Eicher MotorsCase Analysis

SDM, NMP Term IV

Group 4Abhijeet Tomar - 03Argha Ray - 15Khushal Malik - 28 Vipin Kathuria– 59

Context• LCV market liberalized in 1990 by GOI.

• DCM Toyota, Allwyn Nissan, Swaraj Mazda and Eicher Mitsubishi are competitors.

• Toyota has first mover advantage.

• Eicher recovering from the midst of a financial crisis.

• Spares and Reach drive sales success.

• Nascent market cooling off.

Market Dynamics:• Target segment includes Inter City and Intra City Transport Service

Providers, Small and Medium Traders and Cab Service Providers

• Spares sold through Small Autopart Retailers and Garage Owners.

• Market infested with unscrupulous middlemen.

• Long waiting lines as a hangover of License Raj.

• Toyota’s first mover advantage nullified as prominent well located showrooms symbolizes luxury, seldom a consideration for end users seeking usability and low operational costs.

Eicher’s Yardsticks:• Slump in Tractor market has caused precarious cash position.

• It’s expertize in Tractor distribution can be easily leveraged.

• Tractor market slump must have affected Eicher’s channel as hard as it did Eicher.

• Diversification proposition into LCV to Eicher’s channel can be a unique selling point to strengthen relations and mitigate their risks.

• Spares has to reach every nook and corner of the country to compete with private labels.

• Existing distribution channel will not need large quantum investments.

• Design separate channels for LCV and LCV spares.

Two Channel Design:

Design Rationale:

Channel Resonance:• Toyota’s folly is geared toward a luxurious Car market rather than LCV.

• Mazda’s model may turn out to be more effective in terms of both sales and cost considering the target segment.

• Carrying both a Tractor and LCV may make more sense for already scathed Tractor Dealers.

• Impress upon Channel Members that cooling off in LCV market is due to overbooking by middlemen who kept real customers in abeyance due to flawed advance booking model.

• Removing long waiting lines for immediate possession to real customers by removing advance booking will attract those who bit the dust with other competitors.

Channel Selection:• Exclusive Eicher Dealers.

• After sales service is paramount.

• Select those who had been brother in arms during hard days of Tractor market shock.

• Quick learners who can seamlessly recast Tractor selling expertize to LCV sales.

• Downstream partners who show signs of recovery as does Eicher.