Alfa Romeo Geographical Expansion by Shaniya Shabrach-Ortiz

Alfa Romeo Global Expansion Plan - Mumbai, India Rebecca Tummers, Audrey Thames, Molly Buice, Shaniya Shabrach-Oritz LXFM 745 Alessandro Cannata

TABLE OF CONTENTS COMPANY ANALYSIS A. Current Plans and Growth Projections, 10-11 B. Current Distribution, 12 C. Retail Brand Identity Analysis, 14-17 D. Competitive Analysis and Current Positioning, 18-21 E. Strategic Planning Process, 22-24 Situation Analysis, 22-23 Differential Advantages & Mission Statement, 24 GEOGRAPHICAL EXPANSION A. Looking East, 28-33 Malaysia, 30 Indonesia, 31 India, 33 B. PESTEL Analysis, India, 34-35 C. Market Analysis, India, 36 D. Key Players, 38-39 Luxury Automotive Sector, 38 Indirect Competition, 39

COMMMUNICATION & PROMOTIONAL PLAN A. Omni-Channel Marketing Plan, 60 B. Pre-Launch, Launch, and Post-Launch Activities, 62-63 FINANCIAL PLAN A. Sales Forecast, 66 B. Execution Budget, 68-71 EXECUTIVE SUMMARY, 73

TARGET CONSUMERS A. Demographic, 43 B. Psychographic, 43 C. Behavioral, 43 D. Target Consumer Profiles, 44-47

STORE LOCATION, DESIGN, PRODUCT A. Trading Area Analysis - Mumbai, India, 50-53 B. Design of Actual Space, 54 Exterior, 54 Interior, 54 C. Product Plan, India, 56-57

COMPANY ANALYSIS A. Current Status and Growth Projections B. Current Distribution C. Retail Brand Identity Analysis D. Competitive Analysis and Current Positioning E. Strategic Planning Process

Situation Analysis Differential Advantages & Mission Statement

1910

1935

1954

1987

Cavalier Ugo Stella acquired the shares of Società Italiana Automobili Darraq, in Portello, Milan, Italy. Stella renamed the plant Anonima Lombarda Fabbrica Automobili (ALFA). In 1910, Alfa designed and manufactured its first vehicle.

To compete with German automakers, Alfa Romeo engineered the Bimotore for Scuderia Ferrari. This single seater broke two European speed records.

Giulietta, coined “Italy’s sweetheart”, was one of Alfa Romeo’s most loved cars. She was aerodynamic, practical, high-performing, and an international symbol of Italian craftsmanship. By 1961, 100,001 Giulietta’s had been sold.

The stylish Alfa 164 sedan was the first automobile Alfa Romeo produced after being acquired by the Fiat Group. It gained immense popularity in America and special versions were produced exclusively for the American market.

1919

1937

1962

2015

Automotive production ceased during World War I. In 1918, ALFA was renamed to Alfa Romeo. Production resumed in 1919 along with the assembly of parts and the design of new models. Alfa Romeo had a bright future ahead of them.

Alfa Romeo’s 8C 2900 was the world’s most beautiful sports car. The cutting edge engineering of the racing version resulted in an incredible three-win feat at the 1938 Mille Miglia. This was a major milestone for Alfa Romeo.

The innovative engineering of the Giulia revolutionized aerodynamics in the industry. The Giulia was tested in the wind Tunnel in Turin, Italy and had a record aerodynamic coefficient of 0.34 points.

The Alfa Romeo 4C is characterized by its lightweight strength, supercar agility, and race-inspired performance. It continues the Alfa Romeo tradition of innovation technology. It caters to the senses and enriches the outdoor splendour.

1923

1947

1966

2017

Ugo Sivocci painted a white square with a “Quadrifoglio” (four-leaf clover) on his Alfa Romeo to bring him luck in the Targa Florio race in Sicily. He won, and since then each race car has a Quadrifoglio to honor Sivocci - and bring good luck.

The Alfa Romeo Freccia d’Oro, a version of the 6C 2500 Sport, defined the very best of post-war Italian style, sophistication, and class.

Upon being featured in the renowned 1967 American film “The Graduate,” the Duetto Spider became a part of American popular culture. Alfa Romeo produced this model for 27 years.

The technologically saavy Giulia Quadrifoglio, is a natural extension of the driver’s mind, body, and soul. A continuation of Alfa Romeo’s legacy, it focuses on innovation, design, and connection with its driver. It is the sportiest Quadrifoglio yet.

1925

1950

1976

2018

Alfa Romeo won its first World Championship in Jano’s Gran Premio Tipo P2. Four Alfa Romeos crossed the finish line – in subsequent order. This impressive victory inspired the laurel wreath on the Alfa Romeo logo.

Alfa Romeo’s first Formula 1 Championship was won by Nino Farina in Silverstone, England. He raced in an Alfa Romeo Alfetta 158.

Alfa Romeo returned to Formula 1 by building the engine for Brabham. A powerful single-piece 12-cylinder 3000 cc boxer engine with a Spica fuel injection system that produced 500 HP at 1500 rpm.

The Stelvio SUV was inspired by the splendour and magnificence of the Stelvio Pass. The Stelvio looks to the future by offering utility, high-performance, and the utmost craftsmanship.

A. CURRENT STATUS Alfa Romeo is a car manufacturer that is a subsidiary of the Italian-American company Fiat Chrysler Automobile (FCA). The FCA designs, engineers, manufactures and sells vehicles and related parts and services, components and production systems worldwide through 162 manufacturing facilities, 87 R&D centers, and dealers and distributors in more than 150 countries. Its brand portfolio includes: Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Ram, Maserati and Mopar, the parts and service brand (FCA, 34). Alfa Romeo was founded in 1910 and is world renowned for its elegant Italian design, sporting tradition, and innovative engineering. It has recently launched new models to revive its image across global markets and reestablish itself as a luxury car brand. It seeks drivers who appreciate high-level performance and handling combined with captivating and distinctive appearance (FCA, 40). In 2017 Alfa Romeo relaunched its sedan, the Giulia TI, and its sportier sister, the Giulia Quadrifoglio. The Giulia is an extension of Alfa Romeo’s distinctive Italian history and sophisticated design heritage (Alfa Romeo). The Giulia helps to continue the legacy of Alfa Romeo and share its brand story with consumers. Giulia creates excitement for Alfa Romeo by demonstrating its high performance and innovative design (Brinley Forbes). The Alfa Romeo Stelvio Crossover, launched in 2018, was inspired by the immensity and grandeur of the Stelvio Pass (Alfa Romeo). The Stelvio appeals to the consumer demand for SUVs, that offer both practicality and convenience (Brinley, Forbes). To meet consumer demand, production for the Giulia and Stelvio has increased 62% in 2017. Alfa Romeo sales in the U.S. rose from 516 units in 2016 to 12,031 units in 2017 – a 22.3 percent increase (Malan). Alfa Romeo’s three Italian factories produced 150,722 units in 2017, an impressive increase from its production of just 93,117 units in 2016 (Brandt). Upon its 2017 launch, sales of the Giulia have been steadily increasing. In July 2017 the Giulia sold 1,104 units in the US market – a 14.8% increase from its sale of 70 units in January 2017. The Giulia outsold competing premium and luxury cars such as the Buick LaCrosse, BMW 7 Series, Cadillac CTS, and Lexus GS (Cain). Alfa Romeo forecasted global sales of 400,000 cars and 150,000 cars in the U.S in 2018, led by the Giulia sedan and Stelvio SUV (Winton). 1. “A Story That Made History,” Alfa Romeo USA, 2018, https://www.alfaromeousa.com/a-story-that-made-history. 2. Brandt, Eric. “Alfa Romeo Production Reportedly Jumped 62 Percent in 2017.” The Drive, 8 Jan. 2018, http://www.thedrive.com/sheetmetal/17713/alfa-romeo-production-reportedly-jumped-62-per cent-in-2017. 3. Brinley, Stephanie. “Alfa Romeo Returns To The U.S. With The Dynamic Giulia Sports Sedan.” Forbes, 9 Dec. 2016,https://www.forbes.com/sites/stephaniebrinley/2016/12/09/alfa-romeo-giulia-ear nestly-takes-on-the-u-s-starting-at-37995/#48d4511c7351. 4. Cain, Timothy. “Alfa Romeo Giulia Sales Jumped yet Again in July 2017.” The Truth About Cars, 8 Aug. 2017, http://www.thetruthaboutcars.com/2017/08/alfa-romeo-giulia-sales-jumped-yet-july-2017/. 5. “FCA Annual Report at 31 December 2016.” FCA, 31 Dec. 2016, http://reports2016.fcagroup.com/downloads/financial/FCA_2016_Annual_Report.pdf. 6. Malan, Andrea. “Alfa Romeo’s 2017 Production Surged 62% on New Models.” Automotive News Europe, 10 Jan. 2018, http://europe.autonews.com/article/20180110/ANE/180119996/alfa-romeos2017-production-surged-62-on-new-models 7. Winton, Neil. “Alfa Romeo Giulia Leads Sputtering Revival Plan And Its Impossible Targets.” Forbes, 1 March 2018, https://www.forbes.com/sites/neilwinton/2018/03/01/alfa-romeo-giulia-leads-sputeriing-revival-plan-and-its-impossible-targets/#752f4c5e6e2c.

GROWTH PROJECTIONS Alfa Romeo has recently relaunched in the USA and is exploring emerging markets across the globe. The FCA is specifically seeking to expand its presence in Europe and Asia. The brand hopes to relaunch and revive past models (FCA, 19). Alfa Romeo has forecasted to sell 400,000 units by 2018 (Prabha). By 2020, the brand has stated to have all eight models available in the U.S – currently only six models are available in this market. With no new releases set for 2019, the success of the brand will depend on sales performance of the Stelvio in the American and Chinese markets (Malan). The company stated that a C segment (compact) car is in the works – a successor of the previous Giulietta model. Additionally, plans to revive and bring to market the 6C have been rumored for 2020 (Snyder). Alfa Romeo plans to design rivals to the Audi A3 Sportback and A3 Sedan. Alfa Romeo competes with luxury leaders Mercedes-Benz, BMW, and Lexus that have multiple SUV models alone (Butters). The brand intends to better position itself amongst luxury brands such as Audi, by offering well engineered and designed competitive products. The Stelvio has received exceptional reviews and is expected to perform well in the midsize SUV segment that makes up a quarter of the 2.1 million premium vehicles sold in the U.S. in 2016 (Butters). It has been speculated that Alfa Romeo plans on extending its offering of sports utility and crossover vehicles to appeal to the growing demand for utility vehicles (Brooks). Automotive industry analyst Glenn Brooks stated, “One of the biggest problems for Alfa is the US market. The Giulia is a good car, and the Stelvio is a terrific first effort at an SUV. What is needed now are more models, specially SUVs and further ahead, electrified vehicles.” (Brooks). Alfa Romeo has defined its growth plan as one that focuses on the diversification of its product portfolio.

1. Brooks, Glenn. “Future Alfa Romeo Model.” Just Auto, 22 Jan. 2018, https://www.just-auto.com/analysis/analysis-future-alfa-romeo-models_id180549.aspx. 2. Butters, Jamie. “Dont Expect Big Deals On Alfa Romeos Anytime Soon.” Bloomberg, 23 Jun. 2017, https://www.bloomberg.com/news/articles/2017-06-23/alfa-romeo-to-abstain-on-deals-as-brandputs-panache-over-sales 3. “FCA Annual Report at 31 December 2016.” FCA, 31 Dec. 2016, http://reports2016.fcagroup.com/downloads/financial/FCA_2016_Annual_Report.pdf. 4. John Beltz Snyder.“Alfa Romeo 6C could return in 2020.” The Auto Blog, 22 Jan. 2018, https://www.autoblog.com/2018/01/22/alfa-romeo-6c-rumor-2020/. 5. Malan, Andrea. “Alfa Romeo’s 2017 Production Surged 62% on New Models.” Automotive News Europe, 10 Jan. 2018, http://europe.autonews.com/article/20180110/ANE/180119996/alfa-romeos2017-production-surged-62-on-new-models 6. Prabha, Anil. “Alfa Romeo targets eight new models to hit ambitious global sales goal of 400,000 units by 2018.” Paultan.Org, 6 Aug. 2015, http://paultan.org/2015/08/06/alfa-romeo-targets-eightnew-models-to-hit-ambitious-global-sales-goal-of-400000-units-by-2018/.

B. CURRENT DISTRIBUTION The FCA currently operates in four global regions; NAFTA, LATAM, APAC, and EMEA. The 2016 financial results from these regions are outlined in Appendix A. In 2016 the FCA shipped 4.5 million vehicles, had Net revenues of €111.0 billion, and Net profit of €1.8 billion. The FCA operates worldwide through 162 manufacturing facilities, 87 R&D centers, and dealers and distributors in more than 150 countries (FCA, page 34). Alfa Romeo is distributed through the FCA’s four global regions (NAFTA, LATAM, APAC, and EMEA) and is sold in 55 nations (Alfa Romeo). Vehicles are sold directly to a network of distributors and dealers. Manufacturing takes place in Italy where Alfa Romeo’s three factories are located. Total combined output was 150,722 units, up from 93,117 units in 2016, according to the Fim-Cisl union (Malan). Global sales projections for 2017 were set at 170,000 units, an increase from the 71,700 units sold in 2016. Market researchers, JATO Dynamics, estimate Alfa Romeo’s sales for 2017 were between 118,00 and 125,000 units (Malan). The U.S is a crucial market for the success of Alfa Romeo and performance has been steadily growing. In January 2018 1,648 units were sold, a 14.3% increase from the 108 units sold the previous year in January 2017 (Statista). Alfa Romeo had a network of 184 dealers across North America in 2017, this number is expected to grow to 215 dealers by 2018 (Butters). 60 Alfa Romeo dealerships in North America are housed with Maserati. This creates a viable distribution plan for the two high-end Italian sports-car brands in locations where individually operated stores could not be supported. Alfa Romeo and Maserati are projected to combine for an estimated total of 230,000 vehicle sales worldwide in 2017 (Butters). Alfa Romeo dealerships frequently pair up with the Italian brand Fiat in addition to Maserati.

1. Butters, Jamie. “Don’t Expect Big Deals on Alfa Romeos Anytime Soon.” Bloomberg, 23 Jun. 2017, https://www.bloomberg.com/news/articles/2017-06-23/alfa-romeo-to-abstain-ondeals-as-brand-puts-panache-over-sales. 2. “FCA Annual Report at 31 December 2016.” FCA, 31 Dec. 2016, http://reports2016.fcagroup.com/downloads/financial/FCA_2016_Annual_Report.pdf. 3. “Fiat Chrysler’s Number of Vehicle Sales in The United States in January 2017 and January 2018, by Segment (in Units).” Statista, www.statista.com/statistics/239964/chryslergroups-vehicle-sales-in-the-united-states-by-segment/. 4. Malan, Andrea. “Alfa Romeo’s 2017 production surged 62% on new models.” Automotive News Europe, 10 Jan. 2018, http://europe.autonews.com/article/20180110/ ANE/180119996/alfa-romeos-2017-production-surged-62-on-new-models. 5. “Fiat Chrysler’s Number of Vehicle Sales in The United States in January 2017 and January 2018, by Segment (in Units).” Statista, www.statista.com/statistics/239964/chrysler-groups-vehicle-sales-in-the-united-states-by-segment/.

C. RETAIL BRAND IDENTITY ANALYSIS PRODUCT

The first Quadrifoglio SUV, delivering unbeatable sensations at the wheel. Starting from USD$79,995.

The first SUV of our history combines the comfort and the versatility of its class with the driving pleasure that only a true Alfa Romeo can delliver. Starting from USD $41,995.

The most powerful road Alfa Romeo ever; the Quadrifoglio legend is back. Starting from USD$73,700.

The paradigm of a new era in the history of Alfa Romeo, created for an uncompromising driving pleasure. Starting from USD$38,195.

The highest expression of Alfa Romeo emotions delivers super-car performance on the road and on the track. Starting from USD $55,900.

Freedom to the nth degree in a concentration of style and driving pleasure; above it there is only sky.. Starting from USD $65,900.

Its unique style is renewed with even better efficiency without compromising emotion. Not available for sale in the U.S.A.

A new sporty look, maximum driving pleasure even in the city and a next generation infotainment system. Not available for sale in the U.S.A.

1. â&#x20AC;&#x153;Choose a Model.â&#x20AC;? Alfa Romeo , 2018, http://www.alfaromeo.com/cars. .

C. RETAIL BRAND IDENTITY ANALYSIS Product Presentation

Retial Promotional Activities

Alfa Romeo is world renowned for its long sporting tradition and Italian design. With the launch of all-new models, Alfa Romeo strives to reestablish itself as a luxury car brand, appealing to drivers seeking high level performance and handling combined with captivating and distinctive appearance (FCA, 19).

Alfa Romeo dealerships offer leasing options for its cars as well as financing options. The brand focuses on introducing new models frequently to maintain its reputation for being innovative. The brand provides customers with 24/7 towing assistance, a one year warranty package. and a 4 year warranty package (Alfa Romeo).

Each dealership showcases Alfa Romeo’s Italian models in a car showroom. Each car is displayed with the appropriate information and sales representatives are readily available to answer any other questions customers may have. Cars are left open for each customer to sit inside and get a true feel for the Alfa Romeo experience. The showroom is arranged in a free-flowing format that allows for customers to freely explore each unique Alfa Romeo model.

People

Property Alfa Romeo follows a merged distribution model - operating through joint ventures and dealerships across the globe. Property is the responsibility of these independent dealerships. The brand shares a combined dealership with other FCA brands, typically Fiat, Maserati, or both. Alfa Romeo is distributed in 150 countries in Europe, America, Asia, Africa, Oceania (FCA, 19).

1. “FCA Annual Report at 31 December 2016.” FCA, 31 Dec. 2016, http://reports2016.fcagroup.com/downloads/financial/FCA_2016_Annual_Report.pdf. Page 19.

The success of the business is directly related to Alfa Romeo’s excellence in customer service and sales operations. Employment is facilitated through the FCA. Employees are to be enthusiastic brand ambassadors and have model-specific knowledge. These components are crucial in providing the utmost customer service. Each employee is required to undergo mandatory training and technicians are specially trained to understand the Italian design and technology of each Alfa Romeo model (FCA).

2. “FCA Careers, Our Brands, Alfa Romeo.” Fiat Chrysler Automobiles Careers, 2018, https://www.fcagroupcareers.com/our-brands/. 3. “Current Offers.” Alfa Romeo, 2018, https://www.alfaromeousa.com/car-shopping/current-offers.

D. COMPETITIVE ANALYSIS MAKER

FOUNDED

PRODUCT PORTFOLIO

ANNUAL SALES 2016

MARKET SHARE USA 2016*

DISTRIBUTED

Infiniti

1987

Luxury sedans, crossovers, and SUVs

230,000 vehicles 7 % increase

6.7%

South America, North America, Europe, Asia/Oceania, Middle East/Africa

Shared platform with Mercedes, first Infiniti (builds) vehicles with character…desadopters of hydraulic motion body tinations in their own right – beautiful, warm control, backup collision intervention, & designs, sometimes even edgy and aggressive, active lane control. but always distinctive and true

Lexus

1989

Luxury sedans, SUVs, coupes, hybrids, and sports cars

677, 615 vehicles 4 % increase

16%

South America, North America, Europe, Asia/Oceania, Middle East/Africa

Lexus Motorsports, strong partnerships (Black Panther/Marvel), luxury hybrid leader, under Toyota group.

An automotive company that takes inspired design, relentless innovation and uninhibited performance and turns them into passionate, moving experiences.

Volkswagen

1937

Premium sedans, SUVs, wagons, andcompacts

4,300, 000 vehicles 0.98 % decrease

12.7%

South America, North America, Europe, Africa, Asia, Oceania produces vehicles for customers in more than 150 nations

Strong reputation for high-performance & large global presence.

The Volkswagen brand stands for innovative, high-quality, and reliable cars.

Lincoln

1920

Luxury sedans, crossovers, and SUVs

111,724 vehicles 1.1 % increase

5.4%

North America, Middle East, East Asia (S. Korea & China)

Lincoln Way App - Concierge, pick-up & delivery and experience centers, success in China.

Not what a car can do. Rather, what a car can do for you. “Quiet luxury”.

* See Appendix B - market share of luxury car brands in the USA (2016)

1. “Annual Report 2017: Nissan Motor Corporation.” Nissan Motor Corporation, 2018, https://www.nissan-global.com/EN/DOCUMENT/PDF/AR/2017/AR17_E_All.pdf.

COMPETITVE ADVANTAGE

BRAND

2. “Annual Report 2017: Toyota.” Toyota Motor Corporation, 2018, http://www.toyota-global.com/investors/ir_library/annual/. 3. “Volkswagen AG, Annual Report 2016.” Volkswagen AG, 2018, https://www.volkswagenag.com/en/InvestorRelations/news-and-publications/Annual_Reports.html. 4. “2017 Annual Report.” Ford Motor Company, 2018, http://shareholder.ford.com/financials/annual-reports.

D. COMPETITIVE ANALYSIS PRICE/ACCESSIBILITY MATRIX

PERCEPTUAL MAP

comfort

performance

elegance 20

price ($USD)

agressive desgin

accessibility (# of countries distributed in) 21

E. STRATEGIC PLANNING PROCESS SITUATIONAL ANALYSIS STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Alfa Romeo has a rich history in racing and designing high-performance cars.

Not established enough to have a standalone Alfa Romeo dealership.

Expand presence in the emerging automotive markets of South America.

Further import bans and restriction in China – the world’s largest automotive market.

Its presence in F1 racing speaks to the advanced technology and design of Alfa Romeo’s cars.

Poor performance and distribution in the Asian region.

Expand presence in Asia - specifically India which is one of the world’s leading automotive markets.

High import fees in emerging markets.

Not an established brand name in regions apart from Europe .

F1 racing is a cost-effective and efficient way to market the brand on a global scale. Financial backing and support from parent corporation FCA. Cars are thoughtfully designed, keeping inline with the brands elegant Italian aeshetic.

Lack of presence in South America.

Develop electric/hybrid automobile models to capitalize on the growing automotive trend.

Limited car models in comparison to its competitors.

Extend its line of SUV’s to meet consumer demand for utility vehicles

The rising price of gas may result in an increase in the consumption of passenger vehicle substitutes. Shifts in technological trends in the automotive industry that require a large R&D investment

Alfa Romeo offers consumers affordable luxury and competes with the likes automotive giants Mercedes and BMW.

E. STRATEGIC PLANNING PROCESS DIFFERENTIAL ANALYSIS

Advanced Technology

“Every Alfa Romeo has been designed from the outset to establish a new benchmark for technology in its class, thanks to an unparalleled set of innovative proprietary technical solutions”.

Lightness and Efficiency

“Sophisticated choice of materials, extensive use of light alloys, carbon fiber and composite materials., together with meticulous engineering design allow perfect weight distribution, optimal dynamic balance and outstanding efficiency.”

Performance and Dynamism

“Every Alfa is a union of technology with an exceptional power-to-weight ratio, providing class-leading performance in terms of speed, acceleration and roadholding. In every Alfa cornering becomes precise and natural, while driving becomes sheer pleasure.”

Italian Design

“Alfa Romeo is a legendary brand whose DNA is built on a unique motoring history. The brand’s best-in-class performance and pure Italian spirit deliver an unparalleled driving experience” - Alfa Romeo’s Mission Statement

“Subtly elegant lines and meticulous attention to finish and detail are the unmistakable hallmarks of Italian design, and emphasize the uniqueness of the brand. Every Alfa is instantly recognizable, its lines expressing dynamic power in the most natural but utterly personal way.” 1. “Alfa Romeo Brand Identity.” Alfa Romeo, October 2015, http://www.fcaci.com/v15-images/guidelines/Alfa-Romeo-Guidelines-Rev201510.PDF. 2. “Alfa Romeo.” Fiat Chrysler Automobiles: Brands, 2017, https://www.fcagroup.com/en-US/brands/Pages/alfa_romeo.aspx.

GEOGRAPHICAL EXPANSION ANALYSIS OF ALTERNATIVES A. Looking East

Malaysia Indonesia India

B. PESTEL Analysis, India C. Market Analysis, India D. Key Players

Luxury Automotive Sector Indirect Competition

A. LOOKING EAST FCA has set its growth targets on expansion in the Asian region, specifically for the Alfa Romeo brand. FCA operates through joint ventures and other cooperation agreements throughout the Asian region (FCA, 19). Asia is expected to lead the worlds economic growth from 2018-2022 with a Real GDP growth rate of 5% (McCaffrey et al. 3). Alfa Romeo is currently present in China, Hong Kong, and Japan. The saturated global automotive market is highly competitive. A surge of new entrants may result in price reductions, reduced margins, and lessened market share. These are just some of the risks associated with distributing a luxury brand to emerging markets. It is not for certain whether Alfa Romeo would be adversely affected by such risks (FCA, 19). According to AT Kearney’s “The 2017 Global Retail Development Index” (Figure 1), India, Malaysia, Vietnam, and Indonesia are rated amongst the top ten global emerging retail economies (Mukherjee et al. 2). Further research showed that Vietnam is the second slowest auto-market in the Asian region (The Voice of Vietnam) and therefore would not be a viable option for Alfa Romeo. Alfa Romeo is interested in further exploring the emerging South East Asian automotive markets in India, Malaysia, and Indonesia.

1. Courtney Rickert McCaffrey, Erik R. Peterson, et al. “The Productivity Imperative: Global Economic Outlook 2018-2022.” ATKearny, Jan. 2018. https:// www.atkearney.com/documents/236833/942758/The+Productivity+Imperative+-+GBPC+Global+Economic+Outlook+2018–2022.pdf/d38c0396-b4624ce1-6717-165ce2cf2305. Page 3. 2. “FCA Annual Report at 31 December 2016.” FCA, 31 Dec. 2016, http://reports2016.fcagroup.com/downloads/financial/FCA_2016_Annual_Report.pdf. page 19. 3. Mukherjee, Ben-Shabat, et al. “The Age of Focus: The 2017 Global Retail Development Index.” ATKearney, 2017, https://www.atkearney.com/documents/20152/435674/The+Age+of+Focus–The+2017+Global+Retail+Development+Index.pdf/d99729b6-f190-2f4d-c7e6-aca980eaf31a. Page 2. 4. “Vietnam among two slowest-selling automotive markets in ASEAN: report.” The Voice of Vietnam, 3 Dec. 2017, http://english.vov.vn/economy/vienam-among-two-slowestselling-automotive-markets-in-asean-report-363858.vov.

Figure 1. 2017 Global Retail Development Index Rank

Country

Market At- Countractiveness try Risk (25%) (25%)

Market Time Saturation Pressure (25%) (25%)

GRDI Score

Population (million)

GDP, per capita, PPP

National Retail Sales ($billion)

India

63.4

59.1

75.7

88.5

71.7

1,329

6,658

1,071

China

100.0

64.5

24.4

92.5

70.4

1,378

15,424

3,128

Malaysia

77.1

87.1

23.3

56.2

60.9

27,234

Turkey

75.8

60.4

31.7

71.4

59.8

21,147

241

UAE

92.3

100.0

0.9

44.4

59.4

67,696

Vietnam

26.7

25.4

72.4

100.0

56.1

6,422

Morocco

34.6

55.4

64.5

69.8

56.1

8,360

Indonesia 49.3

45.5

52.1

76.7

55.9

259

11,699

350

Peru

45.5

62.2

50.8

57.6

54.0

13,019

Colombia 49.7

71.1

48.7

44.9

53.6

14,162

Mukherjee, Ben-Shabat, et al. “The Age of Focus: The 2017 Global Retail Development Index.” ATKearney, 2017, https://www.atkearney.com/documents/20152/435674/The+Age+of+Focus–The+2017+Global+Retail+Development+Index.pdf/d99729b6-f190-2f4d-c7e6-aca980eaf31a. Page 2.

MALAYSIA The GDP growth in Malaysia fell from 5% in 2015 to 4.3% in 2016 and the nation has encountered issues with its currency and inflation rates. However, the retail industry has continued growing due to higher disposable incomes, an increase in tourism, and government investment in infrastructure (Mukherjee et al. 6). Tourism is a major component of the Malaysian government’s growth plan and the number of tourists is expected to grow by 38.5% to 36 million in 2020 (Mukherjee et al. 7). However, this does not benefit Malaysia’s automotive market as it is not typical of a tourist to purchase a car abroad. The number of Malaysian households with a disposable income over US$25,000 is expected to see a 7.1% growth per year from 2017-2022 (Passport, Euromonitor International). Amongst the Asian Pacific region in 2016, Malaysia sold 514,545 passenger cars – ranking it seventh highest in the region (Statista). The current value of sales in Malaysia’s luxury automotive sector is MYR10 billion and has a yearover-year growth of 3.8% (Passport, Euromonitor International). The Malaysian luxury automotive sector is dominated by Mercedes-Benz with 52% market share in 2016 (Passport, Euromonitor International).

INDONESIA Foreign investment and interest in Indonesia has been heightened recently due to continued liberalization and infrastructure investment within the country (Mukherjee et al. 8). A majority of Indonesian consumers are low to middle income and do not have disposable income. However, the number of wealthy Indonesians has been growing and the number of households with a disposable income over US$25,000 is expected to grow 9.3% from 2017-2022 (Passport, Euromonitor International). Amongst the Asian Pacific region in 2016, Indonesia sold 834,919 passenger cars – ranking it sixth highest in the region (Statista). The luxury automotive market in Indonesia has a current sales value of IDR 7.5 trillion in 2017 and has a year-over-year growth of 4.6% (Passport, Euromonitor International). Mercedes-Benz has the highest market share, 39.6% in 2016, amongst luxury car brands in Indonesia (Passport, Euromonitor International).

Consumers of the emerging middle class are interested in entry-level luxury cars as they are more affordable and offer the consumer a higher-end brand. There has been a growing demand for hybrid and electric cars amongst Malaysian consumers (Passport, Euromonitor International). Currently Alfa Romeo does not offer such vehicles to satisfy this trend.

Despite the presence of a strong economy, the Indonesian automotive market is experiencing slow growth due to the consumer preference to purchase second-hand luxury cars rather than new. Additionally, much of the population is low to mid income and cannot afford a luxury car. A majority of wealthy Indonesian’s reside in Jakarta which is infamous for heavily congested roads – making commuting by car unattractive. However, there is strong potential for luxury sports cars in the next five years due to the growing cultural importance of status based on material luxury goods (Passport, Euromonitor International).

Alfa Romeo Score: 5/10

Alfa Romeo Score: 6/10

1. OICA. “Number of Passenger Cars Sold in The Asia Pacific Region 2016, by Country.” Statista - The Statistics Portal, Statista, www.statista.com/statistics/584904/asia-pacific-passenger-car-sales-by-country/, Accessed 3 Mar 2018. 2. “Luxury Cars in Malaysia – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab#. 3. Mukherjee, Ben-Shabat, et al. “The Age of Focus: The 2017 Global Retail Development Index.” ATKearney, 2017, https:// www.atkearney.com/documents/20152/435674/The+Age+of+Focus–The+2017+Global+Retail+Development+Index.pdf/ d99729b6-f190-2f4d-c7e6-aca980eaf31a. Page 6-7.

INDIA The economy in India has been defined by its steady growth of GDP – it is forecasted to grow by 7.4% in 2017 and 7.6% in 2018. The rising GDP has helped bring forward an emerging middle class, increased consumer spending, and demand for consumer products (Mukherjee et al. 4). The number of households with a disposable income over US$25,000 is expected to see a 14.1% growth per year from 2017-2022 (Passport, Euromonitor International). The Indian government has made progress in relaxing federal and state restrictions that limit the development of retail commerce. This has helped to create a more attractive environment in India for foreign investment (Mukherjee et al. 4). The rising Indian middle class and increasing number of millionaires in India has resulted in a growth within luxury cars (Passport, Euromonitor International). Amongst the Asian Pacific region in 2016, India sold 2,966,637 passenger cars – ranking it third highest in the region (Statista). The luxury automotive segment in India reached a current sales value of INR195 billion in 2017 and has a year-over-year growth of 18%, expecting to reach INR385 billion in 2022 (Passport, Euromonitor International). This segment is currently dominated by Mercedes-Benz with a market share of 37% in 2016 (Passport, Euromonitor International). The growth of the Indian luxury automotive sector has been propelled by increased demand amongst the younger demographic. This demographic makes up a large portion of the population in India, many of which aspire to purchase a luxury car. Much of the younger demographic chooses to move further out of metropolitan areas, to spend less on housing and increase their disposable incomes. These consumers are using their increased disposable income to purchase luxury vehicles that help give them a status boost. Diverse features such as the car’s engine and its torque are now becoming important factors in gaging the value of the car (Passport, Euromonitor International).

Alfa Romeo Score: 9/10

1. “Luxury Cars in India – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab. 2. Mukherjee, Ben-Shabat, et al. “The Age of Focus: The 2017 Global Retail Development Index.” ATKearney, 2017, https://www.atkearney.com/documents/20152/435674/The+Age+of+Focus–The+2017+Global+Retail+Development+Index.pdf/d99729b6-f190-2f4d-c7e6-aca980eaf31a. Page 4. 3. OICA. "Number of Passenger Cars Sold in The Asia Pacific Region 2016, by Country." Statista - The Statistics Portal, Statista, www.statista.com/statistics/584904/ asia-pacific-passenger-car-sales-by-country/, Accessed 3 Mar 2018.

B. PESTEL ANALYSIS - INDIA POLITICAL

ECONOMICAL

SOCIAL

TECHNOLOGICAL

ENVIRONMENTAL

LEGAL

Current strengths Strong democratic set up, foreign policy, and engagement with Europe & Canada

Current strengths Second largest workforce in the world, well developed equity market

Current Strengths Large youth population, employment guarantee scheme, and growing tourism

Current Strengths Reputed space research agency, growing digital transactions

Current Strengths Rich biodiversity and comprehensive environmental policy framework.

Current strengths Comprehensive legal framework for business entities

Current challenges Terrorism, lack of comprehensive peace deal with Pakistan, allegations of corruption, inept implementation of demonetization

Current challenges Poor agriculture sector performance

Current Challenges Healthcare remains major concern, rapid urbanization, low HDI rank, and low literacy level

Future prospects Strong & stable government, better relations with immediate neighbors, stronger relations with Japan, and improved accountability of government

Future prospects Pro-growth policies of the new government, promoting business environment Future risks Increasing non-performing loans

Future risks Intensifying demand for new states, social and communal tensions

Future Prospects Jan Dhan Yojani (Scheme for People’s Wealth), rising life expectancy, and falling infant mortality Future Risks Government’s authority challenged, employment creation

Current Challenges Low expenditure on R&D, talent pool requires further vocational training Future Prospects Significant competitive advantage in biotechnology research, push to urban infrastructure Future Risk Low proportion of high technological exports

Current Challenges Depleted water sources and dependence on fossil fuels for energy requirements. Future Prospects Public-private partnerships and ecotourism, cleaning the Ganges River, afforestation fund Future Risks Distortionary policies and enforcement deterrents

Current Challenges Barriers to trade and investment, weak implementation of intellectual property laws, and judicial delays Future Prospects Improvement in corporate governance, tax reforms Future Risks Inefficient implementation of regulations, lack of single financial market regulator

1. Banerji, Sumant. “Luxury Car Sales Grow Fastest in 5 Years in India.” Business News, Living Media India Limited, 9 Jan. 2018, www.businesstoday.in/sectors/auto/luxury-car-sales-grow-fastest-5-years-india/story/267578.html. 2. “Best Luxury Cars in India - 2018 Top 10 Luxury Cars Prices - DriveSpark.” Www.drivespark.com, Greynium Information Technologies Pvt. Ltd., Aug. 2017, www.drivespark.com/best-luxury-cars/#mercedesbenz-sclass. 3. India Brand Equity Foundation- Automobiles. Ministry of Commerce & Industry, Government of India, 2018, India Brand Equity Foundation- Automobiles, www.ibef.org/download/Automobiles-February-2018.pdf. \ 4. Sing, Rajesh Kumar, and Aditi Shah Reuters. “India Approves Tax Rise on Luxury Cars That Could Hit BMW, Mercedes, Audi, Others.” Automotive News, Crain Communications, Inc., 30 Aug. 2017, europe.autonews.com/article/20170830/ANE/170839995/india-approves-tax-rise-on-luxury-cars-that-could-hit-bmw-mercedes.

C. MARKET ANALYSIS, INDIA In 2017, India became the 27th most attractive global market for luxury goods. The sale of luxury cars stood at 33,279 units in 2016 (India Equity Foundation). In 2017, Indian luxury car sales rose by 18% to reach INR195 billion. The drivers of growth in this market include a rising disposable income, a large younger demographic with heightened demand for luxury goods, greater availability of credit and financing options, and a growing number of millionaires in the country (Banerji). India has the 12th largest population of high net worth individuals (HNIs), and shows continued potential in the luxury car sector (Indian Brand Equity Foundation). The presence of independent distributors continues to limit overall luxury cars sales. Mercedes Benz dominates luxury car sales for the fifth year in a row, with a market share of 37.3 % at the end of 2016. Luxury cars are expected to post a value CAGR of 15% for 2017, with sales reaching INR385 billion in 2022 (Euromonitor). Indian consumers are considering more diverse factors when purchasing luxury cars. Many young consumers are investing less in real estate, and instead, spending excess money on luxury cars. The younger demographic is highly aspirational and associates the purchase of luxury cars with a boost in social status. India is one of the youngest countries in the world, with 70% of its population under the age of 35 (Jain and Patel). In regards to luxury goods, 57% of purchases are made by Indian consumers aged 25-34 years old - mostly in New Delhi and Mumbai (Jain and Patel). As more join the workforce each year, these young professionals obtain high aspirations for luxury goods, specifically cars. What has traditionally been thought of as extravagant purchases is now being seen as a standard way of expressing oneself and enjoying life (Euromonitor). With so many issues related to the environment, the Indian government has shifted its focus on electric cars in order to meet the emission reduction targets. Due to this, local car makers like Mahindra, are set to launch electric models in the coming years while Tesla is considering entering the Indian market (Sing et al.) The Indian automotive consumer is more tech-savvy than ever. In fact, research conducted by Google India and Kantar TNS, stated that 89% of car purchases in India were “digitally influenced” in 2017 compared to 75% in 2016 (Warc News). Consumers are turning to online sources to read customer reviews and research features such as safety, technology, and performance (Warc News). The Indian consumer has also placed an emphasis on in-car connectivity features, such as Bluetooth and GPS (Sen Guptal). 1. Banerji, Sumant. “Luxury Car Sales Grow Fastest in 5 Years in India.” Business News, Living Media India Limited, 9 Jan. 2018, www.businesstoday.in/sectors/auto/luxury-car-sales-grow-fastest-5-years--india/story/267578. html. 2. “Best Luxury Cars in India - 2018 Top 10 Luxury Cars Prices - DriveSpark.” Www.drivespark.com, Greynium Information Technologies Pvt. Ltd., Aug. 2017, www.drivespark.com/best-luxury-cars/#mercedesbenz-sclass. 3. “Luxury Cars in India – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab. India Brand Equity Foundation- Automobiles. Ministry of Commerce & Industry, Government of India, 2018, India Brand Equity Foundation- Automobiles, www.ibef.org/download/Automobiles-February-2018.pdf. \ 4. Nandini Sen Guptal. “Luxury car makers target younger buyers.” The Times of India, https://timesofindia.indiatimes.com/business/india-business/Luxury-car-makers-target-younger-buyers/articleshow/16648725.cms. 5. Sing, Rajesh Kumar, and Aditi Shah Reuters. “India Approves Tax Rise on Luxury Cars That Could Hit BMW, Mercedes, Audi, Others.” Automotive News, Crain Communications, Inc., 30 Aug. 2017, europe.autonews.com/ article/20170830/ANE/170839995/india-approves-tax-rise-on-luxury-cars-that-could-hit-bmw-mercedes. 6. Varsha Jain and Kruti Patel. “Marketing luxury cars in India.” WARC Exclusive, Mudra Institute of Communications, January 2013, https://0-www.warc.com.library.scad.edu/content/article/warc-exclusive/marketing_luxury_cars_in_india/98740. 7. “89% of Indian auto sales are digitally influenced.” Warc News,14 Dec. 2017, https://0www.warc.com.library.scad.edu/newsandopinion/news/89_of_indian_auto_sales_are_digitally_influenced/39744.

D. KEY PLAYERS LUXURY AUTOMOTIVE SECTOR

D. KEY PLAYERS INDIRECT COMPETITION

*See Appendix C A major indirect competitor of India’s luxury automotive sector are two-wheeler vehicles. In 2017 India became the world’s largest two-wheeler market, selling 17.7 million units in 2016. The two-wheeler is increasingly becoming a second vehicle in many households as it offers consumers shorter commutes in congested cities, convenience, and fuel efficiency (Dovall). The top selling brands in India are Honda, Hero, TVS, and Bajaj (Shah). • 37.3% market share (2016) • Dominates luxury automotive sector

• 31.0% market share (2016)

• Domestic manufacturing plants

• Top selling E-Class model

• Offers 14 models in India

Alfa Romeo should also concern itself with lower-end domestically manufactured brands. India’s top three automobile brands, Maruti, Mahinda, and Hyundai account for 70% of the sectors market share (Sengupta|). These brands are well established in India and dominate the market. Rolls Royce, operating in the super luxury automotive category, has launched its new premium model Phantom in India (The Economic Times). It offers consumers the ultimate luxury experience for a significantly higher price than Alfa Romeo. The Rolls Royce brand has a long standing tradition with India’s aristocracy (Jain and Patel). Consumers interested in luxury automobiles may choose to purchase multiple vehicles and may consider a Rolls Royce in the process.

ALFA ROMEO INDIA - INDIRECT COMPETITION: Honda, Hero, TVS, Bajaj, Maruti, Mahindra, Hyundai, Rolls Royce • 28.4% market share (2016)

• 3.4% market share (2016)

• Domestic manufacturing plants

• Imported automobiles

• Top selling BMW 5-series

• Offers 5 models in India

“Luxury Cars in India – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab.

1. Dovall, Pankaj. “India is now the world’s biggest two-wheeler market.” The Times of India, 7 May 2017 https://timesofindia.indiatimes.com/auto/bikes/india-is-now-worlds-biggest-2-wheelermarket/articleshow/58555735.cms 2. “Rolls-Royce launches its new premium model Phantom in north India at Rs 11.35 cr.” The Economic Times, 6 Mar. 2018, https://economictimes.indiatimes.com/magazines/panache/rolls-roycelaunches-its-new-premium-model-phantom-in-north-india-at-rs-11-35-cr/articleshow/63187572.cms 3. Senguptal, Nandini. “Top 3 auto companies hold 70% market share.” The Times of India, 28 Jan. 2016, https://timesofindia.indiatimes.com/business/india-business/Top-3-auto-companieshold-70-market-share/articleshow/50749746.cms. 4. Shah, Ronak. “Top selling motorcycles, scooters in India; TVS Jupiter enters top 5 two-wheelers list.” Financial Express, 28 Nov. 2017, http://www.financialexpress.com/auto/bike-news/top-selling-motorcycles-scooters-in-india-tvs-jupiter-enters-top-5-two-wheelers-list/950663/ 5. Varsha Jain and Kruti Patel. “Marketing luxury cars in India.” WARC Exclusive, Mudra Institute of Communications, January 2013, https://0-www.warc.com.library.scad.edu/content/article/ warc-exclusive/marketing_luxury_cars_in_india/98740.

TARGET CONSUMERS

A. Demographic B. Psychographic C. Behavioral D. Target Consumer Profile

TARGET CONSUMER

A. DEMOGRAPHIC

Alfa Romeo is targeting the “automobile super consumer” in India that desire luxury cars. This segment accounts for 35% of the car buying consumer segment in India and is particularly important to capture, as 40% of them will purchase more than one car (Terron and Pande). Alfa Romeo offers various models that appeal to a wide array of consumers, however the core mental space consumer is outlined below in terms of his demographic, psychographic, and behavioral characteristics.

Sanjay is an Indian male between the ages of 25 and 40. He is an urban-dweller, living either in New Delhi or Mumbai. Like the family he grew up in, Sanjay is affluent and is either a successful professional in a respected career or a business owner. His formal university education either abroad or at India’s top institutions, has helped bring him success in his career (Terron and Pande). Sanjay has a busy work life and so he is either single or newly married and does not yet have any children (Sen Guptal). It is likely that he will be earning a yearly salary of US $100,000, or more (Jain and Patel). His respected career and healthy salary put him among India’s other luxury consuming elite – comprised of two million households and expected to grow at 13% per annum (Jain and Patel).

Meet Sanjay Patel, he is Alfa Romeo’s core customer:

B. PSYCHOGRAPHIC Sanjay is a highly aspirational individual and believes that purchasing a luxury car is a way to express himself, enjoy life, and indulge (Passport, Euromonitor). Sanjay perceives himself to be modern, ambitious, successful, trend-setting, and special (Terron and Pande). In his down time, he engages in various activities that are associated with his elite lifestyle such as vacationing, attending sporting matches, frequenting the gym, dining out, and attending a men’s club (Terron and Pande).

C. BEHAVIORAL Sanjay is a brand conscious individual who believes that high-end brands have a strong association with quality. While traveling for his education, business, and vacations, Sanjay has been exposed to luxury cars and has developed an affinity for them (Jain and Patel). Sanjay considers various features when purchasing his car such as power, handling, technology, safety, and performance. He chooses to upgrade his car to a top-variant model to use all the available features and accessories. As a member of the younger demographic, he is tech-savvy, comfortable with social media (Jain and Patel), and appreciates connectivity features in a car, such as Bluetooth (Sen Guptal). Overall, his ideal vehicle is smart, premium, trustworthy, safe, trendy, and world class (Terron and Pande). Sanjay’s average cycle-time for changing cars is 3 years and he prefers to lease rather than enter a long-term financing arrangement (Sen Guptal). 1. Adrian Terron and Sandeep Pande. “Super Consumers: Racing To the Top.” The Nielsen Company, 2015, https://0www.warc.com.library.scad.edu/content/article/nielsen/automobile_super_consumers_racing_to_the_top_in_india/104897. 2. Nandini Sen Guptal. “Luxury car makers target younger buyers.” The Times of India, https://timesofindia.indiatimes.com/business/india-business/Luxury-car-makers-target-younger-buyers/articleshow/16648725.cms 3. “Luxury Cars in India – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab. 4. Varsha Jain and Kruti Patel. “Marketing luxury cars in India.” WARC Exclusive, Mudra Institute of Communications, January 2013, https://0-www.warc.com.library.scad.edu/content/article/warc-exclusive/marketing_luxury_cars_in_india/98740.

D. TARGET CONSUMER PROFILE MENTAL SPACE & CORE CUSTOMER: SANJAY PATEL GENDER Male

AGE 32

CITY Mumbai

MONTHLY INCOME INR 100,000

D. TARGET CONSUMER PROFILE MARKET SPACE: ANKITA DHALLA

GENDER Female

AGE 27 CITY Mumbai

MONTHLY INCOME INR 75,000

OCCUPATION Junior Manager, Risk Management Department, Indian Bank

OCCUPATION Merchandising Manager, Smytten

EDUCATION Bachelor of Financial Mathematics, University of Warwick

EDUCATION Bachelor of Business, University of Sydney

INTERESTS Ftiness, The Cricket Club of India, upscale nightlife, taking vacations in the Maldives and Paris

INTERESTS Shopping, social media, beauty, fashion, yoga, dining out, vacationing in Europe and Thailand

SHOPPING MANTRA High quality items are expensive, established, and foreign brands

SHOPPING MANTRA Self indulgence means treating myself with quality brands, like Louis Vuitton

SOCIAL MEDIA @sanjaythemanjay on Twitter and Instagram, Facebook, frequents YouTube for videos of exotic cars

SOCIAL MEDIA @ankita1990 on Twitter and Instagram, has Facebook, uses YouTube for beauty and fashion bloggers

MEDIA CONSUMPTION Mobile subscription - Financial Express and The Economist

MEDIA CONSUMPTION Mobile subscription - Vogue India and Elle India

SELF-IMAGE Ambitious, special, trendsetter, modern, elite social butterfly

SELF-IMAGE Stylish, aspirational, strong female, extroverted

ALFA ROMEO MODELS FOR SANJAY Giulia, Giulia Quadrifoglio, 4C Coupe

ALFA ROMEO MODELS FOR ANKITA Giulia, Stelvio

D. TARGET CONSUMER PROFILE

MRS. SOHANI BHATT

MR. NANJOT BHATT

Shopping for: a practical family car

Shopping for: a second car for the weekend

MARKET SPACE: THE BHATT FAMILY

PARENTS Mr. Nanjot Bhatt (39) and Mrs. Sohani Bhatt (33)

CITY Mumbai

CHILDREN Jagan Bhatt (7) and Lathika Bhatt (4)

MONTHLY HOUSEHOLD INCOME INR 350,000

OCCUPATION Stay at home mother

OCCUPATION Cardiac Surgeon, Jaslok Hospital

EDUCATION Bachelor of Social Sciences, University of Mumbai

EDUCATION Doctor of Medicine (M.D), McMaster University

INTERESTS Family, yoga, dates with Nanjot, family vacations, shopping with Lathika

INTERESTS Family vacations, dining out with his wife, playing cricket with Jagan

SHOPPING MANTRA I buy expensive brands - they are the best for my family and our status

SHOPPING MANTRA Foreign brands will help boost my elite status amongst coworkers

MEDIA CONSUMPTION Subscription to Harperâ&#x20AC;&#x2122;s Bazaar India, Food and Wine Magazine, and the Economist

MEDIA CONSUMPTION Subscription to the Financial Times, Nature Medicince Journal, email notifications from Reuters, watches the BBC with breakfast

SELF-IMAGE Caring, modern, social-elite, important

SELF-IMAGE Hard-Working, social-elite, intelligent, modern

ALFA ROMEO MODELS FOR SOHANI Stelvio, Stelvio Quadrifoglio

ALFA ROMEO MODELS FOR NANJOT Giulia Quadrifoglio, 4C Coupe, 4C Spider

STORE LOCATION, DESIGN, PRODUCT

A. Trading Area Analysis - Mumbai, India B. Design of Actual Space Interior Exterior C. Product Plan - India

A. TRADING AREA ANALYSIS MUMBAI, INDIA GLOBAL DISTRIBUTION MODEL To distribute Alfa Romeo in India, a pre-existing FCA brand dealership will be utilized. This distribution model allows the brand to branch into an emerging market, through the use of an already established dealership showroom. The Landmark Lifestyle Cars dealership, opened a branch in Worli Mumbai in 2016 and currently sells Jeep, Fiat, and Abarth - other FCA brands. Landmark has established themselves as the representative FCA dealership in its area and as direct competitor to other luxury automobile brands. The Landmark dealership chain is currently one of the largest Indian national networks, occupying 75 outlets in 5 different states (Landmark Group). The Landmark brand emphasizes a decentralized management and consultant model which have allowed consultants and managers to lead brand expansions and branching within the company (Thakkar and Barman).The Landmark Brand dealership located in Worli is an ideal candidate for the positioning of Alfa Romeo.

MUMBAI - THE “INDIAN” DREAM Mumbai, the capital city of India, has great economic and social potential that would support an Alfa Romeo dealership. Mumbai has nearly 20 million inhabitants, whose pride in Indian national culture and aspirations of becoming a “truly global city” has propelled the city to become a staple of Indian wealth (Mire). Mumbai is emerging as a global city that can be compared to the likes of London and New York - providing Indians with their very own “Indian” Dream. The city boasts the country’s largest international airport, film industry, and financial center. In fact, Mumbai is home to the most active stock market in South Asia - serving leading investment houses such as Morgan Stanley, Merrill Lynch, and Deutsche Morgan Grenfell (Mire). With a projected national increase of 5% in affluent citizens and an 8% increase in elite citizens by 2025, Mumbai is seeing an increase in its wealth distribution (Singhi et al.). Mumbai shows the highest retail potential in India and is ranked second for luxury spending (Gupta).

1. Abhay Gupta. “How luxury brands should target India’s super rich.” Retail Dive, 2018, https://www.retaildive.com/ex/mobilecommercedaily/how-luxury-brands-should-target-indias-super-rich. 2. Abheek Singhi, Nimisha Jain, and Kanika Sanghi. “The New India: The Many Facets of a Changing Consumer.” The Boston Consulting Group, 20 March 2017, https://www. bcg.com/publications/2017/marketing-sales-globalization-new-indian-changing-consumer.aspx. 3. “Automobile Dealerships,” Landmark Group, 2018, http://grouplandmark.in. 4. Kamdar, Mira. 1997. “Bombay/Mumbai.” World Policy Journal 14, no. 2: 75. Academic Search Premier, EBSCOhost (accessed March 12, 2018). 5. Ketan Thakkar and Arijit Barman,”How Landmark’s Sanjay Thakker created one of the largest networks of profitable auto dealerships nationally,” The Economic Times, 2 May 2015, https://economictimes.indiatimes.com/industry/auto/news/industry/how-landmarks-sanjay-thakker-created-one-of-the-largest-networks-of-profitable-auto-dealerships-nationally/articleshow/47127668.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

PRIZM Alfa Romeo’s competitors, Mercedes Benz India, Audi India and BMW India, have reduced manufacturing costs by implementing domestic production. These brands eliminate the 60% import fee (International Trade Administration) in addition to lowering labor costs. This overall reduction in average unit cost has resulted in lower prices and thus higher volume (Passport, Euromonitor International). Porsche accounts for 3.4% market share in the Indian luxury automotive sector and does not have a domestic manufacturing plant (Passport, Euromonitor International). As an Italian manufactured brand, Alfa Romeo will position itself similarly to Porsche - as a “European luxury import.” This will help boost its brand image by communicating an integral component of its Italian heritage. The price increase of Alfa Romeo’s, due to import duties, will help elevate the position of the brand in the Indian market positioning it closer to Porsche.

SALES POTENTIAL The Mumbai region in the state of Maharashtra, experiences seasonal weather fluctuations that may impact unit sales at the dealership. Mumbai’s monsoon season takes place between the months of June and August and is characterized by heavy rains and floods (Weather Online). It is common for the entire city to come to a stand still, as traffic flow is disrupted, or in severe cases, transportation by land is impossible (Aljazeera). These seasonal periods dramatically impact the stability of trading in the area and ultimately the economic production of the city. During monsoon season, a reduction in unit sales is expected to occur. However, the severity of this decrease is dependent on the current conditions experienced during that fiscal year. Seasonal sales may also be impacted by Indian cultural and national holidays. Additionally, sales will be affected by national holidays as India and the Maharahsta region boasts over 20 national and regional holiday that are characterized by celebration and gift giving (Public Holidays). Diwali, celebrated in autumn and Parsi, celebrated in August, are two of the countries and regions largest holidays with an emphasis on gift giving (National Geographic). It has been reported, that car manufactures experience the greatest number of sales during the Indian holiday months, with a significant increase during the celebration of Diwali (CarAndBike). 1. “Climate of the World: India.” Weather Online, 2018, https://www.weatheronline.co.uk/reports/climate/India.htm 2. “Diwali.” National Geographics, 2018, https://kids.nationalgeographic.com/explore/diwali/#diwali_candles.jpg. 3. “Diwali 2017: Top 5 Firecracker Bikes We Rode In 2017.” Car and Bike, 21 Oct. 2017, https://auto.ndtv.com/news/diwali-2017-top-5-bikes-firecracker-bikes-we-rode-in-2017-1765084 4. “India – Import Tariffs,” International Trade Administration, 1 Aug. 2017, https://www.export.gov/article?id=India-Import-Tariffs 5. “Luxury Cars in India – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab. 6. “Monsoon rains bring Mumbai to a standstill.” Aljazeera, 30 Aug. 2017, https://www.aljazeera.com/news/2017/08/monsoon-rains-bring-mumbai-standstill-170829134146264.html. 7. “Public Holidays in Maharashta.” Office Holidays, 2018, https://www.officeholidays.com/countries/india/maharashtra/index.php.

DIRECT AND INDIRECT COMPETITION The Alfa Romeo dealership will be located in Worli, Mumbai at the Landmark Jeep dealership. The direct competitor dealerships are positioned within a 5 mile radius - including Jaguar, Audi, Porsche, BMW and Land Rover. Popular two-wheeler dealerships for Honda, TVS, and Bajaj are within a 5, 20, and 15 mile radius respectively. Domestically manufactured dealerships such as Maruti and Hyundai are positioned with a 15 and 5 miles radius respectively. Lastly, the super-luxury Rolls Royce dealership is within 2 mile radius of Landmark Lifestyle.

AREA ATTRACTIONS Worli is located in close proximity between two of Mumba’s, and India’s, most important financial districts. Many of Mumbai’s wealthy and upper-middle class live in Worli due to its expensive luxury housing options (Priolker). The luxury accommodations in Worli include the St. Regis and The Four Seasons. High-end shopping malls in Worli include the Palladium, the High Street Phoenix, and Shaze Luxury Retail PVT. Other attractions in the area are Hanging Garden, Amarsons Garden, Sardar Vallabhbhai Patel Stadium, The Willingdon Sports Club, Britannia Garden, the Nehru Center Art Gallery, the Nehru Planetarium, and the Mahalakshmi Race Course.

AREA FACTORS The Bandara-Worli Sea Link, opened for public access in 2009, provides commuters with an ease of access to the district (Shetty). Parking for the dealership is located in its underground parking garage. The dealership is made accessible by public transportation. The Nehru Planetarium bus station is located across the street from the dealership.

HUMAN RESOURCES The Landmark dealership in Mumbai is currently outfitted with the Abarth, Fiat, and Jeep brands, existing employees will be crosstrained. To accomodate Alfa Romeo the following staff will be hired: 1 new manager, 2 new car salesmen, 1 new online sales agent, 4 new automotive technicians, and 2 new business development employees. Should a busier time occur, team members from the pre-existing Jeep, Abarth, and Fiat brands will be cross-trained to attend to customers in need. 1. Ashwini Priolker.“5 Reasons Why Worli Is Becoming Mumbai’s Top Address.” NDTV Property, 11 July 2016, http://sites.ndtv.com/property/2981-2/. 2. Sneha Shetty. “Did you know these cool facts about the Bandra-Worli Sea Link?” India, 16 Dec. 2015. http://www.india.com/travel/articles/did-you-know-these-cool-facts-about-the-bandra-worli-sea-link/

B. DESIGN OF ACTUAL SPACE The Alfa Romeo dealership in Mumbai is an expansion of the pre-existing Landmark Jeep dealership. The inspiration for the design was the rich Italian and sporting history of Alfa Romeo.

EXTERIOR (APPENDIX D) The exterior of the building will be repainted from black to red and white. This will better reflect the color scheme of the brand and give the exterior a more elegant appearance. Alfa Romeoâ&#x20AC;&#x2122;s logo is easily visible on the exterior building, along with the other brands retailed at this location - Abarth, Fiat, and Jeep. In order to show off featured models from the inside-out and incorporate natural lighting, there are large floor to ceiling windows. The car service and maintenance center is located underground to ensure space efficiency in a densely populated city.

INTERIOR (APPENDIX E) Alfa Romeoâ&#x20AC;&#x2122;s Italian heritage is highlighted in the vibrant red interior as well as small decorative touches, such as the soccer balls on display. The sophisticated red leather furniture provides a luxurious Italian finish. Products are showcased with spotlights overhead in a free-flowing retail format to ensure each car is visibly highlighted in the showroom. All cars are left open to encourage customers to sit inside and gain a better understanding of the Alfa Romeo experience. The high ceilings provide an open and spacious feel that compliments the free-flowing retail layout. The different sections of the interior include a comfortable waiting area with red leather couches, perfect for those waiting to be helped or waiting for their car to be serviced. In addition to the soccer balls, the glass display cases contain rims, memorabilia and various Alfa Romeo merchandise available to order. Nearby is a guest lounge with televisions and complimentary light refreshments, such as pastries and coffee. The second-floor expansion offers intimate and private setting for clients and employees. Each office contains basic furnishing items such as a desk, chair, telephone, computer, and tablet. The second floor is ideal for sales staff and customers to continue negotiations, ask further questions, discuss details, and complete the final steps of their Alfa Romeo purchase.

C. PRODUCT PLAN - INDIA $115,709

$59,966

The Giulia and Giulia Quadrifoglio will be introduced to India to reflect the tastes of Alfa Romeo’s core consumer. Out of the following models; sedans, multi-purpose vehicles, hatchbacks, sport utility vehicles, and premium models, 40% of “automobile super consumers” prefer sedan models (Terron and Pande). Alfa Romeo’s sedan models, the Giulia and the Giulia Quadrifoglio, offer the core consumer a practical, powerful, and elegant car. To respond to the “automobile super consumers” tendency to upgrade to top-variant models (Terron and Pande), Alfa Romeo India has included the Giulia Quadrifoglio and Stelvio Quadrifoglio in its product plan. These vehicles pay homage to Alfa Romeo’s rich racing history and offer consumers excellence in performance, technology, power, design, and handling.

$65,932

$125,592 $87,763

Alfa Romeo India will introduce the Stevlio and Stelvio Quadrifoglio models to capitalize on the growing demand for sport utility vehicles in the Indian automotive market. In 2016, one in every four vehicles sold in India was an SUV and sales are expected to further increase 30% in 2017 (Dovall). Indian consumers have recently expressed their desire for stronger, safer, and high-occupancy vehicles due to the underdeveloped Indian road infrastructure (Dovall). It is important for Alfa Romeo to enter the Indian SUV segment to build a strong reputation for its SUV models, create consumer loyalty for them, and reap the benefits of a growing market segment. The Stelvio and Stelvio Quadrifoglio, set themselves apart from competition by offering top utility performance, without sacrificing elegance and stylish design. The 4C and 4C Spider will be introduced to Indian market with the purpose of building excitement, communicating Alfa Romeo’s innovative engineering, and educating consumers on Alfa Romeo’s rich Italian and racing heritage. Additionally, the 4C and 4C Spider align with the aspirational element of India’s younger demographic by inspiring affinity for the brand early on (Passport, Euromonitor International). The 4C gives consumers an enclosed sportier feel, while the 4C Spider offers a laidback convertible experience in the warm Indian climate. These models will help boost Alfa Romeo’s image in India as being a luxury European import, positioning itself closer to Porsche.

$103,463

$87,763

1. Adrian Terron and Sandeep Pande. “Super Consumers: Racing To the Top.” The Nielsen Company, 2015, https://0www.warc.com.library.scad.edu/content/article/nielsen/automobile_super_consumers_racing_to_the_top_in_india/104897 2. “Luxury Cars in India – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab. 3. Pankaj Dovall, “One out of evrery four vehicles sold in India is an SUV: Report,” The Times of India, 12 Aug 2017. https://timesofindia.indiatimes.com/auto/miscellaneous/one-of-every-4-vehicles-soldis-an-suv/articleshow/58137054.cms

COMMUNICATION AND PROMOTION PLAN

A. Omni-Channel Marketing Plan B. Pre-Lauch, Launch, and Post-Launch Activities

A. OMNI-CHANNEL MARKETING PLAN The overall communication of the Alfa Romeo India launch matches closely with the brand identity, image, and associations that already exist within the brand. Referencing the Italian heritage of the brand, enhances its sense of luxury and reminds consumers of its performance credibility and high quality. Similar to its launch in the United States, the marketing and promotion plan expresses the idea that consumers are bored of ordinary German vehicles and desire something new and exciting. The younger demographic is not easily convinced by advertising, so Alfa Romeo India’s promotional strategy focuses on communicating its high performance and innovative features - curb appeal, powerful engines, and solid engineering. For each featured model, there is a specific tagline that the brand uses; the Giulia is “a new paradigm, a new era,” the Stelvio is “inspired by the most exciting road in the world,” the 4C is “the highest expression of Alfa Romeo emotions,” and the Quadrifoglio is “always on the side of those who dare.” Some of the mediums Alfa Romeo will utilize in India are billboards, social media, trade shows, digital marketing, public relations events, commercials, and magazine advertisements. The expenses for these promotional activities will be incurred by the FCA.

B. PRE-LAUCH, LAUNCH, AND POST LAUNCH ACTIVITIES For the pre-launch of Ala Romeo in November and December 2018, the brand will attend various car shows across the country, including the Madras Exotic Car Show, the Super Car Show, and the India Auto Show. While attendees can look and feel actual models, they will also be able to experience them through e-brochures that include personalization features as well as informational videos. These brochures will later be available via direct mail as well as online to download. In addition, the launch will include numerous print advertisements in various types of magazines such as Forbes India, Auto Drive India, and Business Today. In January of 2019, there will be a local launch event at the Landmark Jeep Dealership. This will serve as a soft-opening and re-opening since the showroom will be remodeled. Guests of this intimate public relations event will include existing Landmark clients from across India, Indian socialites, influential Indian businessmen and businesswomen, and Alfa Romeo official representatives. It will feature light hors d'oeuvres, live Italian music, raffles, and even an Alfa Romeo Formula One car to generate interest and overall excitement. According to a 2017 report from Statista, the top social media platforms in India include Facebook, YouTube, WhatsApp and Instagram (Statista). These will be key during each phase of the launch. Each account will be @AlfaRomeoIndia to match the existing structure of the official Alfa Romeo Brand. The YouTube account will feature official commercials as well as new content specifically for India. The strategy includes partnering with Formula 1 drivers from Force India, Sergio Perez and Estaban Ocon, demonstrations in different models are shows. This same content will be featured on television during some of the most televised events in India, such as the West Indies Tour of India for cricket, the Hockey Men’s World Cup and the 49th International Film Festival of India. One of the key strategies for Alfa Romeo India includes one of the most traditional for automakers: billboards. These will be placed in high traffic areas throughout the city of Mumbai during every phase of the launch. One in particular will be a painted ad on the side of the Ruby Mills Tower, similar to that of the United States launch in Los Angeles, California (Kiser). Billboards will match the tone of existing Alfa Romeo marketing, showing these vehicles are unordinary - making them extraordinary. Alfa Romeo billboards will inform customers that something new, exciting, and Italian is coming soon and sold exclusively at the Landmark Jeep dealership. Post-launch, Alfa Romeo will focus on continually adding elements of excitement to its offerings. One such example will be a chance to win a driving experience on the racetrack in Mumbai. With any purchase of a new model, customers will be eligible to win an exclusive package to drive their brand-new car on a racetrack, accompanied by an experienced racer. This experience will share a part of the brand’s racing history with the consumer and make for a memory they will never forget. 1. “India: Number of Social Network Users 2022 | Statistic.” Statista, Feb. 2018, www.statista.com/statistics/278407/number-of-social-network-users-in-india/. 2. “India: Social Network Penetration 2017 | Statistic.” Statista, Nov. 2017, www.statista.com/statistics/284436/india-social-network-penetration/. 3. Kiser, Gabe Beita. “Two Artists Graffiti A Massive Alfa Romeo Stelvio Onto A Building In LA.” CarBuzz, CarBuzz Inc., 7 Dec. 2016, carbuzz.com/news/two-artists-graffiti-a-massive-alfa-romeostelvio-onto-a-building-in-la.

FINANCIAL PLAN

A. Sales Forecast B. Execution Budget

A. SALES FORECAST

B. EXECUTION BUDGET SALES PROJECTIONS – UNITS SOLD Projected sales for the 2019 launch of Alfa Romeo in India have been based off sales from the brands 2015 relaunch in the United States (Stock). The unit sales from Alfa Romeo’s 2015 U.S. relaunch are broken down by model in Appendix F. This number has been manipulated to account for the differnce in market size - the Indian automotive market is 17% the size of the U.S (Appendix G). It is therefore estimated that in its year of launch (2019), Alfa Romeo India will sell 107 units. The Indian luxury automotive sector is expected to grow at 18% per year (Passport, Euromonitor International). Taking this into account, Alfa Romeo India is projected to sell 126 units in 2020 and 150 units in 2021 (Appendix H). Projected per model unit sales for the Indian market are outlined in Appendix I.

IMPORT DUTIES When companies sell domestically manufactured automobiles in India, no import duties need to be paid out. Mercedes Benz India, Audi India, and BMW India have established domestic manufacturing plants which allow for lower prices and no import duty payouts. This practice is advantageous for companies as it significantly drops the average per unit price and increases the volume of sales (Passport, Euromonitor International). Alfa Romeo’s cars are currently manufactured in Italy and the company has no plans to invest in an Indian automotive manufacturing facility. The import of Alfa Romeo’s cars to India will be subject to import duties. In India, the import duty for foreign automobiles is 60% of its invoice value (International Trade Administration).

REVENUE FROM DEALERSHIP SERVICES The Landmark Jeep Dealership sells insurance and financing services to an estimated 25% of its clients (Thakker and Barman). These services bring in revenues of USD $45.094 million – 20% of the dealerships income (Thakker and Barman). The Landmark Group sold 15,000 cars across its 75 dealerships in 2015 (Thakker and Barman), which leads to the assumption that 200 cars are sold at each dealership per year. It is estimated that 50 customers (25% of 200 customers) will purchase financing/insurance per year - a $12,025.12 per unit cost of insurance/financing. It is assumed that this number will remain constant and will generate revenues of $601,256 per year (Appendix K). The Landmark Jeep dealership services an average of 8 vehicles per day - an average of 2080 per year (The Landmark Group). It is assumed that the average price for servicing a car in India is $50 (Honda). Under the assumption that the number of cars serviced per year remains constant, revenues earned from maintenance is estimated to be $104,000 per year (Appendix K).

COST OF GOODS SOLD The cost of goods sold take into consideration the cost and quantity of inventory Landmark Jeep Dealership purchased from Alfa Romeo in Italy. This number is directly affected by the number of cars demanded by consumers each year. Cost of goods sold are estimated to total $5,131,025 in 2019, $6,032,220 in 2020, and $7,142,680 in 2021 (Appendix L). 1. “Cost of Periodic Maintenance.” Honda India, 2018, https://www.hondacarindia.com/Honda-Services/Home/CostOfMaintenance. 2. “Automobile Dealership.” The Landmark Group, 2018, http://grouplandmark.in/#business. 3. Ketan Thakkar and Arijit Barman,” How Landmark’s Sanjay Thakker created one of the largest networks of profitable auto dealerships nationally,” The Economic Times, 2 May 2015, https://economictimes.indiatimes.com/industry/auto/news/industry/how-landmarks-sanjay-thakker-created-one-of-the-largest-networks-of-profitable-auto-dealershipsnationally/articleshow/47127668. cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.

PRICING Alfa Romeo will be following the Indian luxury automotive sector standard markup of 5% (Das). The pricing also takes into account the 60% import duty incurred by the Landmark Jeep Dealership. All prices have been based off those in the U.S market. Appendix J outlines factors taken into account for pricing automobiles in the Indian market. 1. “India – Import Tariffs,” International Trade Administration, 1 Aug. 2017, https://www.export.gov/article?id=India-Import-Tariffs 2. Kyle Stock, “Alfa Romeo Bets Big on America and Wins.” Bloomberg, 4 Jan. 2018. https://www.bloomberg.com/news/articles/2018-01-04/alfa-romeo-bets-big-on-america-and-wins. 3. “Luxury Cars in India – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab. https://www.bloomberg.com/news/articles/2018-01-04/alfa-romeo-bets-big-on-america-and-wins 4. OICA. “Number of Passenger Cars Sold in The Asia Pacific Region 2016, by Country.” Statista - The Statistics Portal, Statista, www.statista.com/statistics/584904/asia-pacific-passenger-car-sales-by-country/, Accessed 3 Mar 2018. 5. Sohini Das, “Car dealers now in reverse gear as inventory up 40%,” Business Standard, 30 Sept. 2013, http://www.business-standard.com/article/companies/car-dealers-now-in-reverse-gear-asinventory-up-40-113093000019_1.html. 6. “US Cars Sales Data – Alfa Romeo.” Car Sales Base, accessed 12 Mar. 2013, http://carsalesbase.com/us-car-sales-data/alfa-romeo/. 7. “2016 U.S. auto sales set a new record high, led by SUVs.” Los Angeles Times, 4 Jan. 2017, http://www.latimes.com/business/autos/la-fi-hy-auto-sales-20170104-story.html.

HUMAN RESOURCES EXPENSES

RENOVATION COST

The Alfa Romeo dealership in Savannah, Georgia, USA was referenced for the following human resources analysis. This location has 5 managers, 5 car salesmen, 2 online sales agents, 4 automotive technicians, and 6 business development employees (Alfa Romeo of Savannah). However, many of these employees are cross-trained with the Fiat dealership. The Savannah Alfa Romeo dealership cross-trains 5 managers, 4 car salesmen, 2 online sales agents, 2 technicians, and 5 business development employees.

The Landmark Jeep dealership will undergo a necessary renovation to accommodate the launch of the Alfa Romeo brand. The standard renovation cost in Mumbai is $24.59 per square foot. Assuming that 4,250 square feet will be renovated, the total cost of the renovation is $104,507.50 (Appendix K). This cost will only be incurred in 2019.

Since the Landmark dealership in Mumbai is already outfitted with the Abarth, Fiat, and Jeep brands, existing employees will be cross-trained. The Alfa Romeo brand would only need 1 new manager, 2 new car salesmen, 1 new online sales agent, 4 new automotive technicians, and 2 new business development employees. This staff will be sufficient for the Alfa Romeo addition. Should a busier time occur, team members from the pre-existing Jeep, Abarth, and Fiat brands will be cross-trained to attend to customer needs. The average salary for a car salesman is $4,087.81 per year in India (Indeed). It is estimated that the 2 car salesmen, 1 online sales agent, and 2 business development employees would receive this salary (Indeed). The total yearly cost of these 4 personnel per year is $16,351.23. The average salary for an Automotive Technician is $2,465.04 per year in India (Indeed). With 4 Alfa Romeo automotive technicians, the yearly salary cost would be $9,860.14. The average salary for automotive manager in India is $22,959.8. per year. With only 1 Alfa Romeo dealership manager, the estimated yearly salary cost would be $22,959.8 (Glassdoor). The total cost of human resources is assumed to remain constant throughout 2019 to 2021, amounting to $49,171.17 per year (Appendix K).

PROMOTION The average price for a corporate event in Mumbai is $769. The Landmark Jeep Dealership will be hosting one corporate event per quarter to build brand loyalty and grow the consumer’s affinity for the brand. The total cost for promotional events stays constant 2019 through 2021, amounting to $3,076 per year (Appendix K).

FURNITURE COST With 6 new sales employees, the dealership will need to buy 6 chairs and 6 desks. The price of 6 chairs is $600 (Office Depot) and the price of 6 desks is $6,500. The total cost of furniture is $7,100 and is only incurred in 2019 – the first year of operation (Appendix K).

OFFICE SUPPLIES The 6 new business employees will need 6 computers and 6 tablets. The total cost of these items is $5,070 and is only incurred in 2019 – the first year of operation (Appendix K).

UTILITIES It is estimated that the Landmark Jeep Dealership will spend $583.68 on utilities per year (Cost of Living). This expense remains constant in 2019, 2020, and 2021 (Appendix K).

COMMISSION (25% OF MARKUP)

RENT/PROPERTY EXPENSE

The standard industry commission that car salesmen make is 25% the profit of each car sold. The 25% is taken from the profit margin of each individual car sold (McDonald). The Alfa Romeo dealership will have 2 car salesmen and 1 online sales agent – a total of three employees earning commission. Employee commission is directly affected by the number of units sold. The total commission expense is $67,518.75 in 2019, $79,377.50 in 2020, and $93,990.00 in 2021 (Appendix M).

The Landmark Group owns the property of Landmark Jeep Dealership. Rent and property expense can be ignored for this discussion.

1. “Basic Utilities,” Cost of Living, accessed 12 March 2018, https://www.budgetdirect.com.au/interactives/costofliving/compare/mumbai-vs-toronto/.

1. “Automotive Technician Salaries in India.” Indeed, 2018, https://www.indeed.co.in/salaries/Automotive-Technician-Salaries. 2. “Best Corporate Party Planners for your Organization in Mumbai.” Urban Clap, 2018, https://www.urbanclap.com/mumbai-corporate-event-planner. 3. “BMW Salaries in India.” Glassdoor, 26. Feb. 2018, https://www.glassdoor.com/Salary/BMW-India-Salaries-EI_IE3460.0,3_IL.4,9_IN115.htm. 4. “Car Sales Executive Salaries in India” Indeed, 2018, https://www.indeed.co.in/salaries/Car-Sales-Executive-Salaries. 5. “Meet Our Staff.” Alfa Romeo of Savannah, 2018, http://www.alfaromeosavannah.com/dealership/staff.htm.

2. “iPlus 8ft. Contemporary Office Table,” Boss’s Cabin, accessed 10 March 2018, https://www.bossescabin.com/shop/office-tables/i-plus-2/. 3. “Realspace® Modern Comfort Series Winsley Mid-Back Bonded Leather Chair, White,” Office Depot, accessed 10 March 2018, https://www.officedepot.com/a/products/907932/Realspace-Modern-Comfort-Series-Winsley-Mid/?cm_mmc=PLA-_-Google-_-Chairs_Seating-. 4. Mark McDonald. “Car Salesman Confidential: How We Get Paid.” Motor Trend, 14 Feb. 2014. http://www.motortrend.com/news/car-salesman-confidential-how-to-get-paid/. 5. Sunainaa Chadha. “Rs 1,200 per sq ft: Mumbai realty bribery rate is half of actual building costs.” First Post, 24 Oct. 2014, http://www.firstpost.com/business/economy/rs-1200-per-sq-ft-mumbai-realty-bribery-rate-is-half-of-actual-building-costs-1994603.html.

EXECUTIVE SUMMARY Alfa Romeo is world renowned for its Italian heritage and racing legacy. The brand prides itself with its advanced technology, lightness and efficiency, performance and dynamism, and Italian design. Operating in 55 nations and offering eight models, the brand is seeking further expansion into the Asian region. Alfa Romeo has targeted Mumbai, India for the expansion of its brand in Asia. The Indian luxury automotive market is characterized by an emerging middle and wealthy class, increased disposable incomes, an aspirational younger demographic, and a year-over-year growth of 18%. Alfa Romeo will enter the pre-existing Landmark Jeep Dealership in Mumbai. The dealership currently sells the following FCA brands: Jeep, Fiat, and Abarth. Alfa Romeo will enter the market with its Stelvio, Stelvio Quadrifoglio, Giulia, Giulia Quadrifoglio, 4C Coupe, and 4C Spider. Alfa Romeo will position itself in the Indian market as a luxury Italian import. The promotional strategy of Alfa Romeo India includes omni-channel integration of billboards, social media, digital marketing, public relations events, trade shows, commercials, and magazine advertisements. The three-year sales forecast of the expansion shows healthy financial performance with profits reaching $5.2 million in 2021. Financial success in India is due to low labor costs, financial support from the FCA, generous profit margins, consumer purchasing power, and promising industry growth.

APPENDIX A

APPENDIX B

Source: “FCA Annual Report at 31 December 2016.” FCA, 31 Dec. 2016, http://reports2016.fcagroup.com/downloads/financial/FCA_2016_ Annual_Report.pdf.

Source: Cain, Timothy. “Top 15 Best-Selling Luxury Vehicles In America – 2016 Year End.” Good Car Bad Car: Auto Sales Data and Stats, 5 Jan. 2017, http://www.goodcarbadcar.net/2017/01/2016-usa-best-selling-luxury-autos/.

APPENDIX C

APPENDIX D

Source: “Luxury Cars in India – County Report.” Passport, Euromonitor International, February 2018, http://0-www.portal.euromonitor.com.library. scad.edu/portal/analysis/tab.

APPENDIX E

APPENDIX F - U.S UNIT SALES (2015)

APPENDIX G DIFFERENCE IN MARKET SIZE

APPENDIX H - PROJECTED UNIT SALES GROWTH, INDIA

APPENDIX I PROJECTED UNIT SALES INDIA

APPENDIX J - PRICING, INDIA

APPENDIX K - SALES FORECAST

APPENDIX L - COST OF GOODS SOLD

APPENDIX M - COMMISSION