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Old 10th November 2011, 21:52   #166
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

I have also seen some companies price their cars initially at low price, then after very short period, they start charging higher prices and no one complains or even notices. I remember the launch prices of Qualis, Octavia, etc. So in some of the cases mentioned by GTO in this thread, the companies should have been smart enough to adopt the same. Take the case of XUV500, we all know that the price at which it is launched is definitely not sustainable for Mahindra, and they have already mentioned that they will revise the prices when bookings open again. But till then the reputation is already built and most importantly the product itself will do the talking and people will be ready to pay more. IMHO Honda must have applied this route for Jazz and Skoda for Fabia.
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Old 2nd March 2012, 18:46   #167
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by ACM View Post
Kiza.. can't ever spell it right - Maruti? But then they do charge a premium for even the Swift so is is not a premium small car. Yes it does get a brand premium in the small car segment compared to TATA but obviously not as much as say a Honda or a VW or even a Skoda. They yet do not have a car in the 8-15 segment and just decided to skip two segments higher a tough ask.
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Originally Posted by Tats07 View Post
Spoke my mind on this! Interestingly, does anyone have an answer as to why they don't yet have something in 8-15 segment? If they think SX4 is a rival of City/Vento etc. just because it is dubbed as a C segment sedan, then I must take pity on the officials at Maruti. They must exploit the C/C+ segment by launching something smart and sleek. There will be lots of takers.

Kizashi should've been positioned in the Civic/Corolla segment. I can bet that it would've dented the current Corolla sales, there's nothing to dent of the current Civic sales anyway! :-)
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Originally Posted by ARG View Post
#1. Kizashi - always thought this was a strategic posturing / halo product, giving out a clear message that they are open to starting a price-war (etc) in upper segments of the market (which form the staple for some brands that are eyeing a chunk of the lower segments) - if it comes to that.

#2. Fluence - again IMO, an image builder/enhancer that clearly tells India - 'Not a taxi-maker'! How they play with models that follow the Fluence will be their trump.
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Originally Posted by dot View Post
I think Maruti needs to launch a premium brand aka Lexus or Acura if it wants to really play in the specialty segment.
I don't think MUL was serious about the Kizashi. I am going to go with ARG's line of thought and assume that they merely intended to signal to Honda/Toyota/Skoda/VW/Nissan that if they want to compete with MUL in the A/B segments, then MUL is not going to take it sitting down either.

History is replete with many such examples (the most famous of which, Barco Projector Systems vs. Sony, ended up becoming a famous marketing case study in top MBA programs).

MUL may not care what the media and consumers think of the Kizashi, as long as the heads at Honda/Toyota et al have heard the message loud and clear.

Now that Toyota has anyway gone ahead and launched the Liva, and Honda the Brio, MUL may decide to make their threat credible and hit them where it hurts (C+/D segments). And this may mean, like dot suggested, spawning off a specialty brand.

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Originally Posted by rajneeesh View Post
I was speaking to some folks from Renault whow were visiting NCR for the FI race preparations. You folks will be surprised to know that they were very happy with the Koleos sales as they had sold the entire loto of 150 cars they had imported .
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Originally Posted by scuderiamania View Post
Just a couple of days a go Autocar[or was it overdrive] take a few koleos to the highest motorable road in india. The Renault india head was present there. So, bert D'souza asks him "how has the indian customers responded to the fluence and the koleos?". He replies by saying "oo, the response has been overwhelming!
Any manager who sees his company meeting a target will be happy. If they planned 150 sales and hit them, they are entitled to feel that the market response has been overwhelming.

Now, you may dismiss them for being so timid with their projections, but when they are testing out a market which you do not know completely, like nilanjanray others on this thread have said, it's better to be conservative. It's very rare that you research a market and decide that it can take 'x' volume, but you go with your gut at say '5x' and still succeed. It's heady when it happens and you will be praised no end, but if the move doesn't succeed, it's actually very costly for the business in all respects.

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Originally Posted by sahakar View Post
Almost, everybody has one major peeve.

Why can't any car manufacturer make one car that would tick all the boxes for a typical buyer?

I cannot think of one car that satisfies all my needs - either the handling sucks or the interiors suck or a monkey has priced the model and so on..

One car, people - Just get one car, right !!!!
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Originally Posted by inreverse View Post
Well, on the flip side... Even if you have the product, pricing and VFM it sometimes does not warrant to be a volume puller - FIAT :(

Build me car which has almost everything in it and under INR 9 lacs

Look what the Linea did to the mid-segment... Verna/Fiesta et they all had to add competitive features in their next releases to cope-up with the benchmarks.

Even benchmarks can't retain volumes if the strategists goof up some way or the other.

The majority of the market demands "VFM" + "Value Addition" + "Benchmarks" which in turn translates to better overall acceptability of the product.
You do realize how tough that is, right?

The population isn't homogeneous. Manufacturers segment their market and target them appropriately. A car that is fast may not necessarily have best-in-class mileage. A car that handles brilliantly may not have the best ride. A car that sails our roads and ditches and potholes and speed-breakers will not be a low-slung tarmac-hugger. A low-slung car will have poorer visibility and cabin space than a cab-forward high-set car.

Unfortunately, the segment that TBHPians and the like belong to isn't a particularly voluminous segment. So where will they get their margins if they make a sub-9 lac car that ticks all the boxes for us? And when a manufacturer goes out of his way and makes such a car, we lambast it for "not doing well" in the market or for being priced way too high.

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Originally Posted by 4x4addict View Post
Who the bloody hell heads up Marketing in Tata. He should like to second prize in stupidity.
While the Nano and Aria aren't the hits they were hoped/expected to be, most of the rest of their cars are market leaders or close to them. Look at the Indica, Indigo and Manza. Here are cars that fit the needs of many value-conscious Indian customers to the T. Acres of space, "basic comfort" (i.e. AC, ride quality, leg room, cubbyholes etc.) that rivals cars from at least two segments higher and extremely cheap to run and maintain. If that isn't a marketing win, what is? Marketing after is all understanding what the market needs, building it and delivering it supremely well. To my mind, Tata has had only two failures - Nano and Aria. And in the Nano's case, Ratan Tata probably over-ruled the marketing head all the way, so he is not even to blame.

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Old 2nd March 2012, 20:31   #168
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by GTO View Post
Guys, please note that this is not a thread to discuss why the cars failed. I want to stress on how top management seemed to lack common sense in their final decision. If it was so obvious to us laymen, how come it wasn't to them?
There are various reasons for this.
1) Top management are generally well paid and for most of them the value for money concept is not as ingrained in their psyche as for the common man. I mean if you earn a crore a year, would it make a difference to you if you paid 8, 9 or 10 lakhs for a car. If not, then that differential pricing of 2 lakhs is enough to kill your market offering.
2) Most top management do not think along the lines of having to pay for a product that they put in blood, sweat and tears to earn (they all get free company cars). In India, after a house, a vehicle is the second most expensive purchase a family makes so how the common man values a car and how the executives value a car is different.
3) The top management only looks at the company bottom line and hope they can get away with higher pricing as that means they come out of it looking better. There is an element of greed and profiteering in this, along with an element of your company needing to make short term margins and thus looking good to shareholders. Especially if you are an employee who can get fired for not meeting financial expectations. In this sense companies like Mahindra have a bit of an edge if an owner in the company is involved in the process.
4) There are intangibles that some company executives factor in that the common man doesn't care about. Is a Mercedes for example really justified in the price they ask for their car. How much of that is just the mind set of "I have made it in the world and show it by the car I can afford to drive". That is why the Japanese manufacturers have made such a killing with their executive brands (Lexus, Infiniti, Acura etc.)
5) Very few car executives and car companies take a long term view of the market. Too many of them are focused on this quarters numbers (In some ways connected to point 3 above). Long term means higher volumes at lower margins.
6) At least some of the cars are over priced due to tax reasons (CKD, CBU etc.). This does not help. Obviously localisation does matter. Maruti showed us that with their CBU's never selling (GV, Kizashi) despite the fact that they are much better than vehicles than their locally made super sellers like the new Dzire (I still cannot figure out what this cars USP is). Assuming they assembled the GV and Kizashi here, they should be able to price them better and thus should be better sellers.
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Old 2nd March 2012, 23:45   #169
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Quote:
Originally Posted by pganapathy
1) Top management are generally well paid and for most of them the value for money concept is not as ingrained in their psyche as for the common man. I mean if you earn a crore a year, would it make a difference to you if you paid 8, 9 or 10 lakhs for a car. If not, then that differential pricing of 2 lakhs is enough to kill your market offering.
2) Most top management do not think along the lines of having to pay for a product that they put in blood, sweat and tears to earn (they all get free company cars). In India, after a house, a vehicle is the second most expensive purchase a family makes so how the common man values a car and how the executives value a car is different.
I would like to think that is not true.

No one can survive in business with such an attitude. Just because someone earns in chores and/or gets a company car doesn't mean he has free reign over pricing. There would be enough checks and balances to ensure that such biases, if any, don't reflect in the final pricing. Secondly, no one will make it to a position of such responsibility if they have displayed such callousness in decision-making at any point of time in their career.

Quote:
Originally Posted by pganapathy
like the new Dzire (I still cannot figure out what this cars USP is).
It is the a) most inexpensive, b) Maruti with a c) boot.

What else does it need?

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Old 5th March 2012, 13:57   #170
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

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Originally Posted by spadix View Post
I would like to think that is not true.

No one can survive in business with such an attitude. Just because someone earns in chores and/or gets a company car doesn't mean he has free reign over pricing. There would be enough checks and balances to ensure that such biases, if any, don't reflect in the final pricing. Secondly, no one will make it to a position of such responsibility if they have displayed such callousness in decision-making at any point of time in their career.



It is the a) most inexpensive, b) Maruti with a c) boot.

What else does it need?

Regards,
spadix
I too would like to think it is not true, but what other explanation is there. I mean, at the end of the day, the top management have to sign off on the pricing even if they don't make the original decision of what to price it at. They will not let some 25 year old yuppie a year out of B-school make the final decision, even if they might permit him to make the first decision, right. Eventually the buck has to stop with top management, which is why I say what I do. I would love to hear another rationale which shows me how sensible these people are and why the pricing is skewed, but I don't see one unfortunately. Also, if this type of decision making results in greater profits, it is not callousness from a business perspective, just smart business strategy. Sad but true

So essentially it is selling because it is a Maruti. Let me put my question another way, would the Dzire sell even half as much if it had another logo on the boot. I don't think so. JMHO
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Old 5th March 2012, 19:45   #171
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

What we tend to ignore is that that the large volume cars are those where
- Cost of acquisition is low
- Cost of maintenance is low
- Required equipment is there

Now for quite some time M800 was a large volume seller. Slowly better engine and better AC of Alto converted the M800 buyers to the Alto 800. The Alto 1.1 never sold in numbers and neither does the A Star, which is the latest version of the Alto, just because the extra goodies - safety, better build etc are just not (perceived to be) affordable to the buyers.

While deciding on the sale price of vehicle the top management has to juggle a lot of factors
1. actual cost to manufacture.
2. cost of advertising.
3. premium that the market can absorb.

Contrast the case between Aria and Fortuner. Assuming that both the vehicles cost the same to manufacture, the factor # 3 - premium that market can absorb worked, for the Fortuner and against the Aria.

On the other hand Kizashi being a CBU, tanked because of factor #1 - actual landed cost, which was not commensurate with what the market is willing to bear.

Another factor is the quality of construction and subsequent niggles. No manufacturer is willing to admit that their quality is bad, so if they are let down by the manufacturing, the costing is immaterial. This may explain the difference in sales numbers of the Scorpio and the Safari.

On the whole getting the pricing right is more of an art than a science, and that is why a lot of marketing duds and a few run away successes.
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Old 25th June 2013, 17:24   #172
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Default Re: Big Money + Big Talent = The overpriced market dud. How?

Adding to the list is the latest avataar of the Hyundai Sonata
Name:  ext12859151202011hyundaisonata550x366.jpg
Views: 626
Size:  46.1 KB

Barring the first Sonata model launched in India with the Jag looks
Big Money + Big Talent = The overpriced market dud. How?-2003hyundaisonata73511.jpg

The current version has been launched in only with a gasoline power plant in a country crazy of mileage and efficient oil burning bigger motors. Being a very competent machine on it own, without a second engine option, it is a sure shot recipe for failure.

Hyundai could have capitalized on capturing a very healthy lead over its arch rivals such as Accord and Camry with its current fluidic design philosophy being quite popular in our market with both the Verna and Elantra doing quite well in their segments.
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