Proton’s Marketing Strategy for Proton Perdana-The Challenge for Malaysia’s

National Car

Introduction

The Proton Perdana, based on the Mitsubishi Eterna, was first produced in 1995, and

was intended for the higher-end market. The first generation Perdana was also Proton's

first car to offer an anti-lock braking system (ABS) and cruise control. Under the

guidelines of Malaysia's automotive policies, cars for use by federal and state

governments are required to be of national makes. So as a sedan- Perdana cars are

used by government officials. We need to produce a marketing strategy for a new or

existing product. We have chosen Perdana V-6 of Proton Edar Car and we will try to

produce a marketing strategy for its main product car.

The aim of this marketing strategy is to identify the correct target market, determining

the present problems/defects of Perdana V6, establishing a new pricing policy which will

suit current market position of the product, how to develop promotion offers and after all,

meeting the customer’s needs and wants by stepping ahead of competitors. We try to

evaluate proton’s existing marketing strategies in the process.

The Main Objectives of Proton

Proton is Malaysia’s national car manufacturing company, yet it’s still unable to take the

global role expected from it, although it claims that it is doing everything necessary to

increase sells. Perhaps something is not going right because sales are not going as

expected. The roles and responsibility of Proton & Proton Edar should be re-looked

upon if they want to be competitive and become a global manufacturer. Currently,

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Proton is the manufacturer and Proton Edar being the sole marketing arm and

distributor. As both the manufacturer as well as the distribution arm of Proton cars, the

quality production and quality deliveries of proton cars to the customer may be affected

when the quantitative sales target is mixed with qualitative deliveries. Proton wants

numbers and customer wants better improved cars.

Marketing objectives of Proton Perdana: Target market, Satisfaction level of target

market current yearly sales of Perdana, Current issues-gear box problems etc. Current

promotions efforts to sell Perdana-from proton’s site

• Current Mission of Proton: To strive towards excellence in all aspects of our

operations.
• Our Proposed Mission statement for Proton: Quality and luxury cars at an
affordable price
• Current vision: Being customer’s no 1 choice in automobile product and

services

• Our Proposed Vision statement for Proton: Becoming a world leader in the

automobile market

The Concept of Marketing

Marketing is the process of planning and executing the conception, Pricing, promotion,

and distribution of ideas, goods and services to create exchanges that satisfy individual

and organizational objectives". This definition stresses the importance of beneficial

Exchanges that satisfy objectives of both those who buy and those who sell goods and

services. The purpose and objective of marketing are;

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Marketing seeks (1) to assess the needs and wants of prospective customer and (2) to

satisfy them. The key to achieving the two objectives is the idea of exchange or the

trading of things of value between buyer and seller. Strong customer-orientation and

competitively-priced products are the foundation of protons business and are essential

to the company’s success. Proton aims to maintain market leadership by continuing to

develop innovative products and through satisfying its customers in a more profitable

way than its competitors. Customer satisfaction is a key element where various

initiatives are being or will be rolled out to make the experience of owning a proton

Perdana V6.

Maintenance Controversy

Terengganu state government ordered to purchase

14 Mercedes-Benz E200 Kompressors, which were

intended to replace existing 2004 Perdana V6

Executives as part of their fleet of state government

cars. Perdanas often require costly maintenance,

especially on the gearbox, when used for

continuous, long distance journeys. Perdanas' lack

of reliability.

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Target Market and Market segmentation for Proton Perdana V6

• Young Business class people/High end Market

• Age range: 18-45

• Family size: 3-6

• Monthly Income: 3500 and above

• Religion: Muslims, Hindus, Christians

• Climate: Provide cars which can withstand high Young Business class

people/High end Market

• Lifestyle: Fairly high class

• Temperature and Humidity.

Current Business Context

The automotive sector is a key industry in the Malaysian economy. The economic

contribution of this sector is immense, with significant linkages to the manufacturing and

services sectors. The automotive sector began with importation of vehicles which then

progressed to assembly operations and the establishment of a wide network of

automotive components and parts manufacturers.

The establishment of Proton in 1985 and consequently Perodua in 1993 acted as

catalysts to the development of the automotive sector.

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Sales growth: The government felt that Proton's management should be allowed to

continue with its plan to strengthen the company in light of improvements in its domestic

sales and exports. But Sales declined 19% to Rm1.14 billion compared with the same

period last year. To increase sales and market share for Perdana cars as the leading

car brand in the domestic market, proton should mainly through the consolidated effort

on sales operations and quality improvement.

Profit: Proton posted a Profit for the first quarter of 2008 is 52.03 million after tax. An

improvement compared to net losses 46.7 million ringgit for the corresponding previous

quarter. Proton also has gained back some of its lost market share this year after it

launched two low-priced models, allowing the national car brand to ride on a recovery in

the Malaysian automotive industry.

Turnover: 11% increase in turn over this year, combined turnover was 409.9 billion

Market Share: Proton has a huge domestic market and reaping the benefits of being

national car manufacturer by utilizing government provided subsidies. Malaysia's

national carmaker may soon be in the hands of Europe's largest automaker,

Volkswagen AG. Because the competition in the said market has led to the declining

market share for the Malaysian automaker. The Malaysian government has been

looking for an international automaker which is interested in buying 43 percent share in

Proton which the government currently owns.

Research Methods

We have collected information by generating questionnaires and distributing them

among existing users of Perdana V6 and potential consumers as well to find out what

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they expect from the product. A further direct interview of existing Perdana owners was

also conducted. We also collected articles from the internet, news papers, magazines

and existing reports and projects done by our seniors from the college library.

Questionnaire analysis:

Sample size was 20 randomly chosen Proton Perdana owners and prospective owners.

Analysis of field Research (primary data)

Gender Male female

66.67% 33.33%

Age 15-20 20-30 30-40 40-50 50 ++

13.33% 13.33% 60% 13.33% Nil

Income 10000-15000 15000- 20000-25000 25000-30000 30000++

20000

5.32% 6.67% 23.34% 36.67%

Profession Student Job Own Other

business

33.34 66.34% 20% 13.34%

No of cars in 1pc 2pcs 3pcs 4pcs 5pcs++

the house 26% 53% 20% 4%

Maintenance High Higher than Lower than Higher but Low

costs other other affordable

60% 20% Nil 20% Nil

Proton’s Very good Average Less than Very

Service average disappointed

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 6.67% 20% 66.66% 6.67%

Parts Fully Average Less than Disappointed

replacement satisfied average

6.67% 80% 6.67% 6,67%

Rate of 40% 60% NIL

consumption High Average Low

Proton’s 33% 53% 14%

offer &

promotion Yes No No idea

Perdana v6 6% 14% 60% Nil 40%

cars need to Fuel engine Gear box Braking

developed efficiency issues system

Reason of 20% 33% 7% NIL 40%

buying Low price Pay by After sales Attractive look convenience

proton car installment service

Comfort & 14% 86% NIL

convenience Very Average Not

proton is comfortable comfortable

Interview Analysis: A further face to face interview was conducted by the members of

our group. A strong sense of disappointment and despair was noticed while interviewing

existing owners of Proton Perdana V6

Focus group: Prospective consumers and car retailers in Bandar Puchong Jaya

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Overall satisfaction derived from Proton Perdana V6

Recommendations

a) Should provide with more models/version with enhance features and multiple

options-line depth

b) Improve interior designs & making interior parts more compact.

c) Improve gearbox technology or buy new gearbox systems from external

suppliers-whichever is cost effective on the long run.

d) Collaborations with International for Manufacturers for new technology

e) Proton should perform Q.C tests on all of their automobiles before launching

in the market. This way they can reduce recall costs and after sales service

related calls as they are providing free service for 4years.

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 f) Invest more in Research &Development

g) Create consumer awareness about Proton’s promotions and offers

h) Build specific models for certain regions

i) Proton should also periodically publish their product defect rate per1000

pieces.

j) This can enhance customers’ view about Proton’s cars as less defected

products will be in the market.

k) Should try to build up Brand image by promoting reliability and maintenance

issues on the media and internet forums

l) Reduce fuel consumption rate/km

PESTLE Factors Analysis

Social, Economical, Political and Technological factors relating to Proton Perdana:

• Political Factors: Government subsidiary, Government owns 43% of Proton’s

shares currently-it can be used as the biggest opportunity.

• Economical factors: Should speculate the effect of implementation of AFTA and

adapting in the changing marketing environment, Free Trade in the ASEAN

region can be an advantage to deliver Proton’s products throughout the region in

a lower price than its rivals. The effect of global recession and rising Inflation

related factors must be taken into consideration.

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 • Social factors: Muslim Symbol-effect on consumers of other religions, Corporate

Social Responsibility

• Technical factors: Proton should invest more in improved Research and

development to gain competitive advantage and to survive in the market. Proton

should learn from its experiences of past manufacturing technologies and their

pros and cons and try to acquire new technologies whenever available.

Venturing with Other Manufacturer

As a tie-up between Proton and Volkswagen was discussed between 2004 to 2007,

however, with newfound confidence in itself after warm reception of the Proton Persona

and brisk sales of the Proton Saga, Proton snubbed Volkswagen and decided not to go

ahead with the tie-up in late-2007. There was also talk between Proton and Mitsubishi

Australia in 2005 to have a replacement Perdana in the form of a rebadged Mitsubishi

380 sedan. These talks never eventuated. To date, there have not been any further

announcements on the Perdana's successor.

Ultimately, sooner or later, Proton will feel the need of a global partner which is more

acceptable in the global market and have a heritage of automobile marketing. So this

would be the best time for this kind of venture as Proton is facing increasing pressures

from the investors and the society. Therefore, we think it’s time to be more business

minded and professional rather than emotions.

Promotional Methods

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The following are some of the steps that could be useful to promote Perdana V6:

• Advertising on the television, news paper, street bill boards

• Yearly Sales Promotion, maintenance cost deduction offer, new parts at a low

price offer

• Generate more Public awareness about Proton’s existing offers and media

coverage to fight the current consumers’ perception about Perdana cars.

• Street and road Shows and demonstrations, participating in trade fairs, auto fairs,

auto magazine covers etc.

Pricing

Now-a-days people more concern about money. The prices of the Proton Perdana V6

Enhanced and the Proton Chancellor V6 remain the same. Current price is

approximately Rm105k-125k depending on the models. Proton should readjust the

pricing for Perdana V6 and make more flexible installment planning to encourage

customer to buy Perdana V6 cars.

Distribution

Car demand in Malaysia may be fine now, but rising inflation could result in falling

disposable income and rising interest rates. Proton Current Distributor is Proton Edar

Sdn. Bhd only. Proton will not renege on the promise to deliver “the right car for the right

market at the right time for the right price”. So we think Proton can venture with some

new private agencies to promote their sales. And proton should select and Monitor

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some appropriate distribution Channels to satisfy customer requirements and meet the

required safety and environmental standards of target market.

Implementation of Strategy

Any Strategy depends on the Successful Implementation of it. In light of the increased

competition and liberalization within the domestic automotive industry, rapidly changing

trends and industry challenges, Proton should to re-strategize for Perdana V6 and see

how it should compete. We think that to survive in the Market after the activation of

AFTA, Proton needs to implement the above Recommendation discussed earlier.

Control Process

After Implementing the Strategy, It must be controlled by making corrections as there

might be errors in the strategy due to survey errors and biases. Actively promote

programmes for the employees to instil awareness for the safety and health of the

employees, company’s business associates and the public.

Limitations of This Strategy

Although we tried our best to make an appropriate marketing strategy for Pronton

Perdana V6; the strategy might have its limitations due to errors made and biases

during the data collection and analysis.

• Bias in questionnaires: There were some biases in our questionnaires although

we tried to put our maximum efforts to reduce the biases and minimize the

percentages of question related confusions in the questionnaires. However we

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 were unable to eliminate all the errors and biases in the survey

instrument(questionnaires and interviews)

• Surveyor’s error/ interviewer’s bias: there were some errors made by our

interviewers unintentionally during conducting the interviews with the members of

the sample population. And there was also bias due to participants’ perception

and views toward a student performed survey.

• Non-Response bias: Limited Access to population sample(Perdana V6 owners)

and Limited secondary data

• Data analysis error: Further errors could have occurred unintentionally while

inputting the data from the survey instrument into the computer and during the

analysis as SPS was not used for the analysis.

Conclusion

Proton is a government subsidized company, Malaysia’s Pride. It is expected to

generate great revenue for the government but it’s unable to make this achievement

due to low quality management of their automobiles. Proton rising inflation and high

crude prices won’t hurt car sales because most of the models have 1.6-liter or smaller

engines. Therefore we suggest improving quality, provide all the necessary facilities and

equipment for the employee, Actively participate in all the Environmental, Health and

Safety (EHS) programmers, Perform Q.C tests and Position the Product in the

appropriate Market segment by crating Brand Image. It has a much potential high

market in both domestic and internationally, Proton just needs to know who its

customers, what they want are and put maximum efforts to satisfy those needs by

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learning from past mistakes. Therefore, Proton should position Perdana V6 in the

appropriate target market with a new marketing mix, in other words if they target

comparatively rich consumers and make it a luxury product-then they must design and

provide facilities needed by that group of consumers and reaching the product to them

efficiently.

Reference

Philip Kotler, Gary Armstrong, p.2005, “Principles of Marketing”, 11th edition, Pearson
Prentice Hall, New Jersey.

Rain Stockton, Proton's Shares Increase as Its Deal with Volkswagen near Conclusion,
26-07-2007, [online], available: http://www.articlesbase.com/automotive-
articles/protons-shares-increase-as-its-deal-with-volkswagen-near-conclusion-
188723.html

Robin Brant, Malaysia firm's 'Muslim car' plan, BBC News, 11 November 2007, [online],
available: http://news.bbc.co.uk/1/hi/world/asia-pacific/7089707.stm

Anthony Fontanelle, Volkswagen Closing in on Proton Deal, [online], available:

http://www.streetdirectory.com/travel_guide/51428/car_focus/volkswagen_closing_in_o
n_proton_deal.html

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Proton dealer does well in Kuwait, eyes Iraqi mart, DAILY EXPRESS NEWS, 01st
December, 2003, [online], available: http://www.dailyexpress.com.my/news.cfm?
NewsID=23260

Proton Perdana, 27st October 2008, [online], available:

http://en.wikipedia.org/wiki/Proton_Perdana

The Malaysian Bar, Strong sales, so Proton drops partner option, 21 November 2007
[online], available: http://www.malaysianbar.org.my/index2.php?
option=com_content&do_pdf=1&id=12414

Below expectation - Proton can do better than this, 19th Jul 2006, [online], available:
http://www.carsurvey.org/viewcomments_review_92844.html

Paul Tan, why-proton-Volkswagen-was-a-no-go, 2008, [online], available:

http://paultan.org/archives/2007/11/21/why-proton-volkswagen-was-a-no-go/

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