Friday, January 24, 2020
Starbucks :: essays research papers
Starbucks is a corporation that offers specialty coffees, coffee beans, cold blended beverages, pastries, coffee related products and machines, and tea. Starbucks opened its first location in 1971 in Seattle. By the year 2000, Starbucks had over 3300 locations, and it is still growing. SWOT STRENGTHS:  ·Ã‚     2000 marked 5th consecutive year of sales increase.  ·Ã‚     Low long-term debt to equity ratio of 0.01, company has good financial standing.  ·Ã‚     1993, Opens second roasting plant in Kent, Washington in order to maintain on-time production and delivery, then in 1995 opened state of the art roasting facility in York, Pennsylvania.  ·Ã‚     Howard Schultz joins corporation in 1982, is a visionary leader who made Starbucks the famous coffee bar that it is today. In 2000, Schultz assumed role of chairman and chief global strategist. WEAKNESSES:  ·Ã‚     Low presence in third largest coffee market, Japan and Asia.  ·Ã‚     Limited (currently increasing) channels of distribution. OPPORTUNITIES:  ·Ã‚     Schultz sees opportunity to make coffee/espresso bar available to everyone: (i.e.: new channels of distribution) o     1990 – Horizon Air Account o     1991 – First licensed airport location o     1992 – Nordstrom Account o     1993 – Barnes & Noble relationship o     1994 - Starwood Hotel Account o     1995 – United Airlines Account o     1997 – Canadian Airlines Account o     1998 – Grocery store coffee bars due to agreement with Kraft Foods. o     2000 – Host Marriott International Agreement  ·Ã‚     Global Opportunities: o     Opens locations in several countries.  ·Ã‚     Other types of drinks, including cold coffee beverages, blended drinks, fruit drink, and tea. THREATS  ·Ã‚     Small coffee shops in New York are trying to compete with Starbucks on the basis of customer loyalty.  ·Ã‚     Protesting against Starbucks for using milk with artificial bovine growth hormone. GOST GOALS  ·Ã‚     Open 1,200 new locations in 2001, 900 in the United States.  ·Ã‚     Open new store in Vienna by end of 2001.  ·Ã‚     Open 10-15 new stores in Zurich within the next 12-18 months.  ·Ã‚     Distribution of new Bottled Frappuccino Coffee Drinks, from affiliation with PepsiCo, to entire USA by September 2001.
Thursday, January 16, 2020
Baroque and Impressionism Essay
Baroque art refers to the style that would be found in Europe and North and South America during the 17th and 18th century. The Catholic Church heavily influenced their art, as well as the Protestant rising up during this time. There was an emphasis on unity and harmony in all of the visual arts that often had themes from the Bible or stories. There was realism and more attention was paid to physical details in portrait paintings, there was more light contrast, landscapes were more expansive and there was use of more deep, rich colors. In architecture there were structures that expressed humans longing for spirituality and there was extreme presentation and in the grand scale it was reflected theatrically (Mindedge, 2013). In the Baroque period the art would depict a play, that it was not just a picture but every figure would have meaning, the art was meant to be read just not looked at as decoration. Figures would be drawn with realism, they have depth in the art, and they are almost falling off the page. They used dark shades and lights to show realism in their paintings. This was brought on with the further discovery of how our universe was formed, how we are not the center of the universe and also with that discovery, we discovered that Europe is not the middle of the Earth as well. Each painting had a story, told about us, about real people and there was more realism than before. Sculptures were made to be experienced, they were made not as standing men but men in action, they told a story in each sculpture that was made in this period. The social conditions that contributed to the Baroque period began with the rebirth of people, the Catholic Church had overcome the Protestant rising. There was new life and new water brought in to Rome and other major cities. We made discoveries that had shown us that the Earth was not the center of the universe like we had previously thought, also the discovery that the Earth was not flat. We had explored across the Atlantic and discovered the Americas as well. This was a time of great growth and triumph, and this was all shown in our paintings, which told their stories, and the sculptures that shared their tales. Impressionism which would be found in France in the late 19th century, took a fresh bold approach to painting. Impressionism did not paint pictures of the past, or historical figures but instead they painted pictures of their reaction to now. There were pictures of current landscapes, current people and the painting was often done very vividly using lights and colors and were very over simplified, often leaving out many details. Many artists focused on the interactions between sunlight and color and the way that the light would be interpreted by the eye. Storing paint in tubes at this time allowed artists to paint outside the studios, they could take their canvas, put it down in front of a scene and paint it in the natural light and see how it impacted the landscape (Mindedge, 2013). In the Impressionism era the opera house in France was completed, there was a time that new classes of people came forth and they felt they should be able to enjoy themselves. Paintings were painted at events, they were treating the world as a spectacle, there would be people enjoying themselves, going about their everyday lives and that was depicted in their paintings. It would be open air, mostly simple art, visible brush work and no form that made their work look sloppy. There was much interest in painting outdoors and each artist would put their own vision on the landscape. The relationship between the Baroque and the Impressionism periods were few, the stylistic similarities between the eras were using lighting to make the paintings come to life, they would paint in a way that it would tell a story, the Baroque period there would be large canvas that would go from one story to the next, and in the Impressionism period artists would paint a party, a gathering and show what it was like, or give the current mood and story behind the event. The differences between the periods is the detail in the art. The Baroque period paid large attention to detail in the art, there was blending and lighting differences and the art was life like. The Impressionism period the art was often like a draft, there would be paint brush marks on the painting still, there would be blotches lines and there would be details missing from the paintings. Baroque and Impressionism do have similarities with their subject matter. Ordinary objects and people were used as subject matter in the Impressionism time. This was also used in the Baroque period since the painters did not create art just for the upper class, and it was painted for the merchant class as well which led them to use ordinary people and objects in their art. Impressionism deviated from the Baroque period in details, the Realism period was before the Impressionism period, and it still contained many details from the Baroque period, but with the Impressionism art there were many details and stories that were lost. The pictures didn’t depict life like characters, there was often sloppy work with less than ideal lighting, and the art was also made outdoors, often with the painters taking the canvas to their location, in the Baroque period you went to your canvas or painted in a workshop because the paint was not portable like in the Impressionism period. Impressionism was the end of conventional art, the Baroque period showed life like sculptures and paintings, Impressionism went away from that. Impressionism gave the artists freedom to break away from the usual art that was photo-esc, they would paint how they wanted, they left brush marks and would give little details compared to the Baroque period. The specific work of art I chose from the Baroque period is The Abduction of Europa by Rembrandt van Rijn and from the Impressionism period I chose the Houses of Parliament by Claude Monet. The comparisons between the two paintings are their attention to details, The Abduction by Rembrandt van Rijn is a very detailed picture of a lady on a horse that is running into the water, there are people on the shore trying to get her to stay there but she is being abducted across the river. The Houses of Parliament is a picture of a dark castle type building that appears to be on a river or lake, there are clear brush marks on the picture and it is not very detailed, the strokes are very rough unlike in The Abduction of Europa where it is a very fine line, it is almost hard to tell what you are looking at because of this. Impressionism changed how the world saw art, artists were no longer constrained to painting indoors, and they could move their canvas to any scene that they wanted to paint, carry their paint tubes and then paint. Artists were liberated from what art was, there were no rules or technique that they had to follow, and they were free to paint how they wanted and what they wanted. There are brighter color used in art now which is a direct influence from Impressionism times, and it is widely considered that Impressionism is the root of all modern art (Alan Oz, 2012). Alan Oz (2012) Retrieved from http://www.impressionism.org/finis.htm Mindedge (2013) Baroque and Impressionism. Retrieved from http://wgu.mindedgeonline.com/content.php?cid=19779
Tuesday, January 7, 2020
The launch of fiat 500 - Free Essay Example
Sample details Pages: 15 Words: 4360 Downloads: 9 Date added: 2017/06/26 Category Business Essay Type Analytical essay Did you like this example? Introduction On 4th July 2007, Fiat Auto the Flagship division of Fabbrica Italiana Automobili Torino (FIAT) re-launched its heritage brand the Fiat 500. It was exactly 50yrs after the launch of Fiat 500 on 4th July 1957, which not only helped Fiat in post World War-II recovery but also provided mass motorization to Italians. Luca De Meo, CEO, Fiat Auto, on the re-launch occasion stated that â€Å"This is the car that gave ordinary Italians four wheels for the first time; that transformed a country and a company.†(Duff 2007) In its 18yrs of career between 1957 and 1975, 3,893,294 Fiat 500s were built sold, which provided millions of Italians and Europeans individual mobility (The Fiat 500 2007). Don’t waste time! Our writers will create an original "The launch of fiat 500" essay for you Create order Post 1970 with beginning of free trade in Europe, Fiats market share eroded continuously. Foreign companies such as Volkswagen, Renault, Ford, Peugeot, Honda and Toyota became prominent players in the Italian car market threatening survival of Fiat. In 2004 Sergio Marchionne got appointed as the CEO of Fiat Group and directed the massive restructuring of the ailing business. The re-launch of Fiat 500 was one of the important strategic tools in rejuvenating Fiat. On the re-launch occasion Sergio commented that â€Å"I want Fiat to become the Apple of automobiles. And the 500 will be our iPod.†(Colleen 2007) â€Å"The 500 has always been in the hearts of Italians, and I think therefore that it will be a great success.†(Colleen 2007)- Silvia Depaoli, president of the Fiat 500 Club Italia. Fiat 500 Strategy: As per Ansoff (1957) growth matrix, Fiat adapted a product development strategy. Fiat leveraged the brand heritage of 500 in Italy (Europe) by re-launching it. Fiat adapted a market led paradigm and followed a relationship approach for success of 500. In the heart of 500s strategy was to keep the audience engaged from the very beginning and knowing them. As per Hambrick Fredrickson (2001), a good strategy should be able to be refined into five elements: Arena, Vehicle, Differentiator, Staging pacing and Economic logic. Following is the breakdown of 500s strategy, which is discussed in detail in the later part of this paper using Porter Wiersema framework. Arena (Where will we be active?): Fiat mainly focused on Italian and European customer for 500. It chose to focus on small car segment as demand for small fuel efficient cars was going up in European market because of rising fuel prices. For promotion of 500, Fiat chose to focus equally on online and offline media. As Fia t was targeting young-at-heart professionals and city-car drivers, and these customers spend time on the web. The online campaigning formed an effective and efficient bellow the line and soft communication tool for Fiat for targeting a broad customer segment. Vehicles (How will we get there?): The prime vehicle of the whole strategy was to take advantage of 500s heritage significance in Italian consumers. The success of re-launch of BMW Mini and Volkswagen Beetle proved the market for retro models. So Fiat also adapted the same strategy of re-launching its heritage 500. â€Å"The 500 has always been in the hearts of Italians, and I think therefore that it will be a great success,†said Silvia Depaoli, president of the Fiat 500 Club Italia (AutoNews 2007). Fiat diligently tried to attract customers sentiment for 500 through advertising campaigns, car rallies blogs. Further in the designing process of 500, Fiat included enthusiasts to participate and contribute to 500s desi gn. Differentiators (How will we win?): The unparalleled differentiator in Fiat 500 strategy was the huge range of options for customisation. It was unprecedented in small car segment. Practically a customer could customise 500 in 549,936 ways (Tagliabue 2007). Attractive finance options were also made available for 500. Further 500 was satisfying the emission norms of Euro 5, which was supposed to be implemented 2yrs later of the launch. The extended after sales services also formed a great differentiator in Fiats strategy. Additionally, the new Fiat 500 was designed by Frank Stephenson, the designer of new Mini and Beetle. All these differentiators helped Fiat positioning 500 in the target customer segment. Staging pacing: Initially, Fiat targeted for a sale of 120,000 units per annum with a breakeven point of 85,000 units. And further as 500 was in the heart of Italians, Fiat choose to launch 500 initially in Italy then to roll out to whole Europe. (AutoNews 2007) Econo mic logic (How will returns be obtained?): In Europe Fiat is known for in-expensive cars. However, for 500, Fiat charged a premium price by banking on 500s heritage value. At a conference in Prague, Fiat CEO, Luca De Meo remarked â€Å"I am not a fan of introducing [more] low-cost cars in Europe, we did it for years, and we went almost bankrupt.†(Maxwell 2007) Further to achieve an economy of scale Fiat decided to share the platform with Ford and use components from Fiat Panda. Porter and Treacy Wiersema frameworks: Porters framework (1980): In the strategic positioning matrix, a firm gets its strategic position depending upon the width of industry, it targets and the type of competitive advantage it chooses. The strategic position helps a firm in reducing the rivalry in its industry (Sanders 2009). Fiat adapted the broad differentiation strategy for 500. Fiat targeted a broad market for 500, maintaining its old image of peoples car. Sergio Marchionne said â€Å"I want Fiat to become the Apple of automobiles. And the 500 will be our iPod.†(Colleen 2007) And for the strategic advantage, Fiat chose differentiation. Fiat differentiated 500 by offering product customisation and enhanced services while charging a premium price (ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬10,500 for the basic model and could run up to ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬14,000 as per customisation (Tagliabue 2007)). As per Treacy and Wiersema (1993) framework Fiat adapted the value discipline of ‘customer intima cy for 500. Fiat 500 was projected as a car for everyone: â€Å"it is the car of the people, made by the people, for the people. The 500 is the ‘New Fiat and the ‘New Fiat belongs to everyone.†(Weenen 2007) By adapting customer intimacy Fiat offered a wide range of options to tailor 500 and enhanced after sales services to attract and satisfy customers. Fiat developed a unique market proposition by adapting customer intimacy and differentiation. Following are the elements of the proposition. Pre-launch campaign: Fiat tried to develop customer intimacy well before the launch of 500. It started a pre-launch online campaign â€Å"500 wants you†. In this campaign, enthusiasts were welcomed to join the competition of designing accessories for 500 and winning free accessories with the purchase of new 500. Over 3,000,000 enthusiasts participated and submitted their idea to the project. Fiats approach for designing of the new 500 was distinct and was very ap pealing to Fiat fans. Additionally, Fiat tried to reconnect with Italians through starting new fan clubs and blogs on the internet. XXIV Fiat 500 Rally: Fiat organised a grand rally for old 500s on 6th, 7th 8th of July 2007 in Garlenda, Italy just one day after the official launch of new 500. 1400 models including vintage models of 500 from all over the world participated in the rally, which helped in awakening Italians sentiment for 500. On this occasion Dante Giacosa 500 Multimedia Museum was also inaugurated, which features special models, designs, books, magazines, photographs and videos of 500 that provided Italy mass motorisation. Further on this occasion a new 500 was brought to the rally location through the air by a helicopter. (The New Fiat 500 at the ‘XXIV Fiat 500 Rally in Garlenda 2007) All these events got extensive media coverage and helped Fiat in its above the line communications. Patriotic advertisements: More than a year before the launch of 500, Fiat started advertising 500 with an aim to connect 500 with customers sentiment. In Italy Fiat advertised 500 by patriotic slogans such as â€Å"If youre Italian, you have to buy a Fiat†â€Å"The new Fiat belongs to all of us†. In Italy Fiat offered extras such as side stripe in colours of Italian flag. In France the slogan used was â€Å"The new Fiat is your history too.†(Tagliabue 2007) Through the campaigns, rallies and advertisements Fiat tried grabbing attention of Italians, excite interest in enthusiasts and create desire for 500. Extended options for customisation: The most unique about 500 was the extended range of options for customisation. Customers can tailor their 500 in more than 549,936 ways (Tagliabue 2007). Some of the options were 12 colours including six vintage colours with tri-coat. Pink colour to attract women customers. 15 types of upholstery including luxurious Cordura and Frau Leather. Seven types of interior trims. Full range of engines (1.2 8v Fire, 1.4 16v Fire and 1.3 16v Multijet). 9 types wheel rims. 19 types of stickers. Hand-stitched leather steering wheel covers. Electric fragrance diffuser with three types of fragrances. Coloured key case matching cars colour and many more. Extended payment options: The privilege of customisation was also made extended to payments and services. For example, in the â€Å"500 Cents†package a customer will pay only five Euros a day without any down payment as a part of the purchase plan. And in the â€Å"50 to 500†package, the customer will make a 50% down payment and rest payable after two years (Weenen 2007). Enhanced after sales services : Fiat 500 was initially offered with 5years/500,000km manufacturers guarantee and 24hrs roadside service. Further for periodical maintenances, Fiat offered to pick up the car from the customers place and customers mobility was made assured by reimbursement of taxi fare (Weenen 2007). The re-launching event: Fiat made re-launch of 500 a national event in Italy and organised it on the bank of PoRiver in Turin. In the event, pictures of famous people with old 500 and Italian history with old 500 were projected on huge screens. 7000 people from 63 countries includin g ministers, entrepreneurs, businesspeople, sports stars, and over thousand journalists attended the event. The whole event cost $16.4 million to the company. This event along with the XXIV Fiat 500 Rally formed a strong above the line communication tool for Fiat, as all these events were aired live on Italian mass media. Some of the other elements in the proposition which helped Fiat to develop customer intimacy: Mascot and logo campaign: Fiat launched an online competition for designing an official mascot and logo for it. Participants could download an online brief and submit their ideas to Fiat. Pregnant mom competition: The competition was only for pregnant moms, who thought would deliver a baby on the same day of re-launch of 500 (4th July 2007). And the winner of the competition was offered a new 500 as the prize. Analysis: Using all of these above mentioned methods and tools, Fiat has tried to follow customer intimacy. Nevertheless Fiat widely adapted â€Å"customer intimacy†, but there are also some signs of the third discipline â€Å"product technology leadership†. Fiat 500 was launched with Euro 5 emission standards, which was more than two years of the legislation deadline. It was also the first time that a compact car had achieved a 5-star, the highest rating possible, in the frontal EuroNCAP collision tests. Further seven airbags including a knee bag and BlueMe technology was also offered as a standard fitting, which was a novelty in small car segment (Tagliabue 2007). The BlueMe technology has been developed in association with Microsoft, which includes eco drive that helps the driver to drive in a kinder to environment and fuel efficient way, voice activated navigation system MP3 player. So it can be concluded that Fiat followed â€Å"customer intimacy†value proposition widely along with â€Å"product technology†. How do Fiats marketing strategies match its competitive position? A firms competitive position depends on its internal resources capabilities, the strategic group, the industry environment and the macro environment. Fiat adapted a differentiation and customer intimacy strategy as per Porter and Treacy Wiersema frameworks. In this part Fiats internal resources capabilities, the Italian car industry and macro environment have been examined to analyse the match between Fiats strategy and its competitive position. As Fiat was more focused on Italian market the following analysis is focused on the Italian car market and macro environment. Marketing environmental audit: In 2006, the European car industry surged by 17%, making Europe the fastest growing car market in the world. The proliferation of cars on European streets led to the congestion problem, as unlike United States, which is a large country with wide open spaces, European streets lack open space. Congestion along with rising fuel price made small cars more appealing to customers. This drove all major car manufacturers to focus on fuel efficient small cars, which can move around the cities quickly and safely. Following the market demand, major manufacturers launched small cars such as BMWs Mini, VWs Beetle and Fiats Panda. Value volume of Italian car market: Between 2005 and 2007 there has been a steady growth in Italys car industry both by volume and value. In 2007 with 2.5 million units sold, the market was worth $72billion. Analysts forecast that the Italian new car industry will be of $92billions in 2014, a rise of more than 30% since 2007. So there have been ample business opportunities for car manufacturers in Italian market. Industry life cycle: The steady growth trend of Italian car industry, the proliferation of large numbers of car manufacturers and aggressiveness of consumer has led to maturity phase of the industry. In this phase of industry life cycle, product features and differentiation plays the key role in success of a product. Companies should look for new innovations, product development and marketing mix to compete successfully (Kotler 1999, p. 630). Fiats innovation for 500 in terms of technology specifications and engaging customers in product development were matching requirements of the industry life cycle. Further its diligent marketing mix helped generate sentiment and customer for 500. Porters five force analysis (Porter 1980): The Italy new car market has a large number of buyers as 2.5 million units have been sold in 2007. The lower switching cost, availability of substitutes and easy accessibility of comparative information on the web drove threat of substitutes to be very high. Further Fiat cars were perceived as of low quality cars with low reliability. So, threat of substitute for Fiat was very high. However, buyer power of individual customers was moderate, because an individual lacks scale and scope to have a bargain with a car manufacturer but can choose a substitute product. Key inputs for this industry are steel and labour. The manufacturer has little control over the price of the inputs as prices are determined by market forces. So supplier power is also moderate. Threat of new entrants at the time of launch of 500 was low, as this industry requires a very high capital investment, return on investment is very low in comparison to other industries and the exit barriers are high. However, fol lowing the opening of European market in 1970, the Italian car market was already flooded with car manufacturers such as Peugeot, Volkswagen, General Motors, Renault, Ford, Honda and Toyota. So, the degree of rivalry was very high. Fiat lost its majority market share and its share of 52% in 1990 shrunk to less than 28% in 2003 (Jain 2007). From Porters five force analysis of Italian car industry, it implies that Fiats marketing strategy for 500 matches external market conditions. Degree of rivalry and threat of substitute were two major concerns for Fiat as the industry was getting more and more fragmented with the presence of a large number of players. And because of low product quality, Fiats brand identity was on stakes and product differentiation was at the lowest level. Fiats strategy of choosing differentiation and customer intimacy supported overcoming of these two barriers. The customisation options and pre-launch campaign (500 Wants you) allowed Fiat to develop a car, th at customers wanted. Further the rallies and patriotic advertisements helped Fiat to consolidate the fragmented car market and invigorate sentiments for 500. Environmental scanning PESTEL Analysis of Italy: Political: The opening up of European economy in 1970 allowed major auto manufacturers enter European and Italian market. This increased market competition. However, Fiat used its political clout in Italy to keep competition away. There were restrictions on Japanese car manufacturers on the number of cars they can import into Italy. Further, Fiat also utilised its political clout to get subsidises and concessions (Jain 2007). Economy: As per CIA World Factbook 2007 few of the major economic indicators are: Per capita GDP: $32,100 (ranked 22 in world), Urbanisation: 68% and Un-employment rate: 6.8%. High corporate tax of 31.4% (EU average 25.04%). (Datamonitor, Italy 2007) Social: 66.3% of total population is in the age group of 15 to 64 (CIA Factbook 2007), which is the target segment for Fiat 500. The graduation level in Italy has increased from 19% in 2002 to 39% in 2006. (Datamonitor, Italy 2007) Environmental: Carbon emission has increased to 474millions in 2007 from 448millions in 2002. So, the Italian government is planning to stringent emission laws. (Datamonitor, Italy 2007) Technological Legal: As Fiat 500 was one of the small cars with advance technologies, which are rare in this segment, so there was no known macro level technological effect on Fiat. No known legal issues related to re-launch of 500. Considering the PESTEL analysis of Italy, Fiats marketing strategies are in line with political, economy and environmental conditions of Italy. The per capita GDP and purchasing power make Italy an attractive market for car manufacturers. Further the new 500 was satisfying Euro 5 standards at the time of launch, which was two years ahead of regulation deadlines. Gap Analysis: The gap analysis will help us know whether Fiat could meet the needs of its customers. Post 1990, the prime reason for declination of Fiat was the lack of innovation and deterioration of quality of vehicles. Between 1995 and 2001 Fiat spent $4.5billion on RD in comparison to Volkswagens $20billion and Renaults $9billion (Economist 31st Jan 2003, cited by Momin 2008). The Fiat became synonymous with â€Å"Fix It Again Tony†, â€Å"Fehler In Allen Teilen†(defect in every part) and â€Å"Fur Italien Ausreichende Technik†(sufficient technology for Italy). Fiats market share in Italy fell down drastically from 52% in 1990 to below 28% in 2003 (Jain 2007). The BCG matrix analysis will help in revealing the reason for the gap and low RD expenditures. BCG Matrix: The primary reason for low RD expenditures was un-related acquisitions between 1990 and 2001. Some of Fiats acquisitions were Toro, Italys 3rd largest insurance company, Montendison, Italys largest private power production company and Case New Holland, an agriculture equipment manufacturer. Fiat also diversified into banking, telecom and pharmaceuticals sectors through acquisitions. Fiat neglected its cash cow (automobile business) and invested its financial and managerial resources on stars, dogs and question marks. This deprived the core auto business of the capital it required, resulting gaps in product range. Further, these acquisitions led to a debt burden of $5.6billions in 2003 (Phani 2003 p. 100, cited by Momin 2008). All these debt burdens and lost focus led to 75% utilisation of operational capacity at the manufacturing units, which is an essential performance indicator in manufacturing industry. Further in the last decade of twentieth century, Fiat focu sed on emerging markets such as Argentina, Brazil, Turkey, China and South America neglecting the mature markets such as North America Western Europe where growth was moderately low but demand was constant. Because of all these mismanagement, during the recession of 2001, Fiat was on the verge of bankruptcy, but was saved by a $2.8billion bank bailout. (Jain 2007) Turnaround strategy to fill the gap and rectify cash usage: In 2004, Sergio Marchionne took charge as the CEO of Fiat and embarked upon a massive restructuring program with a layoff of 6000 personnel. The same year Fiat showcased Trepiuno, a prototype similar to 500 at the Geneva Motor Show. The model attracted good review from all over the world and prompted Fiat to work on 500. The new 500 was designed by Frank Stephenson, who had successfully redesigned BMWs Mini. To reduce cost, 500 shared the platform, engine and other electrical equipment from Fiat Panda, another compact car. In 2005, Fiat centralised its RD a nd innovation functions and could acquire 80 new patents the same year. In 2006, Fiat radically increased its RD expenditures budget to $7.05billions for 2006-08. Further Fiat changed its purchasing policies. It started centralised purchasing and sourcing from low wage countries. This helped Fiat save 28% of material cost thus reducing production cost considerably and invest in RD. Segmental Positioning of Fiat: In spite of initial success of 500, industry analysts were skeptical about 500s success. As per them, although 500 has performed well in Italy and France, its success in other geographic regions is doubtful. Their apprehension was that, Fiat is generally known for manufacturing inexpensive small cars and its attempt to place 500 with BMWs Mini might not work. According to S. Whitwell, customers do prefer BMW Mini, not only for its nostalgic value but also for the quality reputation of BMW brand. And 500 may do well in Italy and some parts of Southern Europe. However, it is not iconic enough to get acceptance in other markets (Maxwell 2007). To counter competition from other incumbents Fiat pitched 500 against Mini. The 500 was priced ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬10,500 for the basic model and could run up to ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬14,000 with customisation (approximately around $13,600 and $21,000), little lower than price of mini ($18,050 $25,400). The pricing was to provide 500 the price advantage over Mini while charging a premium for the heritage value. In the above segmental positioning by Morrison-Jones (2006), Fiat has the medium brand perception and placed in differentiated product category. Where as BMW commands high brand perception and placed in luxure car segment. However, Volkswagen is placed in similar category as that of Fiat. According to Stephen Cheetham, customers may not feel to pay a premium price for 500 except in Italy where Fiat has a strong brand and good will (Maxwell 2007). Fiats world market sales: It is clear from the above sales figures that, Italy and Brazil are the primary market for Fiat. Though there is not much variance in sales figure in Brazilian market, Italys car sales eroded continuously between 2000 and 2005. Nevertheless, following the restructure in 2005, in 2006 sales improved. In 2006, number of units sold in Italy touched 852,000 and European market share increased to 7.5% from 6.5% of 2005. (Edmondson 2007) Kotlers Product Levels model (1969): As per this model, Fiat 500 is a level 5 potential product. 500s long heritage confirms its three core levels i.e. core benefits, generic product and expected product. The extended scope for customisation, finance or payment options, safety features and enhanced after sales service confirmed augmentation and differentiation of 500. Confirmation of Euro 5 standards and Fiats enthusiasm for innovation of 500 by launching 500 convertible and sports version, makes 500 a potential product. Marketing Audit (SWOT) From the above analysis of Fiats internal, external and macro environment, Fiats strengths, weaknesses, opportunities and threats are summarised. Strengths: Fiats one of the key strengths is the strong sentiment of Italians for Fiat. In 2000, GM had acquired 20% of share of Fiat and was ready for a complete takeover if Fiat wished so. During the restructuring process in 2005, GM agreed to hand back its Fiat shares for $2billions. This break-up was well received in Italy and Fiats advertisements proclaimed, â€Å"Fiat is all-Italian again†. (Jain 2007) Style look of Fiat 500 and options for customisation Euro 5 emission standard and Level 5 safety standard. Heritage value of 500 as it provided mass motorisation to Italy. A level 5 product in Kotlers product level model. Enhanced innovation capability after increase in RD expenditures. In-line with industry life cycle. Weakness: Lack of scale in comparison to its competitors. Peoples perception of Fiat as manufacturer of inexpensive cars. Tarnished quality image of Fiat cars. Opportunity: Increasing demand for small and fuel efficient cars. Increasing demand for retro cars. Rising purchasing power of Italians. Threats: High degree of rivalry and threat of substitutes in new car market. Low profit margin and high operational cost corporate tax. Analysis: From the SWOT analysis, it can be deduced that, Fiat has satisfactorily utilised its strengths for developing the marketing strategy for new 500 to cease the opportunities in the automobile market. By sharing platform and components with Panda, Fiat has minimised its weakness of lack of scale. Through extensive RD and involving people in the development of 500, Fiat has improved its brand perception. Further, the differentiation and customer intimacy strategy had helped Fiat to minimise the threats of high rivalry and substitutes. Conclusion: The sales phenomenon of 500 in Italy and France was very much appreciating for Fiat. The demand for 500 in first two days of launch exceeded its two quarters production. It received 57,000 dealer orders, where as it was planning to sell 50,000 to 60,000 units that year. Many customers were ready to pay a premium price to get the car that year. From the above graph it is clear that with the launching of 500 and restructuring, Fiats operating profit improved drastically. Further delighted with the success of 500, Fiat planned to launch 500 convertible and sport edition of 500. References: Ansoff, Igor. (1957). Strategies for Diversification. Harvard Business Review. AutoNews. (2007). Fiat CEO Sergio Marchionne has big plans for little Fiat 500. 24hrs a Day Auto News. July 01, 2007. https://www.autonews24h.com/Auto-Industry/Fiat/1887.html (accessed April 04, 2010). Colleen, Barry.(2007). Fiat has big aspirations for little 500. 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