Published on March 12, 2014
Eicher Motors Case Analysis SDM, NMP Term IV Group 4 Abhijeet Tomar - 03 Argha Ray - 15 Khushal Malik - 28 Vipin Kathuria– 59
Context • LCV market liberalized in 1990 by GOI. • DCM Toyota, Allwyn Nissan, Swaraj Mazda and Eicher Mitsubishi are competitors. • Toyota has first mover advantage. • Eicher recovering from the midst of a financial crisis. • Spares and Reach drive sales success. • Nascent market cooling off.
Market Dynamics: • Target segment includes Inter City and Intra City Transport Service Providers, Small and Medium Traders and Cab Service Providers • Spares sold through Small Autopart Retailers and Garage Owners. • Market infested with unscrupulous middlemen. • Long waiting lines as a hangover of License Raj. • Toyota’s first mover advantage nullified as prominent well located showrooms symbolizes luxury, seldom a consideration for end users seeking usability and low operational costs.
Eicher’s Yardsticks: • Slump in Tractor market has caused precarious cash position. • It’s expertize in Tractor distribution can be easily leveraged. • Tractor market slump must have affected Eicher’s channel as hard as it did Eicher. • Diversification proposition into LCV to Eicher’s channel can be a unique selling point to strengthen relations and mitigate their risks. • Spares has to reach every nook and corner of the country to compete with private labels. • Existing distribution channel will not need large quantum investments. • Design separate channels for LCV and LCV spares.
Two Channel Design:
Channel Resonance: • Toyota’s folly is geared toward a luxurious Car market rather than LCV. • Mazda’s model may turn out to be more effective in terms of both sales and cost considering the target segment. • Carrying both a Tractor and LCV may make more sense for already scathed Tractor Dealers. • Impress upon Channel Members that cooling off in LCV market is due to overbooking by middlemen who kept real customers in abeyance due to flawed advance booking model. • Removing long waiting lines for immediate possession to real customers by removing advance booking will attract those who bit the dust with other competitors.
Channel Selection: • Exclusive Eicher Dealers. • After sales service is paramount. • Select those who had been brother in arms during hard days of Tractor market shock. • Quick learners who can seamlessly recast Tractor selling expertize to LCV sales. • Downstream partners who show signs of recovery as does Eicher.
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