Case Study of Mahindra Scorpio

   CASE STUDY OF MAHINDRA RISE SCORPIO

Brand

In recent years the automobile industry in India h as grown by exponential rates. In India it is one of the largest in the world and one of the fastest growing globally. The Indian Automobile industry is manufacturing over 11 million vehicles and export about 1.5 million every year, About 91% of the vehicles sold are used by households and about 9% party for commercial purpose. Two wheelers with a market share of over 76.49%, passenger cars with a market share of about 1.6.96% &Commercial vehicles and three wheeler share about 7.55% of the market between them.  Automobile sector is one of the most emerging sector in India


Company
Mahindra & Mahindra (M&M), the market leader in multi-utility vehicles in India. The company started manufacturing commercial vehicles in 1945. M&M is the leader by far in commercial vehicle and the second largest in the passenger vehicle market. The company is the world’s sixth largest medium and heavy commercial vehicle manufacturing.

Mahindra is best known for utility vehicles and tractors in India, Its automotive division, the company's oldest unit (founded in 1945), makes jeeps and three-wheelers (not passenger "auto rickshaws). M&M's farm equipment sector, formed in 1963 during India's green revolution, manufactures tractors and industrial engines. M&M also produces military vehicles. The company has facilities located throughout India

Growth rate
Mahindra & Mahindra Ltd. (M&M Ltd.), India’s leading SUV manufacturer, today announced a 22% rise in its auto sales numbers, which stood at 45836 units during August 2012 as against 37684 units during August 2011. The company’s domestic sales stood at 42826 units during August 2012, as against 35756 units during August 2011, an increase of 20%. The Passenger Vehicles segment (which includes the UVs and Verito) has registered a growth of 39%, having sold 21831 units in August 2012, as against 15664 units during August 2011. Exports have also grown by 56%

The Gross Revenues and other income of Mahindra & Mahindra Ltd. during the year ended 31^st March 2011 isRs.25896.0 crores as against Rs. 20595.5 crores in the previous year – a growth of 25.7%.  The Net Profit before tax for the current year is Rs. 3519.6 crores as against Rs.2846.8 crores in the previous year. After providing for tax the same is Rs. 2662.1 crores against Rs. 2087.8 crores in the previous year - a growth of 27.5%.The growth in the profit of the company despite the relentless increase in material costs is due to a good volume performance by both Vehicles and Tractors, tight control on expenses and prudent financial management resulting in lower interest costs.

Sales Summary

Segment	August 2012	August 2011	YTD August FY13	YTD August FY12	MOM Growth%	YOY Growth %
Passenger Vehicles (UVs & Verito)	21831	15664	105346	81190	39%	30%
4-wheelers Commercial (Passenger & Load)*	14267	12563	68366	57091	14%	20%
3-wheelers	6004	6394	24968	25847	-6%	-3%
MNAL	724	1135	5133	5231	-36%	-2%
DOMESTIC TOTAL	42826	35756	203813	169359	20%	20%
M&M EXPORTS	3010	1928	15111	9955	56%	52%
SECTOR TOTAL	45836	37684	218924	179314	22%	22%

 

Customer Attraction

 Mahindra has tied up with ICICI Bank and State Bank of India and is working with the dealers to offer loans at a more attractive rate. The company is focusing on bringing Mahindra Capital Services Inc to India in order to bring more customers into the market.

Challenging Old Techniques-
Introduced Asia's 1st 100% Biodiesel SUV & India's 1st hydrogen powered three wheeler.
Development of HCNG (Hydrogen + CNG mixture) commercial vehicles.

Growth

Enhanced product offerings beyond SUVs to boost self-employment in semi urban and rural India India's 1st compact low maintenance, high mileage and affordable trucks -Mahindra Go and Maximo Entry in construction equipment and heavy vehicles manufacturing

State-of-the-art green manufacturing plant with a phased investment of over USD 1 billion and vision to be among the world's most eco-friendly auto plants

                      Survival

1.      Fully integrated R&D facility - Mahindra Research Valley (MRV) in Chennai

2.      Acquired Reva Electric Vehicles Ltd. - one of the 1st companies in the world to introduce electric vehicles

3.      Expanded global reach through acquisition of SsangYong Motor Company Limited

4.      From Alternative Technologies to Alternative Markets

Delivery of the Product:

Delivering quality service to all our customers and ensuring utmost customer satisfaction have been the founding values of our automotive businesses.

StrategicApproach:

With the above reality as a backdrop, M&M defined a two pronged strategy for the Automotive Sector  continue to dominate the rural and semi-urban market with a range of products catering to the needs for low cost mass transportation needs. Develop a strong presence in the fast growing urban markets with a range of value for money products.

To compete against the global players and also to meet its goal of developing a strong presence in the urban market, M&M embarked on Project Scorpio.M&M needed to work to its strengths and competencies. To find ways of side stepping the MNC competition for it did not have the deep pockets that global majors did. The implication was that the project cost had to be optimised to a fraction of what world majors would spend. The other direction was to develop a product which would provide great value and hence would be very affordable.
A world class product which is also affordable is no mean task. It needs innovation and out-of-the-box thinking. The approach taken was to focus on and to prioritise what the customer values the most and to excel at it. The broad objectives of the Project Scorpio were Create a new segment and retain market domination differentiate offering (vis-a vis MNCs) an excellent value proposition optimise project costs.

Demand.
Mahindra & Mahindra's 11-year-old Scorpio has managed to hold on to its crown in the mid-size SUV market despite strong competition, largely from Renault’s successful new entrant Duster. What has worked to Mahindra & Mahindra’s advantage is a strong presence in rural and semi-urban markets, which accounts for up to 40% of Scorpio sales and 30% of its overall volumes, and where demand is up almost 20% today. Scorpio sold 36,428 units in April to December 2013 compared with 35,955 units of the nearest competitor Duster. Scorpio has maintained steady volumes of 4,000 units a month with the high in October (5,230 units) turning out to be the highest-ever monthly sales. The existing automatic version of Scorpio model which was being offered with top VLX variant has been discontinued due to lack of demand and price tag of 12 lakhs for 2WD and 13 lakhs for 4 WD options.
Need:
The depot hack was used to transport people and luggage from the train station and this vehicle laid the groundwork for the development of the longest running SUV model, the Chevy Suburban. Over time, many more models have been introduced to the market, but the Chevy Suburban remains a strong market leader. SUVs have been a popular choice among drivers. However, buyers have tended to stay away from buying them during hard economic times when oil prices hit record high prices. Automobile manufacturers responded to this with many innovations in the design of SUVs which have made them more competitive with cars in terms of cost and benefits to the driver. The roominess factor an SUV offers may outweigh some of the drawbacks others see in the vehicle. With the combination of the seating of a car and the heavy duty aspects of a truck, the SUV offers many drivers a great multifunctional automobile. Those looking to purchase a new vehicle can consider these 7 benefits of owning an SUV. Other needs are: Extra Seating Capacity, Seating and Hauling Versatility, Towing Capacity, Vehicle Handling, Vehicle Safety, Fuel Efficient Options, More Horsepower in an SUV
Customer Satisfaction Dissatisfaction and delight:
Mahindra Scorpio has offered much more than the expectation of the customer and this is what delight the customer.First one is its look. The car looks very imposing. It has chrome tipped Mahindra logo at the front on the grill and huge bumper sporting the fog lamps. The side profile shows off the flared wheel arches and there is a chrome step up to climb into the car.The interiors is really able to meet the expectation of the customer .Some of the features which really keeps it distance apart from others are - cruise control, steering mounted audio controls, 4 speaker stereo music system with USB, MP3 and Bluetooth compatibilities. Also its interior build quality and fit and finish is on par with the rivals from its segment.
It has comfortable seating which provide excellent support to the back and has dual-tone interior. It also has a huge 1243 litres of storage space which is sufficient to carry luggage for family on a road trip. It also keeps on enhancing the vehicle, for instance they have introduced mHawk engine which develops the same amount of power as the older one and it delivers an ARAI certified fuel efficiency of 13 kmpl.
Mahindra Scorpio has an excellent suspension tuner: Lotus. This suspension of this SUV have provided pleasurable drive for the buyer. It has a comfortable drive and good ride quality which gives the rider a unique experience.  And this vehicle offer outstanding features at very competitive price.
Internal External and Interactive Marketing
Integrateddesign and manufacturing the innovative production process used for designing and producing Scorpio wasbased on cross functional team that included suppliers, they catered to every aspect of product development from design and engineering of system through testing and validation suppliers were also involved in assembly plant improvement and sourcing and locations
Key achievements of the product development process were as follows:

1.      Unique process called Integrated Design and Manufacturing. 

2.      Best in the world tie-ups but in-house execution. 

3.      Customer focus from thought to finish.

4.      Cross-functional, co-located, young, lean team.

5.      Lowest Project Costs.

6.      Intensive Testing.

The first step was to trap customer requirements and map the market potential of the various vehicle categories. For this purpose, the in-house team visited the market and met customers from various segments. As a result, key buying factors were evolved through the Quality Function Deployment process (QFD). These customer requirements were then converted into product specifications and were taken to the design phase. At every stage, customer inputs were taken from first design to finished product.
The nodal agency was Interface Communications This was situated near the main manufacturing facility and promised better co-ordination. The strategy adopted the positioning along the theme – “Luxury of a Car – Thrill of a SUV. Perceived as Jeep. But car is opposite of Jeep. Similarly the communication strategy was centredon perceived as rural but is actually an urban one. Multiple modes such as TV, Radio, Print etc. The commercials itself was shot in Australia to give a sporty feel. Off-road images throughout were shown to give this a sporty feel.
USP and Differentiation
USP is their capability to manufacture vehicles with having very little technological help from foreign sources. They are very indigenous regarding this particular aspect. Their first indigenously developed sports utility vehicle was the "Scorpio".
Rise is a value system and a call to action. It’s about hard work and ambition, creativity and spunk. It’s something our employees, our customers, and the communities we work in all share.
4 p’s
Product: The M&M focused on product like Scorpio which was best design SUV available in that segment. This led to huge demand for that product because the only competition for them in that segment was Tata Safari which was also not updated in terms of its design.
Promotion: M&M promoted their cars using lot of advertisements and putting their cars in car rally across the country. Scorpio become even big hit after it was being continuously shown in various movies.
Price: M&M introduced their product with proper blend of innovation and price. They developed their products on their own without taking help from third party agencies, so they could keep the prices of the products very competitive.
Place: M&M has 4 manufacturing plants viz. in Mumbai, Nasik, Igatpuri and one in Andhra Pradesh. All these locations are either close to big markets like Mumbai, Pune, and Hyderabad etc. Also they can export the cars at lesser transportation cost because of vicinity to port.

STP
The target customers for mahindra are specifically from upper middle class and middle middle class in case of their four wheelers production and they have been quite  successful to design their products according to this customer segment.Also they are now targeting the lower and middle middle class segement by entering into 2 wheelers segment.Mahindra has also been targeting the farmers by entering into Tractor production or introducing roboust designs like Bolero,introducing products like pick up trucks which are not only being purchased in rural india by farmers for goods transport but also being very popular in urban areas.

Value

Value exploration and creation
We can explain this point by taking an example of scorpio.Scorpio was launched in India in the year 2002.At that time the cars available in that segment of
MUV were TaveraQualis and TATA Safari. TATA Safari
was being sold out the most during that tim So Mahindra identified the opportunity and came out with a very innovative design i.e Scorpio The result of their success was reflected in the awards that they had got for this design The car has been the recipient of three prestigious Indian awards: the "Car of the Year" award from Business Standard Motoring as well as the "Best SUV of the Year" and the "Best Car of the Year" awards, both from BBC World wheels. In the year 2006, they updated the scorpio and came out with an attractive model also one more modified model i.e Scorpio gateway which was a pickup truck. So they created value in terms of innovation, quality and competitive price.

A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. 

1. 
   
   Value Exploratio: Mahindra was lacking the products that can cater the modern urban customer needs. And this is the reason it came up with SU, Scorpio. It  intelligently worked to find out the expectation of a customer from SUV .  Market Research showed that  the customer valued the style, power, fuel efficiency and luxury.
2. Value Creation:  Mahindra Scorpio imposing look,  great interior design and spacious interior , powerful engine with high torque makes it unique model as compared to others . Along with functional benefit it has been successful in meeting the subjective benefit also.
3. Value Communication:  Mahindra & Mahindra effort to launch Scorpio as strong stand alone brand was quite successful. Branding Scorpio helped it to reach end customer.
4. Value Delivery: Mahindra Scorpio has been quite successful in delivering the product that it promised as SUV to the customer.
5. Value Capturing:  Customers have a large range of products and services to choose from. They choose among these offerings when they are satisfied. So, it becomes challenge for an organisation to retain existing customer and get new customer. For this the company must choose a value proposition that fits its targeted customers and the position they want to fill in the marketplace.
6.    Facilitating Value: Mahindra Scorpio has facilitated its customer by timely upgrading the features and technology.