M4-0407-I-m INTRODUCTION On 15 February, 2001 Claudio San Pedro, the Chief Executive Officer of Fiat Auto España (FAE), held an urgent meeting in his office with Marketing Director Manel Palau, and Sales Director Martín Moya, in order to make a final decision about the basket of competitors that the new model of the brand, the Fiat Stilo, would be compared to, and which would be launched at the end of the year: Gentlemen, we have been discussing this subject for two months. The Turin office has just called me giving me an ultimatum: we have to decide immediately or they will make the decision for us. By tomorrow morning I want you to give me your final conclusions so I can pass them on to Italy. Claudio San Pedro, age 45, Argentinian, was the youngest General Manager in the history of FAE. He had previously worked for Epson Computers and then joined Fiat with his clear ideas about the future of automobile distribution. Since he was appointed General Manager and Chief Executive Officer, his objective had been to modernize a company that needed a radical change in direction. To do so, he restructured the primary functions of the company, rejuvenating some of the key areas and, above all, implementing the most advanced on-line sales system in the automobile industry in Europe, known as Link. This system was able to offer the client virtual stock of the entire market, as well as automatic stock management. It also provided online communication among all the members of the company and those of the 100 brand dealerships, thus becoming the center of all Fiat activities and its network. Change is required due to the company’s situation. At the end of the 1980s, Fiat was the leading European car manufacturer, but by 2001 it had fallen back to seventh place. That is why the new Fiat Stilo was considered a great opportunity by all the directors of the company as a way to relaunch the brand image in Spain, which has highly declined since the beginning of the 1990s because of the successful car launches by other European manufacturers, especially the French and the German. To do so, it was important to combine short-term interests, in regards to the market shares, with the strategic objective of improving the company image. San Pedro realized that launching the Fiat Stilo would strengthen the whole company. Nevertheless, it was necessary to combine the visions of the two areas involved in the launch, which were quite different. On the one hand, the marketing area considered the high quality of the product essential for capturing clients who had not yet considered purchasing a Fiat. This meant competing with other general brands like the Golf or the Peugeot 307, whose images were more highly valued. Furthermore, this area’s first aim was to improve profitability, and then to slowly improve market share through the image that the Fiat Stilo would project. On the other hand the change was too radical for the sales area because it was important to keep in mind the clients who considered the Fiat as a purchase alternative: These clients associate the brand with price attributes and we should not disappoint them because we will the ones to lose out. First we need to improve the share and then we should improve profitability little by little, Moya stated. Carlo Lancio, Product Manager of Fiat for Spain, was in charge of combining the conflicting visions of the commercial and marketing departments, and had to try to propose a solution that was in line with the needs of the company. To do so, he analyzed the market, the potential client, the sales strategy and the most related competitors.
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M4-0407-I-m This discussion was key because all the important marketing variables (product, price, channel and communication) depended on this final decision. To position the Stilo well is an indispensable element in order to achieve the objectives of profitability, volume and prestige that the company has set. Nevertheless, the positioning...
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