Suzuki Samarai – Summary and Notes
HBR
Background: * Suzuki was founded in the early 1900’s an d started off as a motorcycle company. In the 50’s, lightweight vehicles became popular. Motorcycle products grew and expanded products to include a lightweight vans and cars. Until 1979, cars and trucks were only sold in Japan. In 1979, auto’s were introduced into foreign markets and by 1984, Suzuki cars were available in over 100 countries and Hawaii. In 1983, GM purchased 5% of Suzuki and helped develop subcompact car for US market (Chevy Sprint) – sold exclusively by Chevrolet dealerships
American Suzuki Motor Corporation (ASMC) * GM’s success with the Sprint showed Suzuki that a market existed for its cars. Suzuki decided to establish its own presence in US market (not including GM) – and could begin selling under their own name. To test the waters, ASMC started with a beta product in FL called the SJ413 that had 1324 cc engine and was designed with US market in mind. In 1985, Suzuki hired Douglas Mazza to head ASMC and develop a Suzuki dealer network to sell SJ413 within 6 months. They named SJ413 the Suzuki Samurai and decided to market a convertible and hard top version.
Samurai Dealer Network * Mazza’s goal was to establish Suzuki as a major car company in US – and had to convince prospective dealers to build separate showrooms for samurai to ensure product visibility. Facility had to include a showroom, sales offices, customer waiting and accessory display areas. A minimum of 2 service stalls had to be reserved for Suzuki and dealer had to display signs outside the sales office and service stalls. A minimum of 3 sales people, 2 service technicians, and a general office clerk had to be dedicated to the Suzuki dealership. Mazza estimated that each dealership would have to sell approximately 30 Samurai’s per month to cover operating costs and financing charges on initial investment. * To ensure dealer success, Mazza planned to limit the number of Samurai dealers so they could guarantee a minimum supply of 37 units per month to each one – thereby ensuring profit if it sold its total allotment. Mazza convinced Suzuki that they could outperform the expected 6000 units to be sold in a 6 month period and received a commitment of 10,500 units for the same period. Mazza decided to limit the number of dealerships to 47 – to be rolled out in 2 or 3 states (CA, FL & GA) – where Japanese import sales were higher than the US average. * In positioning the Samurai, he combined car registration data and census info, concentration of owners of imported vehicles or SUV’s – so they could pinpoint this segment by zip code – thereby choosing where to target dealerships.
Samurai Positioning * Mazza decided to allow an advertising firm called keye/donna/pearlstein (KDP)– which had no experience in the automobile space – to compete for the opportunity as he believed a fresh approach was needed for the new product. KDP concluded that industry practice was to position products according to physical characteristics (like subcompact cars vs. luxury sedans). If they followed the industry practice, they had 3 options to position the Samurai: 1. As a sport utility – it could be advertised as “a tough little jeep” – and ads would emphasize that Samurai cost about ½ as much as the jeep. But, Mazza was not convinced this was the method as SUV sales accounted for less than 3% of total auto industry sales. He saw this as difficult to meet his goal of 30,000 units sold within a 2 year period 2. As a compact pickup truck – the market was 2 ½ times the size of that of compact SUVs and compact Japanese trucks sold well in the US – accounting for 54% of total compact pickup truck sales in 1984. In Pearlsteins view, they would price it at $5,995 to be comparable with other Japanese pick up trucks. In this case, the pickup would not be advertised on price but only mentioned to show it was comparable in price to other comparable options. Advertising would probably be series, practical, male-targeted and portray the Samurai as a “tough truck.” 3. As a subcompact car – this would open up the largest of 3 possible markets. The Samurai boasted 28 miles per gallon in combined city/hwy – and was priced lower than many subcompact cars. Advertising would promote the vehicles looks – defining that the Samurai was “cuter” than viable other options. The concern was that it would not meet buyer expectations. As it was built on a truck platform, it was a stiffer and less comfortable ride.
Market Research * In gathering research, Pearlstein wanted to gain a definition to the product positioning through a thorough understanding of attributes that prospective buyers would like about the Samurai as well as the profile and characteristics of potential buyers. They mapped 7 factors on a perceptual map defined as everyday driving, off-road/snow driving, passenger comfort, quality/durability, styling, capacity, and gas mileage. In reviewing research from outside sources, studies showed that the majority (75%) of Samurai buyers were male, and 62% were between the ages of 18 -34. Average age was 33. The profession most common was skilled trade person and avg household income was $43k. When asked, When you hear the name Suzuki, what do you think of?”, 40% responded motorcycle, 23% said 4x4, 16% said Jeep and so on. When asked to describe the Samurai using 1 word, “fun” was used most often. Research also showed that design/appearance was the most mentioned reason for purchasing the Samurai. When asked what else they would consider buying in lieu of the Samurai, 29% mentioned various models of Jeep – others were Ford Ranger and bronco, GMC Jimmy, etc. When asked why they bought Samurai over their other first option, the overwhelming response was economy/value (59%) followed by design/appearance (29%). FL was the only beta state that had statistics on Samurai sales as many were purchased through foreign markets (US virgin islands, Jamaica, etc.). they asked sales people 4 questions: 4. Who was the buyer? – young, average between 18 – 30 yrs old, single, first time buyer, student. Young women liked it too – often purchased by their father 5. Who does the buyer see as competition? Unanimously – they said “there was no competition” 6. Why does the buyer want to buy this vehicle? – It was the “most fun for the dollars” 7. How are they selling? – People are lining up to get them – cant get enough in. * Samurais also sold for $8,500 on average at these dealerships. Most buyers learned of Samurai through word of mouth or seeing it while driving. Most buyers rated low price and convertible option as the attribute that was most important to them. They then performed a focus group in CA amongst young males and the Samurais size invoked mixed reactions. The most important was that some saw it as a symbol of independence or to do something different. Interest in the focus group members seemed to be linked more to attitude than age.
Conclusion
* When reviewing Pearlsteins research, they concluded that any young-at-heart person considering the purchase of a small car, small truck or SUV was a prospect for Samurai. The Samurai represented different things to different people so they were careful not to typecast the vehicle to one particular segment. They would have a broad enough position so buyers could define in their own way. As a pitch, “the alternative to small car boredom” would attract buyers from all 3 segments.
Summary
* This case study provides insight into how a marketing company would approach evaluating segments to come up with a defined position to market a product. It encompasses the use of market research, Perceptual maps, market polls, regional and demographic research, and knowledge of competition and company’s own product relative to the competition to find its positioning.