MARKETING MANAGEMENT

PRODUCT : PROTON EXORA 2

Prepared by:

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An Introduction

Proton Exora is a compact multi-purpose vehicle (MPV) model produced by Malaysia car
manufacturer known as Proton Holdings Berhad (Proton). The new model car was launched
on 15 April 2009, which is the first Malaysian designed MPV. Proton Exora is a new lifestyle
family vehicle, which combines advanced styling, spacious interior, which accommodates 7
adults and has multiple usage, high quality design and good performance with emphasis on
the value for money factor.
Despite the benefits offered by Proton Exora, our group had identified few major problems
faced by Proton. One of the major problems faced by Proton is Proton has lost its market
share to local and foreign competitors from 60% of the domestic passenger car market in
2001 to 29% for the first half of 2008 (Malaysian Automotive Association 2008). Protons
brand value has also dropped from RM239 million in 2007 (rank 19) to RM150 million in
2008 (rank 23). The latest news on 23 rd November 2009 reveals that Protons ranking has
dropped from Malaysias 30 Most Valuable Brand (MMVB) ranking.
Therefore, our group has recommends new concept car known as Proton Exora 2 with
additional improvised features included to enhance the performance and increase the demand
for Proton Exora car. Possible solutions to mitigate the problems identified are by introducing
additional value improvised features to enhance the performance and sales of Proton Exora 2
by focusing on fuel efficiency, convenience and safety and emphasizing on the environment
friendly vehicle. Overall, the action plans recommended are based on 4Ps strategies and
marketing mix models.

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Company Background
PERUSAHAAN OTOMOBIL NASIONAL BERHAD or PROTON was incorporated on
May 7, 1983 to manufacture, assemble and sell motor vehicles and related products,
including accessories, spare parts and other components. PROTON produced Malaysias first
car, the Proton SAGA which was commercially launched on July 9, 1985 by Malaysian
Prime Minister, Dato Seri Dr. Mahathir Mohamad who conceived the idea of a Malaysian
car.
PROTON had some major challenges in the recent years, with new competition and the
deregulation in the industry. Proton Holdings Bhd has swung into the black in 2008 with a
cumulative net profit of RM202.9 million, compared with the loss of RM589.5 million it
registered in 2007. The national carmaker's revenue rose 14.6 per cent to RM5.63 billion
from RM4.91 billion a year earlier. One of the reason of this achievement is due to the
introduction of new models with higher profit margins, stronger sales volume, savings from
group-wide cost-reduction initiatives, income from the sale of rights for use of Intellectual
Property Rights relating to a vehicle platform (for the China market) as well as the R&D
grant.
For the year 2008, PROTONs focus would be in the core areas of product, quality, cost
efficiency and distribution network. PROTON aims to have a strong product portfolio by
introducing the right car, for the right market, at the right price and at the right time. This
was reflected in the organisations newly introduced Exora, Persona and Saga Models, with
the latter powered by the new CamPro IAFM engine. PROTON has also continued to update
and refresh existing product lines to entice and attract customers.

Market Overview

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Once known as the king of the road, PROTON has seen its fortunes dwindle due to growing
competition from local and foreign competitors as Malaysia opens up its auto market.
Malaysia is Southeast Asia's largest passenger car market with 497,459 vehicles sold in the
year 2008.
Malaysias auto market is dominated by its national cars, PROTON and Perodua which in
year 2000 accounted for market share of roughly 90 percent of the vehicles sold annually.
Some 25 other manufacturers compete for the remaining 10 percent. But compare with last 2
years, market share of the national car makers has declined to roughly 63 percent.
During year 2000, PROTON conquered 63.4 per cent market share. It has eroded to below 30
percent in year 2007 and 2008. Perodua, the second national cars manufacturer has taken
over the market of the king since two years ago with a market share of 33.6 percent in 2008.
PROTON has been maintaining their market share with best- cost and broad differentiation
strategy, although the market share fell from 40% in 2005 to 32% in 2006
(www.wikicars.com) allowing Perodua to overtake PROTON as the country's largest
passenger carmaker for the first time. Total losses in 2007's financial year has climbed to
RM169 million and this was caused by the extensive promotional discounts by its tight
rivals, according to PROTON.

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Figure 1: Show the Overall market share of passenger car market. (from MAA vehicle sales
resources) Noted : 2006 data is not published
To date, PROTON is facing severe competition in its home market as government may
remove rules that protect local car makers when it reviews the 3-year-old auto policy to boost
foreign investment. This reduction of the protection accorded to PROTON may increase its
difficulties to become market leader again. Although government has cut import taxes, it still
imposes high taxes on locally assembled foreign cars and this has given protection to national
carmakers.
Looking at the industry overview, the year 2009 witnesses a tremendous improvement in
motor vehicle sales. This uptrend, which began from the second half of 2007, was a welcome
relief to the industry but unfortunately the momentum could not be maintained. After
recording peaks of more that 50,000 sales in April, July and September 2008, it saw a
significant drop of 21% after that, which was due to the global economic meltdown marked
by the collapse of major financial institutions in the United States. This was further
compounded by the increase in petrol price in October 2008. After that the industry resurged,
driven mainly by the introduction of new models at highly competitive and consumerfriendly prices, attractive and creative financing schemes for car buyers as a result of
aggressive sales campaigns, and strong economic growth of 5.75% in 2008. But again, in
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2009, MAA has forecasted that there would be a decrease of 12.2% of passenger cars
compared to 2008. The forecast was well-founded on the current global financial and
economic climate, reiterated by the contraction of GDP growth. Other factors may include
fluctuating oil and commodity prices as well as unfavorable FOREX rates (ref:
www.proton.com.my).
In terms of financial performance, for the financial year ended 31 March 2009, PROTON
recorded a loss after tax of RM301.8 million, although there was improved revenue of
RM6.5 billion. This decline was largely due to the one-off exceptional provision for the
impairment of property, plant and equipment and inventory write-down for certain models
impacted by declining demand. In addition to that, PROTONs financial performance for the
second half of the financial year was also adversely affected by the accelerated amortization
of dies and jigs for certain models as well as higher commodity prices, increased costs of
components and raw materials which arose from higher foreign currency exchange rates,
particularly the Japanese Yen and US Dollar.
Marketing Analysis
Product
Price

: PROTON design and technology lack of attractive

: The price that PROTON offer to the customer is more expensive compare to the

same CCs of foreign car.

Place
:Promotion : The promotion that offered by PROTON is quiet many but it less attractive. We
can say that it is all about the mentality of few Malaysian that feel that local brand is not as
good as imported brand.

SWOT Analysis
Strengths

Competitively priced products

Weaknesses

Reputation

of

poor

product
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performance and functionality

Extensive nationwide distribution

network

High cost to expand their operation

Good corporate governance

Influence of patriotism as Proton is

Short history in automotive industry

national car-maker

Vulnerable to increasing material

by advanced technology

Government support

Opportunities

High demand on the products

Opportunity to grow their business

globally

R&D Development

Government support

After-sales services

Collaborations within automotive

industry

cost (steel, etc)

Threats

Competitors - local & international

brands

A lot of substitute products in

market

Fast

changing

and

advanced

engineering technology

Economic downturn decrease of

car sales

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