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Company Background: Micro Suzuki founded Suzuki Loom Works, a privately owned loom manufacturing company, in 1909 in Hamamatsu, Japan. In 1952, the company began manufacturing and marketing a 2 -cycle, 36 cubic centimeter (cc) motorcycle, which became so popular that in 1954 the company introduced a second motorcycle and changed its name to Suzuki Motor Company, Ltd. (Suzuki). In 1985, American Suzuki opened its automotive division and was the first manufacturer in the United States compact utility Vehicle. SUZUKI'S MARKETING STRATEGY IN THE U.
S. MARKET ENTRY STATEGY: Suzuki changes its policy many times according to the market requirements. At first they entered in the US market as exporter of a single product (only motor cycle) with pure vertical integration. In 1964 Suzuki began exporting motorcycles to the United States.
It established a wholly owned subsidiary, U. S Suzuki Motor Company, Ltd. , to serve as the exclusive importer and distributor of Suzuki motorcycles. Then it began to export multi products and out sources its one brand: In 1983, General Motors (GM) purchase 5 % of Suzuki hand helped the company a subcompact car for the US market. The car name was Chevrolet Sprint, it was the first entry into the continental US automobile market. And it was introduced regional basis only in the West Coast. At last they decide to go for manufacturing in foreign land: GM's success with Sprint showed Suzuki that a market existed for its cars in the continental of United States.
So the company planned to introduce several unique vehicles into the U. S market over time. Suzuki had no guarantee, how ever, the GM would be willing to market the vehicles. Therefore, Suzuki decided to establish its own presence in the US automobile industry. Japan's voluntary restrain agreement (VRA) quotas made it impossible for Suzuki to export any cars other than the Sprint to USA in future. So in 1985, Suzuki and GM began negotiations with the Canadian government to build a plant in Ontario that could produce approximately 200, 000 subcompact cars per year.
Suzuki management expected the plant to be on line by early 1989, and the company could then begin selling cars in the USA under its own name. But the US market was growing market and was very lubricated for both Japanese and other foreign competitors, and Suzuki managers believed that clutter might limit their success if they waited until 1989, they were convince that it was the right time to enter in USA. And in 1985 Suzuki introduced the SJ 413 an upgraded model of SJ 410 and designed specially for US market. On May 10, 1985 Suzuki hired Douglas Mazza to organize and to head of its subsidiary ASMC, he was responsible for both developing dealer network and making marketing plan for SJ 413. Suzuki planned to market two versions of the Samurai in USA, a convertible and a hard top. DISTRIBUTION: Mazza's goal was to establish ASMC as a major car company in U.
S. To accomplish this objective he adopted the following steps: Convince prospective dealers to build separate showrooms for the Samurai. Then he designed a dealer agreement that required prospective Samurai dealers to build an exclusive sales facility for the Samurai including a showroom, sales offices, and a customer waiting and accessory display area. The dealers were required to dedicate minimum of two service stalls to Suzuki, which had to be operated by Suzuki-trained mechanics. Required dealership to display specific signs and outside the sales office and in the service stalls. A minimum of three salespeople, two service technicians, one general manager, and one general clerk had to be dedicated to the Suzuki dealership.
The bullet points above are illustrating the fact that the company followed the selective distribution (close to exclusive distribution) It allowed the company to achieve higher profitability, dealer loyalty, greater sales support and also higher degree of control over the retail market. PRICING POLICY FOR DEALERS: Price is the only marketing variable that generates revenue. Though it is close to exclusive distribution that is characterized by high margin, high profit and low volume, Mazza adopted with an opposite view. The company aimed to gain market response for its high quality with low price advantage. Thus their strategy was to sell high volume with low profit margin. Thus ASMC's planned retail price for the basis Samurai was $ 5, 995.
The planned dealer invoice price was $ 5095, only 7. 5 % higher than ASMC's own landed cost for the vehicle. Additionally they planned to offer about 50 dealer installed option, the sale of which would boost a dealer's unit profit. Each dealership's needed to sell approximately 30 Samurai per month to cover its investment and operating expenses. ALLOTMENT TO DEALER: Mazza planned to limit the number of samurai dealers so that ASMC could guarantee a minimum supply of 37 units.
Suzuki had set Mazza the goal of selling 6000 Samurais in first six month. But later realizing far more potential of the market, Suzuki raised its commitment to ASMC to 10, 500 vehicles for the same time period. Finally, Mazza decided to limit his initial dealer network to no more than 47 dealers. Mazza chose to introduce Samurai into California, Florida and Georgia, which have higher usage of, imported vehicles.
POSITIONING STRATEGY: Positioning is placing a brand in that particular part of the market where it will receive a favorable reception compared to competing products. From the point of view of Leonard Pearlstein, president and CEO of key/ donna/ pearlstein advertising agency, positioning is, " The unique way we want prospects to think about a product. " Douglas Mazza wanted a fresh approach for his company's new product so he gave the responsibility to that advertising agency, which had no experience in developing campaign for automobiles. After accepting the offer, Pearlstein and his associates scanned the industry practice for automobile advertising. They found out that the industry practice was to position vehicles according their physical characteristics. They also found out that most advertising was feature/ benefit or price oriented.
Based on its physical characteristics, the major three positioning options for Samurai SJ 413 were: Position as a compact sport utility vehicle. Position as a compact pickup truck. Position as a subcompact car. The pros and cons of positioning the samurai in each of these segments individually are given below: COMPACT SPORT UTILITY VEHICLE: The most obvious position for the samurai was as a sport utility vehicle. It looked like a "mini- jeep" and had 4 -wheel drive capability.
PROS: The features matched exactly with the attributes of compact sport utility vehicle. Designed to drive well off road. Positioning as a sport utility vehicle is consistent with the samurai' heritage. Praising of foreign owners because of samurai's reliability. It had the ability to go anywhere where larger vehicles could not and ease of repair. Smaller and lighter than the other vehicles.
It's price and size made it distinct from all other sport utility vehicles in the U. S. market. It was sold below the price of the other vehicles. Thus the positioning of Samurai as sport utility vehicle solely concentrated on the low price and its ability to squeeze through places where bigger vehicles could not go. So, it needed to be advertised as a " Tough little cheap Jeep. " CONS: There seemed to be a problem of whether the positioning could generate the envisioned sales volume.
The market for sport utility vehicle was relatively small. In 1984 it was less than 3 % in the U. S market. The goal was to build as annual sales of 30, 000 units within 2 years of its introduction. To achieve this it was required to exceed the combined 1984 sales of all imported sport vehicles. COMPACT PICKUP TRUCK: The advertising copy should emphasize the vehicle's looks.
PROS: It would tap a market two and one-half times the size of that for compact sport utility vehicles. It also had the advantage that Japanese trucks sold well in the U. S accounting for 54 % of total 1984 compact pickup trucks. It had the high level of US consumers' acceptance. The Samurai could be used as a truck when purchased without back seat or when its back seat was folded up.
The price was also set at the retail price to keep it in comparison with Japanese imported trucks. Thus the positioning strategy would only indicate uniformity with other truck prices but rather uphold a serious, practical, male-targeted tough truck. SUBCOMPACT CAR: PROS: Positioning the Samurai as a subcompact car would open up the largest of the three possible markets. A trend had been developed that professional like lawyers, doctors drove it to their offices leaving their Mercedes at home.
The Samurai boasted an average 28 miles per gallon in combined city and highway driving, was priced lower than many subcompact cars, and offered more versatility. Those who were shopping for an economy car could consider it. Thus the positioning strategy should give emphasis upon looks and style of the car. CONS: But if it was positioned as a car then it might not meet the expectations of the consumers because the Samurai was built on a truck platform, its ride was stiffer and less comfortable than the least-expensive subcompact cars.
UNPOSITIONING STRATEGY: Unpositioning is just the opposite of positioning. It is offering a single product to the entire market. Each person can define the product in his or her owns way and can rationalize the purchase decision in his or he owns terms. Pearlstein Ad agency suggests that Samurai SJ 413 should be un positioned in the market to cover all three possible segments; compact sport utility vehicle, compact pickup truck and subcompact car. ADVANTAGES OF UNPOSITIONING: Larger Target Customers: Due to unpositioning Suzuki Samurai American Suzuki Motor Corporation (ASMC) gets the opportunity to target the entire potential consumers segment. The Un positioned Suzuki Samurai will appeal the users of pi...
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Research essay sample on Analysis Of Marketing Strategy Suzuki Motor Company Ltd
