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The Academy of Economic Studies

Faculty: Business Administration


Students: Radu Ionut
Pereverzov Sorin
Todea Cristian


INTERNATIONAL MARKETING
CASE STUDY
AUTOMOBILE DACIA S.A.









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CONTENTS


1. Background
2. The Marketing Strategy
2. 1. People
2. 2. Product
2. 3. Price
2. 4. Promotion
2. 5. Place
2. 6. Competitive strategies
2. 7. Distribution strategy
3. VISION. MISSION. VALUES
3.1. Automobile Dacia SA Company Mission
3.2. Values in the Automobile Dacia SA
3.3. Development and implementation regarding the launch of Dacia on the
market
4. ANALYSIS OF POSSIBLE RESISTANCES AND METHODS TO OVERCOME THEM
4. 1. SWOT ANALYSIS OF THE COMPANY
5. EXTERNAL ENVIRONMENT COMPETITIIONAL ANALYSIS
6. Goals and Objectives
7. Conclusion

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1. Background
In todays rapidly changing environment products and markets have a limited life
expectancy. A company which does not update and change its products and
markets is unlikely to be successful for long. This was at the core of Renaults decision to take
over Dacia, a long established car producer in Romania, the heart of Romania's automotive
industry. Renault has been present in Romania since 1966 and forged the country's automotive
industry. Close ties have existed between Renault and Automobile Dacia for 35 years, with
various Renault models being assembled by Dacia, under license through to 1978, thereafter
independently. Excluding the Super Nova, the vehicles currently produced by Dacia are based
on former models of the Renault range.
On September 29, 1999, Renault acquired 51% of the capital of the Romanian car maker Dacia,
amounting to $50 million. Renault has since increased its equity stake to 92.72% and put the
entire company on track for rapid, wide-reaching modernization. Built in 1966, Dacia's Pitesti
plant covers some 2.9 million sq. meters. More than 2.2 million vehicles have rolled off the
production line since 1968. The plant has an annual production capacity of 120,000 vehicles,
plus 120,000 engines and gearboxes, with operators working in two shifts. Fully computerized,
Dacia is now hooked up to the Renault-Nissan Alliance networks. To meet demand, the
company has developed a monthly programming system that adapts production to demand
forecasts. The modernization of production facilities and assembly lines is an ongoing process.
The new Logan launching marked the Dacia brand revival. Once this was launched
Dacia could run in its industrial commercial tool and define its new identity with vehicles like
Solenza, the Diesel engine on the van, etc.


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2. The Marketing Strategy
2.1. People
At Pitesti, Renault is working with local players to combat unemployment. This
partnership paved the way for the founding of the Development and Solidarity Foundation of
the Pitesti-Mioveni region in 2001. The objective is to develop employment in the region by
promoting business creation, capital investment and vocational training.
Dacia's employees (12,000 employees) are the company's most valuable asset. The present
focus on customers implies a veritable "cultural" revolution among employees, in management
styles and work organization. The number of hierarchical levels has been reduced. A system to
recognize individual performance (personalization of compensation) and collective
achievement (bonus for quality progress) has been successfully introduced.
Cross-functional work groups and basic work teams have been formed. The organization of the
workforce into basic work teams has resulted in the development at the level of each unit of
the "customer/supplier" principle. Each unit receives parts from its suppliers and delivers them
to its customers with value added. Training was given to 1,200 employees in 2000, in Romania
as well as in other countries, particularly in France. To complement its proactive training policy,
Renault has set up the Automobile Academy based in Bucharest.
The academy consolidates managerial, commercial and technical training programs
for the employees of Dacia, Renault and Nissan Romania.




2.2. Product
Romanian car market represents a great case-study for analysts. Today there are in
operation several motor vehicle manufacturers, and also a network of suppliers working both
for the local assembly lines and for export. The production of motor vehicles over the last years
since 1995 is presented in the chart below:
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In 2005, the local motor vehicle production went up by a strong almost 60% as compared with
2004.
This increase was due mainly to the Dacia Logan's production and also to the success the model
is already having on many export markets. The market of passenger cars is oriented firmly
towards the lower-medium class of family cars (class C) which covers 58.6% of the market,
certainly due first of all to the share of the domestic Dacia in the market, but also due to fact
that among the imported cars (both new and second-hand) there is also the class C to prevail.

Dacia, the leading Romanian brand with a domestic market share of 63.7% offers a
complete line of passenger cars and light commercial vehicles at prices that put car ownership
within reach of a great number of Romanians.
The Logan car, completely of Renault origin (technology, development, rolling chassis, engine,
gearbox, etc.) was conceived in the Renault Techno Centre near Paris and meets the Renault
manufacturing standards. Logan was a pilot program for the use of the new numerical
technologies in the conception of the product, the tools and the manufacturing process.
Another peculiarity of the conception process was that. Logan was a decisive step of the
"design to cost" program, introduced by Renault in 1992. Logan meets European security
standards.


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2.3. Price
The Romanian car market is characterized by very low prices: between $3,000 and
$10,000. Price is a determining factor in the decision to make a purchase and shapes the
market. Even if the purchase of a car is done almost breathlessly, Romanians are not too
Western-like about the models they choose, since family-cars are dominant, with large cargos.
Statistics from APIA have revealed that Romanians favorite car is simple and conservatory.
Romanian tastes are not very pretentious regarding aspect, color and price. Other considered
elements are viewing consumptions, too. Less appreciated are safety and features, which come
first in Western Europe. Within C class a harsh competition takes place among top models.
Thanks to its price, Logan can be considered a winner. The young car-star of Romanians is
followed by imported cars, with more features and higher quality: Megane Sedan (Renault),
Octavia (Skoda), Peugeot 307, VW Golf, Opel Astra and Ford Focus. Following C class, mini A
segment cars have attracted many clients, especially Daewoo Matiz and Fiat Panda, Smart and
Citroen C2.
Around two thirds of the Dacia's production and almost all the Daewoo's production goes to
the local market. Dacia and Daewoo are covering together almost all the market for locally
made vehicles.
The 2005 passenger car sales of local manufacture are shown in the table below:

On the local market the range of prices for Logan vary between 6280 Euro and 9620 Euro.


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2.4. Promotion
Dacias promotion campaign is relied both on direct and indirect marketing. The direct
promotion is made through the sales promotions, radio broadcasting, and television
commercials. The last promotion campaign was lanced at the end of March 2005, when Dacia
initiated a test campaign for the Logan model in order to give its clients the chance to
experience the Logan. More than 14,000 Romanians took advantage of the campaign to test
the Logan. Dacia is, also, involved in sponsoring national sport events and cultural events.
As a member of the Renault Group and an admirer of the French art and culture, Dacia co-
sponsored the first substantial exhibition of French art in the last 30 years hosted at the
Romanian National Gallery, between the July 15 and October 2nd, 2005, which consisted of 77
works of art (displayed in four sections) coming from the art collections of the most famous
Parisian museums (the Louvre, Quai d`Orsay, etc.) and the art galleries in Bordeaux, Caen,
Dijon, Lille, Lyon, Orleans, Pau, Rouen, Tours, Picardia Museum in Amiens and the Granet
Museum in Aix-en-Provence.


2.5. Place
The Dacia vehicles and parts distribution will be assured in most countries through the
Renault network. In most countries of the world, repair and maintenance works will be carried
out in the Renault Dacia outlets. In Western Europe, the after sale service will be assured by
the Renault concessionaries as of January 1, 2005. The Project Logan provides 42 first rank
suppliers from different countries: Romania, Turkey, Eastern and Western Europe and a
supplier assistance program with the objective of improving the development, the organization,
the technical capabilities and the cost management. Production, which began in Romania in
2004, started up in Russia, Morocco and Colombia in 2005, enabling Logan to be sold in 40
countries by the end of the year.
In 2005 Logan was the best-selling vehicle in Central and Eastern Europe (over 106,000 units),
ahead of the Skoda Fabia, and was available in three body styles. The other countries of West,
Central and East Europe as well as those of Maghreb and Middle Orient will follow suite. Logan
will be marketed at the end of 2006 in almost 40 countries.

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2.6. Competitive strategies

Given that the car market in 2008 (at the launch of the Sandero model) was mature and
complex, the strategy that was used was mainly that of reducing prices, making this an
essential element of the mix, along with a diversification of range of products (After
Logan family was released and Logan Van on gasoline and diesel, then the youth
Sandero) in an attempt to satisfy different consumer needs, thus increasing the reach of
products. On the other hand this limitation by reducing the price obtained was a barrier
to new entrants but also for competitors.
Basically they resorted to creating a new product Sandero addressed to a young existing
market with middle-income, pragmatic and entrepreneurs who want a reliable car,
robust to poor infrastructure but also contain elements of attractiveness in terms of
space and design.

2.7. Distribution strategy
a) As in the case of product policy and international distribution for the question of
standardization or adaptation. The main alternative strategy used by people from
Dacia SA in terms of breadth of distribution is the exclusive distribution, by
targeting orientation on one segment of potential consumers.
Thus, the target segment of customers is given by rational, pragmatic and young people
for whom price is the main criteria for purchasing a car. The introduction of Sandero,
Dacia car market addresses a new challenge, proposing a model with an attractive
design and a highly competitive price. "With this launch, Dacia basically aims to
increase demand for this type of car, bicorp in a market where are mainly sold tricorp
models.
b) In terms of channel dimensions were used long distribution channels, and in the
degree of participation of the company's distribution process it is performed by
specialized intermediaries. Bear in mind that low cost software development is an
excellent opportunity for manufacturers to gain experience in management of
supply, to make maximum use of economies of scale and adapt to the mechanical
requirements of various market platforms.







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3. VISION. MISSION. VALUES
The company's vision Automobile Dacia SA
If before 1989 the automotive industry in the countries of Central and Eastern Europe
where creating few models, today, countries like Hungary, Poland, Slovenia, Romania
produces hundreds of thousands of cars annually and are likely to expansion their
production.
Before 1989, Hungary didn`t had on its territory any factory producing cars. Poland had
two in Warsaw and Bielsko Biala, Czechoslovakia produced Skoda in a factory in Mlada
Boleslav, and in Yugoslavia there were three, Novo Mesto, Slovenia territory today,
Sarajevo, in Bosnia Herzegovina and Zastava factory, near Belgrade.
So in such periods carmakers have acted quickly and made massive investment in
Central European countries. So in Hungary came prestigious brands such as Audi, Opel
and Suzuki. Poland has privatized the existing plants Fiat and Daewoo.Toyota, Peugeot
and Citroen have invested in Slovakia and Slovenia. One of the few plants that did not
list any builder.

3.1. Automobile Dacia SA Company Mission

The main mission of the organization is to support the French group on emerging
markets of Romania. In other words, we can say the company's mission is its reason to
exist. Renault managed and still manages to develop new markets seizing production
and sales of its products throughout countries around the world.
In addition, Renault, the Dacia company wants to be innovative, competitive, efficient,
putting great emphasis on price and car's interior cabin.

3.2. Values in the Automobile Dacia SA

The main values that govern the company's activity is work, discipline, respect,
responsibility, caring for the environment. The work is "the law of the modern world
that has no place for lazy people.
Submitted effort by employees of Dacia, who demonstrate professionalism, discipline at
work, all these values gives a distinctive image of the company
Respect is a real value, implemented in the society in which it operates, and not least in
the environment. This is well shown by the scrappage program.
Concern for the environment has become a necessity. Long-term company's efforts to
reduce global warming pollution, encourages initiatives to production with minimal
waste, extend the use and recycling of end products

These initiatives are combined with a program of long-term commitment to society.
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3.3. Development and implementation regarding the launch of Dacia on the
market

Market Strategies
Marketing strategy aimed at putting the company in connection with the market and
taking advantage of this opportunity. Enterprise resources of Automobile Dacia SA -
human, material, financial are one of the main arguments of its strategic options.

The main strategies adopted by Automobile Dacia company meet the following
strategies:
Growth strategy: Company Automobile Dacia SA is a company in full
expansion, with a high synergy and operating in a dynamic market. From year to
year the company grew, encompassing new models of cars, and increasing
market share, turnover, and investing considerable sums in the prospects for
sustainable development.
Focused strategy. This strategy conveys the idea of implementing a strategy to
focus on a few consumer segments, adapting to the requirements of their needs
and preferences.
Active strategy. Dacia Renault Group is a powerful group, modern, working
continually upgrading and improvement. The amounts allocated to various
projects, the degree of innovation of products strongly support the adoption of
such a strategy.
The exigence strategy assumes that the company reduced requirements are
not concerned with creating a vehicle of exceptional quality, relying on the utility
and practicality elements of the car. However the price-quality is unbeatable now.
If we add that the after sales servicing is excellent, exterior design becomes
increasingly engaging with the launch of Dacia Sandero, and that it will be
improved with the launch of future models, we can say that in the future this
strategy will change radically in favor of a strategy of the high demands.
Offensive strategy. By adopting such a strategy Dacia aims at increasing
market share by building a competitive advantage.

Strategies of the marketing mix strategies
Product Strategies

a) Quality Strategy is the most important strategy in the approach used to create
product quality relationship built on efficiency. It is known that an increase in
quality undoubtedly involve a progressive increase in expenditure covered only to
a point of revenue contributions to the quality question. Dacia always approached
such a strategy to ensure its maximum efficiency with turning human and
technical potential available in all producing countries, subsidiaries of the parent
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company. Dacia Trust didn`t aimed at the highest level of product quality, but
rather the best value for money. Dacia objective was to produce a range of
vehicles robust, reliable and accessible for Romanian and foreign customers,
Renault quality standards.

b) Global supply strategy
Dacia management opted for a strategy based on undifferentiated markets, sustained
effort on the part of the massive image change that requires special attention from
consumers and on the other hand, the low cost car segment positioning. At present,
Dacia is available in 51 markets from Europe to Africa, through North Africa and Turkey
and will make entry in Portugal but also in Scandinavia (Sweden, Denmark, Finland).
Thus, Sandero, like Logan, will be available gradually on an international scale. In 2009,
this 5-door sedan bicorp comes on the market in South Africa.

c) Another strategy is the approach of Dacia on the location of the product strategy.
Since this is a transnational company, the final product is achieved within one or
more countries, but its components are made in various international markets
linked. Thus, the products are made mostly in Romania Pitesti plant in centers
where there is currently making the body, engine, gearbox and transmission
assembly. But add to these input suppliers such as Valeo (PCB), ACI (bridges)
Cortubi (exhaust gas), or Valeo Climate (air) to carry out the production process.
Dacia team had a very important contribution to the development of Sandero,
considering that 45% of the engineers who worked on the project are Romanian.
In terms of supply and production strategy, it is focused towards improved
quality and reduced costs. Thus, the suppliers agreed by Renault Dacia are of two
categories: Class A (90 respond 100% of the 140 criteria) and class B
(corresponding to approximately 75 90% on the evaluation criteria). The trend is
that all providers to be providers Dacia rank, that is to meet over 90% of the
expectations of the beneficiary. The main criteria for evaluation of suppliers are:
delivered product quality, strict adherence to the terms and conditions of delivery
and reduced costs. Dacia performances depend on who develops relationships
with both suppliers of raw also with distributors and buyers of the products.




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4. ANALYSIS OF POSSIBLE RESISTANCES AND METHODS TO
OVERCOME THEM


Key resistance is represented by the resistance of mentality. Many perceive the
Romanian Dacia brand with great reluctance based on experiences long ago, and
especially during communism. During this period the political situation did not allow
competition to develop in this segment, and the restriction of competition has led to a
monopolistic practice of the company, and thus almost all Romanians who had a car
was brand Dacia.
Before being taken over by the company Renault in 1999, Automobile Dacia SA has
benefited from a favorable image of Romanian consumers. With the takeover, Dacia has
acquired a new form, took courage and began to gain ground in the consumer's mind.
The solution was represented by a method which required rebranding huge costs
especially in the technological system and then to promote the product. Fig.2 Dacia
brand's history


Finally perhaps the biggest obstacle was the low price. Mostly price is an indicator of
quality, especially when the intrinsic and extrinsic elements of the product are not
known or are difficult to predict.
As the intrinsic elements, it could be easily determined because of their tangibility. All
these elements were based on a high-tech manufacturing plus cheap labor force and
state subsidies.
If the problem of the tangible cost item was solved, the issue of extrinsic elements
remains suspended.
Basically, without a glorious past, or a positive image, Dacia car appeared in another
form and claimed to have respect from its customers, given that it showed a reduced
price and brought the quality promised.
This obstacle was overcome with the help of specialists in the field, Blogging, Public
Relations.




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4.1. SWOT ANALYSIS OF THE COMPANY

SWOT analysis is an overall assessment of strengths, weaknesses, opportunities and
threats of the company. Strengths refer to internal capacity, resources and situation of
positive factors that help the company serve its customers and to achieve its goals.
Weaknesses include internal limitations and negative situation into factors that may
affect a company's performance adversely.
Opportunities are favorable factors or trends in the external environment, the company
is able to exploit its advantage and threats are external adverse factors or trends that
may become challenges for company`s performance.
The aim is to corroborate the analysis on the one hand, the strengths of the environment
with attractive opportunities, and on the other side than to eliminate or minimize
weaknesses and threats.

Strengths

Latest equipment used to manufacture cars, continuously improving from year to year,
cheap labor that is not less than 13.873 employees only in Romania, is the first
company's strengths.
Customers and clients of the Logan in 2004 are today, forming what we call customer
set. Existing distribution, with its canals, information and processing systems are the
company's strengths.

Strengths regarding the communication strategy within the company Dacia
International communication strategy, modern, dynamic.
Credible communication strategy.
Clear identification of the message communication (customer profiling).
Use of site communication mix: advertising TV, games, contests, advertising
billboard, print, participation in fairs and exhibitions of national and
international web page.
The messages are clear and consistent, providing a balance between simplicity
and complexity.
Direct communication through the show room advisers arranged sites to
international standards in accordance with brand image.





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Weaknesses

Failure to satisfy all consumers, with a risk that some of them focus on competition.
Given that the car will be available for export, both by land by truck and train and by
ship, in Constanta, we can say that a weakness is the high cost distribution.
These costs in addition to physical transportation, also include charges for insurance of
goods and the transport costs of transport on the ship, unloading charges, stock
expenses.
Infrastructure in the Community is a weakness as mentioned above makes distribution
difficult.



Weaknesses of the company's communication strategy
At Dacia there was a communication strategy before 1999.
Dacia brand image leaves its mark with its ups and downs on the communication
strategy and new Dacia products.
High costs for rehabilitation Dacia brand image.

If the first two concern the whole company Dacia and it reflects the real situation,
opportunities and threats reflect the environment and its impact on business activity.
The company must analyze its market sales and marketing environment to find
attractive opportunities and to identify threats.


Opportunities
Among the main opportunities encountered in the Romanian market we enumerate:
The rapid growth of the market.
Opportunities to expand product portfolio, which happened in the last four years,
and current efforts are going in the same direction, development and creation of
new models.
Possibility of vertical integration. This includes the purchase of companies
accounted for Dacia suppliers of raw materials or strategic points were on the
market.
Possibility of concluding lease contracts.

Ultimately can be seen as an opportunity the manifestation of a state of stagnation or
decline of the competitors.
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Threats
The main threats of the company Automobile Dacia SA can be represented by:
Adoption of regulations restrictive laws or regulations with adversely
impact;
Joining an economic recession at the national or international level.
Unfavorable demographic changes,
Changes in needs, tastes and preferences of customers,
Market entry of new competitors;
Increasing demand for cars competition,
Vulnerability to changing business environment.



5. EXTERNAL ENVIRONMENT COMPETITIIONAL ANALYSIS

Michael Porter developed a model based on analysis of five factors which exert their
influence in the competitive environment specific to each sector. The five factors are:
The rivalry between existing firms within the industry.
Threat to those who could enter into the consideration the company operates.
Bargaining power of suppliers
bargaining power of customers
Threat of substitutes.

Marketing claims that to be successful, a company must give its customers more value
and satisfaction than its competitors.
The company not only must adapt to consumer needs, but must obtain a strategic
advantage, implementing in their minds that their product offer is much better than the
competitor.


Dacia main competitors:

Renault
Clio
Peugeot
207
Opel
Corsa
Ford
Fiesta
Chevrolet
kalos
Volkswagen
Polo




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Rivalry among existing competitors is a tough market because many opponents act with
the same financial forces. All competitors occupy in the consumer's mind strong
positions.

The threat of new competitors in the automotive field must not be neglected. A great
example that can be illustrated here is the deposition of Company Xerox by Canon.
Automobile Dacia SA currently has minimum price advantage compared with
competitors. As entry barriers are high due to other competing political instability in the
country, Dacia can still get high profit margins.
When in the market would enter other competitors, and here we refer to Tata Motors,
the situation on the market supremacy could change.

Analysis of the threat of substitute products. In this area substitutes can not be an
imminent danger for the company Dacia.
However, strategic management of the company is aware that the distant future will
support more than ever need for travel by means such as cycling, air balloon, suspended
train, etc.

Analysis of the bargaining power of their clients. We are now in an era where the customer
has the power to decide.
We are in an era of relationship marketing where we try to retain customers, to make
him truly an "apostle" of our products.
So with this in mind we can say that Automobile Dacia SA is a customer-oriented
company.
Going after applying the model used by Toyota and the innovation management that
takes into account its customers complaints, Dacia has tried over time to change the
outdated past image of representing people drive and what it is today.

Bargaining power is not even that good, because we are talking about a durable good,
and the switching costs of suppliers are big. Also purchased product is an important
product for the customer, he may not easily abandon it.

Analysis of the ability of suppliers. Providers have an important role because they are in
fact the interface between product and producer. They must be well motivated or it can
move towards more intensive promotion of a competitor of the Dacia.
Once the provider`s confidence was gained, bargaining power may increase to a higher
level because he is aware of the fact that switching costs to another supplier are higher
than the margin that he may require the manufacturer to continue to meet the desired
services.
After all the number of authorized dealers is not very high, and the product offered is an
important one for the client.

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6. Goals and Objectives

The Logan Project is part of the international development strategy of the Renault Group, which plans
to produce annually more than 700,000 units of this model by 2011. Here are some of the key figures:
350 million Euro budget invested for the development of Logan; sales in 35 countries in 2005; 5 Logan
production sites by 2007; 42 first rank suppliers.
Renault has embarked on a strategy of profitable growth to achieve its target of annual sales of 5 million
vehicles by 2011, of which 50% will be outside Western Europe. The group therefore has to be
strategically present in new automotive markets, deemed the principal drivers of growth over the
coming decade. Renault has assigned Dacia the task of acting as a highly integrated, low-cost production
base, capable of producing entry-level cars that are modern, high quality and robust and of meeting the
needs of customers in countries where car ownership is still a remote dream. The plan has engaged
Dacia in a process of long-term modernization.
The year 2006 represents a new stage in the Logan program. The Logan Steppe Concept show car,
presented for the first time at the Geneva Motor Show, demonstrates Dacia's intention to broaden the
Logan range.


7. Conclusion
The brand's purchasing strategy involves developing a culture of quality among its suppliers at
the same level as it now insists on for its own production processes. The inclusion of Dacia in the Renault
group has already attracted foreign suppliers to Romania, such as Michelin, Cabla, Continental,
Johnson. Controls, Magnetto and Ficosa. This will help to improve the existing supplier panel,
transforming the Arges Valley around Pitesti into a veritable "Automobile Valley".