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Piaggio S.p.A.
International Marketing Plan
For China
Professor Name: Georges Knell
Course: LSBF-GGSB MBA (4)
Module: International Marketing
Student Name: Giulio Neri
Student ID: A4006942
Date: 20/3/2008
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Executive Summary
Piaggio is a world-class manufacturer of high quality designer scooters and commercial
light vehicles. Piaggio international expansion enjoyed outstanding results in Europe and
North America, however Piaggio has not yet significantly entered the exciting Chinese
market. This report shows that if Piaggio Group wants to succeed in China, it needs to
commit to a very aggressive marketing strategy, requiring a funding of 19m in the first
year alone. The report focuses on the contextual analysis for such an ambitious project
and it demonstrates that in the medium term Piaggio could achieve an outstanding 5%
market share, which is the equivalent of 60% of the current worldwide output for the
group.
Introduction
The Piaggio Group is a world-class manufacturer of scooters and light-weight vehicles for
personal and business use. The brand Piaggio is known worldwide for the legendary
Vespa model, introduced in 1940 in Italy and now becoming a recognized icon of
easygoing lifestyle with a touch of class while providing young business men and women
a convenient way to commute in the busy financial districts of
the city.
In April 2004 Piaggio Group started a joint venture in China with
Zongshen Industrial Group which is providing facilities for the
production of scooters and engines for Piaggio worldwide
market and a distribution channel into China.
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Situation Analysis
Macro Economical Environment - PESTEL
Political
Recently China has made extraordinary efforts in modernizing legal and economical
system aimed to stabilize the growth of the country; however China remains a strictly
controlled country, where civil liberties, such as freedom of communication, religion
practice and demonstration are severely limited. Major internal problems in China include
growing corruption, increasing rural poverty and environmental degradation. China
enjoys a strong relationship with the US and other western countries and is likely to
increase its influence in the region due to its expanding economy. China has difficult
relations with a number of neighbouring countries, such as Japan, Vietnam, North Korea
and Tibet; in particular the strained relationship with Taiwan could ultimately result is a
war if the Taiwanese government formally declares independence.
Economical
China economy is characterized by its extraordinary size and growth. The GDP has
grown steadily since 2003 peaking at 11% year-on-year growth in 2007 (China Business
Forecast Report 2008, [7]) and inducing concerns about the country over-capacity in the
long term.
The US government is trying to exercise its
influence to accelerate the appreciation of the Yuan,
in an effort to limit or at least control its export
deficit.
Although the Peoples Bank of China has raised the
Sustained Strong Growthreal GDP Growth (%)
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interest rates for five consecutive times in 2007, inflation is still very high with peaks of
6.2% in 2007.
Economic growth is still mainly driven by fixed asset investment and exports; however
there has been a noticeable increase of private consumption.
Social
China has the largest population in the world, 1.3 billion people increasing of about 7.8
million people every year. Research based on forecast data from the Department of
Economic and Social Affairs of the United Nations Secretariat (http://esa.un.org) shows
that the number of people with age between 20 and 39, which represent the target
customers for Piaggio scooters, is going to settle in the next 10 years around 400
millions (30% of the total population). 48%
of the population in the target age group are
female and although the gender equality has
been in the past years a priority for the
Chinese government, women still experience
a significant status and income disparity. In
average women with a university degree can
earn as little as 75% of the salary of males
with equivalent skills. Finally it should be
noted that in China title and status are very
important, as well as punctuality both
professionally and socially.
Percentage Of Population Aged 20 To 39
0%
10%
20%
30%
40%
50%
60%
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
China Italy United Kingdom
Population Forecast in China (millions) - Target Age Group (20-39)
0
50
100
150
200
250
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
Male Female
Data Source: Population Division of the Department of Economic and Social Affairs of the United Nations
Secretariat, World Population Prospects: http://esa.un.org/unpp, accessed on March 03, 2008.
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Technological
China has developed a number of industrial
centres where transport, telecommunications and
energy infrastructures are widely available. China
has also demonstrated a widespread adoption of
new technologies, for example mobile phone
subscriptions has sharply increased to 461
million, compared to the 368 million land lines (CIA world factbook, 2008, [9]). The
number of internet users has also peaked in 2007 to 162 million thanks to a
comprehensive broadband network infrastructure based on submarine trunks, fibre-optic
cables and satellite links, making China the third largest internet community after the
European Union with 247 million and the US with 208 million. Although comparable in
terms of population, China has got almost 3 times more internet users than India (60m).
Environmental
The environmental policy is becoming one of the most critical issues for the Chinese
government, which is investing $175 billion over the next five years for environmental
improvements. In fact the current ecological degradation, due to rapid industrial growth
of the country, is posing a long term threat for China in terms of economic growth and
more generally in terms of international relationships. Due to the heavy dependence on
coal and to the increasing energy demand, the air is heavily polluted, resulting in acid
rain and water reserves contamination. China is currently the world second largest
producer of carbon monoxide.
Mobile Phone Penetration (%)
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Legal
The Chinese legal framework is a source of uncertainty for international investors; in fact
laws remain subject to a certain degree of interpretation, mainly because of weak
wording and inconsistencies between local and national regulations (BMI 2008, [7] and
Countrywatch.com 2008, [8]). The judiciary system lacks independence, judges are
frequently corrupted and torture or other forms of mistreatment are often used to obtain
confessions.
The government has recently overhauled the anti-monopoly and competition laws,
incorporating elements derived from the European Commission, the US and other
developed countries. Anti-Monopoly Law covers the definition of Intellectual Property
and the boundary between protecting IPs and abusing dominant market position. Nathan
Bush (2008, [10]) describes the concerns about the enforcement of the new regulation
which may disproportionately target foreign firms and their Intellectual Property.
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Micro Economical Environment
Michael Porter 5 forces
Michael Porter 5 forces analysis provides a
comprehensive methodology to identify the nature of
the competitive relations within an industry. Michael
Porter (2008, [2]) indicates that the analysis of
competitive forces should not be limited to the
competitive rivalry, in fact pressure from buyers and
customers, as well as threats of new entrants and
substitutes may have an equivalent impact on the
underlying profitability of an industry.
Bargaining power of customers: (high). The buyer group is relatively price
sensitive because of low income: customers may bargain and compare other
offers available in the market before purchasing and the current offering does not
include fundamentally differentiated products.
Bargaining power of suppliers: (low). China offers low labour cost and a
large variety of suppliers for the materials and parts required. Piaggio also has an
existing Joint Venture agreement with Foshan, providing manufacturing facilities
and machinery.
Threat of new entrants: (low). Piaggio and other main competitors which
operate globally benefit from economics of scale which represent a high entry
barrier for new entrants. In order to be competitive in China a new entrant is also
Michael Porter (2008, [2]). The Five Competitive Forces That
Shape Strategy.
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likely to require local manufacturing facilities which represent a high level of
involvement in terms of both time and resources.
Threat of substitutes: (high). The government, as part of the environmental
programme, may carry out improvements in the public transport and create
urban cycle routes available only to electric bicycles and mopeds. Some major
city centres in China have already banned motor scooters over safety and
environmental concerns.
Competitive rivalry: (high). The motorcycle offered by different competitors in
China are quite similar to each other, therefore the competition is mainly based
on price producing the strongest pressure. The size of the market is also drawing
the attention of many competitors.
Kenichi Ohmae 3C model
Kenichi Ohmae defines 3 dimensions to analyze the micro environment:
Company: Piaggio is a specialized company, which produces high quality motorcycles
with superior and innovative design. The company has proven able to respond quickly to
changes in customer demand and market trends. Piaggio enjoys a solid financial
position, with an increase of sales of 10.9% and a turnover of 1.6 billion Euros. Piaggio
invested more than Euro 15m on R&D for the leading brands Piaggio, Vespa and
Aprilia. Finally Piaggio has already established a significant presence in China with the
joint venture Piaggio-Foshan, with a production capacity of 200K units per year
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Customers: The main Customers for Piaggio in the 2-wheel market are young business
men and women who want to commute in style and safety. Potentially the customer
base could be expanded to government
and large corporate customers in China,
following the example of Italy, where
Piaggio entered an agreement with the
Italian post office for the supply of 36m
in scooters in 2006.
Competitors: The following table summarizes the market share for the main
competitors of Piaggio worldwide and in China.
Company US (2004) EU (2007) China (2007)
Yamaha 35.2% 12.4%
Honda 34.4% 16.0%
Piaggio 19.9% 13.0%
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Product Life Cycle
Piaggio in China sells mainly products which have already reached a late maturity or
decline stage such as the Vespa GTS-250 and the LX150 models, which have proven to
be top seller products in Europe and other markets in 2006. Several new models have
been introduced in Europe in 2006 (such as Vespa-S and LXV series), however such
models are not yet available for the Chinese market. Vespa is an expensive product and
the target consumer group tends to be more demanding: in order for Piaggio to be
appealing in China it is essential that new products are introduced earlier into the
market.
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BCG Matrix
The Boston Consulting Group (BCG) matrix provides information about the product
lifecycle derived from the analysis of business growth and market share.
Currently Piaggio has a minimal market share in China and the market is predicted to
grow considerably in the next few years. The BCG matrix suggests investing either to
gain a dominant market position or to become a cash cow.
High
Low
High Low
BUSINESSGROWTH
MARKET SHARE
??
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MARKET ATTRACTIVENESS COMPETITIVE POSITION
Market size: $4 billions (high)
Market Growth: 8% (high)
Environmental impact: uncertainties(low)
Market share: insignificant
Quality of product: better thancompetitors, superior design
Distribution channel: not developed
Overall ranking: high Overall ranking: low to medium
GE Business Screen
The GE Business screen provides an alternative method to analyze the market position of
Piaggio and it is specifically designed for brands as opposed to the BGC matrix which is
mostly suitable for commodities. In particular with the GE business screen the
measurement of both market attractiveness and competitive position can be subject to a
number of criteria.
High
Medium
MARKETATTRAC
TIVENESS
Low
Strong Medium Low
COMPETITIVE POSITIONEarn Selectively
Invest - Grow
Harvest - Divest
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The GE business screen analysis shows that the most suitable strategy for Piaggio is to
invest and grow in the Chinese market, focusing on improving its competitive advantage
to increase its market share.
SWOT Analysis
The most important elements derived from the macro and micro environment analysis
can be summarized in a SWOT matrix. Strengthsand Weaknessesare variables over
which Piaggio has some level of control, whereas the Opportunitiesand Threatsdepend
only on external factors typical of the Chinese environment.
Strengths
Well Known Brand Major market share in western
markets
Superior, innovative design
World-class, specialized andadaptable company
Existing manufacturing facility inChina
Weaknesses
Non Differentiated Product inChina
Electric / Green models notavailable
Insignificant market share inChina
Products introduced towards theend of their lifecycle
Opportunities Sustained growth of economy
Large customer base in target agegroup
Growing wealth
Relative political stability
Threats Government priority to improve
environmental conditions andcarbon emissions
Possible ban for scooters in largecities over pollution and safetyconcerns
Still low wages especially forwomen
Some uncertainties on the futureeconomic growth (credit crisis,
high inflation and necessity tocontrol output)
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International Marketing Strategy
Objectives
From a marketing perspective Piaggios objectives for the expansion into the Chinese
market are:
Increase the volume of sales to 200,000 units within 2 years
Increase market share to 5% within 5 years, corresponding to 400,000 units per
year
Increase brand awareness to 30% in terms of brand recognition, based on
pictures of vespa scooters in one year. Within those who recognize the brand,
achieve 80% of brand association with high quality, luxury product.
Brand awareness increase to 50% in 5 years.
Entry Strategy
Piaggio has already established a Joint Venture with the
conglomerate Zongshen Industrial Group in China. The JV, named
Piaggio Foshan Motorcycle Company, is owned 45% by Piaggio,
45% by Zongshen and the remaining 10% by a local government
authority. The joint venture uses Piaggio technology and design
together with Zongshen industrial plants and local expertise to
produce scooters and motorcycle engines, which are sold
worldwide by Piaggio. The JV sells its products in China on a co-
branding basis using the Zongshen distribution channels.
Data from Piaggio Group annual
report (2006, [16])
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Technology
Brand
Design
Generic Strategy
Michael Porter (1980, [3]) defines three alternative strategies that form a consistent
framework for successful marketing plans:
Cost leadership: Although having the lowest cost base can compensate strong
competitive forces, it requires cuts to R&D budgets and reduction in the
perceived quality of the product, which directly impacts Piaggio competitive
advantage.
Differentiation: is the most suitable strategy for Piaggios expansion in China,
as it specifically resists the competitive forces characteristic of the Chinese
motorcycle industry. In particular differentiation reduces the price sensitivity of
customers and consequently their bargaining power whilst
easing the competitive rivalry resulting from the existing
price-based competition. Differentiation for Piaggio will be
achieved in three dimensions: design, brand image and
technology.
Focus: this strategy aims to achieve excellence by concerntrating the entire
organization efforts to one specific customer group or product range. It includes
elements of differentiation, within the specific customer or product segment, as
well as cost leadership, which cannot be achieved by Piaggio in China due to the
market share and overall level of involvement of the main competitors, in
particular Suzuki.
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Growth strategy
The growth strategy for Piaggio in China is summarized by the Ansoff matrix as follows:
PRODUCTS
EXISTING NEW
EXISTING
Market Penetration
B2B Marketing: government,distribution and postal service
companies
Product Development
Green Vespa: Electrical /Hybrid low-emission model
MAR
KET
NEW
Market Development
Pink Vespa: target professionalwomen
Diversification
Sale of apparel and otherscooter accessories
As described by Vella (2006, [14]) Piaggio is already working on a new eco-friendly
Vespa, using a hybrid combustion/electrical engine, however the timing for the
development are still uncertain.
Pink Vespa is an initiative to develop a special packaging for the vespa scooter, in
terms of colour combination and accessories, to target Chinese women, which represent
almost 50% of the target consumer group. The price of the Pink Vespa should be
adjusted to compensate the lower income of women in China, creating a particularly
attractive offer.
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Segmentation
According to Kotler et al. (2002, [1]) there is no single way to segment a market. I
particular for the expansion of Piaggio in China a specific combination of geographic,
demographic, psychographic and behavioural factors should be considered, including:
Geographic: city size and density (dense urban, urban, suburban and rural)
Demographic: age, gender, income and occupation
Psychographic: social class and personality (compulsive, gregarious,
authoritarian, ambitious)
Behavioural: purchase occasion, benefit sought, user status (non-user,
potential user, first-time user, ex-user, regular user).
Targeting
There are three main approaches for selecting the target market from the different
segments identified using the specific segmentation criteria.
Undifferentiated marketing, extending the product offering and the
marketing mix to all market segments
Differentiated marketing, inwhich different market segments are targeted
using different marketing mixes and offers
Concentrated marketing, in which all marketing resources are dedicated to a
particular market segment. This approach is particularly advantageous for Piaggio
in China because Vespa owners are typically ambitious medium-to-high income
young professionals, living and working in busy cities, looking for high quality and
stylish products.
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Positioning
The following value map shows the target competitive positioning for Vespa and other
Piaggio scooters in China compared to other manufacturers:
Other areas of competitive differentiation for the positioning Piaggio in China include
image, design, product technology, safety and customer service.
More
For
More
LOWER SAME HIGHER
HIGHER More
for
Less
More
for
the Same
SAME Same
for
Less
Me
Too
LOWER Less
for
Much Less
PRICE
VALUE
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International Marketing Mix
The international marketing mix for Piaggio is based on the extended 7P model, as
described in the following section.
Product. The product itself is a key differentiator for Piaggio. R&D efforts should
be co-ordinated between the Italian design centres and the still limited R&D
facilities in China, in order to adapt the product to the Chinese consumer
requirements. In particular Piaggio should push the development of the eco-
friendly hybrid powered Green Vespa as well as the Pink Vespa, a repackaged
Vespa model designed in terms of colours and accessories for the large base of
female Customers. Extended warranty support should be offered to improve
customer service and the overall customer experience. Innovative products
should be launched in the Chinese market immediately, rather than towards the
end of their life cycle.
Price. Vespa is positioned as an exclusive, expensive and high value item.
Discounts and other market penetration offers should always be consistent with
this marketing approach. The new Pink Vespa should be launched at a
significant lower price, allowing ambitious professional women to enjoy the same
level of quality and style for their scooter. Considering the current banking crisis
in China and worldwide, Piaggio should not offer special financing conditions to
avoid undertaking unnecessary financial risks.
Place. Distribution of Vespa will continue through the sales channel of the
partner Zongshen, which provides national coverage. New outlets, specifically
selling the Vespa models, should be opened in the main financial districts of the
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largest cities, in particular Shanghai, Bejing, Shenzen, Guangzhou and Hong
Kong. Develop an online sales channel, which is already available for the main
competitor Suzuki Grand River Group.
Promotion. Piaggio Vespa represents an expensive, high involvement product
with a high perceived differentiation of its brand. The the Foote, Cone and
Belding involvement grid (Lambin, J. 2000, [15]) suggests that the buyer
readiness stages will be likely to follow the feel, learn, do sequence. The
communication mix should therefore be concentrated on above-the-line (ATL)
advertising activities, aiming to promote Vespa image and increase brand
awareness (Attention and Interest), followed by some below-the-line (BTL)
initiatives, such as sales promotions (Desire and Action). Sales promotions should
focus on business to business marketing, trying to secure supply contracts with
major corporates or local government institutions.
FCB Involvement Grid, Lambin, J. 2000, [15].
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The message should be consistent throughout the integrated communication
initiatives and should focus on the quality of the product, in particular the design,
technical innovation and safety. Collateral messages should point to social status
and punctuality to attract the public attention, specifically for women within the
Pink Vespa programme.
People. Substantial investment in people is required for the expansion of Piaggio
in China, especially in terms of technical and operational training as well as for
the acquisition of best-in-class sales and communications staff.
Processes. European standard processes are already in place in the
manufacturing facility of Piaggio in China. Standard processes should also be
extended to sales and distribution channels as well as customer services, in order
to provide a standard high quality experience for Piaggio customers. This is
particularly important to reinforce the premium quality perception of Piaggio
products.
Physical Evidence. Piaggio should offer to its customers scooter apparel and
other symbolic gifts. This would have the triple benefit of compensating the
intangibility of the service provided, endorsing Piaggio brand and promoting the
collateral sale of Piaggio accessories and apparel.
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Numerical forecast - Marketing Budget
The average unit price is estimated based on the global average extracted from Piaggio
Annual Report (2006, [16]).
In the marketing budget for China it is assumed a unitary price of 2300 for standard
models and a 25% discounted price of 1725 for the Pink Vespa model (equivalent to
the average disparity of income for university degree educated professionals). Although
Pink Vespa itself will not add a significant contribution in terms of profit, the
revolutionary initiative will increase the overall exposure and brand awareness of Piaggio
as well as its market share. The Green Vespa model is likely to require several years to
be developed and therefore it is not included in this budget calculation. The marketing
budget is calculated as 10% of the total revenue. This amount is then distributed in the
following percentages:
52% Above The Line (ATL) activities
28% ATL activities for the Pink Vespa
10% Below The Line (BTL) sales promotions
5% Market Research
5% Staff
GEOGRAPHICAL AREA ITALY EUROPE NA INDIA OTHER TOTAL
Volumes (000) 212 281.3 23.1 139.4 24.9 680.8
Sales (millions of ) 618.4 648.1 77.2 206.4 57.3 1,607.4
Average Price Per Unit () 2917.0 2303.9 3342.0 1480.6 2301.2 2361.0
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The following table shows the breakdown of the marketing budget per activity from
March 2008 to April 2009.
Total Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09
Expected Sales ( 000)
Standard Model Units (000) 112 5 7 8 9 10 10 11 11 12 13 8 8
Pink Vespa Units (000) 40 0 0 0 1 3 4 4 5 6 7 5 5
Total Units Sold (000) 152 5 7 8 10 13 14 15 16 18 20 13 13
Total Sales 326,600 11,500 16,100 18,400 22,425 28,175 29,900 32,200 33,925 37,950 41,975 27,025 27,025
Marketing Budget (10%) 32,660
ATL - Standard ( 000)
TV 10,800 700 1,000 1,000 1,000 900 700 900 900 1,000 1,000 1,000 700
Radio 2,400 200 200 200 200 200 200 200 200 200 200 200 200
Print 2,700 50 50 400 400 50 50 50 400 400 400 400 50
Internet Advertisement 870 50 60 60 70 70 50 80 80 90 90 100 70
Total ATL - Standard 16,770 1,000 1,310 1,660 1,670 1,220 1,000 1,230 1,580 1,690 1,690 1,700 1,020
ATL - Pink Vespa ( 000)
TV 6,000 1700 700 500 400 240 240 300 1100 500 320
Radio 1,480 400 120 120 120 120 120 120 120 120 120
Print 700 200 200 100 100 100
Internet Advertisement 780 100 120 100 60 60 60 60 80 80 60
Total ATL - Pink Vespa 8,960 0 0 2,400 1,140 720 580 420 420 580 1,400 800 500
BTL ( 000)
Sales Kiosk 1,200 0 0 200 200 200 0 0 0 200 200 200 0Sponsorship 750 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5
PR 750 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5
Direct Marketing
(phone + direct internet sales) 480 40 40 40 40 40 40 40 40 40 40 40 40
Total BTL 3,180 165 165 365 365 365 165 165 165 365 365 365 165
Market Research (5%) 1,633
Staff (5%) 1,633
Grand Total ( 000) 32,176
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The marketing budget is adjusted for
seasonal cycles with peaks in the summer
and towards the end of the (Chinese) year.
The Pink Vespa will be introduced in May
2008 with a massive TV advertisement
campaign. The ATL budget for Pink Vespa
is then reduced to more sustainable levels
after the launch. Sales Kiosks in the main cities will operate twice a year for a period of 3
months each, allowing potential Customers to try Vespa and distribute symbolic gifts.
The following table shows the marketing budget forecast for the next 5 years and the
corresponding Net Present Value calculation, considering:
Inflation: 4% average in the next 5 years
Gross Profit Margin: 30.1% (from Piaggio Annual Return 2006, [16])
Current Sales Volume for China, estimated 100K units/year
Discount rate: 16%
Current Market Size: 8m units/year (Datamonitor 2007, [13])
Sales increase uniformly approximately 30% each year
Additional investment in Piaggio-Foshan of 10m in 2009/10 and 2011/12 to
increase production capacity
Marketing Budget ( 000)
0
500
1,000
1,500
2,000
2,500
3,000
Mar
-08
Apr-08
May
-08
Jun-08
Jul-0
8
Aug-
08
Sep-08
Oct
-08
Nov-08
Dec
-08
Jan-09
Feb-
09
Tot al ATL - S tand ard To tal ATL - P ink V es pa Tot al BTL
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2008/9 2009/10 20010/11 2011/12 2011/12
Sales
Standard Model Units (000) 112 146 189 246 280
Less Current Sales Volume (000) (100) (100) (100) (100) (100)
Pink Vespa Units 40 70 91 118 120
Total Additional Units Sold 52 116 180 264 300
Market Share 1.9% 2.7% 3.5% 4.6% 5.0%
Unit Price (standard) 2,300 2,392 2,488 2,587 2,691
Unit Price (Pink Vespa) 1,725 1,794 1,866 1,940 2,018
Total Additional Sales 96,600 234,655 391,884 607,443 726,482
Expenses
Unit Cost 1,608 1,672 1,739 1,808 1,881
Total Production Cost 83,600 193,284 313,487 478,087 564,234
Marketing Expenses (10%) 32,660 23,466 39,188 60,744 72,648
Additional Investment (Foshan) 10,000 10,000
Total Expenses (Outflow) 116 ,260 226,750 352,675 548,832 636,883
Cash Flows -19,660 7,906 39,209 58,611 89,599
Discounted Cash Flows (PV, 16%) -16,949 5,875 25,120 32,371 42,659
NPV 89,076
Payback Time 2Y 3M
Discounted Paybeck Time 2Y 5M
The Net Present Value calculation considers only the incremental sales resulting from
this marketing project, assuming that the profit from the existing sales of 100K
units/year will be used to offset the fixed costs of the Chinese operations. In the first
year the project will report a loss of about 19.6m, mostly because of the low price
offered on the Pink Vespa, however the NPV of the five year project is positive and the
payback time is relatively short (2 Years and 3 Months).
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Marketing Controls
The Balanced Scorecard (Kaplan and Norton 2007, [4]) provides a very effective
methodology to link long term company strategies to short term targets, evaluated on
Key Performance Indicators which are based on both quantitative and qualitative
measurements. The balanced scorecard can be adapted to implement Piaggio marketing
strategy for this project using the following KPIs.
Objectives Measures 2008/9 2009/10 2010/11 2011/12 2012/13
Financial
Revenues Standard Sales (000) 257,600 348,275 470,868 636,614 753,389
Pink Vespa Sales (000) 69,000 125,580 169,784 229,548 242,161
Volumes Standard Units sold (000) 112 146 189 246 280
Pink Vespa Units Sold (000) 40 70 91 118 120
Marketing Cash Flow Marketing expenditure (000) 32,660 23,466 39,188 60,744 72,648
Customer
Customer satisfaction Satisfaction index 50% 60% 70% 75% 80%
Value for money Highest Value in Perception Maps 20% 40% 50% 60% 60%
Brand Awareness Brand Recognition 30% 35% 40% 45% 50%
Brand Association with High Quality 80% 80% 80% 80% 80%
Internal Business Process
Implementation of CRM Customer info migrated to CRM 30% 60% 90% 100% 100%
Online Channel Efficiency Search Engine Ranking > 3 > 3 > 3 > 3 > 3
Site Visits (million/month) 0.5 0.8 1.5 2.5 3.5
Click-Through Rate > 3% >4% >5% >5% >5%
Online Sales Volume (000) 3 9 11 15 16
Learning and Grow
People Employee Satisfection Index 50% 60% 70% 75% 80%
Innovation New Packaging Options
Employee and customer suggestions
Quality and number of new packaging options
Quality and number of proposed new initiatives
ConclusionThe Chinese market offers unique exciting opportunities for Piaggio. Establishing a
significant market presence in China does require large investments and a very
aggressive marketing strategy, but it also offers the opportunity to enter the most
attractive and fastest growing market. This is a opportunity that Piaggio, which mission
statement is to be world-leading manufacturer for light mobility vehicles, cannot afford
to ignore.
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