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Vũ Ngọc Thạch – SE04094 Case Study FIAT: A good product with a wrong strategy ABOUT FIAT Fabbrica Italino Automobilo Turino (Fiat SpA or Fiat), is Italy’s largest car maker, based in Turin It has been known for its manufacturing operations Fiat was created in 1899 by an investor group including Giovanni Agnelli – who was among the founder members of Fiat and became the chairman in 1920 Fiat grew particularly after the First World War among the Italy’s industrial companies, and concentrated particularly on making the international presence of Fiat Fiat India Automobiles Limited (Fiat India) was formed by a joint venture between Fiat and Tata Motors on January 2, 1997 However, the definitive agreement between the two parties was reached on October 19, 2007 The manufacturing operations were located in Ranjangaon, Pune in the state of Maharashtra ANALYSIS MARKETING ACTIVITIES OF FIAT INDIA The creation of the joint venture with Tata Motors in 1997 was aimed at improving the distribution network of the brand in India but has had miserable outcomes After the joint venture ended between Fiat and Tata Motors distribution and servicing was solely taken care of by Fiat The rejuvenation exercise was assigned to one of their senior executives, Enrico Atanasio, who is heading the new company and trying to revitalize its sales, marketing and distribution network But there is no reaction from the customers at this stage The key cause of this failure as said by Ratan Tata is the lack of variety in the product portfolio The manufacturing facilities were underutilized at Ranjangaon, Pune Also, Palio Stile was not widely available in the bigger markets and was discontinued as the sales were not high enough to upgrade it to the BS-IV pollution norms The Grand Punto was launched by Fiat in Punto while competitors are launching cars every year (Baggonkar, 2011) In May 2012, both the partners decided to part ways for the distribution channel while the manufacturing collaboration still exists Continued poor showings in the Indian market and increasing congestion in the showrooms prompted them for separating ways as the potential Fiat customers had been unable to have a feel of the brand The joint venture model did not move towards achieving its objective of gaining a foothold in the emerging market of India The fall in the sales is attributed to customer feedback which said that the customers need to have an experience of the brand at the retail end Earlier in 2011, Fiat had been working on revamping its brand as it launched Fiat Cafes in Pune and Delhi and had been attempting to convince dealers to set up a separate retail setup for Fiat Though this was just in its nascent stages in 2011, Atanasio’s entry in 2012 for Fiat India displayed signs of making this true with a strong focus on an exclusive dealership for Fiat The plan was to convince 178 existing dealers across India to join them in their new setup (Mohile, 2012) In May 2012, it was announced that the joint venture agreement between Fiat and Tata Motors would be ending in terms of distribution while manufacturing would continue This was the second time that a joint venture between Fiat and an Indian partner had ended According to Atanasio, Fiat would be bringing its well-known international brands to India, this would be decided by the year end or the beginning of 2013 However, analysts believe that it will take even longer Fiat although has received new application for a dealership in hundreds The company has to sail through this transitory period and wait for the much awaited aforementioned brand launches (ET Bureau, 2012) Fiat has formed a separate company which has assumed responsibility for all marketing and service-related activities for the brand Fiat, but it seems that the process of network creation will take about two years This has to be coupled with launch of new models which will attract dealer interest and scope for their positive return on investments The company will soon begin to expand its dealer network The transition is also based on the feedback of the customers that there was a need to have a ‘‘Fiat experience’’ at the retail end The cities that will form part of the first wave of transition will include Delhi, Mumbai, Kolkata, Chennai, Bangalore, Pune, Jaipur and Hyderabad Atanasio has stated that the company is taking steps to transform its marketing strategy and therefore has changed its advertising agency They are focusing on the advertising campaign The company is also adjusting its vehicles to the road conditions in India and also revamping the air-conditioners Fiat is reevaluating the Indian market scenario on various fronts and must be looking at launching a new product which will improve the situation now and in the years to come The new regional headquarters is now located in Shanghai for the supervision of Indian operations The situation of Fiat in China is even worse than that in India After the recent acquisition of Chrysler by Fiat the company aims at focusing on the two biggest emerging markets of India and China SUMMARY Through the view of Fiat India’s marketing activities, it’s clearly that the following reasons had bring the failure of Fiat India: • • • • • • • Wrong choice of local partners, which lead to the wrong in marketing Poor reliability Poor after sales service Poor mileage Not so powerful heavy cars Poor brand image in India The lack of sale maintenance And the biggest that caused the failure of Fiat is in their launching plan, when they basically launches a model (and its booted variant) and waits for it to die a slow painful death Fiat, in 15 years, has launched a grand total of models, this made Fiat’s consumer not to have the choices when they walk into the showroom SUGGESTION Here is some suggest some marketing implications in Fiat India case: • • • Brand: A well-known international brand need to change things, to be adopt in the different market At Fiat case, they need to relocate their position in India market, choose a different dealer to be in partnership with, of which focusing on upper middle class consumer Product: Fiat needs to extend their sales service and after sales service With the high price of their product, they should have more network of Spares and service centers In addition, a diversification in production is the need of Fiat, when they need to put their customer in the place of “to make a decision” Distribution: This would helpful for Fiat in making when they treat right with their dealer No dealer wants to invest their space and human resource for a lower –resale value A higher discount for the dealer is not only good for sales activities, but also good for promoting activities to the target consumers ... implications in Fiat India case: • • • Brand: A well-known international brand need to change things, to be adopt in the different market At Fiat case, they need to relocate their position in India market,... biggest emerging markets of India and China SUMMARY Through the view of Fiat India s marketing activities, it’s clearly that the following reasons had bring the failure of Fiat India: • • • • • • •... time that a joint venture between Fiat and an Indian partner had ended According to Atanasio, Fiat would be bringing its well-known international brands to India, this would be decided by the
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