatives enable them to offer Maruti owner s greater value. Hyundai Motors India Ltd According to the officials of Hyundai Motor India is at a very exciting stage in India today. established nationwide sales & service network. The way they look at it is that this will provide complete mobility solutions to the Maruti customer. corporate lease and fleet management and resale of pre-owned cars in partnership with its dealers. launched global-standard cars in rapid succession and exported cars made-in-India across the globe. They are experiencing tremendous growth . a much admired lifestyle brand in Europe and elsewhere. across all socio-economic & lifestyle groups. the company s endeavor is to be close to the customer. car customers in India are able to access these services through a one-stop shop. and the ability to translate them into customer-desired offerings through leading edge R&D. It s been their continuous endeavor to fulfill the entire spectrum of customer needs and desires. Getz. Tata Motors According to the officials of Tata Motors the foundation of the company s growth over the last 50 years is a deep understanding of economic stimuli and customer needs. For HMI's focus and commitment to the Indian automobile customers is of critical importance. They believe that the new business initiatives taken by MUL have expanded the scope of this relationship. The company leverages its global expertise to manufacture and market well engineered and safe products through its well-established retail network that provide an excellent ownership experience to its customers. Since these services play a vital role in the car customer's ownership experience.

Ford India has been revamping all dealerships under the Ford Brand@ Retail. Ford India continues to expand its distribution network and has grown to around 150 dealer outlets.country. technical and non-technical aspects of the business and in the financial management of the dealership. sales. 24 . a global corporate identity program to offer a world-class purchase experience to the customer. The officials also mentioned that Ford India provides training support to dealers in areas including customer satisfaction.

Hyundai Motors India Ltd According to the officials at HMI. and international quality press.specially equipped Santro that can provide emergency service to all its customers anytime. Hyundai also has a fleet of 78 emergency road service cars . In order to be closer to the customers. As a major step in this direction they have started Call Center service with toll-free number for the people of National Capital Region in year 2000. anywhere. finance options. customers can call 24-hour assistance at 30308080. MUL has multiple avenues of one-to-one interaction with customers. prices. the Company has set up more than 70 dealer workshops that are equipped with the latest technology. machinery. Widespread sales and service outlets across the country ensure that customers have the assurance of great service wherever they travel in India. and the locations of our numerous service stations.Interacting with Customers Maruti Udyog Limited According to the officials of MUL. The unique 3-hour service programme comes with a promise of servicing your car in just 3 hours. General Motors According to the official at GM.Only from MTNL & BSNL numbers) 011. designed to compliment every aspect of owning a car and ensuring complete peace of mind. Maruti's consistent performance over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand. The objective of this service is to ensure that customers have quick and easy access to all information on their models. or you get the service free. thereby providing a one-stop shop for a Hyundai customer. customers can now conveniently get their car serviced. This service. So be it emergency assistance. is now available nation-wide. 25 . For prospective buyers. body and paint shops. it is accessible from any fixed-line or mobile phone of BSNL/MTNL network across the nation. dealers. The customers can also call on 1800-11. their overall strength lies in building an organization that is sharply focused on the voice of the customer. Customers in over 700 cities/towns across India can contact them any time during the day and all days of the week.4645 (Toll Free . For any car related query or emergency requirement. they have introduced the GM Service Plus a unique cluster of services. across the country. Customers can be assured of yet another great moment from General Motors. when they use it the least. The toll-free service is 1800 1800 180.26924645 (For all GSM Connections / Landline other than MTNL & BSNL numbers) for any queries & customer complaints. named Anytime Maruti. Anytime Maruti helps customers to learn more about their Maruti Cars and also about other services offered by Maruti. to bring greater value and service to customers. With their 24-hour workshops. value added services. Anytime Maruti can help them deciding amongst various Maruti Models and benefits of buying from Maruti. an urgent car servicing or even sourcing genuine accessories. The Anytime Maruti Call-center can also be accessed using telephones on other networks by dialing 09811801515 (not toll-free).

the company aims to provide quality. peace-of-mind products for the customer and embodies a brand synonymous with its ability to provide products that can be tailored to suit one's individual needs. Brakes.Tata Motors According to the officials of Tata Motors. Customers can place an online service request at Ford. When vehicle needs a repair or a component replacement. the company has strengthened its distribution and customer care network and today has 77 dealers and 230 authorized service outlets spread across 119 locations in India. dealership is the place to get it. shocks. 26 . Ford Solutions serve to develop products for Ford and the Dealer body that enhance customer satisfaction. batteries or anything the vehicle may need. Ford Dealership is simply the best place to have vehicles serviced. Ford India Limited According to the officials at Ford solutions. customer needs Quality Care service.

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