Background Analysis: Volvo is a Swedish automobile manufacturer who has launched luxury buses in India at a cost of Rs 45 lakhs.

The road subsector, which already had an estimated 80% share of land transport demand in 1990, witnessed annual growth of about 12% in freight demand and 8% in passenger demand till 2002. Lane capacity is low majority of national highways are two lanes or less. A quarter of all India's highways are congested. Poor quality of roads and underfunded road maintenance leads to deterioration of roads, variation in travel time and high transport costs for users. The Golden Quadrilateral would be converted to four lane system connecting millions of small towns on the way. This would increase the speed of intercity travel, ease traffic congestion and would reduce standard deviation on travel times. Volvo offers reliability to the transport operators. The service interval mark for a Volvo is 60000km against 10000km for other Indian buses. Fuel economy of Volvo buses at higher speeds is 3 Km/l as compared to 2.8 Km/l. If we assume for a journey of 1000 km around 250 km is at speeds below 80 km/h then the fuel consumption would be: Volvo Others 333.33 litres 330.35 litres

But if BRTS can be incorporated in highways then the fuel consumption would be: (100 Km distance travelled at less than 80 Km/h) Volvo Others 333.33 litres 346.43 litres

Fuel consumption rates are not a differentiating factor at present condition. But in future with BRTS Volvo buses would save 15*2*12 i.e. 360 litres of fuel /bus/month. At present Volvo buses consume an extra 180 litres of fuel /bus/month.

The seating capacity of a Volvo bus is 48 against 36 for others. The cargo capacity of a Volvo bus is around 25 30% more. Hence the cargo capacity of 3 Volvos equals 4 of others. We can calculate: 4 3 Volvo(12 round trips) Others(8) 13500000 6000000 24,000 Km 16,000 Km 1.2 6.4 910 700 3456 2304 1.33 1 255.36 224 5000 3000 4421760 2284800 8000 5285 24000 21142.85 23 23 552000 486285.55 5000 3000 6000 19200 700000 750000 1255485.5 1258000 5 1029314.4 3163760 5 952880 14.16757619 343874.45 17.448228 56

Cost(Rs) Distance/month/bus No of Services Price /Customer(Rs) No of Customers Cargo Capacity/Bus Cargo handled (space units) Cost/Unit Space (Rs) Total Revenue(Rs) Fuel/Bus (L) Total Fuel (L) Cost/Litre (Rs) Total Cost Servicing Cost (Rs) Total service cost (Rs) Miscellaneous (Rs) Total expenditure(Rs) Net Profit(Rs) Assuming 50%efficiency Volvo & 70% efficiency for others Break Even Time (Months)

Assuming full capacity runs a Volvo would be more profitable since passengers is a constraint. Lifetime of a Volvo bus is more than other buses. For cargo owners would not mind paying the premium but for customers we should target and show them the benefit of AC coaches, comfort and reliability in service and time.

Objective: To develop a marketing strategy to convince travel operators of the value being offered in this premium priced product. Problem statements: To compete with lower priced (entrenched) transport operator. Convince the target segment that it is a more enjoyable experience to travel in a Volvo bus over other buses and even trains. Convince operators of viability even on short distance high density routes.

Alternative Courses of Action: 1. Marketing campaign targeting operators informing them about the savings (above cost sheet) which can be made by operation of a Volvo. In view of impeding improvements in Roads and if Bus Rapid Transit System is implemented Volvo would be the ideal bus. The campaigns strategy should be V stand for Reliability. Its focus could be that a Volvo: a. Would be provided free towing in case it breaks down. b. Servicing needs are 1:6 as against other buses( time and money saved) c. it provides comfort to not only passengers but also drivers(more on road time) d. it has a longer lifetime than other buses They can also offer to train drivers to ensure better performance of the vehicle. Time is money. The operators can promise their customers to be there on time with lesser variation in time travel and more comfort at more flexible timings as opposed to rail. Show them value for money in time saved and comfort provided. Hence even between high density routes people would be

willing to pay a premium to avoid the hustle and to be in time. The marketing campaign for this service by operators could be, Arrive refreshed not tired! 2. The marketing campaign strategy should be that they would offer financing options and insurance. The Volvo can also launch a marketing campaign on the web, the bus stands and railway stations inviting people for short rides to See it to believe it and inform them about the premium to get this service which could make their travel an enjoyable experience. Create demand for short distance high density routes. 3. The Volvo can offer franchise options to bus operators or tie up with local operators in a partnership. It can launch a full scale marketing campaign to convince the middle and upper middle class that its comfortable and reliable to travel by Volvo. It can initially just park the Volvos at bus stands and railway stations and show them the difference which they are offering at such a low premium. Evaluation: 1. Free towing and training of drivers strengthens the core offering of Reliability. The comfort would ensure that passengers are not tired when they have arrived at destination. The driver may not run the buses at the optimum speeds to make some money. 2. Financing facility would relieve many operators of the initial high investment costs. The passengers can actually get a feel of the product before they travel. They would try it for short distances. 3. Franchise or partnership options would lead to vertical integration, more control over the supply chain and high investment costs. Implementation: Financing Options and Insurance The instalments could be flexible with down payment equal to what it costs for them to buy another bus. Volvo would be ideal in view of the impeding improvements in conditions of road. Inform them about the profits (above cost sheet) to be made, the reliability and standard performance of their buses. Operators of Volvos can also exhibit the See it to believe it posters along with web presence. They can recommend the passengers to try travelling in a Volvo at least for a one or two hour journey to feel the difference. This could lead to high passengers demand for travelling in comfort making it viable for operators to run the bus on short distance high density routes. Plan B: V stand for Reliability

The marketing campaign should be to send the marketing executive to meet the operators show them the benefits of buying a Volvo and how they could translate the same value to their customers. Free training of drivers and towing would strengthen their claim. Arrive refreshed not tired! would ensure that people would try Volvo even for shorter distances. Have tie ups with operators to provide water and wet wipes to passengers. Show operators and passengers that time is money.