Proton&Perodua - Proton and Perodua PDF

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UNIVERSITI TEKNOLOGI MARA PERLIS BRANCHFACULTY OF BUSINESS MANAGEMENTBACHELOR OF BUSINESS ADMINISTRATION (FINANCE) (HONS)PRINCIPLES AND PRACTICE OF MARKETING(MKT 420)INDIVIDUAL PROJECT 1(PROTON vs. PERODUA)PREPARED FOR:MADAM IMA ILYANI BT. DATO’ HJ. IBRAHIMPREPARED BY:MUHAMMAD NORSYAHIDDIN BIN SUAID...

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UNIVERSITI TEKNOLOGI MARA PERLIS BRANCH

FACULTY OF BUSINESS MANAGEMENT BACHELOR OF BUSINESS ADMINISTRATION (FINANCE) (HONS)

PRINCIPLES AND PRACTICE OF MARKETING (MKT 420)

INDIVIDUAL PROJECT 1 (PROTON vs. PERODUA)

PREPARED FOR: MADAM IMA ILYANI BT. DATO’ HJ. IBRAHIM PREPARED BY: MUHAMMAD NORSYAHIDDIN BIN SUAIDI

2019554591

GROUP: RBA242-2A

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TABLE OF CONTENT PART A: COMPANY BACKGROUND  Company Background  Company mission statement  The analysis on current business portfolio  The possible developing strategies on current business portfolio PART B: PRODUCT  The level of product  Product / service offering classification  Individual product and service decisions  Product line and product mix decisions  Branding strategy PART C: PRICE  General Pricing Approaches  Product Mix Pricing Strategies  Price Adjustment Strategies PART D: PLACE  Number of channel levels  Strategy used for its marketing intermediaries  Types of retailer/wholesaler that carry their products/services

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10 – 13

14 – 17

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PART E: PROMOTION  Concise analysis on their advertising strategy with example  Concise analysis on their sales promotion strategy with example

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REFERENCES

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COMPANY BACKGROUND PROTON Holdings

PROTON Holdings Berhad (PHB), informally known as Proton, is a Malaysian automotive company and automobile corporation active in automobile design, manufacturing, distribution and sales. Proton was established in 1983 as Malaysia's sole national badged car company until the advent of Perodua in 1993. The company is headquartered in Shah Alam, Selangor, and operates additional facilities at Proton City, Perak. 'Proton' is a Malay language acronym for Perusahaan Otomobil Nasional (National Automobile Company). Proton was originally a manufacturer of rebadged Mitsubishi Motors (MMC) products in the 1980s and 1990s. Proton produced its first indigenously designed (though Mitsubishi-engined), non-badge engineered car in the year 2000, and elevated Malaysia as the 11th country in the world with the capability to design cars from the ground up.1 Since the 2000s, Proton has produced a mix of locally engineered and badge engineered vehicles. Proton cars are currently sold in at least 15 countries, the majority of which are in Asia. Proton was originally owned in majority by HICOM, with minority stakes being held by Mitsubishi Group members. By 2005, Mitsubishi had divested their stake in Proton to Khazanah Nasional, and in 2012, Proton was fully acquired by DRBHICOM. Proton has been the owner of Lotus Cars since 1996. In May 2017, DRB-HICOM announced plans to sell a 49.9% stake in Proton and a 51% stake in Lotus to Geely Automobile Holdings.2 The deal was signed in June 2017, and since then, Lotus ceased to be a unit of Proton.

COMPANY MISSION STATEMENT 1 “Astonishing Facts”- http://www.proton.com/about_proton/facts_figures/astonishing_facts.php 2 "Geely to acquire 49.9% stake in Proton, 51% in Lotus – definitive agreement to be signed before end of July"- https://paultan.org/2017/05/24/geely-to-acquire-49-9-percent-stake-in-proton-51-percent-in-lotus/

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Mission Proton’s mission is to continuously create innovative process, product and, service that win people’s heart and minds. They focused on the main three (3) attributes which is economical, caring, and quality. (a) Economical - providing cars which are affordable, cost efficient and valuable. (b) Caring – gives customer a high satisfaction and its social corporate responsibility as Malaysian car manufacturer. (c) Quality – Consistently improve and enhance the product. Vision “A Leading Globally Mobility Solutions Provider” Proton’s vision is to become a successful Malaysian automotive engineering and manufacturing company globally by being oriented and producing competitive priced and innovative products that satisfy its customer.

COMPANY BACKGROUND 4

PERODUA

Perusahaan Otomobil Kedua Sendirian Berhad (Second Automobile Manufacturer Private Limited), abbreviated to Perodua, is Malaysia's largest car manufacturer, closely followed by Proton . It was established in 1992 and launched its first car, the Perodua Kancil, in August 1994.3 'M2' refers to the codename which was used when the project to establish Perodua was still top secret. Initially Perodua mainly produced minicars and superminis, and did not have models in the same market segments as Proton. In recent years, however, its targeted market segments have started to overlap with Proton's – especially in the supercompact segment. Perodua does neither design nor engineer its main components, such as engines and transmissions, in house. The cars have historically used Daihatsu component designs. Daihatsu held a 20% stake in Perodua at the company's launch, increasing this to 25% in 2001 and then to 35%. In 2004 Perodua started assembling the Daihatsu Xenia at its plant in Rawang, for sale in Malaysia. Perodua sold more than 207,100 vehicles in 2016, which was its highest-ever yearly sales record, and achieved a highest-ever market share of 35.7%. 4 The company is planning to set up a second car manufacturing plant with a planned $770 million investment in the coming years.

COMPANY MISSION STATEMENT Mission 3 World of Cars 2006·2007. Warsaw, Poland: Media Connection Sp. z o.o. 2006. p. 203

4 Perodua in 2016 – 207,100 vehicles sold; highest ever market share with 35.7% of TIV; 6% growth in exports http://paultan.org/2017/01/17/perodua-in-2016-207100-vehicles-sold-highest-ever-market-share-with-35-7of-tiv-6-growth-in-exports/

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Perodua’s mission is to be a world class automobile company renowned for excellent quality and reliability through: -

Professionalism in all our operations, Efficiency in utilising technologies and available resources, Resilience in meeting our challenges, Optimising benefits to our customers and stakeholders, Dedication towards social responsibility to community, the environment of competent workforce, Uniqueness in our products, and Aspiration to glorify the name of PERODUA.

Vision The vision of Perodua is to be the most preferred automotive brand renowned for products and services of excellent quality which contributes to the development of the nation.

THE ANALYSIS ON CURRENT BUSINESS PORTFOLIO

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Vehicle Sales Performance and Company Market Share in Malaysia, First-Half 2019 (H1 2019) versus First-Half 2018 (H1 2018) Brand Perodua Honda Proton Toyota Nissan Mazda Mercedes BMW Mitsubishi Isuzu Ford Hino Volkswagen Kia Subaru Hyundai Peugoet Volvo Fuso Renault Daihatsu MINI Sinotruck Lexus Scania Volvo Trucks CAM UD Trucks Land Rover Porsche Bison Chana Auman CAMC Bei Ben Tata MAN King Long JMC JAC Jaguar

Total Sales Market Shares H1 2019 H1 2018 Different H1 2019 H1 2018 121782 117098 3.85% 41.10% 40.44% 44260 51354 -16.03% 14.94% 17.74% 43518 27106 37.71% 14.69% 9.36% 31251 31709 -1.47% 10.55% 10.95% 10383 11926 -14.86% 3.50% 4.12% 6491 6696 -3.16% 2.19% 2.31% 5649 6950 -23.03% 1.91% 2.40% 5035 5340 -6.06% 1.70% 1.84% 4236 4561 -7.67% 1.43% 1.58% 4137 4689 -13.34% 1.40% 1.62% 2874 3072 -6.89% 0.97% 1.06% 2744 2510 8.53% 0.93% 0.87% 2633 3344 -27.00% 0.89% 1.15% 2242 2352 -4.91% 0.76% 0.81% 1335 2318 -73.63% 0.45% 0.80% 1166 1704 -46.14% 0.39% 0.59% 1024 1168 -14.06% 0.35% 0.40% 920 573 37.72% 0.31% 0.20% 878 1096 -24.83% 0.30% 0.38% 589 416 29.37% 0.20% 0.14% 586 349 40.44% 0.20% 0.12% 575 551 4.17% 0.19% 0.19% 308 389 -26.30% 0.10% 0.13% 272 425 -36.00% 0.09% 0.15% 234 300 -22.00% 0.08% 0.10% 194 207 -6.28% 0.07% 0.07% 183 161 13.66% 0.06% 0.06% 177 326 -45.71% 0.06% 0.11% 107 72 48.61% 0.04% 0.02% 100 196 -48.98% 0.03% 0.07% 83 68 22.06% 0.03% 0.02% 62 30 106.67% 0.02% 0.01% 37 26 42.31% 0.01% 0.01% 36 70 -48.57% 0.01% 0.02% 36 19 89.47% 0.01% 0.01% 33 12 175.00% 0.01% 0.00% 31 93 -66.67% 0.01% 0.03% 29 65 -55.38% 0.01% 0.02% 25 17 47.06% 0.01% 0.01% 24 11 118.18% 0.01% 0.00% 9 20 -55.00% 0.00% 0.01% 7

Chevrolet TOTAL

3 296291

164 289553

-98.17% 2.33%

0.00% 100%

0.06% 100%

Car Manufacturer's Market Share for the first half of 2019 Perodua Honda Proton Toyota Nissan Mazda Mercedes BMW Mitsubishi Isuzu Ford Hino Volkswagen Kia 0.00% 0.20% 0.35% 0.19% 0.31% 0.10% 0.30% 0.09% 0.20% 0.08% 0.07% 0.02% 0.06% 0.01% 0.06% 0.01% 0.01% 0.04% 0.01%0.01%0.01%0.00% 0.01% 0.03% 0.01% 0.03% 0.39% 0.76% 0.45% 0.97% 0.93%0.89% 1.40% 1.43% Subaru Hyundai 3.50% Peugoet Volvo 1.70% Fuso Renault 41.10% 1.91% Daihatsu MINI 2.19% Sinotruck Lexus 10.55% Scania Volvo Trucks CAM UD Trucks Land Rover Porsche Bison Chana Auman CAMC Bei Ben Tata 14.69% MAN King Long JMC JAC Jaguar Chevrolet 14.94%

BCG Matrix (Boston Consulting Group) 8

PERODUA

PROTON

ANALYSIS From the BCG Matrix, Proton is in the top-right quadrant because they possess relatively low market share in the high competitive growth automobile industry. The company’s cash needs are high but their cash generation are low. This quadrant is called “Question Marks” because any company that falls within this quadrant have to decide whether to strengthen the business by pursuing an intense strategy (development, innovation, research, joint-venture, etc.) or to sell it. On the other hand, Perodua is in the top-right quadrant because they possess high market share in the automobile industry. They often need heavy investments and funding to finance their rapid growth. This quadrant is called “Stars” because any company that falls within this quadrant have high market share in a fast-growing industry. They are graduated “Question Marks” with a market share front-runners in a high-growth sector.

PRODUCT 9

Product is defined as anything that can be offered market for attention, acquisition, use or consumption that might satisfy a want or need of a person. Products are key element in overall market offering. The Level of Product The Three Product Levels model by Philip Kotler provides a way to understand the different level of needs a customer has for product. It is worth noting that, according to Kotler, the definition of a product goes far beyond offering a simple product or service. It includes anything that can be offered to the marketplace to:   

Capture attention Acquire customers Satisfy a need or want

Kotler proposed examining each product as though it were actually three separate products – the core benefit, the actual product, and the augmented product.

1) Core Benefit The core benefit is the fundamental need that the customer satisfies when they buy the product. The core product is the benefit of the product that makes it valuable to the customer. For example, the core benefit of a mobile phone is to provide a mechanism to make telephone calls when away from your home or office. Note that products are rarely marketed using the core product. This is because core products offer no competitive advantage. 2) Actual Product The actual product is the product features and its design. Products typically have lots of features but very few actual benefits (core benefits) to the customer. Returning to our mobile phone example, then the actual product consists of the design and features of the phone (dimension, colour, screen size, packaging, etc.) 10

3) Augmented Product The augmented product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. Typically, the augmented product includes such things as warranty and customer service. Product and Service Classification Products and services fall into broad classes based on the types of consumers who use them: consumer products and industrial products. Broadly defined, products also include other marketable entities such as experiences, organizations, persons, places, and ideas.

Products/Services

Consumer Products/Services - Convience Products - Shopping Products - Speciality Products - Unsought Products

Industrial Products/Services - Raw Materials - Fabricating Parts and Materials - Installation - Accessory Equipment - Operating Supplies

Automobile such as cars were classified as shopping products under consumer products. Shopping products are the type of products which purchased less frequently and careful comparison is made by the customer on the price, quality, sustainability and style. In case of purchase of shopping products, increased time & effort is made by the customers in collection of information & comparison making. Following are some of examples of shopping products.

Product Line 11

As of 2019, Proton and Perodua have refresh and upgraded their existing product line of automobile from different type of class which include sedan, hatchback, MPV and more. PROTON

Proton Saga (A-segment sedan)

Proton Iriz (B-segment hatchback)

Proton Persona (B-segment sedan)

Proton Ertiga (B-segment mini-MPV)

Proton Exora (C-segment MPV)

Proton Preve' (C-segment sedan)

Proton X-70 (C-segment SUV)

Proton Perdana (D-segment sedan)

PERODUA

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Perodua Axia (A-segment hatchback)

Perodua Bezza (A-segment sedan)

Perodua Myvi (B-segment hatchback)

Perodua Alza (B-segment mini-MPV)

Perodua Aruz (C-segment SUV)

PRICE

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Price is the amount of money charged for a product or service. More broadly, price is the sum of all the values that customers give up to gain the benefits of having or using a product or service. Price is the only element in marketing mix that produces revenue while other elements represent costs. Price is also one of the most flexible marketing mix elements. General Pricing Approaches The price the company charges will fall somewhere between one that is too low to produce a profit and one that is too high to high to produce any demand.

In setting its price between these two extremes, the company must consider several external and internal factors, including competitors’ strategies and prices, the overall marketing strategy and mix, and the nature of the market and demand. There are three main approaches:   

Cost-based pricing, where price is determined by adding a profit element on top of the cost of making the product. Customer-based pricing, where prices are determined by what a firm believes customers will be prepared to pay. Competitor-based pricing, where competitor prices are the main influence on the price set.

As most of the automobile manufacturers, cost-based pricing is the most appropriate approaches in determining the price of the product. Cost-based pricing involves setting prices based on the costs of producing, distribution, and selling the product plus the fair rate of return for the company’s effort and risk. A company’s costs take two forms which is fixed costs and variable costs. Fixed costs (overhead costs) are costs that do not vary with production or sales level. For example, rent, utility bills, heat, interest, and executive salaries regardless of the company’s level of output. Opposite to fixed costs, variable costs vary directly with the level of production. Although these costs tend to be the same for each unit produced, they are called variable costs because the total varies with the number of units produced. PROTON CAR MODEL PRICE

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MODEL Proton Saga

Proton Iriz

Proton Persona

Proton Ertiga Proton Exora Proton Preve'

Proton X-70

Proton Perdana

VARIANT Standard MT Standard AT Premium AT 1.3L Standard MT 1.3L Standard CVT 1.3L Executive CVT 1.6L Executive CVT 1.6l Premium CVT Standard MT Standard CVT Executive CVT Premium CVT Standard MT Standard AT Premium AT Executive CVT Premium CVT 1.6L Executive CVT 1.6L Premium CVT Standard 2WD Executive 2WD Executive AWD Premium 2WD 2.0L Executive CVT 2.0L Premium CVT 2.4L Executive CVT 2.4L Premium CVT

PRICE* RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM

32,800 35,800 39,800 36,700 39,700 44,700 46,700 50,700 42,600 44,600 49,600 54,600 56,773 59,525 62,278 59,800 66,800 61,090 68,430 99,800 109,800 115,800 123,800 103,927 104,326 126,849 127,247

MONTHLY PAYMENT** RM 360 RM 395 RM 440 RM 402 RM 435 RM 490 RM 512 RM 560 RM 466 RM 488 RM 545 RM 599 RM 622 RM 652 RM 682 RM 655 RM 740 RM 669 RM 749 RM 1,093 RM 1,203 RM 1,268 RM 1,356 RM 1,138 RM 1,143 RM 1,390 RM 1,394

* On The Road Price Without Insurance **Expected Monthly Payment Based On 10% Down Payment, 9 Years Loan Period and 3.5% Interest Rate

PERODUA CAR MODEL PRICE 15

MODEL

Perodua Axia

Perodua Bezza

Perodua Myvi

Perodua Alza

Perodua Aruz

VARIANT 1.0L Standard E - MT 1.0L Standard G - MT 1.0L Standard G - AT 1.0L SE - MT 1.0L SE - AT 1.0L AV - AT 1.0L Gxtra - MT 1.0L Gxtra - AT 1.3L Premium X - MT 1.3L Premium X - AT 1.3L Advance - AT 1.3L G - MT 1.3L G - AT 1.3L X - AT 1.5L H - AT 1.5L AV - AT 1.5L S - MT 1.5L S - AT 1.5L SE - AT 1.5L AV - AT 1.5L X 1.5L Advance

PRICE RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM RM

22,990 32,590 34,390 35,590 37,490 40,390 34,490 36,290 40,090 41,890 47,790 42,790 44,590 46,590 50,290 54,090 51,490 54,290 56,890 62,690 72,900 77,900

MONTHLY PAYMENT RM 251 RM 357 RM 376 RM 390 RM 410 RM 442 RM 378 RM 398 RM 439 RM 459 RM 523 RM 468 RM 488 RM 510 RM 551 RM 593 RM 564 RM 594 RM 623 RM 685 RM 798 RM 853

* On The Road Price Without Insurance **Expected Monthly Payment Based On 10% Down Payment, 9 Years Loan Period and 3.5% Interest Rate

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Product Mix Pricing Strategies Product Mix is a collection of products and services that a company chooses to offer its market. The strategy for setting a product’s price often has to be changed when the product is part of the product mix. There are five (5) product mix pricing strategies that have to be considered by the companies.

For most of the automobile companies which include Proton and Perodua, they use optional-product pricing. Optional-pricing pricing is pricing optional or accessory products along with the main product. For example, Proton and Perodua offered different variants of the same car product. Customers can choose these variants ranging from base model to high-end model. These variants can varies between each other which includes different engine capacity, number of airbags, seats pattern and materials, and infotainment system. These optional ads-on however does not affect the main function of the product.

Price Adjustment Strategies There were seven (7) price adjustment strategies which are discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographical pricing, dynamic pricing, and international pricing. The car manufacturer company like Proton and Perodua must decide how to price its products for customers located in different parts of the country. Therefore, they should consider the geographical pricing strategies for this situation. One of the geographical pricing options is FOB-origin pricing, this practice means that the products are placed free on board a carrier. At this point, the title and responsibility pass to the customer, who pays the freight from the factory to the destination. The further the distance, the higher the cost incurred. This explains why products and services offered in east Malaysia were slightly higher that west Malaysia. 17

PLACE Place is defined as the “direct or indirect channels to market...