Export policy plan
Juliane Grandjean
Arno de Wolf
Karst Pullens
Anita Nguyen
Class: 3XCH & 3P
Date: 12 – 06 – 2014
1
Table of content
Table of content................................................................................................................. 2
Preface ............................................................................................................................... 4
Management summary...................................................................................................... 5
Introduction ....................................................................................................................... 7
Export Policy Plan ............................................................................................................. 8
Chapter 1 – SWOT analysis ............................................................................................. 8
1.1
Extensive list of SWOT ................................................................................... 8
1.2
Market size estimation Kazakhstan ................................................................. 9
1.3
Market size estimation Ukraine ....................................................................... 9
1.4
Confrontation matrix Kazakhstan .................................................................... 9
1.5
Confrontation matrix Ukraine......................................................................... 10
Chapter 2 – Options ....................................................................................................... 11
2.1
Option Kazakhstan........................................................................................ 11
2.2
Option Ukraine .............................................................................................. 14
Chapter 3 – Market Portfolio Analysis ............................................................................ 18
3.1
MABA Analysis Kazakhstan .......................................................................... 18
3.2
MABA Analysis Ukraine ................................................................................ 19
Chapter 4 – FAS Analysis .............................................................................................. 20
4.1
FAS Kazakhstan ........................................................................................... 20
4.2
FAS Ukraine ................................................................................................. 23
4.3
BCG Matrix ................................................................................................... 27
Chapter 5 – Choice optimal option ................................................................................. 28
Strategic Marketing Plan ................................................................................................. 29
Chapter 6 – Marketing objectives ................................................................................... 29
6.1
First year ....................................................................................................... 29
6.2
Third year ..................................................................................................... 29
6.3
Fifth year ....................................................................................................... 29
Chapter 7 – Target group ............................................................................................... 30
7.1
Primary target group ..................................................................................... 30
7.2
Secondary target group................................................................................. 30
Chapter 8 – Positioning .................................................................................................. 31
8.1
Positioning method ....................................................................................... 31
8.2
Benefits......................................................................................................... 31
8.3
Positioning statement .................................................................................... 31
Chapter 10 – Product ..................................................................................................... 32
10.1
3 level of products ......................................................................................... 32
10.2
Assortment.................................................................................................... 32
Chapter 11 – Promotion ................................................................................................. 34
9.1
Marketing communication target audience .................................................... 34
9.2
Communication objectives ............................................................................ 34
9.3
Communication instruments .......................................................................... 34
Chapter 12 – Price ......................................................................................................... 35
Chapter 13 – Distribution ............................................................................................... 36
Chapter 14 – Budget ...................................................................................................... 37
Chapter 15 – Consequences HQ & Home Country ........................................................ 38
2
Sources ............................................................................................................................ 39
List of figures................................................................................................................... 40
Appendix 1 – Calculations budget ................................................................................. 41
Appendix 2 – Creative Session ...................................................................................... 42
Appendix 3 – Innovation idea ......................................................................................... 44
3
Preface
We would like to express our gratefulness for the support and guidance we got during this
project.
For the past few months we had the pleasure to work on this project for DAF trucks. We
had researched the part- and truck market of the counties Kazakhstan and Ukraine. As a
result of this project we have learned a lot about market research, writing a strategic
analysis and writing an export policy plan.
Therefore we would like to express our gratitude towards a few people.
Firstly we would like to thank the company DAF for their time and information. We are also
thankful for the tour and Q&A session at the company in Eindhoven and another Q&A
session at Fontys University in Tilburg. This had provided us much information and created
a clear image of the company, production and distribution process.
Secondly we would like to thank Ms. Steeghs for her feedback and expertise during the
export and strategic marketing plan.
Tilburg, 28 May, 2014
Karst Pullens
Arno de Wolf
Juliane Grandjean
Anita Nguyen
4
Management summary
DAF is a Dutch truck producer that sells its trucks all over the world. DAF was founded in
1932 by two brothers, Hub and Wim van Doorne. Nowadays, DAF is a division of PACCAR
and has a worldwide network consisting of approximately 1,000 dealers and service points
in inter alia, Europe, Africa, Australia and Taiwan with its headquarters located in
Eindhoven, the Netherlands.
In the European market, DAF had a market share of 15,5% in the 16> tons segment in
2011. In facts, this comes down to 241,000 registered trucks in this segment. In addition to
their trucks, DAF also sells DAF genuine parts, DAF accessories and TRP parts. The DAF
genuine parts and accessories are traditional products which will fit perfectly in every DAF
truck. For the older trucks and drivers who do not want to spend too much money on
repairs, there are the TRP parts. These parts are cheaper and compatible with every truck
part, no matter which brand.
Although DAF has a big role in the international truck and trailer parts market, there is
always room for expansion. With Kazakhstan and Ukraine being ‘freed’ from Russia since
1991, they have become interesting markets for DAF and PACCAR. Especially because
both countries are trying very hard to become a member of the EU, with all the import and
export privileges that go with that. Apart from that, many Russian influences can still be
found in these two countries. This is also reflected in the competitors.
Looking at the competition in these two countries, DAF does not have to deal with much
competition locally, only 11% of the total trucks imported to Ukraine was produced locally.
The other 89% came mainly from Europe and Russia, so the main competitors will also
come from these regions. The biggest competitor is GAZ, a Russian brand, which has a
total market share of 18% in new vehicle registrations. After that, GAZ is followed by only
European brands. First comes Volkswagen, with 14%, then Fiat with 11% and after that
Renault and Citroen. The biggest local producer is ZAZ, who comes in sixth place. So GAZ
is the biggest brand, however all the European truck companies are catching up with the
Russians. Where GAZ saw a decrease from 2010 to 2011 in registration of trucks, al its
European rivals saw a great increase in registrations. Like Citroen, which/that almost sold
100% more trucks in 2011 compared to 2010.
When it comes to parts TRP have to compete with OEM and WD competitors. The biggest
OEM competitors are WABCO and Bosch. There are numerous low quality WD
competitors. At the moment consumers use the more cheaper WD parts instead of the
more expensive OEM parts. This is expected to change over time. Because of the growing
economy, clients demand more reliable parts which they then will be able to afford.
DAF has a very well balanced marketing mix. The prices for genuine parts are pretty
expensive, but the quality of the products are very high. Besides that it is possible for the
less wealthy truck-drivers to buy the cheaper TRP parts. Not only are they cheaper, they
are also compatible on every brand of truck, so everybody can buy them. The range of
products is very broad at DAF. For every type of business DAF sells a different truck. So is
it possible to buy trucks for distribution, long distance traveling, agricultural purposes and
the construction industry.
The best example for that are the latest additions to the DAF fleet, the Euro 6 models.
These trucks are perfectly balanced for the purposes they are made for. For instance, the
new XF has been developed for long distances, so it has a lower fuel consumption, is very
reliable and easy to fix and has great driving convenience for the driver. The LF was
5
created to be the perfect distribution truck, so the main priorities for this truck were loading
capacity and manoeuvrability
With respect to place, DAF is very well represented all over the world. As mentioned before,
there are approximately 1,000 dealers and service points located on various continents.
Besides that, it also has thirteen sales branches in Europe and an additional thirteen
distribution centres all over the world. Furthermore different channels are used to reach the
target group. Besides the standard e-commerce and the direct sales, DAF also has a big
DAF dealer network where dealers can cooperate and help each other. To ensure customer
satisfaction, DAF has a Web Connect for DAF truck owners so they can easily get their
trucks repaired and a Connect Xpress so they can buy their truck parts conveniently.
One of the other strong points of DAF, is its financial situation. They have a consistent
turnover with very good key figures to keep the company out of financial trouble. This
makes it a lot easier to go to Kazakhstan or Ukraine. It good be very wise for DAF to just go
the two countries but not too intense. Both markets may not be very interesting yet, but just
being there could be vital for a company. Only a few partners are necessary to raise
awareness of a brand. If DAF starts with that; a few transportation companies which drive
DAF trucks and thus buy parts eventually, some repair shop and distribution partners that
sell TRP-parts and a couple of independent TRP-parts shops, it raises brand awareness
and is active on the market when it emerges. Because of the good financial statement from
DAF and PACCAR, DAF should be able to cope with small losses in the first few years.
Allowing the market to grow DAF should not be put off when losses may occur.
When weighing the options from Kazakhstan versus the ones from Ukraine. Ukraine’s
options seems more feasible but also less risky. Because there are more reliable
information available of the Ukrainian market than for the Kazakhstani market. But also
DAF already has some dealers located in Kiev who are quite successful so the current
distribution channel and knowledge can be used. For Kazakhstan this is different. Because
the only dealer is located at a non concentrated truck region.
If DAF focuses on the Ukrainian market the total estimated market size will consist of over
110,00 registered heavy trucks. The primary target group will be transport companies and
the secondary target group will be individual truck owners. These target groups own mainly
EURO 3,4 and 5 trucks.
The best method to expand business in this market is to focus mainly on creating more
dealers ships with workshops who will sell the TRP parts but also provide tools so truck
owners can replace parts themselves. But the first focus should be on creating brand
awareness. While creating awareness DAF should focus on the benefits of the TRP parts.
Which are the wide range of parts, the quality compared to substitute parts, trained and
experienced dealers, short delivery time, extra services and the DAF warranty/ quality.
Brand awareness can be created with special truck events. DAF should organize a truck
rally to create awareness among truck owners and truck lovers. This will be a great
opportunity for DAF to exhibit some of the TRP parts but also to get in contact with their
target group and improve their customer relations and get feedback.
For pricing of the products, TRP parts are relatively more expensive compared to the
competitors or the substitute products. But when DAF creates dealerships with workshops,
customers can cut down on installing cost. Which can eventually lead to equal prices or
with only a small price gap.
Not only should DAF focus on dealerships with workshops, but the company should focus
more on online activities. Because Ukraine has a growing internet usage. And by internet
activities DAF do not need to create a network all over Ukraine. In regions with less
population or transport activities the company will be accessible through a TRP website. So
that customers from these regions will get access to TRP parts.
6
Introduction
This export policy plan is written on behalf of DAF trucks NV. and Fontys University of
Applied Science. The report has been written by Karst Pullens, Arno de Wolf, Juliane
Grandjean and Anita Nguyen, Students International Marketing and Management.
In this report the strength, weaknesses will be discussed. But also the opportunities and
threats for DAF/TRP in the Ukrainian and Kazakhstani market. In this plan the options for
the Ukrainian and Kazakhstani market will be discussed and the feasibility of implementing
the options.
Overall this reports gives DAF an advice of how they can approach the Ukrainian truck
market with their TRP products.
7
Export Policy Plan
Chapter 1 – SWOT analysis
1.1
Extensive list of SWOT
Strength

















TRP parts of DAF and
PACCAR (image and
financially strong)
Highly efficient distribution
system
Fully skilled and trained
dealers
Wide range of qualitative
products against a fair price
Innovative products
Regular quality check to
ensure quality
Opportunities Kazakhstan
Weakness





TRP has low market share in the part
market
No tracking of the second owners of the
trucks
Not active online/ no strong online
presence
Small network in Kazakhstan and
Ukraine
CIP transport system
Threats Kazakhstan
Open economy
Cooperation agreement with
Europe, makes it easier to
trade with and in Kazakhstan
Growing truck parts market
Products of competitors lack
quality
Kazakhstani companies are
sensitive to work with
international companies
Most of the trucks are located
in the Northern part of the
country
Opportunities Ukraine


Products of competitors lack
quality
Growing truck parts market
Many transportation companies
Internet usage is growing
Many DAF trucks in Ukraine





Low prices of the competitors
Many competitors/ substitute products in
the truck part market
Around 50% of the trucks are owned by
individual proprietors
Lots of influence from Russia and China
Collectivistic country so consumers are
loyal to their current brand
Threats Ukraine






Low prices of the competitors
60% of the DAF trucks in Ukraine are
older model trucks
90% of registered heavy trucks are not
DAF trucks
Political unstable country
Almost no funding from the government
to Research and Development
No free trade agreement with European
Union countries
Old import laws that was influenced by
Soviet Union
Many competitors/ substitute products
Figure 1 – SWOT Scheme
8
1.2
Market size estimation Kazakhstan
The market for the TRP products in Kazakhstan exist out of transportation companies but
also individual truck owners.
The total market size for the TRP products consist of over 428,000 trucks and 250,000 of
these trucks are owned by individual proprietors. So 178,000 trucks are owned by bigger
transportation companies.
1.3
Market size estimation Ukraine
For Ukraine the total market size consist of over 80.000 registered heavy trucks. With 8.500
trucks being DAF trucks. The DAF trucks in Ukraine are likely to be from older model series
such as the EURO 3, 4 or 5 series.
In 2011, the total amount of registered trucks was around the 80,0001. The top 5 trucks
brands in Ukraine had an increase of 20,13% (from 9269 to 11135) in total registered trucks
and it is expected that the total market will grow around half of this pace. So this equates to:
Year
2012
2013
2014
1.4
Expected Growth
11%
13%
12.5%
Total Truck on Market
88,800
100,344
112,887
Confrontation matrix Kazakhstan
The factors in the confrontation matrix were chosen because they were the most relevant to
the Kazakhstani market. Based on these factors, a strategy can be formed.
Figure 2 – Confrontation matrix Kazakhstan
1
http://investukraine.com/wp-content/uploads/2012/06/Automotive-_www.pdf
9
1.5
Confrontation matrix Ukraine
The factors that are listed in the confrontation matrix below were chosen because of the
relevance to the Ukrainian market. Out of these factors option could be chosen which will
be the base for the strategy in the strategic marketing plan.
Figure 3 – Confrontation matrix Ukraine
10
Chapter 2 – Options
2.1
Option Kazakhstan
2.1.1 First option
Wide range of qualitative products against a fair price + Products of competitors lack quality
+ Growing truck parts market + Low prices of the competitors + Many competitors in the
truck part market.
= outdo competition by positioning TRP as a premium brand at a low price.
In general transporting companies and truck drivers in Kazakhstan try to patch up their
trucks using cheap, low quality parts. Since TRP’s parts are of a very high quality, it doesn’t
make sense for them to try and outdo their competitors on a pricing level. Therefore they
need to position themselves as a high quality brand, while keeping the prices low, so that
parts are available and not too expensive for the Kazakhstani market.
Market (country/target group)
Kazakhstani truck drivers and transport companies.
Product (assortment/concept)
Wide range of qualitative products against a cheap price.
Entry strategy (production/sales)
Own TRP shops with garages that can be rented, in order to save money the driver can
apply the bought parts themselves, allowing them to save money on labour in order to
spend more money on parts.
Competitive strength
High quality
Varied range of parts
Premium brand
Distribution network
Total
Market attractiveness
Market size
Market growth
Profitability
Competitive intensity
Total
Weight
Estimation
0,35
4
0,35
4
0,15
4
0,15
3
Score
1,4
1,4
0,6
0,45
1
Weight
Estimation
0,20
4
0,30
3
0,20
3
0,30
3
3,85
Score
0,8
0,9
0,6
0,9
1,00
3,2
Figure 4 – Weighting competitive strength and market attractiveness
Clarification:
TRP has a lot of competitive strength. This is because their parts are of a very high quality
when benchmarked against competitors. TRP also has a bigger product range then all of its
competitors. TRP is also being considered to be a premium brand and they have a very
solid distribution network all over the world.
11
On the part of market attractiveness this market looks pretty attractive. The size of the
market in Kazakhstan is more than sufficient, and as Kazakhstan’s economy keeps
developing plenty of growth can be expected. The market also proves to be profitable. The
only downside to this all is that the competitive intensity will rise as well.
2.1.2 Second option
TRP has Low market share in the part market + Most of the trucks are located in the
Northern part of the country + Current agent is located in Southern part of the country + Not
active online + Small network in Kazakhstan
= New TRP shops in the North with online action
On the parts market, it is preferable to have the product available to customers. Because
DAF, through TRP products provides high quality and advanced products this would be a
great opportunity to provide TRP parts in Kazakhstan, particularly in the North of the
country. It is a big potential market for TRP. Due to this option; TRP could increase their
market share in the part market and enrich their network in Kazakhstan. Moreover, give
customers the possibility to browse the TRP’s offers online is a great benefit for the
company.
Market ( country/ target group)
North of Kazakhstan, DAF/Other brands consumers needing parts
Product ( assortment / concept)
TRP shops with an easy online access
Entry strategy ( production/ Sales)
New TRP franchises (own TRP shops) located in the North of the country.
Competitive Strength
High quality
Varied range of parts
Skilled dealers/
personnel
Distribution network
Total
Market attractiveness
Market size
Market growth
Profitability
Competitive intensity
Total
Weight
Estimation
0,30
4
0,25
4
0,30
0,15
Score
1,2
1,0
5
3
1,5
0,45
1
Weighing
Estimation
0,20
4
0,30
3
0,20
3
0,30
3
4,15
Score
0,8
0,9
0,6
0,9
1,00
3,2
Figure 5 – Weighting competitive strength and market attractiveness
Clarification:
Due to the fact that TRP is able to offer a wide range of parts and skilled and experienced
dealers, these variables are considered to be the most important and therefore have the
highest weighting. When looking at market attractiveness, the competitive intensity and the
market growth are most important for this option and it get a higher weighting than market
12
size and profitability. Market size scores well because this is a growing market due to the
thriving industry.
2.1.3 Third option
Around 50% of the trucks in Kazakhstan are owned by individual proprietors + Many of
these people don’t repair their truck or do it themselves + DAF has a very broad range of
products which are all very reliable + Great skilled and trained dealers to get those products
to the customers.
= Position as qualitative products that are offered by skilled and trained dealers
Market ( country/ target group)
Target group in this option are the individual truck owners in Kazakhstan. Most of them
have a second hand truck or even older. They repair their trucks themselves and only the
vital parts. Parts that they presume useless aren’t going to be fixed because they don’t want
to spend money on it. Because they are individual drivers, they are always underway and
very busy to earn enough money to provide their family or own lives.
Entry strategy ( production/ Sales)
Based on the Ansoff matrix, the TRP parts are defined in the market penetration market. In
this market, same products are marketed to customers in an existing market. TRP parts are
going to be a new contender in this market, but isn’t going to bring such innovative products
that they could be considered as new products. Also the customers are still existing on the
market, they only go to competitors. So with this option DAF will look at dealers, to create
alliances/ dealerships.
Competitive Strength
High quality
Varied range of parts
Skilled dealers/
personnel
Distribution network
Total
Market attractiveness
Market size
Market growth
Profitability
Competitive intensity
Total
Weight
Estimation
0,30
4
0,25
3
0,30
0,15
Score
1,2
0,75
4
5
1,2
0,75
1
Weighing
Estimation
0,20
3
0,30
4
0,20
2
0,30
5
3,9
Score
1,00
0,6
1,2
0,4
1,5
3,7
Figure 6 – Weighting competitive strength and market attractiveness
Clarification:
High quality of products and good service are perceived as very important on the
Kazakhstani market. That’s why they have the biggest weight weighing on them. After that,
for a parts sales company, it is important to have a big varied range of parts so the
customers can get everything they need for their truck at one place. At last, compared to
the other factors, the distribution network isn’t that important.
Looking at a market, the most important things to decide whether or not enter, are market
growth and competitive intensity. If the market isn’t growing, than it is even harder to find
13
new customers. And in a market with very intensive competition is it difficult to get even
started. So also for TRP these two factors are the most important. Especially because DAF
and PACCAR have a very good financial situation so profitability should not have to be top
priority in a potential market.
2.2
Option Ukraine
2.2.1 First option
Wide range of qualitative products against a fair price + Products of competitors lack quality
+ Growing truck parts market + Highly efficient distribution system + Many transportation
companies + Low prices of the competitors
= Focus on position the parts as qualitative products against fair pricing to the many
transportation companies
The first option is to mainly position the parts as qualitative products against a fair pricing.
The products that are currently available on the market in Ukraine are mostly of poor quality
and are sold at lower prices. These are sold by the many competitors that are located here.
TRP products have a limited customer group that consist mainly out of individual truck
owners and transport companies. The Ukrainian market has a huge potential because it is
not only a growing market but it also consist of many transportation companies. So it has a
lot of customers but also it will be easy to set up an efficient distribution system within
Ukraine.
So TRP has a chance to grow their business in Ukraine by focusing on the transport
companies and on the positioning of the brand/ products.
Market (country/target group)
Transportation companies who use DAF trucks.
Product (assortment/concept)
Large assortment of diverse parts for a competitive price with the competitors
Entry strategy (production/sales)
Reach out to transportation companies and make them aware of the price quality ratio.
Competitive Strength
High quality
Varied range of parts
Skilled dealers/
personnel
Distribution network
Total
Market attractiveness
Market size
Market growth
Profitability
Competitive intensity
Total
Weight
Estimation
0,30
4
0,25
5
0,30
0,15
Score
1,2
1,25
4
3
1,2
0,45
1
Weighing
Estimation
0,20
5
0,30
4
0,20
3
0,30
4
4,1
Score
1,00
1,0
1,2
0,6
1,2
4,0
Figure 7 – Weighting competitive strength and market attractiveness
14
Clarification:
For this option it is important to focus on providing high quality parts towards diverse
transportation companies, but also a varied range of parts to meet all the needs of the
diverse customers. By doing this it will create a competitive strength when comparing TRP
to the competitors. The truck part market in Ukraine is attractive for Ukraine because the
market size is sufficient. Currently the market share of TRP in Ukraine is low but there is a
lot of potential in for the market to grow and thus grow their market share.
2.2.2 Second option
Wide range of qualitative products against a fair price + Direct sales through internet + Not
active online + Small network in Ukraine + 60% of the DAF trucks in Ukraine are older
model trucks + 90% of the registered heavy trucks are non DAF trucks
= Focus on online sales to be able to offer a wider range of products without expanding
dealer network in Ukraine
For this option DAF should start selling their TRP parts through internet. With this option
they do not need to expand their network too much in Ukraine, to be able reach their
customers in Ukraine. This is also the best method to offer customers and owners of
different model truck the needed parts, without actually distributing it to diverse dealers/
stores. This will save them distribution cost but also save them distribution cost for
unnecessary parts but attract diverse customers / owners of different model trucks.
Market (country/target group)
Transportation companies and sole proprietors who own DAF trucks.
Product (assortment/concept)
Large assortment of diverse parts ranging from parts for older truck series to newer truck
series.
Entry strategy (production/sales)
Reach out to transportation companies and the sole proprietors with DAF trucks and make
them aware of the website where a big variety of parts will be sold.
Competitive Strength
High quality
Varied range of parts
Skilled dealers/
personnel
Distribution network
Weight
Estimation
0,30
4
0,25
5
0,30
0,15
Total
Market attractiveness
Market size
Market growth
Profitability
Competitive intensity
Total
Score
1,2
1,25
3
2
0,9
0,3
1
Weighing
Estimation
0,20
5
0,30
4
0,20
2
0,30
3
3,65
Score
1,00
1,0
1,2
0,4
0,9
3,5
Figure 8 – Weighting competitive strength and market attractiveness
15
Clarification
With this option it is important for TRP to focus on internet sales, because they can turn one
of their weaknesses into their strengths and they are able to reach more customers through
their website without expanding. For this option offering high quality products is important,
but also to have skilled personnel, because TRP should offer online part identification, and
to able to do so they need skilled personnel. The market is attractive for this option since,
the market size is sufficient and the internet usage is growing. But also through internet
TRP will be able to reach out to a larger group and groups who don’t live near repair shops.
2.2.3 Third option
Suitable for diverse truck brands + Growing truck parts market + Many transportation
companies + Direct sales through internet + 60% of the DAF trucks in Ukraine are older
model trucks. They are from the EURO 3,4 or 5 series. + 90% of registered heavy trucks
are not DAF trucks.
= Expand TRP’s product line to better serve all trucks from multiple brands, and focus on
selling them online, targeting transporting companies.
Market (country/target group)
All truck brands, including euro 3,4 and 5 series.
Product (assortment/concept)
Wide range of qualitative products against a cheap price.
Entry strategy (production/sales)
Own TRP shops with garages that can be rented, in order to save money the driver can
apply the bought parts themselves, allowing them to save money on labour in order to
spend more money on parts.
The market for DAF parts in Ukraine seems very small when you look at the total market for
aftermarket truck parts for all trucks. If TRP expands their product line to serve not only the
newer DAF trucks but also older ones and trucks from different brands they are finding
themselves on a much bigger, possibly much more profitable market.
Competitive Strength
High quality
Varied range of parts
Skilled dealers/
personnel
Distribution network
Total
Market attractiveness
Market size
Market growth
Profitability
Competitive intensity
Total
Weight
Estimation
0,30
4
0,25
4
0,30
0,15
Score
1,2
1,0
5
3
1,5
0,45
1
Weighing
Estimation
0,20
4
0,30
3
0,20
3
0,30
3
4,15
Score
1,00
0,8
0,9
0,6
0,9
3,2
Figure 8 – Weighting competitive strength and market attractiveness
16
Clarification:
This option shows plenty of competitive strength. Most important is the skilled personnel.
After this comes the quality of the parts, the big product range and the sufficient distribution
network. All of which are points that TRP scores above average on when compared with
competitors.
This market also shows a reasonable amount of market attractiveness. The size of the
overall market looks good as well as all other factors.
17
Chapter 3 – Market Portfolio Analysis
3.1
MABA Analysis Kazakhstan
Figure 9 – MABA Analysis Kazakhstan
The MABA analysis shows that all options are the same regarding the competitive strength.
But when looking at the market attractiveness they have a slight difference. Option 1 and 2
have a lower score on the market attractiveness when compared to option 3. For option 1
this is mainly because of the positioning as a premium brand at a low price, because this
could scare off the individual owners of trucks. For option 2 this could be because of the
current internet usage. It is low but it is currently growing. So on the long term the market
will be attractive, but the numbers are low for now. Option 2 received a high score due to
the number of trucks that are located in the North. Currently there are no TRP/DAF dealers
near this area. For the thirds option the competitive strength is high but also the market
attractiveness. Because when creating dealerships. DAF/TRP can use the dealers’
customers to sell the parts to.
18
3.2
MABA Analysis Ukraine
Figure 10 – MABA Analysis Ukraine
The MABA analysis shows that option 1 and 2 have a strong market attractiveness and a
high competitive strength. This is mainly because of the focus on the qualitative product on
the transport companies. But also because of the online sales. The internet usage has been
growing really strong in the last couple of years. DAF/TRP can reach out to customers all
over Ukraine without having to create shops in every part of the country. For option 3 is that
TRP should expand their TRP line with parts that could fit every brand truck but also older
model DAF trucks. Since 90% of the trucks in Ukraine are non DAF trucks. This is why the
market is less attractive since lots of things needs to be change. But when implementing
the option DAF/TRP could create an absolute strength compared to competitors.
19
Chapter 4 – FAS Analysis
4.1
FAS Kazakhstan
4.1.1 First option
Feasibility
Implementing this option shouldn’t be too difficult to do, except when it comes to the
amount of competitors in the truck part market. Part of this option are factors that DAF can’t
control themselves. But DAF does minimize these factors their threats by positioning their
TRP parts as high quality, cheap price parts, filling a positioning gap that is currently
present.
Financial
DAF is financially strong, so on this aspect this option will be feasible. They have enough
resources to cope with losses.
Organizational
No huge different in the organizational environment. Because the company already focuses
on their price quality ratio.
Economic
Economic this option is feasible, because the market in Kazakhstan is upcoming. More and
more companies or truck owners have money to maintain their trucks well ( with better
quality parts or go more often to garages)
Technological
There won’t be a huge change technologically for DAF.
Social
This option won’t bring any social problems.
Juridical
Juridical this option is quite feasible. It won’t bring any problems to focus on quality. Also
quality standards in Kazakhstan are lower as in European countries.
Ethical
The parts and trucks are becoming more environmental friendly. But for the Kazakhstani
market this won’t bring any problems for DAF.
Option 1
F
5
O
3
E
3
T
4
S
3
J
3
E
3
Total
24
Acceptability
This option would be a very soothing option to choose. The strength that is part of this
option is also TRP’s USP, therefore it makes a lot of sense to focus on it. And even though
this option consists out of one strength, one opportunity and two threats, it would remain
acceptable if the current market changes over the next few years.
Suitability
This option looks very promising from every angle, thus making it a suitable option. The
only weakness of this option is the fact that many of the factors are out of DAF’s controlling
ability, which makes it necessary to keep a close look at the market as time progresses.
Ukraine.
20
Suitability
+/+
Option 1
Feasibility
+
Acceptability
+
Total
+
This option would be a great option for DAF to choose because, it meets every aspect well.
4.1.2 Second option
Feasibility
This option is feasible for DAF because the company will be able to reach out to more
customers. If the network expands more to the Northern part of the country, TRP will be
available near the concentrated truck area. DAF has a dealer located in the Southern part
of the country, so there is already a knowhow of creating a dealership in Kazakhstan.
Financial
DAF is a huge company which is looking to the opportunity to expend their products to
Kazakhstan. There are enough financial resources when looking at this option.
Organizational
DAF is already used to open new subsidiaries worldwide, it is not a new experience for
them, they are on familiar ground.. However, the next step is to discuss the real
organization of the option : work with intermediaries , agents or distributors, own
subsidiary... DAF has a strong marketing and sales department.
Economic
Kazakhstan is a developing country. It is why we were asked by DAF to do these
researches. They want to expand their business and Kazakhstan is a good country for this.
Technological
This option is technologically feasible because DAF already did it in the past.
Social
DAF social factor are important in the organization. The mission statement of DAF is: “DAF
is driven by quality in all aspects, in all corners of the organization”. DAF’s aim is to deliver
the highest possible quality to the customers to get the highest customer satisfaction.
Juridical
The juridical aspect of this option is totally justified; this has been proven through other
cases of the same type before.
Ethical
DAF has an environmental certification ISO 14001, certified since 1998. Moreover, since
1993, DAF has an environmental management system related to the international
ISO14001 standard. The company manages honor their commitment by developing and
implementing “green” products such as turbo pressure filling for better engine
performances.
Option 2
F
5
O
4
E
4
T
3
S
3
J
3
E
4
Total
26
Acceptability
This option will be profitable and moderately risky. The notoriety of the brand is already
done but despite this, customers have to get used to the brand and the products and be
convinced about the possibilities the company offers.
21
Suitability
This option really suits the problem because it will increase the attendance of DAF/ TRP in
Kazakhstan. Moreover, this option consist of 3 weaknesses and 2 opportunities, this option
is so a good way to improve the lacks of the company in this area.
Option 2
Suitability
+/+
Feasibility
+/+
Acceptability
+/-
Total
+
Option 2 is feasible for DAF. But will bring risk with it.
4.1.3 Third option
Feasibility
Implementing this option could be quite hard. It will probably be very hard for DAF/TRP to
reach those individual proprietors and convince them that TRP products are better than the
products they use to repair their trucks with now. Although, the fully skilled and trained
dealers could be a great help with this because DAF can also find them in Kazakhstan.
Maybe not as skilled and trained as DAF wants from its dealers, but DAF can help them
with that. At the same time, those dealers maybe already have bonds with a percentage of
those individual truck owners. Another solution to the problem could be hiring agents to find
the consumers themselves. The wide range of quality products for a fair price is strength of
DAF and just has to be made clear to the consumers.
Financial
DAF is financially strong enough for this option. They already produce the products and
they have strong financial key figures to take a few risks with finding partners or even make
a few losses the first years.
Organizational
The option is organizational feasible, the only problem is that DAF has to trust on their
chosen partners in Kazakhstan. In this manner they don’t have many influence on the
marketing program of these partners.
Economic
The economy has an influence on this option, because in a growing economy, people have
more to spend and a country exports more. This means that more truck drivers are needed
and that they would make more money to buy parts for their trucks. However, it is a growing
economy and not an already strong economy.
Technological
This is of quite high importance in the market. Because drivers want the best parts for their
trucks. In this factor DAF scores really good. They are one of the leading companies
regarding technology and innovation in their products. That is why the TRP parts are
suitable on every brand of truck for instance.
Social
This option won’t have any social problems because trucks and their parts are accepted by
the consumers and they don’t have any problems with brand from another country given the
fact that there are no real big local truck brands in Kazakhstan
Juridical
Because Kazakhstan signed a contract with Europe, finding partners or even setting up an
own shop won’t be a problem juristically.
22
Ethical
However DAF does everything it can to make their trucks and parts environmentally better.
Trucks are still very bad for the environment so that’s why is has a low score.
Option 3
F
4
O
3
E
3
T
5
S
5
J
4
E
2
Total
26
Acceptability
Knowing the financial situation of DAF, this option is financially acceptable. Finding skilled
and trained dealers (or training them to that point) isn’t going to be too hard and the wide
range of products will help those dealers find new clients more easily. Also the existing
clients are immediately known with DAF which helps with the profitability. The risks are
quite high though, because this 50% is quite likely to be unable to pay for the TRP parts.
Together with the fact that they are very brand loyal, it is possible to invest a lot of money
for a target group that can’t afford or doesn’t even want another parts brand.
Suitability
This is for certain a suitable problem. One of the things that DAF is missing, is the location
of second hand truck owners. Almost everyone in this 50% is a second hand truck owner
and DAF wants to reach this group. The two internal strengths are two factors that could
very well help reaching them.
Option 3
Suitability
+
Feasibility
-
Acceptability
+
Total
+/-
Option 3 would be an interesting option if good partners could be found who know a fair
amount of individual truck drivers.
4.2
FAS Ukraine
4.2.1 First option
Feasibility
This option is quite feasible, because the company has the budget to enter a new market
and the money to promote TRP in this country. DAF could encourage their current network/
customers to inform other transportation companies about the products. But there is a
problem that could occur for DAF, it will be hard for DAF/TRP to convince transportation
companies that TRP is of higher quality then the parts of the competitors.
Financial
For this option DAF is financial feasible. The company has the high equity and is able to
take some risk while entering the market. Because of the high equity DAF is able to cope
with losses in the first few years before it can become profitable.
Organizational
For this option there won’t be a change organizationally, so it would be feasible. The only
things that would change for DAF is that the transportation companies could be considered
as customers, but it is also possible to collaborate with them for the distribution in Ukraine.
Economic
This options fit the objectives for DAF, because the company wants to grow their business
in Ukraine for the TRP parts. With this option they will grow their business for the TRP
23
parts. There are no objectives to become profitability immediately. So the option is
economic feasible.
Technological
On this aspect problems could occur because around 60% of the DAF trucks in Ukraine
are from an older model series (EURO 3,4 or 5). Some of the parts in these models are not
the same for the ones that DAF produces now. So they have to produce the old ones in
order to meet the customers’ need. But on this aspect it could feasible aswell, because
around 90% of the total registered heavy truck are not DAF trucks. TRP parts are suitable
for diverse brand of trucks.
Social
On this aspect there won’t be any problems. Because DAF aims to get the highest
customer satisfaction and this option is not really related to it.
Juridical
Juridical it wouldn’t be a problem for DAF to execute this option, but the political
environment of Ukraine is unstable. So when something happens it will be hard to deliver
parts to the country.
Ethical
DAF trucks and parts are designed to be less damaging to the environment as other trucks
and parts.
Option 1
F
5
O
4
E
4
T
4
S
1
J
2
E
4
Total
24
Acceptability
This option will bring some risk to management. Because Ukraine is a political unstable
country, that can influence doing business in this country for example by obstructing the
transport of parts to the country, but it will also bring some financial risk when focusing on
this country. Because the first few years are more likely not too profitable, since it is
important to put the focus on creating brand awareness for TRP instead on the sales.
Suitability
This option definitely suits the problem, because the problem for DAF is how the company
could successfully expand their business with TRP products in the Ukrainian market. With
this option DAF truly has a chance to generate more business, but it will be on the long
term, because currently the market share and brand awareness of TRP products is quite
low in Ukraine.
Option 1
Suitability
+
Feasibility
+/-
Acceptability
+/+
Total
+
Option 1 would be a quite interesting option because it is feasible, suitable and acceptable
for DAF.
4.2.2 Second option
Feasibility
This option is feasible for DAF because there is a market for the TRP parts, but currently
DAF only has a small network in Ukraine. Their budget for Ukraine is quite small, so by
focusing on internet sales they could reach their customers without having to use agents
and it will eliminate cost of excessive parts to dealers.
24
Financial
DAF is financially strong, so it won’t be a problem for the company to grow their business
online in Ukraine. DAF also has a high equity which makes them to be able to cope with
possible losses and risks.
Organizational
For this option there will be a slight change organizationally, because DAF needs to create
a team to support the “Web shop”. But this is quite feasible.
Economic
This option fits the objectives but also will turn a weakness into a strength. DAF wants to
grow their business in Ukraine for the TRP parts. And one of the strength of DAF is that
they don’t have strong presence online.
Technological
On this aspect there would not be a problem.
Social
On this aspect there won’t be any problems. DAF aims to get maximum customer
satisfaction. With this option they could serve the customers better. So this provides
customers an extra service.
Juridical
Juridical it wouldn’t be a problem for DAF to execute this option, because it happens
through internet. Only distributing the products could cause problems when the country is
political unstable.
Ethical
This is not related to the option.
Option 2
F
5
O
3
E
4
T
4
S
3
J
2
E
1
Total
22
Acceptability
This option will bring a risk with it, because when DAF just starting to expand their online
activities it won’t be too profitable, because many customers won’t know about it. So DAF
should create awareness for their online activities and make people switch to buy online
before it could become profitable. But on long term it could become a success, because in
combination with the highly efficient customers could get every part that they need for every
model truck in relatively short period. While competitors don’t have a wide range of product
and don’t have parts that fit the customers’ demand.
Suitability
This option will help DAF to turn one of their weaknesses into a possible strength. Currently
they have no activity online. But this option will help them o have a broader reach without
cooperating with many dealers.
Option 2
Suitability
+/-
Feasibility
+
Acceptability
+/-
Total
+
Option 2 is according to the FAS model quite feasible. On suitability and acceptability it will
be harder to succeed.
25
4.2.3 Third option
Feasibility
This option is feasible, but if chosen it needs a clever marketing plan to implement it. The
difficulty in implementing this option has mainly to do with the fact that TRP would like to
focus on DAF, but since they also produce interchangeable parts, and 90% of the trucks
are a different brand then DAF it leaves them with a huge market for their interchangeable
parts.
Financial
DAF is a financially strong company. So on this aspect is won’t be a problem to implement
this option.
Organizational
When implementing this option there will be a change organizationally. Because there has
to be a team to support the “Web shop”. But also because of the varied range of products
parts of older model trucks needs to be manufactured. So there need to be room at the
manufacturing site to adapt the production process to it. It is feasible but with a slight
reorganization.
Economic
For this option economically it is feasible. Because it fits the objectives of DAF to grow their
business in the Ukrainian part market. With this option they will meet the needs of Ukrainian
truck owners.
Technological
This option has a slight impact because they need to produce parts for older model trucks
and trucks that would fit any brand trucks. But TRP parts already fit some other brand
trucks if the model of part is known.
Social
This option won’t cause any problems on this aspects. Because for DAF to get maximum
customer satisfaction the company provides extra services such as transportation advice
for no extra cost.
Juridical
This aspect won’t create many problems for DAF. Only the political unstableness can
influence transportation within the country but also distributing the products from factory to
the country.
Ethical
This is not related to the option.
Option 3
F
5
O
3
E
3
T
4
S
3
J
3
E
2
Total
23
Acceptability
Choosing this option would mean TRP has to give up their main USP: their big range of
DAF parts. If DAF would choose this option it would mean they will lose their biggest USP,
making it harder to wear of competitors. DAF will need to take a different approach then
they have done before with their TRP brand, creating a difficulty when it comes to this
options applicability.
26
Suitability
Choosing this option wouldn’t be very suitable to DAF. Giving up their main USP, making it
harder to compete and more difficult to implement, are all consequences that make this
option less suitable than others.
Option 3
Suitability
-
Feasibility
+/-
Acceptability
+/-
Total
+/-
This option is quite feasible, but will change the image of DAF/ TRP towards the customers.
4.3
BCG Matrix
Figure 11 – BCG matrix TRP
TRP in its current state can be seen as a question mark. TRP has a low market share in the
truck part market in Ukraine but has a lot of potential to grow.
27
Chapter 5 – Choice optimal option
The project group already knew before hands that DAF should focus on Ukraine.
Information about the Ukrainian market is more reliable and available than information
about the Kazakhstani market. DAF already has some knowledge of the Ukrainian market
because of dealers in Kiev who are quite successful. Moreover, some companies are
already aware of the presence of TRP parts. So this will make it easier for DAF to succeed
in growing their business in the Ukrainian market.
The optimal option would be to expand TRP’s product line to better serve all trucks from
multiple brands, and focus on selling them online, targeting transporting companies.
With this option TRP will be able to reach out to a large customer group. By offering the self
service garages in TRP shops, DAF will differentiate themselves from the competitors.
Apart from that, by focusing on online sales DAF will change their weakness into strength
and they are able to communicate/ help to customers who are not nearby a TRP shop.
This option is quite feasible with a clever marketing plan to implement it. The main difficulty
with this option has mainly to do with the fact that TRP would like to focus on DAF, but
since they also produce interchangeable parts, and 90% of the trucks are from a different
brand. The interchangeable parts of TRP are mainly for the trucks of international brands.
This leaves DAF with a huge market for their interchangeable parts. Truck brands that are
used in Ukraine ranges from international brands, but also some Russian and Chinese
brands. So TRP should try to expand their range to these brands as well.
For DAF too succeed they should not only focus on online activities in Ukraine, because
real shops can attract and reach out to more customers and offering self repair garages
with equipment can diverse TRP from the competitors.
28
Strategic Marketing Plan
Chapter 6 – Marketing objectives
6.1
First year
Quantitative marketing objectives
In the first year that DAF would focus on the Ukrainian market the objectives would be to:
 Achieve a market share of 3% in the total second hand truck market.
 Achieve brand awareness among 50% of the used DAF trucks in Ukraine.
 Increase distribution intensity in Ukraine up to 25%.
Qualitative marketing objectives
 Improve online activity
 Improve customer retention among the TRP users in Ukraine
6.2
Third year
Quantitative marketing objectives
In the third year the marketing objectives for DAF would be to:
 Increase their share to 6% in the total second hand truck market.
 Increase brand awareness among the used DAF trucks and create awareness
among 20% of the total second hand trucks in Ukraine.
 Increase distribution intensity in Ukraine up to 40%.
Qualitative marketing objectives
 Improve online activity
 Improve customer retention among the TRP users in Ukraine
6.3
Fifth year
Quantitative marketing objectives
In the fifth year the marketing objectives for DAF would be to:
 Increase their share to 10% in the total second hand truck market.
 Increase brand awareness among the used DAF trucks and create awareness
among 30% of the total second hand trucks in Ukraine.
 Increase distribution intensity in Ukraine up to 50%.
Qualitative marketing objectives
 Improve online activity
 Improve customer retention among the TRP users in Ukraine
29
Chapter 7 – Target group
7.1
Primary target group
Transport companies
In Ukraine there are many transport companies who have their own fleet of trucks (EURO 3
till 5). The size of their fleet and the trucks they use vary depending on where they are
transporting to, and the overall size of the company.
6 W’s of Ferrel for the primary target group:
Who are they?
Transport companies in Ukraine that focus on road
transport.
What do they do with the
They use it to repair their trucks, using reliable, high
Product?
quality parts at the best price.
Where can they buy?
They buy our products online and at dealers located
throughout Ukraine.
When do they buy?
They buy our products when they need the part
replaced as soon as possible. Or when the old part is
damaged beyond repair, and replacing it is inevitable.
Around after 90,000 KM or every 9-12 months.
Why do they buy?
They buy our products because they have the need for
reliable, high quality parts at the best price possible.
Why don’t they buy?
They use cheaper, low quality products to save money
and cut costs in the short run.
7.2
Secondary target group
Independent truck drivers/ truck owners
There are also quite a lot of independent truck drivers who own their own truck. For an
independent truck driver it is very rare to buy themselves a brand new truck. Therefore the
trucks they own will also vary from EURO 3 till 5.
6 W’s of Ferrel for the secondary target group:
Who are they?
Independent truck drivers in Ukraine that own their own
truck.
What do they do with the
Product?
Where can they buy?
When do they buy?
Why do they buy?
Why don’t they buy?
They use it to repair their trucks, using reliable, high
quality parts at the best price.
They buy our products online and at dealers located
throughout Ukraine.
They buy our products when they need the part
replaced as soon as possible. Or when the old part is
damaged beyond repair, and replacing it is inevitable.
Around after 90,000 KM or every 9-12 months.
They buy our products because they have the need for
reliable, high quality parts at the best price possible.
They use cheaper, low quality products to save money
and cut costs in the short run.
30
Chapter 8 – Positioning
8.1
Positioning method
The positioning method that DAF should focus on is the dual positioning method. Because
it is important for DAF to create brand awareness for the TRP parts and make people
aware of the differences of TRP and substitute products. So with this method the benefits of
TRP parts will be emphasized. If people are known with the benefits they are more willing
to take the risk to change to a different brand parts.
8.2
Benefits
The key benefits that DAF should focus on with TRP are:
 Wide range of parts, even parts for older model machines and different brand trucks
 The benefits between using TRP parts and substitute parts
 Highly trained and experienced dealers
 Parts are delivered fast
 Extra services
 DAF warranty
 The self repairing garages, so customer can install the parts themselves so they can
save on labor cost.
8.3
Positioning statement
TRP parts is a subdivision of Paccar Parts and DAF. TRP offers a wide range of
aftermarket truck parts for all makes of trucks and trailer regardless of the age and brand of
the vehicle. The parts that are offered are value for money and increases the uptime of the
trucks. TRP sales point have skilled and fully trained staff to help each customer to identify
the right part and offer it for the right price.
31
Chapter 10 – Product
TRP offers an aftermarket parts for all your makes parts needs. TRP parts are
manufactured and tested to surpass your expectations with quality, value and reliability.
10.1 3 level of products
The core product
The benefit for the TRP products resides in its adaptability to all brands. This benefit is so
really convenient because there is much more possibilities to reach the customer.
The actual product
For TRP, the actual product is a comprehensive range of All Makes truck and trailer parts
and workshop consumables, in a wide range of topics to suit the customer demand. For the
second part of the actual product, TRP have also professional workshops staffed by expert
mechanics.
The augmented product
Concerning the augmented product, TRP has a warranty of all its parts: 1 or 2 years with a
possibility of extension, the Full DAF Warranty. Moreover, they offer value for money quality
parts that meet the demands of maximum vehicle uptime. They have skilled staff to identify
the right part at first time. And for the distribution, TRP offer an affective Customer Delivery
Service. Next to these services TRP will also offer self repairing garages so customers can
install the parts by themselves and do not need to spend money on the labor cost of
installing the part.
10.2 Assortment
On the TRP website, the customer can easily browse the catalogue and the wide range of
parts, through many topics. This catalogue is available in 8 different languages and with a
single telephone call or a visit to your DAF dealer; you can simply order the parts you need.
The assortment of parts that will be available in Ukraine will be especially parts for EURO
3,4 and 5 model trucks. But overall all parts that are listed in the catalog will be available to
ship to Ukraine.
Part categories:
Vehicle Spec Sheets - Trailer Axles - Air Suspension - Mechanical Suspension - Chassis &
Body Parts - Lighting - Safety - Electrical - Braking - Air Brake - Cab - Engine Transmission - Accessories - Consumables & Tools
32
Service
In addition to the wide range of high quality parts and workshop, no matter the age of the
vehicle, TRP have professional workshops staffed by expert mechanics. Their key concept
is offering each customer the right product at the right price.
To keep the customers up to date TRP can keep a database of all the clients and send out
newsletters when changes appear, when they launches new products or just in order to be
sure of the customer's satisfaction.
Brand
The brand is TRP which stands for Truck and trailer parts. The function of the brand for the
customers is to be different to the competitors but also it will be easy for customers to
recognize the TRP parts easily. The brands also bring some kind of reassurance regarding
the quality because it is related to Paccar/ DAF, which bring high quality standards.
33
Chapter 11 – Promotion
9.1
Marketing communication target audience
The most important group for TRP to reach out to in Ukraine are the transport companies.
TRP will also need to target the independent truck drivers who own their own truck.
9.2
Communication objectives
First TRP will need to work on its brand recognition .Besides creating brand awareness
TRP’s most important communication objective is to get their USP’s through to their target
audiences. This means they will need to communicate their favorable price-quality ratio and
their large assortment.
9.3
Communication instruments
TRP can use multiple communication instruments to fulfill all of its communication objects.
In order to create brand awareness TRP will need to work on its visibility and presence in
Ukraine. A suitable way of doing this will be to have a good website, and to sell their
products at various dealers throughout Ukraine. However having a good online marketing
strategy won’t be enough. TRP will still need to work on creating close customer
relationships, and offer their clients a high level of customer service. Since TRP already has
a good customer scoring system it would be a logical step to also use this system in
Ukraine.
DAF/TRP Should introduce their Max card saving program in Ukraine, because then the
company is able to track the spending of their customers and can see how often Ukrainian
customers purchase new parts.
It is advised that DAF will use agents to maintain contact with transportation companies and
dealers. This way they can develop the needed customer relationship.
DAF/TRP should also held a lottery that if 500 parts have been sold. They would give one
of the customer a price should hand out a gift card of €1000 to the winner so they can
spend it on TRP parts.
Since TRP is interested in out of the box ideas they could also organize some sort of truck
race, or track day at the circuit of Chaika located in Kiev. This would be an excellent chance
for TRP to get in contact with their target group, show case their products, build customer
relations etc.
34
Chapter 12 – Price
The pricing of TRP parts are relatively more expensive than the competitors who are active
in the Ukrainian part market. When comparing TRP parts to genuine (DAF) parts they are
much cheaper. TRP have a good price quality ratio.
In the final sale price of the parts there are a few aspects included in the calculation.
 Manufacturing cost, this depends on the part.
 Average discount to dealer on fast moving items around 35%
 Negotiation margin for dealers  between 20 – 25%
Overall when a TRP part is sold the profit margin on it will be between 35 – 70%. The
margin depends on what kind of part is sold. This profit margin percentage is an industry
standard.
35
Chapter 13 – Distribution
Entry mode
The production will still take place in the Netherlands. It is way too expensive to build a
whole new parts factory when you have one close by (in Europe). The Netherlands and
Ukraine aren’t very far apart and transporting parts there won’t give any problems.
Especially because Ukraine became an official member of the WTO and although Ukraine
only has a favourable trade regime with the Netherlands, negotiations with Europe for a free
trade agreement are taking place which would make business for DAF even easier2. As for
a headquarters, DAF is already active in Ukraine and all the sales are coordinated centrally
in Kiev. The most wise decision is to leave it that way. There is no use of relocating the HQ
in a country, particularly when this HQ is located in the busiest part of Ukraine.
DAF has one of the best distribution systems in the world. Together with its partnership with
TRAXPARTS Ukraine ltd. in Ukraine, which delivers to every area in the country3. The
distribution is already very good. It could be interesting to hire one or two agents who look
for new partners in the meaning of transport companies or small service centres to increase
the market share in Ukraine. These agents mostly take around a 5% cut. So when it comes
to subsidiaries, TRAXPARTS is the most important for DAF and also the only one needed.
It can distribute directly to clients, but also to retailers like small service centres. If
TRAXPARTS ends up to be not as good as presumed, there are many more distribution
companies in Ukraine that are potential partners for DAF, like Cargo-Parts and OmegaAutopostavka4. Because TRP-parts have to be considered as quality parts, but for good
value of your money, the most wise decision would be to use selective distribution. Also
because the market isn’t that big yet, it would be a waste of resources to use intensive
distribution. The retailers for TRP parts must be chosen carefully and it would be wise to
make a few service centres of those retailers too.
As for possible partners/retailers, Cargo-Parts and Omega are already mentioned as
possible distribution partners. When looking at sales, this is only done through one central
dealer in Kiev and no further retailers. This is the same with service centres. There is one
partner now taking care of that, namely Truck Centre Ltd. Because most retailers are
already supplied by wholesale companies, it is a smart decision to partner up with those
wholesales. For instance Concord, this company cooperates with 80 large dealerships. In
every region of Ukraine they have at least 3 partners5. Next to that, it would not be a bad
idea to sell TRP-parts through internet sites, because internet use is rising in Ukraine and
there are a few big internet websites where TRP/DAF can sell its products directly to
everyone on the web (like Dutch marktplaats.nl). The biggest site in this is Autoline6. At last
there are the small dealers. When the brand awareness of DAF has grown in Ukraine, it is
better to start with only TRP/DAF dealers. They will only sell TRP/DAF parts and will be
same as genuine DAF dealers. They would also have a service centre so clients can have
their truck fixed there, or do it themselves at home. It is important to have those dealers,
because the problem with cooperating with wholesalers is that they also supply their
dealers with other brands.
According to Truckregion.com, there are 88 different spare parts dealers in Ukraine7. The
distribution target for DAF will be 14. This means that TRP-parts will be sold by 14 different
dealers throughout Ukraine. This comes down to a weighted distribution of: 14*100/88=
17,5%
2
http://www.ukraine-arabia.ae/investment/regimes/
http://daftrucks.kiev.ua/en/
4
http://autoukraine.info/sample-of-research/
5
http://concord.km.ua/en
6
http://autoline.com.ua/
7
http://truckregion.com/en/index.php?country=ukr&category=8&page=4
3
36
Chapter 14 – Budget
Market size
In 2011, the total amount of registered trucks was around the 80,0008. The top 5 trucks
brands in Ukraine had an increase of 20,13% (from 9269 to 11135) in total registered trucks
and it is expected that the total market will grow around half of this pace. So this equates to:
Year
2012
2013
2014
Expected Growth
11%
13%
12.5%
Total Truck on Market
88,800
100,344
112,887
Now the total amount of trucks is known, the total market size can be calculated. In the
question hour with DAF on the 21st of May, the manager from DAF said that the average
consumption on a truck each year lies around the €2500. This means that the total market
size will be: 112,887*2500= € 282.217.500,Budget calculation can be found in appendix 1.
8
http://investukraine.com/wp-content/uploads/2012/06/Automotive-_www.pdf
37
Chapter 15 – Consequences HQ & Home Country
If DAF/ PACCAR enters the Ukrainian market with their TRP parts it will bring some
consequences for the headquarters in the Netherlands. First of all, Paccar Parts has to
make some good arrangements with the future partners. So they can make sure that both
parties agree and have the same vision regarding the communication, distribution, sales,
quality control and marketing. Next to these arrangements DAF/PACCAR needs to monitor
the activity in Ukraine, not only the sales figures, but also the development in the part
market.
Other consequences for the home country is that they have to financially invest in another
country. When a company enters a new market, they will have to invest a lot of money in
order to see some results. The money that DAF/PACCAR needs to spend to approach this
market cannot be spend in the home country. Entering a new market in the first few years
cost a lot of in terms of money, it will not only be profitable but will bring some risk with it.
So the headquarters should make some reserves for this in order to be able to cope with
some losses before it can become profitable. Not only will it bring financial consequences
but also it will bring some changes in the current way of doing business for example the
increasing demand for parts will have an impact on the production, DAF/PACCAR should
be increase their production capacity to be able to meet the growing demand.
38
Sources
1. Import and export, Ukraine Arabia, viewed on May, 2014 – http://www.ukrainearabia.ae/investment/regimes/
2. DAF trucks in Ukraine, DAF, viewed on May, 2014 – http://daftrucks.kiev.ua/en/
3. Ukrainian market of spare parts, Auto Ukraine, viewed on May, 2014 –
http://autoukraine.info/sample-of-research/
4. Concord Company, Concord, viewed on May, 2014 – http://concord.km.ua/en
5. Autoline, Autoline, viewed on May, 2014 – http://autoline.com.ua/
6. Spare parts dealers, Truck region, viewed on May, 2014 –
http://truckregion.com/en/index.php?country=ukr&category=8&page=4
7. Automotive, Invest in Ukraine, viewed on May, 2014 – http://investukraine.com/wpcontent/uploads/2012/06/Automotive-_www.pdf
39
List of figures
Figure 1 – SWOT Scheme .................................................................................................. 8
Figure 2 – Confrontation matrix Kazakhstan ........................................................................ 9
Figure 3 – Confrontation matrix Ukraine ............................................................................ 10
Figure 4 – Weighting competitive strength and market attractiveness ............................... 11
Figure 5 – Weighting competitive strength and market attractiveness ............................... 12
Figure 6 – Weighting competitive strength and market attractiveness ............................... 13
Figure 7 – Weighting competitive strength and market attractiveness ............................... 14
Figure 9 – Weighting competitive strength and market attractiveness ............................... 16
Figure 10 – MABA Analysis Kazakhstan ........................................................................... 18
Figure 11 – MABA Analysis Ukraine .................................................................................. 19
Figure 12 – BCG matrix TRP ............................................................................................. 27
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Appendix 1 – Calculations budget
Calculations Budget part in attachment mail.
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Appendix 2 – Creative Session
42
43
Appendix 3 – Innovation idea
Innovation Idea will be send as an attachment in a email.
44