The differentiation strategy used by Tata and Ashok motors.

The Indian bus markets for a long time have been dominated by the two subsidiaries, Tata and Ashok motors. The two companies were manufacturing buses that were affordable by the bus operators but did not meet the expectations of the operators. The design of the buses did not provide enough space for storing bags, and the 110-120 horsepower was making the transportation uncomfortable. The buses were making a lot of noise and had to go through several maintenance issues in the course of the travel. Volvo decided to enter the market in 2001 with luxury buses, which were highly-priced. The local manufacturers in the Indian market were reluctant to upgrade their bus technology until late in 2004 (Gupta, 2007). The bus companies in India assumed that the bus operators were not in demand for the luxurious buses. Volvo decided to enter the market by bringing state-of-the-art buses and established long-distance luxury travel.

The strategy used by the company is known as a differentiation strategy where a company introduces a unique concept in the industry. The bus operators never knew the luxurious buses in the country, and everyone was reluctant to explore beyond their capabilities. Volvo decided to take the risk of tapping into the market using a new idea, which required a lot of resources to initiate the investment. Differentiation strategy makes a product unique from all the other companies. The Subsidiaries in the Indian market had old fashioned buses that were not meeting the expectations of the customers (Gupta, 2007). The customers were not satisfied with the services provide by these buses, but being that they never had an alternative, they were obliged to use the available services. The introduction of the pricey luxurious buses brought a change in the transportation industry in India. The bus operators acquired luxurious buses at higher prices as compared to the initial cost of the buses from the traditional manufacturing companies in China.

Volvo was attempting to introduce new buses in the industry with unique and new features. The 240-250 horse pipe, which was mounted at the back ensures that the buses were moving fast with limited noise. The bus operators and the customers had a comfortable ride. Comfort is essential to those who were traveling for longer distances. The first target market for the Volvo buses were the long-distance customers (Gupta, 2007). These customers wanted security and comfort as they travel. The design of the o the coach and the position of the engine provided for an interior space where the luggage was stored as the customers travel across different places. For example, the business people who were traveling for longer distances to attend various meetings and travel back to their destinations had the chance to participate in their meetings in time and travel back to their places of work. The cost of booking hotels for accommodation incurred earlier by the business people was now placed into traveling regularly to these meetings.

The luxurious and costly Volvo buses provided post-sale services for the maintenance of their buses. These services increased the life expectancy of the buses from three years to ten years. The bus operators were spending less on the maintenance of the buses and at the same time, they were confident of using the Volvo buses for an extended time. Longer lifespan for the buses implies that the buses were going to bring revenue to the owners for a long time (Gupta, 2007). The maintenance of the Volvo buses was not expensive as compared to the key market players such as Ashok and Teta motors. Drivers were issued with free training upon the purchase of the coaches. The skills acquired from the training services allowed the drivers to safely drive their buses and took more care of their buses. Several bus operators were not willing to incur the cost of training their drivers, and they were ready to go for a company that was providing the training freely.

The advertisement strategy used by the Volvo Company was also unique. The company was advertising directly to the customers rather than concentrating only on the bus operators. The promotion strategy of reaching the customers through cinemas also assisted the operators to advertise their services to the customers. The demand for the services increased significantly since the target market segment capture in the advertisements was broad enough to attract a large number of customers (Gupta, 2007). The bus operators earned higher profits since they were also able to increase the prices for their bus tickets by 35% as they were providing smooth, faster, and more reliable travel. Volvo was able to expand its production, and in the following years, it was able to increase its production and exports of buses to European nations worldwide.

Q2

Volvo’s strategy of differentiation, which is used to enter the Indian market, was unique, but with time there is a threat of new entrants. Several other companies are likely to introduce a similar business strategy of luxurious buses after realizing that the operators have changed their demand from the old traditional buses to the new costly luxurious buses. Stiff competition is likely to arise in the travel market since Teta, and Ashok Layland also changed from the previous models to the production of their luxurious buses (Gupta, 2007). Competitors such as Teta and Ashok Layland have adopted a similar strategy to tap into the Indian travel market, and this is likely to affect the market base. There is a threat of substitute products since Teta Motors and Ashok Layland can provide the same travel buses. The customers and bus operators have an option for their travel buses. When customers have an alternative means of travel, then they tend to have high bargaining power in the travel market. The increased power of bargaining from the customers and bus operators will result in a decrease in the price of the buses. The bus operators will start experiencing a fall in profits since other bus operators have the option of going for the new luxurious buses from the other competitors.

Volvo Company can resolve the threat of new entrants by using advanced technology in the manufacturing of its buses. Technological advancement in the motor industry requires technical technology, which can make a company compete in the highly competitive motor industry.

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