Description
Segmentation, targeting and positioning of Hyundai cars, 4ps of hyundai, strategy adopted by hyundai, marketing strategy by Tata Nano
HYUNDAI’S MARKETING STRATEGIES IN INDIA
Hyundai’s Marketing Strategies in India
Summary: The case deals with the marketing strategies Hyundai Motor Company (HMC) in India. HMC entered India by establishing its wholly owned subsidiary Hyundai Motors India Limited (HMIL) in 1996 compared to its foreign competitors who entered the Indian market through tie-ups with Indian Counter parts. Within a year of launch of its first product - Santro, HMIL had emerged as the second largest car company in India. The case describes in detail the pre market conditions, entry, product, pricing, distribution and promotional strategies of HMIL. The case also discusses the challenges faced by the company and its marketing plans in future. It also includes a note on the Indian passenger car industry, the leading player and its marketing strategy. Problems faced by HMIL: • Hyundai launched its ‘B’ segment vehicle Hyundai Getz in a period when there was intense demand for Hyundai Santro causing the demand for Santro to go down. The impact was very high that even the market leader tag was lost to MUL. The competition among other motor companies dominated this era thereby paving way for HMIL to lose its market share to rivals like MUL, Ford, and Mitsubishi etc. Though the demand for Hyundai cars where very high owing to plant production constraints it cannot match up to its expected demand thereby losing a part of its share to its competitors. The introduction of newer cars meant to new segment reach, new customers, new technology etc. but HMIL just did not concentrate on simultaneous promotional campaigns causing for the drop down in advertisements for existing products which were doing well in the market. This meant losing of customers and paving way for competitors.
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1) Segmenting & Targeting Maruti Udyog Ltd. (MUL) targeted the ‘A’ segment of the market by launching its Maruti 800 for Rs. 40,000. This was due to an initiative of the Government of India to produce a small and affordable car targeting the Indian middle class. Hyundai Motors India ltd. (HMIL) on the other hand entered the market by
targeting the ‘B’ segment. HMIL believed that the middle class Indian consumer would not mind paying extra for value addition. Hence HMIL entered the Indian market by targeting the ‘B’ segment. After its initial launch in 1983, MUL also targeted the B and C segments with the launch of ‘ Zen’ and ‘Esteem’ respectively .MUL also went on increasing its market share in the B segment by launching ‘Alto’ and ‘Wagon R’ models. The combined sales of the three models (viz: ‘Zen’, ‘Alto’ and ‘Wagon-R’) ensured MUL to gain a dominant share in the ‘B’ segment. The luxury ‘D’ and ‘E’ segments were however not covered by MUL. Conversely HMIL did not introduce any other model besides ‘Santro’ in the B segment. HMIL targeted the rural market as well in selling ‘Santro’. On the contrary MUL did not target the rural market for any of its car in the ‘B’ segment. HMIL however entered the ‘C’ segment with the launch of ‘Accent’. HMIL also entered the D segment and the Luxury ‘E’ segment by launching ‘Sonata’ and ‘Elantra’ models. By July 2004, HMIL introduced another model ‘Getz’ which specifically targeted the upper B segment. Positioning HMIL positioned its cars as follows; Santro: Santro was initially positioned as ‘the Family car’ targeting the age group of 35-45 years. When the competition intensified in the ‘B’ segment, Santro was again repositioned in October 2002 as the ‘Sunshine car’. The basic idea was to target young customers of the age group of 25-35 years. Accent: HMIL positioned its model ‘Accent’ as ‘The next step’. This was done to highlight the latest technology used in the car. Sonata: Sonata was positioned with the tag line as ‘Dreamt about by everyone, owned by select few’. This line highlighted the luxury feature of the model. 2) Four P’s Product: All products of HMIL had some distinguishing features that enabled them to become the market leaders of their particular segments. Santro had its unique design features such as; more head room providing easy entry and exit, higher positioning of the driver seat which ensured better visibility, safety features like child lock rear doors, crumple zone to absorb frontal impact and, ergonomically designed seats to ensure comfort. Accent had the latest technology, Sonata had its luxurious design and Getz had a larger space compared to other cars in the same segment. Price: All products of HMIL were priced lower than its competitor’s products in their respective segments to gain substantial market share. Santro was priced at Rs.2, 89,000 compared to MUL’s Zen which was priced at Rs.3, 45,000. Accent was priced at Rs.5, 35,000 as compared to Mitsubishi’s ‘Lancer’ at Rs.7, 80,000. ‘Sonata’ was priced at Rs.16, 00,000 compared to Honda’s Accord which was
priced at Rs. 17,00,000. HMIL also followed a unique “pricing based on customer value perceptions” strategy in which different models of the same brand had different features and customers had to pay based on the features they prefer in the car. This strategy was employed by HMIL in the pricing of Santro brand wherein the three models were Santro LP, Santro GS and Santro LE. Place: HMIL was very cautious in selecting its dealers. It had an elaborate selection procedure wherein every prospective dealer had to fill up a detailed application form revealing his personal information, financial status, asset value, liabilities, impending legal proceedings etc. The dealers were also required to have a sound knowledge of the market position and the current trend and position of car sales in their specific region. Other minute details like distance between showroom and workshop, organizational structure and references were also sought by HMIL. These details helped HMIL to scientifically decide, which applicant was to be picked for a particular location for dealership. Dealers from rural areas were also selected for pushing the sales of Santro in these regions. Promotion: HMIL used different media for the promotion of its various brands. Santro was promoted by television advertisements featuring the product features and customer responses to Santro. HMIL had given the advertising contract to Saatchi & Saatchi. In rural areas Santro was promoted by organising road shows and offering test drives. Accent on the other hand was promoted through the Print media. The reason was, since Accent was a higher value product it appealed to a specific kind of audience. HMIL gave the responsibility of advertising campaign of Accent to Grey Worldwide India (GWI). Accent CRDi was however promoted through television advertisement as it was a new technology used in the Indian Automobile Industry. Sonata was also promoted through television advertisements. 3) Strategy adopted by HMIL As an entry strategy Hyundai motors corporation (HMC) set up its subsidiary in India and named it Hyundai Motors India Ltd (HMIL). This was contrast to other foreign companies who entered the Indian market by forming joint ventures with Indian companies. HMC wanted to leverage upon the low manufacturing and labour costs in India. Hence it set up its own manufacturing plant at Irrungattukottai near Chennai. In contrast other companies only established their assembling units in India. HMIL used superior technology in its products, which gave it a competitive advantage over its competitors. As a result Santro and Ascent became the market leaders, although they were the sole products of HMIL in their respective segments. HMIL also widened its portfolio by introducing one product in each segment and also made sure that the product had a substantial market share in its segment.
HMIL was the first company to introduce what became popular as the “pricing based on customer value perceptions”. Based on this strategy HMIL had introduced three models of Santro with varying features and different prices. HMIL had its unique interacting methodology with its dealers, which gave HMIL a better understanding of the customers. 4) Opportunities for the car industry in 1980s In the early 1980’s the automobile industry was highly protected with only two players Premier Automobiles (PA) and Government of India (GOI). This lead to very little technological improvements in the industry thus for poor technology people had to pay higher prices. As a result of which the CAGR was just 3.5% since most of the middle class could not afford to buy such a high priced car. At this moment the GOI felt the need to introduce a small car that is affordable by Indian middle class. There was a huge potential for this market but the sector was not opened up for other players. A company with more focus on technology or having a tie-up with foreign players for latest technology could have improved the quality of cars. This would have given an edge to the company compared to the other players PA and GOI which weren’t technologically savvy. Along with it a company could have reduced their prices too and still maintain higher margin by virtue of huge market potential. 5) Opportunities used by HMIL in the Indian car market HMC was the first foreign company to set up its own subsidiary HMIL and its own manufacturing plant. HMIL discovered that there was a potential market for small cars and hence went on with the introduction of Santro. HMIL also discovered that the middle class customers belonging to the ‘B’ segment would not mind paying a little higher price for better comfort and hence targeted this segment in particular. HMIL also recognised the opportunities in other segments (C, D and E) and launched new products in these segments, which went on to become quite successful. 6) Marketing strategies for TATA Nano (Four P’s) Product: The features of TATA Nano are given below:a. Tata’s Nano will have 624 cc Petrol Engine and it will give 33 bhp power (engine is in rear) b. This car will give fuel average of 20-25 Km/litre c. Top speed of Nano will be 90 Km/hour d. Petrol tank of this car will have capacity of 30 litres e. Nano will be available in three colours red, yellow and silver f. This car can accommodate 4-5 people
g. Nano will meet Bharat 3 and Euro 4 emission standards h. Tata will launch one basic and two deluxe models (with AC) of this car i. Length of car is 3.1 meter and its width is 1.5 meter
The high end/deluxe models will include air-conditioning and other features to be incorporated based on suggestions of the common people j. The most important feature of TATA Nano is that it has 21% more space and 8% smaller than Maruti 800, which is the nest cheapest car in the A segment Source:-http://www.thoughtsofanordinaryman.com/2008/01/features-of-nanotatas-one-lakh-rupee.html Price: Price to the distributor of Nano in Delhi will be Rs 1 Lakh and its actual price will be slightly more than 1 lakh for customers. At about $2,500 retail, the Nano is the most inexpensive car in the world. Its closest competitor, the Maruti 800, made in India by Maruti Udyog [Get Quote], sells for roughly twice as much. To put this in perspective, the price of the entire Nano car is roughly equivalent to the price of a DVD player option in a luxury Western car. The low price point has left other auto companies scrambling to catch up. Source: 454.html http://lifestyle.iloveindia.com/lounge/tata-nano-car-specifications-
Place: TATA Nano is believed to be a new revolution in Indian car market and many experts believe that this car also has lot of potential for world market too. The main place of launching the product is the urban cosmopolitan market. The rural market in India can provide a huge opportunity for this car. Since it’s a very cheap car and is easy to maintain, the less established and less educated people will want to buy the car. The techniques initially developed to reach poor and rural customers may have even greater potential when used to reach highly demanding, affluent, urban customers in Western economies. Source: - http://in.rediff.com/money/2008/mar/25nano.htm Promotion: In order to provide an added facility to help its Nano customers to finance the car, Tata Motors has entered into an understanding with Corporation Bank. Corporation Bank has lowered their car loan rates and now offers loan up to 85% of on road price, for tenure ranging up to 5 years, at a very competitive rate of 11.75% p.a. The dealer network will be fully trained to explain the loan formalities and will help customers in completing the documentation required for availing car loans from the bank. Both the organisations have jointly organised sales promotion activities by display each other's products and offerings at their respective premises. This tie-up will provide a single window for both cars as well as car loans and will make Nano buying easier for customers.
Tata showcased the one-lakh ‘people’s car’ – Nano at the Auto Expo Jan ’08 held in Delhi. This is the most coveted place to unveil a new car. People are speculative about the car mainly because of its low price. The features need to be advertised so that people can come out of their mental jinx. A popular celebrity can be approached to endorse the product. The main media of advertising should be the television because it’s a low priced product it will appeal to the middle class segment that prefer watching more of television rather than reading magazines. Ads can also be given in newspaper. Source: combo/ http://www.carwale.com/blog/foreign-cars/375-tata-lr-jaguar-quite-a-
doc_935909657.doc
Segmentation, targeting and positioning of Hyundai cars, 4ps of hyundai, strategy adopted by hyundai, marketing strategy by Tata Nano
HYUNDAI’S MARKETING STRATEGIES IN INDIA
Hyundai’s Marketing Strategies in India
Summary: The case deals with the marketing strategies Hyundai Motor Company (HMC) in India. HMC entered India by establishing its wholly owned subsidiary Hyundai Motors India Limited (HMIL) in 1996 compared to its foreign competitors who entered the Indian market through tie-ups with Indian Counter parts. Within a year of launch of its first product - Santro, HMIL had emerged as the second largest car company in India. The case describes in detail the pre market conditions, entry, product, pricing, distribution and promotional strategies of HMIL. The case also discusses the challenges faced by the company and its marketing plans in future. It also includes a note on the Indian passenger car industry, the leading player and its marketing strategy. Problems faced by HMIL: • Hyundai launched its ‘B’ segment vehicle Hyundai Getz in a period when there was intense demand for Hyundai Santro causing the demand for Santro to go down. The impact was very high that even the market leader tag was lost to MUL. The competition among other motor companies dominated this era thereby paving way for HMIL to lose its market share to rivals like MUL, Ford, and Mitsubishi etc. Though the demand for Hyundai cars where very high owing to plant production constraints it cannot match up to its expected demand thereby losing a part of its share to its competitors. The introduction of newer cars meant to new segment reach, new customers, new technology etc. but HMIL just did not concentrate on simultaneous promotional campaigns causing for the drop down in advertisements for existing products which were doing well in the market. This meant losing of customers and paving way for competitors.
•
•
•
1) Segmenting & Targeting Maruti Udyog Ltd. (MUL) targeted the ‘A’ segment of the market by launching its Maruti 800 for Rs. 40,000. This was due to an initiative of the Government of India to produce a small and affordable car targeting the Indian middle class. Hyundai Motors India ltd. (HMIL) on the other hand entered the market by
targeting the ‘B’ segment. HMIL believed that the middle class Indian consumer would not mind paying extra for value addition. Hence HMIL entered the Indian market by targeting the ‘B’ segment. After its initial launch in 1983, MUL also targeted the B and C segments with the launch of ‘ Zen’ and ‘Esteem’ respectively .MUL also went on increasing its market share in the B segment by launching ‘Alto’ and ‘Wagon R’ models. The combined sales of the three models (viz: ‘Zen’, ‘Alto’ and ‘Wagon-R’) ensured MUL to gain a dominant share in the ‘B’ segment. The luxury ‘D’ and ‘E’ segments were however not covered by MUL. Conversely HMIL did not introduce any other model besides ‘Santro’ in the B segment. HMIL targeted the rural market as well in selling ‘Santro’. On the contrary MUL did not target the rural market for any of its car in the ‘B’ segment. HMIL however entered the ‘C’ segment with the launch of ‘Accent’. HMIL also entered the D segment and the Luxury ‘E’ segment by launching ‘Sonata’ and ‘Elantra’ models. By July 2004, HMIL introduced another model ‘Getz’ which specifically targeted the upper B segment. Positioning HMIL positioned its cars as follows; Santro: Santro was initially positioned as ‘the Family car’ targeting the age group of 35-45 years. When the competition intensified in the ‘B’ segment, Santro was again repositioned in October 2002 as the ‘Sunshine car’. The basic idea was to target young customers of the age group of 25-35 years. Accent: HMIL positioned its model ‘Accent’ as ‘The next step’. This was done to highlight the latest technology used in the car. Sonata: Sonata was positioned with the tag line as ‘Dreamt about by everyone, owned by select few’. This line highlighted the luxury feature of the model. 2) Four P’s Product: All products of HMIL had some distinguishing features that enabled them to become the market leaders of their particular segments. Santro had its unique design features such as; more head room providing easy entry and exit, higher positioning of the driver seat which ensured better visibility, safety features like child lock rear doors, crumple zone to absorb frontal impact and, ergonomically designed seats to ensure comfort. Accent had the latest technology, Sonata had its luxurious design and Getz had a larger space compared to other cars in the same segment. Price: All products of HMIL were priced lower than its competitor’s products in their respective segments to gain substantial market share. Santro was priced at Rs.2, 89,000 compared to MUL’s Zen which was priced at Rs.3, 45,000. Accent was priced at Rs.5, 35,000 as compared to Mitsubishi’s ‘Lancer’ at Rs.7, 80,000. ‘Sonata’ was priced at Rs.16, 00,000 compared to Honda’s Accord which was
priced at Rs. 17,00,000. HMIL also followed a unique “pricing based on customer value perceptions” strategy in which different models of the same brand had different features and customers had to pay based on the features they prefer in the car. This strategy was employed by HMIL in the pricing of Santro brand wherein the three models were Santro LP, Santro GS and Santro LE. Place: HMIL was very cautious in selecting its dealers. It had an elaborate selection procedure wherein every prospective dealer had to fill up a detailed application form revealing his personal information, financial status, asset value, liabilities, impending legal proceedings etc. The dealers were also required to have a sound knowledge of the market position and the current trend and position of car sales in their specific region. Other minute details like distance between showroom and workshop, organizational structure and references were also sought by HMIL. These details helped HMIL to scientifically decide, which applicant was to be picked for a particular location for dealership. Dealers from rural areas were also selected for pushing the sales of Santro in these regions. Promotion: HMIL used different media for the promotion of its various brands. Santro was promoted by television advertisements featuring the product features and customer responses to Santro. HMIL had given the advertising contract to Saatchi & Saatchi. In rural areas Santro was promoted by organising road shows and offering test drives. Accent on the other hand was promoted through the Print media. The reason was, since Accent was a higher value product it appealed to a specific kind of audience. HMIL gave the responsibility of advertising campaign of Accent to Grey Worldwide India (GWI). Accent CRDi was however promoted through television advertisement as it was a new technology used in the Indian Automobile Industry. Sonata was also promoted through television advertisements. 3) Strategy adopted by HMIL As an entry strategy Hyundai motors corporation (HMC) set up its subsidiary in India and named it Hyundai Motors India Ltd (HMIL). This was contrast to other foreign companies who entered the Indian market by forming joint ventures with Indian companies. HMC wanted to leverage upon the low manufacturing and labour costs in India. Hence it set up its own manufacturing plant at Irrungattukottai near Chennai. In contrast other companies only established their assembling units in India. HMIL used superior technology in its products, which gave it a competitive advantage over its competitors. As a result Santro and Ascent became the market leaders, although they were the sole products of HMIL in their respective segments. HMIL also widened its portfolio by introducing one product in each segment and also made sure that the product had a substantial market share in its segment.
HMIL was the first company to introduce what became popular as the “pricing based on customer value perceptions”. Based on this strategy HMIL had introduced three models of Santro with varying features and different prices. HMIL had its unique interacting methodology with its dealers, which gave HMIL a better understanding of the customers. 4) Opportunities for the car industry in 1980s In the early 1980’s the automobile industry was highly protected with only two players Premier Automobiles (PA) and Government of India (GOI). This lead to very little technological improvements in the industry thus for poor technology people had to pay higher prices. As a result of which the CAGR was just 3.5% since most of the middle class could not afford to buy such a high priced car. At this moment the GOI felt the need to introduce a small car that is affordable by Indian middle class. There was a huge potential for this market but the sector was not opened up for other players. A company with more focus on technology or having a tie-up with foreign players for latest technology could have improved the quality of cars. This would have given an edge to the company compared to the other players PA and GOI which weren’t technologically savvy. Along with it a company could have reduced their prices too and still maintain higher margin by virtue of huge market potential. 5) Opportunities used by HMIL in the Indian car market HMC was the first foreign company to set up its own subsidiary HMIL and its own manufacturing plant. HMIL discovered that there was a potential market for small cars and hence went on with the introduction of Santro. HMIL also discovered that the middle class customers belonging to the ‘B’ segment would not mind paying a little higher price for better comfort and hence targeted this segment in particular. HMIL also recognised the opportunities in other segments (C, D and E) and launched new products in these segments, which went on to become quite successful. 6) Marketing strategies for TATA Nano (Four P’s) Product: The features of TATA Nano are given below:a. Tata’s Nano will have 624 cc Petrol Engine and it will give 33 bhp power (engine is in rear) b. This car will give fuel average of 20-25 Km/litre c. Top speed of Nano will be 90 Km/hour d. Petrol tank of this car will have capacity of 30 litres e. Nano will be available in three colours red, yellow and silver f. This car can accommodate 4-5 people
g. Nano will meet Bharat 3 and Euro 4 emission standards h. Tata will launch one basic and two deluxe models (with AC) of this car i. Length of car is 3.1 meter and its width is 1.5 meter
The high end/deluxe models will include air-conditioning and other features to be incorporated based on suggestions of the common people j. The most important feature of TATA Nano is that it has 21% more space and 8% smaller than Maruti 800, which is the nest cheapest car in the A segment Source:-http://www.thoughtsofanordinaryman.com/2008/01/features-of-nanotatas-one-lakh-rupee.html Price: Price to the distributor of Nano in Delhi will be Rs 1 Lakh and its actual price will be slightly more than 1 lakh for customers. At about $2,500 retail, the Nano is the most inexpensive car in the world. Its closest competitor, the Maruti 800, made in India by Maruti Udyog [Get Quote], sells for roughly twice as much. To put this in perspective, the price of the entire Nano car is roughly equivalent to the price of a DVD player option in a luxury Western car. The low price point has left other auto companies scrambling to catch up. Source: 454.html http://lifestyle.iloveindia.com/lounge/tata-nano-car-specifications-
Place: TATA Nano is believed to be a new revolution in Indian car market and many experts believe that this car also has lot of potential for world market too. The main place of launching the product is the urban cosmopolitan market. The rural market in India can provide a huge opportunity for this car. Since it’s a very cheap car and is easy to maintain, the less established and less educated people will want to buy the car. The techniques initially developed to reach poor and rural customers may have even greater potential when used to reach highly demanding, affluent, urban customers in Western economies. Source: - http://in.rediff.com/money/2008/mar/25nano.htm Promotion: In order to provide an added facility to help its Nano customers to finance the car, Tata Motors has entered into an understanding with Corporation Bank. Corporation Bank has lowered their car loan rates and now offers loan up to 85% of on road price, for tenure ranging up to 5 years, at a very competitive rate of 11.75% p.a. The dealer network will be fully trained to explain the loan formalities and will help customers in completing the documentation required for availing car loans from the bank. Both the organisations have jointly organised sales promotion activities by display each other's products and offerings at their respective premises. This tie-up will provide a single window for both cars as well as car loans and will make Nano buying easier for customers.
Tata showcased the one-lakh ‘people’s car’ – Nano at the Auto Expo Jan ’08 held in Delhi. This is the most coveted place to unveil a new car. People are speculative about the car mainly because of its low price. The features need to be advertised so that people can come out of their mental jinx. A popular celebrity can be approached to endorse the product. The main media of advertising should be the television because it’s a low priced product it will appeal to the middle class segment that prefer watching more of television rather than reading magazines. Ads can also be given in newspaper. Source: combo/ http://www.carwale.com/blog/foreign-cars/375-tata-lr-jaguar-quite-a-
doc_935909657.doc