Friday, November 17, 2006

Volvo : Redefining Travel

Brand : Volvo
Company: Volvo India
Agency : Grey

Brand Count :158


India is one of the largest market for buses and trucks in the world. With most of the population depending on public transport systems , this product is tied close to the life of an Indian.
Buses come under the category of commercial vehicles and the marketing is mainly business marketing. In business marketing , the concept of customer is different when compared to the Consumer marketing. Here customers are the institutions /companies who uses this product for their business. Hence the branding of business products is a different ball game altogether.

Seldom do such brands become popular at the ultimate consumer level. There are cases where such b2b brands had successfully built equity at the consumer level. Notable examples are Intel , Dupont, Lycra etc. Volvo is a brand that had touched the consumer successfully and made a mark for itself in the Indian market.

Volvo changed the way Indians travel ( I have used this phrase for many brands, bear with me). The Indian bus market is huge with a size of around 10,000 -12,0000 units per month. The market is dominated by Tata with a market share of around 62%. With the economies of scale, distribution network and the equity of TATA serve as an entry barrier for any new players in the Indian market. This is applicable to the Truck market also.

Volvo entered Indian market in 1998 by launching high quality trucks. In 2001, Volvo launched its first bus in India. This virtually ushered in a new era in the Inter city bus travel . Volvo did not entered the city bus market which is the huge market because of the following reasons.
a. The entry barrier created by established players
b. Volume constraints
c. The purchases for city buses are done by state transport corporations. The market is not fully privatised. The STC's are cash strapped and hence they may not be able to afford the high cost of Volvo buses

This prompted Volvo to enter into a niche market of Inter City travel which is privatised and not regulated. Volvo introduced its Luxury bus B7R into this segment. Actually there was no segment called Luxury Bus segment. During the launch the Air Buses ( Not the plane but Bus with Air suspension) was considered as luxury buses. Volvo was A/C luxury bus and thus a new category of Luxury A/C Intercity Buses was created. Priced 2-3 times above the ordinary buses, Volvo offered unmatched luxury for the passengers.

Although priced steeply , Volvo buses made sense for the bus operators. It enhanced the image of the operators, the buses were fuel efficient and ushered in a new segment of customers who switched from rail to road because of these buses. For example , lot of people in Kerala prefer to travel to Bangalore by Volvo rather than take a train.

Volvo had a clear strategy when it entered the truck/bus market in India. It was to have a clear differentiation over the existing players. Hence the company opted to focus on niches rather than go in for mass markets. In the truck segment also , the company focused on large carriers rather than compete with Tatas and Ashok Leyland. Volvo trucks were differentiated on the basis of
a. Productivity
b. Transport economy
c. Customer education ( source: IBEF.org)
For example,the drivers cabin was a/c which ensured that he will not be exhausted even after a long drive and that will make him more productive.
The customers were trained about the products and safe driving methods that helped the fleet owners to get more returns on their investment. I think Volvo certified drivers are having great demand in US. The customers were also trained in optimising their vehicle for better performance. These factors together with excellent quality inspired many fleet owners to opt for Volvo trucks.

In the bus segment,passengers became the brand advocate. Volvo became a generic name for luxury buses. Passengers used to ask for a Volvo ticket rather than a Luxury ticket. The again prompted many travel operators to include Volvo in their fleet. It is to be noted that Indian bus majors were not looking at this segement at all . It another case of marketing myopia. Now after 4 years , Indian companies are thinking about luxury segment.

While Indian companies start thinking about having a product in this segment, Volvo is trying to enter the city bus segment. Here also Volvo is going in for unconventional route. The city bus they have introduced is large and very different from the normal buses that is currently plying. One of the issues that can affect the equity of the Volvo buses is the maintenance of Volvo buses by the fleet owners. To get more out of the bus, there is a chance that the operators put in more seats and reduce the luxury that this bus produce. My first experience with Volvo was not superlative and I felt the bus lacking enough leg space or comfort.

Volvo is a brand that has pioneered the concept of luxury buses in India. It has also showed that in the commercial vehicles segment, the customers look for quality and performance. The fleet owners in both truck and bus segment ordering Volvo is a classic example of " How a marketer can create value in the Indian Market".

source: volvo.com, ibef.org,hindubusinessline,autocar,agencyfaqs.