green veh strategy

Indian Institute of Management , Bangalore

Gopalakrishnan D (0910021)

Mukesh Sharma (0910036)

Faculty Guide

Prof.Mithileshwar Jha

Profiles of Presenters

• Gopalakrishnan D

– 8 years in Automotive industry (Maruti Suzuki)

– Customer relation and channel management

• Mukesh Sharma

– 11 Years in Automotive Industry (Maruti Suzuki/Suzuki Motor

Corp/Tata Motors)

Indian Institute of Management , Bangalore

Corp/Tata Motors)

– New Product development and Vehicle R&D

Contents

• Motivation behind the work

• Introduction

• Objective and scope

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• Methodology

• Findings

• Discussions and Recommendations

Motivation behind the work

• Decreasing fuel � increasing cost

• Emission norms getting tougher

• Mobility requirements getting denser

• Alternate fuel research going on

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• Alternate fuel research going on

• To understand consumer behavior for new

sources of mobility

• Facilitate academicians and practitioners

•Global warming

•Pollution

•Oil dependence

Introduction

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•Fast growing Indian

automobile market

•Lesser carbon foot

print

•Least carbon foot print

for electric cars

•Oil conservation in

Introduction

0

5,00,000

10,00,000

15,00,000

20,00,000

25,00,000

Ve

hic

le s

ale

s

Indian Automobile sales 2008-09

Total sales

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•Oil conservation in

range of 50~100%

0

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Objective and Scope

Consumer• Understanding Consumer insights

• Segmentation , Targeting and

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Marketing Strategy

• Segmentation , Targeting and Positioning of green vehicles

Overall Strategy

• Blue print for promoting green vehicles in emerging markets like India.

Methodology

Conventional cars

Industry experts

Current customers

-Study conventional car market

-Green car evolution so far

-Literature study about green

marketing

-Understand World scenario

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Green car evolution

Literature study

Indian scenario

World ecosystem

Focus groups

Potential customers

-Understand Indian scenario

-Interview industry experts

-Survey current electric car

customers

-Conduct focus groups for

potential customers

-Survey potential customers

Findings and Frameworks

• Psychology of green consumers

• History of electric cars

• HEV/EV programs in other countries

• Indian scenario and NHPP

• REVA customer(54) vs conventional customer(61) analysis

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• REVA customer(54) vs conventional customer(61) analysis

• Pros and cons framework (PNC)

• Focus group findings (1-8)

• Green vehicle ecosystem framework (GVE)

• Green customer perceived value framework(GCPV)

• Industry expert analysis framework(14) (IEA)

• Green vehicle diffusion model (GVDM)

Psychology of green consumersS.No Type Characteristics

1 True blue greens (10%) � People with strong environmental beliefs

� Politically active

� Contribute money to environmental groups

2 Greenbacks greens (5%) � Their willingness to pay for green product is

22% and support environmental concerns

� Busy in life , not politically active

3 Sprouts (33%) � Willing to pay 4% extra

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� Willing to engage in environmental activities if it

consumes less time

� After some time few of them migrate to true

blue and greenback greens

4 Grousers (15%) � They feel saving environment is responsibility

of government

� They recycle cans and bottles , but grudgingly

5 Basic browns (37%) � Not convinced that environment problems are

that serious

� They believe it’s a hype

History of Electric vehicles

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HEV/EV programs in countries

• USA (California)– ZEV/PZEV – Penalty based enforcement

– Lobbying by Oil companies/Auto companies

• France– Denser city layout

– Gasoline – Higher taxes

– Nuclear power

– Public procurement approach

• Japan– Earliest promoters (1970’s)

Active –Consensual

Active -Impositional

Reactive -Consensual

Reactive -Impositional

CaliforniaFrance

Japan

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– Earliest promoters (1970’s)

– Government + Companies+ Municipalities

– Development of quick charging stations

– R&D support

– Market support

• Israel – Better place model ($2300 million invested)

– Oil independent by 2020

– 500,000 charging stations by 2011

– Battery swapping mechanisms

Indian scenario• REVA NXG /NXR electric

• Toyota Prius hybrid

• Tata Indica electric

• GM Spark electric

• Maruti Suzuki Eeco electric, SX4 hybrid

• Hero electric

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• Hero electric

• Mahindra and Mahindra

• National Hybrid propulsion program(NHPP)• Ashok Leyland ,Tata Motors ,Maruti Suzuki ,Bajaj Auto

Mahindra and Mahindra

REVA customer VS Conventional

customer survey analysis

Revacar user profile

Women ~ 50%

Senior citizens ~

40%

Working couple ~

55%

Daily use of Reva ~

95%

First Value, then Eco-friendly

Conventional car user profile

Men ~ 95%

Middle aged ~ 90%

Single earner ~

70%

Daily use of car ~ 95%

First Value, then

Comfort

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Self-employed

~ 20%

Own 2 cars ~ 70%

Private firm ~ 55%

Car for Leisure

Trips ~ 60%

•Inadequate service

network (37%)

•Poor build quality (30%)

•Battery charge problem

(28%)

•High vehicle cost (24%)

•Poor service quality (11%)

•Environment friendliness

(69%)

•Low running cost (54%)

•Quality of drive (15%)

•Derisk from petrol prices

(8%)

•Less maintenance (8%)

•Expensive (71%)

•Unproven technology (35%)

•Lower performance (18%)

•Uncertain serviceability (12%)

•Stability issues and poor

design (6%)

•Less space/ too small (30%)

•Not value for money (30%)

•Less drive range per charge

(22%)

•Unsafe (17%)

•Not really eco-friendly (17%)

Reva dissatisfaction Reva NOT good purchase Why GREEN cars? Why not GREEN cars?

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Pros and cons framework (PNC)

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Total cost of ownership comparison

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Total cost of ownership comparison

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Potential customer focus group

analysis

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Green vehicle ecosystem framework (GVE)

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Green customer perceived value

framework(GCPV)

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Industry expert analysis

framework(14) (IEA)

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Green vehicle diffusion model

(GVDM)

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Discussion and Recommendation

• Innovation wheel

• Technology VS affordability quadrant

• Segmentation , Target , Positioning

• Green strategy– Lean Green

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– Lean Green

– Shaded Green

– Defensive Green

– Extreme Green

• Marketing Mix and challenges

• Future projections - India

Innovation wheel &

Technology VS affordability

quadrantMore

Investment

Better Technology

More Profits

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More Demand

Lower Costs

Higher Sales

Green strategy

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Product Price Place Promotion

LEAN X

DEFENSIVE X X

SHADED X X X

EXTREME X X X X

Marketing Mix and challenges

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•People: Education and awareness of people

•Politics: Lobbying with government for tax subsidy

•Process: GREEN alliances.

•Proactive planning: changing consumer tastes.

•Pace: implement the suggestions as fast as possible.

•Publicity: publicize both the makers and the users to

increase the diffusion rate of such an innovation.

11 point Blue Print: Strategy for

promoting green automobiles• Green alliance.

• Commitment of resources.

• Electric vehicle regulation.

• Infrastructure - charging points.

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• Infrastructure - charging points.

• Tax reliefs and Subsidy.

• Incentives to consumers to change their

driving and vehicle ownership behavior.

• Education and awareness - Schools and

colleges

11 point Blue Print: Strategy for

promoting green automobiles• Segmentation and Targeting of consumers for electric

vehicles– Short term (10 years): Women and older people.

– Medium term (20 years): Increase consumer adoption rate .

– Long term (> 20 years): Develop mature ecosystem mass adoption.

• Positioning of the product:

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• Positioning of the product:– In short term- “Value for money car”.

– In medium term - “Value for money + eco friendly product”

– In long term - “Total eco friendly product”.

• Electric cars require electricity– Centralized Nuclear power plant generation systems

– Decentralized (standalone) Solar electricity generation systems.

• To prove the technology for mass usage and change the consumer behavior to use such products.

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How will it eventually happen?

100

70

Chance that

next person

WillingnessCapability

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0 70 100

% of people using conventional cars

0

next person

purchasing a

car will be

conventional

Opportunity

Forecast

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Future scope of work

• Analysis of battery industry and its dynamics

• Analysis of future power generation systems

such as solar and nuclear means.

• Hypothesis development and testing.

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• Hypothesis development and testing.

• Article

• Book

Thank you for your patience

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