Saturday, March 12, 2011

4Ps B&M analyses

Mercedes has proven to be that fast second-mover. But how does the company plan to market its latest offering to the Indian consumer? According to estimates, the size of the pre-owned car market in India is expected to be 10-15% of the new car market volume (sales figures for the first half of 2010). This figure is expected to rise substantially over the next couple of years, which makes the pre-owned car market critical for all luxury carmakers. So what marketing mode of mass communication are the second-hand car sellers banking upon. Says Debashis Mitra, Head – Sales & Marketing, Mercedes-Benz India to 4Ps B&M, “A large chunk of awareness will depend on the word-of-mouth advertising through the consumers in the pre-owned cars business.”

On the proactive front, the company plans to follow conventional advertising methods to promote its second-hand car arm in the Indian market, as it has been doing for its passenger car business so far. Talking about outreach, the company has rolled out its Proven Exclusivity program across four cities (Phase I) and plans to take the count to 12 locations by the end of 2010. Aulbur also says that Mercedes is expecting to generate around 10-15% of its topline via the used car route by 2011. Experts also opine that the second hand car business will guarantee greater footfall in Mercedes’ showrooms across the country.

There is a challenge that threatens to decelerate this dream run of the Mercs – the unorganised market. According to industry data, 90% of the resale auto market belongs to the unorganised segment, which covers not just the friendly neighborhood second hand car dealers but also the one-to-one ‘grey’ dealmakers. There is one hope though – thanks to the segment in which Mercedes operates, it is widely believed that the consumer will prefer the organised channel.

Even in other segments, competitors like Maruti True Value (Maruti’s preowned car reselling arm), have been showing growth rates between 25-50% month on month (data available till February 2010). At the same time, due to the fact that there is no dearth of top class service and support facilities for even the grey market purchases/imports, one would have to wait for the market figures to come in, before confirming Mercedes’ success. Sixteen years and 30,000 units sold in India – what does the future hold for Mercedes? Whatever it does, its long-earned glory in India will come in handy.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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