Prolonged success for auto manufacturers is likely to come from their ability to sell cars in rapidly developing countries like Russia, Brazil, India, and Indonesia. However, selling cars in these emerging markets can be complicated, especially for foreign companies. Nissan is one company that has struggled to expand into emerging markets: its overall share of auto sales is 6%, but its share in Brazil is just 1.2%. With the goal of increasing its global reach, Nissan announced it would revive the Datsun brand name, and develop six new vehicles specifically designed for emerging markets' growing middle classes. The company aimed to produce modern, stylish cars that appeal to consumers visually, and more importantly, fit into their budgets.
In bringing back the Datsun brand, Nissan in effect created a distinctive identity for the unique set of cars that comprised its new global venture. The emerging middle class wants cars, but it can't afford to spend $15,000 to $20,000 on a family sedan. Thus, automobile companies like Nissan need to create small, extremely affordable cars; to do so, they must often take a bare bones approach. That means no air conditioning, no passenger air bags, and no power windows. While Datsun will provide entry into the market, the Nissan brand will continue to be sold as upscale, feature-rich cars. Per Ammar Master, an analyst at LMC Automotive in Bangkok, "Datsun could bring in volumes at the lower end of the market...While the Nissan brand will continue to move up-market."
Dawson, C. (2012, October 02). For Datsun revival, Nissan gambles on $3000 model. Fox News Auto. Retrieved from www.foxnews.com/auto/2012/10/02/for-datsun-revival-nissan-gambles-on-3000-model.html
Siddharth, P., Mukai, A., & Hagiwara, Y. (2012, March 21). Nissan revives Datsun after three decades to boost sales. NewsmaxFinance. Retrieved from
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Winter, C. (2012, March 21). Behind the birth, death, and rebirth of Datsun, Bloomberg Business week. Retrieved from www.businessweek.com/articles/2012- 03-21/behind-the-birth-death-and-re-birth-of-datsun
a. Name and describe two external environmental factors Nissan must consider as it enters into rapidly developing countries like Russia, Brazil, India, and Indonesia. Use facts from the case as examples.
b. Briefly define the following product decisions: one product, one message; product invention; and product adaptation. Which product decision did Nissan utilize when it developed six new Datsun models for emerging markets' growing middle classes? Explain your reasoning.
c. Suppose that, instead of developing its Datsun line for emerging markets, Nissan simply sold its existing models in those markets for half their original price.
i. State the term used for this practice, and explain why it is regarded as a form of price discrimination.
ii. Discuss why Nissan might choose this approach.
iii. Do you think it would be successful? Why or why not?