Marketing Management, for example, the Ford Mondeo and the Toyota Prius - Case Study Example

Marketing Management Table of Contents Introduction 3 Objectives 3 Literature Review 3 Analysis 4 Product 4 Promotion 8 Placement 10 Price 11 Value Proposition Theory: 11 Inferences from the 4Ps Analysis in context of 'value proposition' and some ensuing parameters: 11 Market mission and values: 11 Competitive differentiation: 12 Market assets: 12 Competitive position: 12 Conclusion (1) 12 Analysis (2) 13 PESTLE 13 Political factors 14 Economical factors 15 Social factors 16 Technological factors 16 Environmental factors 17 Legal factors 18 Value Migration 18 Conclusion (2) 20 References 21 Introduction The Ford Mondeo and the Toyota Prius are both well know cars but the technology they offer are different from each other. While Toyota Pius is a hybrid car using a petrol engine along with an electronic motor, the Modeo still runs on petrol and diesel. But the changing environmental and economic scenario is creating newer realities for global auto companies and it is to be seen whether the value propositions of these two products remain the same or there is a change in it in tandem with the changing realities of today's age. Objectives To analyse the value proposition of Ford Mondeo and Toyota Prius while making an objective comparison between the two brands and the cars and then to find out whether there has been any value migration in context of one car. Literature Review 4Ps of Marketing - In the 1960s Professor Jerome McCarthy came up with concept of marketing mix which consisted of the came to be known as 4Ps of marketing. The 4Ps stood for product, price, place and promotion. The 'product' signifies the product which the business deals in or sells. Price is the monetary value which the consumer pays whereas the place is the location from which the consumer buys the particular product. Promotion literally stands for the marketing activities used in selling the product. Any business can do permutations and combinations with the 4PS in accordance with their objectives, both long term and short term. This concept looks from a seller's perspective (King K., 2002). PESTLE- The PESTLE analysis looks at the different environmental factors which impacts a company or an organisation. The factors that are considered are political, economic, social, technological, legal and environmental. A proper analysis of these factors helps one understand and to form a perspective of the environmental factors which could have a bearing on the functioning and operations of a company (Elearn Limited, 2005). Analysis (1) Comparison and Benchmarking: In terms of 4Ps of marketing for both the brands and cars: Product Engines The Toyota Prius engine is a hybrid between petrol and electric and the technology is called Hybrid Synergy Drive which signifies. This engine offers very high fuel economy and significantly low carbon dioxide emissions. System power output is 134 bhp. The car has acceleration from zero to 99.78kmph in 10.4 seconds. In terms of fuel economy the car gives 30.8kpl through its combined engine technology. When driven using the petrol technology the car produces 89g/km of CO2 which is even better than the existing Euro- emission rules. In the electric mode the car does not use or consume any fuel and has no emissions at all. The car offers duel technology uses and could be run on petrol engine or the electric motor exclusively. Again the car can use the combination of these two technologies to drive it. The engine is a combination of cutting edge technology and is an amalgamation of a generator, an electric motor and also a 1.8 liter petrol engine. This petrol engine is capable of producing maximum torque at lower rpm and this drives the fuel economy of the car especially during long distance travelling. The electric motor which is used in the car is 60KW motor. This motor is 20% more powerful than its previous generation and also smaller by 33% in terms of size. The battery used in the car is powerful enough which provides the car to drive on the electric motor alone. The capacity of the fan has been increased which provides better cooling. The Ford Mondeo has got four cylinders 1997 cc engine. Max power is 138 bhp and at 4000 rpm. Maximum torque is at 1750 rpm and 250 feet. Output of the engine is 69.1 bhp. The car runs on fossil fuels. The car accelerates from zero to 60 mph in 10 seconds. The car has got a fuel economy of 32.8 mpg. The Ford Mondeo is a car which runs on conventional fossil fuel i.e. petrol and diesel and its engine is loud. The engine also delivers high performance only when neither revved up, nor is the overtaking control satisfactory. Road handling is good and the inner cabin is capable of cutting out the noise due to good quality insulation (Ford Mondeo 2.3 Ghia, September 2007). The Toyota Prius on the other hand is almost silent when it operates on the electronic motor. And when it moves on petrol it does not create much sound either. The duel use of electric motor and petrol does not only cut down on noise but offers many positives for the car. Safety The Mondeo offers a plethora of safety features starting with Anti Lock Breaking System or ABS and Electronic brake force distribution or EBD, both of which offer greater stability while braking and prevents skidding in slippery conditions. Then there is the Electronic Stability Programme which monitors the front as well as rear tyres and accordingly applies brakes to the wheels and also changes the engine power. In case of emergency the Emergency Brake Assist or the EBA comes into play. In case of uphill drive, to prevent the car from rolling down backwards, there is a feature called Hill Start Assist or HAS. Adaptive cruise control or ACC a fixed distance between the car in front while driving can be maintained as when this distance decreases the car automatically reduces its speed. In case of a tyre puncture, there is the feature called run flat tyres which enable the car to move on till permanent solution is found. Also the Halogen lights in the front are capable of turning by 15 according to the turning of the steering wheel and the speed of the car. Special cornering lights go on automatically when the steering wheel turns by 30. This feature is known as the Halogen Adaptive Front Lighting System. In terms of safety features the Toyota Prius ranks very high. It has been ranked very high by specific agencies. It has received a five star rating from the Euro NCP and in terms of child safety it has received the highest points (Engineered for safety, n.d.; Technical highlights, 2008). Environment The Ford Mondeo in its own way has been trying to meet up to the environmental concerns and challenges. In its Econectic series the Mondeo ECOnectic model, Carbon dioxide emissions are at 139g/km. The car has a aerodynamic design, tyres which are low resistant, a new indicator for the gear shift which automatically proposes the best gear option and thus saves fuel. The car also uses low friction oil which ensures more power for the engine while driving. A power train undershield has been put under the car which lets the air flow below the car in a better manner thus ensuring lesser energy being spent while driving. Suspension of the car has been lowered to facilitate better aerodynamics. The Prius on the other hand has the title of being the leading ecologically friendly car. Its petrol engine along with the electric motor provides huge fuel economy and very low emissions. When the car starts, it moves using the electric motor and continues to do so automatically up to a certain speed. When speed goes higher, the dual technology comes into use. It has been found that this car produces one ton less carbon dioxide in comparison to some of best fuel efficient diesel cars in the market. Again in comparison to petrol driven cars the Prius produces '-32%' carbon dioxide. It has the best performance in terms of Nitrous oxide emissions also. The car has been manufactured using recyclable materials wherever it has been possible. Conservation of energy at every mode has been the mainstay in this car's design. The intelligent power steering system which comes into operation only when needed saves energy along with self charging motor of the car which charges itself from the car's motion itself (Mondeo ECOnetic, 2008; Prius Environment, 2008). Promotion While launching Toyota the Prius focused on the early adopters and innovators. According to the technology adoption cycle concept, the innovators and the early adopters are those set of consumers who are ahead of anyone else in adopting or trying out new technologies and concepts. The company's initial marketing and advertising campaigns drove home the message about its commitment in producing environmentally friendly vehicles with unique features. The company created a website which had details about the technology being used and allowed potential customers to visit it almost two years before the actual launch of the vehicle. The campaigns also heavily stressed on the capability of their hybrid technology in terms of freeing the consumer from over dependence on oil. E-brochures were dispatched to more than 44,000 people. The company also came up with the idea of 'rental' scheme under which potential consumers were given the option of having a prolonged test drive period for one day so that they could have a firsthand idea of the vehicle and its revolutionary technology. With the launch of the 2nd generation of the Toyota Prius the company this time targeted the early majority consumer base. The early majority consumers want reliable products which have proved their mettle in the market. The company also put forward the utility of a bigger sized car this time along with its obvious environmental connotations. But the company cleverly kept its relationship with the early adopters and was able to gain 1200 preorders for this 2nd generation Prius (Rodriguez A. and Page C., September 2004). Ford also has been following a global approach in its marketing strategy. In the year 1994 it brought its European and US versions together under the name FAO which stood for Ford Automotive Operations. To avoid duplication of different works which could be costly for the company, the executive unified and took care of the broad marketing strategy for its brands worldwide. Especially in case of Ford Mondeo which is a standardised car on a global scale, this move proved beneficial (Eagan C. and Thomas M.J., 1998). Ford Mondeo is basically a source brand which means that it carries the name of the manufacturer along with its own product name (Doole I. and Lowe R., 2007). The company has come out with a new website which tells the about Ford's long journey. The site is called the fordstory.com. Moreover the brand has received various badges of honour in context of quality parameters, which it uses in its promotion and marketing activities to put forward the quality of the vehicle. Germany's TV Rhineland group has awarded the Mondeo with "Allergy Tested Interior" badge. Ford cars are the first to pass this very tough quality parameters in the world. After conducting a series of stringent tests the German authority bestowed this badge upon the Mondeo along with some other cars of the Ford stable (New Ford Mondeo Awarded "Allergy Tested Interior" Seal of Approval, May 2007). One of the best selling and well respected motoring magazines in UK has rated the Ford Mondeo as the overall champion for the year 2007. It was also given the title of the best car in the family segment and also the best in the estate segment (Ford Mondeo Is Auto Express Car of the Year, July 2007). The company also has been a part of motor racing almost since the days of its inception and this has acted as a major branding marketing initiative also. Long ago in 1901 Henry Ford participated in a 10 lap race in the Detroit Driving Club in Michigan and won it. In the year 1909 The marquee product of Ford the Model T won a cross country race to Seattle from New York. The company has been a part of the NASCAR rally and race for long and in the year 1949 it became the national champions of NASCAR championships. More recently in the year 2006, the company came out with a new car called NASCAR Nextel Cup Car and another car called Busch Series Car. Also a new world rally car was introduced the same year which was known as the Ford Focus World Rally Car (Ford Racing History: 100-plus Years & Still Running Strong, 2009). Placement Toyota and Ford use single and multi-channel retail and distribution networks but they also use a very innovative strategy through their respective websites. The visiting customer could custom fit their own cars with accessories and other specifications. Price Ford Mondeo's price range is between 17,395 and 26,995. Again Toyota Prius has a price range between 18,370 and 21,210. (New Toyota Prius: A mix of technology and innovation, May 2009; Ford Mondeo, July 2007). Value Proposition Theory: Value proposition stands for a clear set of tangible utilities which a customer would benefit from while consuming a particular product or service or rather it signifies what a particular brand or product offers or proposes to offer to the end consumer which would be of value to her (Umass Boston Development Center, n.d.). Inferences from the 4Ps Analysis in context of 'value proposition' and some ensuing parameters: The four P s of marketing are used to analyse the two cars and brands from the following perspectives and the value proposition they offer: Market mission and values: For Ford Mondeo it is providing the customer with a car which provides "rewarding driving experience" and which becomes a leading model in the luxury family car segment while offering various technological innovations in terms of safety, style and engineering. For Toyota Prius it is creating a "harmony between man, nature and machine". It is also about providing style, comfort and its main focus area is innovation in the area of clean technology which gives very high mileage and almost the lowest emissions (The stylish Ford Mondeo from 17,395, 2008; Prius 10, 2009). Competitive differentiation: In this context the Toyota Prius wins over the Ford Mondeo with its value proposition of the hybrid technology and the ensuing positive characteristics. Mondeo though a good car yet in terms of true differentiation which would especially in a value migratory environment, the Toyota leads over it. Market assets: The Ford Mondeo is a successful model and has been rated the best family car and best estate car in prestigious awards. The Toyota Prius considers its unique value proposition which emanates from its innovative use of the hybrid technology, to be its asset. Competitive position: Competitive position: Competitive position of the Ford Mondeo comes from its blend of technology, safety features, mileage factor (in context of petrol/diesel). Conclusion (1) From the above 4Ps analysis it is evident that both the cars that belong to marquee brands in the world of automobiles have their strengths. The Ford Mondeo and the Toyota Prius are similar in terms of shape or size. But a crucial point where the Prius scores massively over the Mondeo is the area of efficiency, fuel economy and eco-friendliness. The Prius with its hybrid technology leaves the Mondeo far behind which runs on petrol or diesel. In terms of air pollution and carbon emission again the Prius outscores the Mondeo or any other vehicle. This 'Value proposition' is hard to beat and especially in today's day and age when environmental concern has come to the fore the Prius has a great future. Social groups as well as government authorities, all are taking steps to curb global warming by curbing carbon emissions. Even the Mondeo Econecti, which is supposedly Ford Mondeo's greener offering for environmentally conscious buyer falls far short in terms of technology in comparison to the Toyota Prius. Analysis (2) A pestle analysis is done to understand the macro environment in context of hybrid technology cars. The PESTLE analysis looks at the different environmental factors which impacts a company or an organisation. The factors that are considered are political, economic, social, technological, legal and environmental. A proper analysis of these factors helps one understand and form a perspective of the environmental factors which could have a bearing on the functioning and operations of a company (Elearn Limited, 2005). PESTLE Political factors There are two main political parties in UK, the Labour party and the Conservative party. In the 21st century when almost everyone is discussing global warming and is concerned about it, the political parties are also taking this into account. In fact the Labour party has taken steps towards making the country greener and considerably less polluted. Schemes such as 'renewable obligation' and 'climate change levy' have been inducted to bring down environmental pollution by curbing green house gases. The Labour party was the first to take initiative and induct climate change as a subject in the G8 discussions channel. In fact they even introduced the 'climate change bill' also. The party aims to take measures and introduce processes that would ensure that there is a cut in CO2 levels by atleast 20% by the year 2020. During the same period the party hopes to have UK's renewable energy production up by three times the present level. The party focus area is to aim for cleaner rivers, beaches, air and drinking water. Some of the important accomplishments for the party have been that UK's CO2 emissions came down by 10.8 million tonnes in comparison to the previous year. Other greenhouse gas emissions also came down by 66 million tonnes in comparison to 1997 levels. Recycling activities has increased fourfold since 1997 in UK. The party has also taken a new ambitious goal of making all the new homes in the country zero-carbon by 2015. They are also on the verge of unveiling a 100 billion plan which is targeted at massive production of renewable low carbon energy. The present Prime Minister, Gordon Brown has proposed his thought and aspirations regarding making UK a world leading destination for hybrid cars. The Conservative is also proposing its own set of plans and vision for the country for a better environment. They are of the view that environmental concerns should not be a periodical process rather the country should take solid steps towards curbing global warming and also reducing its dependence on fossil fuels whose prices have been on the rise for a considerable period of time. They even want to introduce tough laws and regulations much like the US state of California (Environment, n.d. ; Grice A., April 2009; The Conservative Party and The Environment, June2008). Economical factors From the economic perspective certain rules and regulations in context of global warming have incentivised the use of greener cars. The Government would provide a grant of 2,000 to people who buy electric cars. This grant is being used to encourage people to buy more of these electric vehicles. The government is also proposing another scheme under which those who exchange their fuel guzzling old vehicles and buy fuel efficient electric or hybrid cars would get a similar grant of 2,000. The mayor of London has also highlighted his goal of having at least 100,000 hybrid cars running in the city which would make the city environment much cleaner. The authorities are also proposing to put in money in the development of infrastructure needed to support the hybrid ecosystem by developing at least 25000 charging stations in the city by 2015. Social factors The ever rising price of crude oil coupled with the prevailing global recession and economic slowdown has made life difficult for the general consumer. They are always in lookout for solutions which would help reduce their financial burden. A hybrid vehicle would be ideal from this context as it would reduce the cost of running a car for the already financially burdened consumer class. Technological factors The hybrid cars are wonders of technology and especially in case of the Toyota Prius which has top of the rung technology incorporated in it. The Prius can run on petrol or on electric motor or on both as and when required. It has got an intelligent mechanism which understands the need of transferring power from these available sources and reacts accordingly. This ensures high level of efficiency and reduces cost of running the car by a considerable margin. The clean technology ensures that it produces the least amount of Carbon emissions even when running on petrol and when it uses the electric motor it does not produce any emissions. Environmental factors The recent environmental concerns emanating from global warming and excessive creation of greenhouse gases have made it to the front page news sections of every major newspaper. The human race is looking out for solutions to this problem. In fact this has been posed as the biggest threat to making in this century by a plethora of experts. Due to global warming it is predicted that the glaciers would melt fast and there would be rise of in the sea water level. There would be consequences on the climate as well as many people would die out of heat wave. Yield of crops would decline dramatically as the climate changes drastically. These are just some of the negatives of the whole phenomenon of global warming. Hybrid cars and other such technologies is crucial to curb this phenomenon and is extremely important for the earth to survive in its full glory and for a long time. Again rules and regulations in context of global warming have incentivised the use of greener cars. The Government would provide a grant of 2,000 to people who buy electric cars. This grant is being used to encourage people to buy more of these electric vehicles. The government is also proposing another scheme under which those who exchange their fuel guzzling old vehicles and buy fuel efficient electric or hybrid cars would get a similar grant of 2,000. The mayor of London has also highlighted his goal of having at least 100,000 hybrid cars running in the city which would make the city environment much cleaner. The authorities are also proposing to put in money in the development of infrastructure needed to support the hybrid ecosystem by developing at least 25,000 charging stations in the city by 2015 (Gardenr A., May 2009). Legal factors There are various laws either prevailing or on the anvil in regard to environmental protection and curbing global warming. These actually act as impetus for further research in the area of improved technology which helps in creation of a cleaner environment. Value Migration Value migration happens when the values which a consumer receives from a product or an industry shifts to another product or industry due to change in technology or macro factors. If a consumer does not gain the utility which she used to get from a product due to a better product being available in the market which takes care of her problem more than the first product then she would shift to the new product. This is because the forces which had created value for her in the first place have shifted their places and newer important forces have emerged. The Mondeo belongs to the Ford group which is a marquee brand in the world of automobiles. It is a luxurious family car with a plethora of features. But it runs on fossil fuel like diesel and petrol. Even those versions which have been built keeping the environmental factor in mind have not been able to cut carbon dioxide emission by much and especially in comparison to the Toyota Prius which is a hybrid vehicle and one of the leading one at that. In context of various factors like global warming, environmental degradation due to greenhouse gas emissions, rising crude oil prices, value migration has happened in favour of the Toyota Prius over the last few years. General public is looking out of cleaner and cheaper energy sources as well as vehicles to drive. This car uses its power efficiently thus polluting much less while running on petrol and nil emissions when running on the electric motor. Actually, there has been convergence of needs of the consumer and respective supply of the hybrid Prius which provides the solution that the consumer wants. It is quite logical to that since the supply of renewable sources of energy fossil fuels is limited, prices of crude would go up again in the future. Moreover, tougher laws are being incorporated in relation to environment to curb its degradation. All these have propelled the customer in UK to shift his/her focus from general fossil fuel based cars to those with hybrid technology and therefore towards the Toyota Prius. The value has migrated towards the new hybrid technology and therefore towards the Toyota Prius (Slywotzky A.J., 1996). The value proposition of the Toyota Prius emanates from the solutions it offers to the UK consumer as well as the consumer world over in context of green technology and considerable freedom from crude oil whose prices have seen a quantum jump in the recent days. The technology is in line with the philosophy of a greener world and planet which is propagated world over and also in UK. Conclusion (2) The Ford Mondeo and Toyota Prius are successful cars in terms of sales. Ford and Toyota are big companies with a strong business legacy and history. But the changing environmental factors as well as macro economic factors have created a new reality which is much more conducive for a hybrid car like the Prius to leverage. Also various environmental factors like the rising price of crude, concern for the environment, tougher emission laws all have contributed in increasing the value proposition of product like the Toyota hybrid vehicle called the Prius, which offers many solutions to these problems. References Baker J. M., 2000, Marketing Theory: A Student Text, Cengage Learning EMEA. Doole I. and Lowe R., 2007, International Marketing Strategy: Analysis, Development and Implementation, Cengage Learning EMEA. Doyle P., 2001, Marketing Management And Strategy, Prentice Hall. Eagan C. and Thomas M.J., 1998, The Cim Handbook Of Strategic Marketing, Butterworth-Heinemann. Elaern Limited, 2005, Business Environment, Edition - illustrated, Elsevier. 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