Suzuki Samurai

Table of Contents

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

II. Positioning Options

a. SUV Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

b. Truck Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

c. Compact Car Market . . . . . . . . . . . . . . . . . . . . . . . . . . 4

d. "Unpositioned" Approach . . . . . . . . . . . . . . . . . . . . . 4

III. Positioning Suggestion

a. Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . 4

b. Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

c. Breakeven Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

d. Time Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

e. Market Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

f. Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

IV. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

V. Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-8

In 1985, automobile company Suzuki was entering the American automobile market with the Suzuki Samurai, a lightweight off-road four-wheel drive vehicle. A dilemma that the American Suzuki Motor Corporation (ASMC) was faced with was exactly how to position the Samurai in the American market. There were several options for them to do this, each of which had unique advantages and disadvantages, however only one that would effectively maximize the sales potential for the Samurai.

The first option was to position the Samurai as a sport utility vehicle (SUV). The Samurai already had the look of a "mini-jeep", and already had four-wheel drive capabilities. Standing out from all other SUVs, the Samurai was smaller, lighter, and less expensive; suggested retail was about half the price of the average SUV. Leanord Pearstein, CEO of a competing advertising agency, preferred to portray the Samurai as a "tough little cheap Jeep." Those who had already purchased the automobile had also considered buying a Jeep or other sport utility vehicles.

In 1985, the sport utility vehicle market was very small. Less than 3% of automobile sales in the United States in 1985 came from SUV sales. Douglas Mazza, who headed the Samurai operation in the US, had a goal to sell 30,000 units within two years, which would exceed all SUV sales in 1984.

The second option was to position the Samurai as a compact pickup truck. The market share was two and a half times the compact SUV market. This would make it easier for Suzuki to enter is they positioned the vehicle in this way. In the pickup truck market itself, Japanese trucks sold very well; they accounted for 54% of total compact pickup truck sales. If they wanted to introduce the Samurai as a truck it would be more versatile and less expensive than a subcompact car.

Since custom regulations for compact pickup trucks state that there must be a 25% tariff on all trucks imported in to the US, this is ten times the amount the tariff would be for a car. Pearlstein believed that even with the high tariff it would be worth paying in the long run, however this is still a significant cost.

Another positioning strategy was to sell the Samurai as a subcompact car. This market was considerably larger than the previously stated markets. Pearlstein suggested that they should market this as an alternative to the "dull" automobile, a compact car with a "cuter" look. A disadvantage of this approach was that the Samurai was built to be a "rugged truck". It may be a problem to attack the subcompact car market because of the "stiff, rugged build" the Samurai was manufactured to have.

Finally an approach existed to position the Samurai away from the other approaches, or "unposition" the vehicle. The vehicle wouldn't be positioned as a car, sport utility, or truck, but a completely different automobile, or "antidote to traditional transportation". This would be a great opportunity to attack a market that didn't exist; however this could be a major risk as well.

The positioning approach that we recommend is the "unposition" approach; positioning away from the car, truck, and SUV markets. A main reason to separate from either the truck or car market is that the projections show no significant increase in either market. Appendix I shows that between 1985 and 1986, there is expected only a 1.41 and 1.75 increase in Japanese car and truck imports to the United States respectively. Also, no one in the car market would really want the Samurai. After considering research that was done in both Canada and the U.S., Appendix III shows that the average age of the Samurai buyer was considerably less than the typical small car buyer; the target market is much different for the two niches. Appendix III also reveals that 43% of small car buyers in the United States were males, while a majority 75% of Canadian Samurai buyers were male; not giving much reason to attack a market segment that didn't contain the already proven target market. The sport utility vehicle positioning approach isn't very feasible simply because the Samurai doesn't fit into the description; SUVs are large, expensive, luxurious, and cost an average range of $10,000 to $13,000 in 1985. To enter this market, you'd have to position yourselves as a very cheap, inexpensive vehicle which is never good. Since the truck and car markets show extremely small growth potential, market research proves that age and gender demographics don't fit the Samurai for several existing approaches, and the Samurai simply won't successfully work to attack the SUV market, it should attempt to be "unpositioned" as it's own, unique automobile.

The breakeven analysis shows us that the Samurai will attain profits at 13,085 units sold. In Hawaii in 1984, 2,124 Suzuki