Upload
others
View
5
Download
0
Embed Size (px)
Citation preview
RENAULT ESPACE ODYSSEY
« With the Espace, they hit the jackpot… but it was an accident »
Renault executives about Matra
1/ WHY WAS THE ESPACE SUCH A
SUCCESS?
•A success built on an ambitious differentiation
strategy.
•Which found its own consumers.
•Helped by market circumstances.
AN AMBITIOUS DIFFERENTIATION
STRATEGY
Renault ESPACE is a revolutionary car:
Exterior characteristic:
Elegancy
Dynamism
Lightness
Similar to a TGV
Intern characteristic:
Movable and pivoting seats
Flat floor
High position
Tablets
Motor characteristic
Speed (185km/hr)
WHICH FOUND ITS OWN CONSUMERS
Consumers are attracted because of: The seat flexibility
The “insurance policy” for special use
Pleasant view for children
Feeling of safety and domination of the road
Interior comfort
Relative rapidity
Characteristic of those consumers:
65% are 35-49 years old (study made in 1993)
Large families
30% of women
Those consumer represent a huge market:
They were born between 1944 and 1958 = BABY BOOM
After 70’s crisis people are looking for differences (Fordism crisis)
HELPED BY MARKET CIRCUMSTANCES
Marketing strategy:
Bad start
Good welcome from specialized media
Positioning as a top of the range product
Fit well with Espace II (good quality)
Competitors failure:
The few earlier competitors are not good enough
Very bad reactivity
An inertia effect (high renewal rates)
Leads to a big competitive advantage
CONCLUSION
To sum up:
Renault ESPACE is totally new
Lot of people are interested
A huge competitive advantage
Favorable socio-demographic environment
= Success
Advantages of a successful differentiation strategy?
Protect against competitiveness
Loyal customers
Strong defense against substitution product
Above all: prospect of huge profitability
2/ HOW DID THE ESPACE
PROFITABILITY EVOLVE OVER TIME
BOTH FOR RENAULT AND MATRA?
•Global tendencies
•Market share/ correlation analysis
GLOBAL TENDENCIES
We could also describe: Two product cycles:
A big one (84-96)
A more contrasted one (96-01)
A break point (96)
A correlation between market share and profitability (above all for Matra)
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
80 85 90 95 00
Profitability Matra
Profitability of Renault
Market share
At first sight: A relatively bad start
Error of timing
A huge growth of profitability
Which melts away with time
CORRELATION ANALYSIS OF MARKET SHARE
AND MATRA PROFITABILITY
The graph show
an obvious
correlation
Coefficient of
determination :
R²= 0,7843
• Interpretation:
78% of the market share variations explains the Matra CA ones
Matra takes huge advantages of the differentiation success
But Matra profitability is very depending on Espace Market
share
R² = 0,7843
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
-0,1 -0,05 0 0,05 0,1 0,15
Matra/Market share Linéaire (Matra/Market share)
CORRELATION ANALYSIS OF MARKET SHARE
AND RENAULT PROFITABILITY
The correlation
is less obvious
Coefficient of
determination
R²=0,0906
Interpretation:
Less than 10% of Espace Market share explains the Renault CA variations
Renault profitability is less depending on the market share
R² = 0,0906
0%
20%
40%
60%
80%
100%
120%
-6% -4% -2% 0% 2% 4% 6% 8%
Renault/Market share
Linéaire (Renault/Market share)
CONCLUSION
The global trend show that: After a huge growth, profitability has slowly
decreased for both of Renault and Matra.
Matra profitability has much bigger variation.
Correlation analysis shows the Matra’s profitability huge dependency on Renault ESPACE.
The profitabity evolution for Matra and Renault shows:
The success of the differentiation strategy
That Matra health depends on Renault ESPACE
That Renault is less depending on Renault ESPACE
The two firms share the same product, but their level of dependency is different
3/ WHY DID RENAULT DECIDE TO
RENEW THE MATRA ALLIANCE FOR THE
ESPACE 2 AND ESPACE 3, BEFORE
BREAKING IT FOR THE ESPACE 4?
•Basis of a strategic alliance
•1988 & 1993: Renewal of the alliance
•1995-1996: Breaking of the alliance
BASIS OF A STRATEGIC ALLIANCE
What they have to do?
Matra:
Architect and creator
Buys components to Renault
Manufactures the car (Romorantin)
Sells it to Renault
Renault:
Supplies some components
Supplies its network
Supplies its brand
Why do they need this?
Matra:
They need Renault network to sell the car
Renault
They need the Romorantin’s knowledge of SMC
1988 AND 1993: RENEWAL OF THE ALLIANCE
First re-negociation:
Possibility to use the AMC network to sell Renault
ESPACE (As They did for Renault 9 & 11).
In this case Romorantin would not give a sufficient
production
But the investment is too costly
Matra shows again its creative skills (the P36 project
won)
Second re-negociation:
Renault is much more hesitating, but:
Volvo-Renault merger is a failure
Scenic project will also decrease market size
Matra won the architecture contest (P52)
Volumes are not sufficient to launch an automatic
steel production
1995-1996: BREAKING OF THE ALLIANCE
Ambition of Renault: 600 units a day
decreasing the price by €2.300
Steel technology
But:
Matra is only equipped for SMC
SMC fixe cost are lower than steel one
SMC variable cost are higher
SMC and steel cost are approximately the same for a 450-500 unit production
What can propose Matra? 400-450 units a day
SMC technology
Refusal of Renault: The alliance no longer exists.
CONCLUSION
A successful alliance based on:
network-technology sharing
A core activity concentration for each firm
An obvious imbalance based on:
The Matra dependency with ESPACE
The Romorantin’s plant limits
For Renault it is as everything was about volumes
4/ WHAT ARE THE PROSPECTS OF
SUCCESS FOR THE AVANTIME AND
THE M72?
•Difficulties of the Avantime focalisation
strategy
•M72 an encouraging project?
DIFFICULTIES OF THE AVANTIME
FOCALISATION STRATEGY
Encouraging marketing studies: You love or you hate it
For adventurers and technology likers
People older than 50
Fan of espace which no longer need all the modularity
25% of:
Ex-ESpace
Coupé
Sedan
Sporty estate cars and SUV
= there is a market
But lots of troubles: Costs higher than expected
Launch with only a V6 manual transmission
People confound Avantime and Vel satis
Coupé
Other Sedan
Ex Espace
Avantime
M72, AND ENCOURAGING PROJECT?
Innovative characteristic:
Low price of the m72: € 6,000
Original style
Open bodywork, a two seat format, rear wheel drive, reminiscent of the Mini Moke
Possibility for the 16 years old to drive it 20hp version
First car to bear the Matra brand name since the Rancho:
New way to sell the product:
Internet and independent garages, instead of selling its car to exclusive dealers
IRR of more than 13% because of low production costs
CONCLUSION
Matra has understood the risk of having only one
product:
=Diversification
Matra cannot invest or produce a lot:
=Focalization strategy
So Matra has exchanged a « only one product
risk » to a « very little market » risk.
What is happening?
In spite of encouraging market studies, the
Advantime start is bad.
m72 could be very profitable (13%)
5/ WHAT STRATEGY WOULD YOU
RECOMMEND TO MATRA FOR THE
FUTUR
•Our suggestion
OUR SUGGESTION
Priorities
Insure the future of the plant
Conserve our SMC skill
Find a way to have access to a network
Diversify the risk is the key solution.
Strengthening Renaults Alliance with the plant
devoted to the Advantime car
The brand Advantime should sponsor sports events
Positioning : live your times, feel free, Advantime !
M72 becomes the Mstreet
Beginning of a new strategic alliance with Sony
Growth and characteristics of Asian market
small cars’ market expectations are optimistic
Matra-Toyota “just in time” agreement
THANKS
Matthieu AUCLAIR
Walid B
Jean François J