marketing project on suzuki
DESCRIPTION
This is a marketing project on Suzuki.TRANSCRIPT
ContentsDedication..................................................................................................................................8
Acknowledgement......................................................................................................................9
Letter of Transmittal................................................................................................................10
EXECUTIVE Summary...........................................................................................................12
Current Situation – Analysis of Macro Environment..............................................................13
Demographics......................................................................................................................14
Economic Condition.............................................................................................................14
Social and Culture Forces....................................................................................................15
Political and legal forces.....................................................................................................15
Technology...........................................................................................................................15
Current situation of market and market analysis......................................................................16
Market definition..................................................................................................................16
Market size...........................................................................................................................17
Market Segmentation...........................................................................................................17
Target Marketing..................................................................................................................17
Gender:.............................................................................................................................18
Income:.............................................................................................................................18
Family Size:.....................................................................................................................18
Age:..................................................................................................................................18
Occupational:...................................................................................................................18
Positioning............................................................................................................................18
Porter’s 5 Force....................................................................................................................19
1. Potential new entrants..................................................................................................19
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2.Bargaining power of buyers..........................................................................................19
3. Bargaining power of suppliers.....................................................................................20
4. Threat of substitutes.....................................................................................................20
5. Industry Competition/rivalry between competitors.....................................................21
Competition and market share.............................................................................................21
Atlas Honda......................................................................................................................21
Toyota motor....................................................................................................................22
Hyundai motor.................................................................................................................22
Adams motors..................................................................................................................22
Strengths and weakness of...................................................................................................23
Competitor............................................................................................................................23
Atlas Honda......................................................................................................................23
Toyota motors..................................................................................................................24
Hyundai motors................................................................................................................25
Adam motors....................................................................................................................25
Market trends.......................................................................................................................26
THE EMERGING RURAL MARKET:..........................................................................27
THE FUTURE OF CONSUMER CLASS:......................................................................27
Natrure of the buying analysis.............................................................................................28
Participants...........................................................................................................................29
Demographics......................................................................................................................30
Income..............................................................................................................................30
Family Size.......................................................................................................................30
Age...................................................................................................................................30
Occupational....................................................................................................................31
Psychographics.....................................................................................................................31
Social Class......................................................................................................................31
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Life Style..........................................................................................................................31
Buyer motivation and expectation.......................................................................................31
Loyalty segments:................................................................................................................31
Current situation – internal.......................................................................................................32
Company Resources.............................................................................................................32
Financial...............................................................................................................................32
Balance sheet of Suzuki...................................................................................................32
People...................................................................................................................................33
Time.....................................................................................................................................33
Skills.....................................................................................................................................34
Vision & Mission.................................................................................................................34
Our Vision............................................................................................................................34
Our Mission..........................................................................................................................34
Corporate objectives:...........................................................................................................35
financial objective:...............................................................................................................35
Marketing objective.............................................................................................................35
Long term objectives............................................................................................................35
Short term analysis...............................................................................................................36
Corporate culture:.................................................................................................................36
SWOT Analysis.......................................................................................................................37
Strengths...............................................................................................................................37
Increasing Demand for Cars.............................................................................................37
Resale of Local Assembled Cars......................................................................................37
OEM.................................................................................................................................37
Quality of Local Cars.......................................................................................................37
CNG kit............................................................................................................................38
Mechanics........................................................................................................................38
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Weakness..............................................................................................................................38
WTO—Deletion Program................................................................................................38
Input Cost.........................................................................................................................38
Protection Level...............................................................................................................38
Lack of Skilled Manpower for Modern Machinery.........................................................39
Scarcity of Raw Material Especially Steel.......................................................................39
Opportunities........................................................................................................................39
Import German Technology and Skills............................................................................39
Foreign Investment and Setup Production Facilities.......................................................39
Baggage Fuel....................................................................................................................39
Global Spare Part Market.................................................................................................40
Threats..................................................................................................................................40
WTO—Parts Indigenization.............................................................................................40
Competition with Imported Cars......................................................................................40
Fuel Prices........................................................................................................................40
Decreasing Tariff Structure..............................................................................................40
MARKETING MIX.................................................................................................................41
Marketing strategy-current and the proposal...........................................................................43
Product.....................................................................................................................................43
PRODUCT LIFE CYCLE....................................................................................................43
Introduction:.....................................................................................................................43
Maturity Stage..................................................................................................................44
Levels of Product.................................................................................................................45
Core Benefit.....................................................................................................................45
Actual Product..................................................................................................................45
Augmented Product..........................................................................................................45
Product Classification..........................................................................................................45
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Consumer Product................................................................................................................46
Industrial Products...............................................................................................................48
Individual Product Decision.................................................................................................48
Product Line.........................................................................................................................49
Product Mix Decisions.........................................................................................................50
Brand Equity........................................................................................................................51
Brand Strategy Decision......................................................................................................51
Product Lines of Suzuki.......................................................................................................51
Product Lines in Pakistan.....................................................................................................52
Automobiles.........................................................................................................................52
Specifications.......................................................................................................................54
Specifications.......................................................................................................................56
Alto 1000 cc..............................................................................................................57
Specifications.......................................................................................................................58
Mehran 800 cc.........................................................................................................59
Specifications.......................................................................................................................60
APV 1500cc(Imported).......................................................................................61
Specifications.......................................................................................................................62
Bolan VAN..................................................................................................................63
Specifications.......................................................................................................................64
RAVI Pick Up 800cc..............................................................................................65
Specifications.......................................................................................................................66
History..................................................................................................................................67
Price......................................................................................................................................69
Considerations in Setting Price............................................................................................69
l and external considerations................................................................................................69
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General Approaches.........................................................................................................70
Internal Factors.....................................................................................................................72
External Factors...................................................................................................................73
New Product Pricing Strategies...........................................................................................76
Market-Skimming Pricing................................................................................................76
Market-Penetration Pricing..............................................................................................76
Product Mix Pricing Strategies............................................................................................77
Price-Adjustment Strategies.................................................................................................78
Discounts and allowances........................................................................................................79
PLACEMENT..........................................................................................................................80
Channel Functions................................................................................................................81
How Channel Member Add Value.......................................................................................81
Channel Levels.....................................................................................................................82
Direct Marketing Channel................................................................................................82
Indirect Marketing Channel.............................................................................................82
Channel Behavior and Organization....................................................................................83
Channel Conflict..............................................................................................................83
Channel Dynamics...........................................................................................................85
Channel Design....................................................................................................................87
Analyzing Customer Needs..............................................................................................87
Establishing Channel Objectives......................................................................................87
Identifying Major Channel Alternatives..........................................................................87
Evaluating major channel alternatives.............................................................................88
Channel Management...........................................................................................................88
Retailing Process..................................................................................................................89
Types of Retailing............................................................................................................89
Placement in Retailing Process............................................................................................89
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Wholesaling Process............................................................................................................89
Why Wholesalers?...........................................................................................................90
Placement in Wholesalers Process.......................................................................................90
Market Logistics...................................................................................................................90
OBJECTIVES..................................................................................................................90
Market Logistics Decisions..................................................................................................91
Order processing Decisions..............................................................................................91
Warehousing Decisions....................................................................................................91
Inventory Decisions.........................................................................................................91
Transportation Decisions.................................................................................................91
Promotion.............................................................................................................................91
Integrated Communication...................................................................................................92
Seven Steps in Developing an Effective Communications Plan......................................93
Push vs. Pull Strategy...........................................................................................................95
Push strategy....................................................................................................................95
Pull strategy......................................................................................................................95
Budget and control...................................................................................................................96
Suggestion and recommendations............................................................................................96
Bibliography.............................................................................................................................97
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Dedication
Dedicated to our beloved parents, teachers, and friends, whose assistance
and moral support is such a great source of inspiration and a drive to work
for all of us!
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Acknowledgement
Every word of praise and gratitude goes to Allah Almighty
whose blessings and bounties are innumerable to realize and
count, and due respect to Holy Prophet (peace be upon Him)
who enables us to recognize our creator and whose teachings
are a role model for us to follow in the time of darkness and
despair.
Our extreme and heartiest thanks is for our Respected teacher,
who guided us so well at every stage of this project of Suzuki
Motors when we could not just step ahead without her kind
assistance.
She is a true source of knowledge and a Personality to follow for all of us!
Special Thanks to Mr. Mudassar the assistant manager
of Suzuki Motors, without his guidance the compilation of this
report was not possible.
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Letter of Transmittal
Mrs. Aaffia Khalid
Faculty Member
Lahore Business School
University of the Lahore
Dear Ma’am Aaffia:
Here Is the Report of Principles of Marketing for third semester of Bachelors in
Business Administration (BBA) from Lahore business school, University of the Lahore
.
As you will see, we have given the profile and history of Suzuki Motors and its
future endeavors. After that we have discussed each P of the promotion mix in detail. At the
end, we have done a detailed SWOT analysis of Suzuki Motors explaining its strengths,
weaknesses, opportunities and threats.
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We pay our heartiest gratitude to Ma’am Aaffia Khalid to help us provide such a
base. It has been a great opportunity for us to improve and enhance our knowledge as well as
our learning capacities.
Sincerely Yours,
Farzan Yahya (02093006)
Muazzam amin (02093044)
Muhammad ali (02093045)
Umer Farooq Arshad (02093025)
Qamar-Uz-Zaman (02093026)
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EXECUTIVE Summary
The purpose of this project is to study and develop deep insight into the organization and have a practical experience of what is going on in the market. In short, what the market really is.
Our project is all about the marketing mix and the detailed analysis of the marketing insight of Suzuki Motors which is a very fascinating project. In this project of ours we have sorted out the procedure how the company does the purchase and sales and on various issues related to its processes.
We started with the history and then explained the segments and target groups of the organization. Then we explained the product, price, placement and promotion one by one in great detail with the help of pictures, list prices, and much more.
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A detailed and very informative SWOT analysis is given in the last section of this project which will surely communicate that how well we have understood the marketing insights.
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Current Situation – Analysis of
Macro Environment
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Demographics Society holds a global or summary belief that an organization is proper and worthy ofsupport. Suzuki takes pride in being the most trusted name all over Pakistan. Itsvehicles are regarded as a status symbol. It is the guiding principles of Suzuki whichhas strongly developed trust in the people.
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Economic ConditionPakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes and external ongoing conflict with India. However, IMF approved the government policies, encourages by different foreign assistance and renewed access to global market since 2001.By following these policies government succeed to reverse the situation of
economy during last five years.
Social and Culture Forces
Pakistan has strong culture background and it has been follow in some particular region of Pakistan strictly. But with the passage of time it is going to change. Thoughts of people, choices, taste and style has been totally changed. If we talk about the transportation source in Pakistan, People use buses, pickups etc for journey. They also have their own as well e.g. cycle, bikes etc and lots of people are pedestrian. But now the people who haven’t any source of transportation they also want something for their convenience because they wants to save their time as much as they can. People want to use such vehicle which looks beautiful and also affordable.
Political and legal forcesPakistan has to face lots of ups and down since its independence. So many governments have been broken down by military authority and most of the time marsh law applied on Pakistan. In this scenario no entrepreneur was willing to invest in Pakistan except few. Due to this market environment wasn’t so good in Pakistan. Anyhow Pakistani government never been trustworthy for any investor.As all countries, Pakistan also has some legislation about each sector. But like developing countries it is hardly being imposed by authorities. Only due to corruption government encourage smuggling and black marketing. When anyone supported by government or give more commission to Govt. get inside in the market and they have very soft behavior by government for any legal action. Such unethical activities destroy all law and legislation
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Technology Technological factor also very important and we haven’t control on it. Technology is grooming with the passage of time. People also want that the product that they have is full of technology. We never control on technology for example you launched the product last year and your sale volume on that time is very high but after sometime due to latest invention a lots of substitute exist in market which affect on your business so you can’t hold on it.
Current situation of market and
market analysis Market definition
Marketing was defined according to its activities and utilities within the organization. Therefore, different organizations and experts define it differently, as the viewed it from different angle. The popular definitions of marketing are as follows...
According to The Chartered Institute of Marketing (CIM - UK)- Marketing is the management process responsible for identifying, satisfying and anticipating customer requirements profitably.
On the other hand American Marketing Association (AMA) define Marketing as the performance of business activities that direct the flow of goods and services from producer to consumer or user.
The Webster's: definition goes like this: 1. The act of buying and selling in the market. and 2. All business activity involved in the moving of goods from the producer to the consumer, including selling, advertising, packaging, etc."
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According to Philip Kotler and Gary Armstrong, two ideal marketing theorist,“Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.”
Market sizeFirst half of the year was the worst. Sales volume during this period has
dropped by 53% compared to last period of last year. Second half was somewhat
better than first half year. As it was grew by 33% over the first half year.
The market size of Suzuki has marginal improved by 2% over the last year in
the organized sector. During the year 593,479 units were sold against 580,604 units
last year. During the first half year Demand was 25% lower than same period of last
year. However this loss of demand was offset by the increased demand latter half year.
Market SegmentationDividing a market into smaller groups with distinct needs, characteristics,
or behaviors who might require separate products or marketing mixes
geographic segmentations (their location)
demographic/socio-economic segmentation (gender, age, income occupation, education, sexual orientation, household size, and stage in the family life cycle)
psychographic segmentation (similar attitudes, values, and lifestyles)
behavioral segmentation (occasions, degree of loyalty)
product-related segmentation (relationship to a product)
Target Marketing“
Dividing a market into groups based on variables such as age, gender, family size, family life style, income, occupation, education, religion, race,
generation and nationality
or
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Dividing a market into different income groups”
‘
Gender:Suzuki has designed its Alto especially for females by giving it a
unique exterior and interior. It targeted women here.
Income:Suzuki offers many different products in automobile product line to make its product available for different income group people. It targeted his market in all classes i.e. Middle ,Upper and Elite class.
Family Size:Suzuki has launched Safari and APV to cover the consumer market of people having big families. Here it targeted big families
Age:SUZUKI particular products are popular with people of particular age, i.e. swift and Liana for people 20-45 years old.
Occupational:Products of SUZUKI are very popular among people belonging to different occupation, i.e. Managers use Liana, Swift, farmers use SUZUKI PICKUP, clerical staff use Alto.
PositioningSmall cars have been positioned in Pakistan as city cars, which are easy to drive, give high mileage, with low operational cost and low price. Because of the tremendous growth in the small car market, various global car manufacturers are entering this market and thus leading to growing competition. This has further led to each manufacturer positioning it, better than the rest; by upgrading products, several versions, new technology giving discounts & offers, better financing options.Target customer –A first-time car buyer looking for the best affordable car in the market .
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Benefit –Good performance, good fuel economy. Good in price as well as quality.Value proposition (time of difference) –The trusted and reliable cars with access to the largest service network and commanding the highest resale value.Positioning image – Worlds largest selling cars.
Porter’s 5 ForceThe strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.Here are the Porter’s 5 forces.
1. Potential new entrants
2. Bargaining power of buyers
3. Bargaining power of suppliers.
4. Threat of substitutes.
5. Industry Competition/rivalry between competitors.
1. Potential new entrantsIn Pak Suzuki this can be described as
• In the New Entrant category of Porter's 5 forces, we can see that it would be tremendously difficult for another car manufacturer to enter into the market.
• The rate at which the industry is changing does not allow for new entrants to come into the market very easily, and the cash investment for a new firm to produce massive quantities of cars is in the billions.
2.Bargaining power of buyers• Buyers, from the strong competition inside of the market find themselves in a very favorable position.
• Since competition is so strong between auto makers and dealers, consumers will often do research on a vehicle before making a purchase.
• The high quantity of dealer’s forces prices to be very negotiable and the consumer often knows exactly what the dealer paid for the car.
• Thus, consumers are in an enviable position: The market supply is strong, competition between auto makers and auto sellers is very intense, and there is no set price.
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• Everything is negotiable. For companies like Pak Suzuki to continue to compete, the quality of their offerings must be excellent, dealership service must be strong, and they must focus on offering consumers a product with high durability and value.
3. Bargaining power of suppliers. Pak Suzuki’s suppliers have been known to be some of the
most dedicated suppliers in the industry.
By virtue of the Just-In-Time production concept pioneered by Pak Suzuki, the auto industry itself has seen a very positive relationship develop between its suppliers and producers.
Suppliers are expected to make deliveries of parts in small quantities several times a day.
Pak Suzuki, by reducing its part inventory, has been able to speed up production costs, save money by not letting parts sit on the shelf, and improve its relationship with parts suppliers, which rely on Pak Suzuki for their revenue.
4. Threat of substitutes Consumer preference is changing (Mini cars are being
replaced by compact or midsized cars)
Setting up integrated manufacturing facilities may require higher capital investments than establishing assembly facilities
Pakistan is also likely to increasingly serve as the sourcing base for global automotive companies, and automotive exports are likely to gain increasing importance over the medium term
Pakistan passenger car market is moving towards cars of higher capacity.
5. Industry Competition/rivalry between competitors Industry competition between auto makers is fierce.
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The typical consumer, when searching for a particular vehicle is bombarded by choices.
For example, a search for ALTO (Product of Suzuki) yields a result of Coure (Daihatsu) with a minimal extra amount.
Competition and market share
Atlas HondaHonda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited Japan, and the Atlas Group of Companies, Pakistan.
The company was incorporated on November --, 1992 and joint venture agreement was signed on August ---, 1993. The ground breaking ceremony was held on April 17, 1993 and within a record time of 11 months, construction and erection of machinery was completed. The first car rolled off the assembly line on May 26, 1994. Official inauguration was done by President of Pakistan, Sardar Farooq Ahmad Khan Leghari. Mr.Kawamoto, President of Honda Motor Company Limited Japan was also present to grace the occasion. The company is listed on Karachi, Lahore and Islamabad Stock Exchanges.
On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore, and Islamabad. Since then the Dealerships Network has expanded and now the company has sixteen 3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pitstops network in all major cities of Pakistan.Since the commencement of production in 1994, the company has produced and sold more than 150,000 cars till Oct, 2008.
It is the constant endeavor of Honda Atlas Cars (Pakistan) Limited to achieve No .1 Customer satisfaction. Honda Atlas Cars (Pakistan) Limited is committed to meet customer expectations, and to provide good value for money . Currently we are offering 8 different models of Honda CIVIC and CITY cars in wide range of colors with unique technological and other features.
Toyota motorToyota Motor Introduction Toyota Motor Corporation is one of the world‘s leading automakers, offering a fullrange of models, from mini vehicles to large trucks. Global sales of its Toyota andLexus brands, combined with those of Daihatsu and Hino, totaled 6.78 millionunits in CY2003*. Besides its own 12 plants and 11 manufacturing subsidiariesand affiliates in Japan, Toyota has 45 manufacturing companies in 26countries/locations, which produce Lexus- and Toyota-brand vehicles andcomponents. As of March 2003, Toyota employs 264,000 people worldwide (on aconsolidated basis), and markets vehicles in more than 140 countries. Automotivebusiness, including sales finance, accounts for more than 90% of the company's
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total sales, which came to a consolidated ¥16.05 trillion in the fiscal year to March2003. Diversified operations include telecommunications, prefabricated housingand leisure boats.
Hyundai motorThe Hyundai Atos (also known as Amica and Santro Xing) is a city car produced by the Hyundai. The original Atos was introduced in 1997. In 1999, it was joined by the less controversially styled Autos Prime. It uses the G4HC Epsilon straight-4 engine. The mkII version comes with a 1086 cc G4HG engine.
While most markets have phased out this model in favors of the new Hyundai i10, it is still being manufactured in India, where it
The Santro was launched in Pakistan in 2000. As of December 2009, Pakistan is the only country where the first generation autos is still being sold and the model has received no upgrade
Adams motorsAdam Motor Company, Ltd. was an automobile manufacturer based in Karachi, Pakistan. They were notable for producing the Revo, which was Pakistan's first indigenously designed car. Production ceased in 2006 and their assets were put up for sale.
Initially Adam Motor was involved in assembling light trucks from Chinese components, followed by a four-wheel drive sports utility vehicle.
Market share of Suzuki or competitors
company names market share
Pak Suzuki motors 44.11Atlas Honda motors 22.32Toyota motors 27.25Hyundai motors 5.12Adam motors 1.2
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40%
49%
9%2%
Market share of Suzuki and its competitors
Atlas Honda motorsToyota motorsHyundai motorsAdam motors
Strengths and weakness of
Competitor
Atlas Honda
STRENTHS 1.Brand name image Smoother drive as compared to competitors
Efficient performance Quality – ISO Certification Highly loyal, committed and motivated employees
Hardworking, experienced and qualified staff STAYS CLOSE TO CUSTOMERS.o Technology, Bonuses and reward system for
employeeso UNDERSTAND THEIR NEEDS.o EXCEED THEIR EXPECTATIONS
WEAKNESSES
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1 . Honda in Pakistan has a lower sale value than Suzuki and Toyota.
2. Its Distribution Centers are less people of Lower Class are unwilling
to buy it because of its image as high status car .
3.Honda’s are expensive to buy and maintain then its counterpart
rivals.
“It faces a long road in gaining trust and making ways to remove the image that Honda’s are unreliable cars”
Toyota motorsSTRENGTHS 1.
Toyota has become the generic name in the Pakistan market. Whenever the company
launches the new car in the market it has always the great support of the already market
orientation so the car introduced by it easily covers the introduction stage. People have a lot of
trust for their name and this is why Toyota is the leader in automobile industry. 2.
Toyota has a great strength for its 2.OD car, Toyota is the hot selling diesel engine car in
Pakistan and is the only company offering the diesel engine in this category of cars. 3.
The important edge over the company editors are the ample availability of the spare parts in the
markets. The price of spare parts is comparatively low and availability all over the country has
proved to be beneficial for the company. 4. Toyota is a financially strong company. This can be seen by analysis of the financial reports of the previous years. 5. Toyota vehicles have got a much stronger resale value than other car in Pakistan. This is why people prefer to buy a Toyota. 6. Toyota vehicles are made according to the Pakistani environment. No doubt the other cars are available but Toyota has an edge because it has learnt various conditions of the Pakistan environment and people. So new additions
and changes are proving to be successful. 7.
Toyota has an edge over others because it is the only automobile company in Pakistan, while
offers many variants of its vehicles. Also Toyota offered many variants of colors. 8.
Toyota is proud to have a successful team of competent managers and skilled workers.
Extensive training have enabled the employees to perform outstandingly. 9.
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Toyota is the only company having the most sophisticated network of dealerships where
customers are treated by professional dealers. There are seventeen dealers in Pakistan where
sales, service and spare parts are offered, leading to convenience for the customers.
There are some weaknesses in the dealership network. The dealers sometimes tend to
deviate from the recommended course of action and principles of Toyota. This results in
customers complaints sometimes. 3.
The company is besieged with internal operating problems which are not very serious.
Because of dependency on Toyota’s principles delivery of cars is done after 4-6 months. This
is because CKD kits are ordered four months before and once they arrive from Japan,
assembly and delivery takes some more time. 4.
A lot of effort is pull into the sales forecasting because of the changing political and economic
scenarios. For this reasons inventory has to be kept low. 5.
The company feels that one weakness is the changing policies of the government and also the
30% cash L/c margin. This has lead to an adverse environment.
Hyundai motorsStrength
It has Strong domestic market
It has Good quality
It has Cheap labors cost
It has Production facilities
Weakness It has no new Design
It has no innovations
It has no luxury cars
Adam motorsStrengths
Adam motors is market leader in Automobile Industry with high market share.
Adam Motors Company have huge employee base.
Adam motors employee productivity percentage is higher.
Adam motors produce low price car with low fuel consumption.
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ADAM motors is the reputable brand in Indian Industry.
Adam Motors Limited is India’s largest automobile company, with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08.
The company’s dealership, sales, services and spare parts network comprises over 3500 touch points.
Adam Motors has been aggressively acquiring foreign brands to increase its global presence.
weakness Return on Investment on ADAM motors shares in low.
ADAM motors is not able to meet safety standards in their vehicles.
The domestic sales of the company are not up to the mark.
Adam has not got a foothold in the luxury car segment in its domestic market.
Market trendsThe market trends of Suzuki are listed below:
SALIENT FEATURES:
Increasing young population
Rising GDP and per capita income
Changing lifestyle
THE CONSUMER CLASS:1) The Urban class
2) The Semi Urban class
3) The Rural class
THE RISE OF SEMI-URBAN CLASS
Saturating megacity market
Growing semi-urban tier II
cities
Better performing market in
recession
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THE EMERGING RURAL MARKET: 42 million people Rs. 8,00 Crores estimated market Improving Infrastructure. Rural Literacy from 36% to 47% Low rural, a marketing opportunity. Rural marketing in recession
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THE FUTURE OF CONSUMER CLASS: Positive long term demand Supportive recent quarter data Consistent 6% and above projected GDP growth
Current situation – Consumer Analysis
Natrure of the buying analysis“ In consumer marketing the relationship between a buyer and a seller is non-personal. Consumers change their purchasing habits frequently and the buying
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decisions are always based on physiological, social and psychological needs of the
members of a family household.”
Consumers of suzuki take f ollowing decision:
choosing a vendor (a new one? The old one?),
� knowing how to know what brand, type, or model would be appropriate,
� melding the user's criteria with the spoken or unspoken company/group criteria,
� financing (where is the money coming from),
� the user's idiosyncratic criteria,
� the company's needs (or family's needs, etc.) in general and in specific,
� political/relationship-oriented fallout from the decision
ParticipantsTo make this project we make research and surveys and then we get the participants.The participants of suzuki is as follows:
1: Suzuki Mehran is usually bought by female, teenagers, students and middle class. As it is economical and unmatched fuel efficiency.
2: Suzuki Liana is usually used by family and business class. As it is a luxury car and can be found in 1300cc and 1600cc
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3: Suzuki Swift is usually used by youngster and teenagers. As it is innovator, unique and stylish car.
4: Suzuki Ravi is usually used by farmers and transportation of goods. As Suzuki Ravi is the veritable cargo vehicle with an amazing capacity for load-bearing and durability
5: Suzuki Bolan van is usually used by the school van drivers for pick and drop of students.
Suzuki Bolan Hi-roof gives you everything you ever wanted in a van. It has tough engine to
carry large loads and plenty of room for passengers to enjoy a comfortable day long ride.
6: Suzuki Alto is usually used by business workers, employees and women like that car. As it
Smooth-riding comfort, Functional and easy to use, Sharp looks, Offering maximum
efficiency and powered by a 1.0-litre engine delivering peppy acceleration and responsive
performance, the Alto fully responds to today’s driving needs in smart and stylish fashion.
7: Suzuki APV is usually used by big families as it has large capacity. It has Heavy engine to
carry load, usually used for long drive.
8: Suzuki cultus is most selling car of Suzuki. As it is universal car used by
middle class. Suzuki Cultus assures everyone, exceptional value and quality.
Demographics Gender
Suzuki ALTO is especially for females as it giving them a unique exterior and interior.
Income Suzuki Mehran, Alto, Cultus are used by middle class and Suzuki Liana, Swift are used by
upper class.
Family SizeSuzuki Bolan and APV is used by market of people having big families.
Age Suzuki particular products are popular with people of particular age, i.e. Cultus and Liana for
people 20-45 years old.
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Occupational Products of Suzuki are very popular among people belonging to different occupation, i.e.
Managers use Liana, farmers use Ravi, clerical staff use Alto.
Psychographics
Social ClassSuzuki’s all products offered in Pakistan are for lower uppers, upper middle, and middle
class.
Life StyleSuzuki’s automobile models are for people of different of life styles, i.e. Liana for achievers,
Mehran for survivors.
Buyer motivation and expectation
If a buyer has a low income then he will not afford an expensive car like Liana. He always prefer to buy Suzuki Mehran. If a buyer is a rich person then he will not motivated to buy a less expensive car like Mehran. Consumer expect a product that will meet his need and within budget with good service. Suzuki is giving a good service and product that’s why it has largest market share and market growth in Pakistan as compare to other automobile company. Consumer expect after sale service and maintenance from the company. And company provide and treat them well.
Loyalty segments:
Suzuki’s customers are loyal to it as it gives good service and its cars are for all segments. For example Suzuki APV is for big families and customer with big family is loyal to this car. Suzuki Mehran is for middle class and students so people related to this class are loyal to the company.
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Current situation –
internal Company Resources
FinancialTo check the financial position of the business we must have balance sheet to recognize its current position.
Suzuki has largest market share and have largest market growth in Pakistan.As shown in Balance sheet below its assets in 2000 were 3458.2 and in 2009 its assets increased to 10043.8
Balance sheet of Suzuki
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PeopleSuzuki's people are its strength; they believe in investing in their people to bring out the best in them. Each Suzuki member lives each Suzuki moment with customer orientation, positive attitude and the drive to excel. People and employees of Suzuki are well-educated, very efficient and very good in making customer relationship. Suzuki proud of its people.
Time
Suzuki is using the method “Just-in-time”. Just-in-time (JIT) is a management
philosophy that strives to eliminate
sources of manufacturing waste by producing the right part in the right place
at the right time. Waste results from any activity that adds cost without
adding value, such as moving and storing. JIT (also known as lean
production or stockless production) should improve profits and return on
investment by reducing inventory levels (increasing the inventory turnover
rate), reducing variability, improving product quality, reducing production
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and delivery lead times, and reducing other costs (such as those associated
with machine setup and equipment breakdown). In a JIT system,
underutilized (excess) capacity is used instead of buffer inventories to hedge
against problems that may arise. So Suzuki’s customers are loyal to it.
Skills
Suzuki’s people have great skills of marketing. As they
1. Analytical pattern recognition
2. Agile project management
3. Experimental curiosity and rigor
4. Systems thinking
5. Mash able software fluency
Vision & Mission
Our Vision
To be excellent all around
Our Mission
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To provide automobile of international quality at
competitive price
To improve skills of employees by imparting
training and inculcating in them a sense of
participation
To achieve maximum indigenization and promote
the automobile vending industry
To contribute to Pakistani society through
development of industry in general and automobile
industry in particular
Corporate objectives:
provide high quality reliable and comfortable cars
financial objective:
Suzuki,s financial objectives are to make money.
Marketing objective
main objective is world domination,with regard to supplying cars.
Long term objectives
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.To make a profit - entrepreneurs risk their capital in a business and profit is their reward for
risk-taking. If a business is to grow it needs to make a profit. Some of the profit could be used
to buy new equipment, staff or premises.
. To increase market share - If a firm is able to increase its market share, it shows that it is
winning customers from its competitors; so many businesses have increasing market share as
one of their key aims.
. To provide services to costumers - most businesses provide a service to customers and
therefore, they need to provide services to customers in order to make a profit.
. To improve the quality of the product or service - In most markets, customers have a choice
about the product or service that they use. If the quality of a product is not as good as that of
its competitors it is likely to loose market share.
Short term analysis Enhancement of Expertise
Run through the Hierarchy System
Enhancement of Finance
Increase in Responsibilities
Corporate culture:Corporate culture is the collective behavior of people using common corporate vision, goals, shared values, beliefs, habits, working language, systems, and symbols. It is interwoven with processes, technologies, learning and significant events. In addition, different individuals bring to the workplace their own uniqueness, knowledge, and ethnic culture. So corporate culture encompasses moral, social, and behavioral norms of your organization based on the values, beliefs, attitudes, and priorities of its members.Corporate culture can be transformed, but leadership to sustain anything that sweeping has to come from "the top."
The corporate culture of Suzuki is “fosters flexibility and innovation”
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Summary of situation Analysis
SWOT Analysis Strengths
Increasing Demand for CarsIn Pakistan context there are 9 cars in 1,000 persons which is one of the lowest in the
emerging economies which itself speaks of high potential of growth in the auto sector and more so in the car production.
Rising per capita income with changing demographic distribution and an anticipated influx of 30 to 40 million young people in the economically active workforce in the next few years provides a stimulus to the industry to expand and grow.
Resale of Local Assembled CarsResale of locally assembled cars is better due to availability of spare parts and after
sales services and warranty. Used imported cars have been selling below their cost at the showrooms for the last six months but consumers are not inclined to buy because of their low re-sale value and problems in parts availability.
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OEMThe local OEM of Pakistan is well equipped with enough advance technology and
skilled labor to produce parts according to the desired quality of any foreign company.
Quality of Local CarsInitially when the import of cars was liberalized the quality of local assembled cars
was unsatisfactory so the people of high income level group started buying imported cars and the sales of the local assembled cars started decreasing so the local assemblers started enhancing the quality of their vehicles so we can say that the quality of local cars is becoming the strength of the auto industry..
CNG kitThe advantage of buying local assembled cars is that they comes with factory fitted
CNG kits at the times when the prices of fuel rising at higher pace internationally.
MechanicsFor local assembled cars mechanics are readily available in market and much cheaper
so the buyer has not to worry about any problem that can occur in the car in long term whereas the availability for imported cars is a bigger issue for the owners and if somehow they are able to find one then the mechanics charges much higher than actually it should be charged.
Weakness
WTO—Deletion ProgramTHE World Trade Organization (WTO) has rejected Pakistan’s request for the
extension of the deletion program which enabled it to lay down the condition of the local content requirement (LCR). Under LCR, the automobile and other engineering industry was required to use locally manufactured parts and accessories in terms of government’s deletion policy. The condition of the LCR was an aberration to the Clause 5.2 of the WTO Agreement on Trade Related Investment Measures (TRIMs), Article III–-National Treatment under the GATT, 1994.
WTO’s decision for not extending its deletion program / LCR condition has varied impact on Pakistan’s vendor industry, automobile assemblers, car users and the government.
Input CostIn Pakistan as the inflation is increasing so as the input costs and for manufacturers it
is becoming harder to produce at lower cost. Increasing cost of energy and its unreliable and inconsistent supply adds up the cost of manufacturing and wastage of resources. It is estimated that by the year 2012, auto industry consumption of electricity will cross 500 – 600 MW from around 250 - 300 MW, as of now.
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Protection Level
Before the TBS was introduced the auto industry was well protected by the government but now as the import of CKD and CBU is liberalized the protection level to industry by government is decreased.
Lack of Skilled Manpower for Modern Machinery
In Pakistan conventional machines are not able to meet the precision manufacturing and the available labor is not familiar with modern technology it caused by lack of coordination and linkages with Government/Semi Government Supporting Bodies and Technical Training Institutes
Scarcity of Raw Material Especially Steel
Through previous years the world prices are rising and causing costly inputs and Pakistan has left with scarce Steel and Iron left, so manufacturers are facing difficulties in producing cars with low prices.
Opportunities
Import German Technology and Skills
EDB wanted to build a Pakistan-German automotive supply network, providing opportunities to Pakistani automotive vendor enterprises to benefit from the German know-how and technology to improve quality, productivity, developing and marketing of value-added products.
Foreign Investment and Setup Production Facilities
China National Heavy Duty Truck Corporation (CNHDTC), one of the largest heavy duty truck manufacturers in China, has shown interest for investment in the automobile sector
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of Pakistan. The study is required to attract players from Germany as well as from other countries to develop business with the Pakistani counterparts.
Baggage FuelAs the fuel prices are rising in world Pakistan should switch to Ethanol Fuel as Brazil
is using. Ethanol Fuel is produced by Molasses. Pakistan is one of the country which produces good quantity of molasses but the engines of the local cars do not support ethanol so Pakistan should acquire the Technology to produce ethanol compatible cars. In Brazil they use 90% Ethanol and 10% petroleum whereas Pakistani cars with default engines can afford only 3% Ethanol.
Global Spare Part Market The annual gross sales turnover of the auto industry, at present, stands at Rs210 billion while export of auto parts are estimated at $35 million. As such, the increase in production turnover is projected to increase by 185 per cent while the exports of auto parts would make quantum jump.
Threats
WTO—Parts Indigenization SMUGGLING OF AUTO PARTS
The auto industry is generally faced by multiplicity of taxes; the presumptive tax regime has led to increase in prices of imported inputs and the finished goods. Component manufacturers are struggling to compete with under-invoicing, miss declaration and smuggling. Import of used parts is still continuing at a large scale. Smuggling, under-invoicing and dumping of auto parts
Competition with Imported CarsAuto industry is facing a threat from the import of cars which is already liberalized
further it is said that government will cut about 15% of duties till 2011.
Fuel PricesAccording to the authorities the fuel prices which currently are Rs 68.8 and are going to increase by more Rs. 6 by the end of Feb 1,2010.
Decreasing Tariff Structure
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For localized parts of CKD cars, the tariff would reduce from 50 per cent to 45 per cent in 2008-09 and further to 35 per cent in the next two years. The tariff for CKD non-localized parts would be reduced from 35 per cent to 32.5 per cent in 2007-08 and would keep on decline by 2.5 per cent every year to 25 per cent in 2010-11.
The rate for CBU cars up to 1500cc, the tariff would be reduced from 50 per cent to zero next year (2007-08) and to be kept at that level thereafter. For CBU cars between 1500-1800cc, the current rate of 65 per cent would be reduced at the rate of five per cent annually to 50 per cent by 2010-11. For CBU cars exceeding 1800cc, the applicable rate of 75 per cent would be reduced at the rate of five per cent per annum to 50 per cent in 2010-11.
The tariff for prime movers (above 280HP) and would remain unchanged, while it would be reduced for trucks from 10 to five per cent and from 30 to 25 per cent next year.
MARKETING MIXA Marketing mix is the division of groups to make a particular product by pricing, product,
branding, place, and quality. Although some Day1 marketers have added other P's, such as
personnel, packaging and physical evidence, the fundamentals of marketing typically
identifies the four P's of the marketing mix as referring to:
"Marketing Mix" is set of correlated tools that work together to achieve company's
objectives, they are: product, price, promotion, place.
The set of controllable tactical marketing tools, product, price,place and promotion - that the
firm blends to produce the response it wants in the target market:
Product - A tangible object or an intangible service that is mass produced or
manufactured on a large scale with a specific volume of units. Intangible products are
often service based like the tourism industry & the hotel industry. Typical examples
of a mass produced tangible object are the motor car and the disposable razor. A less
obvious but ubiquitous mass produced service is a computer operating system.
Price – The price is the amount a customer pays for the product. It is determined by a
number of factors including market share, competition, material costs, product
identity and the customer's perceived value of the product. The business may increase
or decrease the price of product if other stores have the same product.
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Place – Place represents the location where a product can be purchased. It is often
referred to as the distribution channel. It can include any physical store as well as
virtual stores on the Internet.
Promotion – Promotion represents all of the communications that a marketer may use
in the marketplace. Promotion has four distinct elements - advertising, public
relations, word of mouth and point of sale. A certain amount of crossover occurs
when promotion uses the four principal elements together, which is common in film
promotion. Advertising covers any communication that is paid for, from television
and cinema commercials, radio and Internet adverts through print media and
billboards. One of the most notable means of promotion today is the Promotional
Product, as in useful items distributed to targeted audiences with no obligation
attached. This category has grown each year for the past decade while most other
forms have suffered. It is the only form of advertising that targets all five senses and
has the recipient thanking the giver. Public relations are where the communication is
not directly paid for and includes press releases, sponsorship deals, exhibitions,
conferences, seminars or trade fairs and events. Word of mouth is any apparently
informal communication about the product by ordinary individuals, satisfied
customers or people specifically engaged to create word of mouth momentum. Sales
staff often plays an important role in word of mouth and Public Relations
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Marketing strategy-current
and the proposalProduct
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PRODUCT LIFE CYCLE
Introduction: As a new product much time will be spent by the organization to create awareness of it presence amongst its target market. Profits are negative or low because of this reason. Growth: If consumers clearly feel that this product will benefit them in some ways and they accept it, the organization will see a period of rapid sales growth. Suzuki stands on Growth Stage. As the sales of Suzuki is high as compare to Hyundai Getz then the consumer will buy Suzuki by providing them with great benefits in future and they will accept it.
Maturity StageThree phases of this stage are:
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Growth (Sales growth rate starts to decline) Eg:
Suzuki sold 3,436 units in Feb ’07 (7% increase over Jan ’07 but less than Feb ’06 over Jan ’06 increase)
Stable (Sales flatten) Eg: Suzuki’s Alto, and Swift sales stood at 34,759 units in July ’08 as against 34,737 units in July ’07 (up 0.2%).
Decaying Maturity (Absolute level of sales starts to decline) Eg: Suzuki sold 5,970 units in July ’07, but only 4,953 units in July ’08 (17% decline)
A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need
Levels of ProductThere are three levels of product.
Core BenefitActual ProductAugmented Product
Core BenefitThe most basic level is the core benefit, which addresses the question What is the buyer really buying? When designing the product Suzuki marketers first define the core benefits or services that its consumer seeks.
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Actual ProductAt the second level, product planners must turn the core benefit into an actual product. Suzuki marketers develop product features, design, a quality level, a brand name etc.
Augmented ProductFinally, product planners must built an augmented product around the core benefit and actual product by offering additional consumer services and benefits.
Product ClassificationProducts fall into two broad classes based on the type of consumers that use them.
Consumer Product
Industrial Product
Consumer ProductProduct bought by final consumer for
personal consumption is a consumer
product
Marketers usually classify these products further based on how consumers go about buying
them. It includes:
Convenience Product
Shopping Products
Specialty Products
Unsought Products
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Market Considerations
Type of Consumer Product
Convenience
Shopping
Specialty
Unsought
Customer Buying Behaviour
Frequent purchase, little planning, little comparison or shopping effort, low customer involvement
Less frequent purchase, much planning and shopping effort, comparison of brands on quality, price, style
Strong brand preference and loyalty, special purchase effort, little comparison of brands, low price sensitivity
Little product awareness, knowledge (or, if aware, little or even negative interest)
Price Low price Higher price
High price Varies
Distribution
Widespread distribution, convenient location
Selective distribution in fewer outlets
Exclusive distribution in only one or a few outlets per market area
Varies
Promotion Mass promotion by the producer
Advertising and personal selling by both producer and resellers
More carefully targeted promotion by both producer and resellers
Aggressive advertising and personal selling by producer and resellers
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Industrial Products
Product bought by individuals and
organizations for further processing or for
use in conducting a business
The three groups of industrial products include:
Materials and parts
Capital Items
Supplies and Services
Individual Product Decision
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Product Att ribut
eBranding Packagin
gLabelling
Product Support Services
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Product Attributes
These include:
Quality
Features
Style
Design
BrandingA name, term, sign, symbol, or design, or a combination of these that identifies
the product or services of one seller or group of sellers and differentiates them
from those of competitors is referred as a Brand ex “SUZUKI MOTORS” and
the process is called branding.
Product LineA group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are
marketed through the same types of outlets, or fall within given price range
The major product line decisions involve:
Product Line LengthProduct Line Stretching
UpwardDownwardBoth ways
Product Line Filling
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Product Mix DecisionsProduct mix or product portfolio is
the set of all lines and items that a
particular seller offers for sale
A company’s product mix has four important dimensions
Product Mix Width
Product Mix Length
Product Mix Depth
Product Mix Consistency
Product Mix Width
The number of different product lines the company carries.
Suzuki motors has two product lines in Pakistan i.e. automobiles and motorcycles.
Product Mix Length
The total number of items Company carries
within its product lines.
SUZUKI MOTORS has 9 products in automobiles and 5 in motorcycles in Pakistan
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Product Mix Depth
The number of versions offered to each product in the line.
SUZUKI MOTORS provides different versions of different products.
Product Mix Consistency
How closely related the various product lines are in end use.
SUZUKI MOTORS has closely related product mix.
Brand EquityThe positive differential effect that
knowing the brand name has on
customer response to the product or
service
Brand Strategy Decision
Product Lines of Suzuki The international product line of Suzuki includes:
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Brand Positioning
AttributesBenefitsBeleifs and Values
Brand Name Selection
SelectionProtection
Brand Sponsorship
Manufacturer's BrandPrivate BrandLicensingCobranding
Brand Development
Line ExtensionBrand ExtensionMultibrandsNew Brands
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Automobiles
Motorcycle
All-Terrain Vehicles (ATVs)
Outboard Marine Engines
Internal Combustion Engines
Product Lines in PakistanSuzuki Motors have two major product lines in Pakistan.
Automobiles
Motorcycles
Automobiles
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Liana VURV 1300 cc / 1600 cc
A high-grade dashboard where luxury meets sporty functionality.
Neatly laid out instruments.
A surprisingly spacious Liana cabin, tastefully colour-coordinated in beige and black,
surrounds the driver and passengers in relaxing ambiance.
The Liana VURV is tailored for driving experience that are both refreshing and
relaxing.
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Specifications
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CulTus 1000 cc EFi
Cultus is a blend of space and craft
Its trim body conceals ample space, flexibility for both
passengers and storage.
Suzuki Cultus assures everyone, exceptional value and quality.
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Specifications
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Alto 1000 cc Smooth-riding comfort
Functional and easy to use
Sharp looks
Offering maximum efficiency and powered by a 1.0-litre engine delivering peppy
acceleration and responsive performance, the Alto fully responds to today’s driving
needs in smart and stylish fashion
An exciting set of new features now make the Alto even more stylish, more
convenient and more comfortableExterior
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Specifications
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Mehran 800 ccUnrivalled in its class, Mehran is Pakistan’s largest selling car.
More smart features like
Head turning lamp
Matching front grill
Two spoke steering wheel gives it the tidy look
Functional economy, peak performance or unmatched fuel
efficiency, Mehran VXR is the leader
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Specifications
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APV 1500cc(Imported)
The New APV gives you everything you ever wanted in your
vehicle
Spacious interior for comfort
Tough engine to carry large loads
Plenty of room for passengers to enjoy a comfortable day long ride.
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Specifications
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Bolan VANThe Suzuki Bolan Hi-roof gives you everything you ever wanted in a van
Spacious interior for comfort
Tough engine to carry large loads
Plenty of room for passengers to enjoy a comfortable day long ride
Air-conditioned model (dual thrust) has been recently introduced
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Specifications
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RAVI Pick Up 800ccSuzuki Ravi is the veritable cargo vehicle with an amazing capacity for load-bearing
and durability.
Undoubtedly, the unrivalled commercial vehicle in its class, Ravi is the breadwinner
for millions in Pakistan.
This light commercial vehicle referred to as the mini revolution, replaced the animal-
drawn vehicles in Pakistan.
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Specifications
Recent Launch
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HistoryWith success stories in countries across the globe, the new Suzuki Swift
has embarked its journey in Pakistan. From the very beginning of the new
Swift’s development programme, a dedicated team of Suzuki designers and
engineers collaborated extensively with automotive professionals and motoring
enthusiasts in pursuit of Suzuki’s best compact car ever. Suzuki on track of its
radical programme of innovation, to reaffirm and strengthen Suzuki’s position
as a leader and innovator in compact car segment and to yield vehicles that
embody unique position of company being market leader in automobile
industry. In pursuit of this and satisfying market need of a compact car with
latest technology; Suzuki Engineers went into relentless effort to come up with
new Suzuki Swift and modify it according to the needs and requirement of
Pakistani customer. New Suzuki Swift has short yet impeccable history of
Success, rewards and accolades.
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PriceThe amount of money charged for a product or service, or the sum
of the values that consumers exchange for the benefits of
having or using the product or service the product or service
Considerations in Setting Price
l and external considerations
The price the company charges falls somewhere between one that is too high to
produce any demand and one that is too low to produce a profit. Customer oriented pricing
involves understanding how much value consumers place on the benefits they receive from
the product and setting a price that captures this value.
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Other interna
Marketing Strategy,
Objectives and Mix
Customer Perceptions of
value
Price Ceiling
No demand above this
price
Product Cost
Price FloorNo profits below
this price
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General ApproachesValue Based Pricing
Setting prices based on buyer’s perceptions of value rather than on
seller’s costIt means that the marketer cannot design a product and marketing
program and then set the price. Price is considered along with the other
marketing mix variables before the marketing program is set.
Types of Value Based Pricing
Good – Value Pricing
Value – Added Pricing
Good – Value Pricing
Offering just the right combination of quality and good service at a fair price
Value – Added Price
Attaching value – added features and services to differentiate a company’s offers and to support
charging higher price
Cost Based Pricing
Setting prices based on the costs for producing, distributing, and selling the product plus a fair
rate of return for effort and risk
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Customers
Value
Price
Cost
Product
71
SUZUKI MOTORS uses both cost-based and value based
pricing for its various products.
Types of Cost
Fixed cost – Cost that do not vary with production or sales level
Variable cost – Costs that vary directly with the level of production
Total cost – The sum of the fixed and variable costs for any given level of
production
Types of Cost-Based Pricing
There are two types of cost-based pricing:
Cost-Plus Pricing
Break-Even Analysis
Cost-Plus Pricing
Adding a standard markup to the cost of the product
Unit Cost=VariableCost+ ¿CostUnit Sales
Markup Price= Unit Cost(1−Desired Returnon Sales)
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Product
Cost
Price
Value
Customers
72
Break-Even Analysis
Setting prices to break even on the costs of making and
marketing a product; or setting prices to make a target
profit
Break E venVolume= ¿CostPrice−VariableCost
Internal FactorsCustomer perceptions of value set upper limit for prices and costs set
lower limit. Internal factors affecting pricing include the company’s overall
marketing strategy, objectives, and marketing mix, as well as other
organizational considerations.
Overall Marketing Strategy
Price is only one element of the broader marketing strategy. Thus, before
setting the price, the company must decide on its overall marketing strategy for
the product or service. If the company has selected its target market and
positioning carefully, then its marketing mix strategy, including price, will be
straightforward. Pricing Strategy is largely determined by decisions on
marketing positioning.
Overall Marketing Objectives
General pricing objectives might include survival, current profit
maximization, market share leadership, or customer retention and relationship
building. At a more specific level, a company can set price to attract new
customers or to profitably retain existing ones. It plays an important role in
helping to accomplish the company’s objectives at many levels.
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Overall Marketing Mix
Price is the only one marketing mix tools that a company uses to achieve
its marketing objectives. Price decisions must be coordinated with the product
design, distribution and promotion decisions to form a consistent and effective
integrated marketing program. Decision made for other marketing mix variables
may affect pricing decisions.
Target Costing
Pricing that starts with an ideal selling price, then target costs that will ensure that the
price is metOrganizational Consideration
Management must decide who within the organization should set prices.
Companies handle prices in a number of different ways. Companies handle
pricing in a variety of ways. In small companies, prices are often set by top
management rather than by the marketing or sales departments. In large companies,
pricing is typically handled by divisional or product line managers. In industrial markets,
salespeople may be allowed to negotiate with customers within certain price ranges.
PAK SUZUKI MOTORS set prices with consultation with its parent company in Japan.
External FactorsExternal factors include the nature of the market and demand, competitors’ strategies and prices, and other environmental factors. High taxes imposed by the government on this industry are one of the major external factors.
The Market and DemandCompetitor’s Strategies and PricesEconomic ConditionsResellersGovernmentSocial Concerns
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The Market and Demand
The seller’s pricing freedom varies with different types of
markets. Economists recognize four types of markets, each presenting
a different pricing challenge.
Pure Competition
The market which consists of many buyers and sellers trading in a uniform commodity
Suzuki Motors does not prevail in such type of market because it offers
different products ranging from very expensive products to reasonable products
and it mainly focuses the middle and upper class.
Monopolistic Competition
The market consists of buyers and sellers who trade over a range of prices rather than a single market price
Suzuki Motors does not prevail in such type of market because it offers
different products ranging from very expensive products to reasonable products
and it mainly focuses the middle and upper class.
Oligopolistic Competition
The market consists of a few sellers who are highly sensitive to each other’s pricing and marketing strategies
Suzuki Motors prevail in such type of market because it offers different products
ranging from very expensive products to reasonable products and it mainly focuses the
middle and upper class.
Pure Monopoly
The market consists of a single seller
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Suzuki Motors does not prevail in such type of market because it offers different
products ranging from very expensive products to reasonable products and it mainly focuses
the middle and upper class.
Competitor’s Strategies and PricesIn setting prices, the company must also consider competitors’ costs, prices, and
market offering. Consumers will base their judgment of a products value on the prices that
competitors charge for similar products. The company’s pricing strategy may affect the
nature of competition it faces. No matter what price the company charges – high, low or in
between – be certain to give customers superior value for that price.
Economic Conditions
Economic conditions can have a strong impact on the firm’s pricing
strategies. Economic factors such as boom or recession, inflation, and interest
rates affect pricing decisions because they affect both consumer perceptions of
the product’s price and value and the costs of producing a product.
Resellers
The company must also consider what impact its prices will have on other
parties in its environment. How will resellers react to various prices? The
company should set prices that give resellers a fair profit, encourage their
support, and help them to sell the product effectively.
Government
The government is another important external influence on pricing
decisions. Pricing decisions are subject to an incredibly complex set of
customer, company, competitive and environmental forces.
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Social Concerns
In setting prices, a company’s short term sales, market share, and profit
goals may have to be tempered by broader societal considerations.
New Product Pricing StrategiesPricing strategies usually change as the product passes through its life cycle. The
introductory stage is especially challenging. Companies bringing out a new product face the
challenge of setting prices for the first time. They can choose between two broad strategies:
Market-Skimming Pricing
Market-Penetration Pricing
Market-Skimming Pricing Approach under which a producer sets a high price for a new high-end product or a
uniquely differentiated technical product is called price skimming. Its objective is to 'skim'
maximum revenue from the market before substitutes products appear. After that is
accomplished, the producer can lower the price drastically to capture the low-end buyers and
to thwart the copycat competitors.
In its initial phases, sets up high prices, in order to "skim" the revenue layer by layer
from the market. It is normally suitable for situations when the quality and image of the
product justify and support the premium price, when an adequate number of buyers are
willing to buy the product at the proposed premium price by the company. Market skimming
is also suitable when the cost of production of a small volume of products is not that
high. Lastly, market skimming is applicable when the competitors of the product are
incapable of accessing the market conveniently.
Market-Penetration PricingStrategy adopted for quickly achieving a high volume of sales and deep market-
penetration of a new product. Under this approach, a product is widely promoted and its
introductory-price is kept comparatively lower. This strategy is based on the assumption that
are as follows:
The product does not have an identifiable price-market segment
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It has elasticity of demand (buyers are price sensitive)
The market is large enough to sustain relatively low profit margins
The competitors too will soon lower their prices
This pricing strategy involves setting a low initial price in the attempt of
penetrating the market on a quick yet productive basis in order to win a large
chunk of the market share. In contrast to market skimming, market penetration
works when the market of the respective product is highly price sensitive or the
production and distribution costs share an inverse relationship with the sales
volume. Another suitable situation for market penetration would be when low
price plays a prime role in defeating and keeping out the competition.
Product Mix Pricing StrategiesStrategy Description
Product Line Pricing
Setting price steps between product line items
Optional-product pricing
Pricing optional or accessory products sold with the main product
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Captive-product pricing
Pricing products that must be used with the main product
By-product pricing
Pricing low-value by-products to get rid of them
Product bundle pricing
Pricing bundles of products sold together
Price-Adjustment StrategiesStrategy Description
Discount and allowance pricing
Reducing prices to reward customer responses such as paying early or promoting the product
Segmented pricing
Adjusting prices to allow for differences in customers, products, or locations
Psychological pricing
Adjusting prices for psychological effect
Promotional pricing
Temporarily reducing prices to increase short run sales
Geographical pricing
Adjusting prices to account for the geographic location of customers
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Dynamic pricing
Adjusting prices continually to meet the characteristics and needs of individual customers and situations
International pricing
Adjusting prices for international markets
Discounts and allowances
Discounts and allowances are reductions to a basic price of goods or services.
2/10 net 30 - this means the buyer must pay within 30 days of the invoice date, but will receive a 2% discount if they pay within 10 days of the invoice date.
3/7 EOM - this means the buyer will receive a cash discount of 3% if the bill is paid within 7 days after the end of the month indicated on the invoice date. If an invoice is received on or before the 25th day of the month, payment is due on the 7th day of the next calendar month. If a proper invoice is received after the 25th day of the month, payment is due on the 7th day of the second calendar month.
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3/7 EOM net 30 - this means the buyer must pay within 30 days of the invoice date, but will receive a 3% discount if they pay within 7 days after the end of the month indicated on the invoice date. If an invoice is received on or before the 25th day of the month, payment is due on the 7th day of the next calendar month. If a proper invoice is received after the 25th day of the month, payment is due on the 7th day of the second calendar month.
2/15 net 40 ROG - this means the buyer must pay within 40 days of receipt of goods, but will receive a 2% discount if paid in 15 days of the invoice date. (ROG is short for "Receipt of goods.")
PLACEMENTA set of interdependent
organization that help make a
product or services available for
use or consumption by the
consumer or business user
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Every other P is affected by channel decision. Today, companies are using
multiple channels in a bid to woo customer.
A company channel decisions directly affect every other marketing decisions.
For the success of any firm management must design its channel carefully
incorporating today’s needs with tomorrow’s likely selling environment.
Suzuki Motors has designed its distribution channels very strongly which is
the main cause of its success. The imaginative distribution systems of Suzuki
Motors have helped them in gaining competitive advantage.
Channel FunctionsTo gather information about potential and current customers ,Competitors
, etc
To develop and disseminate persuasive communication about an offer to
stimulate purchasing.
To reach agreement on price and other terms so that transfer of ownership
can be affected.
To place orders with manufacturer.
To finance inventories at different levels.
To provide storage/movement.
To ensure payment.
Suzuki Motors perform all these function of distribution to get the success
in the modern era. This is one of the main reasons of its success and Suzuki
Motors always try their best to satisfy all the needs and want of their
customers.
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How Channel Member Add ValueProducers of different Suzuki companies use intermediaries because they
create greater efficiency in making goods available to target markets.
Suzuki Motors through their contacts, experience, specialization, and scale
of operation, intermediaries usually offer the firm more than it can achieve
on its own.
Using intermediaries can provide economies. Suzuki Motors get these
economies by using different levels of intermediaries.
Suzuki Channel members add value by bringing the major time, place and
possession gaps that separate good and services from those who would
use them.
Channel Levels A layer of Suzuki intermediaries that performs some work in brining the product and its ownership closer to the final buyer is the channel level. The number of Suzuki intermediary levels indicates the length of a channel. There are two type of channels
Direct Marketing ChannelIndirect Marketing Channel
Direct Marketing ChannelA marketing channel that has no
intermediary levels is called direct marketing channel.
Suzuki Motors has no link with this direct marketing channel. It
involves many intermediaries but to satisfy the needs of some
important and special customers it has to involve in this type of
marketing channel.
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Indirect Marketing ChannelA channel containing one or more
intermediary levels is called indirect marketing channel.
Suzuki Motors is mainly linked with this type of marketing
channel. It involves many intermediary levels to provide their goods
to their target market consumer.
Consumer and business marketing channels with even more
levels can sometimes be found. But less often, from the producer
point of view of Suzuki Motors, a greater number of levels mean less
control and greater channel complexity.
Channel Behavior and Organization
Distribution channels of Suzuki are more than simple collection of firms tied
together by various flows. They are complex behavioral systems in which
people and companies interact to accomplish individual, company and channel
goals. Some interactions are formal and some are informal depending on
organizational structure. Suzuki Motors deals with both type of interactions but
mainly focus on formal interaction.
Marketing channels of Suzuki Motors consist of firms that have partnered for their
common good
Each channel member of Suzuki Motors depends on the others
Each channel member of Suzuki Motors plays a specialized role in the channel
The overall channel success of Suzuki Motors depends on the success of individual
channel success
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Channel ConflictDisagreement among marketing
channel members on goals and roles-
who should do what and for what
rewards is called channel conflict.
The disagreement over goals, roles and rewards among different channels
of Suzuki Motors sometimes generate channel conflict.
Horizontal conflict of Suzuki Motors- conflicts occurs among firms at
the same level of the channel of Suzuki.
Vertical conflict of Suzuki Motors- conflicts between different levels of the same channel
of Suzuki.
Causes of Conflicts
Main causes of conflicts in Suzuki Distribution Process are:
Goal incompatibility
Unclear roles and rights
Differences in perceptions
Cooptation
Joint membership in and between trade association
Solutions to Conflict
When conflict is acute, there are three solutions:-
Diplomacy
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Mediation
Arbitration
Diplomacy
Each side sends a person /group to meet with its counterpart to resolve conflict
Mediation
Resorting to a neutral third party who is skilled in conciliating their interests
Arbitration
When two parties agree to present their argument to 1 or more arbitrators and
accept their decision as final and binding
Channel DynamicsSuzuki uses following types of marketing channels:
Conventional Distribution ChannelVertical Marketing SystemHorizontal Marketing SystemMultichannel Distribution System
Conventional Distribution ChannelA channel consisting of one or more independent producers, wholesalers, and
retailers, each a separate business seeking to maximize its own profits even at the expense of
profits for the system as a whole.
Vertical Marketing System
A distribution channel structure in which producers, wholesalers, and
retailers act as a unified system. One channel member owns the others, has
contracts with them, or has so much power that they all corporate.
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VMS achieve economies through size, bargaining, power, and
eliminating of duplication (dominant in U.S)
Types of VMSs
Corporate VMSContractual VMSAdministered VMS
Corporate VMS
A vertical marketing system that combines successive stages of
production and distribution under single ownership – channel leadership is
established through common ownership.
Contractual VMSA vertical marketing system in which independent firms at different levels of
production and distribution join together through contracts to obtain more economies or sales
impact than they could achieve alone. A contractual VMS in which a channel member called
a franchiser, links several stages in the production process is called a franchise organization.
Administered VMSA vertical marketing system that coordinates successive stages of production and
distribution, not through common ownership or contractual ties, but through the size and
power of one of the parties is called administered VMS.
Horizontal Marketing SystemA channel arrangement in which two or more companies at one level join together to
follow a new marketing opportunity, by working together, companies can combine their
financial, production, or marketing resources to accomplish more than any one company
could alone.
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Multichannel Distribution SystemsA distribution system in which a single firm sets up two or more marketing channels
to reach one or more customer segments- often called Hybrid marketing channels.
Suzuki Motors has mainly focused on this channel because it is considered to be best
for automobiles companies and also give a lot of benefits.
Benefits
Important benefits of multichannel marketing systems are:
Increased market coverage
Lower channel Cost
More Customer selling
Channel DesignThe channel design decisions include:
Analyzing customer needs
Establishing Channel Objectives
Identifying major channels alternatives
Analyzing Customer NeedsLot size -1 or many unitsWaiting time – Customer Want speedSpatial convenience – degree of ease of purchasingProduct variety Services backup
Establishing Channel ObjectivesChannel objectives vary with product characteristics:-
Perishable product require shorter channel.
Bulky products need channels that minimize channel distance and handling.
Non – standardized products (Specialized machinery) are sold directly by company
representatives etc.
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Identifying Major Channel Alternatives
Identifying major channel alternatives involve:
Types of intermediariesNumber of marketing intermediariesTerms and Conditions
Types of Intermediaries
A firm should identify the types of channel members available to carry out its channel work.
Company sales forceManufacture’s agencyIndustrial distributors
Number of Marketing Intermediaries
Companies must also determine the number of channel members to use at each level. Three strategies are available:
Exclusive distribution – AutomobilesSelective distribution – FashionIntensive distribution – Coca Cola
Suzuki Motors uses the strategy of exclusive distribution for automobiles and motorcycles but there is a room for selective distribution for motorcycles.
Terms and Conditions
Price policy – Producer must establish a price list and a schedule of
discount.
Condition of sale – Producer payment terms (credit /discount)
guarantees (for distributers)
Territories – Producer defines distributers for territories and terms of
appointing other distributers
Tying agreements – Full line forcing
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Evaluating major channel alternatives
Economics criteria – Choosing between different levels of sales and costs
Control and adoptive criteria – to decide whether company should sell
directly or through agents
Channel ManagementSelecting channel members – financial market reputation , servicing ability
Training channel members – esp. , dealers , salesman
Evaluating channel members – carrot/stick
Modifying channel arrangement – effecting changes when necessary.
Retailing ProcessAll activities involved in selling goods or services directly to find customer for
personal, non - business use. Any organizing selling to find customer is retailing.
Types of RetailingSpecialty stores
Department stores
Supermarket
Convenience store
Discount Store
Off Price Retailer
Hyper markets
Catalog Showroom
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Placement in Retailing Process General business districts
Regional shopping centers
Community shopping centers
Strip malls – “walk the mall”
Location within a larger store- “Shop within a shop”
Wholesaling ProcessWholesaling process includes all activities involved in selling goods/services to those
who buy for resale or business use and excludes manufacturers, farmers, retailers, etc.
It is different from retailer because of these reasons:-
They deal with business customer (not final customer)
Transactions are larger in volume and areas
Taxes / legalities differ in the 2 cases
Why Wholesalers?More contacts/rapport
More assortments
Customer benefit from bulk sales/buying
Warehousing
Transportation
Financing
Risk sharing
Market information
Counseling retailers/ industrial customers
Placement in Wholesalers Process
Placement in Wholesalers market were usually located in low rent commercial areas
but are becoming more up-market now with computerized operations.
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Market LogisticsDeciding on company value proposition to consumer
Deciding on best channel design / network to reach customer
Operational excellence in sales forecast, warehouse, management, transportation, and material
management.
Implementing Solution with Best MIS, equipment, policies, and procedures.
OBJECTIVES M= T + FW +VW + S
M= Total logistics cost of system
T= Total fright cost of system
FW = Total fixed warehouse cost of Suzuki motors
VW = Total Variable warehouse cost of Suzuki motors
S= Total cost of lost sales due to delays/glitches
OBJECTIVES = MINIMIZE MMarket Logistics Decisions
The marketing logistics of marketing logistics decisions of Suzuki Motors include:
Order processing DecisionsMost companies try to shorten the order to payment cycle.
Warehousing DecisionsCompany must decide on number of inventory stocking locations. To reduce warehousing
and inventory stocking duplication costs the Suzuki Motors may centralize its inventory in
one place and use fast transportation to fulfill orders. Trend is “automated” warehousing
where computers handle everything and issuing invoices.
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Inventory DecisionsWhen to order (reorder point)
How much to order
Inventory carrying cost
Just in Time
Transportation DecisionsThere are six types of transportation system in Pakistan – Rail, Air, truck, waterway, pipeline
and internet
Criteria – Speed, frequency, dependability, capability, Availability, Traceability cost.
Promotion
A company’s total promotion mix also called its marketing communication mix consist of the specific blend of
ADVERTISING is any paid form of non-personal presentation and promotion
of ideas, goods or services by an identified sponsor.
SALES PROMOTION is a short term incentives to encourage the
purchase or sale of a product or service.
PUBLIC REALITION is building good relation with companies various
publics by obtaining favorable publicity, building up a good corporate image, and handling
and heading off unfavorable rumors stories and events.
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PERSONAL SELLING is a personal presentation by the firms sale
force for the purpose of making sales and building customer relationships.
DIRECT MARKETING is a direct connection with carefully targeted
individual consumers to both obtain an immediate response and cultivate lasting customer
relationships.
PAK SUZUKI uses a combination of advertising
and direct marketing.
Integrated CommunicationCarefully integrating and co-
coordinating the companies many communication channels to deliver a
clear consistent and a compelling message about the organization and
its products.
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Seven Steps in Developing an Effective Communications Plan
PAK SUZUKI effective communication to potential
audiences what a project is about is of paramount importance when little or nothing is known in the
area.A little bit of planning in this area will pay dividends in terms of coherence and
consistency in what you want to say and when. You also need to give some thought,
especially in complex projects, to who is going to do the talking!
1. Know what your overall priorities and objectives are.
This might sound ridiculous; of course you know; you’ve got a project plan. But how
do these objectives translate into messages your audience can either relate to or will be
interested in? How do they fit in with what might be happening in the wider world? Many
priorities and objectives don’t necessarily need to be relayed to anyone outside a project –
they’re merely part of the development. Having those accessible on a website or where
people can find them if they need to, should be fine. But one or two will be real corkers, else
you’d not be doing the work!
2. What main themes do they fall into?
Keep these themes straightforward.
3. Who do you want to tell?
And who needs to know (funders, partners)? How aware of you or your activity are
they already? (one of the biggest challenges is dealing with different potential audiences who
are at differing ends of the awareness spectrum). Try not to be too ambitious and reach too
many people – better to keep it small and do it well. Map your audiences against their likely
angle of interest in the project (in the technical or the social networking side for instance?).
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4. How do you think you can reach them? What do they read/attend/listen to/log onto? How much of your dissemination might
be simply word of mouth and networking at particular events? If that works for you, fantastic;
don’t discount it! Equally, other partners can help your message get across and often even
strengthen it.
5. What bite-sized messages can you break your themes down to?
Don’t confuse through making a message too complex or irrelevant. Are the end-users
really going to need to know all about how the technology works? Focus on what each person
needs to know and tell them simply and succinctly. Avoid jargon and too much background.
If people want that they can get it later. Less is more, as long as less gets to the point!
6. What sort of timescales is realistic?
Don’t be over-optimistic; don’t underestimate preparation time and capacity. Having
just a few, but strong, key comes milestones is probably a good thing to aim for, with perhaps
some drip-feed for in-between times.
7. And finally
Map all these back to objectives and main themes – keep it focused on the end goals!
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Push vs. Pull Strategy
Push strategyA promotion strategy that calls for using
sales force and trade promotion
to push the product through
channels
Pull strategyA promotion strategy that
calls for spending a lot on advertising and consumer promotion to induce final
consumer to buy the product
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Budget and control
The cost for Suzuki marketing was 2000 Million Rupees but its budget was only 1100
Million Rupees. Company thinks to advertise first by this money. The decision was made by
Marketing department and then they contact Finance Department to get finance. Finance
department approved their request to get finance. After getting finance they start marketing.
Suggestion and recommendatio
nsWorld trade organization (WTO) has rejected their program of deletion. We
suggest they must start an alternative program for extension of their
growth. So that their market growth and market share do not declined. To
reduce their input cost they must use other methods for producing
resources so that they can lower their cost of production. They must make
trust with government so that government give them security and
protection. They must train their workers to use innovations and new
technology as workforce is backbone of the company. We recommended
them that they must increase their production and give more beautiful and
heart touching look to the car with good system and service.
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Bibliographywww.paksuzuki.com
www.google.com
www.informaworld.com
www.pama.com
Principles of Marketing (Philip Kotler)
Suzuki Area Office Lahore
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