Consumer Behaviour Case Study

Skoda had a monopoly in car manufacturing in Czechoslovakia until the 1989 Velvet Revolution. During this time it had developed a fearful reputation as possibly the worse built, worst designed car in the world. Jokes about its notoriety were ruthless, unremitting and widespread. The only place it sold in any number was in the country of manufacturer. After the fall of communism the Czech government started looking for a commercial partner in the West to revitalise its Skoda factories. Most respected commentators felt strongly that there would never be a business prepared to take on the acquisition because of the huge task of trans- forming the name from risible rejection to amiable acceptance. In 1991, however, Volkswagen took a 30 per cent stake in Skoda and started work in training and educating the workforce to Western quality standards in the hope of completely turning the business around, making the name of Skoda synonymous with quality and reliability. It invested over billion in the plant, research, development and new models. It also undertook an advertising campaign, of momentous proportions, that excited the admiration of all in the promotion business. Ten years later, in 2001, VW took total control of the business and such was its success, Skoda had become one of the fastest-growing car brands in the UK motor industry, increasing sales in the first two years by over 60 per cent. Although sales in 2004 have fallen slightly, in line with other car manufacturers, the story is one of remarkable success, not least in being able to understand and alter and turn around such deeply ingrained consumer ridicule and opposition.

Questions: 1. Discuss the part that an understanding of consumer behaviour played in the success of Skoda. 2. What were the major problems that VW had to solve to overcome consumer antipathy to Skoda?

Case Study: Read the following situation and answer the following questions: Maruti-Suzuki is a well known Automobile company in India. It is also enjoying the status of having the largest share of Indian automobile market. MUL's (Maruti Udyog Limited) Maruti-800 was ideally suitable for Indian customers as it was reasonably priced, fuel efficient and was sleek and easy to drive when compared to the other models available in market. With the success of its M-800, MUL soon replaced Hindustan Motors as the leader in the passenger car market. But then also, MUL come up with several strategies in the market recently to combat other competitors in the segment The various strategies are

Launch of new variants and models Increasing dealer profitability-During 2003 and 2004, MUL visualized and implemented a strategy for its dealers to increase their profitability levels in view of increased competition. According to the strategy, the 300-odd dealers of the company were asked to strengthen their manpower, increase the salaries of their sales agents, and offer them better incentives...

Promotional offers--MUL focused its promotions strategy on targeting two-wheeler owners. 'Change Your Life' campaign--MUL launched novel offers like "Change Your Life" campaign and also offered vehicle insurance 'for Rupee One only', to attract customers Television campaigns--In 2003, MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message. The advertisement depicted a child playing with a toy car. When reprimanded by his father the child replies, 'Kya karoon papa petrol khatam hi nahin hota' (What should I do? The petrol never finishes)

'2599' offer--In 2004, MUL introduced the '2599' offer under which a consumer could buy an M-800 by paying an EMI of Rs 2,599 only, for a period of seven years. The down payment was fixed at Rs 40,000. MUL entered into an agreement with the State Bank of India (SBI), the largest bank in India, to promote this scheme

'Teacher Plus' scheme--To further penetrate into the market, MUL continued to focus its efforts on the rural markets and specific target groups. In 2004, it introduced the 'Teacher plus' scheme, in a tie-up with SBI, aimed at teachers who were interested in buying a new car.

Maruti 'True Value'A one stop solution outlet for exchange and buying-selling old cars.

The question is-

a. Why MUL has to come up with these strategies even though it is enjoying a comfortable
market share in India?

b. What could be the relevance to study this case regarding consumer behaviour?