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B2B Case Study
Volvo’s entry in India with The ‘State Corporation Of India’
By Brotin Ganguly 12
Ekta Bawa 16 Manish Kumar Barui
18 Shubhadeep Mitra
Sridev Saha Avinab Banerjee
Company Logowww.themegallery.com
Contents
Right Strategy for Volvo to enter the Indian Market.
SWOT Analysis for a typical B2B.
What went wrong with the Indian Auto LCV manufacturers.
Is tailoring needed to enter the B2B market.
Criticalities of a B2B market in globality.
Conclusion
• State transport corporation
• Royal Cruisers- Public private
corporation
Business 2 business marketing
Buyers
• Tata’s
• Volvo
• Ashok Leylande
Sellers
PPP Model- Public private participationSharing money in State Transport Corporation.
PEST Analysis
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGY
• Government of India gave Rs 50000 crores for development of urban cities• BJP came up with National Quadritrangle• PPP Model
• Dropping mainline products- passenger car market- overcrowded in India• Huge investment: Volvo-1 crore, Tata bus- 40 lakh• Volvo generates positive cash flow, huge employment
• Increase in consumption.• Urbanization.• Increase in per capita income – affordability• Most population depending upon public transport system
• Dashboard of Volvo heavily computerized• Volvo drivers are trained- 3.3 lakh to train at Bangalore, certification required
Company Logowww.themegallery.com
Right strategy to enter the Indian market.
Company Logowww.themegallery.com
Right strategy for Volvo to enter the Indian market.
Companies expanding sales activities in emerging markets need access to deeper knowledge of local customers, support networks, distribution and advertising.
In many cases, companies choose joint ventures
with experienced players in a local market, For
example, after manufacturing and selling in
India for 10 years, Volvo formed a joint
venture with Eicher Motors, a local
commercial vehicle manufacturer India to sell
heavy vehicles and leverage its network of over
200 service centers across the country. Volvo
plans to use Eicher’s sales and service
infrastructure and manufacturing prowess to
increase its sales from 5,000 vehicles to
100,000 by 2015. With $225 million invested
so far, Volvo plans to gain a 15% market share
of heavy commercial vehicle.
Company Logowww.themegallery.com
Right strategy for Volvo to enter the Indian market.
As they build complete product lines and develop new products, companies require a significant level of control over strategic business activities. For example, Sweden’s Volvo group, the world’s second largest truck manufacturer, owns a subsidiary in India that builds trucks to sell in India, Myanmar, Indonesia, Vietnam and China. Volvo India has also established a product development center in Bangalore, India that employs over 200 people.
VOLVO’S STRATEGY
VOLVO trucks were differentiated on the basis of
Niche market of inter city travel
‘CLEAR DIFFERENTIATION OVER EXISTING PLAYERS’
1) Productivity
2)Transport Economy
3)Customer Education
Synopsis
Huge investments- Volvo- 1 croreRoyal Cruisers charge Rs 20 in Kolkata
MarketEmerging Economy
Industrial Selling
Commercial Aspect
Large Commercial
Vehicles.
India&
China
After Sales Service
comes up. 15 years
minimum guarantee
STC, PPP – ROT?.
Segmentation
Ansoff Matrix for Volvo- New emerging market India
Market penetration
Market development
Diversification
Product development
Existing products New Products
New
mark
ets
Exis
ting m
ark
ets
Emerging market: BRIC countries
Company Logowww.themegallery.com
Porters 5 Forces for VOLVO.
LOWHigh comfort level- Luxury segment is brand conscious and willing to pay a premium for great experience, service quality and safety
HighJNNURM.
MODERATE- Toyota, Hundai•Economies of scale, distribution network, equity of established players like Tata being market leader in Indian bus market
Volvo is a substitute to Shatabdi trains
Tatas, Ashok Leylande, Mercedes Benz
Cost plus strategy---production cost + variable cost + profit margin.
Target pricing strategy--- target return pricing:: to achieve target return on target achievement.
Early cost recovery ---maximum profit return from the product at the earliest.
VOLVO
Pricing strategy
12
Skimming Strategy
Priced 2-3 times above ordinary buses Volvo offers unmatched luxury for the passengers.
SWOT Analysis
STRENGTHS Generic name for luxury buses- high comfort level Largest producer of diesel engines Good quality and reliable products- fuel efficient High productivity Efficient logistics management Known for safetyWEAKNESS No manufacturing units in India. Pricing of the products is higher, compared to the competitors. Not concentrating on low segment vehicles Manpower No advertisements – India Service centre
SWOT Analysis for a typical B2B.
OPPORTUNITIES Setting up manufacturing plants in India Developing the business in Indian
infrastructure Acquisition of companies Extending the service THREATS Price sensitive customers Competition- Tata with 62% market share
in bus market Future Competitors- Toyota, Hundai
SWOT Analysis for a typical B2B.
What went wrong with the Indian Auto LCV manufacturers
The pinch of competition from the new Japanese collaborated LCV manufacturers was being felt- Thus Standard Motors Products of India Ltd (SMPIL) realised the need to modernise and update its existing range of vehicles
Need to redesign the LCV to rival the Indo-Japanese models in style, comfort and ergonomics. It also had to appeal to the driver. Hence it was necessary- to provide some amount of protection to the driver and other occupants - and, at the same time, as space-efficient as possible.
Seeing the success of the Maruti van, considerable scope for a vehicle that would be a people-carrier, that would find a slot between a large family-car and a light commercial vehicle, with a variety of applications between the categories.
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Tailoring by Volvo
Ruggedness of the vehicle
Quality Comfort
SafetyTechnology
These vehicles far exceed customer expectations. These features greatly reduce driver fatigue, breakdowns and routine maintenance, thereby enabling far higher utilization levels than other CVs.
cabin comfort (ergonomics, visibility) fit and finish, painting and aesthetics.
Engine capacity and performance
Safety features are far beyond what the Indian market was exposed to earlier
Complex Decision Making Unit (DMU)
B2B buyers are more Rational
B2B products are more complex
Limited number of buying units in B2B market
B2B markets have fewer Behavioural and Needs-Based Segments
Personal relationships are moreimportant in B2B markets
B2B buyers are long term buyers
B2B Markets Drive Innovation less Than Consumer Markets
B2B buyers are more Demanding
Brands seldom become popular at the ultimate consumer level In B2B
Criticalities of a B2B market
Conclusion- Factors for success
1
2
3
Volvo’s slow and steady growth in India has been due to a combination of factors.
This has been backed up by a service and parts strategy that has grown in tandem with its sales growth and coverage.
Since the time Volvo entered India, the fuel costs have escalated steeply. This has favoured these fuel efficient products in offering greater opportunities in improving the transport economy.
A clear strategy that was meticulously executed, focus on customer training and education, a range of top of the line HCVs that aim at offering customers greater productivity levels and transport economy.
4 The Indian government’s focus on highways development can help make prospects even better.
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