Marketing Case Study - The Mahindra Scorpio Off-Roader in India

Consumer Behavior

Before launching Scorpio, M&M analyzed the consumer segments (B and C category car buyers) to better understand their expectations and perceptions about cars. The key consumer insight was that “Consumers want to consume premium imagery at prices affordable to them”.

The results of the market research showed the following psychology of consumers:

• Unarticulated and hidden need for product combining luxury, performance size and ruggedness.

This made economic sense for upper middle class – those who could not necessarily own separate vehicles for each of these value perceptions.

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INITIAL MARKETING COMMUNICATION STRATEGIES

Positioning influenced the communication strategies. In an era of high economic growth for middle and more globalized India – upper middle class sought products that indicated their status as well as matched their inner sense of achievement. Size mattered- big size stands for status. Consumers seek actual value. First vehicle in India with CRDi Rail Diesel Technology – this was promoted by Mahindra in print campaigns that emphasized quality. Subsequent brand additions and versions of Scorpio started to emphasize feature to reinforce and make customer more secure of his perception. Ease and in control – high speeds being achieved as a matter of fact – woman driver. Luxury – associated images of helicopter and castle.

The advertisement was unique in certain aspects to India only insofar as India represented an emerging economy, whose middle-upper middle class consumer increasingly placed value on international imagery of success – hence foreign models and foreign locations, to bring associations of global excellence and also to obfuscate the parent “Mahindra” image of rural, off track vehicle for transport purposes.

The Launch

The media TV coupled with ground events such as the Launch Cavalcade. The idea was to create a big-ticket launch while managing the budgets". The launch advertisement featured a very, rich, successful couple living in a swish mansion. The ad shows the man choosing their Scorpio over his luxury car. (Link:  ). It won the "Best Product Launch" of the year award at the India Leadership Summit, in November that year.

Brand Persona

While the physical traits of the Scorpio embody a car that is powerful, provides car like comfort and is luxuriously styled to fit international standards, the brand persona is one who is powerful and sophisticated. As a brand, Scorpio seeks to be an extension of the customer's lifestyle and symbolizes a culture of those who live life on their own terms. While the self-image of the brand was to be a cut above the rest and one that epitomizes those who expect the best, a Scorpio user is a new economy self-made businessman with evolved tastes. Thus, Scorpio sought to augment the Mahindra image of being tough and rugged.

Brand Promise

The promise that Scorpio held for the customer was in terms of functional and emotional benefits. Ownership experience assured to be one of thrill, excitement and power; a Scorpio promised to be the much-needed young modern, premium city companion. The functional benefits were the excellent styling, superior performance and car-like comfort at a value price.

Brand Building

Brand building, in keeping with the tough image, has been through association with adventure sport events such as Bike Brigade and the Great Escape. Great Escape a series of off-road expeditions organized by Mahindra & Mahindra gave motoring enthusiasts a chance to get away from the humdrum of city life and enjoy the outdoors with family and friends.

Baseline

The ‘nothing else will do’ was another play on the excellence that was attempting to be pushed. The base line captures the essence of the brand, which is superiority and uncompromising attitude. It also summarizes the spirit behind the making of the Brand.

PRESENT MARKETING COMMUNICATION STRATEGY

The new communication strategy of Scorpio focussed more on the indifference between SUV and a Sedan. It communicated a premium , classy, urban, international image with an attitude that cannoted superiority over other cars, yet provided thrill and excitement.

1.Telivision Ads

The television medium is basically used to communicate the emotional benefits and to provide international imagenary to the brand. Mahindra scorpio major chunk of advertisement spending for television media. We have analysed the latest ads of scorpio and figured out the message they communicated.

“SUVs verses sedan; it’s not “versus” anymore” – Projecting the people indifference, moreover preference over sedan of SUV. Their recent advertisement strategies are:

• Projecting Scorpio as an SUV which can be a substitute of sedan.

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• “The new mighty muscular scorpio” - projecting its ruggedness with new luxury look. ( )
• “Nothing else will do” – Projecting the international quality standards and the performance factor.

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• “Stick of Scorpio and go traffic” – Projecting the ease of use in heavy traffic and the convenience. ()
• Cleary communicating the enhanced mileage feature of Scorpio.

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• “The car you walk into; not crawl into” – Projecting the more spacious feature of Scorpio. ()

Analysis of most recent Scorpio with mHawk Engine Ad

1. Brand benefit:

• Rational benefits : World class vehicle, good looks, ruggedness but comfortable, status
• Emotional benefits : Ownership experience of thrill, excitement and power
• Relational benefits : Young, modern, premium extension of lifestyle
• Brand promise: ‘Luxury of a car. Thrill of an SUV’
• Baseline:  ‘Nothing else can do’. The baseline captures the essence of the brand, which is superiority and uncompromising attitude. It also summarizes the spirit behind the making of the Scorpio.

2. Brand Symbolism: The advertisement talks about the toughness of the brand. The Scorpio is built around a sophisticated all-original frame that is rugged yet forgiving. That gives you the flexibility to take Scorpio anywhere — from urban alleyways to glass-smooth highways to boulder-strewn trails — in confidence and comfort.
3. Resonance with target consumers: There were no SUVs in India that the mass people could buy. Mahindra Scorpio tapped this market. The target market needed a comfortable, easy-for-city driving car which should have imagery comparable to international brands. In the ad Scorpio is shown providing car-like driving pleasure and at the same time providing the edge over cars in power, style, luxury and comfort.
4. Communication: The advertisement has a compelling storyline. It shows the features such as toughness,    luxury, thrill and power which M&M want to convey. The product is the central part of the ad. The tone and manner was to help associate the brand with the modern and urban lifestyle. The TVCs as well as the press still-shots were shot in Australia to provide an international city feel. This brought in the international, premium, up-market association for the brand.
5. Campaign: Scorpio is shown as an extension of brand Mahindra which promises to give the best values and support their consumers’ ambitions to improve their living standards.

2. Print Ads

 Print medium is used to communicate the functional benefits that supported the emotional claims.

Analysis of the Print Ad

1. Message is clear. It shows the muscular image and ruggedness.
2. Details about the new technology used and its benefits are mentioned on the top
3. Illustration is not supporting the muscular and ruggedness image. There need to be a proper background to support that.
4. Message is clearly readable. But the benefits are written bit skewed. The font size can be improved.
5. Product is easily identifiable. Even the brand and company is easily identifiable.

3. Online Marketing Communication

In the contemporary world, online marketing is an integral part of Marketing Mix. They are efficiently using this medium to communicate with their consumers by posting news of their new launches, videos, competitions and getting feedback from their consumers. A few of them are mentioned below.

1. A snazzy new Scorpio website:- , with all the  all the latest technologies used to create a best user experience to mention a few 360 degree view, HD quality background and background music etc. It provides all the information and clearly defines the brand positioning.
2. Online Marketing through face book: - Scorpio's online community crosses 5 lac fans on Face book. The magic of the Scorpio is reflected in the array of impromptu fan clubs initiated by customers over the years. The brand is also strongly represented by its customers in the virtual world: from thriving Scorpio communities on the web, to Scorpio owners exchanging notes and sharing online travelogues on blogs and various other forays.  Today, its popularity can be gauged by the fact that it is one of the largest online auto communities on Face book India with greater than 5.75 lac fan base.
3. Online advertisements through third party websites: - Mahindra has advertisement through major online news websites like economic times, India online and through other major auto specific websites like zigwheels. The major activities include Banners, Shoshkele & Direct Mailer and the objective is to generate test drive leads and Branding.

4. Other Marketing Communication Strategies

In order to create excitement and product visibility, the company sponsored rallies and events, started clubs etc. A few of them are mentioned below:

1. Scorpio on Movie - Going beyond the vehicle itself, the Scorpio experience is woven into the cultural fabric of the country. A visible star on the silver screen, Scorpio has frequently dazzled moviegoers through its presence in a number of movies.
2. Coffee table book – “The Legend of Scorpio” –This volume chronicles a great adventure and a labor of love and it is a pleasure to share it with aficionados everywhere. The ‘Scorpio Coffee Table Book’ is available at leading book stores, Mahindra dealerships across the country.
3. ‘Full Throttle’ Music Album - A foot tapping collection of songs brought out by Scorpio, in collaboration with Times Music.  And resonating vividly with the Scorpio devotee is the heady, pulsating song ‘Nothing else will do’.
4. Brand Merchandise - For the Scorpio enthusiast, the S Collection offers a basket of fine quality branded merchandise crafted to the same demanding standards as the Scorpio itself. 
5. Mahindra Great Escape Off-roading Game - Mahindra is launching different rallies and events which help them to connect with their consumers effectively. The Scorpio also stars in the Mahindra Great Escape Off-roading Game, a much-awarded game which won the Gold in FICCI BAF 2010.  It has had 1 crore game plays and more than 1 lakh Face book downloads till date.
6. Association with Buddh International Circuit (BIC) - As part of the association, Mahindra will provide 25 Scorpios as the official intervention and support vehicles to the BIC over the next 5 years and for various other motorsports events including the inaugural edition of the Formula 1 TM Indian Grand Prix in Oct, 2011. Association with motorsports aptly demonstrates the tough and rugged DNA of Scorpio. Association of Scorpio with BIC to create stronger connect with enthusiasts.

Sales Promotion

Sales promotion includes several communication activities that attempt to provide added value or incentives to consumers, wholesalers, retailers or sales-force to stimulate the immediate sales.

Types of sales promotion:

1. Consumer Promotion
2. Trade Promotion
3. Sales-force Promotion

Mahindra & Mahindra takes care of 50% of the promotional strategies for Scorpio. Rest 50% is taken care of by the dealers.

Consumer promotion strategies by Mahindra Scorpio

• They gave away free “Nokia Navigators” to their first few buyers.
• Scorpio owners get a day out.
• Mahindra Corporate Advantage Scheme (MCAS)

Corporate clients can enjoy the following benefits under MCAS:

• Attractive offers over and above the market offer for top corporate and their employees
• Incentives for bulk purchase
• Special finance schemes
• Attractive exchange offers

• Top Gear Club membership facility for existing users

             Top Gear Card:

• Exclusive offers on a host of lifestyle goods
• Regular Newsletter on the latest in the world of Mahindra
• Invitation to special events for members
• Priority invitation to Great Escape off-road adventure

Trade promotion strategies by Mahindra Scorpio

• Additional bonus given to the salesperson for exceeding a certain target figure
• More budget provided for dealer promotion

Recommendations

On doing a STDP analysis, we found that the brand communicates ruggedness, power, luxury and an international feel. After studying a research report from capgemini

We found that following pitfalls in the communication strategy and we listed out few recommendations below.

1. In addition with luxury and comfort, a consumer looks for safety and reliability of the car. SCORPIO did not communicate both these attribute in their brand communication strategy.
2. It also failed to talk about technology (for instance they were first one to come out with BS4 technology, but did not communicate this). Very recently they are communicating about the technology in their ads, but not emphasizing much on it.
3. The brand Scorpio can be extended to other classes of vehicles like the B-segment cars and also for luxury SUV segment.
4. Scorpio could also do a Co-Branding with Sanyoung motors which it recently acquired in Korea. Now both companies are working as a separate entity.

                                   MARKETING CHANNEL STRATEGIES

Since the Scorpio was targeted at an urban clientele it needed a stronger distribution presence in Metros and urban areas. Hence, the distribution channel for Mahindra Scorpio had to focus on providing an appealing experience for modern car buyers and on offering international standards of auto retail. The Scorpio was launched in a phased manner - first in Metros Mumbai, Delhi, Bangalore and Chennai. Thereafter, twenty cities were included over a period of 4 months and within a year 50 cities were covered. This ensured attention to main markets and to ensure that initial production of the vehicle could match demand. Dealerships were revamped prior to launch in a particular city.

Mahindra has an Exclusive Distribution network. During the launch of Scorpio, M&M adopted “serve fewer markets but serve them well” policy and had phased out launch in various cities.  All dealerships in major urban areas were required to have separate outlets for Bolero & Scorpio as these vehicles have distinct identities from the previous M&M vehicles. M&M has 150 distributors across India and its showrooms are spread over 29 states in India & in 19 cities across Maharashtra.

The below diagram shows Mahindra and Mahindra’s marketing channel:

Mahindra and Mahindra have a one level marketing channel distribution for Scorpio. The one level channel involves one intermediary – the Mahindra Scorpio outlet. Scorpio is delivered to the customer when they place an order at the retailer showroom and the retailer orders it from the manufacturer according to the requirements of the customer.

If selling directly from the manufacturer to the consumer was always the most efficient methodology for doing business, the need for channels of distribution would be obviated. Intermediaries, however, provide several benefits to both manufacturers and consumers, in this case the Scorpio outlet, improved efficiency, a better assortment of the car and easier searching for goods as well as customers. The outlets provide benefit by bridging the gap between the assortment of Scorpio cars generated by producers and those in demand from consumers.

Producers are searching to determine their customers' needs, while customers are searching for certain products and services. A degree of uncertainty in both search processes can be reduced by using channels of distribution. The Scorpio outlets serve this purpose here. They bridge the gap between the Mahindra & Mahindra Company and the manufacturers and the customers of Mahindra Scorpio.

Comments: Since the company is doing well with this channel of distribution so they should continue with the existing strategy.

PHYSICAL DISTRIBUTION CUM LOGISTICS STRATEGIES

Mahindra Scorpio’s Physical Distribution Flow Chart

This flow chart signifies the physical distribution process of Mahindra Scorpio. The customer places the order with the Mahindra Scorpio outlet. At the time of placing the order, the customer deposits the initial amount of Rs.50, 000. The outlet then communicates about the customers’ requirements to Mahindra’s back office. All the customers need in terms of the color of the car; its features etc. are communicated to the back office. The back office then makes an entry of the same and intimates about it to the company. The company processes the requirements of the customer and manufactures the product desired. The car is thereby reached to the customer in a time frame of 15-20 days.

Fitness of the distribution strategies - The physical distribution strategy of Mahindra Scorpio is very well effective. It consists of not many levels but just the customer, the Mahindra Scorpio outlet, Mahindra back office and the M&M Company. It is a very free flowing process with effective utilization of existing capacities. The customer’s requirements reach the company easily and the company plans its actions according to their requirements. It is a very effective process in terms of fulfillment of customer’s needs. The process does not take a long time to complete and is short thereby making it more effective.

Mahindra Scorpio Logistics

This is 100% subsidiary of M&M. It was founded in the year 2000 for internal & external customers. It was engaged in taking care of M&M complex supply chain needs including -Inbound & outbound logistics - Inter plant movement, Warehousing, Linefeed, Value added services. Mahindra Logistics is one of the few logistics service providers which also offer People Transport Solutions

SCM at Mahindra Logistics - The focus of the supply chain management at Mahindra Logistics has always been on providing end to end solutions

Transportation

Expertise helps to optimize both the inbound and outbound flows of material and goods. Mahindra uses three types of Transportation modes for the distribution of Scorpio.

1. Primary Transportation- Mahindra imports all the required raw materials and parts for the production of its Scorpio through international transport-imports by sea and air, and domestic transportation-imports by road and rail.

2. Secondary Transportation- Mahindra distributes its Scorpio from warehouses/hubs to consumption points. Transportation is integral to the success of any supply chain solution. With a variety of vehicles available, with customized packaging as well as handling solutions, Mahindra ensures that solutions are fully adapted to customer’s needs.

3. Tertiary Transportation- Mahindra ensures Instant order fulfillment and making sure customer’s products reach their final sales point on time. Through tertiary transportation of Mahindra Scorpio, it ensures ability to plan and optimize routes, vehicle deployment and utilization ensures to meet the performance and cost target.

SALES FORCE DESIGN

The Mahindra auto is divided in to two broad categories Personal segment and Commercial segment. Under personal segment come the vehicles Xylo, Scorpio, Logan and rest of the commercial purpose vehicle come under commercial segment.

In the same way, the sales force at each dealer showroom is divided into two wings, one for the personal segment and other for the commercial segment. This is as per the company, Mahindra policy. There is a target for each wing [personal and commercial] and there is an individual target as well. There is no specific target for a particular car. The target is for the entire wing. There is a variable pay component which is directly associated with the target. If the salesman perform better and do business more than the target, he will get some bonus in proportion with the additional selling he did beyond the target. The target is on monthly basis.

As per the primary research we did in a showroom at Lucknow (Auto movers pvt Ltd), there are 14 sales persons for personal wing. The target for the sales force per month is close to 100 vehicles in personal category. Their variable pay is directly related to the sales target. That means if they do 90% of the target sales, they will get 90% of the allotted variable pay. There is a personal target as well. Also the allotted variable pay and the target will be different for the sales person depending on their seniority.

There is a direct company employee who will visit the dealer showroom once in a month, to redesign the interiors and to create an ambiance as per the Mahindra requirements. That includes where to position the display vehicles, what all print advertisements need to be placed inside the showroom etc. In addition, dealers will get 50% of the amount that they spend for promotional activities reimbursed from Mahindra but with some conditions.

Recommendations

As a part of our primary research, we visited Tata Motors showroom in Lucknow. The sales force design is different over there. For each type of vehicle, two or three sales persons are assigned. So instead of category, the sales person is assigned to particular vehicles. The major problem they are facing is because of these sales force design. To say, if a customer come and ask for a Tata Indica vehicle, but he has the potential to buy Tata Indigo. Even though the salesperson knows that fact, he won’t try to convince the customer to buy Tata Indigo, because he will lose his share of business, moreover his variable pay component. This is a potential loss to the Company as well as to the dealer. Since the sales force design was on the basis of whole category [personal and commercial] for Mahindra Scorpio, they are not facing this threat of losing a potential customer. Hence we recommend following the same sales force design and structuring which they are following.