Professional Documents
Culture Documents
Table of contents:
INTRODUCTION About Hyundai Motors Operations in Pakistan Operations of DFML 4 4 4 5 6 6 6 7 7 7 7 7 8 8 9 10
SWOT ANALYSIS
PEST ANALYSIS Political Environment Economic Environment Socio-Cultural Environment Technological Environment
HYUNDAI SNATRO COMPETITORS ANALYSIS MARKET SHARE OF SANTRO REASONS FOR FAILURE MARKETING STRATEGY
11
12
12
13 13 13 13 13 14 14 14 14
Objectives Re-Positioning
Place Promotion
15 15 16 16 16 17 18 18
RECOMMENDATION
Acknowledgement
Dear Reader:
With the blessings of ALLAH the almighty, the report enclosed has reached its stage of final completion. This report is a result of exhaustive and much enthusiastic work. We extend our heartiest thanks to our teacher Sir. Prof: DR MAK Chishti, for conducting this course and making it interesting and knowledgeable, without his efforts and co-operation the report would not have been possible. We also thank for his confidence and trust he had in us, importance of which can in no way be under estimated. We are equally grateful to Iqra University for providing us the opportunities to pursue our endeavor. We hope readers of this report can complement the depth of the study and efforts put into it. Thanking You
LETTER OF TRANSMITTAL
Prof: DR MAK Chishti Iqra University Main Campus Karachi Dear Prof: DR MAK Chishti
We request you to accept this report on Re-launching of HYUNDAI SANTRO that you assigned to us at the beginning of summer semester 2011. It has been a privilege to work on this assignment and we have put in our utmost effort to prepare a comprehensive report on the topic. Should you have any query concerning the report, we shall be happy to discuss them with you.
Sincerely,
10263 10904
Operations in Pakistan
Hyundai Motors started its operation in Pakistani on December 1998 under the flagship of Dewan Farooque Motors. On December 25, 1998, Dewan Farooque Motors Limited entered into Technical Licensing Agreement with Hyundai Motor Company of South Korea for assembling and manufacturing of Hyundai vehicles in Pakistan. The project cost was approximately Rs. 1.8 billion financed on a 58:42 Debt to Equity ratio, with the assembly plant's installed capacity of 20,000 vehicles annually in two shifts.
Mission Statement:
To be the No. 1 automobile company in Pakistan. To assume leadership role in the technological advancement of the industry and to achieve the highest level of quantitative indigenization. To offer high value, economical and qualitative solutions to address the commuting needs of a diverse range of customers.
To seek long-term and good relations with our suppliers and dealers with fair, honest and mutually profitable dealings. To be a totally customer oriented company and to achieve Total Customer Satisfaction. To create a work environment, which motivates, recognizes and rewards achievements at all levels of the organization. To produce environment friendly vehicles. To be a contributing corporate citizen for the betterment of society, and to exhibit a socially responsible behavior.
Dewan Farooque Motors Limited acquired franchises of Hyundai Motor Company Kia Motors Corporation
Their aim: to bring in Korean technology to the country to produce vehicles of high quality at reasonable prices, offering the highest value for money.
Ditribution: Dewan farooque Motors has franchised its authorized dealership to private parties all over Pakistan. The company provides units to these dealerships and provides technical and maintenance training and support to ensure after sale service values.
WEAKNESSES
DFML has not yet achieved appropriate economies of scale as compared to its competitors. DFML and Pak Suzuki motors are producing the same no of vehicles per year) but for DFML incur huge cost. For DFML CKD kits account for 60% of their total Manufacturing cost, where as for Honda CKD kit account for 70% CKD kits cost for DFML is on the average about 10% higher than its competitor Pak Suzuki. DFML has total capacity of 20000 units. But at present they are producing 8000 units, this shows that they are not fully utilizing their capacity. It means that they are not
amortizing their fixed cost in best way, while major competitor having capacity of 10000, but at present producing 7000 units. Their dealership network is weak. Company does not own this dealership network. DFML has manufacturer-sponsored retailer franchise systems. They license dealers to sell their cars. So dealers often charge high price DFML. According to DFML sources, all major decisions are made in Korea by the holding company, they send instruction about their decisions in Pakistan and this process delays the policy making at corporate level by the top management.
OPPORTUNITIES
Political stability in Afghanistan will increase demand for commercial vehicles in the Central Asian States. So this is an opportunity for them to export the commercial vehicles as well as passenger cars to Central Asian Republics, for the Central Asian republics, Karachi being their nearest port the opening of trade routes in these countries, will lead to an inevitable growth in the transport sector. According to Manager Imports Mr. Farhan Asrar from DFML. There is an opportunity to expand market of Shehzore in Nepal and Bhutan, if India gives way through its trade root to Pakistan by an agreement. According to sources from DFML, if engineering board of Pakistan makes the industry specific deletion policy this will provide an opportunity for the development of vendor industry. At present, there are 180 vendors in the vendors industry, if they remain and increase in vendor industry, this will enforce localization of cars.
THREATS
The government tax policies are threat to DFML. DFML have to pay 6.25%
capital value added tax (cvt). Apart from this, they have to pay 35% important duty on CKD kits (the main component of cars), that is imported from Korea. That has increased its costs.
The law and order situation in the country especially in Karachi is threat to
DFML. Which has caused diminishing of companies production and demand in the country in demand of locally manufactured cars.
Suzuki 800cc and 1000cc cars are substitute for DFML car. The reason is that
people are becoming more price conscious and want economical car, which give low fuel consumption that, is why Suzuki demand in gradually increasing.
DFML imports CKD kits from Korea, when devaluation in the country takes
place, it increases the CKD cost.
PEST Analysis:
Uncontrollable environment are those external factors which can prohibit us or can create hurdles between us and our business. It is also called pest analyses which are as:
Political Environment Pakistan has to face lots of ups and down since its independence. So many governments have been broken down by military authority and most of the time marsh law applied on Pakistan. In this scenario no entrepreneur was willing to invest in Pakistan except few. Due to this market environment wasnt so good in Pakistan. Anyhow Pakistani government never been trustworthy for any investor..
Economic Environment
Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes and external ongoing conflict with India However, IMF approved the government policies, encourages by different foreign assistance and renewed access to global market since 2001. By following these policies government succeed to reverse the situation of economy during last five years.
Socio-Culture Environment Pakistan has strong culture background and it has been follow in some particular region of Pakistan strictly. But with the passage of time it is going to change. Thoughts of people, choices, taste and style has been totally changed. If we talk about the transportation source in Pakistan, People use buses, pickups etc for journey. They also have their own as well e.g. cycle, bikes etc and lots of people are pedestrian. But now the people who havent any source of transportation they also want something for their convenience because they wants to save their time as much as they can. People want to use such vehicle which looks beautiful and also affordable.
Technological Environment Technological factor also very important and we havent control on it. Technology is grooming with the passage of time. People also want that the product that they have is full of technology. We never control on technology for example you launched the product last year and your sale volume on that time is very high but after sometime due to latest invention a lots of substitute exist in market which affect on your business so you cant hold on it.
Share in %
Hyundai Santro:
The Santro was launched in Pakistan in 2000. As of December 2009, Pakistan is the only country where the first generation Santro is still being sold and the model has received no upgrades. Hyundai Santro is a car of 1000 cc powered Hyundai Epsilon Engine, with the latest EFI (Electronic fuel injection) system and 55/5700 PS/rpm horse power. Given such specifications, the car should give its driver something to drive home on. Although certain problems still remain to be readdressed, the car is now of a more solid stamp, and in faith a better drive. Santro is available in six variants: Prime, Prime Gv, Club, Club GV, Exec and Exec GV with prices ranging from Rs. 674,000/- to Rs. 907,000/-.
Honda Atlas
Honda atlas consist of two brands name Civic and City catering the market of 1300CC and above targeting the middle level of the market.
Others
After the deposition of duties on imported vehicles, different brands of cars have entered the Pakistani market. Consumers perceive such foreign brands as good quality and that satisfy selfesteem needs.
The utmost priority is to form a share of mind and heart among consumers so as to build a high market share for the company.
To duly anticipate in maintaining quality benchmark by maintaining the efficiency of automobile production unit by continuous research and development program, keeping in view the customers needs and a sound distribution system to attain the max of customer satisfaction.
Our intention is to attain an increase in share of the urban population consisting of Karachi, Lahore, and Islamabad as well as in rural areas of Pakistan in automobile industry. The duly purpose to attain this target by direct frontal assault on the market and to re-launch the brand on a higher scale to eliminate the resistance from small competitors and taking on competition directly.
RE-Positioning
We will re-position itself as a reasonably priced, high quality and a cost effective car in Pakistan
containing some features and attributes. The car itself will be positioned as Smart Car.
Target Market
Santro was positioned itself as a complete family car. The brand was targeting those 800 users who wanted to upgrade into the luxurious cars. The target market was the 35-45 yrs middleclass Pakistan.
Product Features
y y y y y 1000 cc powered Hyundai Epsilon Engine. 4-cylinders, EFI (Efficient Fuel Ignition) engine 55/5700 PS/rpm horse power 5-Speed manual transmission Nice, stylish and elegant interior. Dash board is equipped with a digital clock, MP3/ CD player with AM/FM radio and 4 speakers.
Price
Focused on differentiated pricing strategy. For all three models, there are further two categories, one with CNG and one with not. The price range of all are given below: Santro Prime
674,000
Santro Prime GV
714,000 Santro Club 787,000 Santro Club GV CNG
Place
Santro is distributed through the wide distribution network of DFML. It is available through 20 3S dealerships. Authorized 3s dealer provide three types of services all over the Pakistan under one roof:
Promotions
DFML joined hands with MCB to put forward a unique offer for its customers. On booking of hyundai santro customers were offered free cng for two months, lowest markup and insurance rates in the market. The alliance was supported by extensive media campaign covering TV, Print, Radio and BTL activities.
their money and comfortable ride in city conditions. Our primary business target is mid sized to large sized corporates that want to help their managers and employees by providing them a car for ease of transport. Our secondary business target is entrepreneurs and small business owners who want to provide discounts to managers buying a new car.
Age Group
25+ married, unmarried, male, female, young executives
Social Class:
Middle class, Upper middle class, Lower upper class.
Pricing Strategy:
Should focus on Differentiated pricing strategy. By introducing new features there will be increase in cost of production, Company can adjust that extra cost in selling cost. There is wide gap in prices with compare to its competitors so small increase in price with revised features will not affect market loss of Santro.
Advertisement:
Road Shows The company plans to stage road shows, to display vehicles in the pavilions during various college festivals and exhibition. Television advertisements Advertisements to promote and market our product will be shown on leading television channels. Major music and sports channels will promote and they will reach out to the target market will be promoted through AAg, Geo News, Express News and Dawn News etc as it has more viewers. Radio Radio is the medium with the widest coverage. Studies have recently shown high levels of exposure to radio broadcasting both within urban and rural areas, whether or not listeners actually own a set. Many people listen to other people's radios or hear them in public places. So radio announcements will be made and advertisements will be announced on the radio about the product features and price, qualities, etc. Print Ads Daily advertisements in leading newspapers and magazines will be used to promote the product. Leaflets at the initial stage will be distributed at railway stations, malls, college areas and various other locations.
Workshops and Seminars Workshops and seminars will be held in colleges and big corporate to make people aware about the companys past performance and product features, its affordability and usage, vast distribution network. Road shows will be conducted where free trials of the car would be given. Banners, neon signs Hoardings, banners, neon signs will be displayed at clubs, discs, outside theatres and shops to promote our brand car.
Booklets and pamphlets Booklets will be kept at car showrooms, retail battery outlets, etc for the customer to read. These booklets will provide information about our company; the products offered which suits the customers need accordingly.
DISTRIBUTION:
Same distribution channel will be utilized for the revised Santro. Authorized 3s dealer will offer three types of services all over the Pakistan under one roof: Sales Services Spare parts
Recommendations:
Technical support should be taken from Hynudai Motors in order produce high quality luxury products. Vendors should be equipped with technology and expects to produce quality row material. The name of company should be changed from Dewan Farooque Motors to Pak Hyundai, or Hyundai Pakistan. Offer some incentive as local assembler which are missing by Pak Suzuki and Toyota. Be brave, offer comprative analysis with other 1000 cc cars and advertise it in the same manner as company did for new audio in Santro because their product is better than that (e.g. fuel economy, engine type, brakes).