Suzuki Samurai Case Analysis GROUP 03

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CASE ANALYSIS :

Presented by:ARUNA

C K SHARMA

SRINIVASARAO

SUZUKI SAMURAI

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CONTENTS

History of Suzuki

Suzuki samurai in US

Analysis

Target segmentation of Suzuki Samurai

Marketing plan for ASMC

Suzuki’s Goal, Strategy and its success



HOW TO POSITION SUZUKI SAMURAI IN USA



SUZUKI IN JAPAN

• Michio Suzuki started as “Suzuki loom works” in 1909

• It was a loom manufacturing company



1952 and 1954• 1952 Suzuki introduced first 2-cycle

• 1954 Suzuki introduced 2nd motorcycle

Popularity of these motor cycles led to change in name as “Suzuki motor company, Ltd.”



1959

• After 7 years of success, Suzuki introduced a first light weight Van



1961

• After 9 years of success, Suzuki introduced a first CAR of 2 stroke engine named “SUZULIGHT”



1964 – 1965

After 12 years of success in 1964, SUZUKI started exporting motorcycles to USA, quickly established as a

Major brand in U.S. motorcycle industry.

By 1965, SUZUKI product line had: Motorcycles Automobiles Motorized wheel chairs Outboard motors General purpose engines Generators Water pumps and Prefabricated houses



In 1979 and By 1984

In 1979, SUZUKI automobiles introduced to foreign markets, after 27 years of success

And

By 1984, SUZUKI goes global in over 100 countries and Hawaii



1983General Motors (GM) buys 5% of Suzuki and helps

company develop a subcompact car for the U.S. market

CHEVROLET SPRINT



DEMAND FOR SPRINT

In mid 1984, Sprint was Suzuki’s first entry into continental U.S. automobile market.

These cars were sold exclusively by Chevrolet dealers.

Voluntary restraint agreement (VRA) limited the shipping number of cars to U.S. by 17,000.

All cars were quickly sold by GM even though it’s distribution was limited to U.S. west coast dealers.



EMERGENCE OF ASMC

• SUZUKI planned to introduce several unique vehicles to U.S. market over a time.

• Unknown of GM willingness

• SUZUKI DECISION

• To form American Suzuki Motor Corporation



SUZUKI ACTION

• Success of Sprint gave confidence, but VRA was hurdle

• Planned to Manufacture cars in Ontario, plant ready by 1989

• In 1986, Hyundai and Yugo were expected to enter US market .

• Industry experts predicted Japanese imports command of 19.2% share of U.S. market in 1985.

• Market forces and projected new entrants makes Suzuki change their plans



SUZUKI CHANGE IN ACTION

• Introduce SJ413 (Upgraded samurai) to U.S. market.

*As a TRUCK or CAR*



SUZUKI SAMURAI FOR U.S.

• If classified SJ413 as a truck, out of VRA quotas

• But 25% tariff v/s. 2.5% tariff on cars

• SUZUKI management yet found deal worthy

Suzuki planned to market 2 versions of SAMURAI

- Convertible version and- Hard-top version



FIVE FORCE ANALYSIS

Industry Rivalry

Nutshell: Import market is growing.

Ex. Hyundai and Yugo pressurized the release of

samurai. Industry experts predicted

19.2% share of U.S. market.

Barriers to Entry a. medium difficulty

b. Huge capital requirements

c. Govt. policy and regulations (VRA)

d. advertising and other costs

Supplier powerMedium to little power

a. Several car components have multiple substitutesb. Each car component

manufacturer has multiple substitutes.

Thus, suppliers have little powers in forcing car

manufacturers to submit to their choices.

C. Some companies such as Suzuki exhibited vertical

integration.

a. Chevrolet Jimmy (AMC)b. Tercel (Toyota)

c. Sentra (Nissan) etc.

Buyer Power a. Consumer – most powerb. Supplier (Dealerships) –

very little power c. ASMC wants good dealers who are able to invest both monetarily and emotionally

d. Dealer agreement to safeguard Suzuki current

sales and future expansion plans too.

Substitutes



DEALER NETWORK

Suzuki goal “To establish itself as a major car company in U.S.”

SUZUKI REQUIRED:

• Exclusive sales facility for Samurai with• Showroom, Sales offices

• Customer-waiting and accessory-display area• Dedicated minimum 2 service stalls and operated by

Suzuki trained mechanics• Shall display required signs at inside service stalls

and outside the sales office• 3 sales executives, 2 service technicians, General

manager, General office clerk• Planned to limit dealership – 50nos., lucrative ROI



ASMC’S STRATEGY • ASMC planned retail price : $ 5,995

and Dealer invoice price would be 7.5% lesser

• ASMC wanted to attract dealers such that opportunity match investment requirements. Thus,

boost dealers average unit profit, dealers loyalty, greater sales support, higher control over retail

market.

- Initial dealers limited to 47 nos.- ASMC guaranteed supply of minimum 37 units per

month than planned 30 unit earlier for 50 dealers.

• The target selling of 6000 units in 6 months were raised to 10,500 units, by Mazza.

• Introduce Samurai into U.S. largest automobile market : California, Florida and Georgia



WHAT DOES SUZUKI SAMURAI LOOK LIKE?



This is SJ413 SUZUKI SAMURAI,

1985 US MODEL



SJ413 SUZUKI SAMURAI, 1985 US MODEL



Even this …



PRODUCT OVERVIEW

PRODUCT BENEFIT EMOTIONAL BENEFIT PERSONALITY

Ruggedness Feeling of being strong and rough

Outdoorsy, tough

Efficient gas mileage, low maintenance

Feeling of austerity and satisfaction

Sincerity, honesty

Looks “Cute” and “Stylish”

Being in vogue, pride in being watched and

appreciated

Hedonistic

Easy off road handling, choice of

convertibility

Comfortable and adaptable to all

situations

Spirited, Daring



QUESTION

HOW DO YOU FEEL SUZUKI

SAMURAI SHOULD BE

POSITIONED?



OPTIONS FOR POSITIONING

• COMPACT SPORT UTILITY VEHICLE

• SMALL PICKUP TRUCK

• COMPACT CAR



COMPACT SPORT UTILITY VEHICLE

PROS CONS

4x4 drive capability Low Market Potential which might not reach target sales

Built like an SUV Limited Market of SUVs[less than 3% in 1984]

Drives well off-road Some consumers correlate Price and Quality

Low Price

Smaller and lighter



SMALL PICKUP TRUCK

PROS CONS

Relatively large size of the market –

2.5 times that of the SUV market

Losing out on the subcompact car segment

which was larger

Americans favor trucks imported from Japan [54% of total sales in

1984]

It had a 25% import tariff compared to the 2.5% for

cars

Used as truck when purchased without back seat/folded up Narrow target segment



SUBCOMPACT CAR

PROS CONS

Opens up the largest of the 3 markets

Stiff and less comfortable than even the least expensive

subcompact car

Priced lower than many other subcompact cars

Very good mileage of 28 miles to the gallon



SUBCOMPACT CAR

PROS CONS

Opens up the largest of the 3 markets

Stiff and less comfortable than even the least expensive

subcompact car

Priced lower than many other subcompact cars

Very good mileage of 28 miles to the gallon



Market research by:

- PEARLSTEIN (Ad agency) - Don Popielarz (Director of research and planning)

- Tim O'Mara (External agency, Account supervisor)

To make prospects think Unique about SUZUKI SAMURAI



SUZUKI COMPETETIVE ADVANTAGE ANALYSIS



• Everyday driving

• Off road/snow driving

• Passenger comfort

• Quality/Durability

• Styling

• Capacity

• Gas mileage

CONSUMERS LOOK FOR



Target segment market were identified by face to face and focus group interview

• Primary Market

• Secondary Market

TARGET MARKET SEGMENT



PRIMARY TARGET MARKET

• Single male, 18-30 years old

• First time car buyer

• Students, fresh graduates, young professional

• Come from 2-person households that earn an average income annually

• Young, unconventional, works hard, often go parties, desires to be rugged, takes pride, likes to be different and who seeks fun.



SECONDARY TARGET MARKET

• Single/Married, Male, >30 years old

• Has at least 2 cars

• Businessmen and establishedprofessionals

• Has children (usually female) who can already drive

• Come from households that earn higher than an average annual income

• Young at heart, Straight-laced, loves his family, but wants to break free and indulge at times



CONSUMER INSIGHTS

Consumers think that SAMURAI was

• A symbol of their independence to do different

• Practicality to drive a versatile vehicle

They felt as “Cute”, “Neat” and “Fun” that make them :

• stand out • goes well with their lifestyles• break the traditional mould and away from the

traditional Sedan.



CONSUMERS COMPLEX BEHAVIOUR



ANALYSIS BY CONSUMER

SJ413 CAR can be used for:

City travel (good mileage)Passenger car (accommodations for 5 people)Transportation of material (pick up truck capability)Possibility of a convertible (cool summer car)Off road capabilitiesDesigner looks Price for car

A car with a wide range of capabilities for a good price



MARKET ANALYSIS

Based on the five forces analysis:

The Suzuki samurai is the perfect debut vehicle for U.S.

• No significant substitutes that matched • Price• Capabilities• Appearance

• Get ahead of other Asian companies that would plunge shortly to take advantage of the growing imports industry



COMPETITIVE ANALYSIS

• Key resources and capabilities

• Brand name• GM support• Useable statistics (“Gray

market”)

• Competitors

• They are relatively new entrants (Hyundai and Yugo)

Price remains same for all custom type of vehicles



HOW TO POSITION SJ413



POSITIONING STRATEGY

IT’S AN UNPOSITIONING STRATEGY

ANTIDOTE TO TRADITIONAL TRANSPORTATION



PEARLSTEIN CONCLUSION

“ANTIDOTE TO TRADITIONAL TRANSPORTATION”

MARKETING TAG LINE

“The end of DULL. The start of Suzuki”

SUZUKI TAG LINE

Its an everything vehicle”



POSITIONING CONCLUSION

SUV buyers would like the Samurai because its cheaper.

Small car buyers would like to buy it because its not “Dull”

Small truck buyers would like to buy because it’s cheaper than a Subcompact car but more versatile.



ADVANTAGES OF “UNPOSITIONING”

• Appeals all consumers as ensures higher customer acceptance by offering various needs .

• It’s prospected as • Multi purpose vehicle. • Dull breaker• It’s Fun• 4x4 wheel driver• Economy• High quality• More versatile (than import

subcompact cars)



ADVANTAGES OF “UNPOSITIONING”

• Customer satisfaction: Customer defines car to his own desire, leads to better congruence between vehicles promise and value delivered.

• Ensures larger profit and enables Suzuki establishment stronger in U.S.

• Able to attract new customers along with existing customers

• Low risk



DISADVANTAGES OF “UNPOSITIONING”

• Sacrifices the possibility of being number one in the niche market in particular segment.

• Might loose brand image if customers reject Jeep with different appeals.

• Trouble for the sales people

• Increased confusion might drop sales but alternative to small -car-boredom.

• 80/20 rule adopted



ADVERTISING MEDIA

• TV

• Radio

• Billboard

• Print ads• Outdoor – bus top, public highways• Indoor – malls, stadiums, etc.• Sports magazines, news paper

• Social media• Blogs• Face book• Twitter



CUSTOMER RELATIONSHIP

• Customer relation ship to be strategically planned

• After sales servicing

• Customer satisfaction

• Good relationship b/w dealers



SUCCESS OF SUZUKI SAMURAI

The SUZUKI SAMURAI became extremely popular.

Buyers liked the light 4 wheel drive because:

positioned as the

• Light 4WD

• Reliable on and Off roads

• Light weight and compactness gave it an

advantage edge (Beginners off road Car)



END OF SUZUKI SAMURAI

After 1988, SUZUKI SAMURAI was under scrutiny for

being unsafe and prone to rollovers.

This led SUZUKI to modify SAMURAI because of low

sales and some safety regulations.

In 1995, the SIDEKICK replaced the SAMURAI.




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Suzuki Samurai Case Analysis GROUP 03