Green Veh Strategy

Indian Institute of Management , Bangalore

Gopalakrishnan D (0910021)

Mukesh Sharma (0910036)

Faculty Guide

Prof.Mithileshwar Jha

Profiles of Presenters

• Gopalakrishnan D

– 8 years in Automotive industry (Maruti Suzuki)

– Customer relation and channel management

• Mukesh Sharma

– 11 Years in Automotive Industry (Maruti Suzuki/Suzuki Motor

Corp/Tata Motors)


Corp/Tata Motors)

– New Product development and Vehicle R&D

Contents

• Motivation behind the work

• Introduction

• Objective and scope


• Methodology

• Findings

• Discussions and Recommendations

Motivation behind the work

• Decreasing fuel � increasing cost

• Emission norms getting tougher

• Mobility requirements getting denser

• Alternate fuel research going on


• Alternate fuel research going on

• To understand consumer behavior for new

sources of mobility

• Facilitate academicians and practitioners

•Global warming

•Pollution

•Oil dependence

Introduction


•Fast growing Indian

automobile market

•Lesser carbon foot

print

•Least carbon foot print

for electric cars

•Oil conservation in

Introduction

0

5,00,000

10,00,000

15,00,000

20,00,000

25,00,000

Ve

hic

le s

ale

s

Indian Automobile sales 2008-09

Total sales


•Oil conservation in

range of 50~100%

0

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Objective and Scope

Consumer• Understanding Consumer insights

• Segmentation , Targeting and


Marketing Strategy

• Segmentation , Targeting and Positioning of green vehicles

Overall Strategy

• Blue print for promoting green vehicles in emerging markets like India.

Methodology

Conventional cars

Industry experts

Current customers

-Study conventional car market

-Green car evolution so far

-Literature study about green

marketing

-Understand World scenario


Green car evolution

Literature study

Indian scenario

World ecosystem

Focus groups

Potential customers

-Understand Indian scenario

-Interview industry experts

-Survey current electric car

customers

-Conduct focus groups for

potential customers

-Survey potential customers

Findings and Frameworks

• Psychology of green consumers

• History of electric cars

• HEV/EV programs in other countries

• Indian scenario and NHPP

• REVA customer(54) vs conventional customer(61) analysis


• REVA customer(54) vs conventional customer(61) analysis

• Pros and cons framework (PNC)

• Focus group findings (1-8)

• Green vehicle ecosystem framework (GVE)

• Green customer perceived value framework(GCPV)

• Industry expert analysis framework(14) (IEA)

• Green vehicle diffusion model (GVDM)

Psychology of green consumersS.No Type Characteristics

1 True blue greens (10%) � People with strong environmental beliefs

� Politically active

� Contribute money to environmental groups

2 Greenbacks greens (5%) � Their willingness to pay for green product is

22% and support environmental concerns

� Busy in life , not politically active

3 Sprouts (33%) � Willing to pay 4% extra


� Willing to engage in environmental activities if it

consumes less time

� After some time few of them migrate to true

blue and greenback greens

4 Grousers (15%) � They feel saving environment is responsibility

of government

� They recycle cans and bottles , but grudgingly

5 Basic browns (37%) � Not convinced that environment problems are

that serious

� They believe it’s a hype

History of Electric vehicles


HEV/EV programs in countries

• USA (California)– ZEV/PZEV – Penalty based enforcement

– Lobbying by Oil companies/Auto companies

• France– Denser city layout

– Gasoline – Higher taxes

– Nuclear power

– Public procurement approach

• Japan– Earliest promoters (1970’s)

Active –Consensual

Active -Impositional

Reactive -Consensual

Reactive -Impositional

CaliforniaFrance

Japan


– Earliest promoters (1970’s)

– Government + Companies+ Municipalities

– Development of quick charging stations

– R&D support

– Market support

• Israel – Better place model ($2300 million invested)

– Oil independent by 2020

– 500,000 charging stations by 2011

– Battery swapping mechanisms

Indian scenario• REVA NXG /NXR electric

• Toyota Prius hybrid

• Tata Indica electric

• GM Spark electric

• Maruti Suzuki Eeco electric, SX4 hybrid

• Hero electric


• Hero electric

• Mahindra and Mahindra

• National Hybrid propulsion program(NHPP)• Ashok Leyland ,Tata Motors ,Maruti Suzuki ,Bajaj Auto

Mahindra and Mahindra

REVA customer VS Conventional

customer survey analysis

Revacar user profile

Women ~ 50%

Senior citizens ~

40%

Working couple ~

55%

Daily use of Reva ~

95%

First Value, then Eco-friendly

Conventional car user profile

Men ~ 95%

Middle aged ~ 90%

Single earner ~

70%

Daily use of car ~ 95%

First Value, then

Comfort

Confidential ( Non disclosure agreement )


Self-employed

~ 20%

Own 2 cars ~ 70%

Private firm ~ 55%

Car for Leisure

Trips ~ 60%

•Inadequate service

network (37%)

•Poor build quality (30%)

•Battery charge problem

(28%)

•High vehicle cost (24%)

•Poor service quality (11%)

•Environment friendliness

(69%)

•Low running cost (54%)

•Quality of drive (15%)

•Derisk from petrol prices

(8%)

•Less maintenance (8%)

•Expensive (71%)

•Unproven technology (35%)

•Lower performance (18%)

•Uncertain serviceability (12%)

•Stability issues and poor

design (6%)

•Less space/ too small (30%)

•Not value for money (30%)

•Less drive range per charge

(22%)

•Unsafe (17%)

•Not really eco-friendly (17%)

Reva dissatisfaction Reva NOT good purchase Why GREEN cars? Why not GREEN cars?

Confidential(Non disclosure agreement)

Pros and cons framework (PNC)


Total cost of ownership comparison



Total cost of ownership comparison


Potential customer focus group

analysis


Green vehicle ecosystem framework (GVE)


Green customer perceived value

framework(GCPV)


Industry expert analysis

framework(14) (IEA)


Green vehicle diffusion model

(GVDM)


Discussion and Recommendation

• Innovation wheel

• Technology VS affordability quadrant

• Segmentation , Target , Positioning

• Green strategy– Lean Green


– Lean Green

– Shaded Green

– Defensive Green

– Extreme Green

• Marketing Mix and challenges

• Future projections - India

Innovation wheel &

Technology VS affordability

quadrantMore

Investment

Better Technology

More Profits


More Demand

Lower Costs

Higher Sales

Green strategy


Product Price Place Promotion

LEAN X

DEFENSIVE X X

SHADED X X X

EXTREME X X X X

Marketing Mix and challenges


•People: Education and awareness of people

•Politics: Lobbying with government for tax subsidy

•Process: GREEN alliances.

•Proactive planning: changing consumer tastes.

•Pace: implement the suggestions as fast as possible.

•Publicity: publicize both the makers and the users to

increase the diffusion rate of such an innovation.

11 point Blue Print: Strategy for

promoting green automobiles• Green alliance.

• Commitment of resources.

• Electric vehicle regulation.

• Infrastructure - charging points.


• Infrastructure - charging points.

• Tax reliefs and Subsidy.

• Incentives to consumers to change their

driving and vehicle ownership behavior.

• Education and awareness - Schools and

colleges

11 point Blue Print: Strategy for

promoting green automobiles• Segmentation and Targeting of consumers for electric

vehicles– Short term (10 years): Women and older people.

– Medium term (20 years): Increase consumer adoption rate .

– Long term (> 20 years): Develop mature ecosystem mass adoption.

• Positioning of the product:


• Positioning of the product:– In short term- “Value for money car”.

– In medium term - “Value for money + eco friendly product”

– In long term - “Total eco friendly product”.

• Electric cars require electricity– Centralized Nuclear power plant generation systems

– Decentralized (standalone) Solar electricity generation systems.

• To prove the technology for mass usage and change the consumer behavior to use such products.


How will it eventually happen?

100

70

Chance that

next person

WillingnessCapability


0 70 100

% of people using conventional cars

0

next person

purchasing a

car will be

conventional

Opportunity

Forecast



Future scope of work

• Analysis of battery industry and its dynamics

• Analysis of future power generation systems

such as solar and nuclear means.

• Hypothesis development and testing.


• Hypothesis development and testing.

• Article

• Book

Thank you for your patience


Documents

Green Veh Strategy