Marketing Strategies For Perodua

Executive Summary

This marketing report briefly analyses the marketing approach of Perusahaan Otomobil Nasional Kedua (PERODUA), in this analysis, the various marketing activities such as product development, distribution, pricing, advertising and market research of the company is critically evaluated.

The report also evaluates the company's current position against the automotive industry and its competitors. A concise insight into the consumer's perception of the brand is also investigated. The contents contained herein is not exhaustive of the company's marketing and business activities but merely provides a basic overview of its current marketing standpoint, business challenges and possible remedies to its position based on information available on the public domain.

Table of Contents

1.0 Introduction 3

2.0 Company Information 4

3.0 Definition of Marketing Terms 6

4.0 Perodua's Business Concept 8

5.0 Competitive Issues Facing Proton 10

6.0 Segmentation 12

7.0 Conclusion 13

8.0 References 14

9.0 Appendices 15

1.0 Introduction

Marketing is an organization function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationship in ways that benefit the organization and its stakeholders (Kotler et al.,2007).

Marketing is a holistic process encompassing prior and after the act of selling applicable to any organization, large or small, for-profit or non-profit, domestic or global. Marketing itself is an evolutionary process starting off from consumer goods marketing all the way to electronic marketing of current times. Marketing professionals have also capitalized on viral marketing in recent times.

This marketing report analyses the marketing approach and challenges of Perusahaan Otomobil Nasional Kedua (PERODUA), Malaysia second national car manufacturer. The report explores and benchmarks the company marketing activities against the automotive industry and its competitors.

2.0 Company Introduction

Perusahaan Otomobil Nasional Kedua (PERODUA) was formed in 1993 as the second national automobile manufacturer in Malaysia after Proton, the first national auto manufacturer.

Headquarted in Sungai Choh, Rawang, Perodua does not have in-house design and manufacturing for main components (engine, transmission, chassis,etc.) and therefore re-assembles Daihatsu car models. Daihatsu Motors Japan is owned by motoring giant Toyota and has a long-established working relationship with United Motor Works (UWM) Malaysia via its parent company Toyata. This led the formation of Perodua, a joint venture between UMW Corporation Sdn Bhd (38%), Daihatsu Motor Co. Ltd. (20%), MBM Resources Berhad (20%), PNB Equity Resources Corporation Sdn Bhd (10%), Mitsui & Co. Ltd (7%) and Daihatsu (Malaysia) Sdn. Bhd. (5%).

Perodua was formed by the government to produce compact cars which are cheaper and accessible to Malaysians. Such positioning ensured it didn't cannibalize market share from Proton. In fact, the deliberate segmenting of markets is evident where in the United Kingdom, Perodua cars are actually sold by Proton dealerships.

Since commencing operations in 1994, Perodua has sold approximately 800,000 vehicles by the year 2004 Ð'- a tremendous achievement by an industry newcomer in 10 years. In the year 2001, Perodua initiated a restructuring exercise to further strengthen its position in the automotive industry with the formation of Perodua Auto Corporation Sdn. Bhd. (PCSB) as a joint venture with two Japanese partners Ð'- Daihatsu Motor Co. Ltd. and Mitsui & Co. Ltd. The entire manufacturing operations of the Perodua group are being managed by PCSB. The rationale behind the formation of PCSB is explored and analyzed in the upcoming sections.

According to their corporate website; since the restructuring, the Perodua group has 3 main operating entities (refer Appendix 1 for group structure) consisting of:

1. Perodua Sales Sdn. Bhd.

Ð'* Responsible for the sales, marketing, distribution, service and sales of spare parts of all Perodua vehicles

2. Perodua Manufacturing Sdn. Bhd.

Ð'* Responsible for the manufacturing of Perodua vehicles and selected vehicle components.

3. Perodua Engine Manufacturing Sdn. Bhd.

Ð'* Responsible for the assembly of engines and selected engine components.

Across all operating entities, the group employs an 8,000 strong workforce with a manufacturing plant having capacity to produce 250,000 vehicles per annum. Perodua has grown its presence nationwide with over 170 sales points and 130 services centres. Furthermore, the group has extended its operations overseas with the vehicles being exported to 13 countries including Egypt and United Kingdom.

Perodua has continues its drive to acquire core competencies in automotive technogy by investing in main power training and research & development locally. Perodua's success in creating opportunities for local suppliers is evident with the Perodua Kancil now being assembled using 75 local components and the group continues to improve this figure further across all product lines.

3.0 Definition of marketing terms

3.1 Needs

Perodua, as a company responds to the basic need of affordable transportation for the Malaysian mass. Proton was formed in the early 90s as the first national car company using technology sourced from Mitsubishi of Japan. However, with the rising value of the Yen against the Ringgit, Proton cars became overpriced.

Thus, the Perodua brand was introduced as second national car company to provide cheap entry level cars to the consumer.

3.2 Wants

While based on the ideology of affordable entry level vehicles, Perodua responds to the consumers' wants of various type of vehicles for different use and budgets. Furthermore, the consumer also wants a fuel efficient car while