Background
Suzuki began operations 105 years ago by producing weaving looms to the silk industry in Japan. Twenty years later, Michio Suzuki had to patent his products to prevent replication. During this period, he managed to protect over 120 machineries and exported most of his inventions to other countries. Since the 1900’s Suzuki has improved its innovations through a careful study of the market.
The company came up with the first trail car in 1937 (Global Suzuki, n.d.). Suzuki made huge sales until the beginning of WWI when the Japanese government deterred citizens from owning personal cars following the heavy traffic they caused. By 1951, the company embarked on full production of weaving looms, but one year later, the cotton industry collapsed causing major losses for Suzuki.
It forced the company to develop products that would ease traffic in Japan. Most companies began producing bicycles, and Suzuki took the opportunity to develop motorcycles. Suzuki brand positioned itself through originality. It ensured development of unrivaled products while improving their innovations annually.
Suzuki mostly targeted the middle-income civilians who needed small, comfortable, and cost effective locomotives. In 2011, Suzuki assumed the 10th position among multinationals dealing in the manufacture, assembly, and sale of automobiles. In 2013, Japan Automobile Manufacturers Association (JAMA) rated Suzuki, as the country’s second greatest producer and distributor of automobiles (Global Suzuki, n.d.).
Suzuki’s ownership is a family affair considering that its current Chief Executive Officer is Osamu Suzuki. Suzuki’s venture into small cars including the Maruti 800 was its marketing strategy for developing countries especially India, Uruguay, and Latin American States.
Marketing
The 4Ps of marketing include product, price, promotion, and place. They influence the brand position of an organization in the target market.
Product
In 1955, Suzuki focused on the production of motor vehicles that had a fuel capacity of between 36cc to 300cc. Today, the company vehicles have a fuel capacity that goes beyond 950cc. Suzuki Suzulight was the first innovation with a 36cc capacity. The company manufactured it in order to fulfill the growing demand for automobiles following the conclusion of WWI.
For an affluent market, Suzuki mostly offers the guzzlers and SUVs (Global Suzuki, n.d.). In Latin America, Suzuki seeks to take a similar approach, as the Indian market. It will introduce Maruti 800 since the Latin American market seeks affordable products that are easy to maintain. In addition, Suzuki India provides all the spare parts needed for the Maruti to function.
Price
Suzuki will import both second hand and new Maruti 800 to the target Latino market. A brand new Maruti will cost between $8823 and $8430 (Global Suzuki, n.d.). On the other hand, a second hand vehicle will cost a Latino between $5924 and $6100.
Many factors will determine the variations in pricing including the consumers’ bargaining power. Other determinants will include political stability, technological development, and economic position of Latin America. Recession is a likely economic impediment to reduction in prices of the Maruti’s.
This company targets audiences with different products and prices. Small cars are on a high demand because of their high speed, low fuel consumption, and affordability. It would be the best idea to introduce Maruti 800 into the market that highly demands these products.
Place
Suzuki’s location in over 20 countries across the world signifies its strong presence in Europe and the Americas. Besides, it has branches in India and Uruguay making it possible to provide services to the North American market. India’s Suzuki Corporation majorly manufactures the Maruti 800 making it possible to supply the Latin American market with these products (Global Suzuki, n.d.). Maruti manufacturers create it for hectic tasks even though it cannot carry heavy materials.
It has the ability to maneuver through rocky areas, as it uses limited fuel and can access both urban and suburban areas. In Latin America, Suzuki will supply Maruti 800 in Brazil, Uruguay, and El Salvador, including other areas of Latin America. The Maruti 800 serves terrains in Africa and India; there are high possibilities that it will serve Latin American States properly.
Promotion
Promotion refers to short-term incentives that seek to improve sales. Suzuki has been supporting sporting activities since the 90’s. This provides it with the requisite exposure for brand positioning of its products. In addition, it posts advertisements around stadia during sporting events.
The company advertises on newspapers and television stations across the globe as well. Its most successful advert increased the purchase of Suzuki Chevrolet from 1985 to date. Through Rizla Suzuki MotoGP competition, many European markets learnt about Suzuki products in 2006 (Global Suzuki, n.d.).
Other events include rallies that Suzuki supports. In other occasions, different sponsors often support events organized by Suzuki. Suzuki equally uses social media to reach out to audiences on Facebook, Twitter, and LinkedIn among other avenues.
Industry Information
Suzuki belongs to the manufacturing industry. It deals in the design, assembly, and marketing of automobiles in its 23 subsidiaries across the world (Global Suzuki, n.d.). Many external factors influencing sales in the automobile sector include politics, economics, technology, and competitor information.
Politics
A stable political platform provides an opportunity for companies to thrive. Politics influence relations between countries and citizens. This influences the exchange rates of currencies in the targeted countries. Latin America has an unstable political ground. Investors in these countries need to develop risk measurement policies in their media plans in order to develop solutions to business stability even when wars occur.
Economics
In the past three years, Suzuki engaged in extensive financial training of individuals in Latin America. The company realized that financial illiteracy makes it difficult for consumers to make wise decisions before purchasing products or services. In its attempts to market Maruti 800 in Brazil, Suzuki imported trainees from Peru to teach Latin Americans how to observe financial trends including differences in exchange rates (Global Suzuki, n.d.).
This will help Suzuki in attracting several Latinos who will have interest in Suzuki stocks. However, other financial factors such as inflation are beyond the control of Suzuki and General Motors (GM) among other players in the market. When recession occurs, it increases the cost of importing used Japanese cars, and new ones; this would increase the price of the imported products, which could interfere with sales.
Technology
Product development at Suzuki requires sufficient technological input. Technology assists in research, marketing, online banking, and other cost effective activities. Suzuki needs to venture into a market that understands technology properly. It should have an advanced technological community that would carry out online transactions for shipment purposes. Business trends shifted towards online support systems in the 20th century (Katz, 1995), and Suzuki needs to ensure that the Latin market understands these concepts properly.
Competitor Information
Competition from direct and indirect rivals often influences the business strategies adapted by various organizations. In Latin America’s oligopoly market, Suzuki is likely to face direct competition from Toyota and General Motors. An oligopoly market refers to an economy that receives investors and ensures fair distribution of the market share (Katz, 1995).
This makes all companies significant to economic growth as opposed to a monopolistic market that focuses on the success of a single investment. Even though Latin America has an oligopoly market, a few investors have outlets in that part America. Toyota and GM are major competitors who invested in Latin America in the mid 90’s. Both GM and Suzuki manufacture automobiles that use the least amounts of fuel; this happens in order to capture the middle-income market in Japan and other targeted countries.
According to Sarrazin (2011), Toyota understands the Latin American market well since among the competitors, it has the longest history in North America. The oligopoly market provides equal room for expansion irrespective of company reputation, size, or ownership.
Competitors
Financial Information
In 2009, GM filed for insolvency because its target market strategy did not succeed. It provided customers with Saturn and Hummer brands even though the Latin American market majorly sought affordable and easy-to-maintain cars. Following a change of strategy in 2012, GM accrued a profit of 3% from the increased purchase of the fuel saving vehicles (Bennett, 2014).
The 2008 sales were the least promising with a 23% reduction owing to the poor entry strategy. It entered the market in 1925, and today sells its stock at 11.7 crore for the Latin American market. By the end of the fiscal year 2013, GM made a profit of over $797 million (Bennett, 2014). Toyota’s financial position in Latin America explains its stay in the country since 1990.
In 2005, Toyota introduced the Innovative International Multi-purpose Vehicle (IMV) following the urgent need for affordable and cost effective automobiles in Peru. This followed a profit reduction of 19% in 2000 because it focused on selling guzzlers. In order to succeed in this market, Suzuki should sell the Maruti 800 alongside farm tractors because of the agricultural landscape.
Brand Positioning
Toyota and GM are overly careful about the cost of branding their products. Lately, the two assumed an online approach to advertisements, which save space, and money. Online advertising also has many audiences who access social media and the internet. Concerning the adverts, they often critique the adverts or products of the competitors.
Toyota and GM are major players in this market, and there are advert slogans that state, “The better choice.” In a market infiltrated by two companies, such slogans are likely to attack the opponent. Other avenues of advertisement include sports sponsorships and erection of billboards on major highways. Even though Toyota accessed the market first, most Latinos prefer GM products because of their diversity (Ogier & Bamrud, 2011).
People get variety of products depending on price, quality, and products. GM also uses mergers to enhance its brand image. A prospective merger is with Fiat and Opel because the two have a strong presence in Latin America. Suzuki has prospects of venturing the market through Brazil. It needs to focus on adverts that support football in order to acquire public goodwill.
Pricing
Prado, Chrysler, and Saturn are most of the cars sold in Latin America. The response level towards the products was low since the prices range between $23,529 and $47, 000 (Sarrazin, 2011). Toyota, Opel, and GM currently engage in production of cost-effective and eco-friendly cars in order to attract the target market.
These cars are almost 10 times low the price of the initial cars. Even though the competitors manufacture cars only, Suzuki produces variety of automobiles. If the target population fails to respond positively to Maruti 800, they are likely to purchase motorcycles, tractors, or bicycles. Pricing tactics are important to marketers; they need to learn from competitors.
Media and clients equally provide sufficient information concerning pricing, and manufacturers need to respond proactively to such data. Suzuki should analyze annual financial reports of its predecessors in the Latin American market. This will enable it make an excellent decision concerning place of investment.
Product
GM manufactures and distributes Saturn, SUVs, Cadillac Escalade, Chevy varieties, and Sierra among others. The company brought in about 400, 000 different varieties of vehicles in order to serve the American market. Most of these vehicles had a good response in the US, but few Latinos had interest in the classy cars.
If the merger with Opel becomes successful, GM will equally distribute Chrysler, which enjoys positive response from the United States’ market (Ogier & Bamrud, 2011). GM exports such vehicles because its target market has a population of many affluent people and many poor people. The socio-economic difference is huge and provision of different products is an advantage to a manufacturer.
Innovative International Multi-purpose Vehicles that Toyota developed are cost-effective since they consume limited amounts of fuel (Takahashi, 2014). Today even the Land Cruiser, Vitz, and Demio varieties are relatively small, but heavy duty. Introducing Maruti 800 into the Latino market will compliment efforts made by competitors. Maruti 800’s media strategy succeeded in the African and Indian markets. There is a high possibility that Latinos will embrace the automobile.
Place
Before determining the place of marketing, competitors assess the response levels to products manufactured by rival groups. Latin America demands for affordable services because the states still strive to fulfill primary needs. It would be unfair to introduce expensive cars in countries that barely access luxurious commodities.
According to Ogier and Bamrud (2011), GM invests in Brazil because the country responds positively to the Saturn Vue. Brazil is a country that hosts many footballers who would be willing to purchase expensive cars. Secondly, in comparison to other Latin American countries, Brazil has the greatest population and physical size.
Brazil’s fame in Latin America makes it accommodate immigrants who show interest in foreign automobiles such as GM cars. Suzuki is likely to choose Brazil because of similar factors. GM’s showroom in Mexico enabled the company sell over 900, 000 cars since 1925 (Ogier & Bamrud, 2011). Toyota invests in Peru, El Salvador, Venezuela, and Uruguay among other states.
As such, Suzuki should explore other markets such as Argentina and Costa Rica in order to gain a competitive advantage. The following chart best explains competitor investment in Latin America.
External Information
Many factors influence the ability to invest in a foreign country. They include politics, economy, technology, and legal procedures.
Politics
Politics determine the inter-boundary relations between States. It also determines the relationship between a government and the citizens. Moreover, it exists in the relationship between rivals in a target market. When Suzuki invests in Latin America, it should assess the growth potential in the states by reviewing profiles of other competitors.
There is a possibility that the progress of competitors such as Toyota in Latin America could equally apply to Suzuki’s progress in the same place. According to Katz (1995), a politically stable country negotiates monetary exchange rates reasonably. It saves resources for public gain; this reduces the cost of taxation. Most Latin American States have unstable political grounds, which adversely affect businesses.
Economics
Inflation influences major decisions in this industry. Following the 2009 to 2011 worldwide recession, companies developed media plans that had financial risk management measures. Inflation also influences exchange rates between countries. Considering it is an external factor, Suzuki cannot control it.
Instead, it needs to develop a good strategic plan that will help it manage the unpredictable economic terrain in Latin America. Other economic factors that Suzuki needs to assess include the number of major and minor competitors in the target market. This will enable it establish showrooms in the most receptive states in Latin America.
Technology
Technology is a necessity in the current world. Companies take advantage of it to improve productive for marketing and distribution. Latin American residents should embrace latest technological advancements in order to ease Suzuki’s work in the North.
In most cases, it is difficult to traverse a conservative culture when technological matters arise. The Suzuki Association of the Americas understands that penetrating Latin America might be a challenge since most people uphold traditional cultures in doing business and in their thinking (Global Suzuki, n.d.).
This might affect technological breakthrough in the country. Suzuki will have to introduce simple aspects of technology during the entry level, and later discuss complex technological matters.
Legal
Countries have dissimilar tax policies and legal procedures. In Latin America, Suzuki will have to abide to the government regulations in the target country. Suzuki should respect the Equal Employment Opportunities Code (EEOC) in order to avoid any scandals with the public. EEOC standards oppose inequality, gender discrimination, racial prejudice, and other issues that prevent minorities from getting equal employment opportunities.
Besides complying with EEOC standards, Suzuki needs to embrace ethical work standards. It should have a code of ethics that all employees follow across different showrooms. Most companies that ignore legal and ethical issue often face scandals (Katz, 1995). A media response unit helps in redeeming brand image and winning public goodwill during such occasions.
Current Users
After introducing Maruti 800 to the African and Indian markets, it was evident that the car suited middle-income earners who sought to reduce traffic and fuel consumption. A similar case applies to Latin America. Users of Maruti 800 compliment its speed and ability to access various terrains (Global Suzuki, n.d.).
In India and Africa, people use the car in both urban and suburban regions. The fact that it reduces congestion of public vehicles promotes its convenience to the suburban areas. People from such regions constantly seek markets in urban regions while acquiring resources from the rural areas. They choose Maruti since it maneuvers through different terrains.
Maruti 800 has many traits including affordability, which is a principal factor to consider. India and Africa have huge populations of low and medium-income earners (Global Suzuki, n.d.). They have huge differences between the rich and the poor. This contributes to high poverty levels making it possible for people to acquire the basics only.
Following the introduction of Maruti in this market, people displayed interest in ownership of cars for commercial purposes. Indians and Africans like Maruti 800 because of the low fuel consumption rate. A capacity of 300cc enables an individual to drive the car for almost two weeks without refueling. This encourages most people to own such models.
Further, its maintenance is easy because of locally available spare-parts in various markets. Maruti 800 provides services for light-users because of its size. However, it does not damage easily; this reduces the cost of maintenance (Global Suzuki, n.d.). In summary, demographics and psychographics of audiences in India, Africa, and Latin America are close. They share related political and socio-economic challenges, and this shapes their mindset. The same applies to audiences who choose other cars from Suzuki, Toyota, and GM.
References
Bennett, J. (2014). General Motors Profit Falls 13%. The Wall Street Journal. Web.
Global Suzuki. Suzuki Motor Corporation. Web.
Katz, H. E. (1995). The Media Handbook. Lincolnwood, Ill., USA: NTC Business Books.
Ogier, T., & Bamrud, J. (2011). Company Report: South American Boost for General Motors. Latin Trade Group RSS. Web.
Sarrazin, M. (2011). Toyota and its global strategy. Slideshare. Web.
Takahashi, Y. (2014). Toyota Aims to Top 10 Million in 2014 Global Sales. The Wall Street Journal. Web.