Summary of Suzuki Samurai Case

Suzuki Loom Works was founded in 1909 in Hamamatsu, Japan by Michio Suzuki. The transition from loom manufacturing to motorcycles took around 45 years when in 1954, Suzuki Motor Company was formed. After the success of the motorcycle business in 1950s , the company forayed into lightweight cars and trucks, with the introduction of “Suzulight”,the first Japanese car with a two stroke engine in 1961. I n 1964, U. S . Suzuki Motor Company Ltd. was formed, in the United States, to serve as exclusive importer and distributer of Suzuki Motorcycles, where it quickly became an established brand.

In 1983, General Motors picked up 5 % stake in Suzuki and introduced Chevrolet Sprint on the West Coast in the mid 1984 and was sold exclusively by Chevrolet dealers. The sprint was Suzuki’s first entry into the Continental U. S automobile market. But the Sprint was subject to Voluntary Restraint Agreement( VRA), in place since 1981, and hence in 1984, Suzuki’s total VRA quota of 1700 cars went to G. M as Sprints. Suzuki called itself “The always something different car company” and planned to introduce several unique vehicles into the U.

S market and hence formed a new subsidiary “American Suzuki Motor Corporation”(ASMC) and on MAY 10,1985 hired Douglas Mazza to organize and head its new subsidiary. It also negotiated with the Canadian Government to build a plant in Ontario to produce around 200,000 compact cars per year, so as to begin selling cars in the United States under its own name from 1989. But market forces made Suzuki wait until the end of 1989. In 1984, Japanese imports touched 17. 7 % share of U. S new car and truck sales and based on this industry experts predicted that it would touch 19.

2% share of U. S market in 1985. The U. S automobile sale was expected to grow by 10 % in 1985. Moreover Hunadai Motor Company of South Korea and Yugo of Yogoslovia were expected to enter the U. S market in 1986. Suzuki feared that it might lead to brand clutter if they waited till 1989 and hence decided to to introduce SJ 413, a mini four wheel drive off-road vehicle with 1324 cc engine, for the continental U. S market. Suzuki planned to name it Suzuki Samurai as it is in Canada and market both convertible and hard top version of it.

Mr. Douglas Mazza wanted Suzuki Samurai to be a success and hence wanted to establish prospective Samurai dealers to build an exclusive sales facility for the Samurai with showroom, sales office, customer waiting and display area etc. The idea was to get high monetary and emotional attachment from the dealers resulting in high sales. ASMC suggested that the retail price for the basic Samurai to be $5,995 and the planned dealer invoice price was $ 5,095, only 7. 5% higher than ASMC’s own landed cost for the vehicle.

It planned to offer 50 dealerships initially and chalked out that each of them needs to sell approximately 30 Samurais per month to cover its operating cost and the finance charges on its initial investment. Mazza chose to introduce Samurai into California, the nations largest automobile market and Florida and Georgia, where Japanese import sales are higher than the U. S average. Now the major challenge before Mr. Douglas Mazza was positioning Suzuki Samurai in the U. S. Thus the question he posed to its advertiser Keye/ Donna/Pearlstein was “How do you feel this vehicle should be positioned?

” Now Pearlstein, C. E. O of the ad- agency had three options for positioning: * Sports utility vehicle(SUV) * Pick up truck (PUT) * Small car category (SCC) The other option he had was to totally think out of the box and unposition it. Pearlstein also studied several survey reports like secondary research of J. D. Power and Newswell and primary research of Suzuki Canada Survey, Florida Survey on Sales Manager and Representatives etc. He analysed the pros and cons of positioning in each of the segment and he listed them as below: | SUV| PUT| SCC| UNPOSITION|

POSITIVES:| * Good appearance * 4 wheel drive capability * Off road capability * Fastest growing segment * Ease of repair * Mileage * Price advantage| * Larger market than SUV * Highest Japanese share of 54% * Style and Design * Concept versatile * Tough Rider * Tough Truck| * Largest market * Mileage * Florida market research report favourable * California focused group report favourable * Cute, neat and fun * Price| * FUN| NEGATIVES:| * Less than 3% * Low price

* Quality questionable * Cheap Jeep * Small for off road * Weak Japanese penetration| * Price not cheap * Functional/PerformanceQuestionable * Smaller than SCC * Hard to bring out SCC later * PUT to SCC not possible| * Rough ride * Does not handle like SCC * Car positioning will not appeal to SCC and PUT buyers| | Pearlstein finalized that Samurai should be positioned as the “ antidote to traditional transportation”. He thought that he will not label it as any type of vehicle. No advertisement should refer to it as car, truck, or sport utility vehicle.

So it was evident that Pearlstein wanted to position it differently, may be what he was thinking of was unpositioning it. But the question was how should the car look? Because even if he unposition it then to it will either have the look of a SUV or a PUT or a SCC. At the same time he had to make sure that nothing overlaps so as to create brand confusion. Thus he tried to get the most befitting combination. | SUV| PUT| SCC| FUN| possible| | | BOREDOM| | possible| | RUGEDNESS| | | | COMFORT| | | possible| Thus as per Keye/ Donna/Pearlstein the best positioning strategy will be to unposition it, make it a fun vehicle and give it the looks of a SUV.