Honda marketing Strategy:

The American Honda Motor Company was established as a subsidiary by Honda in

1959. During the 1960's the type of motorcycles brought by Americans underwent a
major change. Motorcycle registrations increased by over 800,000 in five years from
1960. In the early 60's the major competitors were Haley - Davidson of U.S.A, BSA,
Triumph and Norton of the UK and Motto - Guzzi of Italy. Harley-Davidson had the
largest market share with sales in 1959 totalling a6.6 million dollars. Many of the
motorcycles produced were large and bulky and this led to the image of the motorcycle
rider as being one who wore a leather jacket and went out to cause trouble.

The Boston Consulting Group ( BCG ) report was initiated by the British government
to study the decline in British motorcycle companies around the world, especially in the
USA where sales had dropped from 49 0n 1959 to 9 0n 1973. The two key factors the
report identified was the market share loss and profitability declines an the scale
economy disadvantages in technology, distribution, and manufacturing. The BCG
report showed that success of the Japanese manufacturers started with the growth of
their own domestic markets. The high production for domestic demand led to Honda
experiencing economies of scale as the cost of producing motorbikes declined with the
level of output. This provided Honda to achieve a highly competitive cost position
which they used to penetrate into the US market. " The basic philosophy of the Japanese
manufacture is that high volumes per model provide the potential for high productivity
as a result of using capital intensive and highly automated techniques. Their marketing
strategies are therefore directed towards developing these high model volumes, hence
the careful attention that we have observed them giving to growth and market share."
(BCG p.59 ).

The report goes on to show how Honda built up engineering competencies through the
innovation of Mr Honda. The company also moved away from other companies who
relied upon distributors to sell their bikes when the company set up its headquarters in
the west coast of America. The BCG found that the motorcycles available before Honda
entered the market were for limited group of people such as the police, army etc. But
Honda had a "policy of selling, not primarily to confirmed motorcyclists but rather to
members of the general public who had never before given a second thought to a
motorcycle"( SP p.116 ). The small, lightweight Honda Supercub sold at under 250
dollars compared to the bigger American or British machines which were retailing at
around 1000 to 1500 dollars. In 1960 Honda's research team comprised of around 700
designer and engineer staff compared to the 100 or so employed by their competitors
showing the value which the company placed on innovation. Production per man-year
was 159 units in 1962, a figure not reached by Harley-Davidson until 1974.

Honda was following a strategy of developing region by region. Over a period of four
to five years they moved from the west coast of America to the east coast. The report
showed the emphasis which Honda paid to advertising when the company spent heavily
on the advertising theme " you meet the nicest people on a Honda" thereby
disassociating themselves from the rowdy, hell's angels type of people.

Essentially the BCG is portraying Honda as a firm dedicated to being a low cost
producer, utilising its dominant position in Japan to force entry into the U.S market,
redefining that market by putting up the nicest people image and exploiting its
comparative advantage via aggressive advertising and pricing.

Pascale tends to disagree on many points of the BCG report. The report suggests that
there was a smooth entry into the U.S market which led to an instant success. Pascale
argues that Honda entered the American market at the end of the motorcycle trade
season showing their impotence to carry out research in the new market. As they entered
the market at the wrong time sales were not as good as they should have been and any
success was not going to be instantaneous. Pascale also criticises the assumption that
Honda was superior to other competitors in productivity. He says that Honda was
successful in Japan with productivity but circumstances indicate that the company was
not superior. The lack of funding from the ministry of finance and the ploughing back of
profits into inventory meant they had a tight budget to follow.

The BCG report shows that Honda had a smooth policy of developing region by
region, moving from the west to the east. Pascale response is that this is partly true but
reminds that Hondas advertising was still in Los Angeles in 1963, four years after
setting up their subsidiary. The report to the British government showed that Honda had
a deliberate strategy of disassociating themselves from the hells angels type of people
by following the nicest people advertisement policy. Pascale shows that this was not an
intentional move since there were disputes within the company with the director of sales
eventually persuading to management against their better judgement. The BCG report
found Honda pushed into the U.S market with small lightweight motorbikes. However
Pascale says this is again not true. He argues the intended strategy was one of promoting
the larger 250cc and 350cc as Honda felt that this was what the market wanted since
Americans liked all things large. The bikes were unreliable which led to the promotion
of the supercubs. These bikes salvaged the reputation of the company. An idea which
hardly came from an inspired idea but one of desperation. Overall Pascale gives the
impression that it was through an incidental sequence of events which led to Honda
gaining a strong hold in the U.S market, mainly through the unexpected discovery of a
large untapped segment of the market while at the same time trying to retain the
interest of the current market.

The criticism made by Pascale can be further analysed by looking at the strengths of
the Honda company.

The strengths of Honda start with the roles which the founders played. Honda was an
inventive genius with a large ego and a volatile temperament. His main concerns were
not about the profitability of the company or its products, but rather to show his
innovative ability by producing better engines. Fujisawa on the other hand thought
about the financial section of the company and how to market the ideas. He often
challenged Honda to come up with better engines. By specialising in their own abilities
the two of them were able to pool together resources and function effectively as a team.

Another strength was the way the company utilised its market position. Strengths in
design advantages and production methods meant they were able to increases sales in
Japan even though there was no organisation within the company. Once there was a
large enough demand for its products, mainly the supercub, Honda both in Japan and in
America, moved from a sale on consignment basis to one that required cash on delivery.
This seemed a very risky decision to make at the time but within three years they had
changed the pattern within the motorcycle industry by shifting the power relationship
from the dealer to the manufacturer. Mr Honda had cultivated a "success against all
odds" culture into the company. This was tested when he sent two executives to the U.S
with no strategy other than to see if they could sell something.

The weaknesses within an organisation can become irrelevant if the strategy is strong
and there is good leadership.

An element of luck also helped Honda follow an emerging strategy. Restrictions

placed on funds by the government for the U.S venture forced Honda to take an
alternative route. If they had all the funds necessary they may well have gone through
the normal distribution channels.

Honda entered the us market right at the end of the motorcycle trade season. When
leaking oil and clutch problems occurred on their bikes it did not affect Honda as hard
as it would have had they entered in the beginning of the season. Also people noticing
the Supercubs led the company to produce a bike which was not at first supported by
senior management.

The success of Honda was not the result of senior management coming up with all the
answers. In fact senior executives in most Japanese manufacturing companies do not
take their strategic positions too seriously. Salesman, cleaners and those working on the
manufacturing floor all contribute to the company is run and thereby influence its
strategic position. It is this ability of an organisation to move ideas from the tom to the
bottom and back again in continuos dialogue that the company values the greatest.

As a conclusion it is necessary to consider the theoretical side of Hondas strategy and

see whether the company was in fact following a model. The first model is the Andrew's
model. Andrew came up with the idea that there were two stages to corporate strategy,
formulation and implementation. Formulation involved looking at the market,
competitors and resources and formulating a corporate strategy which would be
implemented throughout each process of the organisational structure. This model was
also supported by Porter. This is how the BCG saw Honda, as a corporation, who had
looked at the market, formulated a strategy to cope with the environment and
competition pressures and implemented it, making all Hondas plans and activities
deliberate.
 The second model known as the emergent strategy portrays a different image to the
Andrews model and shows how Pascale viewed Honda. The model shows a realised
strategy made up from a an intended strategy together with an emergent strategy which
is not planned but emerges in relation to activities within the environment. Pascale
seemed to think that in Hondas case a substantial proportion or the companies corporate
strategy was emergent and less was actually intended strategy. The actual strategy
followed by Honda is likely to be a combination of both.

McDonald
McDonald's Marketing Strategy

McDonald’s is the world’s largest fast-food restaurant chain. It has more than 30,000
restaurants in over 100 countries. Over one billion more customers were served in 2007
than in 2006. Although net income was down by $1.1 billion in 2007, McDonald’s sales
were up 6.8%, and revenue was a record high of $23 billion. “The unique business
relationship among the company, its franchisees and suppliers (collectively referred to as
the System) has been key to McDonald’s success over the years. The business model
enables McDonald’s to play an integral role in the communities we serve and consistently
deliver relevant restaurant experiences to customers.” (McDonald's, 2008, 25).
McDonald’s overall strategic plan is called Plan to Win. Their focus is not so much on
being the biggest fast-food restaurant chain, rather it is more focused on being the best
fast-food restaurant chain. McDonald’s “strategic alignment behind this plan has created
better McDonald’s experiences through the execution of multiple initiatives surrounding
the five factors of exceptional customer experiences – people, products, place, price and
promotion” (McDonald's, 2008, 25). McDonald’s also incorporates geographical strategic
plans. In the U.S., McDonald’s strategic plan continues to focus on breakfast, chicken,
beverages and convenience. These are the core areas in the United States. McDonald’s
has launched the Southern Style Chicken Biscuit for breakfast and the Southern Style
Chicken Sandwich for lunch and dinner. In the beverage business, McDonald’s starting
introducing new hot specialty coffee offerings on a market-by-market basis. In Europe,
McDonald’s uses a tiered menu approach. This menu features premium selections, classic
menu, and everyday affordable offerings. They also “complement these with new
products and limited-time food promotions” (McDonald's, 26). In the Asia-Pacific,
Middle East, and Africa markets, McDonald’s strategic plan is focused around
convenience, breakfast, core menu extensions and value. With McDonald’s overall
strategic plan and its geographical strategic plan, the company should start to see more
positive financial results.
McDonald’s incorporates several organizational strategies. Some of the organizational
strategies consist of better restaurant operations, placing the customer first, menu variety
and beverage choice, convenience and daypart expansion, and ongoing restaurant
reinvestment. McDonald’s plans to “continue to drive success in 2008 and beyond by
leveraging key consumer insights and our global experience, while relying on our
strengths in developing, testing and implementing initiatives surrounding our global
business drivers of convenience, branded affordability, daypart expansion and menu
variety” (McDonald's, 2008, 25). One of the ways McDonald’s can obtain a positive net
income is to maximize efficiency in its restaurant operations while at the same time
placing the customer first. With strategic focus on menu variety and beverage choice,
McDonald’s is hoping for increased sales and guest counts. With their convenience and
daypart expansion initiative, McDonald’s is hoping to increase efficiency in its drive-thru
pick up window, and the company is staying open later for those late-nighters who want a
quick bite to eat. McDonald’s also has locally owned and operated restaurants which “are
at the core of their competitive advantage and makes them not just a global brand but a
locally relevant one” (McDonald's, 27). They are in the process of remodeling and
upgrading its franchises. The company is also opening up McCafe’s “with the
expectation that the gourmet coffee shop would move it closer to its goal of doubling
sales at existing U.S. restaurants over the next decade” (Peter & Donnelly, Jr., 2007,
253). A couple other organizational strategies are branded affordability, and the
development of their employees starting with recruitment and training and leading all the
up to leadership and management.
McDonald’s strategic plan is influencing their marketing efforts by building better brand
transparency. They want their image to be recognized globally. They are enhancing the
customer’s experience. “Across their markets, they are making is easier for customers to
enjoy a great McDonald’s experience. They are introducing drive-thrus to the
increasingly mobile populations in China and Russia, while in the U.S. and Canada,
greater drive-thru efficiency and double drive-thru lanes enable them to serve even more
customers quickly” (McDonald's, 2008, 13). In Germany, McDonald’s has a reimaging
program that includes adding about 100 McCafes. They are also installing new kitchen
operating systems so that they can continue to deliver high food quality. McDonald’s has
already renovated about 10,000 restaurants world wide. They want their restaurants to be
an expression of their brand. The company is also delivering greater value to the
customer with new menu selections. “By serving a locally relevant balance of new
products, premium salads and sandwiches, classic menu favorites and everyday
affordable offerings around the world, they create value for customers and satisfy their
demand for choice and variety” (McDonald's, 15).
Types of marketing mix that McDonald’s use to achieve their marketing goals are longer
operating hours, everyday value meals, and optimizing efficiency in the drive-thru.
McDonald’s also uses marketing campaigns. In 2007, McDonald’s used the Shrek movie
to give children a choice between milk, fruit, or vegetables as part of their Happy Meal.
In addition to their commitment with children, McDonald’s is building their brand image
“with innovated marketing transporting ideas across borders and using i’m lovin’ it to
deepen their connection with customers who love their food and the unique McDonald’s
experience” (McDonald's, 2008, 17). In the 2008 Olympics held in Beijing, McDonalds
offered the Beijing Burger, Carmel and Banana Sundae, and Rice Sticks. They featured
nine Olympic and Paralympic athletes on their packaging. In Australia, McDonald’s held
a marketing campaign where the people could decide what name to give its new
hamburger. The name that won was Backyard Burger. With marketing campaigns like
these, McDonald’s is trying to create a better brand image.
Other organizational and marketing strategies are “creating stronger bonds of trust by
being accessible and maintaining an open dialogue with customers and key stakeholders”
(McDonald's, 2008, 27). The company is reinvesting approximately $1.9 billion into their
restaurants primarily to reimage existing restaurants and build new ones. McDonald’s is
also moving towards a more heavily franchised, less capital-intensive business model.
Although in some countries, such as China, this is not permissible due to governmental
laws.
With McDonald’s growing global brand image and its emphasis on the five factors of
exceptional customer service, this should help them increase sales and net income. With
the initiative of remodeling and upgrading existing franchises, this will give the customer
a more pleasant and friendly place to dine out at. With McDonald’s marketing campaign
for the 2008 Olympics, they were an integral part of the games and this only enhanced
McDonald’s brand image in a positive way. With the recruitment and training initiatives
for current employees or future prospects, this will allow McDonald’s to achieve less of
an already high turnover ratio.

TOYOTA

Analysis of marketing of Toyota:

Toyota manufactures cars, which has a wide coverage from economic minibus to
luxurious cars, SUV. The brand on sell includes Crown, Reiz, Vios, Corolla, Coaster and
Prius. And Prius is the brand or car that Toyota has made a significant success in
American market. It is a hybrid vehicle. What are the characteristics of it?
Hybrid vehicles have both a gas engine and an electric motor. When starting up or at very
low speeds (under 15 mph), the auto runs on the electric motor. At roughly 15 mph, the
gas engine kicks in. this means that the auto gets power from only the battery at low
speeds, and from both the gas engine and electric motor during heavy acceleration. When
starting up and operating at low speed speeds, the auto does not make noise, which seems
eerie to some drivers and to pedestrians who don’t hear it coming!
Then, have a look back at Toyota’s history to find new Toyota has made its way to
America. In 1957, Toyota exported to America at the first time and established the selling
company. In 1984, a joint venture was established with General motor. Co. And in 1997,
Prius was first in production and had a launch in America. It was such a great success that
Toyota conquered American market. To dig into the reasons, it was largely contributed to
the micro and macro environment at that time.
First, let’s have a look at micro-environments. We all know that American love cars so
much. And due to oil crisis, Americans changed the need structure for cars, converting
their needs to oil saving cars. While American car manufactures lacked producing such
cars, then Toyota caught that opportunity and tried to occupy this niche market.
Toyota’s competitor at that time was Honda. It started to develop the hybrid car almost at
the same time as us. It introduced the insight. Afterwards, but It didn’t sell well because
of its poor design. As a result, Toyota got the first place in America. However, Toyota
had no competitors in local at that time. GE and Ford were followers later.
In the macro environment there are many young men who love technique and pursue new
technology products. And they are also highly educated and so have a strong
environmental protect spirit. And Prius is just the combination of the concepts of
environment and technology. Other factors are natural resources and pollution. Before the
environment problem and energy crisis come into people’s attentions, Toyota began to
research and develop the hybrid cars with a long term view, which was designed to
reduce oil consumption and gas emissions.
In a country where everyone was ecstatic when governments raised speed limits above 55
mph, why would the Prius be so successful? For the first model, the answer lies in
Toyota’s clever marketing campaign. To begin with, it wasn’t aimed at the mass market.
Instead, Toyota thought that the first hybrid buyers would be “techies” and early adopters
(people who are highly likely to buy something just because it’s new). The company was
right. Once Toyota identified the target market, it was able to educate the right consumers
2 years before introduction. The company established a Web site to distribute information
and set 3-brochures to 40,000 likely buyers just before the introduction. The press was
also excited about the technology. Auto magazines, and even general interest media, ran
articles describing, enthusing, or belittling the hybrids. All of this coverage helped
Toyota sell 1,800 cars immediately.
In all, Toyota spent $15 million in 1997 touting the Prius. There were print ads in
magazines such as Newsweek and Vanity Far, but the bulk of the campaign was in
television advertising on channels such as Discovery, the History Channel, the Learning
Channel, and MSNBC. These ads helped to position Toyota as an “environmentally
concerned” company and more subtly stressed the technology aspect of the car. After all,
Americans love technology and are quick adopters of it.
After introduction, the ads appealed more to emotion with taglines such as “When it sees
red, it charges”——a reference to the recharging of the battery at stoplights. Such ads are
based on ambiguity where the headline attracts attention because its meaning is not clear.
The consumer must process the information in the ad in order to interpret it. The result is
higher ad impact and longer ad recall. Toyota also took advantage of the environmental
appeal by sending out green seed cars shaped like Toyota’s logo to prospective buyers on
Earth Day. They also wrapped some Priuses in green and gave away cars at Earth Day
events.
Much of the Prius’s success is based on correct identification of the target market. Many
early purchasers were attracted by the technology, began to modify cars, and shared their
experiences through chat rooms such as Priusenvy.com.
Even though the Internet played a major part in the Prius launch, Toyota does not sell the
car from its Web site. Buyers go to www.prius.toyota.com online to look at colors and
decide on options such as CD players and floor mats. After that, the dealers get involved,
but it takes specially trained salespeople to explain and promote the Prius. Therefore,
Toyota is planning to launch and educational campaign aimed at salespeople and
consumers.
Strategies after the year 2004
Enlarge the market
1. Launch a new product.
As more and more people accepted the new Hybrid vehicles, Toyota decided to enlarge
the market, from the market of techies and adopters to a wider market. In order to reach
this purpose, Toyota launched a new Prius.
The new Prius improved styling, performance and gas efficiency. It is a sleek, Asian-
inspired design including seven colors. Inside the Prius, there is a stubby switch to
engage reverse or drive and a push button that turns everything on. A 7-inch energy
monitor touch screen displays fuel consumption, outside temperature, and battery charge
level. It also explains whether you’re running on gas, electricity, regenerated energy, or a
combination of these. There are also screens to show how much electricity you have
stored and to arrange your air conditioning, audio, and satellite navigation system. The
interior is roomy and practical, with plenty of rear legroom. There are many storage space
cubbyholes and shelves in the front, as well as a deep dashboard which leaves ample
space for maps, books, and even your lunch. The CD player holders six discs.
2. Large promotion
To launch the new Pirus, Toyota spent more than $40 million dollars spread over media
in more consumer-oriented magazines and TV. The promotion is successful, as Prius
sales are up 120 percent and have reached 28000 units in 2004.
3. Relatively moderate price.
Because of the “environmentally friendly” aspects of the car, there are government
breaks on the car. The federal government gives a $1500 tax deduction, and some states
allow single-occupant hybrids in HOV (High Occupancy Vehicle) lanes. Although the
federal deduction will be phased out in the near future, other bills are pending to extend
the tax break based on greater fuel efficiency and lower emissions from vehicles. So
compared SUV cars there is a relative low cost because of the tax relief, and the price is
moderate.
4. Increased production from external incentives
Because of the rising gasoline prices, the demand for Priuses increased. Sales of full-
sized SUVs such as the Ford Excursion and Expedition and the Lincoln Navigator
suffered a sharp drop. The increased demand can be seem from the long for 6 months or
more waiting lists. Spots on dealers’ waiting lists were even being auctioned on E-bay for
$500. Toyota increased monthly production of Prius from 7500 to 15000, but just
alleviated the shortages. During this time, the reputation of Prius increased and the sales
increased a lot. However, though the excess demand for Prius, Toyota had no plans at
that time to start production at a second plant, perhaps because he couldn’t predict how
long this high demand would last.
The new Prius made Hybrid familiar to the common consumers, the target of enlarging
the market has reached. However, as the excess benefit exists in this market, there must
be competitors coming in, and because of the internal learning curve. What strategies will
Toyota make to offend these competitors?
Bring Hybrid to a luxury car level
After Toyota’s success in Hybrid car, many competitors came up. Honda is another
Japanese automaker. Ford began production of a hybrid model of the Escape SUV, giving
consumers a choice of a hybrid or regular model. To promote the hybrid, Ford began an
environmental print campaign built around mileage, emissions and other environmental
concerns. GM is following the similar strategy, putting hybrid technology in vehicles that
use the most gas. It has also developed a hybrid model of its Silverado truck.
Although so many competitors come up, they are followers. Toyota is still the market
leader because of its more mature technology than other automakers and the reputation it
made and because Toyota is the first to come into this niche market. In order to keep its
advantages Toyota keeps on updating its technology and its Lexus division introduced a
Lexus SUV hybrid, moving Hybrids up to the luxury car level.
Thus, Toyota has a big jump on US automakers who have only dabbled in this market at
that time. So hybrid has taken a seat from medium car level to the luxury car level and
until now Toyota is updating the hybrid technology and improving the performance of
the hybrid car. Now the newest model is 2008 Prius model. The effort of Toyota makes
common consumers remember Toyota every time someone mentions hybrid.
Now in the car market, most people still like stockcar racing, and SUV vehicle is still
appealing to people’s taste. But as the gasoline price increases these years and people’s
environmental protection awareness hances, the hybrid car which brings fuel efficiency
and low emissions will become more and more popular in the future. And the
competition will become more and more violence. So Toyota should keep on producing
hybrid cars and updating technology.

Suggestions:
Do more market research so as to predict the demand more precise and make suitable
production. This can also increase the reaction speed to the changing market so that the
large shortage and excess demand is less likely to happen.
Build a new plant to produce hybrid car because of its promising future, which is from
the prospective in the meeting of late 2004.
Prius04
When a new version of Prius which is improved from the old one is launched, Toyota
also consider a lot of macro- and micro-environment factors to establish their marketing
strategy. Micro-environment factors usually contain the company, suppliers, marketing
intermediaries, customers, competitors and publics, while macro-environment factors
usually contain demographic, economic, natural, technological, political, and cultural
environment factors. As for different companies, these factors have various levels of
influence. And Toyota also has some particular factors which are more important and
need closely monitored. We discuss such factors in detail in the following paragraphs.
Micro-environmental factors
The company
The slogan and concept of Toyota express explicitly that Toyota is always pursuing the
product which is environment-friendly and fuel efficient. As the previous version, the
new version is also continued to use this concept and the improved Prius is in accordance
with the company’s image perfectly.
Suppliers
There are not some apparent elements changed from the earlier period, so this factor
does not contribute much to the decision making about marketing strategy.
Marketing intermediaries
Compared with 1997, the intermediaries are more familiar with the product and can sale
it more efficiently. However, this is also not a very important factor since it does not
change too much.
Customers
The customers are more familiar with such new environment-friendly product and
accept the concept. From the past promotion and the practical driving experience of
customer, they have form a quite stable and growing market for the new version of Prius.
This factor is more beneficial than the prior years when the product was first introduced
to the market.
Competitors
 Changes in this factor are quite important to the strategy decision. There arise some
competitors in the market, such as Honda, Ford, GM. So the competition in this market is
fiercer than before. Toyota should monitor its competitors closely and try to predict their
marketing strategy and establish the reaction plan.
Publics
Until now, It seems that the public always appreciate Toyota’s concept since Toyota
emphasis on the new technology and environmental protection idea which is in the
interest of the public.
Macro-environmental factors
Demographic environment
There are more educated people nowadays and this trend will continue in the
foreseeable future. It is a factor that has no changes compared to prior years.
Economic environment
This summer, the price of gas has climbed to the record high level. And the experts
predicted that such price rising is not temporary but permanent. It is likely that the price
will rise further, so the demand of the hybrid car which can use fuel more efficiently is
growing. Toyota’s new product can meet such growing demand exactly. Such changing
factor certainly contribute a lot to the decision-making process of marketing strategy.
Natural environment
Since the resource is limited, it enhances the need of the public to find substitute
resource and the need to use the fuel more efficiently. So Toyota’s product suits the need
of the times well.
Technological environment
Toyota has already been the top producer of the hybrid cars and although the other
producers are providing the similar products, their technological ability is still far behind
Toyota. However, Toyota needs to further enhance their leading position and keep up to
date about any technology changes.
Political environment
This is the most important factor in the macro-environment. The government has already
given the tax incentives to the people who purchase the hybrid car that they can enjoy the
tax deduction of $1500 when they buy it. Although such benefit will be out of date
recently, there’re more other tax incentives which are under discussion and probably to
be approved by the government in the near future. Furthermore, some states even provide
the exclusive lane for the hybrid car in some highway. All these favorable government
policies give more incentive for the public to purchase hybrid cars. So Toyota should take
advantage of this factor.
Cultural environment
Cultural factors are not changed so much and generally the culture of the public shows
that the hybrid concept is well accepted.

Suggestions:
about product
Since the hybrid car is more complicated to use than traditional ones, Toyota should try
to simplify the use by advancing the technology. Although Toyota has already taken the
lead in this field, it should further enhance its research and development ability.
about distribution channel
Now the website of Prius only provides the display function of different versions of Prius
for people to have a look. The company designed the website in such a way several years
before because Prius was new to the public and the public will not buy it directly through
the website. However, now we consider it appropriate that the website should provide
further service such as the on-line sale since the public are familiar with the Prius now
and are willing to buy it through website to reduce their cost of purchase.

NOKIA
Marketing Analysis of Nokia

As I sat around and pondered for 6 and ½ weeks, what I was going to do for my
marketing analysis it finally hit me. I needed to write about something even if I did not
have a passion for it. I chose to write about Nokia, the world leaders in mobile
telecommunications. Everyone has a mobile phone in some way, shape or form and I
thought I may do well. The need a mobile phone has satisfied are there is no need to
stay by the phone to wait on an important phone call if there are other errand that need to
be done, access to the e-mail without having to search for a computer to accomplish this
goal, easily able to contact children if they are involved in after school activities, and just
a wide variety of fulfillments. There is always a history behind a successful company
and I thought that I would start there.

In 1865, Fredrik Idestam, an engineer built a wood pulp mill in southern Finland and
starting manufacturing paper and other paper goods. Due to the high European demand
for paper Nokia became very successful. The hydroelectricity that the wood pulp used
attracted Finnish Rubber Works and they form a factory in Nokia, Finland. Also during
that era Finnish Rubber Works started using Nokia as their brand name. As time passed
a great deal of Nokia’s products were exported to Russia, United Kingdom and France.
To back up a little Finnish Rubber Works manufactured rubber products such as tires,
industrial parts, raincoats, and much more.

After World War II, Finnish Rubber Works purchased nearly all of the Finnish Cable
Works shares and consolidated into the Nokia Group by 1967. The Finnish Cable Works
manufactured cables for telephones and telegraphs. By this time Nokia had established
global success in telecommunications. In 1960s, Nokia Group also established Cable
Works Electronics department which started to research semiconductor technology and
also generated 3% of all Nokia Group net sales. Nokia started to develop a digital
mobile telephone technology called Nokia PX200 in the 1970s and 80s since analog
telephone switches had long been invented. Around this same time new laws allowed
Nokia to set up mobile networks for car phones and as a result formed Nordic Mobile
Telephony. By early 1991 Nokia was using the digital technology or global systems and
selling its product in 9 European countries then by August 1997 expanded to be the
telecommunications company we know today and selling expanded to over 31 countries.
Did you know at one point in time Nokia was also the largest information technology and
television manufacturer in the Nordic counties? (1)
Now after all that boring stuff let get on to more boring things! I am going to spend
sometime talking about the 4 P’s of marketing that Nokia used and what I think may need
a little improvement. In the marketing mix the 4 P’s stand for price, place, promotion
and product. I will start with price.

Nokia’s current marketing strategy is to produce new phones and sell them at a high
introductory price then after about 4 months to then drop the price to be more competitive
with others. The quality of a Nokia phone also allows them to price slightly higher in
the beginning because of the brand name.

Next is the place of distribution. Nokia normally sells their phone at mobile phone
dealerships and anywhere electronics are sold. Nokia states, this will allow for a phone
to remain a limited edition if only sold at limited supplier which will encourage younger
consumer to buy them.

Promotion is something different when it comes to Nokia. In their advertisement they

never really promote just one type of phone at a time like LG or Samsung. Nokia will
just use one advertisement and show all of their phones and limited features hoping the
consumer will go venture for more information or do some internet research on a
particular phone. This also allows for saving and possibly more money to advertise
more often.

Last but not least is product. I could not pick just one item because like I just state
Nokia markets their entire new product at one time, I did not want to single out just one
phone. All of Nokia new phones usually have the latest technology because they are
always working on new innovation and normally have phone features the consumers
love. Not only do phone generate 41.1 million dollars in Europe alone so does all the
accessories you will purchase to make your phone stylish and unique to your personality,
like changing the color of the face of your phone or getting a different phone case.
Selling accessories for your phone generate massive sales figures for Nokia.

Nokia’s marketing also target younger consumer ages 13 to 19 years old and its target is
currently very successful. They believe this will only last until 2009 because then their
teenage target will be older and then they will reposition their aim. I think all Nokia has
to do to reposition their market is to just make phone must more easier to operate for the
older not a computer savvy consumer.

In 2006, Nokia established its focus on five key areas. The five areas are creating
winning devices, embrace consumer internet services, deliver enterprise solutions, build
scale in networks and expand professional services. In addition, Nokia plans to invest in
and prioritizes three strategic assets. The three areas are brand and design, customer
engagement and fulfillment, and technology and architecture. (2) I also discovered
Nokia uses competitive and penetration pricing as a pricing strategy. This is proven to
be very effective. The total mobile device volume of Nokia during 2006 was 347
million units, which represents growth of 31% compared to 2005. Based on the global
market volume their estimate market share is 36% for 2006 compared to 33% in 2005.
As I began doing this research I concluded I am still clueless about what really needs to
be in this analysis. I guess it time for my opinion on the subject matter. Let me begin
with pricing. I like the fact that Nokia is positioned 6th most valued brand in the world
according to Business Week and Interbrand for their annual rating. (3) I also concluded
that if the price is just a little higher than other brand I would wait until the price went
down if it were a product I want because I know that it will be worth the wait. As fair as
pricing is concern if the target market is teenagers I believe they should lower their
prices. Especially if they want the sales to go up for their target market. So if Nokia
changed their pricing strategy to demand based pricing or market skimming for certain
products then what would they have to lose.

Next is place of distribution. I know that Nokia should continue to sell their phones in
the same arenas they have already selected to sell their products. I know it sound far
fetched but maybe they could expand the markets by selling phones not just in mobile
phone dealerships or stores with major electronics sections but if they tried to sell pre-
paid phone in everyday place like a convenience store or grocery stores will increase sell
too. In those types of stores there is no other competition and maybe they will target
more women and children to increase sells.

Promotion, promotion, promotion. I guess I would increase advertisements in

magazines, newspapers and on the internet. Nokia does a lot of sponsored event which
also create advertisement. I think Nokia should do most of it advertisement in the
Sunday newspaper across the nation because that is the paper most people purchase.
Nokia should also place more commercials on channels like BET, MTV and VH1 if they
are continuing to target teens. If they want to target business professional add some
advertisement in the Forbes or People magazines. Whomever they want to target for a
particular items should be promoted by what society wants. Starbucks and other coffee
shops should really have fliers or something do to the vast majority of people who enter
that place or billboards.

Then there is product. I just recently purchased a Nokia mobile phone and I personally
thought that it did not have the additional features my Motorola had. As I learned all the
features of the phone I am finding that those features I thought were missing are just
under a more complicated submenu or very different name. It took some getting used to
but I finally figure it out. Will older people like it? Maybe not so I understand now why
Nokia targets younger consumers because there is a lot of learning when you purchase a
new phone. Nokia was also one of the first companies to introduce the 3G technology.
Innovation like 3G is what keeps them on top of their technology. 3G or 3rd generation
cell phones are a technology that allows a user to have modern equipment and features
that are normally done on a computer. As the future approaches Nokia has also come
out with models of phone so easy that they have one button calling that parents have to
program for their children to handheld computer so the business person on the go.

Next I will talk about the SWOT analysis, which is also a factor in some of the decisions
of Nokia marketing. SWOT stands for strengths, weakness, opportunities, and threats. I
looked on the internet and some of the strengths for Nokia are being a dominant player in
the smart phone market, 36% market share and still the largest cell phone vendor, 6th top
brand in the world. Weaknesses are Nokia has the tendency to produce the newest styles
slowly and Symbian is giving Nokia a bad image. Some opportunities are the increase
their presences in new markets like India and other countries that are expanding their cell
phone and getting leverage or preference and stronger positioning with carriers. The
threats the have listed is the fact that they were late coming out with 3G which could
have probably displaced them from being the leaders in the industry and the Asian
countries are entering the market very aggressively with their own products. (4)

In conclusion, I do not think there is too much to improve for Nokia since the market is
overwhelmed with all the other mobile phone companies in the world. Nokia should
stay the way they are with the different levels of technology they have availble from easy
to use to the most complex mobile phones. A lot of a company success depends on the
perception the consumer has on the brand name. So far Nokia seems to be very
successful and besides branching out into different venue to market I would not change
too much about their marketing strategy.

Sony’s Marketing Stategy for the Mini-Disc

EXECUTIVE SUMMARY

Sony has changed the way that the world listens to music. They introduced the
Walkman, the Compact Disc and now the MiniDisc.

Developed in the late 80’s the MD was introduced into Japan in 1992 that saw an instant
success. The same year the MD was introduced into the United States.

The MiniDisc was a product that was new to the world. It was the first time that that 74
minutes of music could be recorded then re-recorded over and over again without losing
any of its near perfect digital sound quality, on 2 ½ inches.

The target market in 1992 was described as the ‘MTV Generation’ but the MD failed to
impress and was therefore re-launched in 1994. The main reason for failure here was
due to very high prices and not enough information to the public that the MD was not a
replacement for the CD, which had just been introduced, but a replacement for the
cassette.

It was then re-launched again in 1996 and again in 1998. The target market was defined
as 18-34 year olds with a higher than average income, who purchased more than twelve
CDs per year. With each re-launch prices fell greatly.

The main reasons for the failure of the MD in America were the high prices and the
product launch. Sony then had to spend millions and millions of dollars trying to
convince its target market- the young, cool people of the USA that the MD was the way
of the future.

However, competition from the likes of the MP3 player has seen Sony introduce a cable
called the PC-to-MD that allows PC users to download their digital music stored on their
computers onto a MD. Also new long play MDs mean that 340 minutes of music can be
stored onto the same 2 ½ inches of plastic.
1.0 INTRODUCTION

The chosen product for this report is the Sony MiniDisc.

Founded in 1946 by Masaru Ibuka and Akio Morita, Sony opened for business in an old
department store in Tokyo with 20 employees.
In the beginning the company tried its hand at any work that came in its direction such as
electrical repairs and maintenance, whilst still trying to build its own products. In 1950,
the company had major success when they introduced Japans first tape recorder and
obtained a licence to make transistors.
Since then Sony have went on to have major success and have introduced many world
firsts. Examples included the first colour television in 1968, personal stereo (Walkman)
in 1979, the 3 ½” floppy disc in 1989, the CD player in 1982 and the first camcorder in
1993.

Today Sony has transformed itself from a small electronics company to an international
entertainment company with over 138,000 employees world wide (Sony, 1998) and an
estimated annual global media spend of over $1.5billion making the company the worlds
11th biggest advertiser. (www.mind-advertising.com)

Sony has changed the way in which people listen to music with the introduction of the
Walkman, the CD and now the MiniDisc. The MiniDisc was launched successfully in
Japan in 1992, however in America the market proved to be less receptive. Re-launched
in 1994, 1996 and again in 1998, only now the MD is growing in popularity.

Sony intended the MD as a replacement for the cassette. This proved to be a success in
Japan but the opposite in the US. This could be due to the fact the MD was viewed by the
American market as a replacement for the CD, which at that point was still in its early
growth stage.

Although 80% of Sony’s new product activity is through modifying and improving
existing products (Trott 1999), the MD was a product that was ‘new to the world.’ It
was the first time that 74 minutes of music could be recorded on to a 2 ½“ disc time and
time again without the loss of quality.

Products competing with the MiniDisc include the digital compact cassette, which was
also introduced in 1992 by Philips and Matsushita, CD–R and CD–RWs, MP3 players
and the most recent competitor to be introduced into the market is DVD audio

2.0 MARKETING STRATEGY

2.1 TARGET MARKET

When Sony introduces a new product, they do not believe in product research before the
launch. They believe that if the product is going to be a success, the customers will
decide. (Sony, 1998).
When the MD was introduced in 1992, the target market was the ‘MTV Generation’
(Trachtenberg, Wall Street Journal, 24/07/98). Due to the fact that the first and second
launches was extremely unsuccessful, a Sony executive –Mark Viken, admitted that for
the third launch, Sony had done its research and that the target market was people aged
18 to 34, who buy twelve or more CDs a year and who have a higher than average
income ($50,000). In 1998, 3.5 million people in the United States fitted into that
category.

2.2 PRODUCT

The MiniDisc looks similar to a CD but is half the size (2 ½ “). It is magnetically
encoded that makes it more shock-resistant than the CD. Sony developed a system
called the Adaptive Transformer Acoustic Coding (ATRAC) which only records audio
sounds and then compresses them, thus enabling 74 minutes of high quality music on one
small disc.
The MD is similar to a computer disc in the fact that the music is stored in segments, and
has a table of contents. This enables the user of the MD to edit and erase whole tracks or
even just small sectors of specific songs.
Today, a MD Walkman with batteries weighs on average between 83g and 142g.
The latest innovation from Sony is that of a network MiniDisc that can be connected to
laptop computers, and also a PC kit that enables users to download digital music files
stored on their computers hard drive on to a MiniDisc.

2.3 PROMOTION

With a product that was such a major success in Japan, Sony knew they had a world-class
product.
December 1992 saw the launch of the MD in the USA. This proved to be a failure.
This was because of the high prices aimed at a young market, and the CD was still in the
introductory stage of its product lifecycle.

Two years later in 1994, the MD was re-launched and named The Media Blitz Campaign.
It was regarded as one of the biggest ever music giveaways. It lasted eight months and
saw extensive magazine advertising. The Rolling Stone Magazine published coupons
redeemable for MiniDiscs and had a giveaway program called ‘Sony Mini Music.’ It
gave those who purchased a playback model, $300 of MD music. Sony also gave away
over a million MDs.
Although MD sales had rose to 400,000 units being sold (Seong-Shin Hong, 2000), it was
still a considerable amount less than the million units sold in Japan in the same year.
Sony concluded that the reason for this is that people saw the MD as a replacement for
the CD and not the cassette as intended.
A factor that made things far more difficult for Sony was the lack of support from the
record companies. They did not support pre-recorded MDs due to the lack of demand
from consumers.
Support from Sony Music and also Time Warner meant that by 1999, there were only 500
pre-recorded MDs available compared to thousands of CDs (Seong-Shin Hong, 2000).

1996 saw the third attempt by Sony to increase America’s awareness. Entitled ‘Where
the Music Takes You’. Sony’s Vice-President of Personal Audio, Robert R. Nell stated
that this was the ‘most aggressive and largest advertising and promotional campaign that
has ever been conducted by Sony’. The focal point of the campaign was declining
cassette sales and that the MD was not a replacement for the CD

‘The horse, the automobile.

The typewriter, the computer.
The cassette tape, the digital Recordable MiniDisc’ (Sony 1996)

Nell stated that 50% of Sony’s total print advertising was spent on the MD.
1996 also saw more of a focus on portable MD players.
At this point Sony believed the only reason for poor sales in the US was due to poor
marketing.

1998 was dubbed ‘ The Year of the MiniDisc’. By this time only 25% of American adults
were aware of its existence (Wichner, 1999). However Mark Viken announced that this
was to be the ‘biggest campaign in audio history of the US’. The LA Times estimated
that Sony would spent $30 million on the campaign including standard print, tv
advertising, retail promotions, sponsorships and co-branding opportunities.

Increased competition from companies such as JVC, Sharp and Pioneer meant that there
was more support for the product that saw sales increase.

Since 1992 Sony worked hard to try and convince the US market that there was a need
for the MD. The main aim of the marketing from the beginning was to show people that
the MD was a cool product, which was the way of the future and is a product that fits into
our new digital age.

In 1987, the Smithsonian Institute in Washington DC recognised the Walkman as a

cultural icon, and so since 1996 when the main focus of the campaign was the portable
units of the MD player, Sony have tried to focus on the points that made the Walkman so
successful.

With a redesigned Walkman logo, Sony has highlighted many similarities and differences
between the MD Walkman and the original. Also the use of the Sony Walkman brand
name has been used to suggest that the MD Walkman is an upgrade of the original for the
future.
With adverts such as ‘go create’ and ‘create the soundtrack to your life’ the MD is
aimed at the fashion conscience, youth culture and to ‘cool’ people emphasising features
such as portability, mobility, edit features and superior sound quality.

Finally the American people are becoming aware and converting their cassettes to MDs
with sales up 35% between 1999 and 2000. ( Iverson, 2000)

2.4 PRICE

Each time Sony re-launched the MD prices were cut as they realised that the price was
limiting sales, however they were also aware that it would take sometime before the MD
would become affordable to the public.
Sony used a price-skimming strategy charging the highest possible price for the MD.
This strategy worked in Japan. Due to the fact that in Japan CD prices are extremely
high, it was more cost effective for the Japanese to buy a MD and to then hire and copy to
MD.
Demand therefore increased allowing the price to fall due to economies of scale.

In America on the other hand CD prices were low and therefore there was no demand for
a high-quality recording device.
Another theory is that the people of America have less disposable income as they tend to
spend more on real estate and larger products for the home (Popular Mechanic, 1998)

The price of the MD has clearly been reduced since the introduction making the MD
more affordable to the target market. (Appendix 1). Today the cost of a blank MD is less
than that of a high quality cassette.

2.5 PLACE (DISTRIBUTION)

1998 saw an unexpected acceptance of the MD by several large scale retailers who
dedicated displays that were built with Sony’s support. By 1998 over 9000 retailers
were selling the MD.
Sony also has a number of independent dealers who deal only in Sony products.
Products are distributed to these dealers through a central distribution warehouse who
order the products when needed.
MDs are widely available on the Internet too.
3.0 PRODUCT DEVELOPMENT PROCESS

Sony uses an early form of New Product Development for developing products called the
Departmental – Stage Model (Saren 1984).
It is a four stage process that starts with planning, then design, procurement, then
manufacture. (Appendix 2)

When the MD was developed it was a product that would have been a multi-format disc
that could be used to store computer data, play films and play music. However due to
copyright rules in America, Sony whose earlier product Digital Audio Tape which was
required by law to insert a circuit which prevented DAT to DAT copying called the Serial
Copy Management System, Sony decided to make the audio MDs incompatible with
MDs that stored computer data. It is an important fact to note that one of the main
priorities placed on a product in the planning stage is environmental compatibility.
With reference to Booz, Allen and Hamilton’s eight-stage process, this Planning stage
would cover the Idea Generation and the Idea Screening concepts

Design at Sony is organised in a way in that enables the company to make products that
both create and respond to customer needs.

Designers of products are kept closely in touch with cultural trends and cultural practises
within target markets. Showrooms in major global cities such as Tokyo, New York and
Paris are part showroom, part shop and part R & D laboratory. Customers were invited
into lifestyles settings such as bedrooms and offices and are encouraged to touch and
experience new products. Sony staff then monitor their behaviour and preferences.
This information is then sent to Sony HQ who can then refine the design of the product if
necessary and can then develop marketing and merchandising strategies.
This stage would relate to Booz, Allen and Hamilton’s Concept Testing stage, and
Business Analysis stage. It could also cover the Test Marketing stage to a certain extent.

The procurement stage is concerned with what materials will be used in manufacturing
and disassembly, also the environmental impact of the product during use and recycling.
Once these have been considered, the product can then be passed to the manufacture
stage. This stage could be compared with the Product Development Stage.

The Test Market for the MD was in River City, Austin. Sony chose this city as it best
met the four criteria they set – high proportion of 18 – 34 year olds with incomes greater
than $50,000, a tendency to own a CDs and a tendency to purchase electronics. River
City is a music oriented town and met the four criteria with 60% of the population aged
between 18 and 34.
4.0 ASSESSMENT OF PERFORMANCE

There are three key factors that make a successful product – product uniqueness and
superiority, market knowledge and marketing proficiency and technical and production
synergy. (R.G Cooper)

The MiniDisc was a unique product that was highly innovative and new to the audio
market. It allowed customers to have a higher quality recording device that would last
longer and is more reliable than competiting product (cassette).

Cooper stated that a product is successful where the market oriented activities were
expertly undertaken were more successful, especially if the firm has a sound
understanding of the market. A great understanding of the marketplace with an effective
launch is vital to new product success.
Sony failed to have an effective product launch, not once, but three times.
There are also three barriers to success. These are having a high priced product, being in
a market with many new product introductions and being in a competitive market where
customers are already well satisfied.

The MiniDisc was a extremely high priced product in the US audio market, a market
where new models are constantly being introduced by a number of competitors. The CD
was still in its growth stage and therefore consumers were already satisfied both with the
cassette and the CD.
5.0 CONCLUSIONS

Nearly ten years after its first introduction, today the American market are finally
responding, and taking interest in Sony’s MiniDisc.

The MD was an instant hit in Japan, which proved to Sony that they had a world-class
product – if they could satisfy Japan, then the rest of the world should also respond.

Overall I feel that Sony’s introduction of the MiniDisc in the United States of America
was a failure.

The main reasons for the failure of the MD were the high prices and the product launch.
The American people saw the MD as a replacement to the CD that had just been
introduced, and not as a digital replacement of the cassette as intended. Sony then had to
spend millions and millions of dollars trying to convince its target market- the young,
cool people of the USA that the MD was the way of the future.

With the innovative ideas such as the MD recording deck on the latest laptop computers,
and the introduction of the PC-to-MD cable which will compete with MP3, the falling
prices, new long-play MDs which can give up to 340 minutes of music on one small 2 ½
inch disc and also Sony’s current advertising campaign – MTV awards, I think that in the
not to distant future the MD will finally become the success that Sony aimed for in the
US market.

6.0 REFERENCES

• ‘Sony Corporation (Japan)’- www.mind-advertising.com

• ‘The Sony MiniDisc’ – Brandon Seong-Shin Hong, 2000
• ‘Now hear this Future’s sound is digital, mini and recordable’ – David Wichner,
Arizona Daily Star, Jan 25 1999
• ‘CD Recorders, MD and MP3 Running Neck, Neck and Neck’-Jon Iverson,
Stereophile, July 10 2000
• www. Popularmechanics.com – January 1998
Harley Davidson Motorcycles

Introduction:

Harley Davidson is a brand steeped in history, heritage and is known as the ‘all
American’ bike. Harley drivers buy a motorbike for the experience, the sensation of
belonging to something substantial, meaningful and authentic, not to get around town or
beat the traffic to work every morning. In this way Harley Davidson has been very clever
in not steering too far away from their niche – American bikes driven for the open road
experience and the image (www.Harley-davidson.com). But perhaps it is time for a
change. Harley Davidson has a relatively low market share in other countries outside of
the USA, not to mention very little market development in emerging economies such as
Brazil, Asia and India.

With the growing global economy, companies are looking for ways to improve their
market share. Many excellent firms have learned how to beat their competitors through
the implementation of new management, marketing, and/or manufacturing techniques. In
order to move into the new age, where the brand is not the be all and end all, but
efficiency and mobility are key, Harley is going to have to adapt its marketing strategy to
continue its growth in market share as well as revenue.

Executive Summary:

Harley-Davidson is still the undisputed leader in manufacturing and selling motorcycles.

Created in 1903 by the Davidson’s a new company established itself as a force within the
motorbike industry (www.Harley-davidson.com). Since then it has come to symbolise
individuality, freedom and rebellion. The Company produces thirty-five Harley-Davidson
motorcycle models. The 2009 figures show that in the heavyweight motorbike market
Harley has a 53% share in the USA and 12% in Europe. In addition to heavyweight
motorcycles, Harley offers motorcycle parts, accessories, and related services. It operates
in two segments, Motorcycles and Related Products, and Financial Services.

Some of the ventures licensed under the Harley Davidson name are:

1. Harley-Davidson motor company, primarily dealing in heavy weight motorcycles.

2. Buell motorcycle company focus is in incorporating Harley Davidson engines in a

performance/sport motorcycles.

3. Harley-Davidson financial services in the form of Eagle Credit Corporation provides

wholesale and retail financial services and insurance to Harley-Davidson customers and
dealers.

1 A Rich History

• Established 1903 by William Harley, and the three Davidson brothers (www.Harley-
davidson.com).

• 1st trademark bike in 1909 (2 cylinder v-twin engine – the fastest bike at the time).

• Became world leaders in the industry by 1920’s (Russel 1997).

• Only survived the Great depression because of exports and sales to the military and
police (Cox 2004).

• Survived WW2 due to military sales then shifted focus to recreational bikes (Cox
2004).

• By 1953 was the only motorbike manufacturer in the USA (www.Harley-

davidson.com).

• 1969 was taken over by AMF (American Machine Foundry) and experienced
difficulties in the 70’s because of Japanese competitors, who offered bikes of better
quality at a lower price, reducing Harley-Davidson sales (Russel 1997).

• In 1951 the company went up for sale, and 13 members accomplished a complete
management buy-out (Cox 2004).

• Adopted a new marketing philosophy that centered on selling community and

lifestyle positioning, rather than simply selling bikes (Russel 1997).This was the turning
point for Harley, which slowly regained market share.

• Established the HOG (Harley Owners Group) in 1983 and the LOH (Ladies of
Harley) a few years later (Cox 2004). This was key to turning around the success

By 2006 Harley-Davidson held half of USA’s heavy weight motorcycle market, and a
third of the worlds – making it the largest producer of heavyweight motorcycles in the
world.

By 2007 there were 1460 dealers in 60 countries. Just over half were in the USA. The
HOG had +/- 1m members worldwide (www.Harley-davidson.com).

Analysis:

1 SWOT Analysis:

STRENGTHS:

• Harley Davidson is an American Icon.

• A strong brand name globally.

 • Mostly bought for recreational purposes rather than for transportation purpose. These
buyers are mostly experienced motorcycle riders (www.motortrends.com). They are
loyalty toward brand, quality, and style

• Has established long-term mutually beneficial relationship with its suppliers.

Excellent relationships with suppliers enable them to ask for cost reducing and quality
improvement (Russel 1997).

• Harley Davidson has developed a long-lasting relationship with employees to ensure

continued success, and joined in community affairs to enhance the company’s image
(Cox 2004).

• Harley Davidson has also developed and marketed a broad range of consumer items,
which not only generated revenue for the company, but also enhanced the company’s
image.

• The HOG (Harley Owners Group) is the largest riding club in the world, and offers
their customers organised opportunities to ride.

• Large numbers of customisations are made on bikes, which is a large source of

revenue for Harley Davidson.

• Repeat business is strong; a large percentage of new Harley Davidson purchases have
owned a Harley Davison previously (Russel 1997).

• Harley-Davidson has designed a wide variety of products based on custom

requirements and uses by customers, i.e. Performance and touring bikes.

WEAKNESSES:

• The price of an average Harley Davidson is relatively high.

• Harley Davidson has yet to enter India and other developing markets, which has a
very large market potential.

• Production of motorcycles is not able to meet the current demand (Russel 1997).

• Weak marketing strategies outside of the USA.

• Harley Davidson was only able to secure a limited market shares in Europe and Asia
Pacific market comparing to a majority market share North America.

• Appear to be weak at attracting new customers to the brand.

OPPORTUNITIES:
 • Europe is the single largest motorcycle market in the world, and demand for Harley
Davidson is the largest outside of the USA (Russel 1997).

• Increasing interest in motor biking by the females is on the rise

(www.motortrends.com).

• Increasing market share in the large portion of younger riders.

• A growing market globally for heavyweight bikes.

• Increasing demand in the USA for motorbikes.

• Opportunities in emerging and developing market, i.e. India, China, Brazil.

THREATS:

• The age of the average Harley buyer is 42 years, and is on the increase (Russel 1997).

• Constraints on production capacity mean that buyers are put on long waiting lists.

• Stronger restrictions globally on emission standards, of which Harley-Davidson does

not meet the required standards in some countries.

• Has encountered some legal problems in India, who have imposed a 60% importing
tariff and other taxes, which substantially increases the price of the bike.

• The upturn of the global economy has been relatively slow, and studies have
indicated that consumer confidence in the economy is directly linked to sales of luxury
items (Russel 1997).

2 Porter’s five forces:

The competitive structure of an industry can be analyzed using Porter's five forces. This
model attempts to analyze the attractiveness of an industry by considering five forces
within a market.

1 The likelihood of new entry

The extent to which barriers to entry exist (www.quickmba.com). The more difficult it is
for other firms to enter a market the more likely it is that existing firms can make
relatively high profits.

Entry barrier is very high in this market, as entry requires a lot of capital (Cox 2004).

Also the market, especially in the USA, is already quite saturated.

2 The power of buyers

The stronger the power of buyers in an industry the more likely it is that they will be able
to force down prices and reduce the profits of firms that provide the product
(www.quickmba.com.

Buyers of Harley Davidson motorbikes are individual customers (Cox 2004), so they
can’t really affect the financial standing.

3 The power of suppliers

The stronger the power of suppliers in an industry the more difficult it is for firms within
that sector to make a profit because suppliers can determine the terms and conditions on
which business is conducted (www.quickmba.com).

Harley Davidson has a wide span of suppliers, for equipment such as steel and electrical
components, so should a supplier decide to increase prices; Harley could easily change
suppliers without majorly affecting production.

4 The degree of rivalry

This measures the degree of competition between existing firms. The higher the degree of
rivalry the more difficult it is for existing firms to generate high profits
(www.quickmba.com).

There is a high degree of rivalry among Harley Davidson and the three other Japanese
competitors in the heavy weight segment.

Also, some of Harley Davidson’s competitors are more diversified, and thus have larger
financial resources. Honda is one such example (Cox 2004).

5 The substitute threat

This measures the ease with which buyers can switch to another product that does the
same thing (www.quickmba.com).

Very few substitutes exist in the Heavyweight motorbike market, which is the Harley
flagship product; however, since Harley is a recreational product, other similar
recreational products such as sports cars are possibly substitutes.

RECOMMENDATIONS:

1 A new marketing strategy for a new era:

Harley Davidson should place a very large amount of energy and resources on expanding
into foreign markets at this point. Research has shown that the Harley has done
exceptionally well in targeting the US market. However, the company did relatively poor
on managing foreign sales. Over the years, Harley built up a strong heavyweight image
over the American market; however this might not fit the global market. When the
company first started up the business, the Harley was developed according to American
taste. They actually did successfully in the US market. However, when they expanded to
globalize the company, they did not do as successful as they did in the US market. They
should do more research on people’s preferences and tastes in the targeted countries.

2 Expanding the Market and product development:

• Harley Davidson does very little mainstream advertising, however to gain some more
market share is regions such as Europe through stronger marketing initiatives (Russel
1997). This should be relatively uncomplicated as Harley Davidson already has a strong
brand name globally.

• By expanding HOG to other regions and countries, like Asia and Brazil, it would
support customer loyalty by engaging with consumers, as well as increase satisfaction
which could increase sales in these regions (Cox 2004).

• Harley Davidson should take sales to developing countries such as India. The
population in these regions are very large so there is huge market potential. Although the
middle class in these regions are on the rise, in order to make products more affordable it
would make sense to set up production plants in India. This will increase profit margins
significantly as it may be a way around the import tariffs as well as logistic costs.

• The global market for female bikers is rapidly rising; it should be a natural
progression for Harley Davidson to customise bikes for female riders.

• Harley’s current consumer market is mainly middle-aged men; however this market
is quite mature at this point (Russel 1997). A new market would be younger riders. They
could be attracted to Harley Davidson with its Buell range of sportier bikes.

• Not only should they target heavyweight motorcycles market, they can also target
sport motorcycles market (Russel 1997). The company could distribute the Buell
Motorcycle Company’s product to the other markets in order to establish a sporty image
and able to directly complete with other manufacturers.

CONCLUSION:

It can be said that Harley Davidson has managed to maintain fierce customer loyalty by
offering more than just the product, but have extended it to involve an experience. It is
one of the most recognisable brands and they need to capitalise on this in order to attract
market share outside of its stronghold, the USA. They need to analyse foreign markets,
especially developing countries where there is high potential of a boom in the market in
the coming years.
Harley also needs to re-position its products to different markets, such as female and
younger markets to gain substantial growth in sales as well as market share. It has long
been realised that Harley Davidson bikes are not driven as a mode of transport, but
recreationally, so by engaging these different markets on that level will prove very
successful. Harley clubs, such as HOG, could be arranged for women who are interested
in riding.

The company has maintained very low key advertising in the past, but perhaps it is time
to build better engagement with the brand, by strategically advertising in certain
magazines and billboards. This should cement Harley place globally as a large, solid and
reliable motorbike manufacturer with the personal touch.

Bajaj Auto Ltd.

Bajaj Auto Limited (BAL) is one of the leading players in the Indian two-wheeler
market, the second largest two-wheeler market in the world.

Background Note

|The Bajaj group was founded in 1926 by Jamnalal Bajaj (Jamnalal). In 1945,
Kamalnayan Bajaj, Jamnalal's son, set up Bachraj |
|Trading Corporation Ltd. (BTCL), a trading company, to import and sell two- and three-
wheelers. This business continued till |
|1959. |
| |
|In 1959, the company secured a license from the Government of India (GoI) to
manufacture two- and three-wheelers. In 1960, BTCL |
|was renamed Bajaj Auto Ltd. (BAL) and the company went public. The same year, it
entered into a technical collaboration with |
|Piaggio for the manufacture of scooters...
|

THE AUTO MOBILE INDUSTRY IN INDIA

External Environment
Industry: Automobiles: Two Wheelers / Three Wheelers
Segments: Presence in all segments
Entry Barriers:
Entry barriers are high.
• The market runs on high economies of scale and on high economies of scope.
• The need for technical expertise is high.
• Owning a strong distribution network is important and is very costly.
All these make the barrier high enough to be a deterrent for new entrants.
Supplier Bargaining Power:
Suppliers of auto components are fragmented and are extremely critical for this industry
since most of the component work is outsourced. Proper supply chain management is a
costly yet critical need.
Buyer's Bargaining Power:
Buyers in automobile market have more choice to choose from and the increasing
competition is driving the bargaining power of customers uphill. With more models to
choose from in almost all categories, the market forces have empowered the buyers to a
large extent.
Industry Rivalry:
The industry rivalry is extremely high with any product being matched in a few months
by competitor. This instinct of the industry is primarily driven by the technical
capabilities acquired over years of gestation under the technical collaboration with
international players.
Substitutes:
There is no perfect substitute to this industry. Also, if there is any substitute to a two-
wheeler, Bajaj has presence in it. Cars, which again are a mode of transport, do never
directly compete or come in consideration while selecting a two-wheeler, cycles do never
even compete with the low entry level moped for even this choice comes at a
comparatively higher economic potential.

Summarizing the industry analysis, it can be said that the two-wheeler market is attractive
as it scores well on three out of five categories.
Key Earnings Drivers
Below are the key factors, which strongly affect the auto industry: -
Government policy impact on petrol prices: Petrol prices determine the running cost of
two/three wheelers expressed in Rupees per kilometer.
Petrol prices are the highest in India as GOI subsidizes kerosene and diesel. But with the
recent change in GOI policy to reduce the subsidy, the prices of petrol will remain
constant at the current prices. This will have a positive effect on purchases of two/three
wheelers.
Improvement in disposable income: With the increase in salary levels, due to entry of
multinationals following liberalization process and fifth pay commission, the disposable
income has improved exponentially over the years. This will have multiplier effect on
demand for consumer durables including two-wheelers.
Changes in prices of second-hand cars: The second hand car prices of small cars have
come down sharply in the recent past. This will shift the demand from higher-end two-
wheelers to cars and affect the demand for two-wheelers negatively. A further drop in
second-hand car prices will lead to pressure on the two-wheeler majors who plan to
release higher-end scooters and motorcycles.
Implementation of mass transport system: Many states have planned to implement mass
transport systems in state capitals in the future. This will have negative impact on
demand for two-wheelers in the long run. But taking into account the delays involved in
implementation of such large infrastructure projects the demand to be affected only five
to seven years down the line.
Availability of credit for vehicle purchase: The availability and cost of finance affects the
demand for two- and three-wheelers as the trend for increased credit purchases for
consumer durables have increased over the years. Therefore, any change with respect to
any of these two parameters as a result of change in RBI policy has to be closely watched
to assess the demand for two- and three-wheelers.

Outlook

The late 1990s saw the popularity of scooters wane and motorcycles emerge as the new
favorites in the Indian two-wheeler market. It was believed that the dramatic shift
happened because players like BAL did not pay sufficient attention to design, R&D, and
customer satisfaction. “The decline of the market for scooters was directly related to
neglect of this segment over decades vis-à-vis critical benefits (mileage), contemporary
technology, and non-stop excitement of launch of newer and newer models offered on the
motorcycles platform,” said Francis Xavier, managing director, Francis Kanoi Marketing
Planning Services.

Bajaj Auto Ltd. (BAL) is one of the oldest and the largest manufacturer of automobiles in
India and has been the market leader in scooters. In 1990s, the near monopolistic market
structure, perhaps, lulled the company into being complacent and they gave way to the
competitors like Hero Honda and TVS.
TVS Suzuki tied up with foreign majors to bring in the latest in terms of aesthetics and
technology, and Bajaj failed to gauge the changing tastes of consumers. In 1990s, there
was a marked shift in customer preference from scooters to motorcycles. Bajaj found
itself at a loss here, as this was largely an unchartered territory.
Here in this work, I started with the industry analysis, company analysis, portfolio
analysis, and then moved on to exploring the strategies adopted by BAL to reinvent itself
and once again become a market force to reckon with in the Indian two-wheeler industry.
The paper touches upon the following areas: -
• Industry Analysis - Five Forces Analysis
• SWOT Analysis
• Tows Matrix
• Marketing Strategies
• Strategies Implementation
• Strategies for Overseas Market
• Research & Development
• Future
• Recommendations
The Company
Bajaj Auto is the flagship of the Bajaj Group of Companies. Bajaj is currently India's
largest two- and three-wheeler manufacturer and one of the biggest in the world. Bajaj
has long left behind its annual turnover of Rs. 72 million (1968), to currently register an
impressive figure of Rs. 81.06 billion.
Current Situation
Current Performance.
• BAL is currently outperforming the industry growth rate in two-wheeler segment with
32% growth in year 2004-05 v/s industry growth of 19%.
• Market share in Motorcycles is improving with every passing year. It has also
increased from 28% in 2004-05 to 31% in 2005-06.
• Annual turnover for the year 2005-06 is Rs. 81.06 billion v/s Rs. 63.23 billion a year
before - an increase of 28% which is very healthy.
• BAL has significant presence in all the three basic segments - Price Segment, Value
Segment and Performance Segment - and has been showing increased sales in all the
segments over years.
Besides this, BAL is a market leader in two-wheeler exports and it consists a great chunk
of there overall revenues. Currently, BAL is selling over 1 lac motorcycles annually in
Sri Lanka, further, they are commanding 50% market share in Central America.
Profile Change in Indian Two-Wheeler Industry
The demand shift from scooters to motorcycles in the 1990s was without parallel in any
comparable product category in India. This was mainly attributed to the change in
customers' preference towards fuel-efficient and aesthetically appealing models, which
scooter manufacturers failed to provide. The delayed launch of new, advanced scooter
models, fear of four-stroke scooters being prone to increased skidding risks and
vibrations, and the difficulty of maintenance also contributed to this shift.
[pic]
nterestingly, the growth in the motorcycle segment was mainly driven by the demand
from rural and semi-urban consumers. An estimated 60% of the demand for motorcycles
came from rural and semi-urban customers. The rise in their disposable incomes on
account of good monsoons in the 1990s provided the normally conservative rural and
semi-urban customers with extra money that induced them to experiment with new,
innovative products.
Shift from Scooter to Motorcycle
|Year |Total In '000 |Overall Growth |Scooter |Motorcycle |
Moped |
| | |
| |Strengths |Weaknesses
|
|Opportunities |Can use the existing R&D capabilities for |Must employ the cash in
production and product capabilities |
| |new models. |to match competitors and for continuous
export growth. |
| |Can use Kawasaki's distribution networks |
|
| |internationally. | |
| |Can invest and grow the life style segments.|
|
|Threats |Increase the customer centric initiatives |Invest in building world class
bikes to sustain the |
| |and command more customer loyalty. |international markets
independently in the coming years like|
| |Improve the efficiency of the financing and |WIND 125.
|
| |the insurance arm. | |
| |Invest in new product platforms. |
|
| |Actively market electric range |
 |
| |internationally. | |

Marketing Strategies
The focus of BAL off late has been on providing the best of the class models at
competitive prices. Most of the Bajaj models come loaded with the latest features within
the price band acceptable by the market. BAL has been the pioneer in stretching
competition into providing latest features in the price segment by updating the low price
bikes with the latest features like disk-brakes, anti-skid technology and dual suspension,
etc.
BAL adopted different marketing strategies for different models, few of them are
discussed below: -

Kawasaki 4S - First attempt by bajaj to make a mark in the motorcycle segment. The
target customer was the father in the family but the target audience of the commercial
was the son in the family. The time at which Kawasaki 4S was launched Hero Honda was
the market leader in fuel-efficient bikes and Yamaha in the performance bikes.

Kawasaki 4S had the punch line "Kyun Hero" means "now what hero" which reflected
the aggressiveness in the marketing front by the company.
Boxer - It took the reins from where the Kawasaki 4S left. Target was the rural
population and the price sensitive customer. Boxer marketed as a value for money bike
with great mileage. Larger wheelbase, high ground clearance and high mileage were the
selling factors and it was in direct competition to Hero Honda Dawn and Suzuki MX100.
Caliber - The focus for the Caliber 115 was youth. And though Bajaj made the bike look
bigger and feel more powerful than its predecessor (characteristics that will attract the
average, 25-plus, executive segment bike buyer), its approach towards advertising is even
more radically different this time around. Bajaj gave the mandate for the ad campaign to
Lowe, picking them from the clique of three agencies that do promos for the company
(the other two being Leo Burnett and O&M). Going by the initial market response, the
campaign was clearly a hit in the 5-10 years age bracket. So, the teaser campaign and the
emphasis on the Caliber 115 being a `Hoodibabaa' bike placed it as a trendy motorcycle
for the college-goers and the 25 plus executives both at the same time.
Pulsar - Pulsar was launched in direct competition to the Hero Honda's 'CBZ' model in
150 cc plus segment. The campaign beared innovative punch line of "Definitely Male"
positioning Pulsar to be a masculine-looking model with an appeal to the performance
sensitive customers. The Pulsar went one step ahead of Hero Honda's 'CBZ' and launched
a twin variant of Pulsar with the 180 cc model. The model was a great success and has
already crossed 1 million mark in sales.
Discover - The same DTSI technology of Pulsar extended to 125 cc Discover was a great
success. With this, Bajaj could realize its success riding on the back of technological
innovation rather than the joint venture way followed by competitors to gain market
share.
Strategies & Implementation
FMCG Business Model
BAL now is taking a leaf out of the FMCG business model to take the company to
greater heights.
Bajaj has kicked off a project to completely restructure the company's retail network and
create multiple sales channels.
Over the next few months, the company will set-up separate sales channels for every
segment of its business and consumers. Bajaj Auto's entire product portfolio, from the
entry-level to the premium, is being sold by the same dealers. The restructuring will
involve separate dealer networks catering to the urban and rural markets as well as its
three-wheeler and premium bikes segments.
Bajaj Auto also plans to set-up an independent network of dealers for the rural areas. The
needs of financing, selling, distribution and even after-sales service are completely
different in the rural areas and do not makes sense for city dealers to control this. The
company also plans to set-up exclusive dealerships for its three-wheeler products instead
of having them sold through an estimated 300 of its existing dealers.
Other Strategic Issues
Cash is strength: Bajaj Auto has been sitting on a cash pile for over five years now. Over
the next couple of years, competition in the two-wheeler market is set to intensify. TVS
Motors and Hero Honda are on a product expansion binge. To fight this battle and retain
its hard-earned market share in the motorcycle segment, Bajaj Auto will need its cash
muscle. A look at its own story over the past five years provides valuable insight.
Delisting worry: What is worrying is that there is an idea to delist the investment
company (also an indirect indication that it would be listed initially). This would be
closing the valve of equitable ownership distribution.

There is a hint of a buyback of shares of the investment company as this is the only way
it can be delisted. The company would not be short of cash to put through such a
buyback.
Factors such as low valuation, low trading interest and the need to provide shareholders
may be cited as plausible reasons for the buyback.
Stake for Kawasaki: Bajaj Auto's attempt to vest the surplus cash in a separate company
may be a prelude to offering a stake to Kawasaki of Japan in the equity of the automobile
company. The latter has been playing an increasingly active role in Bajaj's recent models,
and its brand name is also more visible in Bajaj bikes than in the past.
Better value proposition: Shareholder interests may be better served if the cash is retained
to pursue growth in a tough market. This would also obviate the need to fork-out fancy
sums as stamp duty to the government for the de-merger. A combination of a large one-
time dividend and a regular buyback program through the tender route may offer better
value. A strategic stake for Kawasaki would only positively influence the stock's
valuation.
Strategies for the Overseas Markets
Bajaj Auto looks at external markets primarily with three strategies: -
1) A market where all BAL need to do is distribute through CKD or CBU routes.
2) Markets where BAL need to create new products.
3) Markets where BAL need to enter with existing products and probably with a good
distributor or a production facility or a joint venture.
Earlier, most of the products that Bajaj exported were scooters and some motorcycles.
However, in its target markets, like in India, the shift was towards motorcycles. With the
expansion in Bajaj's own range to almost five-six platforms of motorcycles, it had a better
offering to export, also the reason for its stronger showing. For the last fiscal, 60 per cent
of its exports were two-wheelers and the rest three-wheelers. Of the two-wheeler exports,
close to 90 per cent were motorcycles.
Bajaj has identified certain key markets, which hold potential. Its first overseas office
established at the Jebel Ali free trade zone has been the focal point for exports to middle
Africa and the Saharan nations. Egypt and Iran also continue to be strong markets for
Bajaj.
The other market, which would be a focus area, is South America, where the company
feels it is fairly well represented in most countries, except in Brazil, the largest market.
The company recently participated in a large auto exhibition in Brazil and found good
consumer acceptance to products like Pulsar and Wind 125.
The other focus area is the ASEAN nations, which constitute the third biggest consumer
of two-wheelers. The biggest among them is Indonesia, where Bajaj distributors are
looking to introduce eco-friendly four-stroke auto rickshaws. But two-wheeler market
requires great deal of effort from BAL. Everybody is there with Honda leading the show.
There's Suzuki, Kawasaki and some Korean and Chinese models. BAL should look at the
right product mix for two-wheelers. Bajaj's Pulsar model has taken off well there. It also
wants to develop a new step-through model for the Indonesian market, but for now it will
create a base there with its motorcycle models.
Bajaj has also made a beginning by selling bikes in the Philippines branded in the name
of its technical partner, Kawasaki. The two signed an MoU in February. Kawasaki, a
large multi-product conglomerate, only makes high-end bikes and does not have sub-
200cc models. Kawasaki is marketing the new model, Wind 125, developed by both
companies, in the Philippines. The Bajaj-developed models, Caliber and Byk, which is a
fuel-efficient bike, are also being distributed by Kawasaki. This is a good beginning
strategically for Kawasaki to evince interest in Bajaj products for markets which can still
buy less than 150 cc.
R&D
Bajaj Auto has a huge, extensive and very well-equipped Research and Development
wing geared to meet two critical organizational goals: development of exciting new
products that anticipate and meet emerging customer needs in India and abroad, and
development of eco-friendly automobile technologies.

While the manpower strength of the R&D represents a cross-section of in-depth design
and engineering expertise, the company has also been investing heavily in the latest,
sophisticated technologies to scale down product development lifecycles and enhance
testing capabilities.

Bajaj Auto R&D also enjoys access to the specialized expertise of leading international
design and automobile engineering companies working in specific areas.
Based on their own brand of globalization, they have built their distribution network over
60 countries worldwide and multiplied the exports from 1% of total turnover in Fiscal
1989-90 to over 5% in Fiscal 1996-97.
The countries where their products have a large market are USA, Argentina, Colombia,
Peru, Bangladesh, Sri Lanka, Italy, Sweden, Germany, Iran and Egypt. Bajaj leads
Colombia with 65% of the scooter market, in Uruguay with 30% of the motorcycle
market and in Bangladesh with 95% of the three-wheeler market.
Several new models are being developed specifically for global markets and with these
the company will progressively endeavor to establish its presence in Europe too.
The Future
Although the avalanche of motorcycles offered Indian consumers a wide variety of
models to choose from, it also resulted in increased pressure on the companies to
concentrate on cost-cuts, technology enhancements and up-gradations and styling. Their
margins came under pressure as marketing costs escalated.
The companies were forced to reduce prices and offer discounts to survive the
competition. Moreover, analysts were skeptical about the segment's ability to maintain
the growth rate in the years to come. One of the major assumptions underlying the
motorcycles rush was that if the market was considerably large and was growing at a
constant pace, there was room for a profitable existence for all brands.
Further, the growth in the motorcycle segment was dependant on continuing favorable
market conditions. Analysts claimed that to sustain this growth rate, the segment would
have to completely cannibalize the market for scooters and a considerable part of the
market for scooterettes and mopeds.
Considering the fast growing scooterettes segment, with high demand from female
customers, followed by the moderately growing moped segment and the restructuring in
the scooter segment with major national and foreign players reinforcing their presence, it
was unlikely that the entire growth in the two-wheeler sector would be due to
motorcycles.
Analysts also commented that as the two-wheeler industry had grown steadily for eight
years, stages in the product life cycle would apply to the field sooner, rather than later
and the decline stage would invariably come some day. There was little differentiation
between the brands being launched apart from styling as most companies had introduced
their four-stroke vehicles.
With the failure of the joint ventures, the expected introduction of cheaper Chinese
brands, stringent emission norms and threat from major international players, the survival
of indigenous brands looked uncertain. Constrained with the ruling price levels in the
market place, limited infrastructure and lack of technological innovations when compared
to their foreign counterparts, whether the Indian companies would succeed in generating
the kind of volumes needed to sustain in the competitive motorcycle market, remains to
be seen.
Recommendations
Focus on High Margin Products: Around 50% of the two-wheeler consumers buy high
quality products (products of executive and premium segment motorcycles). Margins on
these products are higher.
BAL should adopt a deliberate strategy of focusing on executive and premium segment
motorcycles and three-wheelers, and is reducing its dependence on lower-end of
motorcycles and scooters segment.
High margin products - Pulsar, Discover, Three-wheelers, Avenger.
Low margin products - Platina, Scooters, Mopeds.
Now with increasing competition in the economy segment and limited scope from cost
saving measures, it is believed this strategy of focusing on higher margin products would
enable the company in retaining its operating margins.
Below are other useful recommendations: -
• Company should keep focusing on the fast growing motorcycle segment.
• In view of the new threat posed by Honda Motors in the scooter segment, the company
needs to review its products line-up and launch new products to cater the changed
demand.
• The company needs to take a look at its ungeared scooters offerings and need to adapt
to the latest trends.
• The company needs to tap the export market more efficiently as there is a huge
potential to make India as the world's two-wheelers production base. For this, it needs to
look for joint ventures abroad.
• It needs to target the young age group more effectively as this group is extremely trend
savvy. The advertising should have a fresh look and the product should live up to the
Gen-X's expectations.

Summary
This assignment report reflects the marketing strategy of the Bajaj Auto, which is India's
the biggest two and three wheeler industry. Successful market depends largely upon
company's ability to manage its marketing programmers within its environment. The
understanding of these environments is essential for the marketers to make future
marketing plans. To cover market Bajaj Auto marketing division makes different
marketing policies and for that market research is done. According to need, want and
demand of the customers marketing policies of the company is implemented .It also
reflects how Bajaj Auto handles main competitors.
Introduction:
Marketing is the front-line business function that identifies customer needs wants,
determines which target markets the organization can serve best, and design appropriate
products, services and programs to
The main target of the company is middle-income family. They encourage them by
providing bike on installment because company concentrates on bike segment. To ride
bikes compared to other two wheelers is easier one and with great comfort.
Market positioning:
After a company has decided which market segments to enter, it must decide what
'position' it wants to occupy in those segments. Market positioning is arranging for a
product to occupy a clear, distinctive and desirable place in the minds of target
consumers relative to competing products (Kotler, Armstrong, Brown, & Adam, 1998,
p196). Today Bajaj Auto Ltd has very good position in two and three wheelers industry
in India.
Conclusion:
Bajaj Auto Ltd understood the microenvironment and

Introduction

In January 2006, Bajaj Auto Limited (BAL), a major Indian manufacturer of two- and
three-wheelers, announced that it had stopped production of Bajaj Chetak, its flagship
scooter model.
The Chetak, a geared4 scooter, had reigned over the Indian two-wheeler market in the
late 1970s to early 1990s and had come to occupy a near-iconic status. According to
Rajiv Bajaj (Rajiv), managing director, BAL, the company had produced about 10
million Chetak scooters before the model was discontinued. In the mid-1940s, BAL
started as an importer of two- and three-wheelers. In the early 1960s, BAL, in
collaboration with Piaggio5, started manufacturing Vespa brand scooters at its plant near
Pune, Maharashtra. With its collaboration with Piaggio coming to an end in the early
1970s, BAL started manufacturing scooters under the Bajaj brand
The Chetak, BAL's first scooter model under the Bajaj brand, was introduced in 1972. In
the 1970s and 1980s, scooters dominated the Indian two-wheeler market. Most middle-
class Indians preferred scooters because of their durability, low maintenance costs, and
versatility, and the Bajaj Chetak name became synonymous with scooters. At that time,
the motorcycles available in India were heavier and not as fuel efficient as scooters. They
were also costlier.
In the late 1990s, the Indian two-wheeler market witnessed a shift in consumer
preferences. The popularity of geared scooters began to wane while that of motorcycles
soared. There were various reasons for the shift – India was undergoing a demographic
change, with the proportion of younger people in the population growing significantly;
the economy was growing, which increased the disposable incomes of the middle class;
also, many newer models of motorcycles, with improved designs and modern technology
had become available in the market. While these changes were taking place in the market,
the features of scooters, especially those of the Bajaj Chetak, remained essentially
unchanged
Consequently, by the early 2000s, motorcycle sales surpassed that of scooters and BAL
lost its title of India's largest two-wheeler company to Hero Honda6. Scooters were
BAL's main products, and when market preferences shifted to motorcycles, the company
was faced with declining sales and revenues.

In an attempt to recapture market share, BAL decided to reorient its business, launching a
series of new motorcycle models, which halted the downward trend in sales. It did not
want to give up on scooters either. It launched new scooter models and upgraded existing
ones.
However, with the introduction and subsequent popularity of Honda Motorcycle and
Scooter India (HMSI)7 scooters, especially the Activa, a gearless8 scooter, BAL lost its
dominance over the Indian scooter market as well.
In 2005-06, scooter sales in the Indian market were around one million units annually,
and consisted predominantly of gearless scooters. In 2005-06, scooter sales in the Indian
market were around one million units annually, and consisted predominantly of gearless
scooters.

Even as it phased out the Bajaj Chetak, BAL was making efforts to regain market share
in the scooter market. In early 2006, BAL announced that it would launch two new
models of gearless scooters in 2006-07. However, with new scooter launches from Hero
Honda and Kinetic Motor Company Ltd.9, analysts felt that it would be an uphill task for
BAL to once again become the largest scooter manufacturer in India.
BAL and the Indian Two-Wheeler Market

Between the mid-1950s and 1980s, the Indian industry operated under what was
popularly termed the “License Raj” . During this period, entities that wanted to produce
two-wheelers were required to secure licenses from the GoI. The production capacity was
also determined by the GoI..

The Turning Point

The early 1990s saw a recession in the Indian two-wheeler market. Overall sales of two-
wheelers declined by 15% in 1991 and 8% in 1992 . This period also saw a steep rise in
fuel prices, which resulted in consumers placing greater emphasis on fuel efficiency
when purchasing a new two wheeler.

However, even as late as 1997-98, the scooter segment was the largest sub-segment in the
two-wheeler market. Scooters, with 42% of the market (in terms of unit sales), were
followed by motorcycles (37%), and mopeds (21%)
By the end of FY 2000, the numbers clearly indicated that consumer preference had
shifted firmly toward motorcycles with four-stroke engines, and industry watchers
predicted that this trend would continue. Geared scooter sales registered a fall of 41% in
2001. “The market has shifted to motorcycles. We will have to follow the trend,” said
Venu Srinivasan, chairman, TVS.

BAL realized, though rather belatedly, that it would have to cater to the changing
consumer tastes and preferences, if it had to survive. Rajiv, who later agreed that BAL
had been slow in reading the demand pattern, said, “See, the company failed to anticipate
the consumer behavior.

the Fall of an Icon

In January 2006, BAL announced that it had stopped production of the Chetak. With this
announcement, BAL closed a major chapter in its history. Rajiv said, “It is a history I
would like to forget. My company has lived too long on nostalgia…holding on to
anything from the past is a sign of weakness.”.

International Business Machine

Executive summary:

IBM created the Software Group in 1995 to pull together all of IBM's infrastructure,
middleware and operational software from dispersed units of IBM. IBM's Software
Group is now a self-sustaining software business, with growth rates, profits and other key
measures in line with other major software companies. In addition, the software group
has services and support capabilities via their development labs (e.g., Toronto, Austin)
and their services via support canters (e.g., Dallas Systems Centre). The Software Group
has the industry's leading portfolio of middleware products. Software Sales Specialists
within Sales and Distribution sell to large customers and over 24,000 Business Partners to
sell everywhere else. IBM Software Group is organized around five brands within the
software industry: Web sphere, Information Management, Workplace, Portal and
Collaboration, Tivoli, Rational. (Understanding IBM, 2007).

1). INTRODUCTION

IBM one of the leader brand of I.T industry which is basically related to computing,
having its arm spreads to almost all dimension of technology weather it is about gadget or
the software. IBM is the world's largest information technology company with 2005
revenues of $91 billion. IBM is the biggest provider of IT services ($47B), hardware
($24B) and rental and financing ($2B). The company has approximately 329,000
employees and conducts business in 170 countries.

International business machine is an I.T giant now days, stretching it hands. The IBM
now a day provides wide range of Data storage devices as well as servers with enormous
storage and secure database. IBM is now aiming for animation, consolidation which
saves wide range physical assets. IBM has also good contribution in the space research
like IBM ThinkPad 750. IBM has established much software for environment
management and protection like in 1999 the environment monitoring software’s. IBM’s
system/390 is the world most powerful main-frame computer. IBM introduced various
cost effective technology like instead of pure silicon chip, introduced a blend of silicon
and germanium. IBM designed the website for Nagano Olympic winter games, the
website made 650 million hits from around the world that is one of the world record.
IBM earns more profit than the next nine computer firms generated in total sales,
spending more on research and development than they made in earnings.

This report is focuses on the new strategies adopted by the IBM and the strategies
through which IBM survived over the competitions. This report shows how IBM states
itself feasible beside of its massive operation size. (Understanding IBM, 2008)

2). Strategic analysis:

Vision statement:

At IBM, we strive to lead in the invention, development and manufacture of the

industry's most advanced information technologies, including computer systems,
software, storage systems and microelectronics. We translate these advanced
technologies into value for our customers through our professional solutions, services and
consulting businesses worldwide.
Mission statement:

IBM main activity is to find solutions to its wide range of clients using advanced
information technology. Its clients are individual users, specialised businesses, and
institutions such as government, science, defence, spatial and educational organisations.
To meet and respond to its customers needs, IBM creates, develops and manufactures
many of the world's most advanced technologies, ranging from computer systems and
software to networking systems, storage devices and microelectronics.(Linch, 1997)

Through this mission statement IBM is striving to dynamically galvanize their props in
various field and trying to maintain a stabilize balance between all above aspect like
clients, government, educational organisation etc.

The main strategy of IBM is to delivers their high value added services (or software) to
customers through their server product. And it can be divided into 4 pieces as follows:

1) Reallocating resources to enhance their server product business and reduce operation
costs and optimize the efficiency.
2) To pursue an innovation agenda with its clients, partners and in other relationships,
and to continue refining its portfolio to achieve higher value.
3) Acquiring businesses that contribute strategically to its portfolio
4) To maintain its leadership of this rapidly changing business by focusing on high-value
innovation-based solutions and services while consistently generating high returns on
invested capital for its shareholders.

The strategy making of IBM should consider whether the new strategy can satisfy these
key stakeholders who have high power. For example, the government element in the
“keep satisfied”, they have high power (legislation power) but low interest. Another
example is the shareholders in “key players”, who have high interest in IBM and high
power on affecting the strategic decision. To sum up, if the strategic decisions threaten
the benefits of the key stakeholders, this strategy might be difficult to be achieved.

Internal Analysis:

Value Chain Analysis

Firm infrastructure:

Supply-Chain Management in IBM, supply chains of IBM are becoming more complex,
harder to manage and more costly to run. In fact, nearly $3.4 trillion was spent on supply
chains in 2005. To address this, IBM is creating a supply-chain management business
transformation outsourcing practice. The Supply chain management (SCM) solutions can
help IBM to improve costs and customer service, while decreasing overall supply chain
inventory. IBM’s (2006) Business Performance Management enables companies to
visualize end-to-end processes across business and IT systems, analyze execution in real
time against goals, and make adjustments as needed. For instance, IBM offers consulting,
services and middleware to simulate and monitor business processes, and provides clients
with real-time analysis of the underlying IT systems carrying out those processes.

Organisation structure:

- Sales & Distribution Group.

- Global Business Services Group.
- Global Technology Services Group.
- Software Group.
- Systems & Technology Group
- Integrated Operations Group.
- Innovation & Technology Group.

HRM:
To
eliminating redundancies and overhead structures to drive productivity, the integration of
HRM has improves IBM's capacity to innovate by providing greater clarity of key
priorities around shared goals and objectives and leads to a sharper focus for the company
on learning, development and knowledge sharing.
Perhaps after this integration, IBM has acquired numbers of companies to enhance their
capability. However the integration issues could appear during the acquisition process
that would be the challenge of the HRM, e.g. the culture conflict.

Technology development:

IBM's research and development, operations differentiate IBM from its competitors. IBM
annually spends approximately $5–$6 billion for research and development, including
capitalized software costs, focusing its investments in high-growth opportunities. IBM
has some of the best technology registered in its account that made revolutionary changes
through-out the many of business operation through huge amount of business data
transferring around the world.

Procurement:

IBM has developed Business Partner relationships with establishment, best-of-breed

Supply Chain Management solution providers. Their solutions, coupled with IBM
products and services, deliver the cost-competitive, scalable and secure infrastructure the
customers need. Acquisitions and mergers in order to improve their businesses on the
high value products and services, IBM acquired service-related companies into the global
services segment, (e.g. Network Solutions, data storage and transferring, mainframes etc)
and the software-related companies that were integrated into the software segment.

Inbound & Out bound Logistics and Operations:

IBM's supply, manufacturing and logistics and customer fulfilment operations are
integrated in one operating unit that has reduced inventories, improved response to
marketplace opportunities and external risks and converted fixed to variable costs. This
feasibility IBM has acquired after facing a huge flexible competition by Compaq in 1982.
Through this flexible and enormous services exchange system IBM now a days
possessing almost top position at market in its segment.

Key Financial system/ Marketing and sales:

In 2005, the company realigned its operations and organizational structure in Europe to
give sales and delivery teams greater authority, accountability and flexibility to make
decisions and to execute more effectively on behalf of our clients. The company had
broaden their dimension to Asian countries in order to increase their sales, company has
explored a huge profitable market in Asia specially in the middle and far east Asian
countries which includes some of the fastest growing economies ( China, India, Taiwan
and Hong Kong, Singapore, Thailand, Indonesia and the Philippines etc.)

Services:

IBM Provides technology and transformation services to clients, businesses, and invests
to improve the ability to help their clients innovate.
And this is the high value added and profitable process. The service IBM provides beside
of above mentioned are Middleware services, Outsourcing services, Security and privacy
services, Server services and Site and facilities services, mainframes, communications,
mainframe storage, minicomputers, and personal computers.
Global Business Services (GBS). IBM Global Business Services replaces what was
formerly called Enterprise Business Services and Business Consulting Services.
Redbooks are distributed by IBM and are increasingly available through online
bookstores such as Fatbrain.com and Amazon.com.
IBM provides services basically in three categories.

1. The more IT-oriented technology services offerings like strategic outsourcing,

integrated technology services, and hosting.
2. IT infrastructure delivery, which is becoming increasingly strategic as a lever to drive
productivity, efficiency and margin improvement.
3. And offerings targeted toward transformation and high-end business value --
consulting, systems integration, application services, business transformation
outsourcing, asset innovation, and strategic business development. (Understanding IBM,
2008)

Value System Analysis:

The value system of IBM is as follows:

In this value network of server products, the processor and the software providers have
higher profit pool than other suppliers. Furthermore for the distributors, the retailers have
the high profit pool. Therefore, the profit space of server products for IBM is not wide
enough.
Value drivers:
Channels Value Drivers
Wholesalers: Price, choice, quality, logistics
Retailers: Price, service, guarantee
Business orders: Price, service, guarantee.

The information above shows the main distributors of IBM and their value drivers.
Because of high buyer power, satisfying their distributors is required for IBM.

PESTEL Analysis:

Political factors:

Taxation, the heavy taxes in the UK make the IBM server products increase the weakness
on the price factor, especially on the premium price IBM products.

Economic factors:

GDP factor, The healthy economic environment with strong and stable GDP in the all
regions provides a good market for the product and service business of IBM. Although
the GDP increase rate is not fast, the stability could balance this disadvantage element.
GDP - composition by sector: The service industry in the world contributed nearly 73.4%
to the GDP in 2006. That indicated that the high value added service market in the world
is matured, and the customer experience on the service would be higher or more difficult
to be satisfied.

Socio cultural factors:

Population and the internet users, in 2006, the population in just U.K it was nearly
60,609,153, and according to CIA, (2007), more than half of these people (37.6 million in
2005) were internet users. The well known about the internet indicated the opportunities
of relevant products and services.

Technological factors:

Internet, A survey from CIA, (2007) shows that there were 6,064,860 Internet hosts in
2006, and more than 400 Internet Service Providers in 2000. In this sophisticated market,
the opportunity and competition will exist together.

Environmental factor:

In environmental dimension the IBM made the some of the major technologies like to
trace the weather through-out the world, IBM made computers for NASA for astrology
that made them to set the satellite which monitor the environmental changes over the
glob. IBM also added some of the revolutionary environmental friendly strategies which
not just provides environmental saving factors, but also cost saving factors like energy
cost.
Legal:
The main legal constraints for IBM are Cyber protection and the chemical the use in
making hardware (like: carbon, germanium and silicon), the cross country business,
currency exchange and many legal registrations for their business outsourcing facilities.

Poters 5 Forces Analysis:

The threat of entry:

the threat of entrants for the server market was low because of the enormous costs on the
R&D, relevant support products and services, manufacturing and the distribution. For
example, IBM spent nearly $171 million in system and technology for server product in
2005, (Annual Report,2006) and IBM spent over $1 billion in the Linux operating system
in 2001.(Shankland, 2002) This was only the barrier on the cost, there were other barriers
like technique, distribution channels etc.

Power of Suppliers:

Intel and AMD, as the two biggest processor providers (monopolies) in the world, have
very strong power on the chip supplying. Although the power of suppliers might be
decreased resulting from the competition between these two companies, the wide range
of customers and high costs on switching cause the buyers lack of power to bargain with
these two giants.
However, the power of suppliers for other low technical required material and parts was
much lower than the core hardware providers.

Power of buyers:

The power of buyers for the server products in the UK was high because the buyer did
not concentrate to the firm and the switching costs for the buyers were low. There were
many product choices for the buyers, e.g. IBM, HP, Dell etc.

Competitive Rivalry:

By 2003, the world server market continues to show promising signs, according to IDC,
(2003), the competitive rivalry in the server market was becoming intense in the world.
These competitors included HP, IBM, Sun Microsystems, Dell and Fujitsu Siemens
Computers were becoming the fifth leading server vendor in the world.

The threat of substitutes:

The web hosting business might be the biggest threat of substitute for the server products
in the world. The advantages of web hosting include low cost, tech-support, easy to
manage and low switching costs.
In addition, the advanced personal computer might be another biggest threat to the server
product. However, currently, the PC can not instead of professional server for the
business uses.

3). SWOT analysis:

Strengths:

- Advanced business performance management. -

Good organization culture.
- Strategic outsourcing, mergers and acquisitions.
- High efficient fulfilment centre.
- Flexible marketing management.
- Creative services.

As company handling all most 95% of business task of top 1000 companies of wall street,
the company have some of the world fastest main frame and many revolutionary
technologies like: speech recognition a software with which you can work just with your
voice, blue gene a supercomputer which is 500 times fastest than world fastest computer
and capable of more then one quadrillion operation per second. Through such
outperforming technologies IBM is able to provide some of the best back hand facilities.
The most recent merge of IBM is with the Lenovo in which lenovo is providing the outer
hardware technology and IBM providing all of its latest chip technology. IBM has been
entered the wide range of fields i.e. Business continuity and resiliency services, End user
services, Integrated communications services, IT strategy and architecture services,
Maintenance and technical support services, Middleware services, Outsourcing services,
Security and privacy services, Server services and Site and facilities services,
mainframes, communications, mainframe storage, minicomputers, and personal
computers. Now IBM came in market with its revolutionary Green technology through
which they can save 40% of energy cost through animation, consolidation and
consultancy.

Weaknesses:

- High costs in the value chain.

- Possible acquisition issues.

Since, IBM spends much on its research and development then it’s earning and have very
limited supplier in market. Since company owning very sensitive place in market,
because of its massive organisation size the immediate change are likely impossible.

Opportunities:

- Strong and stable economic market context.

- Sophisticated service market.
- High individual consumption power.
- Matured internet market.
- High level of entry barrier to the server market.
- Wireless Applications
(Understanding, 2008)

Well, company possess a good place in market, just with little feasible strategies to
market changes, IBM can hold a large share in market. Since, IBM has very less count of
competitors in its segment; almost the star of its field, through these specifications IBM
can create a monopoly in its market. The internet is one of the wide application, that is
growing faster then any thing on earth, the opportunity is open for IBM, because IBM
already in this field by providing huge data storage facilities. Since, IBM is almost
created monopoly on server market, that’s why it’s not easy for other companies to enter
in this field and compete over IBM, except some huge market giants like Microsoft.
Wireless solutions enable customers to extend their reach to clients, suppliers and
employees using wireless and emerging technologies.

Threats:

- Customers have high experience on the service.

- Customers( have low switching costs.
- IBM has high switching costs on the core hardware.
- Intense competition.
- High threat of substitutes.

As being one of the oldest players of its field, Customer may look for change. Today as
market is so flexible, IBM may face threat from small companies like Compaq because of
their small size they can change rapidly with customer environment. IBM high spending
than its earning on research and development can be a loophole for IBM. Because of very
limited suppliers during value chain process, IBM can barely afford to substitute.

4). Strategic challenge/issue:

These are the aspects that affect the strategy changes with in the management of IBM.
Stakeholder Expectations and interests, Owners private/shareholders Profit, Performance,
Direction, Government Taxation, VAT, Legislation, Employment Rate, Senior
Management staff Performance, Targets, Non-Managerial staff Rates of pay, Job
security, Working environment and hours, Trade, Unions Working conditions, Minimum
wage, Customers (Distributor/Government) Quality, Customer, Care, Price, Creditors
Credit score, new contracts, Liquidity, Suppliers Long-term Contract, Stable, Payment,
Local Community Jobs, Involvement, Environmental issues, Shares.

5). Strategic option/ future strategy/ Objectives:

It is becoming widely understood that the way in which companies are behaving as a
society is environmentally unsustainable, causing irreparable damage to our planet.
Rising energy prices, together with government-imposed levies on carbon production, are
increasingly impacting on the cost of doing business, making many current business
practices economically unsustainable. It is becoming progressively more important for all
businesses to act (and to be seen to act) in an environmentally responsible manner, both
to fulfil their legal and moral obligations, but also to enhance the brand and to improve
corporate image. Environmental issue is one of the important aspect of this company,
because the material they use is toxic in nature and the use of these gadgets is all over the
world and in massive amount. That’s why government are getting strict on these factors
and screwing it up day by day with strict rules. IBM has already begun on this
champagne of green and save energy cost which worth million, from their environmental
strategy IBM has save 40% of energy. This dimension is eco friendly as well a positive
sign for IBM because they are saving huge amount of energy amount. (‘Green IT’ – the
next burning issue for business 2007).

Hungry for change:

The enterprise of the future is capable of changing quickly and successfully. Insatead of
merely responding to trends, it shapes and leads them. Market and industry shift are a
chance to move ahead of the competition.

Innovative beyond customer imagination:

The enterprise of the future surpasses the expectations of increasingly demand customers.
Deep collaborative relationships allow it to surprise customer with innovations that make
both its customers and its own business successful.

Globally integrated:
The enterprise of the future is integrating to take advantage of today’s global economy.
Its business is strategically designed to access the best capabilities, knowledge and assets
from wherever they reside in the world and apply them wherever required in the world.

Disruptive by nature:
The enterprise of the future radically challenges its business model, disrupting the basis
of competition. It shifts the value proposition, overturns traditional delivery approaches
and, as soon as opportunities arise, reinvents itself and its entire industry

Genuine, not just generous:

The enterprise of the future goes beyond philanthropy and compliance and reflects
genuine concern for society in all action and decisions.

6). Implementation and Change:

IBM has the biggest threat in front of it that is global recession. The company has to find
some strategy which act as cure for their company in this unsteady market. The main
focus problems for the company are:
- Complexity.
- Inflexibility.
- Speed.
- Scale.
The antidote to complexity is transparency. Complexity can hide the reality about
financial condition. This led to great uncertainty in the minds of investors and can cause
irrational behaviour among players. Runs on solvent companies arise where customers
cannot tell the difference between those organisations which can meet their financial
obligations and those which cannot. The first remedy to future crises is greater
transparency in the form of stronger reporting requirements to the public.

The antidote to inflexibility is insurance. Firms and individuals who want to borrow
should be required to purchase “shock absorbers” with which to withstand a loss of
income, natural disaster or default. The most basic kind is a “rainy day account” a reserve
fund of cash that a firm or individual could use in case of adversity.

The antidote to speed is a coordinated braking mechanism. Trading in markets can be

suspended, as can provide a “cooling off” period in which news and information can
disperse, allowing panicked player to assess the situation more fully. The brakes need to
be applied infrequently and carefully. If player in the market can correctly anticipate a
reaction by governments, the player will begin to game system.

The antidote to the massive scale of losses will be the creation of larger reserve
institutions. The company must maintain a reserve that is equal to the loss they has
expected and creates dent to such occasion. The company must consider the another
constraints like global currency slump, wealth distribution scheme. (Cure of the crisis,
2008)

7). Conclusion:

The information and fact available above in report, gives a brief over-view of IBM
stragies and core operation via SWOT and Internal analysis which includes sales and
distribution, KFS, PESTEL and Porter 5 forces. This report also lighten the future
objectives and challenges for organisation. And on the bases of above analysis the last
aim of this report is to suggest some of the strategy which covers the loophole of the
organisation weak points.

FERRARI
EXECUTIVE SUMMARY
Focusing on the sports car brand Ferrari, we analysed marketing strategies and their
success in two different markets, the Italian and the German one. For the investigation we
used business theories such as the marketing mix, product life cycle, the Boston
Consulting Group matrix, analysis of segmentation and positioning. Although these two
large economically stable countries are quite different, Ferrari doesn’t make many
differences in the way of seelling cars. We will explain the way the company works.
THE BRAND
Ferrari is an Italian sports car manufacturer based in Maranello, Italy. Founded by Enzo
Ferrari in 1929 as Scuderia Ferrari, the company sponsored drivers and manufactured
race cars before moving into production of street-legal vehicles in 1947 as Ferrari S.p.A..
Throughout its history, the company has been noted for its continued participation in
racing, especially in Formula One, where it has enjoyed great success.
ITALIAN – GERMAN FERRARI’S MARKETING MIX
PRODUCT:
“What's red, Italian and goes from 0 km/h to 100 km/h in three and a half seconds?”
The answer is Ferrari. In contrast, we have to appreciate the efforts of these Italian
masters, because aside from technical expertise, Ferrari also understands how to approach
to the market.
Due to the universal strategy adopted by Ferrari in all the markets in which they take part,
we will analyze the Italian market and continue with the German’s one.
As we can see, from the following exhibit, given Italy’s level of GDP per capita, cars
have an extremely high penetration. In fact, Italy has the second highest absolute car
penetration behind Luxemburg.
{draw:frame}
Because of the geographic location and its affinity for cars, Italy has the strategic
advantage in serving the key markets for sports cars. In fact, Italy represent nearly 12%
of sales of Ferrari.
The scuderia Ferrari team is based in Maranello adjacent to Ferrari’s road car factory.
There is one center of Ferrari sport car production and another one seated in Modena
(Scaglietti bodywork) mainly specialized in the formula 1 manufactures.
Within 15 km radius round in Modena there are three of the most valued sport cars
companies, Ferrari, Lamborghini and Maserati, what makes Modena the international
capital of sports cars.
The small geographic area produces a surprisingly high portion (nearly a third) of all the
high-end sports car units sold worldwide every year.
{draw:frame}
Since 1969 Ferrari has been a subsidiary of Fiat. In terms of production capacity, it is
smaller than Porsche, but bigger than Lamborghini and Lotus. Ferrari sales have
continued to increase steadily since 1998. All facilities are located in Maranello,
including factory, development center, F1 team and the famous test track.
{draw:frame}
Ferrari's targeting strategy offers an excellent example of its expertise.
Not just anyone can buy a Ferrari. In fact, unless you are invited, you will not be able to
get your hands on one.
The total annual average production, born by the fusion of advanced technology and
refined artisanal care is about 4200 exemplars. Number voluntarily limited by the
president, Luca Cordero di Montezemolo (ex-president of Confindustria).
{draw:frame} In fact, the secret of profitability is not to sell a lot, but rather to sell a
specific offering to a specific group and, crucially, not to waste time or resources on
customers who fall outside the target group.
Enzo Ferrari’s maxim: “We have to build as many cars as the demand requires… less
one”
Organizations that use this strategy discovered that without a specific target market to
design their products around, they are poorly positioned and vulnerable to competitors
that adopt a more targeted niche approach.
PRICE
Ferrari's pricing strategy also offers a marketing masterclass. Prices are not just the
means of generating revenues. They also indicate the quality and exclusivity of the
product as well as the corporate brand responsible for that product. To investigate about
it, we have to consider 2 factors:
The luxury market, like a product that just a little minority could have, the image that the
same product assigns to his owner and for sure the real value of the product, in terms of
technologies, handmade work, and value of the materials. Luxury is the expression of a
taste, of a creative identity, of the intrinsic passion of a creator and certainly has two
value facets: Luxury for oneself and luxury for the others.
“Luxury sets price, price does not set luxury!”
PROMOTION
{draw:frame} Ferraris promotion is different compared with the others. Since the
beginning, the company was doing both things it still does today: Car Racing and
constructing extraordinary sports cars for speed lovers.
This has been the marketing strategy of Ferrari. The Passion for speed, the Passion for
engines, the Passion for Car Racing. This Passion and excitement goes through to every
racing sport lover all around the world, which gives ferrari loyal customers.
No other brand has the allure of the Ferrari Brand.Yet, Ferrari never spent a penny in
communications or in advertisement.
The company has a developed market of merchandising. This helps to amplify the brand
recognition. For example, Ferrari coorperates with other brands like Lego Racers or
Adidas. Moreover, there are some special shops that just offer Ferrari merchandising
products; one of those stores is located in Berlin.
Also, the German Formula 1 pilot Michael Schumacher helped the Scuderia Ferrari in the
sight of being statistically the most successful F1 team in history.
PLACE
{draw:frame} In Italy there are 37 Ferrari concessionaries, that work directly with the
rampant horse.
These places are chosen between the best Italian cars showrooms. In these showrooms
every single detail (furniture, employees dressing) represents the top quality category that
Ferrari embodies, so the image of the place where to buy a top quality sports car has to
coincide with the image of the brand.
In Germany, 20 authorized dealerships and one service-point offer the information
needed. They have a share of 11% of the Ferrari global sales. Germany also represents
the second largest market for Ferrari worldwide and the largest market in Europe. The
dealerships are based in Radebeul/Dresden, Berlin, Hamburg, Stuhr/Bremen, Hannover-
Laatzen, Kassel, Meerbusch, Köln, Mühlheim-Kärlich, Holzwickede, Frankfurt/Main,
Völklingen, Stuttgart, Singen, München, Starnberg, Nürnberg, Osterhofen, Bayreuth and
Dettelbach/Würzburg.

In 2007 Ferrari sold 6400 sports cars. 88% of the production is exported.
If someone wish to buy a Ferrari F430 or a 599 GTB, this person has to give a down-
payment to the Ferrari dealer, and wait patiently 18 months before the brand deliver the
new Red Ferrari.
PRODUCT LIFE CYCLE
In the first phase, the introduction or start-up, we can see that Ferrari cars (as it is a
luxury brand) are not a basic product, moreover this company doesn’t need a strong
promotion since it is one of the most important teams of F1, which makes it really
influential on the consumers.
In the growth phase, Ferrari has always been a successful brand. In this period customers
are more attracted by the product, however, if it has a selective public, the brand doesn’t
have a massive product extension, it grows little by little.
This stage can be the longest because the company can use a lot of marketing strategies
like taking out the market different models of the product or just manufacture a limited
edition, which increase the interest of the consumers.
For example, nowadays economy is in a recession stage, Andrea Ferrari, the marketing
responsible of the brand, assures that they keep on their waiting list for the Ferrari cars,
the crisis has allowed them to get rid of the speculators, people who made petitions and
negotiated whit them, which wasn’t very good for the image of the company.
BCG MATRIX
As already mentioned before, Ferrari is an outstanding, not usual brand, with a very
special marketing strategy and a small group of exclusive costumers.
Therefore, the products don’t conform always to the normal life cycles of a product (s.
chapter Product Life Cycle).
The BCG-Matrix is based on the life cycle of a product- consequently an analysis of
Ferrari products and creating following strategies by using the BCG-model could be
problematic. Furthermore, the importance of the dimension of the market growth rate is
questionable in the small market of luxurious super-sports cars, in which Ferrari compete.

On the other hand, for Ferrari the (relative) market share is an important indicator; this is
the second dimension of the BCG-Matrix.
Actually it is quite difficult to get free information about the Ferrari products. So it is not
possible trying to create a Ferrari portfolio analysis here or showing some cash cows,
stars, question marks or poor dogs. Ferrari should have some cash cows, products with a
high market share and low market growth. Those are the fundamental products because
you don’t have to invest in them and they give you much money. This money should be
used for your question marks or stars that need much money in the phase of becoming a
cash cow.
But lets put give an example of a Ferrari product that doesn’t fit with the BCG-analysis
model and outlines the special position of Ferrari:
When Ferrari wanted to build the “_Enzo_”, they set a limitation of 345 cars. These were
sold before they were produced. Moreover, the demand was that strong that Ferrari
decided to sell 399 cars (later the 400th car was produced for a fundraiser). You see, there
is no development of the product, all Enzos were sold at once and Ferrari earned much
money with them. But, according to the definition of a cash cow, the Enzo can’t be called
as one, as well as a question mark, star or poor dog. Maybe the Enzo matches a poor dog
soonest because with an amount of 400 cars there is no high market share and, also, the
market of such a super-sports car is very small. Moreover, a poor dog can bring you
much money. And don’t forget the big marketing influence which the Enzo has on the
luxurious image of Ferrari.
In addition, here is shown Ferraris outstanding position- not anybody could buy a Ferrari
Enzo, you would be asked whether you want to buy one.
SWOT Analysis
Strengths:
Myth (all over the world)
High prices
Luxurious and exclusive
Belongs to FIAT
High quality
Weaknesses:
??? Opportunities:
Accomplishing an “immortal” myth
Improving technique and quality
Threats:
Loosing its myth
Will always people go on enquiring a luxurious super-sports car?
Not resistant against economical crises
SEGMENTATION
Ferrari divides the total market into small homogeneous groups in order to focus their
efforts in selling to these new niches. To do this segmentation, Ferrari considers a group
of variables that allows them to divide the market, taking in account the special needs and
characteristics that every group has.
The Variables, used by Ferrari, are:
Demographics:
Age: 35 to 55-60 years
Sex: Male
Family: Single/Divorced
Socio-Economics:
High-incomes
High-education
High-class
Personality, motive and lifestyle:
Quality
Luxury
Status
In what concerns to Ferraris’ targeting strategy, it is easy to see that it is a brand with a
selective public that targets their consumers offering not only a car, but luxury, status and
quality.
Obviously getting one of these cars is not for everyone, and Ferrari ensures that. The
niche, in which they are focusing, is composed by high educated and high income people,
mainly men, between 35 and 60 years old, who belong, as well, to high class. Also, there
are some exceptional cases of famous people who are invited to buy a Ferrari just as a
way of addvalue to the brand.
Finally, the positioning of Ferrari consists on finding the way to position the brand in the
mind of the consumers. To do this, the company had worked in building a brand-image of
exclusiveness, luxury, and freedom only available for those “special” costumers who
reach some specific characteristics set by the company.
Anyway… who doesn’t recognize this logo?
Strategies for RETAILING: a conceptual study on big bazaar retail strategies

Abstract:
Indian retail sector is witnessing one of the most hectic marketing activities of all times.
The companies are fighting for mind share and heart share which can finally be converted
to market share. There is always a ‘first mover advantage’ in an upcoming sector. In
India, that advantage goes to “Big Bazaar”. Big Bazaar, a hypermarket from Pantaloon
Retail (India) Ltd., emerged as a success story in the Indian retail scenario. Big Bazaar
came out with innovative marketing strategies which attracted the middle class
consumers, the large and growing young working population of a preferred customer
segment • Big Bazaar specifically targets working women and home makers who are the
primary decision makers.
Big Bazaar went into tie-ups with some of the manufacturers, which helped the company
to offer goods at low prices to its customers. In this paper author made dare attempts to
answer the following questions
• To understand marketing strategies in mass markets.
• To analyze growth strategies of Big Bazaar in the wake of increasing competition
from other global players.
• Big Bazaar’s promotional strategy
Keywords: retail strategy, promotion strategy, big bazaar

Introduction
Big bazaar – the discount store was launched in the year 2001, to meet the aspirations of
the middle class. Commenting on the outlook for the sector in 2010, the retail king says
demand for new categories is emerging2. However, he was quick to add that rise in
commodity and food grain prices are acting as a dampener. "Pressure on some food
product prices is impacting sentiment.
The Indian Retail Industry is the largest among all the industries, accounting for over 10
per cent of the country’s GDP and around 8 per cent of the employment.
The Retail Industry in India has come forth as one of the most dynamic
and fast paced industries with several players entering the market. Retailing in India
is gradually inching its way toward becoming the next boom industry. The
whole concept of shopping has altered in terms of format and consumer
buying behavior, ushering in a revolution in shopping in India. Modern retail has entered
India as seen in sprawling shopping centers, multi-storied malls and huge complexes
offer shopping, entertainment and food all under one roof. The Indian retailing sector is
at an inflexion point where the growth of organized retailing and growth in the
consumption by the Indian population is going to take a higher growth trajectory. The
Indian population is witnessing a significant change in its demographics.
Retail and real estate are the two booming sectors of India in the present
times. And if industry experts are to be believed, the prospects of both the sectors are
mutually dependent on each other. Retail, one of India’s largest industries, has presently
emerged as one of the most dynamic and fast paced industries of our times with several
players entering the market. Big bazaar coming to India it will be at its introduction stage
so it is quite obvious that it will adopt some strategy for attracting the customers. The
strategy which they adopt is that they will have low price, high advertisements, it offer
different kind of schemes, offers, discounts, scratch cards, coupons.

2Published on Tue, Jan 12, 2010 at 19:09 | Updated at Tue, Jan 12, 2010 at 19:13 |
Source : CNBC-TV18
THE STRATEGY OF BIG BAZAAR
Saving is the key to the Indian middle class consumer.
The concept of “Bazaar”, as the store offers large mix of products at a discounted price,
the name “Big Bazaar” was finalized
The idea was to recreate a complete bazaar, with a large product offering and offer a
good depth and width in terms of range. It has got massive appeal; exterior look justifies
its name “THE BIG BAZAAR”
BIG BAZAAR: FOR THE GREAT INDIAN MIDDLE CLASS

Kishore Biyani led the company’s foray into organized retail with the opening up of the
Big Bazaar in the year 2001.
It is a unit of Pantaloon Retail (India) Ltd and caters to the Great Indian Middle Class. It
was started as a hypermarket format in Mumbai with approx. 50,000 sqft of space. Its
values and missions are to be the best in Value Retailing by providing the cheapest prices
and hence go the tag-line
“Is se sasta aur achcha kahin nahin”
It sells variety of merchandise at affordable rates, the prices of which it claims are lowest
in the city. Usually the items are clubbed together for offers as on the lines of Wal-mart
and Carrefour and it also offers weekend discounts. It currently operates out of more than
100 stores and top 25 stores register a cumulative footfall of 30 lakh a month on an
average.

Strategies for retailing

The secret / strategies of successful retailing are to give customers what they want.
And really, if we think about it from our point of view as a customer, we want
everything:

• a wide assortment of good-quality merchandise;

• the lowest possible prices;
• guaranteed satisfaction with what we buy;
• friendly, knowledgeable service;
• convenient hours; free parking;
• a pleasant shopping experience.

Big Bazaar: Brand’s Identity, Personality & Symbolism

Big Bazaar (Exhibit 1) is Indian personification of retail. It’s like an Indian bazaar or
mandi or mela, the environment created by traders to give shoppers a sense of moment.
Its personality is of being an entity away from fancy or pretty and being authentically
"no-frills". Kishore Biyani never hired any foreign consultant for Big Bazaar which is
evident from Indian-specific personality of the brand. The brand’s personality is self-
explanatory by its tag-line only. This statement places Big Bazaar at the top of
customer’s mind. It reflects that entrepreneurship and simplicity are the essence of
character of Big Bazaar. To use predatory pricing is not in the personality of Big Bazaar,
they never sell goods below the price they have purchased it. Big Bazaar, the "Indian
Wal-Mart", is the modern Indian family's favorite store.. Big Bazaar has shown a robust
growth in recent years

Brand Ambassador:

A brand ambassador is a celebrity (or an attractive or interesting person) used to help

advertise a product or services.
Big Bazaar, has roped in cricketer Mahendra Singh Dhoni as the Brand Ambassador for
its new range of fashion apparel. Dhoni would feature in a series of advertisements across
all media. Dhoni and Big Bazaar have a lot of synergies as the Indian one-day
international team’s captain stands for the aspirations of youths, while Big Bazaar is
looked up to by millions of Indians to fulfill their aspirations.

In this way, Big Bazaar make full use of the marketing mix for a new ventures which
earlier belongs to the unorganized retail sector i.e. kirana stores. Application of the best
marketing practices helps Big Bazaar in a great way.

The strategic decisions that lead to BUILD BIG Bazaar BRAND: -

Real Estate Game

For a retailer, location is one of the most important things. According to Kishore Biyani,
real estate cost should be less than 5% of total sales of store in order to provide maximum
benefits to customer.
The strategic decisions to secure spaces before other retailers join in have resulted in
cost-saving. Also, it has created early presence in market.

Nurturing Relationships
Kishore Biyani follows strategy to develop trust and nurture relationships with suppliers.
This trust led to strategically correct decisions most of the time. .

Value of Branding

Branding plays a crucial role for all the products and services. A successful brand is an
identifiable product or service, and buyers or users perceive values in it which matches
their needs.

Big Bazaar: Positioning & Establishment

Positioning of big bazaar:
Big bazaar positioned itself between low price and high service. By this positioning
strategy it attracts middle class people .
SWOT ANALYSIS:

The SWOT Analysis of current strategy of Big Bazaar elaborates the core competencies
and areas of improvement.

The key features in establishing a brand :

Big Bazaar ensures that no other kirana store / departmental store are offering
considerable discount compared to its own price. This helped Big Bazaar in being the
"value for money" store.

Big Bazaar scores high on product mix as compared to kirana store.

Cheap and local products are heavily stocked in Big Bazaar which makes it easier to
attract lower middle class category of customers.

Promotion of kirana is rare event but Big Bazaar used this channel efficiently to establish
itself as national brand. Customer loyalty resulting in high up sell, i.e., selling to existing
customers.

Big Bazaar refrains from high-end locations for business which reduces its rental budget
and provides competitive advantage over competitors. Kishore Biyani has taken "early
movers advantage" in many retail spaces.

BCG MATRIX OF BIG BAZAAR

[pic]
7P ANALYSIS OF BIGBAZAAR:

7P Marketing Mix is more useful for services industries and knowledge intensive
industries. Successful marketing depends on number of key issues. The seven keys issues
are explained as: -

Product

Big Bazaar offers a wide range of products which range from apparels, food, farm
products, furniture, child care, toys, etc. (Exhibit 7). Products of all the major brands are
available at Big Bazaar (Exhibit 8). Also, there are many in house brands promoted by
Big Bazaar. Big Bazaar sold over 300,000 pairs of jeans, 50,000 DVD-players and
25,000 microwave-ovens. In all, the fashion, electronics and travel segments made up
about 70% of sales. Last year, these categories made up only about 60%.

Product mix of bigbazaar

Price
The tag-line is "Is se sasta aur accha aur kahin nahi". They work on the model of
economics of scale. There pricing objective is to get "Maximum Market Share". The
various techniques used at Big Bazaar are: -

Value Pricing (EDLP - Every Day Low Pricing): Big Bazaar promises consumers the
lowest available price without coupon clipping, waiting for discount promotions, or
comparison shopping.

Promotional Pricing: Big Bazaar offers financing at low interest rate. The concept of
psychological discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool. Big Bazaar
also caters on Special Event Pricing (Close to Diwali, pongal and Durga Pooja).

Differentiated Pricing: Time pricing, i.e., difference in rate based on peak and non-peak
hours or days of shopping is also a pricing technique used in Indian retail, which is
aggressively used by Big Bazaar.

Bundling: Selling combo-packs and offering discount to customers. The combo-packs

add value to customer.

Place

Big Bazaar stores are located in 50 cities with 75 outlets . Big Bazaar has presence in
almost all the major Indian cities. They are aggressive on their expansion plans.

Promotion

Big Bazaar started many new and innovative cross-sell and up-sell strategies in Indian
retail market. The various promotion techniques used at Big Bazaar include "saal ke
sabse saste teen din".

Card (the card offers 3% discount), Shakti Card,

Brand Endorsement by M. S. Dhoni, Exchange Offer - ‘Junk Swap Offer’,
Point-of-Purchase Promotions.

Advertising has played a crucial role in building of the brand. Big Bazaar advertisements
are seen in print media, TV, Radio (FM) and road-side bill-boards.

Opportunity India Retail, Mar 2007. Retrieved Nov 2007

Promotion strategies
The main idea/startegy behind every effort is to make a bulk purchase
• “Saal ke sabse saste 3 din”
• Hafte ka sabse sasta din “Wednesday bazaar”
• Exchange offers “junk swap offer”
• Advertisement (print ad, TV ad, radio)
• Brand endorsement by m.s dhoni
 • Point of purchase promotion
• Faida zones

Promotion can be loosely classified as "above the line" and "below the line" promotion.
The promotional activities carried out through mass media like television, radio,
newspaper etc. is above the line promotion
The terms 'below-the-line' promotion or communications refers to forms of non-media
communication, even non-media advertising. Below-the-line promotions are becoming
increasingly important within the communications mix of many companies, not only
those involved in FMCG products, but also for industrial goods.
Some of the ways by which companies do BTL (below the line) promotions are by

• Exhibitions
• Sponsorship activities
• Public relations
• Sales promotions like giving freebies with goods
• Trade discounts given to dealers and customers
• Reduced price offers on products
• Giving coupons which can be redeemed later etc.

BTL promotions are gaining popularity among all big companies nowadays considering
their effectiveness because of the "individual customer promotion" at a price, which is
much lesser than the normal media promotion.
• Low prices on Wednesday
• Promotional offers
• Concept of big day
• Happy father’s day

People

They are one of the key assets for any organization. The salient features of staff of Big
Bazaar are: -
Well-trained staff, the staff employed by Big-Bazaar is well-suited for modern retail.
Well-dressed staff improves the overall appearance of store.
Employees are motivated to think out-of-the-box. Retail sector is in growth stage, so staff
is empowered to take innovative steps.
Employs close to 10,000 people and recruits nearly 500 people every month.
Use of technology like scenario planning for decision making.
Multiple counters for payment, staff at store to keep baggage and security guards at every
gate, makes for a customer-friendly atmosphere.

Process

The goods' dispatch and purchasing area has certain salient features which include: -
Multiple counters with trolleys to carry the items purchased.
Proper display / posters of the place like (DAL, SOAP, etc.).
Home delivery counters also started at many places.

Physical Evidence

It deals with the final deliverable or the display of written facts. This includes the current
system and available facilities.
BIG BAZAAR’S JUNK SWAP OFFER
Junk swap offer
"This offer will help the housewife clean out the junk while getting a good value for it,"
says Mr. Sanjeev Agarwal, President (Marketing), Pantaloon Retail (India) Ltd.
Big Bazaar is launching a promotional offer from Saturday, with the slogan, "bring
anything old and take something new”.
A press release issued by the company says the customer can bring anything old, such as
newspaper, and get coupons issued in exchange of the junk. The customer can redeem the
coupons before the due date on the condition that he/she shops four times the value of the
coupon.
The prices fixed by Big Bazaar are: clothes (Rs 200 per kg), newspaper (Rs 25 per kg),
plastics/utensils/leather goods (Rs. 75 per kg), footwear/luggage (Rs. 100 per kg),
Pet/beer bottles (Rs 15 per kg), tyres (Rs 50 per kg), furniture (Rs 75 per kg) and others
(Rs 20 per kg).
Advertising: The Essential strategy of Brand Building Process

Advertising is an essential component of brand building. The advertisement and brand

building is done through various ways, the techniques used are: -

Tag-line: Big Bazaar tag-lines are the key components of advertising. These tag-lines are
modified according to demographic profile of customers. These catch-phrases appeared
on hoardings and newspapers in every city where Big Bazaar was launched. Everybody
understood and connected easily with these simple one-liners. The catch-liners include
"Hindi - Chane ke bhaw kaaju", "Bengali - Rui er dame illish", "Hindi - Stall ke bhaw
balcony", etc.

Print Ads: Big Bazaar newspaper advertisements are present just before launch of any
new scheme. This creates aura about the Big Bazaar brand in the minds of customers.

TV Ads: Kishore Biyani spends a lot of money in brand building exercise. Big Bazaar
commercials are shown on various channels in India. Presently, Fashion@Big Bazaar
commercial is aired.

Road-side Advertisements: Big Bazaar bill-boards are displayed on prime locations in

various cities as a brand building exercise. They display the catch-phrases now-a-days.

Radio Ads: Advertisements on FM channels for attracting customers. This informs

customers about all new happenings at Big Bazaar.

Fashion Shows: "FASHION @ BIG BAZAAR - Desh Badla, Bhesh Badlo" is the latest
invention of the Indian iconic brand. In an effort to take the Fashion to the masses, Big
Bazaar, the flagship hypermarket brand of retail chain of Future Group, organized a
three-day Fashion Show on the streets of Bandra, Mumbai.
BIG BAZAAR: STARTEGY TO IDENTIFY POTENTIAL CUSTOMER
Big Bazaar is based on 3-C theory of Kishore Biyani. The 3-C symbolizes Change,
Confidence and Consumption, and according to this theory, "Change and confidence is
leading to rise in Consumption". They divided Indian customers in three categories: -

India One
Consuming class constitutes only 14% of Indian population.
They are upper middle class and most of customers have substantial disposable income.

Disposable Income & expenditure pattern of Indian household

Rs per household 1990 1995 2000 2005 2010 2015

Mean Disposable Household Income:

Current 26,480.7 51,837.1 79,463.5 103,195.0 113,259.6 120,484.8

Constant 1990 26,480.7 31,516.9 33,560.3 35,955.2 33,268.2 30,320.8
Expenditure pattern:
Household goods and 117,923.4 190,179.5 357,030.0 524,227.0 566,210.8 653,510.5
Services
Health goods and 131,153.8 267,911.1 835,170.0 1,412,23 1,640,44 1,883,97
8.1 9.3 1.5
Clothing and footwear 238,610.0 483,360.0 626,090.0 846,544.7 965,967.4 1,096,34
6.1
Source: National statistical offices, Euromonitor International

India Two

Serving class which includes people like drivers, house-hold helps office peons, washer-
men, etc.

India Three

Struggling class, remaining population of India.

Cannot afford to inspire for better living, have hand-to-mouth existence. .

The potential customers of Big Bazaar are India One and India Two. The customer
insights were developed by close observation of the target set.
The insights that came out were: -

• The clean and shiny environment of modern retail stores creates the perception that
such store are too expensive and exclusive, and are not meant for India Two.
 • India Two finds moves and find a lot of comfort in crowds, they are not
individualistic. They prefer to be in queues.

• Indian-ness is not about swadeshi, it’s about believing in Indian ways of doing things.

• Indian customers prefer to purchase grains, grams, etc., after touching them, so it’s
better not to sell in polythene packs. Big Bazaar has counters where you can touch wheat,
rice, sugar, etc., before purchasing.

• Advertisements about schemes and offers through local newspapers, radio in local
languages, inspires customer more than the traditional ways.

• The guards, salesman at the Big Bazaar outlets should not look smarter than
customer, so they prefer not to have tie, etc., in their uniform.

• Hypermarkets in India should be situated in city unlike western countries where they
are located away from city.
• Purchased bags / goods should be sealed at check-out as customer can enter and exit
multiple times.
• For Indians, shopping is an entertainment; they come in groups, with families so Big
Bazaar should offer something for every section of family. That also led separate section
for clothes, vegetables, food, etc., that is multiple clusters within a bazaar.

Big Bazaar: Future Possibilities

Future Group is planning to split Big Bazaar into two entities. One will be front-end
consumer-oriented entity and other will be for back-end operations. Back-end entity may
enter into joint venture with leading international cash and carry retailers. Foreign
partners like Carrefour, Metro, Costco, etc., are in the race, and their role will be to
improve efficiency in sourcing and logistics, which will help drive down prices and boost
margins.

The front-end operations will be further divided in three categories, Big Bazaar Express
with store area less than 40,000 sq. ft., Standard Big Bazaar with store area between
40,000 to 75,000 sq. ft., and Big Bazaar Supercentres with store area more than 75,000
sq. ft. Future Group is also planning to distribute financial products like consumer loans
and insurance through Big Bazaar outlets

[pic]
Big Bazaar is planning to have 300 hypermarkets in the country by 2010-11. The
company may also increase its annual turnover to Rs. 13,000 crore by 2010-11, up from
Rs. 3,600 crore last fiscal on the back of its expansion.
The company has also gone on record saying that it would have another 35 stores by the
end of its fiscal in June 2009 to take the total number to 135. To achieve this they are
targeting a turnover of Rs. 5,000 crore in the current fiscal year and have formulated
plans for reaching a figure of Rs. 13,000 crore by 2010-11 fiscal.
For the expansion, the company would be looking at both the metros and Tier I cities,
besides Tier II cities & smaller cities.
The marketing strategy seems to be perfectly on track as the Big Bazaar hypermarkets
had a footfall of 11 crore last fiscal and the company is aiming for an increase in the
numbers up to 14 crore this year. The average size of a Big Bazaar hypermarket is 30,000
sq ft to one lakh sq ft.

The Group expects to increase its revenues to $7-8 billion by 2011, of which Big Bazaar
is expected to contribute a large chunk of around $4 billion. It has emerged as the largest
retail format of Future Group's retail division. Biyani said that the proposal is at a very
initial stage and has to be taken to the board. “Currently we have more than 80 Big
Bazaars and we are planning to scale it up to 160 by the year end”, he said.
Conclusion
• Big bazaar is undoubtedly the number one retailer in India. it has built a very
emotional and cordial relationship with its customers. it is also very intending to build
long term relationship with all its stakeholders which is very essential for a successful
business venture
• It is found that more than 60% of employees are of the age group of 20-35.from
this it reveals that company is having young and energetic workforce who are very
creative ,enthusiastic and also very determined to grow in their career and in turn helping
the company to grow
The strategies of big bazaar are very efficient in bringing up the company. Following
are some additional strategies they require to adopt:
• Thorough market research
• Site selection and evaluation
• Gaming zone and restaurant
• Less premium and low price branded goods in merchandise assortment.
Promotional activities like advertisement, seasonal discounts, festival offers, etc. While
formulating strategies we should keep in mind that strategies should be flexible. This is
helpful to change or revival of strategy. They would also give stress on providing the
prompt services like home delivery, after sales services, guarantees and warrantees, so as
to sustain in the market and to create a good reputation.