Volvo 2014 Annual Report Download - page 34

Brand portfolio – a competitive advantage
The Volvo Group does business under several leading and
respected brands. These are strategic assets through which the
Volvo Group delivers value propositions addressing the specifi c
needs of customers around the world. The Volvo Group, as part
of a brand portfolio strategy, is therefore working to further
strengthen the image for its brands by improving delivery on
customer expectations. This will allow the Group to optimally
address the total market.
A GLOBAL GROUP 2014
BUSINESS MODEL
BRANDS
Since taking the strategic decision to focus on com-
mercial vehicles, the Volvo Group has built a strong
and industry-leading portfolio of brands. Through
direct ownership, licenses and joint ventures, the
Group has access to a range of iconic and industry-
leading names like Volvo, Mack, Renault Trucks, Volvo Penta,
Nova and Prevost. In 2014, we added Terex Trucks to our brand
portfolio.
On the truck side, current product brands include Renault
Trucks, Mack, UD, Volvo, as well as Eicher through the joint ven-
ture with Eicher Motors in India. In early 2015, the Volvo Group
received approval for a new joint venture with Dongfeng Group in
China. The joint venture will produce and sell trucks under the
brand Dongfeng Trucks in China and selected export markets.
Volvo, Terex Trucks and SDLG branded construction equip-
ment, Volvo, Sunwin (in a joint venture in Shanghai), Prevost and
Nova branded buses and Volvo Penta marine and industrial
engines make up the major product brands in the business areas.
Portfolio structure unlocks hidden potential
Leveraging our brand portfolio to increase market coverage is at
the center of the new Group organization. The Volvo Group is rea-
ligning itself from being a decentralized brand-by-brand organiza-
tion, to delivering on a brand portfolio perspective.
By clarifying the purpose of each brand in the Group portfolio,
we strengthen relations with a broader customer base. This has
meant taking a holistic approach to the markets, while previously
each truck brand operated relatively independently and often
towards the same customers.
Furthermore, we will be able to better utilize the other strategic
assets we have built over time – global scale, industrial footprint,
distribution networks, supply chains and customer relationships.
Specifi c segments and customers
During the past two years, the prerequisites to execute on a brand
portfolio strategy have been worked on extensively within the
Group. This includes a common approach to market segmentation
and aligning the various brands to address various aspects of
customer buying behavior. Every brand within the Volvo Group has
a purpose and delivers a value proposition to a specifi c group of
customers around the world.
At a global level, Volvo, Mack and Prevost represent our pre-
mium brands, aimed at customers who choose a holistic view of
the brand and associated product and service offer. Renault
Trucks is positioned in the high-end space addressing customers
who value total operational cost and network support. Outside of
Japan, UD Trucks addresses the value segment, a new focus area
for the Group, while UD Trucks in Japan is in the high-end seg-
ment. SDLG addresses the value space for construction equip-
ment – primarily in China. Eicher, which currently services the
Indian market, will form the basis of the Group offering in the highly
cost-competitive market segments.
With each brand being assigned a specifi c segment and cus-
tomer base, the Group aims to increase its market share and its
contribution to the overall growth of the Volvo Group. This proved
valuable when the Group Trucks organization designed road maps
to reach their strategic objectives.
New Brands – new potential
Growth markets are an important part of the Volvo Group’s strat-
egy. These markets are drivers of long-term global growth and
they offer a great deal of potential for quality trucks which balance
operational cost with purchase price. We defi ne this space as the
value segment and are increasing our presence in this segment.
The Volvo Group has launched the UD Quester range and SDLG
is excelling in the large Chinese construction equipment market
and in select markets outside China. Buses is developing a bus
for the value segment and Volvo Penta’s sales of both industrial
and marine engines are increasing in these market segments.
The acquisition of Terex Trucks allows us to offer a full line of
construction trucks – covering articulated and rigid haulers. This
opens up new possibilities in construction and mining.
China and India represent large and unique markets. The joint
venture with Eicher Motors provided the Group with a strong
presence in the Indian truck market. The recent strategic alliance
announced with Dongfeng Group fundamentally changes the
Volvo Group’s opportunity in the Chinese truck market.
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