1. Problem Statement:
Since the mid 1990’s, and despite the economic boom in the Spanish market, Fiat’s market share has dropped from 7% to 3.5% (symptoms), bringing it down from the leading car manufacturer to the seventh place by 2001. This was mainly due to fact that Fiat’s brand image was associated with cars that were of poor quality and unreliable (problem). Therefore, Fiat need to move towards the C segment where the automotive industry was moving increasingly, from the A and B segments (causes) (2000 50% of sales in 2000), where they mainly concentrated on.
2. Situation Analysis:
○ The main objective of the company is to improve profitability and volume and improve prestige by re-launching the brand in Segment C in Spain. ● Customers:
○ 5-door: Predominantly male; reluctant to change; attracted to innovation, safety, comfort, versatility; and Mid-high standard of living; ○ 3-door: Mainly male, high percentage of female; not reluctant to change; attracted to character, agility, sport, designer value, aggressive look; and high purchasing power, usually it’s the first car. ● Competition:
The table in Appendix D summarizes who are Fiat’s competitors, their strengths, weaknesses, strategies and prices: (See Appendix D) ● Collaborators:
i. The Link, online sales system: the center of all Fiat activities and its network; ii. The unified dealership networks policy between Fiat, Alfa Romeo and Lancia. This allowed a significant costs reduction and improved client assistance.
A. Marketing strategy: to offer high quality car with higher prices and to capture clients who did not yet consider Fiat as an alternative. a. Pros: Improve profitability; enhance brand image (high prices = high quality = high brand image); moreover a wide range of new features give an image of increasing technology expertise and renovated brand values (appendix A, Alternative 1); b. Cons: Fiat will not achieve instant increase in sales; and the presence of strong well-established competitors will constitute a risk on the launch of Fiat Stilo. B. Sales strategy: to offer standard equipped cars at a more affordable price (Appendix A, Alternative 2) a. Pros: Immediate improvement in market share (still keep the clients’ base who see Fiat as convenient in terms of price) b. Cons: Customers will still perceive Fiat as low quality and cheap brand and they might still associate it with segment A and B vehicles.
We would adopt a mix strategy (referred to as Strategy C):to launch the 3-doors vehicle using the Marketing strategy whereas the 5-doors vehicle using the Sales strategy. ● Marketing Strategy for 3-door model:
○ For the young generation, Fiat Stilo 3-doors is the model that delivers innovation, agility and sturdiness because only Fiat Stilo 3-doors possesses the expertise to design a safe hi-tech vehicle.
i. New features such as new technology therefore, enhancing brand image ii. High real price to reflect better quality and safety iii. Increasing customer segment therefore, long term profitability iv. Repositioning the brand alongside more prestigious brands such as Ford and Renault. ○ Cons:
i. High advertisement costs required to launch the model in a market where competitors adopt aggressive communication and promotion policies ii. Strong players in the market: 4 competitors around 12% market share, 2 around 8% and another close to 5% iii. High price: more difficult to attract “Fiat skeptical”...