mktg-skoda_fabia2341 (2)

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New Product development: Skoda Fabia Presented by: Kanishk Dhadwal 08MBA040 Nitesh Dagur 08MBA062 Pranav Kapoor 08MBA071 Yashasvi Kumar 08MBA118 Marketing Management: Theory & Concepts

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Introducing original products, improving existing products, modifying products and also by introducing new brands through its own research and development methods. New product development The ultimate aim of any organization: profit maximization through customer satisfaction. To achieve this companies must develop a steady stream of new products and services.

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New product development Stages :

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Skoda Started as a bicycle manufacturing company by Lauren and Klement, Skoda stepped into manufacturing cars in the year 1905. Merged with Skoda Works in 1924-biggest industrial enterprise in Austria-Hungary and Czechoslovakia. Saw a decline during the great economic depression but came back soon after it got over. Internationally known for building tough and reliable cars by 1960s. Owe their popularity for first successful car to Favorite launched in 1987. Was made the fourth part of Volkswagen Auto group on 16-04-1991 as part of the privatization policy of the Czech government. Since then they have never looked back and have been a greater success till date.

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Skoda Fabia Skoda India, has unveiled Fabia in the premium hatchback segment of India Successor to the Skoda Felicia, which was discontinued in 2001. Fabia was available in hatchback, estate (named Fabia Combi) and saloon (named Fabia Sedan) body styles while from 2007 merging in the second generation .

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Skoda Fabia Won accolades in UK and other countries. Launched in India in 2007. In words of Skoda: It has all the comforts and roominess of a  big luxury car and at the same time it is so compact that you can drive it and park it with utmost ease in the most congested areas. Variants:1.2 l ,1.4 l diesel &1.6 l petrol MPI (Multi-Point Injection).

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Idea generation Types: internal idea sources & external idea sources. Skoda identified some of the customer(external source) needs of a compact car with comforts of a premium segment car. Maruti Suzuki & Hyundai were the sole players in this segment with Swift & Getz respectively.

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Idea screening Although Fabia was a hit abroad, it needed some of the changes according to the Indian market and roads. For e.g. The power of the engine and the comfort levels.

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Attractive ideas must be refined into testable product concepts . product concept is an elaborated version of the idea expressed in meaningful consumer terms. Indian car owners basically consist of the middle income group. Hatchback and Supermini cars form the choice of Indian consumers. Skoda, before Fabia Specialized in the sedan segment with Superb, Octavia and Laura. And thus, Skoda needed to launch a car that would make it a potential player in this segment. As Skoda had Fabia as a successful car in the foreign market, they were quite confident of its success in Indian market too. Concept development and testing

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Marketing strategy Skoda with its, more than 56 dealers across India targeted the middle income class population of India. Skoda positioned its new innovation as a compact car with the comforts of a luxury car. The price should have been according to the existing players in the desired segment i.e. Rs. 5-6 lakhs. They had a target of selling nearly 1,000 cars within the one fiscal year.

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Product Development First generation was first presented in Frankfurt Motor Show in sep.1999 ,the production of which started in 2000 It was the first model to use the Volkswagen Group's A04 platform. The second generation Fabia was officially presented at the Geneva Auto Show in March 2007 and was sold from April 2007. Based on the PQ24 platform like the first generation, it is slightly larger than its predecessor and takes styling cues from the new Roomster leisure activity vehicle. R&D department tested the versions of the product in many markets. The company underwent many car fairs and also test drive sessions to know the customer responses and to collect the first hand reviews.

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Market testing Skoda is a well established car manufacturer which has been selling cars since 1905 all over the world. Moreover, Fabia wasn’t a new idea especially designed for Indian market, but was already in the markets other than India. Therefore, Skoda was quite confident of its success in the Indian market as well, with the slight changes that it had made in previous stages. People gave a huge response during its displays in the motor shows across the Indian sub continent.

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Commercialization Commercialization of a new product involves four things: market-entry timing geographic strategy Target-market prospects Initial marketing strategy Hatchback segment in India already had players like Hyundai Getz, Maruti Swift. As Skoda chose to launch Fabia to compete with the existing players, so we can say, it made a late entry in the hatchback car segment market. After succeeding abroad, Skoda launched Fabia in the Indian sub-continent for the purpose of increasing its market share globally. As the Indian costumers mainly consist of middle income group people. Therefore the target costumers of Fabia was this particular income group. And the introductory strategy of Skoda was to position it as a compact car, with the comfort of a luxury car

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Comparing Skoda Fabia with Maruti Suzuki Swift

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Comparing Skoda Fabia with Maruti Suzuki and Hyundai

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Comparing Skoda Fabia with Maruti Suzuki and Hyundai

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How Fabia could not come up to the expectations of the customers-major flaws The launch of Fabia took more than what consumers could happily have waited for-more the delay higher the expectations. The price of the higher end model of Fabia was almost equivalent to that of sedan segment cars in spite of the fact that Fabia was priced at 75% of what it was priced abroad. After sales service of Skoda was not up to the expectations and expensive wherever available-spare parts were just not available. Less number of franchisees than needed. Also some technical drawbacks were there which were inappropriate for the Indian roads.

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The competitors offered more to suit the tastes of the Indian-sub continent. It actually failed to incorporate the features of a luxury car sought after by the consumers. How Fabia could not come up to the expectations of the customers-major flaws

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Consequences The industry recorded a sales growth of 52% where as Skoda recorded a meagre 11% growth. Swift recorded a growth of 120% and Getz 76%. Introduction of Swift diesel version is proving to be another threat. Late entry into the market and no unique selling point.

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Direct from Fabia owners As I opened the door I was shocked to see the horrible plastic quality. I had seen the top notch plastic quality of a Diesel Fabia when it was launched. But this was very bad (looks like cost cutting has started). Yes this Rs 9662 for regular routine service with diesel filter of 1472.82, air filter for Rs 710, oil filter 378.68, engine oil RS 4460 paid service for Rs 1250, Shampoo wash for Rs 200 plus 1190 of VAT and other taxes. And after spending that much what I get, my armrest lock broken, engine opener handle lying on the floor, car getting broken down on the road on Monday while going to office, travelling to office daily by hired car for one week. I took my car to the bank. On my way back there was a lil water clogging & hence a lil traffic. In front of my eyes an ALTO & SANTRO went thru the water easily. But as soon as my Fabia went in water, the engine died on me. I was shocked. So pushed the car out from the water and got it toed to NUMMER EINS MOTORS. They informed me that the repair would cost Rs. 60000. I said what the HELL!!!!! I got a call from NUMMER EINS after 7 days, saying they have to put a new HALF ENGINE at a cost of 185000 !!! That did it for me. Also, if at all i say yes, they will order and it will take 15-20 days to come. Add another 6-7 to repair.

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Direct from Fabia owners PRICE - At 8+ lacs on road Mumbai for a Diesel small car? Are you kidding me?!!!? Who in their right mind would pay that? Sure stubborn Fabia advocates will throw the whole "niche" market argument out there, but the honest truth is that the car is 1 - 1.25 lacs overpriced. And to rub more salt in the wound, it doesn’t even offer Automatic Climate Control!!!! 2) NOISE - The only way I can illustrate how noisy this car is, is to ask you to stand next to a 2 year old Tata Indica. That’s because I have an old Tata Indica and the 3 cyl PD Diesel is JUST as noisy. Not a little less...JUST as noisy. I was shocked at the lack of insulation/ refinement. Unlike the Swift Diesel that can hardly be heard at a stoplight, make no mistake, your neighbors at the traffic lights will know which fuel you use..... perhaps the cars at the light ahead of you will too? 3) POWER - Another example of Skoda India’s poor decision making. Did you know that the 1.4 L 3 Cyl Turbo Charged engine sold by the VAG group, parent company of Skoda, is available in two configurations - a 68 Horsepower version that is sold in India AND a 78 Horsepower version that get’s better mileage/ emissions??When I drove the Fabia, it felt adequately powered at mid range revs but NOT till the revs built higher to about 2200 rpms. Till 2200 rpms, I was disappointed with the throttle response and as comparison 0-60 times have shown, FIATs 1.3 Multijet has it beat.

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4) SPACE - The car is spacious and the car is cramped. So far, no small car I’ve sat in beats the Indica for space. None. This car, does have room but its not meant for more than 4 people. You can’t seat a 3rd person in the rear seat because a plastic center rear console would create a lot of bottom pain 5) 14 INCH WHEELS - The Fabia is sold internationally with 15 inch wheels/ tires. The Fabia in India is sold with 14 inchers. The naive viewer will think that has something to do with ride quality. That is, simply naive. The truth is simply: Cost cutting. The Fabia is perfectly capable of riding on 15 inch rubber in India. Give Skoda some time, I’m pretty sure they’ll wisen up just like GM did with the Optra(read my Optra review) and just like a couple other car manufacturers did Direct from Fabia owners If you ask me, Skoda's modest sales target is simply because they know they wouldn't be able to sell more volume even if they tried.

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Suggestions Skoda should have had a clear idea about the time that they would be needing to develop Fabia for Indian market. Fabia was clearly over priced so much so that it was compared to the cars of the premium segment with respect to its price. The after sales service charges of Fabia in India should have been in the range of what the consumers are being offered by other players in the same segment. Skoda should have first concentrated more on increasing the no. of dealers that it has in India compared to its competitors in order to reach the customers better. Fabia were less than what were offered by the other players- therefore Skoda couldn’t understand the sensitiveness of Indian consumer. Many features like power windows, and automatic cooling were not available in the lower end models of Fabia which could practically compete with the other players in this segment.