ALFA ROMEO JUNIOR Launch and post-launch economic theories and strategies

The Alfa Romeo Junior marks a significant step forward in the automotive industry by entering the B-SUV segment with advanced onboard technologies and a dual hybrid-electric powertrain. This paper begins with a brief overview of the product before examining various economic theories that analyze Alfa Romeo's strategies used for the launch of the Alfa Romeo Junior. By integrating these theories, the study offers a robust framework for understanding the challenges and opportunities associated with this launch, ultimately explaining how Alfa Romeo has optimized its market strategy. The analysis starts by contextualizing the competitive environment in which the Alfa Romeo Junior operates, characterized by an oligopolistic market structure dominated by price competition and significant entry barriers. To insert into this environment price competition strategies are necessary, that utilize the Bertrand model to assess how Alfa Romeo's aggressive pricing will capture market share amidst oligopolistic competition. This model also highlights how price wars can lead to lower profit margins despite higher sales volumes. The study then explores the entry barriers that fill the automotive industry, among which economies of scale, absolute cost advantages, and product differentiation. The last two of these barriers pose substantial challenges for new Alfa Romeo Junior as it attempts to enter into the B-UV segment. Subsequently the research investigates the customer loyalty strategies, employed by Alfa Romeo to beat the two entry barriers mentioned before and enhance competitiveness. By focusing on Customer Relationship Management (CRM) and loyalty programs, the study highlights the critical role of sustaining customer loyalty in an environment prone to price wars, as described by the Bertrand model, where loyalty can prevent customer defections to lower-priced competitors. The study also encompasses a detailed market analysis in which Alfa Romeo Junior operates, to better understand the competition behind this environment. Game theory is the tool applied to understand the oligopolistic nature of the automotive market, examining how firms anticipate competitors' moves and adapt their strategies to remain competitive. Then, to better visualize this environment, a description and analysis of the main competitors of Alfa Romeo Junior is provided. The analysis further includes demand curves, demand elasticity and regression analysis to evaluate consumer behavior in response to pricing changes, understanding the elasticity of the demand, i.e. how an increasing of 1€ in the price affect the quantity demanded, using prices applied and quantities sold by competitors from April 2024 to June 2024. Then to better understand Alfa Romeo’s pricing strategy, that allows it to be competitive, a benchmarking analysis is applied, with the Jeep Avenger serving as the target model. The paper also explores two key strategies implemented by Alfa Romeo to beat its competitors: second-degree price discrimination and a cost strategy. Effective cost strategies, such as shifting production to Tychy, Poland, are essential for achieving success in the competitive B-SUV market. Further, market segmentation theory is used to identify and target specific customer segments, ensuring Alfa Romeo’s marketing efforts align with consumer preferences and remain competitive in this, already discussed, environment. Rational choice theory and utility maximization are also explored to explain how consumers make purchasing decisions based on