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Scorpio

Case Study

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Prepared by – Samir Lad, Nilesh Gokhale, Vinod Seelan, Noel Crasta, Babu Anthony & Alok Nag

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Company Overview – M&M• Founded in 1945, Mahindra initially imported and assembled Willys

jeep kits• Company was listed on Bombay Stock exchange in 1956• Mahindra built its image as a manufacturer of light commercial vehicles

& tractors• Since 1983 company had been the top-selling tractor brand in India

(the worlds largest tractor market)• In 1995 company entered into a JV with Ford to manufacture Ford

Escort for Indian market• Anand Mahindra, a third generation family member, MBA from Harvard

Business school was appointed the Managing Director in 1997• Around 1998 company refreshed the existing UV Armada into Bolero

to target the urban market• M&M launched Scorpio in 2002,with successful intention of changing

company’s external image• Mahindra launched the India’s first wide body car in 2007 in JV with

Renaults – Mahindra Logan • Currently among the top 10 industrial houses is worth US $6.7 billion

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Market Place

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• India is the 11th largest Passenger Cars producing countries in the world

• In 2006 - 07 1.37 million passenger vehicles were sold in India

• Major 4 wheeler OEMs in India– MUL – (39.17%)– Tata Motors (30.80%)– Hyundai (17.83%)– M&M (8.81%)

Figures for ‘05 – ’06 (ACMA)

• Mahindra commands major stake in UV market (51.5%) with models like Scorpio, Bolero, Marshal, Maxx etc.

• Mahindra is leader in tractor market India (worlds biggest tractor market)

• Of the 288,601 UV/SUVs sold in India in the year up to March 2008, 148,761 or 51.6 per cent were M&M vehicles and 39,935 of these were Scorpios.

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Market Share

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M&M’s market share in the UV/SUV segment in India

FY08 Growth Share FY07

Total 288,601 5% 100% 274,520

M&M 148, 761 16.4% 51.55% 127,856

TATA Motors 59,864 -12.2% 20.74% 68,211

Force Motors 8,104 -18% 2.81% 9,940

MUL 3,132 -3% 1.09% 3,221

GM 20,671 -5% 7.16% 21,871

TOYOTA 48,069 11% 16.66% 43,421

Scorpio’s market share in the SUV segment in India

FY08 Growth Share FY07

Total 68,938 16% 100% 59,429

Scorpio 39,935 5% 57.93% 38,015

Safari 19,078 21% 27.67% 15,816

Endeavour 2,918 48% 4.23% 1,975

Honda CRV 3,427 82% 4.97% 1,880

Pajero 1,676 75% 2.43% 960

Grand Vitara 795 1.15% -

Others* 1109 - 1.61% -

*Prado, GM Captiva, Hundai, Nissan X-Trail

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Geographic ₋ An all terrain passenger vehicle₋ Initially was launched for Urban and semi urban customer, however is now gaining

popularity with rural crowd too due to better fuel economy

Demographic ₋ Preferred by medium sized families (5 – 7 members) to enjoy travel together₋ Small families with family income of above 50K to enjoy lavish commutation & status symbol₋ Urban professionals , businessmen & local politicians use it to show off₋ Males prefer Scorpio for power & ruggedness but females prefer it for speed & style

Behavioral ₋ Rational benefits: World class vehicle, good looks, car like comfort, great value₋ Emotional benefits: Ownership experience of thrill, excitement and power₋ Relational benefits: Young modern, premium, city companion / extension of lifestyle.

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Segmentation & TargetingUnderstanding the need for Mahindra to emerge as an Urban player, Anand Mahindra formed team IDAM (Integrated Development and Marketing) to develop an SUV which would suit Indian conditions and pockets.

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• SUVs like Pajero, Land Cruiser and Prado are seen as urban vehicles for the rich and famous

• Consumers aspire to own these vehicles as the imagery of these vehicles has become very desirable

• There was no SUV in the market that masses could buy

• Even though Scorpio was created as an SUV, it was positioned as ‘Car plus’

• This was to attract the C class car buyers, since the rates were almost similar and hence creating a new market space for its product

• Ad campaigns had lines like ‘cars you can walk into – not crawl into’ to highlight the benefits Scorpio provided over a regular car

• The Scorpio product package offered - Superior technology, Dynamic Looks, Car-like product and great value for the price

Positioning

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Product - Width

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Product - Length

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Product - Depth

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Pricing

Model Ex showroom On road individual On road company

Scorpio 2.2 VLX – HAWK 7/8 seater

1,042,750 1,158,080 1,231,073

Scorpio 2.2 VLS – HAWK 7/8 seater

984,903 1,094,060 1,163,003

Scorpio 2.6 SLX – CRDE 7/8 seater 921,059 1,023,403 1,087,877

Scorpio 2.6 SLE – CRDE 7/8 seater 895,117 994,692 1,057,350

Scorpio 2.6 DX – 7/8 seater 848,611 943,223 1,002,626

Scorpio 2.6 LX – 7/8 seater 797,230 886,415 942,221

Scorpio 2.6 Getaway 2wd 806,334 896,266 952,709

Scorpio 2.6 Getaway 4wd 911,294 1,012,427 1,076,218

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All prices in Rupees for Mumbai

• Pricing for Scorpio has been ‘selling price minus’ method; wherein the MRP was decided first to suit the Indian customers and then the product was built

• Scorpio was launched at an aggressive price of 6-7 lakhs• Mahindra could afforrd such low prices without compromising the quality

because of outsourcing of major systems, design innovation and testing to the suppliers

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Place - Distribution• Mahindra has ‘Exclusive Distribution’ network

• During the launch of Scorpio M&M adopted ‘serve less markets but serve them well’ policy and had phased out launch in various cities

• All dealerships in major urban areas were required to have separate outlets for Bolero & Scorpio as these vehicles have distinct identities from the previous M&M vehicles

• M&M showrooms are spread over 29 states in India & in 19 cities across Maharashtra

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Dealers in major citiesMumbai – •NBS International Ltd, Stone Building, 10 Chowpatty Sea Face•GMS Automobile (Sahil Motors) Pvt. Ltd., Metro House, Mum – 400098

Delhi•Bhasin Motors (India) Pvt. Ltd., N-12, South Extension Part-1, 110049•Sri Durga Automobiles, 55 Rama Road, New Delhi – 110015

Chennai•MPL Automobile Agency P Ltd, 107/1, Nelson Manickam Road, Aminjikarai, Chennai•GMS Automobiles, 133, Velacherry Main Road, Near Bluecross, Guindy

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Promotion

Integrated Marketing and communication

• TV ad

• Print ads

• Events– A showcase of Scorpio crossing 29 Indian states in 29 days was

used to highlight the durability of the car for heavy travel– Top gear loyalty program– Adventure sport events such as Bike Brigade and the Great

Escape

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Competitor Product

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Competitor Pricing

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Models 4 x 2 4 x 4

Safari LX TCIC Rs. 699885 N.A.

Safari DICOR 2.2 LX Rs. 797390 N.A.

Safari DICOR 2.2 EX Rs. 920153 Rs. 1012137

Safari DICOR 2.2 VX Rs. 1118391 Rs. 1214515

Safari EXi Petrol Rs. 920062 Rs. 1012055

The prices are fixed keeping in mind a number of factors. Tata Motors give a relative price advantage as compares to its competitors. The various determinants of price are:•Market condition•Costs incurred•Profit percentage decided by the co.•Dealer profit

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Competitor Place - Distribution• Tata Motors have contracts with the Government of India and it supplies buses and

passenger vehicles, in some cases, to the Govt. Sometimes, bulk quantities of vehicles are ordered by a Govt. Dept. or a private company. The sales, distribution and billing of these are looked after by the Co. itself

• The passenger vehicles are manufactured at Pune plant. From the plant, the finished product is transported to the dealerships. The nation-wide dealership, sales, services and spare parts network comprises over 2,000 touch points

• Dealers addresses– SHAMAN AUTOMOBILES PVT. LTD. 1S-SALES , SUMER APARTMENT , SHANKAR GHANEKAR MARG,

PRABHADEVI, Mumbai– HAN MOTORS (I) PVT. LTD., 1S-SALES, KARTIK COMPLEX, OPP. LAXMI INDTL. ESTATE, NEW LINK ROAD,

ANDHERI (WEST)

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Competitor Promotion

• TV ad

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Facts and figures from the following websiteshttp://www.surfindia.com/automobile/automobile-industry.htmlhttp://www.acmainfo.com/http://auto.indiamart.com/cars/sport-utility-vehicle.htmlhttp://www.automobileindia.com/cars/sports-utility-vehicles/suv-model.htmlhttp://siamindia.com

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