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Strategic Management

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Marketing mix

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The general concept of marketing of the Chinese car market is the development of the marketing mix, which is a marketing strategy and program implementation (marketing program).

Marketing strategy includes selecting target markets, the choice of target segments, positioning strategy for the formation of these segments in the target markets, brand management strategy and the formation of long-term brand image.

The marketing program is a set of actions aimed at the implementation of the strategy, including food program, program pricing, marketing programs and promotion program.

Marketing Strategy

Target markets

There is heterogeneity of the various regional markets on such parameters as the volume of demand, level of competition, the company's ability to a varying degree of attractiveness of the geographic markets for the company Geely Automobile.

Improving the performance of the company is possible by focusing on promising markets and generates unique marketing programs tailored to specific geographic areas. Example of strategic solutions for business development is the expansion of the VW car for the Chinese market (APCO, 2010). The plans of the VW in 2002 were the introduction of Chinese own models of “cheap” car (Green Car Congress, 2009). This segment of the Chinese automobile market is currently experiencing a boom, and the Germans still do not have a decent offer for it. Over the next 5 years VW plans to invest in China in the amount of EUR 2.5 billion, mainly in the production of new models. According to the forecasts of private transport sector in China, its rapid pace will grow. At the moment, 70% of vehicles are company cars and taxis.

European and Japanese car manufacturers avoid direct competition with American manufacturers producing large and gas-guzzling cars, other than tinsel. Instead, they found unattended consumer segment, requires a small, economical on fuel cars, and filled the gap. To their delight and to the surprise of Detroit - American car giant, this segment has grown in quite a large part of the car market. BMW Group will focus on the production of high-quality and expensive cars (Lei, Xu, 2006).

Target segments

Consumers are not uniform in their mass - differences in parameters such as income level, the experience of the car, etc. result in different requirements for consumers to individual car brands.

Isolation of homogeneous (e.g., in terms of motivating the choice vehicle) segments of consumers and providing them required different sets of service allow achieving better meet consumers of Geely Automobile (Global Data, 2012).

The increased focus of the company Geely Automobile in the most attractive segments of the consumer and the use of unique tools marketing mix for each target segment will maximize profits.

An example of a successful choice of target market can serve as a special branch Geely Automobile, specifically targeting women drivers. The idea to orient their business on Women was adopted after a series of investigations that result, it was concluded that more women than men are brought into service for the car repair and diagnostics, as well as have their individual needs and characteristics of use

Geely Automobile Company is trying to make cars for every “purse, case and person” (Li Shu Fu, 2013). Using a variety of products and marketing approaches, the company hopes to increase sales and strengthen their position within each market segment. Geely Automobile expects that the procedure in several segments in a stronger position to fix in the mind of the consumer communications company with this product category. It also looks forward to more frequent shopping, because the company's offer better fit typical for this segment expectation.

Positioning

The main objective of positioning is the formation of consumers' particular view of the distinctive advantages of company cars, representing great value for them, in order to create additional customer value and competitiveness of cars.

Positioning is designed to answer the question of why the consumer should buy a car company.

The clear position taken by the company in the minds of consumers, will further reduce the cost of advertising, to achieve a high level of customer loyalty, as well as help to keep the company's competitiveness in the high level.

Brand management strategy

The main objective of the strategy of brand management - identification of the main areas in which the company's resources will be used to increase brand value, in order to create additional customer value and competitiveness of a company car. Brand management strategy answers the question: to whom and how to offer a company car (Murabak, Briggs, 2013).

Promising brand image

The main goal of creating long-term brand image - creating a unique set of associations that arise from consumers at the mention of car models of the company, its quality, cost and technical specifications that describe the purpose of the car and carry certain consumer values provided to consumers for the purchase and operation of a company car.

Marketing Program

Product

The main purpose of standing in the formation of the product (the car and set on its service) offered by Geely Automobile, is to determine its optimal performance, can satisfy the needs of different customer segments, and to do it better than similar products of competitors.

Product marketing mix element is designed to answer the question about what the buyer gets, buying a company’s car.

Geely Automobile announced the concept of a new marketing policy, according to which car plant will promote the market is not just a car, but also a range of services associated with buying a car and including a pre-training, warranty and after-sales service.

In order to increase sales volume produced cars, the Group came up with a new kind of insurance. When buying on credit or lease a new or used car Geely Automobile bank insures the car in case the customer loses his job. In this case, the client does not have to worry about the remaining payments for the car. The bank will pay the entire remaining contributions (within 12 months) - completely free of charge.

Price

Price is one of the most important elements of the marketing mix that has a direct impact on the attractiveness of the car for buyers and on the income received by the other party.

Set of price tools to determine the optimal value of the car (base price, discounts, etc.), which satisfies most of the target segments and maximize income generated by the company.

Price item marketing mix designed to answer the question of how much the buyer evaluates a company car.

Smart pricing can lead to a significant increase in market share. Geely Automobile leadership sees as an alternative to direct savings can be improved warranty on parts. New discounts, which are offered by Geely Automobile, make cars of the corporation much more attractive to buyers.

Distribution

Distribution is a marketing mix element, aimed at making the car companies are available, and the process of buying a car - easy and convenient.

The spread answers the question: where and how the consumer can buy a car company.

Geely Automobile Company has organized the sale of the cars over the Internet. Machines are sold with a 13-percent discount and delivered within 10 days. Purchasing mechanism is as follows: the buyer chooses his favorite model. There it is, within 30 days, the buyer was able to see it and decide to buy it or not this model. If it eventually refused, the fee for the reservation is not refundable (Geely Automobile Holding Limited, 2011).

Promotion

The main purpose of promotion is to convey information to the buyers in order to get them to the desired target behavior.

A set of measures to promote the company's products to answer the question: how to influence consumer behavior?

An example of a successful promotion of a new product on the market is the company's advertising strategy. When Geely Automobile launched a new five-door model, it uses an integrated approach in which agencies committed themselves to cooperate with each other to the television commercials, direct marketing and sales promotion featured the same idea and images.

Ambient

Creating a set of tools marketing mix depends on the state and the major developments in the external environment.

The external environment of the company can be divided into a microenvironment, which includes buyers, car companies, dealer network, and the macro-environment that consists of economic, social, political and technological environment.

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Macroenvironment

The economic environment

Economic environment factors affect the purchasing power of consumers, which is reflected in the structure and volume of demand for cars.

Understanding of the main trends in the economic environment will predict the dynamics of the automobile market and helps to take timely action on prevention of significant losses, due to the reduction in demand during an economic downturn or increase revenue by attracting additional customers during the economic recovery.

According to statistics, a car park (adequately characterizes the demand for cars) in a stable environment depends on the level of the economy, which, in turn, can be estimated by the level of GDP per capita (Li, 2007).

Depending on the economic situation in the country, demand is forming for individual vehicle modifications. For example, the company Geely Automobile plans to release in the Chinese market first in the history of the city car class micro. At the time of one of the worst economic downturns in decades, such machines are in high demand (Chiu, 2011).

The political environment

Political environment factors influence the car market, creating additional opportunities and constraints for the activities of its subjects.

Understanding of the main trends and development trends of external regulation of the automobile market can avoid the associated threats and take advantage of opportunities at the expense of timely adaptation of the company to the changing demands of external regulation.

More attention has been paid to the Government of the development of the domestic car market. In keeping with the development of the domestic auto industry to 2010, adopted in July 2002, Chinese auto manufacturers will create conditions that enable us to produce modern machines meet international environmental requirements and safety. According to this document, all customs duties on imported foreign cars will be unified, regardless of age cars.

The social environment

Social environment factors affect the size and structure of the customer, which in turn affects the level and composition of demand for cars.

Changing the population entails a change of people using private transport, and changing age and sex composition may lead to significant changes in the requirements of the model and specification.

One of the main factors affecting the demand for cars is the level of income. With the growth of per capita income, the number of cars, which are in the personal property of the population, is increasing.

Technological environment

Technological environment factors contribute to the creation of new technology, cars and services, increasing the competitiveness of companies using these innovations.

Understanding of the main directions of development of the technological environment will identify and promptly implement promising innovations that can effectively meet the needs of customers, increasing the company's competitiveness.

One of the most popular technological innovations is the Internet. Automakers are making greater use of the Internet. Geely Automobile make bulk purchases on-line, to optimize its network of suppliers, creating new ways to sell cars, etc., which in turn saves time and money. Thus, the driver can receive current traffic information via the Internet, finding a route, weather, traffics and getting other useful information.

Microenvironment

Buyers are a key element of the environment: the degree of their needs depends on the market success of the company (Fourin China Automotive Intelligence, 2009).

Studying of periodically changing customer preferences and providing them the necessary range of vehicles that are required, can increase revenue for better meeting their needs.

The studies of car buyers who intend to buy cars showed that a number of factors have different effects of individual values, reflecting the everyday problems of consumers.

 

Table 1: Consumer segment model graduating (DBS Group Research, 2012)

Factor grade 

Consumer segment

 
 

Model 1

Model 2

Model 3

 

1

Fashion following

Fashion following

Fashion following

 

2

High wages

Esthetic satisfaction

High wages

 

3

Esthetic satisfaction

High wages

Esthetic satisfaction

 

4

Ambition

Ambition

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Total price

 

Ambition

 

5

Personal security

Personal security

Personal security

 

 

Competitors

Competitors have a direct impact on the sales of the company, reducing its customers by offering the same or better quality cars and services.

To be successful, the company is not enough to offer a car that meets the requirements of customers - need to satisfy them better than the competition.

As a result of the acquisition of Rover, BMW has gained access to the production of small cars and off-road vehicles. Thus, its protected flanks by two growing sectors of the car market class «luxury», in which it had not been active.

Competition among automakers in the Chinese market is increasingly moving in the fight for quality (KPMG, 2012). Quality has become one of the most important parameters in the automotive industry. The high degree of reliability of the product gives the manufacturer the ability to set better prices, better meet customer requirements and thus reduce the cost of warranty repairs. Ford heads North American operations since last year provide additional blitz checks at the plants and separate stages of development and acquisition. In January, the corporation was established team of 300 engineers, designed to identify and pursue opportunities to reduce costs and improve the quality. Ford offers its software providers to share existing expertise in this area (Institute of Electrical & Electronic Engineers, 2008).

Sales Network

Sales network has significant opportunities to increase sales of cars of various modifications, affecting customers in the time of purchase.

Offering favorable conditions for cooperation is motivating participant dealer network to increase car sales company, will increase the company's revenue. The increase in sales is possible by optimizing the distribution network, improve service quality and sophisticated programs to stimulate demand for its cars. Geely Automobile worked to reorganize its distribution network and plans to spend some $ 117 - 135 million in the next five years (Green Car Congress, 2010), Geely Automobile expects to increase annual sales by 50% (Green Car Congress, 2013). They are going to open 30 new outlets.

Conceptual Approach

Marketing approach to the organization of the company car market involves strategic planning is an establishing and maintaining a dynamic interaction with the environment the company to provide competitive advantage.

SWOT-analysis of the company's products “Geely Automobile”

SWOT-analysis - analysis of the strengths and weaknesses of the company, opportunities and threats of the environment. It reveals: strengths - strengths, weaknesses - weaknesses, opportunities - opportunities and threats - threats that they are the basis of SWOT analysis. SWOT analysis includes the analysis of the situation within the company, as well as the analysis of external factors and market conditions. All data is subsequently reduced to a single table (matrix SWOT analysis). Analyzing the data in the table located under development options of the company when the external factors, how to use strengths to reduce the risks, etc.

Table 2: SWOT-analysis of the company's products “Geely Automobile”

Strengths:

- Geely Automobile operates two companies:

• Zhejiang Geely Automobile

• Shanghai Maple Guorun Automobile

-Geely Automobile first Chinese car makers took part in the Frankfurt Motor Show (September 2005) iDetroyta. Since 2010, Zhejiang Geely Automobile owns Volvo Cars (produces cars under the brand name Volvo)

-Together with the Government of Uganda to create a corporation MFK Corporation. Geely Automobile works with companies Daewoo International, Maggiora and Rücker

- Geely will continue to improve the technology in order to protect humanity from the negative effects of carbon dioxide

In 2007, the company sold 181,517 cars

- In 2008 the company launched a biofuel cars: natural gas / gasoline and methanol / gasoline

- In December 2009, Ford announced the sale of Volvo Cars for $ 1.8 billion Zhejiang Geely Automobile. The signing of a definitive agreement to sell a controlling stake “Volvo Personvagnar AB” was held on 28 March 2010. The transaction was completed on August 2, 2010.

- In 2012, the company exported 100,300 vehicles, making it the largest Chinese Geely auto exporter.

Weaknesses:

- The impact of the economic crisis on the purchasing power of consumers, which affects the reduction in sales

- No specialized technical service around the clock auto-station specializing in motor vehicles of “Geely Automobile”

Features:

- You can use a passive marketing, allowing the potential buyer to assess the benefits of their products, taking a car. Car rental becomes a powerful marketing tool to promote new vehicle technologies and new machines themselves.

- Open in other countries around the clock AutoTechCenter that provides full service repair, diagnostics, and routine maintenance of the company's brand vehicles

- Studying the Internet, experts in the field of automobile marketing found that the interest of users on the network to the automotive category is very high: 39% visit sites auto categories car magazines or portals, 38% - Sites with private ads for used cars and 33% - Sites automakers. So the Internet is present in the first five levels of the decision of buying a car, from the awareness of the need to pre-trial decisions. What causes the increase in advertising investment company online.

Threats:

- In the most environmentally safe ten included six marks of “Toyota” and only one brand of “Geely Automobile”

- Priorities for the company's competitors are constantly investing in the funds for research and development of environmentally friendly engines and manufacturing technology.

- Lack of equipment with additional technical innovations their vehicles

 

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