Cmgb 6101 – marketing management product : proton exora 2 For: Michael M. Dent Msc, mphil, mcim prepared by
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- CMGB 6101 – MARKETING MANAGEMENT PRODUCT : PROTON EXORA 2
- INTRODUCTION Auto Industry in general 2009
- Jan - June Jan – June Jan - June Jan – June
- PROBLEM IDENTIFICATION PROTON Controversies
- Economic factors Deregulated market
- The ever-increasing cost of manufacturing and raw materials
- Shaken consumer confidence stemming from the threat of global economic slowdown and an over-crowded operating environment
- Policy Export Policy
- Staff and Vendors PROTON’s Managing Director, Syed Zainal Abidin
- The Choice of Decision Faced by the Key Person
- PROBLEM ANALYSIS 4.1. Market Overview
- 4.2. SWOT Analysis Strengths
- POINTS OF PARITY AND POINTS OF DIFFERENCE Points Of Parity (POP)
- Points Of Difference (POD)
- DECISION CRITERIA Business Proposition
- Corporate Vision and Core Value
- Economical
- Key Planning Assumptions
- Possible Solutions New Innovations Strategies
University of Malaya Faculty of Business and Accountancy Graduate School of Business Master of Business Administration ___________________________________________
For: Michael M.Dent Msc, MPhil, MCIM Prepared by: Halisah Ashari CGA 080108 Linda Sim Siew Kian CGA 080016 Teh Chye Beng CGA 080035
REFERENCES APPENDICES
EXECUTIVE SUMMARY Proton Exora is a compact multi-purpose vehicle (MPV) model produced by Malaysia car manufacturer known as Proton Holdings Berhad (Proton). The new model car was launched on 15 April 2009, which is the first Malaysian designed MPV. Proton Exora is a new lifestyle family vehicle, which combines advanced styling, spacious interior, which accommodates 7 adults and has multiple usage, high quality design and good performance with emphasis on the value for money factor. Despite the benefits offered by Proton Exora, our group had identified few major problems faced by Proton. One of the major problems faced by Proton is Proton has lost its market share to local and foreign competitors from 60% of the domestic passenger car market in 2001 to 29% for the first half of 2008 (Malaysian Automotive Association 2008). Proton’s brand value has also dropped from RM239 million in 2007 (rank 19) to RM150 million in 2008 (rank 23). The latest news on 23rd November 2009 reveals that Proton’s ranking has dropped from Malaysia’s 30 Most Valuable Brand (MMVB) ranking. Therefore, our group has recommends new concept car known as Proton Exora 2 with additional improvised features included to enhance the performance and increase the demand for Proton Exora car. Possible solutions to mitigate the problems identified are by introducing additional value improvised features to enhance the performance and sales of Proton Exora 2 by focusing on fuel efficiency, convenience and safety and emphasizing on the environment friendly vehicle. Overall, the action plans recommended are based on 4Ps’ strategies and marketing mix models.
The automotive industry in Malaysia can be considered as one of the most important and strategic industries in the manufacturing sector. Compared with other industries in the manufacturing sector in Malaysia, the automotive industry is hoped to boost the industrialization process so that Malaysia can be a developed nation by 2020.
Table 1: MAA Vehicle Sales, Market Share and Ranking Summary for Top 10 Passenger Cars & Commercial Vehicles in Malaysia for Jan to June 2008 The deregulation of the industry and introduction of strong affordable regional automotive brands from Japan, Korea and China has made the industry to be more competitive. About 90 per cent of the cars sold in Malaysia are produced by the local manufacturers, namely PROTON and PERODUA as shown in Table 1. The automotive industry has played an important role in the development of the manufacturing sector in Malaysia. With the successful implementation of the first National Car Project, the industry has to widen its perspective to take on the challenges ahead by moving towards an international level. Besides gearing up its operation to meet the anticipated growth in the sector, the industry has to strengthen its competitiveness through greater emphasis on product and market development. The industry also has to carve a niche in the export market and foster closer linkage with the target destinations. The prime reason that backed the growth in Malaysian auto market is higher orders from the consumers wishing to buy new vehicles accompanied by the launch of latest makes across a larger part of the segments. The good sales displayed by car models like PERODUA and PROTON supported the overall vehicle sales. Also, the productive steps like the technological enhancements introduced by the Malaysian automobile industry to assist the auto sector helped the market to grow significantly over the years. In 2008, MAA President Datuk Aishah Ahmad expected passenger vehicles to boost vehicle sales due to the backlog of orders to be supplied. Therefore, there was an increase in sales for PROTON and furthermore, consumers had favorable sentiments about the market conditions. At the same time, auto companies were introducing new models, particularly in the lower engine capacity range to sustain the current buying interest. There was also the shift of consumers from expensive car models to the reasonable national cars and the rush of customers to purchase their vehicles before the holidays of Hari Raya. Further, the boost in passenger car sales of in September 2008 can be attributed to the improvement in confidence of consumers and their enhanced lifestyles. However, in 2009, the prospect was somehow different due to the global crisis which affected a number of countries around the world. This has caused the sales of automobiles to remain low as banks are increasing their interest rates to brace for the low volumes. Besides the global crisis, the rise in oil prices has also affected the sales of Malaysian automobiles. Sales are expected to decline as consumers decide to hold back in their purchasing and this will definitely affect PROTON as shown in their sales. Currently vehicles that are manufactured by Malaysian companies such as PROTON, PERODUA, Inokom and Malaysia Truck & Bus (MTB) are priced lower than comparable vehicles that are produced by the assemblers and especially that of the CBU imports. This has allowed lower level income earners to own a car within their household. For year 2010, it is expected that there will be a return to positive annual growth in new vehicle sales although it may seemed that the impact is a slow one. Long term expectations are high for the small car segment, as the MAA envisages a shift towards more fuel-efficient cars. Besides the recovery in the economy, with technology and research and development undertaken by the auto companies, it is expected that there will be a rise in the sales of cars in the near future.
PERUSAHAAN OTOMOBIL NASIONAL BERHAD or PROTON was incorporated on May 7, 1983 to manufacture, assemble and sell motor vehicles and related products, including accessories, spare parts and other components. PROTON produced Malaysia’s first car, the Proton SAGA which was commercially launched on July 9, 1985 by Malaysian Prime Minister, Dato’ Seri Dr. Mahathir Mohamad who conceived the idea of a Malaysian car. PROTON was publicly listed on the Kuala Lumpur Stock Exchange (KLSE) in 1992 and its shareholders include Khazanah Nasional Berhad, Petroliam Nasional Berhad, Mitsubishi Corporation, Mitsubishi Motors Corporation, Employee Provident Fund Board and other local and foreign investors. PROTON had some major challenges in the recent years, with new competition and the deregulation in the industry. Proton Holdings Bhd has swung into the black in 2008 with a cumulative net profit of RM202.9 million, compared with the loss of RM589.5 million it registered in 2007. The national carmaker's revenue rose 14.6 per cent to RM5.63 billion from RM4.91 billion a year earlier. One of the reason of this achievement is due to the introduction of new models with higher profit margins, stronger sales volume, savings from group-wide cost-reduction initiatives, income from the sale of rights for use of Intellectual Property Rights relating to a vehicle platform (for the China market) as well as the R&D grant. For the year 2008, PROTON’s focus would be in the core areas of product, quality, cost efficiency and distribution network. PROTON aims to have a strong product portfolio by introducing “the right car, for the right market, at the right price and at the right time”. This was reflected in the organisation’s newly introduced Exora, Persona and Saga Models, with the latter powered by the new CamPro IAFM engine. PROTON has also continued to update and refresh existing product lines to entice and attract customers.
PROTON’s model products include WAJA, SATRIA, GTi, WIRA, ISWARA, ARENA, PERDANA V6, JUARA, PERSONA and EXORA. The range of 1.3, 1.5, 1.6, 1.8 and 2.0 litre engines satisfies a wide spectrum of customers both locally and abroad. PROTON cars are also known internationally as competitive and innovative automobiles. PROTON now is being exported to 50 countries like United Kingdom and continental European markets, thereby realizing its goal of being an internationally successful Malaysian automobile manufacturer. The first PROTON car was exported in 1986. The number has increased steadily and in 1998, Malaysia exported a total of 18,422 units to countries and areas, including Argentina, Australia, Bahrain, Bangladesh, Belgium, Brunei Darussalam, Chile, Cyprus, Egypt, Fiji, Germany, Jordan, Kuwait, Lebanon, Libya, Maldives, Mauritius, Oman, Philippines, Qatar, the Russian Federation, Saudi Arabia, Singapore, Slovenia, Sri Lanka, Taiwan Province of China, Turkey, United Arab Emirates and United Kingdom. The models being exported include Wira, Sedan/Aeroback, Satria and Putra. PROTON’s exports are the most successful in the United Kingdom due to its competitive pricing strategy and its buyback arrangement with car rental companies in the country. PROTON also benefited from the Generalised Preferences Scheme that made it easy for them to enter the United Kingdom market. PROTON has introduced a few upgraded models with higher engine capacity and sporty design to establish its presence internationally. PROTON is focusing to be more customer-oriented and by producing competitively priced and innovative products. It is therefore contributing to the Malaysia’s attainment of Vision 2020.
Controversies surrounding PROTON till date include the abuses and improprieties in the malpractices issue of approved permits (APs) for imported cars, entry of foreign cars at below-cost prices, the 20-year protectionist policies accorded to PROTON, and other questions concerning the national automotive policy. The 20-year protectionist policies accorded to the national automaker PROTON was the government ways of emulating other vehicle manufacturing countries. Tun Mahathir Mohamad, the former premier and present advisor to PROTON once said that without such policies, Malaysia would not have a car industry, admitting that Proton had gained 80 percent market share "benefitting from protectionism,” and PROTON otherwise would not have been able to penetrate foreign markets due to the economies of scale Malpractices are rife despite the benefits of the import system of Approved Permits (APs). PROTON also lost money due to the lower prices of foreign cars sold in Malaysia. It has been identified that lower prices for foreign cars is due to volume and PROTON would not be able to achieve this because of their protected car market.
It is hard to see PROTON ever making money consistently with the current business model that it operates. At the heart of the car business is all about two basic things: cost structure and product. General Motors failed because it messed up on both counts. The lessons from GM are simple - make products that people want, and make them in a cost-efficient way. Margins are generally so thin in the auto business that car factories really only make money when they are running at or near full capacity. PROTON has not one, but two factories that can output a combined maximum of 1.2 million cars a year, yet it builds only 156,845 units. Given that the vehicle market here is worth half a million units annually, even if we roused enough patriotic fervor to get every car buyer to choose a PROTON over any other brand, that would still soak up only half of the total capacity.
PROTON was established 25 years ago by Tun Mahathir Mohamad as part of an ambitious national industrialization plan, but it has long been criticized for poor quality and unimpressive design. PROTON's major problem, as everybody knows, is quality control. Complaints typically relate to failures in power windows, doors and alarm systems. It’s not unusual (very common, to be precise) to hear public complaint about the overall poor quality vehicles by PROTON over the years and indirectly affecting the financial result of the company, when its sales dwindled tremendously and continuously losing market share and subsequently, the profit margin eroded substantially too. PROTON's head of body engineering once told a local newspaper that the benchmark for world quality class cars is two defects per car but from our observation, world class quality car manufacturers have been aiming for zero defects all this time. "DO IT RIGHT THE FIRST TIME" – slowly but surely the learning curve must show positive result. Most successful companies are.
PROTON 's market share has slumped over the years, as it faced difficulties coping in a new deregulated market. The government has urged PROTON to forge a partnership with a foreign automaker to give it the expertise and economies of scale that it needs to survive, but talks with Volkswagen and General Motors have collapsed when the Government decided it is best to keep the PROTON’s ownership or risk losing control over the design and production of the national car maker.
PROTON, in February 2010 had made net profits for two quarters in a row due to lower operating costs and increased sales. However, it still booked a net loss of 32.92 million ringgit (10 million dollars) for the nine months to December, although it was smaller than the 590.448 million ringgit loss a year earlier. The PROTON chief said the carmaker would proceed with expansion plans despite the soaring cost of raw materials.
Despite the challenges that persistently impact the industry, which include the ever-increasing cost of manufacturing and raw materials, shaken consumer confidence stemmed from the threat of global economic slowdown as well as an over-crowded operating environment. Globally, the automotive industry is going through a period of change, reflecting both the rapid change of technology, increasing need to comply with continually more stringent regulatory requirements and increasing liberalization of markets. Higher petrol prices and increased cost of raw materials and manufacturing resulting in lower profit margins, also posed a challenge. In addition, the declining trend for vehicle sales commenced in early 2006, because the macro-economic factors, higher interest rates and stricter lending practice.
According to Deputy Minister of Finance Datuk Dr Awang Adek Hussin, PROTON exported a total of 18,426 cars in year 2009, from the 108,405 that it built in 2008. Although the focus now is on exports, both numbers are cause for concern for the national car company. In the lightning pace of the automotive industry today, it is small wonder why PROTON is finding it hard to keep up overseas — and increasingly in Malaysia as well. Product lifecycles are getting ever shorter that it feels as though carmakers are introducing new model line-ups virtually every year. PROTON in contrast unveils on average a new model or model variant a year. This replacement rate simply will not do for consumers who have grown accustomed to seeing fresh models in the forecourts of its competitors. One of PROTON’s own Middle Eastern distributors lamented the same when he gave up the business. When Toyota, Honda and the rest were springing models left and right, PROTON’s languid pace with facelifts and replacement models failed to hold buyers’ interest. It is slow because PROTON cannot afford to have it any faster. Not when its rate of returns is so low. The Savvy, for instance, starts at £7,995 (RM 44,000) in the UK, one of the few markets that PROTON exports to. That gets you a Kia Picanto and £2,000 in change. Or, if you want to blow every single sterling, you might opt for a Volkswagen Polo, albeit a pretty bare version. With manufacturers pushing well into seven-figure production territory, PROTON’s 108,405 do it no favor at all. Unable to generate the kind of volumes that any mass-market manufacturer needs to be viable, PROTON cannot hope to match the scale — or enjoy the benefits — that its competitors have. To have PROTON address its dismal exports with urgency is to have it treat a symptom and not the problem. Exports are poor because the fundamentals of the company are poor. Its product replacement cycles are far too long for today’s market and it simply doesn’t have the kind of numbers to be able to offer prices the Koreans, for example, already do. Before PROTON can hope to get its exports up to where it needs to be, it will need to solve these problems first. And it is unlikely that it will be able to do it alone. It may have once been flush with cash but this is no longer the case. A fiercely competitive market at home has made sure of that. To do this, PROTON will need a partner that can help shoulder the exorbitant costs of keeping up with the Joneses. Or better still, to give it access to technology that is already been developed. There is no need to reinvent the wheel each and every time. The Volkswagen tie-up seemed its best bet at the time but it chose to rebuff the protracted flirtations. Now, Volkswagen is busy with its own marriage to Porsche. And the rest of the big players in the world are also busy licking their own wounds. Fresh from the economic crisis, PROTON will have fewer healthy partners to choose from and it is itself no longer the jewel it once was. But the situation remains unchanged, then as now. Without outside assistance, exports will be the least of PROTON’s concerns.
Then there is the matter of price. In Malaysia, PROTON prices are kept comparatively lower to foreign manufacturers through protectionism. This, unfortunately, is a crutch the company cannot count on in foreign markets. Protectionist policy has largely been blamed for PROTON 's stagnating performance.
PROTON’s Managing Director, Syed Zainal Abidin, was once quoted saying that 60 percent of defects in PROTON cars were due to poor quality components from vendors, but admitted the rest of the blame fell on the firm’s workforce. If the management is serious in bringing the PROTON back to a profitable entity, they should run it like a proper conglomerate and not as a charity organization, which means incompetent vendors and vendors which were being overlooked, contributing hiccups and downturn of sales performances and do not adhere to the standard set must be removed and replaced. In another word, if PROTON is to talk about "zero-defect", zero tolerance towards vendors who can’t deliver must come into the picture as a complimentary to the campaign, otherwise the entire exercise is going to be a futile effort and public fund will continue to be wasted. PROTON’s zero-defect campaign aimed at erasing a reputation for poor quality has left it struggling to compete against foreign competitors. The management had urged the employees to focus on quality control, which is critical to profitability and overseas exports. Consumers want quality cars and they have high expectations. According to Syed Zainal, "Today, we want to focus on rebuilding the company. The focus is putting PROTON on a better footing, to improve quality, product and profit. We need to be prepared to compete globally.”
PROTON lacks an engine or platform to expand into the SUV and MPV markets, or the 2.0-litre and above segments. PROTON may need to collaborate with a foreign partner much in the way BMW and PSA Peugeot-Citroen are working together to develop new engines and technologies. It is of some comfort, therefore, to learn that the Government is still willing to consider a strong strategic foreign partner in the future. A tie-up with a strong foreign brand will enable PROTON to penetrate more discerning markets. In the longer term, many of the green engine technologies that are emerging as a result of rising fuel prices and global warming would dictate the direction of automotive development, and these are beyond PROTON capabilities. On its own, PROTON has limited funds for research and development. And the bulk of its exports are mostly confined to less mature markets, including China and some Gulf Cooperation Council.
PROTON’s Managing Director Datuk Syed Zainal Abidin Syed Mohamed Tahir, has taken a turn for the better. Syed Zainal has held the reins for some two years and has instituted a host of reforms, addressing many of the quality control issues, and vendor and marketing problems faced by PROTON in the past. PROTON’s realizes that strong customer orientation and competitively priced products are the foundation of the company’s business. Performance targets have been developed to maintain market leadership, to continue to develop innovative products, to satisfy customer’s needs better and to enhance profitability. Primary factors that contributed to the resurgence of the industry included the introduction of new models at highly competitive and consumer-friendly prices; attractive and creative financing schemes for car buyers as a result of aggressive sales campaigns; and a strong economic growth of 5.75% in 2008 (FR 2009). To change the attitude and mindset of employees, best practices are applicable via effective training. Upon realising the concept, PROTON provided training to all employees to help them understand the company’ ethical principles and how those principles can help them make decisions. Human capital development programmes become more structured which helps to strengthen competitive edge. PROTON had developed extensive vendor programmes to ensure they adhere to the expected quality which previously was overlooked. This has led to reduction of 23% direct-vendors, and a more structured and manageable direct-vendor networks. Taking a look at the latest Exora and we will get a glimpse of some of the changes - more uniform panel lines, better interior plastics and seating, a more responsive transmission, and a more inviting interior, among others.
4.1. Market Overview Once known as the king of the road, PROTON has seen its fortunes dwindle due to growing competition from local and foreign competitors as Malaysia opens up its auto market. Malaysia is Southeast Asia's largest passenger car market with 497,459 vehicles sold in the year 2008. Malaysia’s auto market is dominated by its national cars, PROTON and Perodua which in year 2000 accounted for market share of roughly 90 percent of the vehicles sold annually. Some 25 other manufacturers compete for the remaining 10 percent. But compare with last 2 years, market share of the national car makers has declined to roughly 63 percent. During year 2000, PROTON conquered 63.4 per cent market share. It has eroded to below 30 percent in year 2007 and 2008. Perodua, the second national cars manufacturer has taken over the market of the king since two years ago with a market share of 33.6 percent in 2008. PROTON has been maintaining their market share with best- cost and broad differentiation strategy, although the market share fell from 40% in 2005 to 32% in 2006 (www.wikicars.com) allowing Perodua to overtake PROTON as the country's largest passenger carmaker for the first time. Total losses in 2007's financial year has climbed to RM169 million and this was caused by the extensive promotional discounts by its tight rivals, according to PROTON. 
Figure 1: Show the Overall market share of passenger car market. (from MAA vehicle sales resources) Noted : 2006 data is not published To date, PROTON is facing severe competition in its home market as government may remove rules that protect local car makers when it reviews the 3-year-old auto policy to boost foreign investment. This reduction of the protection accorded to PROTON may increase its difficulties to become market leader again. Although government has cut import taxes, it still imposes high taxes on locally assembled foreign cars and this has given protection to national carmakers. Looking at the industry overview, the year 2009 witnesses a tremendous improvement in motor vehicle sales. This uptrend, which began from the second half of 2007, was a welcome relief to the industry but unfortunately the momentum could not be maintained. After recording peaks of more that 50,000 sales in April, July and September 2008, it saw a significant drop of 21% after that, which was due to the global economic meltdown marked by the collapse of major financial institutions in the United States. This was further compounded by the increase in petrol price in October 2008. After that the industry resurged, driven mainly by the introduction of new models at highly competitive and consumer-friendly prices, attractive and creative financing schemes for car buyers as a result of aggressive sales campaigns, and strong economic growth of 5.75% in 2008. But again, in 2009, MAA has forecasted that there would be a decrease of 12.2% of passenger cars compared to 2008. The forecast was well-founded on the current global financial and economic climate, reiterated by the contraction of GDP growth. Other factors may include fluctuating oil and commodity prices as well as unfavorable FOREX rates (ref: www.proton.com.my). In terms of financial performance, for the financial year ended 31 March 2009, PROTON recorded a loss after tax of RM301.8 million, although there was improved revenue of RM6.5 billion. This decline was largely due to the one-off exceptional provision for the impairment of property, plant and equipment and inventory write-down for certain models impacted by declining demand. In addition to that, PROTON’s financial performance for the second half of the financial year was also adversely affected by the accelerated amortization of dies and jigs for certain models as well as higher commodity prices, increased costs of components and raw materials which arose from higher foreign currency exchange rates, particularly the Japanese Yen and US Dollar. 4.2. SWOT Analysis
4.2.1. Strength PROTON’s strength lies in its competitively priced product. Its extensive nationwide distribution network helps the industry to move forward with the support from Malaysian government. The company also has good corporate governance, and highly regarded by many Malaysians out of patriotism they feel for this country as PROTON is the national car maker. 4.2.2. Weaknesses Inexperience, apparently due to short history in car making certainly could not be an excuse for PROTON to come out with low quality products. This could cost PROTON very high as over time, it might jeopardize PROTON’s reputation. Poor product performance and functionality is something that cannot be allowed to happen and quality always needs to be monitored and assured to the customers. Other than that, operational cost and other expenses is always a challenge to any industry and for the case of PROTON, it is more vulnerable to increasing raw material cost such as steel particularly. 4.2.3. Opportunities The demand for cars in any segment is always there, except for more trying times like during economic crisis. There are always opportunities for PROTON to be a global player. Nobody ever say that cars should only be manufactured by Japan, Germany and other western countries though of course these countries have the reputation of making good cars long before PROTON and Malaysia comes into the picture. Collaborations within industry players could enable PROTON to do many things. Through research and development more innovative products could be invented, and ensure that PROTON as a brand name remains in the industry. 4.2.4. Threats One of the threats is of course from the rivals, the competitors in the automotive industry. Even Perusahaan Otomotif Kedua (Perodua) – Malaysian 2nd national car maker, set up after PROTON started to challenge PROTON’s market share in Malaysia. Perodua actually did better in recent years and outperformed PROTON via their most well selling model so far, MyVi and grab more than 30% of overall market share. Under policy like AFTA, (ASEAN Free Trade Area) consumers can have more choices from Honda, Toyota, Chevrolet and other brands to be selected at a more affordable price, as Malaysia now has cut duties on imports from other Southeast Asian countries to less than five percent.
We try to see how PROTON brand product categories placed itself against its competitors, namely Toyota and Honda. Product extensions for each brand are grouped together. Under ‘Luxury’ category, there is no compatible PROTON product as to compare with Toyota Camry or Honda Accord. However for ‘Executive’ category, we are comparing PROTON Perdana against Toyota Altis and Honda Civic. PROTON Waja is grouped together with Toyota Vios and Honda City while for MPV category, we grouped the newly launched PROTON Exora with Toyota Avanza. As for compact car category, we put PROTON Savvy, Toyota Yaris and Honda Jazz in the same group. From here we figure that PROTON cars are available in almost all product categories as what the competitors have. In term of price, we see that for most of the categories, PROTON cars are more competitively priced rather than Toyota or Honda.
Points of parity associations (POPs), according to Keller (2008), are not necessarily uniquely attached to one brand but may in fact be shared with other brands. PROTON has managed to achieve category points of parity with its car models extension. PROTON cars have always portrayed themselves as one of the competitive market leader in the local automotive industry with its different car design accommodating to different target market. Exora, for instance, is launched to target to hit on the mushrooming of MPV in the market. Exora’s characteristic is much similar to its tight competitor, Toyota Avanza and Nissan Grand Livina. These three different car models somehow share the same market requirement to accommodate to the family-based consumers. PROTON has always benchmarks itself against the highest international standards when it comes to passive safety. Generally, the European Safety Standard is used when controlling the refinement of quality as it is currently the most stringent of standards available. It also refers to other globally available standards such as Australian Design Rule (ADR) and Saudi Arabian Standards Organisation (SASO)/Gulf Standards and adopts the best of these standards as a benchmark. To ensure that compliance is met across the board, PROTON has ensured that all safety requirements to be 20 - 30% more stringent than the benchmarked figures as set earlier. The test results, thus far, have shown that PROTON has not only achieved the targets set but exceeded most of them as well. The same practice, too, has believed to be applied to other brand of automotives in the local market. As a car manufacturer and distributor, PROTON has been able to satisfy its consumers in producing cars that meet the minimum requirement at generic product level and expected product level in terms of its performance, quality, price and design, which allow them to compete with others in the automotive market.
According to Keller (2008), point of difference (POD) refers to attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe that they could not find the same extent with a competitive brand. Some marketers in the Western might relate POD as unique selling proposition (USP). Both of them carried almost the same character, which allows them to be different from rivals in terms of uniqueness, quality, price, etc. PROTON stands a strong POD as it appears to be the first national car manufacturer, followed by Perodua. This has differentiated them from the various cars marketed in Malaysia whom are solely foreign manufacturers, ie Japan and USA. PROTON come into sight with its nation pride and it has successfully tackled the interest of the local whom are seeking for an aura of patriotism and unity. The relatively low car selling price of PROTON is attributed by the government policy, which is said to be the most interventionist regime among the ASEAN countries. As the national car manufacturer, PROTON enjoys a certain amount of protection against foreign competition in the form of tariff and other non-tariff barriers. The higher import duty for foreign passenger cars is between 140-300 percent, based on engine displacement. These policies have massive impact on consumers, especially those who are value-conscious and seeking for a quality and compact cars at an affordable price. It is often not an issue in enquire about such PROTON cars with its distribution channel through the nationwide dealers. PROTON has successfully sustained its market position through the support shown by its distribution dealers as well as the vendors and suppliers. As mentioned in its Financial Report (2008), Proton is clearly committed to enhancing efficiencies within its distribution network. Instead of dealership with various parties, PROTON has invested in vendor-based system. The system has enabled PROTON to take care of its second tier network by virtue of tiering system.
Based on the above problem identification and problem analysis, our group has come out with business proposition to mitigate the problems identified by introducing new concept car known as Proton Exora 2. Additional new product features for Proton Exora 2 will be introduced by applying new innovations technology, increase in fuel efficiency and environmental friendly concepts with emphasis on convenience and safety. We will explain further the additional features to be enhanced for Proton Exora 2 under possible solutions.
The objective of this marketing plan is to recommend a business proposition which is measurable and attainable by firstly identifying Proton’s long-term goal and short-term goal. Proton’s long-term goal is referring to Proton’s vision and core value while its short term goal refers to Proton’s mission to achieve the objectives. The objective of the marketing plan in short term is to introduce new concept car, Proton Exora 2 by early of year 2011 by developing marketing strategies and plan.
Proton’s vision is to become Asia’s premier automotives brand that connects with people and provides products, which become life companions. The PROTON Way is the corporate mantra established by Proton Holdings Berhad, mainly towards its employees. As per annual report 2009, the employees working in PROTON are expected to be highly dedicated to the group’s long-term success. Every employee shall operate under the group’s shared values as guidance in dealing with each other and the customers. These values form the foundation level of how the employees work and bring in business in return. Hence, Proton embraces The PROTON Way that consists of its 6 core values with descriptions as follows:
Sources: PROTON Annual Report 2009 – Proton’s Core Value
Proton’s mission in its short-term goal is focusing on three main attributes that distinguish itself from its competitors as follows :-
Hence, by introducing new concept car known as Proton Exora 2, Proton expects that it will improve its market share in the automotive industry and improves its ranking in future.
The process in identifying the consumer target for new Proton Exora 2 is important due to the fact that consumers tend to have different brand knowledge structures and thus they will perceive differently for the products or services. Proton has successfully identified their target market, according to the segmentation bases namely behavioral, demographic and psychographic factors.
Under the behavioral segmentation, it is clear that PROTON has been targeting consumers who came from the different background status with different model of cars respectively. They are focusing for consumers who are brand loyalty and brand sought. It will also be a good way to build up brand loyalty by continuing in recommending PROTON Exora 2 cars to others. Consumers who are loyal to PROTON will tend to accept the new car innovations by PROTON and may choose to attach themselves with PROTON by joining the membership clubs to gain more information. Hence, the new Proton Exora 2 car innovations would tend to be accepted by consumers with strong brand loyalty towards Proton car.
The potential consumers for the new Proton Exora 2 can be targeted by analyzing the demographic factors. In the case of Proton Holdings Berhad (Proton), they are focusing on factors such as income, age, sex, race and family when identifying the target audience. For our business proposition that introduces new Proton Exora 2, Proton is targeting consumers who has family member with size of 3 to 6 members at competitive and affordable price. Their age are ranging from 18 years onwards with family size of 3 to 6 members. In order to own a Proton Exora 2, the consumers relatively have a monthly income of RM2,000 and above and caters for the consumer preferences for all races.
In terms of psychographics factors, it may include consumers’ attitude towards life, careers, possessions, social issues or political institutions (Keller, 2008) in Malaysia. PROTON's entry into the local automobile market in 1985 has resulted in massive structural changes in the automotive industry, which was reflected in the shift of the domestic car market, which previously depended on imported cars particularly Japanese makes. Therefore, the intention and objectives of PROTON investment in the automotives industry could influence the purchasing power of consumers who are patriotic to the country by buying a national car. Hence, there will be demand for Proton Exora 2 cars based on the psychographics factor. Furthermore, PROTON has not only produced cars for the local consumers but has broadens the automotives industry to regional and international. Hence, the export market for Proton Exora 2 will be a substantial key for PROTON to achieve its long-term success as a credible auto manufacturer. For example, Proton Exora has received an encouraging number of bookings at the recently concluded Thailand International Motor Expo 2009 in Bangkok. The company’s order books were filled with 1,388 bookings from a total of 25,220 orders placed at the Expo. The Proton Exora, which made its Thai debut at the show was the best selling Proton model with 825 bookings, or almost 60 per cent of total orders. Therefore, with enhancing Proton Exora existing features by introducing new concept car called Proton Exora 2 with emphasis on increasing fuel efficiency, convenience and safety at competitive price, this would boost further Proton sales and market shares in the market. In general, Proton Exora 2 target market and market segmentation can be summarized as follows:
The strategy statement for this marketing plan is to introduce and position Proton Exora 2 with new enhancement features as the premier MPV car in Malaysia and international market by early of year 2011 by developing marketing strategies and plan. The marketing strategy approach will seek to create customer awareness on Proton Exora 2 offered and then develop the customer base. Hence, Proton will communicate the new concept car via its promotion activities such as Proton’s websites and advertisements placed in numerous industry magazines.
Based on the target market and strategy statement for Proton Exora 2, Proton needs to plan for designing and manufacturing cars that can meet the personality needs in terms of design, power and size for different age groups using marketing strategic formulation. Prior to the planning process, Proton need to learns from the past records on Proton Exora performance, evaluating the present condition and envisioning the future market. There are three planning phases in value creation and delivery sequence, which could be adopted by Proton in introducing Proton Exora 2. The first phase is by Proton choosing the value by adopting strategic marketing via formula “Segmentation, targeting and positioning” (STP). In second phase of providing the value, Proton will determine its specific product features, prices and distribution, which the enhancement of the product features will be discussed under possible solutions. The third phase is communicating the value of Proton Exora 2 by utilising the sales force, sales promotion advertising and other communication tools to promote Proton Exora 2. The third phase stage will be discussed further under promotion activities.
Additional value added features to enhance the performance and sales of Proton Exora 2 will be in focusing on fuel efficiency, convenience and safety and emphasizing on the environment friendly vehicle.
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