IMPERSONATE: Think Like a CMO
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IMPERSONATE: Think like a CMO THIS CASE STUDY HAS BEEN MADE BY TEAM SIGMA FOR ITS EVENT: IMPERSONATE Page 1 IMPERSONATE: Think like a CMO Milking a dead cow: MG Hector Penetrating Indian Automobile Market Morris Garages’ first model for India, the Hector, has been on sale since June 27 this year. The demand for the SUV has been so strong that the carmaker had to suspend bookings for the Hector in July achieving its 2019 sales target within 20 days of his launch. India’s automobile sector has been witnessing its worst-ever slowdown. In May, passenger vehicle sales in the country fell by 20.55% year-on-year to 239,347 units, the steepest drop in nearly 18 years according to data released by industry body Society of Indian Automobile Manufacturers. How can one reconcile these 2 events happening, barely a fortnight from each other, how did Morris Garages manage to milk the dead cow that the Indian auto market has turned into? Was it a sound positioning strategy, solid pricing and feature loaded product or just great timing? Background: Morris Garages was founded 89 years ago by Cecil Kimber on 21st July 1930. The first MG was 14/28 based on the Morris Oxford. These cars were sold in the Morris Garage that’s how the name came into the picture. MG has also made its name prominent in the international automobile racing. A series of dedicated racing cars such as the 1931 C-Type and 1934 Q-type were made and sold to car enthusiasts. In 1955, the company released the MGA design followed by the MGB, a comfortable and modern sports car, in 1962. These were the MG convertibles cars for sale. In 2015 MG finally decided to launch its first SUV catering mainly to the Middle-east and Asian market and the response they got was overwhelming. SAIC Motor's takeover of British carmaker MG Motor made the latter's India operations a subsidiary of the Chinese firm. MG Motor India has so far invested around Rs 2,200 crore to acquire General Motors' plant in Halol and to develop a C-segment sports utility vehicle (SUV) for its debut in the country. Launching it’s first model for India, the Hector, on June 27 2019. THIS CASE STUDY HAS BEEN MADE BY TEAM SIGMA FOR ITS EVENT: IMPERSONATE Page 2 Was the Automobile Market Really Dead or Was It Just Napping? The stockyards and dealerships of India’s automobile manufacturers are chock-full with unsold cars and bikes. The piled up inventory currently stands at 500,000 passenger vehicles (PVs) and three million two- wheelers, according to The Economic Times, leaving seven of the country’s top 10 auto majors with little option but to temporarily shut down their factories. Mahindra & Mahindra, for instance, informed the stock exchanges on June 8 that it would be observing “no production days ranging between 5–13 days” in the April-June quarter as part of “aligning its production with sales requirements.” Maruti Suzuki also shut its plants between June 23 and June 30 to manage the rising number of unsold vehicles Auto sales in India have dipped for 11 consecutive months now, as vehicle manufacturers struggle to comply with a string of new safety and environmental policies that have forced them to hike prices or even discontinue some old models. India’s ministry of road transport and highways has mandated that all cars manufactured after July 1 should be equipped with features such as airbags, seat-belt reminders, and audio alarm systems that are triggered at high speeds. New crash test requirements are also being implemented from October 2019. The industry is also trying to meet the Bharat VI emission standards that will kick in from April 2020. The new norms, which entail an expensive overhaul of diesel engine technology, has forced Maruti Suzuki to discontinue the sales of all diesel cars from next year, while others are expected to follow. But, the demand for SUVs in the Indian market seems to be holding fast. For the first 11 months of FY2018 (April 2017-February 2018), a total of 8,30,334 utility vehicles (UVs) have been sold in India (+21.34 percent), accounting for 27.79 percent of the overall passenger vehicle (PV) market which saw total sales of 2,987,259 units (+8.4 percent). ). Every fourth PV sold in the country is an SUV and this segment is gradually eating into PV sales as per AutoCar Pro data. February 2018 was a stellar month for UVs – a total of 80,254 units went home to new owners, posting year-on-year growth of 21.82 percent and accounting for 29.14 percent of the PV market (2,75,329 units). In fact, at the end of February 2018, the UV segment has already notched its highest-ever sales in a fiscal – 8,30,334 – and there’s one month still to go for the closure of FY2018. In 2016-17 a total of 7,61,997 UVs (+21.91 percent) were sold. AutoCar estimated that the UV segment will nudge to the 9,20,000 units domestic sales mark by FY2018 and, in 2018-19, drive past the one-million units sales landmark. The handsome growth in the SUV market, which has come on the back of glut of new models and changing consumer preferences, has led to substantial gains for some vehicle manufacturers, both in terms of sales as well as market share. THIS CASE STUDY HAS BEEN MADE BY TEAM SIGMA FOR ITS EVENT: IMPERSONATE Page 3 Sustaining the Boom But can MG keep this performance going? With BS VI on the horizon and MG planning to venture into the hatchback and electric vehicle segments. One can only remain hopeful that the target consumers will respond adequately and keep up the growth numbers. There is also the threat of one hit wonder perception being created in the minds of the consumers , the brand has chosen to highlight the feature loaded and bleeding edge technology in their product but keeping this edge will not come cheap and perhaps will have to be reconsiders in the mid-long run, it also remains to be seen if the highly competitive pricing can be replicated across their newer models and offerings or it turns into a veritable modular salad bar where the consumers pick and choose on their whims . It’s a Human Thing: Positioning MG Hector in Indian Market With the growing young working population of India, MG targeted customers who had futuristic demands & fulfilled them with its iSmart application on their Smartphone which gives the users a full voice control over the car. Voice commands ranging from trivial features like switching the AC on/off to car performance evaluation & over the air software updates gives it an arm’s length advantage over its competitors. The car’s introductory Ad-campaign featured Benedict Cumberbatch who showcases the new age in car features which positions it as more than just a car. (link for the Ad) https://www.youtube.com/watch?v=AijyBbpWuAM Red under the hood? There are also concerns with MG’s perception of being a Chinese company with British name, with the negative connotations attached. Such a perception is reinforced with substantially below the market pricing, perhaps a deal being too good to be true flavor to it, maybe there is a compromise on quality, a strategic trade off for a price sensitive market or such a perception is being created in the minds of the consumers in spite of the amazing technology offerings by Morris Garages. Deliverables: 1) What steps can be taken by Morris Garages to sustain its growth in the Indian market after its initial boom? Suggest a marketing mix which they can deploy? 2) What are the major pain points related to market environment which MG has to face in Indian market? 3) What steps should MG Hector take to counter the business challenges emerging from the particular environment in the automobile industry in India? THIS CASE STUDY HAS BEEN MADE BY TEAM SIGMA FOR ITS EVENT: IMPERSONATE Page 4 EXHIBIT 1 PASSENGER VEHICLE SALES Source: https://www.autocarindia.com/car-news/new-car-suv-sales-up-for-the-first-time-in-two-months- 414376 EXHIBIT 2 THIS CASE STUDY HAS BEEN MADE BY TEAM SIGMA FOR ITS EVENT: IMPERSONATE Page 5 EXHIBIT 3 THIS CASE STUDY HAS BEEN MADE BY TEAM SIGMA FOR ITS EVENT: IMPERSONATE Page 6 .