Mercedes-Benz New Showroom Development

New York University

Subject: New Product and Service Development

Date: 11.19.2006

Name: YC

Contents

• Company Introduction

• Project Objective

• New Showroom Development Process

Company Introduction

The Class Hyosung is one Subsidiary of Hyosung, which is one of big corporations in Korea. TCH is a

distributor (Dealership) of Mercedes-Benz in Korea. Since launching its business in 2004, The Class

Hyosung(TCH) has established itself as an essential player in MBK(Mercedes-Benz Korea)’s operation

Hyosung is a Korean conglomerate with a vast range of business and a particular focus based on the textile and synethetic fiber business

The ClassHyosung

Company Overview

• Jan., 2004 Opening of 1st Workshop

• May, 2004 Opening of 1st Showroom

• Dec., 2005 Opening of 2nd Workshop (Main Service center)

Brief History

'THE CLASS HYOSUNG' was established to ensure that all customers who purchase premium imported cars, including Mercedes-Benz, and enjoy differentiated services and products with the highest standard and lifestyle filled with the value of life and happiness.

Vision & Mission

• In the long term, our mission is to improve the lifestyle of our customers, enhancing their overall quality of life, while also building the best value and happiness for customers.

• The first goal of The Class Hyosung is to become ‘No. 1 car dealer’ of Mercedes-Benz by 2008.

• With Database of Mercedes-Benz Dealership, we expand our business to other areas(other car brands, high-end fashion brands, restaurants, etc)

Goal

Contents

• Company Introduction

• Project Objective

• New Showroom Development Process

Project Objective

Company SituationCompany Situation

• TCH sells Mercdes-Benz only in Seoul.

• TCH market share is about 30% in Mercdes-Benz sales in Seoul

• TCH has one showroom and two service centers in Seoul. One showroom is the biggest showroom in Asia, and two showrooms are located near the showroom.

IssueIssue

• Current showroom reached the limits of its capacity to take care of customers. So, TCH needs to expand its business scope.

• TCH are planning to launch new showroom & service center.

How we successfully launch new

showroom??

Use ‘State-Gate Process’ when TCH

implement to launch new showroom!!

Contents

• Company Introduction

• Project Objective

• New Showroom Development Process

New Showroom Development Process

Gate 1.Idea Screen

Gate 2.Second Screen

Gate 3.Go to

Development

Gate 4.Go to

Testing

Post Launch Review

Gate 5.Go to

Launch

Discovery ScopingBuild

BusinessCase

Development

Launch

Test&

Validation

Stage 1 Stage 2 Stage 3

Stage 4 Stage 5

Discovery

Discovery

ResultsResults

Generate ideas and figure out potential locations

• Internal sources

Research team/ sales team/ marketing team/ planning team/ service and parts team/ Hyosung corporate strategy team

• External sources

Customers & prospects/ competitors/ Mercedes-Benz Korea/ suppliers/ trade publications/ Car community

ActivitiesActivities

Several showroom sites

(For example, 3~4 sites in Seoul and 3~4 locations outside Seoul)

• Stage objective: Search New showroom locations

Gate 1. Idea Screen

Gate 1.Idea Screen

• ‘Must-Meet’ criteria (required criteria)- Does the new showroom project fit the strategic

direction of the Business?- Is its development technically feasible?- Do you have the resources required to

undertake the venture?- Does actual market needs exist?

• ‘Should-Meet’ criteria (desired criteria)- Is market attractive a large and growing one?

How attractive?- Is this familiar technology to us? Do we have

some of the technology skills in-house?- Can the product utilize existing showroom and

service center? How easily?- Will the product have sustainable competitive

advantage? How much?- Does current situation of market? Size? Trend?

CriteriaCriteria ActivitiesActivities

Pick some effective sites with criteria.

GatekeepersGatekeepers

a small group of project team (members from different function areas; planning, marketing, sales)

OutputsOutputs

3~4 suitable sites(For example, 2 locations in Seoul and 2 locations outside Seoul)

Stage 1. Scoping

Scoping

• Stage objective: Specific Location investigation

OutputsOutputs

1. Preliminary market assessment• Assess market attractiveness and potential

Market investigation Collect the market data: Internet search, Key

customers, Advertisements, Your own people, Industry experts, Trade associations, Focus group interview

contact real estate agency and collect the information

1. Gauge possible new showroom acceptance2. Sizes up the competitive situation: competitor’s

situation(distribution channel, showroom locations)

3. Check the possibility of local development plan by government and public organizations and prospects of local economy, overall environment, macro market trends

ActivitiesActivities

• Most suitable location candidates and their characteristics

• Recommendation and plans for stage 2

2. Preliminary technical assessment• Showroom establishment requirements• Rough check of technical feasibility

3. Preliminary business and financial assessment• A sanity check: an extremely rudimentary

and quick check of the business rationale and financial prospects

4. Understand MBK dealership standards5. Consider Synergy with current facilities6. Understand potential, legal, technical, regulatory

variables7. Start to develop marketing strategy

Gate 2. Second Screen

Gate 2.Second Screen

• ‘Must-Meet’ criteria (required criteria)- Does the new showroom project fit the strategic

direction of the Business?- Is its development technically feasible?- Do you have the resources required to undertake the

venture?- Does actual market needs exist?- Is there any Potential, legal, technical regulatory

variables?- What are MBK Dealer standards and regulation?

• ‘Should-Meet’ criteria (desired criteria)- Is market attractive a large and growing one? How

attractive?- Is this familiar technology to us? Do we have some of

the technology skills in-house?- Can the product utilize existing showroom and service

center? How easily?- Will the product have sustainable competitive

advantage? How much?- Does current situation of market? Size? Trend?- Simple financial returns execution- Sales force and customer reaction

CriteriaCriteria ActivitiesActivities

Compare site candidates and make a decision to go or not. Select the most suitable location.

GatekeepersGatekeepers

• a small group of project team

(members from different function areas; marketing, planning, sales, finance)

• Executives of TCH, Hyosung

• Network Development department in MBK

OutputsOutputs

The most suitable site

(For example, 1 location(Bundang) in suburban of Seoul)

Stage 2. Build the Business Case

BuildBusiness

Case

OutputsOutputsActivitiesActivities

• Business case for the project- New showroom definition: new showroom

concept, Showroom features, attributes, performance, requirements, high-level specs

- Thorough project justification- Detailed Project Plan: project scope, The plan of

action from development to launch, in forms of a time line including required resources, a launch date

- Business Plan- Target market definition- Benefits to be delivered including the value

proposition- Strategic rationale, competitive advantage,

leverage, market attractiveness• Review of business, financial, profitability, and

risk considerations• The plan for the next stage in some detail

• User needs-and-wants study: Understand Target customer• Competitive analysis: competitors’ locations• Market analysis

- Market investigation- Related industry(high-end brands, luxury residence, restaurants)

situations and prospects/ Boom-up effects of clustering- Customer lifestyle, flow of movement, etc

• Develop business plan- Positioning determination: Develop specific positioning strategy- new showroom concept development- Target market definition- Construction Plan- Human resource allocation Plan- Operation and Marketing plan- Financial plan- Plans of action

• Detailed technical assessment: Technical feasibility• Financial/ business assessment: detailed business plan and

financial analysis

• Stage objective: Develop effective business plan

Gate 3. Go to development

Gate 3.Go to Development

• ‘Must-Meet’ criteria (required criteria)- Same as Gate 2.

• ‘Should-Meet’ criteria (desired criteria)- Strategic: degree of fitness with business

strategy/ strategic importance - New showroom advantage: unique benefit to

customers/ meets customer needs- Market attractiveness: market size/ market

growth rate/ competitive situation- Synergies: leverages our business’s marketing,

distribution, technical know-how, expertise, experience, operations capabilities, facilities

- Technical feasibility: complexity of project- Risk versus return: expected returns/ payback

period/ certainty of return,profit,sales estimates/ costs

- Standards and opinions of MBK

CriteriaCriteria ActivitiesActivities

Review the Business plan and revise and confirm the plan. Check the possibility of financial returns!

GatekeepersGatekeepers

• project team (members from different function areas; planning, marketing, sales, finance, HR)

• Senior managers from each department in the company

• Executives in a company, Hyosung, MBK

• MBK network development manager

OutputsOutputs

Refined and practical business plan

Stage 3. Development

Development

OutputsOutputs

• Physical development of the showroom• Revise and review plans; operation plan,marketing plan,

financial plan• Seek customer input and feedback: ensure that the new

showroom is right and also to speed development toward a correctly defined target/ Seek of continued customer feedback during development

• Monitor and research the market and the competitive situation. Understand the fluid market change

• Regulatory issues: Check local law and practical detail • Operation process: Organize team to operate new

showroom practically/ Allocate R&R to staffs • Update your financial analysis. Business case plans are

translated into concrete deliverables• Develop Action plans

ActivitiesActivities

• Establishment of new showroom

• Updated business plans (Financial, Marketing

and operation plan, etc)

• Action plans

• Stage objective: Develop new showroom

Gate 4. Go to Testing

Gate 4.Go to Testing

• Revised ‘Must-Meet’ criteria: required criteria and ‘Should-Meet’ criteria: desired criteria

• Existing gate 3 definition• Existing business plan and action plan• Market changes and Market growth prospects

CriteriaCriteria

ActivitiesActivities

• Check on the progress and continued attractiveness of showroom and project

• Review Development work• Ensure the work fit to a quality of fashion• Check Developed showroom’s consistency with the original

definition specified at gate 3• Revisit economic questions through a revised financial analysis

based on new and more accurate data• Approve test, validate plan for immediate implementation• Review detailed marketing, operation plan for probable future

execution

GatekeepersGatekeepers

• a small group of project team including project manager. (members are from different function areas; marketing, planning, sales)

• Senior managers from each department in the company

• Executives in a company, Hyosung

OutputsOutputs

• Development of new showroom

• Test, validation plan

• Refined marketing, operation, action plan

Stage 4. Test & Validation/ Gate 5. Go to Launch

Test&

Validation

OutputsOutputs

• Check the schedule• Simulate operation of showroom and check it

Technically • MBK specialists’ review of the Mercedes-Benz

standards and guideline• Check on an establishment process• Reflect Customer acceptance• Revise business financial analysis

ActivitiesActivities

New Showroom reflected to results of test and validation.

Gate 5.Go to Launch

• Expected financial returns and appropriates of the launch and operations starts-up plans

CriteriaCriteria

ActivitiesActivities

Make estimates of establishment and marketing costs, sales volumes, final prices, and profit margins with a high degree of confidence

GatekeepersGatekeepers

• project team including project manager (members from different function areas; marketing, planning, sales)

• Senior managers from each department in the company• Executives in a company, Hyosung

OutputsOutputs

Showroom and refined launch plan

•Stage objective: revise new showroom project

Stage 5. Launch/ Post Launch Review

Launch

ResultsResults

• Launch the new showroom and starts its operation

• Implement both the marketing and operation plan

ActivitiesActivities

Successful operation of showroom

Post Launch Review

CriteriaCriteria

• Review latest data on revenues, costs, expenditures, profits, timing compared to projection to gauge performance

• Carry out post audit

ActivitiesActivities

• Marketing objectives/ Project objective

• Showroom positioning strategy

•Stage objective: Launch new showroom!

OutputsOutputs

• A reform measure to improve the performance

Thank you