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Red Hot XIMB Peppers-XIMB-Aftermarket
Red Hot XIMB Peppers-XIMB-Aftermarket
Aftermarket Sector
Christopher Jegam
Agenda
Indian Automotive Industry
The
Aftermarket Sector
...
E-commerce
scenario
..
Rural Activation strategy
..
Unorganized
segment Activation
..
Car
Updating and Tracking System
..
e-Auction
strategy
......
Indian
Automotive
Sector
Aftermarket
Sector
Porters Five
Forces
Competitor
segments
The E-market
Year
2006
2007
2008
2009
2010
2011
2012
Passenger vehicles
sales
(in units)
1143076
1379979
1549882
1552703
1951333
2501542
2618072
Total
automobile
sales
(in units)
8906428
10123988
9654435
9724243
12295397
15481381
17376624
% Growth in
% Growth in
Total
passenger vehicle automobile
sales
sales
21%
12%
0.18%
26%
28%
5%
20
20
20
20
14%
-5%
1%
26%
26%
12%
20
20
0
1000000
2000000
3000000
20
4%
15%
45%
7%
Maruti Suzuki
Hyundai Motors
Tata Motors
M&M
General Motors
14%
Others
15%
Indian
Automotive
Industry
Aftermarket
Sector
Porters Five
Forces
Competitor
segments
The E-market
Unorganised
C2C
13%
27%
60%
Emerging trends
Indian
Automotive
Industry
Aftermarket
Sector
Porters Five
Forces
Competitor
segments
The E-market
Entry Barriers
Buyer Power
Price sensitive buyers
High negotiation in
customer to customer space
High confidence in
unorganized transactions
Availability of more
purchase alternatives
Exit Barriers
Supplier Power
High negotiation in selling
space
More selling alternativescustomer to
customer, unorganized
segment
Indian
Automotive
Industry
Aftermarket
Sector
Porters Five
Forces
Competitor
segments
Weaknesses
Organized
players
Unorganized
players
C2C segment
The E-market
Indian
Automotive
Industry
Aftermarket
Sector
Porters Five
Forces
Competitor
segments
The E-Market
Indian
Automotive
Industry
Aftermarket
Sector
Porters Five
Forces
Competitor
segments
The E-Market
2011(in
crores)
India
102.9
121.0
18.1
Rural
74.3
83.3
9.0
Urban
28.6
37.7
9.1
0-14 yrs
Difference(in
crores)
15-64 yrs
5%
65+ yrs
31%
64%
Used car market is approximately 2.5 million units per annum, expected to grow at 15% CAGR
this year
Estimated urban population in the age group of 15-64 years : 23,97,72,000
Estimated 61 million unique Internet users in India in June 2012
Online presence of 15-64 yrs age group :97%, i.e., 59.17 million active internet users
Rural Activation
model
Catchment
Areas-Orissa
Rural
Activation Cost
Unorganized
segment activation
Rural activation
To create brand
awareness in rural parts
of every state and bring
customers into the MFC
brand in the long run.
MFC-Increase awareness
to facilitate showrooms by
2015.
Dealer Increased
sales, localized
promotions, easier
procurement
Aim
Aim
Current
Scenario
Current
Scenario
Scope
Scope
Benefits
Benefits
Competitive
Advantage +
Companys Goal
Unorganized
Activation Cost
Rural Activation
model
Catchment
Areas-Orissa
Catchment
Area mapping
Rural
Activation Cost
Unorganized
segment activation
Requirement
Analysis
Unorganized
Activation Cost
Logistics
Finalizing
Rural Activation
model
Catchment
Areas-Orissa
At Dealer Outbound
Rural
Activation Cost
Unorganized
segment activation
Mahindra
Express
Unorganized
Activation Cost
At Dealer Inbound
Rural Activation
model
Catchment
Areas- Orissa
Rural
Activation Cost
Unorganized
segment activation
Jajapur
catchment
Unorganized
Activation Cost
Dharmasala(56kms)
Badachana(42kms)
Dasrathpur(18kms)
Choudwar(15kms)
Athagarh(45kms)
Salepur(28kms)
Cuttack
catchment
Kendrapara
catchment
Jagatsinghpur
catchment
Khurda
catchment
Jatni (32kms)
Khurdha(26kms)
Begunia(60 kms)
Raghunathpur(28kms)
Naugaon(21kms)
Tirtol(24kms)
Pattamundai(28kms)
Marshaghai(60kms)
Garadpur(42kms)
Districts
Population
Khurdha
2246341
Cuttack
2618708
Jagatsinghpur
1136604
Kendrapara
1439891
Jajapur
1826275
Rural Activation
model
Catchment
Areas-Orissa
Rural
Activation Cost
Unorganized
segment activation
Unorganized
Activation Cost
50000
10000
9200
10000
500
250
50000
200000
46000
Total Stocks
Electricity
Diesel Cost
Total Cost
Average Profit
Profit from Sales
Net Cost
Cost per Contact
50000
10000
31250
582250
10000
100000
482250
37.49
Rural Activation
model
Catchment
Areas-Orissa
Rural
Activation Cost
Unorganized
segment activation
Unorganized
Activation Cost
Can we make them to vouch to people and bring them to Mahindra First Choice ?
The Execution
EVENT CALLING
ELEMENTS DESIGN
EVENT
The various
elements to be
executed during the
event will be
decided in this
phase. This can vary
between dealers.
BRAND
ASSOCIATION
The mechanics and
unorganized players
are explained the
advantage of being
associated with a
brand like Mahindra
EVENT
TAKEAWAYS
Good relationships
are established and
the slabs of
associating with
Mahindra is given to
the second hand
players.
Rural Activation
model
Catchment
Areas-Orissa
Rural
Activation Cost
Unorganized
segment activation
Unorganized
Activation Cost
FINAL COSTS
100
FIXED COST
Training Cost
10000
Miscellaneous Cost
5000
Overall Elements
25000
VARIABLE COST
Refreshments per
dealer
Training Materials per
dealer
Freebies
FIXED COST
Assumptions
Training Cost
10000
Miscellaneous
5000
Overall Elements
25000
VARIABLE COST
Total Refreshments
cost
5000
Training Material
costs
5000
2500
TOTAL COSTS
52500
525
50
25
200
Car Updating
and
Tracking System(CUTS)
Brokers, garage
dealers, fleet owners
to be brought under
MFC umbrella
Aim: To implement
a proper system to
update procured
and sold car details
on website
Implementation Plan
Car details
retrieved by
barcode
Car details
removed from
website
Customer
receives alert
via email and
SMS
Value Proposition
Details stored
in database
Customer satisfied;
sale is made
Automatic updating
of car details in
website
Customer visits
MFCW dealer to
enquire and test
ride the car
Customer is
alerted via
email and SMS
automatically
Customer selects
Dealers where he
wishes to receive
alerts from regd.
car availability
Car available at
selected Dealer;
customer preference
matches as per
records
Customer
preferences
stored in
system
Implementation Plan
Mumbai
Value Proposition
Pune + Hyderabad
followed
Implementation Methodology
Installation of
hardware and
upgrade of
existing
software
Train employee
at each dealer
for data
collection and
upkeep
Data collection
of each car and
update in
website
Feedback from
customers and
dealers six
months after
launch
Value Proposition
Access to larger
customer pool
Prevent lost sales
Effective Customer
Relationship
Management
practices
Dealer
Implementation Plan
Mahindra
Customer
Access to large
number of potential
customers
Opportunity to
improve revenue
and profitability
Faster turnaround
of used cars
Implementation Plan
Value Proposition
Dealer Satisfaction
Survey
Registered user
satisfaction survey
Increase in number
of registered users
in website
Costs
Challenges
Critical
Success
Factors
Overcoming
Challenges
Administrator can
play multiple roles
Training can be
imparted to one
employee per dealer
Periodic checking by
MFCW personnel
e-Auction Strategy
E-auction
scenario
Proposed
locations
C2C Model
Current Model of
Features
Market leader in e-auction (B2B)- 35% market share
Major clients- Kotak Mahindra Bank, Mahindra finance, Bajaj
finance, ORIX ,etc
Facilitates sale of vehicles and not a party to the transaction in
any respect
One time buyer registration fees of Rs. 5000+ service tax
applicable
Server space outsourced to third party hosting company
eDiig is not responsible for any disruptions during auction
process(failure of power, Network, server, internet connectivity,
etc.)
Marketing &
Advertising
Financials
Challenges
Limited C2C involvement
Low trust among retail
customers on the credibility
of buying over internet
Need of additional
features(to attract C2C
space)
Registration fees not
competitive for retail
buyers/sellers
E-auction
scenario
Proposed
locations
C2C Model
Financials
Marketing &
Advertising
Population: 1,67,53,235
State PCI: Rs 1,75,010/MFCW outlets: 10
Mumbai
Population: 1,24,78,447
State PCI: Rs 99990/MFCW outlets: 10
Pune
Population: 94,26,959
State PCI: Rs 99990/MFCW outlets: 6
Source: censusindia.gov.in
Hyderabad
Population: 40,10,238
PCI: Rs 72,380/MFCW outlets: 5
Bangalore
Population: 95,88,910
PCI: Rs 69,190/MFCW outlets: 2
E-auction
scenario
Proposed
locations
C2C Model
Financials
Marketing &
Advertising
In-auction
Negotiation
Auction window is
Buyer
Highest bidder is
declared as winner
announced and
registered buyers
are notified
Buyers bid above
the minimum bid
price
Post-auction
settlement
Shipment and payment terms
negotiated between buyer and
seller
E-auction
scenario
Proposed
locations
C2C Model
Value proposition-Sellers
Value proposition-Buyers
Access to a wide pool of pre-owned cars at
competitive prices(since facility cost is low)
Marketing &
Advertising
Financials
Grade Matrix
Grade
Quality
check
points
Warranty
Free
Service
vouchers
118
1 year
100
10 months
80
6 months
nil
E-auction
scenario
Proposed
locations
C2C Model
Financials
Marketing &
Advertising
Probability Impact
Mitigation
Internet connectivity
failure due to power
outage
Medium
High
Network Security
Low
Medium
Frauds
Medium
a) Non delivery by seller
b) Non payment by buyer
High
Medium
Low
E-auction
scenario
Proposed
locations
C2C Model
Marketing &
Advertising
Financials
C2C model-financials
Year-1
Revenue
COGS
Year-2
Year-3
Year-4
Year-5
Year-6
Year-7
Rs. 12,577,092
Rs. 13,331,717
Rs. 14,131,620
Rs. 14,979,518
7950000
8386500
8839530
9317490.6
9821783.052
10353889.21
10915376.29
Gross Profit
Rs. 2,609,969
Rs. 2,807,067
Rs. 3,025,651
Rs. 3,259,601
Rs. 3,509,934
Rs. 3,777,731
Rs. 4,064,141
Fixed Costs
2688000
2841460
3003802.6
3175544.506
3357232.614
3549445.78
3752796.697
Rs. -78,031
Rs. -34,393
Rs. 21,848
Rs. 84,057
Rs. 152,702
Rs. 228,285
Rs. 311,345
Rs. -78,031
Rs. -34,393
Rs. 21,848
Rs. 84,057
Rs. 152,702
Rs. 228,285
Rs. 311,345
Rs. 25,217.01
Rs. 45,810.49
Rs. 68,485.60
Rs. 93,403.37
Net Income
Rs. -78,031
Rs. -34,393
Rs. 21,848
Rs. 58,840
Rs. 106,891
Rs. 159,800
Rs. 217,941
OCF
Rs. -78,031
Rs. -34,393
Rs. 21,848
Rs. 58,840
Rs. 106,891
Rs. 159,800
Rs. 217,941
year
-71261.37534
-28684.20455
16640.86998
40927.36955
67900.21211
92702.48161
115462.3792
Depreciation
EBIT
Interest
EBT
Tax at 30%
PVOCF
Break Even
point
2-3 years
Discount rate
9.50%
E-auction
scenario
Proposed
locations
C2C Model
Financials
Marketing &
Advertising
Events
TV ads
Campaigns
roadshows at IT
parks, offices, shopping malls, activity
centers
Provide MFC services at parking lots of
shopping malls, corporate hubs-improved
brand awareness
Used car melas
E-auction
scenario
Proposed
locations
C2C Model
Financials
Marketing &
Advertising
Digital Marketing
Print ads
Billboards in high footfall areas (Stadiums, Railway
stations, Office Complexes, Busy intersections)
eDiig- Your own personal marketplace
Metro Ads in metro stations, suburban trains ,city buses
near seats, window panes
Ads in newspaper dailies (Delhi- mid day, BangaloreDeccan Herald, Mumbai- Maharashtra times, PuneSakal, Hyderabad-Deccan Chronicle, etc.)
Social Media
Create network effect- build a strong fan base on
Facebook, twitter
Crowdsource to boost engagement level
e.g: Find-it Campaign-help someone find a car
and get reward points
Discount code for registration on eDiig
Facebook Ads with MFCW website as landing page
Regular contests to increase reach
Promoted account on twitter and frequent tweets
Summary
Rural Activation
C2C e-auction model
on eDiig
Unorganized Dealer
Activation
Convenient Tracking
through enhanced website
Reduction in lost sales
Alerts on car availability
Improved customer
experience