Issues at Aston Martin - Essay Example

? Problem/Issues at Aston Martin Table of Contents Introduction 3 Aston Martin: A Brief Overview 4 Marketing Mix 5 Analysis of the Business Environment 8 PESTEL analysis 8 SWOT analysis 10 Challenges of the Business 11 Responses to the Challenges 12 Conclusion 14 14 References 15 Introduction According to Hansen, one should not wait for everything to be alright, as it will never be. Similarly for an organization, business challenges will always persist. As long as the business houses continue their operation, there will be different type of obstacles, challenges, and imperfect market condition. It either generates from the internal environment of the organization or it is sometimes caused due to activities of the external business environment. Therefore it becomes imperative for an organization to carry out some research works prior to starting any business operation. Most of the organizations around the world depend heavily upon the market research and environmental analysis to develop preventive measures for themselves. For a growing business there are even more challenges compared to a business that has already been established. As the business unit starts to grow, along with the opportunities, various challenges also come up and then it needs a range of solutions. However solution that worked in one situation might not be suitable during another situation due to changing business environment (Infoentrepreneurs, n.d.). In addition to facing the challenges of the present day business, it has become imperative to achieve incessant developments of the organizational competencies, expertise, skills and capabilities of the employees (Sarlak, 2010, p.38). In this context of the study, the organization chosen to depict the business challenges and to suggest a possible solution for the company is Aston Martin. The primary rationale behind choosing the organization is that, there have been numerous reports which illuminates that Aston Martin is faced with different types of business challenges. Thus in order to get deeper insights of the issues as well as to offer solutions to it, the study has been carried out. It will highlight the marketing and promotional strategies of Aston Martin and thereafter in-depth analysis of the internal and external environment of the company will be carried out. The next segment will identify the challenges faced by the company and possible solutions will be suggested. Finally the report will conclude highlighting the key findings and important points of the study. Nevertheless before getting into deep a brief introduction of the chosen company is presented below. Aston Martin: A Brief Overview Aston Martin Lagonda Limited or what we usually call Aston Martin is the designer, manufacturer and marketers of deluxe sports car. The company was founded in the year 1913 by Lionel Martin and Robert Bamford (Pigott, 2005, p.134). It is presently headquartered at Gaydon, Warwickshire, United Kingdom. From the year 1994 to the year 2007, the company operated as a subordinate of the Ford Motor Company. The company specialized in manufacturing sports cars. As of 2010 the company had employee strength of around 1250. Also according to the reports the revenue of the company of 2010 was ?474.3 million. The major competitors of Aston Martin include SRT Viper, McLaren Nissan, Ferrari and Bugatti among the others. Aston Martin primarily targets the higher income group or elite group of customers. Likewise the company positions itself as a company that is offering value to the customers since long with unmatchable luxury and performance. The company has faced a number of issues and challenges from the time of its inception. However every time the company has successfully overcame the challenges. Challenges and resistances never depart away permanently and therefore at every point of time the company has to deal with the challenging business situations. The next half of the report will shed light on the marketing mix and the promotional techniques used by the company to carry out the operation effectively in the market place. Marketing Mix The marketing policies of any organization are highly dependent upon certain factors. For example factors such as market segmentation and targeting, positioning of the products and services and most importantly available resources of the organization. Depending upon the aforementioned factors, companies generally formulates their marketing mix or strategy. Similarly for a company belonging to the automobile industry also has to depend upon the aforementioned factors prior to developing the marketing mix strategies. Furthermore it is very important to develop a strong marketing policy for a business to prosper growth and sustainability in the market. The principles of marketing mix are generally used by the organizations to effectively reach their desired objectives. The elements of marketing mix can be controlled and needs to be managed properly to meet the requirements of the desired target group (Kumar, 2010, p.45). On the other hand the elements of services mix are product strategy, price strategy, place strategy, promotion strategy, people, process and physical evidence (Foodexport, n.d.). Product Strategy – Development of a product strategy marks as an important function for the company. In addition, a product strategy is the key aspect towards managing the competition (Mcgrath, 2001, p.3-4). Aston Martin has variety of cars in the sports car section, but they hardly manufacture any commercial or family cars. Some of the bestsellers of the company include DB4GT Zagato, Vantage Zagato, Vantage V8, Virage Vantage, Lagonda, Vanquish S, DB7 Zagato, DB7 GT, DB7 and Vantage N24 among numerous others (Astonmartin, n.d.). Price Strategy – Pricing strategy can be portrayed as a mode of influencing customer to acknowledge the price and buy the products. The cars of the company are priced extremely high, which makes the products affordable to higher income group. On assessing, it has been found that the company uses premium pricing method. This allows the company to target the higher income group conveniently. Place Strategy – Place strategy is the policy adopted by the company to deliver their products and services to the customers. This is the way by which physical distribution of the products take place. The company has appointed large number of dealers throughout the world. The dealers or distributers sell the cars directly to the end customer. Furthermore the company also has store which directly sells the products and accessories of Aston Martin. Promotion Strategy – Promotion is probably the key factor towards the success of a company. A well promoted product always gets good response from the market. Nevertheless the quality of the offerings also needs to be superior (Smith, 2001, p.8). In any organization, the promotional budgets therefore account the maximum of the overall budget. The company spends huge bucks towards the promotion of the products. In order to promote the products the company uses television advertisements, newspaper advertisements, public relation and also sponsoring large events. It has a strong presence in the car racing field, which helps the company to showcase its expertise in front of millions of car lovers. Apart from that Aston Martin makes good use of social media to ensure mass reach. It therefore promotes via social networking websites such as Facebook, Twitter, and LinkedIn among others. People – People element of the services marketing mix refer to the individual with whom customers interact directly. People in services marketing are important as they contribute to the variability of the product. In this context Aston Martin has dedicated workforce which looks after the queries of the customers related to the products. These employees are referred to as the people. Physical Evidence – Physical Evidence is used to satisfy various objectives. It is responsible for communicating the positioning, quality, and the process employed for delivering the services. Physical Evidences are the factors physically displayed to the consumers (Rao, 2004, p.49-48). In this context, the potential customers are provided with the opportunity to actually experience the cars of Aston Martin, by physically driving them. Free test drives are offered by the company and this acts as the physical evidence to the potential clients. Process – The process element of the services mix is responsible for delivering the final service to the customers. It is the way by which the customers are offered with superior services. In order to offer high quality services to the existing as well as new customers the company has a number of processes built. It uses CRM (Customer Relationship Management) as a tool to maintain the customer database and maintain a cordial relationship with them. Analysis of the Business Environment In order to get deeper insights of the environment where the company carries out its operation, in-depth analysis of the internal and external environment analysis have been performed. To analyze the external environment analysis PESTEL framework has been used, on the other hand to accomplish the internal analysis of the business environment SWOT analysis has been used. PESTEL analysis PESTEL analysis is a strategic management tool used evaluates the external market conditions. The aspects to be assessed are political, legal, social, economical, technological and environmental. Political factor– It includes the factors such as political changes, tax policies, changes in the restriction of trades, tariffs and the stability of the government. Most of the countries where Aston Martin operates such as UK, USA, Japan, China etc., have stable political environment. In addition, most of these countries have well defined regulations for the automobile industry. The only cause of concern is the variable pricing of oil. Political scenario plays a major role in controlling the oil prices and it therefore impacts in the operations of Aston Martin. Economical factor – The economic factors include interest rates, gross domestic product, inflation rate, unemployment rates and growth rate of the economy. Economical factor is extremely important for the automobile industry. Since the product is premium and has high value, the dependency on the disposable income is high. The global economy has suffered a setback in the year 2007, when it was struck by the global recession. The global GDP declined from 5% to 3.7% in the subsequent years resulting in less economic stability. Nonetheless it has already started to recover and according to the reports by the year 2017, it will fully recover. Social factor– The social factors include trends in demographics such as population size, age, cultural factors and consumer activities. Like any other organization Aston Martin also gets impacted by the rising and changing situation of the society. In the recent years the company has expanded into various countries and hence the company has to deal with values, cultures and income levels. Hence in order to deal with this the company initiates various programs. One common activity of preserving the environment can be also noticed in every part of the world, where the company has its presence. Technological factor – Technological factors include rate of new product development, increase in process automation and other technical infrastructure such as technology inducements, technology transfer, impact of internet and R & D activity. Technology has been one of the unique selling points for the car manufacturers. Off late the Aston Martin has successfully upgraded its technology and can be considered as one of the technically sound car manufacturing companies. Environmental factor– The environmental factors of a country includes natural phenomenon such as natural disasters, weather patterns, climate etc. The manufacturing process sometime gets affected by the environment and therefore certain preventive measures are taken by the company to minimize the impact of change. Legal factor – The legal factors of a country includes the laws for employment, favouritism, biasness, health and safety and antitrust. The countries where Aston Martin has operation consist of a well defined legal framework. The regulations and policies provided by the local government forces the company to be more cautious in performing their business functions. SWOT analysis It is a strategic management tool used to evaluate the internal environment of the organization. SWOT analysis will help to understand the internal environment of Aston Martin. SWOT analysis will be done to evaluate the internal and external factors of the company (Williams, Champion and Hall, 2011, p.108). Strengths The company has a strong brand reputation and legacy. Also rich history acts as strength for the company. Aston martin embraces a strong design and engineering team. High market share in the category of sports car. Strong branding and marketing along with the presence in racing events. Opportunities Emerging markets of automobile. Aston Martin can make use of its historical value to attain new customers. Through extensive distribution technique the company has a chance to penetrate the market. The company has the opportunity of using competitive pricing strategy to attract additional customers Weaknesses Limited product range and craters to only a certain section. Inability to reach the desired profit margins. Less market penetration as compared to the other players. Threats Intense competition within the automobile industry. Changing customer needs. Rising fuel cost. Almost every day the competitors are coming up with new and innovative products, which can act as a threat to the company. Challenges of the Business Aston Martin has always faced challenges in operating their business properly in the market. In order to overcome the same the company has employed different types of strategies. Presently the business is facing with the following challenges:- The company is presently dealing with the credit crunch and therefore the company is facing huge challenges in maintaining the market share. As the economy is moving towards the recessions, it becomes further difficult to sustain in the market place. The prices of the Aston Martin car are extremely high, and therefore the company has to depend on a certain section of people to sell their products (Dowsey, 2010, p.126). Some of the reports have even highlighted that the company has priced its cars in such a manner that makes itself out of the competition. Hence it can be portrayed as a challenge for the company to maintain high sales volume and satisfy the needs of the stakeholders. On assessing the external and internal environment of the company it has been found that Aston Martin is facing strong challenges from the competitors. Hence the automobile business environment has huge competition to deal with. In addition scarcity of resources is also a challenge for the company. One of the biggest challenges which are being currently experienced by the company as well as the industry as a whole is the reducing demand of the customers. This particular problem is not particular to Aston Martin, but it is the problem of the automobile industry in general. The sales volume reduced to such an extent that the company went on to record ‘lowest sales ever’. Responses to the Challenges In order to face the challenges the company has to reconsider some of their existing strategies. However some of the suggestions by which the company can efficiently face the challenges are illustrated below. In order to tackle the issue pertaining to market share the company has to follow certain steps. The best possible way is to identify the products of the company which are not doing well in the market or facing issues with its sustainability. The price of those products or the cars can be reduced to gain market share. Apart from that to properly convey the messages of the company to the target customers effective promotional campaigns should be adopted. The promotional campaigns that should be considered by the company include sponsorship of a large event. The advantage of sponsoring a large event is that, mass population can be effectively addressed and targeted. Meanwhile, the company should also consider launching of new and improved products to compete with the rivals. One of the biggest problems that the company is facing is related to its product strategy. In this context, the company only manufactures and markets sports and luxury cars, but does not manufactures any kind of hatchback cars or large or mid-sized family cars. However if Aston Martin assembles such type of cars, they will be able to cater to a diversified market segment. The business environment is always changing and to match the changing needs the company has to assess the needs and tastes of the consumers. To do that periodic market survey and customer interview should be carried out. This will highly assist Aston Martin to come with new products which will meet the needs of the consumers. Also to ensure customer satisfaction, and to get future business opportunities from the existing customers, the company should integrate customer relationship management. The existing customers may become word of mouth promoter for the company if they remain satisfied with the company. The company must also introduce other programs to ensure full satisfaction of the customers. One of the most suitable ways of dealing with the credit crunch is by lowering the prices of the products. Aston Martin cars are priced so high that it remains accessible to only higher income group of customers. However if the prices are lowered middle income group can also become the potential customer of the company. In this approach the company rather than considering profit margins, should consider selling in large. Finally it is highly recommended that the company should appoint more dealers in various parts in order to strengthen the distribution network. Expansion to other countries such with low cost vehicles can be an option for the company to gain more market share in the global scenario. Conclusion The report was about identifying the problems faced by a company belonging to the automobile sector. In order to carry out the study, Aston Martin was chosen as the company. The study revealed that the company is presently witnessing a number of issues pertaining to their business operation. However to get deeper insights, comprehensive analysis of the internal and external environment have been carried out. On evaluation of certain factors, the study entailed that Aston Martin is facing challenges in the context of decreasing sales due to low demand, and strong threats from the competitors. It has been recommended that to curb the situation the company should reconsider some of its present strategies. The company should also consider price reduction on some of the products to target middle income customer as well. New product development is another option to revive the company from the current scenario. The report has also recommended that the company should come up with hatchback cars or large & mid-sized family cars by which mass customers can be catered. Finally modification in the promotional campaign and strengthening of the distribution network is also highlighted. Hence it can be concluded that if the company implements these recommendations the situation can be controlled. References Astonmartin, No Date. Current Models. [online] Available at: [Accessed on 07 November 2012]. Dowsey, D., 2010. Aston Martin: Power, Beauty and Soul. 2nd ed. Victoria: Images Publishing Foodexport, No Date. The Export Marketing Mix. [online] Available at: [Accessed on 07 November 2012]. Infoentrepreneurs, No Date. The Challenges of Growing a Business - And How to Meet Them. [online] Available at: [Accessed on 07 November 2012]. Kumar, P., 2010. Marketing of Hospitality & Tourism Services. New York: McGraw-Hill Education. Mcgrath, M. E., 2001. Product Strategy for High Technology Companies. 2nd ed. New York: McGraw-Hill Professional. Pigott, P., 2005. Royal Transport: An Inside Look at the History of British Royal Travel. Toronto: Dundurn. Rao, K. R. M., 2004. Services Marketing. New Jersey: Pearson Education Inc. Sarlak, M. A., 2010. The New Faces of Organizations in the 21st Century: A Management and Business Reference Book. Canada: NAISIT Publishers. Smith, T. J., 2001. Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures. 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