Biggest Marketing crime by the Japanese

In automobile industry, its always the product P which has a dominant status. Once the product is acceptable then irrespective of the other Ps, the product becomes a winner. The company which demonstrated this to the world more than any other company is now suffering with the same problem.

Its Toyota.

Recalling close to 8 million vehicles, more than its total 2009 sales (Source), Toyota had committed a major marketing crime. It was through the quality and reliability that Toyota redefined, it became the worlds No.1. The company that taught the world JIT, is now suffering because of a quality issue from its supplier. This probably could be an outcome of its cost cutting efforts.

This might possibly be the end of the Japanese dominance in the US market after a similar announcement from Honda. And the impact can be even worse if the other European and Asian countries also react. Even when GM filed for bankruptcy, neither anyone blamed the company nor its brand equity went down. And with the revival strategies, GM will be soon on track. But its not going to be easy for the Japanese. And this might well reflect on other products from Japan.

Now its upto Toyota and Honda, on what strategy they are going to frame to re-establish their lost pride.

Has Bajaj pressed the Panic button?

I think Yes!!!

Bajaj recently introduced the naked version of Pulsar 220. Its the same 220 engine on a discontinued P200 platform. It borrows mechanicals from carburetted P220 and the front fairing from P200. Just that the engine fairing is removed, the bike has gone a bit lighter and is expected to be better in handling and performance.

But why is Bajaj doing this? One side the brand is extended downwards (Courtesy: Pulsar 135LS). On the other side, in the premium segment, its just another cosmetic change in the form of Naked P220. Because of the tough competition from Honda and Yamaha in the premium segment and the market leader Hero Honda in the executive and commuter segment, Bajaj had pushed the panic button.

Pulsar is the only successful brand in the last 9 years. The company could not reproduce the success again in almost a decade. This has resulted in leveraging the brand equity of Pulsar to the fullest. Now consumers will fail to understand the brand DNA. As a result Pulsar may loose its value and image from the minds of the consumer and go out of the consideration set.

Watch how Skoda positions itself...

Ford Figo - Fully Loaded

Will a Retail Format work...?

According to Economic Times report, World's largest auto retail stores are planning to enter the second fastest growing automobile market, India. Autonation from US, Inchcape from Europe, Oman's Saud Bahwan, UAEs Al Futtaim Motors are all in talks with leading car makers to set up retail stores in India. But will this work here?

I think its a big NO. Why?

The automobile market in India, though expected to grow at 15% to 20% annually, is not a matured market like US or Europe. For Indian consumers buying a car, falls in the high involvement purchase relatively more than the consumers of the developed world. So a typical Indian consumer would always want it from a authorized company showroom than from a multi branded  retail outlet. Its always the company showrooms that will be perceived to be better and hassle free. This will be evident from the after sales service pattern in India. Other than the Indian brands Tata and Maruti, there will be hardly any other brand getting serviced out of the authorized showroom. Indian consumers never wanted to take a chance.

Indian market does not have many brands like Ford, Toyota or GM has in US and UK. The company with the largest  product portfolio is Maruti Suzuki. Also in India its only the small car market which is growing at a fast rate unlike other countries where sedans and SUVs also have a good share. Having said all these, the profitability of these stores will be at stake with price competition and high operating costs.

So, for any company in India, its ideal, not to go for retail stores format. Instead companies can invest in setting up more dealerships and expand their service networks.

New AUDI A6

Resurrection of the King

Many, like me, would love to read the news again and again. Some may postpone their decision to buy a bike after reading this. According to Business Standard Motoring, Yamaha had planned to reinvent the legendary RX 100 in a new 4 stroke avatar. So back are days of street racing and high performance rides.

Yamaha ruled the market with this superbike. When there was a strict ban on this bike for its high pollution, unlike others like Suzuki and Kawasaki, Yamaha decide to axe the brand. The successor, RX 135, though matched its performance levels, did not win the share of the consumers heart. And thus the downfall began for Yamaha. Recently after a complete turnaround with its new range of bikes, Yamaha has re-defined the premium segment again. Yamaha did what Bajaj did in the past with Pulsar. The R15s and FZs fed the hungry indian youths. But still in the entry segment of 100cc to 125cc, Yamaha did not make any attempt. If RX 100 in its 4 stroke version is able to meet the needs of this segment, then their target of 10% market share will be achieved in no time.

Is this the beginning of the end for Maruti?

Till 2009, every second car sold in India was from Maruti Suzuki's showroom. Will 2010 see the same pattern? In the entry level segment, with 800 being phased out in 11 cities from April 2010, Alto and Estilo had to survive Chevy Beat and much awaited Ford Figo. In the premium hatchback segment, Swift and Ritz will compete against Volkswagen Polo, Revamped Fiat Grande Punto, yet to come Toyota Etios and the Honda's concept small car along with the Indica. After this never seen before competition in the small car market, will Maruti sustain its 47% market share?

The success of Maruti was not only its pricing strategy. It had won the trust of Indian consumers through its product quality and service quality. With the largest spread of distribution network for sales and spares anything for Maruti was available anywhere. But will todays consumer be happy with this? They need the latest in the market, customised, trendy along with performance. Maruti reacted to this competition last week by announcing a reduction in its small cars from Rs 30K to Rs 50K. Also they have introduced a MUV in the price of an Alto. The customers neither wanted a price reduction nor a MUV in this segment.

Maruti has to repeat history. It should do, what it did in 1984. A revamp in its product line. New products with a premium price tag also will be well accepted. With the help of Suzuki, it should bring in more brands from the Japanese roads tweaked to Indian conditions. A mere price reduction on the existing models will not help the company sustain this market lead. Hope the Nations brand does a successful fightback in this turbulence.

A new beginning @ Delhi

Till early 1990s the Indian automobile industry was almost 20 years behind the rest of the world. A technology which was in use in Germany, Europe and US was available not earlier than 20 years for Indian consumers. Late 90s situation started changing and now many global gaints like GM, Ford, Toyota, Honda and Hyundai launch their new cars first in India and then to the world. Indian automobile industry is all set for the next era.

Today Delhi witnessed the new innings of Indian automobile industry. In the first day at the Delhi Auto Expo 2010, major car manufacturers unveiled their range, specially designed for India. Toyota displayed the Etios, GM launched Beat a day earlier, Honda has unveiled their small car, Volkswagen Polo made its much expected entry while the other German rivals Audi, Mercedes and BMW showcased their offers in the premium segment.

The great Indian gaints, Tata Motors and Maruti proved that they are no inferior. Tata launched its premium MPV Aria and Ventura while Maruti Suzuki displayed its RIII concept.

Lets wait and watch the following days for more news and launches.

Toyota Etios - Teaser

Where did Jazz go wrong?

Honda introduced Jazz as a premium hatchback. Around 8 Lakhs, Jazz was competing with i20 and Fabia, which are also positioned for the same target segment. Jazz, from Hondas' stable, had typical Honda quality and refinement, much above its competitors. The space the car offered was the best in its class. Along with the Honda ownership card, Honda would have expected the Jazz to sweep the market. But it did not happen.

Honda from a layman's view is a mini MUV. It looks like a downsized Innova type. But during the launch, the company positioned it against the hatchbacks. The size and dimensions did not support this claim along with the price. The price was way high for this segment. When the i20 is available with a fully loaded automatic transmission option for 8 lakhs, consumers were reluctant to pay almost the same price just for the brand Honda. This is evident from the sales figures available for the month of November 2009. When i20 did very well by selling 3582 units, Jazz managed just 546 units.

Zeroing down on the problem, it's a Positioning Vs Pricing war, where Jazz lost its plot. If Jazz was positioned as a hatchback, it should have been priced a bit low around 7 lakhs range. If the company wants to enjoy this premium, then it should have been positioned as a Mini MUV.

Honda has realised this and had offered a flat Rs 40,000 off on Jazz for Jan 2010. This is the first model from Honda to get this kind of an offer. Rather than getting into this discount game, Honda can manage its premium tag by revising the price for ever.

Will Fluence have enough Influence?

Renault had decided to launch its Fluence in India, a new saloon, by the end of 2010. Around Rs 12 Lakhs, this car would be positioned in the entry level premium saloons alongside Corolla, Octavia and Civic. But will this change the fortunes of Renault in India?

Renault with its Logan had already been positioned in the minds of the Indian consumers as a cheap car maker with no great R&D. Though globally it is acclaimed that Renault is a potential manufacturer, the mistakes in Logan (as discussed in the earlier post), have ruined the brand image in India. So before the launch, Renault should first make an attempt to change the perception of the brand through brand building exercises. Otherwise, the Fluence will fail to sail along.