The Growing Economic Interdependence Marketing Essay

Today, the turning economic mutuality among the different states of the universe has led in the cross boundary line flow of goods and services, motion of capital and know-how transportation. This led to intense competition among the different industries to show a strong presence in the planetary economic system. Therefore, “ Globalization is the activity whereby “ distinguishable ” national economic systems and re-articulated into the system by basically international procedures and dealing ” ( Hirst and Thomson, 1992 ) .

In October 1994, Peugeot entered the Indian market in a joint venture with Premier Automobile Limited ( PAL ) . The initial response to the auto was rather positive as the gross revenues went up to 10,000 units in the first twelvemonth. Thus, in the mid 1996 company started mounting immense losingss due to serious issues in the company. In November 1997, due to labor unrest and certain strategic confederation issues Peugeot announced to go out the joint venture and leave the Indian market ( Subhadra and Mukund, 2002 ) .

Peugeot is one of the oldest cars fabricating company founded in the twelvemonth 1810 and now the 2nd largest car fabricating company in Europe ( OICA, 2008 ) . They started their concern as the maker of java bombers and bikes and ended up as bring forthing autos. In twelvemonth 1858, Emile Peugeot used the symbol of Lion as the hallmark of their company. The first of all time Peugeot auto was made in the twelvemonth 1889 by Armand Peugeot and it was three Wheeler steam powered theoretical account. Furthermore, in 1896 it started doing its ain engines and Later in the same twelvemonth Peugeot got separated from its parent company. Furthermore, by 1899 gross revenues figure of Peugeot went to 300, where merely 1200 autos were sold that twelvemonth in France. Therefore, to get a bigger portion in the market it bought 30 % of Citroen in 1974, took over wholly in two old ages and now it ‘s called PSA Peugeot Citroen ( Peugeot, 2013 ) .

The primary purpose of this study is to urge a suited selling program for Peugeot to re-enter the Indian market. Harmonizing to PSA Peugeot Citroen ( 2012 ) is present in 160 states in the universe, where they are using 209,068 employees worldwide and bring forthing 59.9 billion in gross. Therefore, it is the figure one car company in France and one of three oldest car companies in the universe ( Merchant, 2010 ) .

Chapter 2: Market Selection Process

In the globalised market it is of import for a company to hold an in-depth cognition about that state ‘s market i.e. the political, geographical, cultural and economical conditions of that state. Therefore, sing the present planetary market scenario and economic growing of the states, India is one of the fastest approaching markets in the universe. In fact, the Indian car industry is the 7th largest in the universe ( Sethi and Rautela, 2012 ) with the one-year production of 10.8 million units in 2007-08 ( Shinde and Dubey, 2011 ) . Therefore, the present Indian automotive industry is the most appropriate chance for Peugeot to re-enter.

Harmonizing to KPMG ( 2010 ) the Indian automotive sector is one of the low costs markets in the universe, which makes it an attractive assembly base for the foreign automotive makers. The Indian car industry has observed a displacement in demand traveling from two Wheelers to four Wheelers due to lifting handiness of low priced autos and most significantly the lifting criterion of life of the people. Furthermore, the Indian car industry has noticed an one-year growing rate of 17 % for the last few old ages ( Ministry of Heavy Industry and Public Enterprises, 2006 ) .

( Beginning: Vogg, 2012 )

The above tabular array shows rapid increase of foreign investing in the Indian automotive industry. In the past decennary, economic development, population enlargement and the increasing wealth of persons were the cardinal factors which attracted the foreign car fabrication companies ( Singh and Gupta, 2012 ) . Besides this, there were alterations in the legal policies for illustration de licensing in 1991 and decrease in revenue enhancements and responsibilities, as a consequence these shifted the Indian car industry on a new growing path ( Ranawat and Tiwari, 2009 ) .

Indian Pockets Growing Deeper

Annual Income ( INR )

Number of Households in 2010 ( million )

Expected Families in 2015 ( million )

More than 1000000

1.2

3.3

500000 – 1000000

2.4

5.5

200000 – 500000

10.9

55.1

90000 – 200000

91.3

106

Less than 90000

101.1

74.1

Sum

206.9

244

( Beginning: Kakkar, n.d. )

The above tabular array indicates the addition in the one-year income where the demand is besides increasing twenty-four hours by twenty-four hours, which straight reflects in high criterion of life and higher buying power.

( Beginning: Kakkar, n.d. )

Apart from the cardinal drivers give above, the other of import factors pulling the planetary car industries to India are the states immense in-between category population, growing in the gaining power of people, strong technologically possible and handiness of skilled work force at competitory monetary values ( KPMG, 2010 ) .

Chapter 3: Manner of entry:

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A manner of entry in an international market is the way where a company justifies its presence in the planetary scenario by stepping in a new international market. Choosing the most appropriate manner of entry in such a diversified planetary market is of import as the determination of how to come in a foreign market has a important impact on the consequences ( Hollensen, 2011 ) . Therefore, for Peugeot to re come in the Indian market where the competition is really intense in the Indian automotive industry it would be critical to take the most suited entry manner.

In October 1994, Peugeot entered the Indian car market in a joint venture with Premier Automobiles Ltd. ( PAL ) , named as PAL-Peugeot Ltd. However, Peugeot ‘s program shortly went haywire when their fabrication works was disrupted due to labor struggles in mid 1996. Production had to be stopped resulted in mounting immense losingss. Subsequently on, there were jobs with PAL sing certain strategic confederation issues including extract of fresh financess and the misdemeanor of the PAL- Peugeot MoU ( memoranda of understanding ) . Therefore, because of heavy losingss in November 1997, Peugeot decided to go out from the joint venture and leave the Indian market ( Subhadra, 2002 ) .

Taking into history the past experience, the present market growing and the hereafter estimated growing rate of the Indian automotive industry, it is suggested that Peugeot should re come in the Indian market by puting up gross revenues and production subordinate. Harmonizing to Ministry of Heavy Industry and Public Enterprises ( 2006 ) India is emerging to be most attractive finish for investing in the car industry due to its huge domestic market, invariably increasing buying power, good established fiscal sector, stable corporate administration model and favorable authorities policies.

Apart from the above factors the other of import facets are de-licensing of the car industry, blessing of 100 % foreign equity investing of car and its constituent is permitted ( Ministry of External Affairs, 2013 ) , exclusion of the particular extra responsibility and decrease on import responsibilities for things like aluminum and steel which constitute as a major constituent in fabrication ( Grant Thornton, 2011 ) , tax write-off in the excise responsibility on little autos and surcharge rate to be reduced from 7.5 % to 5 % for domestic companies and 2.5 % to 2 % for foreign companies ( Ministry of Heavy Industry and Public Enterprises, 2006 ) . Furthermore, authorities ‘s reactivity to ease concern demands and making a favorable on the job environment like the efficiency factor, the resource handiness, the ability to pull investings and propinquity to the markets has besides attracted many foreign investors as shown in the figure below.

( Beginning: India. Ministry of Heavy Industry and Public Enterprises, 2006 )

In fact, India is emerging as a major production base for hatchback autos. For illustration, harmonizing to Thomas White India ( 2010 ) the European makers, Skoda car, the Czech subordinate of Volkswagen has built a good place in the Indian car industry. Volkswagen itself has been a recent participant in the Indian market and has expanded its merchandise scope from little hatchback to midsized saloon. Gallic car manufacturer Renault has opened a big assembly line with its Nipponese associate Nissan. Furthermore, Luxury rider autos have besides noticed an first-class growing in recent old ages. Indian automotive industry is developing a repute in planing and fabricating low cost auto. Therefore, taking into history the above elements it states a perfect scenario for Peugeot to re-enter the Indian market.

Chapter 4: Merchandise:

Though all the 4P ‘s of a selling mix are interlaced and impact each other, but it is the ‘Product ‘ that has the most profound consequence on all other maps. The in-depth survey of merchandise determination procedure is the cardinal facet for a planetary selling mix as it identifies the consumer demands and significantly quantifies the chance created by the merchandise ( Baack et al. , 2013 ) . Hence, while come ining the Indian market it is of import to choose the most suited merchandise line for that peculiar market.

Deciding the merchandise policy in international market, it is really important to stress on the merchandise degrees i.e. to make up one’s mind what parts must be standardized and what parts must be adapted harmonizing to the local environment ( Hollensen, 2011 ) . There are three degrees of the merchandise offer which has to be examined before come ining the market. Harmonizing to the figure given below the nucleus merchandise of Peugeot i.e. the midsized saloon and hatchback theoretical account should be standardized for the Indian market. Then, the merchandise attributes has to be adapted changing to the demand of the local market i.e. the pricing policy in India, the quality control determinations by authorized organic structure in India and the design harmonizing to the Indian roads like the right manus thrust system and land degree clearance ( Anand, 2005 ) . Finally, the support services has to be adapted harmonizing to the company ‘s after-sale service policies, the bringing clip based on the market demand, handiness of the trim parts and authorized service Centres.

LOWW

High

Possibilities of standardising elements of merchandise

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( Beginning: hollensen, 2011 )

India has become a fabrication hub for little auto section. Sing the fuel monetary values in India and the underdeveloped substructure, little autos occupies less infinite and is besides fuel efficient ( Florian and Jutta, 2009 ) . Furthermore, the mid-sized saloon section is the 2nd largest among the overall rider auto section with a immense demand in the Indian market ( Sukhla, 2012 ) .

The demographic factors such as 1.2 billion of population of India out of which 60 % are below the age of 30years, along with the lifting income of the people and the increasing in-between category population i.e. 25 % of the entire population by 2015 offers a immense market chance for the company ( KPMG, 2012 ) . In fact, 140 million of rural population is estimated to switch to the urban countries by 2020 and the disposable income among the people is expected to increase on an norm of 8.5 % per annum boulder clay 2015 ( Davar, 2010 ) . Furthermore, the demand for autos is lifting in the Indian market as the car finance is easy available at lower rate of involvement ( KPMG, 2012 ) .

Therefore, sing the Indian market demands and the declared factors, the best suited division to come in the Indian automotive industry would be the little auto section and the mid-sized saloon section.

Chapter 5: Pricing:

The monetary value of a merchandise is seen as the pecuniary visual aspect for the value of that merchandise in comparing with the handiness of other merchandises in the market. Among the 4p ‘s, Pricing is the lone component that generates gross, whereas the other P ‘s leads to costs. Therefore, pricing is the most of import constituent for any company to derive a competitory advantage for their merchandises ( Masterson and Pickton, 2011 ) .

In the present Indian market, the little auto section has resulted in high competitory monetary values and higher costumier outlook ( Shinde and Gangre, 2012 ) . It is of import for Peugeot to impose the most suited pricing scheme to accommodate the local outlook. They should implement the Market pricing scheme as the monetary values can change from one market to the other ( Forman and Lancioni, n.d. ) . Furthermore, they must use the transportation pricing scheme sing the Indian revenue enhancement strategy, as the monetary value differs within the different legal boundaries of the state ( Walden, 2005 ) . For illustration, autos in Mumbai are expensive than in Delhi or Kolkata due to difference in revenue enhancement and responsibilities, geographical locations, regional transit cost, fuel monetary values, etc ( Purohit, 2010 ) .

Apart from the legal and political environment, it is besides of import to see another major facet i.e. the rivals, like the local and the foreign car companies in the Indian market. The major rivals for Peugeot in the Indian car sector are Hyundai, Maruti, Skoda, Volkswagen and Honda in the hatchback section and mid-sized saloon section ( Shinde and Gangre, 2012 ) . Furthermore, refering to the economic facet of the Indian market, the fluctuating currency rates will besides impact the pricing scheme of the company. For illustration the down autumn of rupee-yen exchange rates had increased the cost of production and pulled down Maruti Suzuki ‘s overall net net income ( Enomic Bereau, 2012 ) .

The pricing determination of a company determines its placement in the international market. Therefore, researching the above critical elements of the Indian market and accommodating itself harmonizing to the local status, Peugeot should see the pricing dimensions like market pricing and reassign pricing to construct a strong presence in the Indian automotive industry.

Chapter 6: Distribution channel:

‘Place ‘ is concerned with the methods of transporting and storing of goods, and so doing them available for the terminal users. Harmonizing to Bucklin ( 1966 ) a channel of distribution consists of a set of establishments that executes all the activities utilised to travel the merchandise from production unit to the concluding consumer. Distribution channel chiefly consist of the mediators like jobber, retail merchant, franchising, agents and licensing ( Hollensen, 2011 ) . Therefore, choosing the most appropriate channel of distribution is of import to guarantee the right merchandise in the right topographic point at the right clip.

India is varied in its natural resources, climatic conditions and coastal countries where some parts of the state are developed and some are still developing. For illustration, provinces like Maharashtra and Gujarat are developed comparison to provinces like Uttarakhand and Rajasthan ( IBEF, 2009 ) . Gujarat is graded first as the most preferable finish for investing in India ( Vibrant Gujarat, 2013 ) . It is the province with longest coastline located on the west seashore of India with favorable climatic conditions and progress infrastructural installations ( Gujarat India, 2009 ) . This has attracted a figure of planetary companies like Tata Motors, General Motors and Maruti Suzuki to Gujarat for their fabrication unit ( Das, 2013 ) . Therefore, sing the above geographical conditions and the cardinal factors given below in diagram, Peugeot should setup its fabrication unit in the province of Gujarat.

Key Drivers for Growth in the State of Gujarat ( Source: Vibrant Gujarat, 2013 )

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The Indian automotive industry has evolved in three major bunchs i.e. the western part, the northern/central countries and the southern parts ( IBEF, 2010 ) . Hence, Peugeot should implement the theoretical account of selective distribution channel as shown in the diagram given below. It will profit Peugeot to increase its market coverage by choosing the assorted mediators to perforate in different parts of the state.

Selective Distribution Channel

Beginning: ( Hollensen, 2011 )

Therefore, it is critical for Peugeot to put up a fabrication unit in Gujarat and unfastened few official company salesrooms and service Centres in the major metropoliss like Mumbai, Delhi, Bangalore, Chennai and Kolkata. Furthermore, they should besides cover other metropoliss through franchise, franchising and licencing manner.

Chapter 7: Promotion:

Promotion is one of the cardinal elements of marketing mix as it enables the company to tempt its bing and possible purchasers. It is the gum that binds the selling mix together, which will assist the company to pass on inside informations about their merchandise, monetary value and topographic point to their mark audience. Promotional scheme is the map of ratting, carrying and act uponing a consumer ‘s determination ( Hollensen, 2011 ) . Therefore, Peugeot should develop an effectual promotional mix to carry the consumers about the trade name image and high quality over their rivals.

In such a huge Indian market, modern advertisement media offers the automotive companies a assortment of attacks to advance their autos. The uninterrupted promotion in engineering makes it possible for commercials of any assortment to make consumers mundane and accomplish a significant consequence. As Peugeot a new entrant in the Indian automotive industry, should raise a trade name consciousness plan by building a selling panel concentrating on one of its cardinal trade name facet i.e. invention in order to do a strong impact through their roll-out in India ( Chattopadhyay et al. , 2010 ) .

Peugeot should besides implement the effectual ways of publicity like the experiential publicity mix as it maximises the ways to make the mark clients and cost ( Sharma and Sharma, 2011 ) . They must connote a mass media attack such as out-of-door advertizement, advertise in the car magazines, ads in English and local linguistic communication newspapers, they must fix a Television advert backing a Bollywood famous person advancing their auto. They should stress on gross revenues publicity activities like expertness gross revenues individual and show of their autos in the salesrooms, exhibitions, car exhibition and shopping promenades. Furthermore, free after sale services and trial thrusts, catalogues with the necessary information of all the discrepancies, supplying free gifts and accoutrements on purchase of the auto and amalgamation with Bankss to supply auto loans at low involvement rates. They must besides keep Public relation manners utilizing imperativeness releases, imperativeness launches, get downing some societal runs and patronizing events. They should besides utilize the manner of digital selling via societal networking sites and opening a company web site.

Peugeot should see that invention must non merely exist in their merchandises but besides in their communicating and advertisement attacks. Therefore, by implementing the above stated publicity mix and their aspiration, Peugeot can set up itself making a strong trade name image in the Indian automotive industry.

Chapter 8: Decision:

Car industry is a representation of proficient wonder by human sort as it is one of the fastest turning sectors in the universe. The production base of most of the monolithic car companies are switching from developed states to developing states where the cost of production is rather low ( Nag et al. , 2007 ) . Indian automotive industry has emerged as the one of the most preferable investing finish in the universe. The enterprises by the cardinal and province authoritiess like supplying developed substructure, skilled labour force at competitory monetary values and revenue enhancement benefits has attracted immense foreign investings in India ( KPMG, 2010 ) .

Sing the present investing scenario and the one-year GDP growing rate of 6.9 % in 2011 ( The World Bank, 2013 ) , Peugeot should set up itself by implementing an adaptative selling mix. Peugeot should re come in the Indian market by puting up a fabrication unit in the province of Gujarat. In fact to hold market coverage they must open some company salesrooms in the major tube metropoliss like Mumbai and Delhi where the demand for the auto is high. They should come in by originating a Peugeot 308 hatchback theoretical account and a Peugeot 301 mid-sized saloon as these two sections are the most favorable for the Indian market. The must accommodate the pricing of the auto sing the Indian purchasing behavior, the rivals monetary value and authorities revenue enhancement ordinances which differs in different provinces of India. Peugeot should utilize promotional methods like the Mass media attack, gross revenues publicity activities, public relation schemes and digital selling.

Therefore, being a new entrant in the Indian market Peugeot should optimally use all the possible chances, its resources, planetary trade name image and the above mentioned marketing mix to the demonstrate their presence as a strong rival in the Indian car motor industry.