19th Global marketing competition 2014- Spain

Global Marketing Competition 2014d

GIM MOTORS

PRESENTATION

2

1

2

3

MARKET ENTRY STRATEGY

KEY STRATEGIES AND COMPETITOR ANALYSIS

CORPORATE STRATEGY

AGENDA

4

5

AVOIDABLE SETBACKS

GLOBAL MARKETING COMPETITION 2014

FUTURE CHALLENGES

3

Corporate Strategy Inspiration

Corporate Strategy

Key Strategies and Competitor Analysis

Entry Strategy

Future Challenges

Avoidable Setbacks


Most ethical company for last five consecutive

years by Ethisphere

Institute

2nd largest US based automaker,

5th largest in Europe and 2nd largest in World

Sustainable Brand equity for over 100

years

Customer-Centric

Approach rather than just profit-oriented

4

Mission,Vision and Culture of GIM MOTORS

Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks


Most admired by our customers, employees, business partners and shareholders for the experience and value they enjoy from being with us.

To be passionate in anticipating and providing the best vehicles and experiences that excite our customers globally

Integrity, Accountability, Customer, Innovation, Concern for environment, Passion for excellence

5

Our Corporate Strategy Guidelines at a Glance:

Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks


Focus on developing cars at

a faster rate to serve every

market segment

Establish economies of scale with an emphasis

on profitability.

Focus heavily on market

penetration and product

development and diversification

Focus on minimizing the finished goods

inventory as much as possible by

understanding PLC

Focus on strong dealer

relationships for a long term

Using the advertising mediums

effectively to improve

awareness

6

Market Entry Strategy Inspiration


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks Detroit : The World’s

automobile capital

“Ford of Europe” Concept

Market Entry with hatchbacks for Europe

Market- Ford Escort, Ford Capri

Market Entry with Mercury

series in “midsize” and

“full-size” sedans

Different Market-

Different Series entry strategy

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Entry level Strategy on Headquarters and Segments:


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

• Decision: Headquarters set-up in North America

• Reasons: Detroit, the motor city , where the big 3 are located, has world’s best suppliers so our purchase managers can negotiate better and keep close relations with suppliers. Our Marketing team can also have a close look at strategies which the big 3 follow. Also, the company got the best possible talent for headquarters.

• Cost of dismissing a production personnel were significantly low in NA market as compared to other two markets

• Explanation: As a rule of thumb,one person at headquarter is counted for every six workers in assembly plants.

Competitor’s Strategies: All other competitors were also headquartered in NA

8

Market Entry for Various segments Vs Our Competitors:


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Decision : (Geographical segmentation)S1 and S2 in SE while S3 and S4 were manufactured in NA. As per Ford Strategy, we entered markets with separate series and aim was to maximise sales with one series in one market.

Reasons: Hatchbacks are in high demand in Europe while the American consumers are fond of Sedans

Explanation: Transportation cost per vehicle from plants to dealer points would have increased if vehicle was manufactured in region where the demand was low

9

Entry level strategy at a glance:


Always have 8 models in market to give a wide range to customers across diesel and petrol variants.

Consistent high margins to dealers among competitors to push the product along with other advertising media engines.

Designs were chosen precisely surveying various vehicles in similar segments available in production country .

Consistent investment on market intelligence surveys.

Investment in racing team to have TOP OF MIND AWARENESS for corporate brand.

Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

10

Production Organization Inspiration: Toyota Production System


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable SetbacksEliminate these wastes (Muda)

Waste of over production (largest waste)

Waste of time on hand (waiting) Waste of transportation Waste of processing itself Waste of stock at hand Waste of movement Waste of making defective

products

Underlying Principles

World’s largest

Production in cars

Design out Muri (overburden), Avoid Mura(inconsistency) and eliminate muda(waste)

Continuous improvement

Respect for individuals and teamwork

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Production Organization:


A unit in Production

Life cycle of the version

Design RatingsCompetitors

Full Capacity Utilization of Assembly Plants

Mapping demand for all versions for a car for TG

Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Employee Relations were given prime importance

12

Shifts Rationale:


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Zero waste of production capability

13

Competitive Analysis of Shifts and Employee Relations


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Year 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 829000

30000

31000

32000

33000

34000

35000

EMPLOYEE RELATIONS IN NA PLANTS

SALARY-NA1SALARY-NA2UNIVERSE AVG

Employee Motivation to

boost performance-Incentives of

15% for exceeding

10% targets

Shifts and Production capacity utilization

14

Pricing rationale:


Cost Plus pricing

Based on lifecycle of the

product

Discounts based on previous year

sales

An eye on average and

competitor prices

Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

15

Cost plus pricing Rationale


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

• Multiplication factor given to cover intangible costs such as Overheads, advertising, market research, R&D etc.

• Rebates worth 400-500 Euros were given for a period of 4-5 months post launch to keep consumer demand intact and get competitive advantage

16

Competitors Analysis of Pricing and Rebates Schemes


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

• Duration of rebates was kept competitive

• Competitors took an advantage by dropping the prices significantly and increasing the Rebate drastically(Team 3 and Team 6)

• Advertising spend(model-wise) was important for generating demand (Explained later)

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Distribution : Dealer evolution Inspiration


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Biggest Car dealer in US

Known for Strategic locations & good attitudes of

Sales Staff

Customer Service score is very high

Wide reach- 267 franchises in

around 15 states

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Distribution : Dealer evolution


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Strong Distribution Network in the Target Markets

Dealer Satisfaction

achieved with multiple

variants

Good Customer Service at the dealer

points

Competitive Dealer

Margins

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Distribution Strategies: We V/s Our Competitors


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Year 3 Year 4 Year 5 Year 6 Year 7 Year 80

500

1000

1500

2000

2500

1600 1650 1700 1750 1750 1700

501

1000 1000 900 850600 550

17002000

505 600 510 510 510 501

No of Dealers -NA Region

1 2 3 6

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Distribution Strategies: We V/s Our Competitors


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

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Product Development


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Product Development

8 versions per model

Secondary Research on

Dimensions of models for

respective regions

Minimizing finished goods

inventory

No. of Diesel/Gasoline versions Based on demand of

engine type in a market

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Competitors Vs Us in Product Development


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

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Positioning


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

For our customers who are valuable than anything, GIM Motors Offers Automobile products and services which are superior to

others

Positioning Strategy-More

for More

Benefits Offered:

• Maximum Warranty Offered• Better Customer service at dealer

points• High number of dealer points in each

geographic location• Cashbacks on purchase for a longer

period compared to competitors

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Market Penetration efforts:


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Penetrating the maximum market

using the all-versions launch

strategy

An eye on the purchasing power

parity of the Target Segment

Snatching the Share from our competitors in the competing model by playing on prices and

promotions

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Market Penetration efforts:


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

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Market Penetration vs Our Competitors


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Y3 Y4 Y5 Y6 Y7 Y80.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

Market Penetration in SE Market

1 2 3 6 Est. Companies

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Promotional Strategies Inspiration: General Motors


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Among top 5 Ad spenders in US and highest in automobile

3% Ad spending by

percentage of sales method

Less/stop spending on

mediums which cannot give sales-

GM stopped spending money on Facebook Ads

in 2012

1267.3

184.5175.8142.522.519.4

1337.2

AD SPEND BY GENERAL MOTORS

TV MAGAZINES INTERNET NEWSPAPERSRADIO OUTDOOR Mainstream Press

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Promotional Strategies


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Brand Ads according to

Target segment

Model advertising

keeping in mind competitor’s

spend in Target market

Always keep racing Car to build Top of

Mind awareness

Modification in advertising budget according to model

ratings and demand in market

after launch

Advertising Budget

allocated as 2-3% of Gross

sales(Percentage of sales method)

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Media Vehicles Selection: Maximum Exposure in Target Market


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

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Competitive Analysis on Ads Distribution


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks 1 2 3 60

500

1000

1500

2000

2500

3000

3500

Model S3-Number of ADs in NA Region


500

1000

1500

2000

2500

NA REGION INVESTMENT IN BRANDING-MAINSTREAM PRESS

1 2 3 6

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Competitors at a glance


Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

•Mismanaged working capital leading to high interest expenses on overdraft amount

•Advertising spend was not mapped and budgeted properly

•Low investment in production capabilities

•Low design ratings leading to low demand generation


-50000000000-40000000000-30000000000

-20000000000

-100000000000

1000000000020000000000

30000000000

Working Capital Management

1 2 3 6

32GLOBAL MARKETING COMPETITION 2014

Avoidable Setbacks

Corporate Strategy

Key Decisions and Competitor Analysis

Entry Strategy

Future Challenges

Avoidable Setbacks

S4 Segment potential not tapped

Low Ratings as compared to other

segments- Car Design

Rating of S4A-6.33 Rating of S4B-5.05

Inventory Pile Up due to wrong

demand estimation

Our strategy of full capacity

utilization(Based on TPM) of plants didn’t worked well for this

segment


Avoidable Setbacks

Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Year 4 Year 5 Year 6 Year 7 Year 80

50000

100000

150000

200000

250000

300000

350000

400000

Sales of S4

Year 4 Year 5 Year 6 Year 7 Year 80

200000

400000

600000

800000

1000000

1200000

1400000

S4 Inventory


Avoidable Setbacks

Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

Negative YOY Sales growth(Year 7 & Year 8)

Not Coming up with new models in year 7 and year 8 and using the same models for a long period of time for which prices were to be

reduced due to declining phase of life cycle of the model, hence sales were affected

Dealer satisfaction was affected in year 7 due to a large increase in dealer margin by our competitor and coming with good designs


Areas of Concern going further:

Corporate Strategy


Entry Strategy

Future Challenges

Avoidable Setbacks

New models in other segments shall also be launched at a faster phase to avoid impact of falling sales of models in mature/decline phase of

lifecycle

S4 Segment Penetration to be improved. Better Secondary research needs to be done before launching new S4 model

Dealer profitability has been affected in last 2 years leading to loss for the dealers leading to decreasing dealer satisfaction and hence

impacting sales.

Imitation of our strategies by competitors leading to low differentiation . E.g: Imitation of dealer margins by competitors – Focus on creating intangible diffrentiation

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Thank You For Your Attention.

Business

19th Global marketing competition 2014- Spain