Should Renault Samsung Motors modify their pricing strategy to increase their sales of QM5 in South Korea?

Authors Avatar

Business and Management Research Project

Acknowledgement

I’m grateful to my Business and Management teacher Mrs. Indira Lokesh for her valuable guidance and continuous suggestion which were very significant.

I also would like to appreciate to Mr. Lee Sang Beom, Mr. Jang Hyun Pyo, and Mr. Hong Eun Pyo the managers of Renault Samsung Motors, for providing valuable information.

Table of Contents

        Page No.

1. EXECUTIVE SUMMARY                                                         8

2. RESEARCH PROPOSAL

3. INTRODUCTION                                                                 9

        2.1 About the Company

        2.2 Products of the Company

        2.3 The case definition

4. METHODOLOGY                                                                10

5. FINDINGS                                                                        11

6. ANALYSIS

6.1 Competition- Based Pricing Strategies                                 13

6.2 Position (Perception) Map                                         15

6.3 Market segment                                                         16

6.4 Price Elasticity of Demand (PED)                                        17

6.5 Sales Revenue and Product Life Cycle                                 19

6.6 Relationship between Price Elasticity of Demand

and Product Life Cycle                                                21

        6.7 PEST Analysis                                                        22

7. CONCLUSION                                                                 27

8. RECOMMENDATIONS                                                         28

9. BIBILIOGRAPHY                                                          30

10. APPENDICES                                                                 

        10.1 The price tables for SUV Models                                 33

        10.2 Interview with the manager of RSM                                 35

        10.3 Questionnaires for the customers/ non-customers of QM5         38

        10.4 Market share and sale revenue tables                                 41

        10.5 The Economic factors tables                                         42

1. Executive Summary

The introduction guides the background of Renault Samsung Motors and the various car models of RSM.

The analysis reveals the problem in specific product which RSM currently faces. QM5 is the representative failure model of RSM since it launched due the high price, hence, pricing strategy will be focused as the key solution.

Hence the research question is Should Renault Samsung Motors modify their pricing strategy to increase their sales of QM5 in South Korea?

The tools are Competition- Based Pricing Strategies, Position (Perception) Map, Market segment, Product life cycle, Price Elasticity of Demand (PED) and PEST Analysis used to find the present market state of QM5 of RSM. 

The inadequacies in the price strategies of RSM will be revealed. All the factors which affected the price of QM5 will be discussed. The main outcome of the analysis will be summarized in the conclusion and give advices to modify the price and the design.

However, further research in relation to the South Korean car market is required and this report concludes by detailing further action and unanswered questions for ‘How could modified strategy of RSM help QM5 to reposition itself as a market leader in South Korean car market? ’

Words Count - 200

2. Research Proposal

Should Renault Samsung Motors modify their pricing strategy to increase their sales of QM5 in South Korea?

Theoretical Framework

This research will focus on the pricing strategy as key to improve the sales of QM5. Price is an important factor which affects the sales. Price is related to many factors internally and externally. The appropriate pricing strategy will retain old customers and draw new customers for QM5. Hence, analyzing on the price strategy of QM5 is an important research to increase the sales of QM5. Analyze and compare the price of QM5 with other SUV models in South Korean Market. By using Competition- Based Pricing Strategies examine whether the price is appropriate. To identify the position of QM5 in the market, Position (Perception) Map will be use to compare the relationship between quality and price. Market segment will be used to reveal whether target consumer is appropriate. Identify how Price Elasticity of Demand (PED) affects the price and sales volume of QM5. Show the Sales Revenue Graph and identify where QM5’s sales revenue stands in the Product Life Cycle. By linking PED to Product Life Cycle, identify the relationship between Price Elasticity of Demand and product life cycle. Identify the specific reason for economic factors which affects on the company by using PEST Analysis.

Methodology

The methodology composes interviewing the RSM manager to discuss the price strategy, current sales levels and to analysis the reasons for the failure. Secondary data will be obtained to apply accurate theory to bring out in-depth analysis. In the primary research, customer questionnaires and manager interview will be carried out to provide reliability to my research.

Anticipated difficulties

●As the object company of my research is located in South Korea, it is not easy to keep contact with the Managers.  

●The Limitations are that only the economic aspect is considered as the factor influencing the pricing strategy, as the recent world economy is fluctuating a lot.

●RSM’s new product, QM5, is launched on January 2008. Hence the study focused on only from January to June 2008.

Action plan

Join now!

Words - 473

3. Introduction

3.1        About the Company

Renault Samsung Motor was established in 1994 under the name Samsung Motors. Due to the Asian financial crisis, SM merged with Renault in September 2000 to become Renault Samsung Motors (RSM). RSM and Nissan Motors of Japan share technology.

        

3.2        Products of the Company

RSM products can be categorized according to the engine size. Therefore:-

        

3.3   Case Definition

QM5 was produced on November of 2007 and launched on January 2008. QM5 has been underperforming due to negative customer perception. This is ...

This is a preview of the whole essay