Marketing Planning and Control - Essay Example

Marketing planning and control - Porter’s 5 forces analysis Introduction: Marketing management is a significant business discipline, which is basically about the management of marketing resources and activities of a business firm by means of the application of various marketing techniques. Marketing management involves a number of responsibilities on the part of the marketing manager of an organisation that includes market and environment research, strategic planning, cost-effective implementation programmes, and so on. There are various tools to analyse the industry in which the organisation operates. One of the most important tools in market management is the five forces model of Michael Porter. The framework is used in industry analysis to determine its competitive intensity as well as industry profitability. This paper briefly addresses the relevance of Porter’s five forces model in the marketing management of automotive manufacturing industry, with the particular context of Primo Motor’s manufacturing plan of small saloon and hatchback cars. Company profile: Primo Motors is a car and van manufacturing plant located in the Midlands, UK. The company ranks third in the pecking order of UK motor manufacturing. It is now planning to venture into the manufacturing of small saloon and hatchback cars, which are ideal for family’s second car. But before working on it, the company has to develop an appropriate market planning. In this context, a description of the 5 Forces analysis of Porter is relevant. Industry analysis: Porter’s 5 forces model Industry analysis aims to establish the competitive position of a business with respect to its micro environment in a particular industry. The micro environment is that which immediately surrounds a business whereas the macro environment comprises those influences that can affect the whole industry in which a business operates. In this context, Michael Porter’s industry analysis framework is the most widely used model among businesses. In 1980, Porter developed a framework known as the five forces model in order to analyse the nature and extent of competition within an industry. Porter discusses five competitive forces that determine the nature of competition within an industry. These five forces are the following (Campbell, Stonehouse and Houston 2002): The threat of new entrants into the industry The threat of substitute products The power of buyers or customers The power of suppliers (to businesses in the industry) Rivalry among businesses in the industry Porter referred to these forces as the micro environment in a business. The threat of new competitors is always high in profitable markets as they ensure high returns. However, entry of new firms can eventually decrease profitability while increasing competition. Availability of common products increases the tendency of customers to switch to alternatives. Besides, the bargaining power of buyers and suppliers can affect price changes, quality and innovation of products, which further influences competition. For most industries, the intensity of competitive rivalry is the major determining factor of the competitiveness of the industry. Automotive industry analysis: These five forces have a significant impact on the overall marketing scenario of an industry. Coming back to the small car manufacturing plan of Primo Motors, it is important to have a brief industry analysis of the automotive industry in the United Kingdom. The automotive industry in the UK is export-oriented, and known for its exclusive brands such as Bentley, Rolls-Royce, Land Rover, and Mini. Names among the top UK car producers include Nissan, Toyota, Honda, Land Rover and Mini. However, international competitiveness of UK cars has declined consistently since the 1990s. Since the beginning of the millennium, the motor vehicle production of the United Kingdom has experienced a sharp fall. Some of the leading players in automotive manufacturing have already closed their motor vehicle production plants and sold their operations to other countries (for instance, Ford sold its Jaguar/Land Rover operation to Tata Motors of India in 2008). Latest Mintel report informs of the economic crisis of the UK since the bankruptcy of the Lehman Brothers (Market Re-forecasts - Automotive - UK - March 2009). Current scenario of the UK automotive industry can be described precisely by means of applying the five forces framework of Porter. We can analyse the industry by explaining the five forces in the following manner. Potential entrants - Entering into the automobile industry of the UK is difficult for a new entrant as it includes bigger investment on safety, motor management, design, comfort and other electronic functions. The difficulties are likely due to the existing dominance of big players like Ford, Toyota and Honda. Substitutes - With the price increase of one vehicle, increases the demand for a substitute. The UK market already has plenty of such substitutes. Besides, increase in gasoline prices influences customers to opt for cars with lesser fuel consumption capacity. Such things are to be focused while planning for small saloon car production. Buyer power - Car buyers now have negotiating power. So buyers can negotiate the term of monthly payment and get a good discount on buying used car or any new car of previous year. According to the report of Keynote, the slow economic growth in the UK resulted in a noticeable fall in new car registrations in 2008 (Automotive Services 2008). The volume of used-car sales is still higher than that of new car sales. Supplier power - The auto industry includes various kinds of suppliers such as suppliers for braking system, cooling system, engine system and fuel supply system. With the ongoing outsourcing process of car manufacturers in the UK automobile industry, the supplier industry is facing new challenges. Internal rivalry - Due to globalisation, the concentration in the UK automotive industry is increasing. The advantages of a global market and economies of scale have directed a number of leading players to venture into the UK automobile market. This clearly indicates the strong and high competitive level in the market. That is to say, with more and more auto manufacturers involved in the market, the competition has gone quite higher than before. Conclusion: With the processes of globalisation doing the rounds, marketing management has become more goal-oriented in every field of business. Marketing concept is conceived today as a company-wide consumer orientation with the objective of achieving long-run success (Kurtz 2009). In order to achieve higher competitive advantage, organisations adopt a number of successful marketing planning tools and techniques. Porter’s five forces model is one of them and effective too. As businesses are fast becoming a multinational phenomenon, it is important to analyse the industry in terms of investigating the new entrants in the market with the availability of substitutes as well as the power of buyers and suppliers. Above all, the combination of all these forces leads to the rivalry among competitors in the market that further provides businesses with substantial insights on gaining competitive advantage. References: 1. Automotive Services 2008. Keynote. Reviewed from http://www.keynote.co.uk/market-intelligence/view/product/2104/automotive-services?utm_source=kn.reports.browse. 1. Campbell, D., Stonehouse, G. and Houston, B., 2002. Business Strategy: An Introduction. 2nd edition. Burlington: Elsevier. 1. Kurtz, D. L., 2009. Contemporary Marketing 2009. Ohio: Cengage Learning. 1. Market Re-forecasts - Automotive - UK - March 2009. Mintel. Reviewed from http://oxygen.mintel.com/sinatra/oxygen/search_results/show&/display/id=447261. Read More