Business and Marketing Management - Essay Example

Business and Marketing Management Executive Summary This report is on a UK based company “Inchcape” that is an automotive retailer. They have business all over the world in 26 countries. But their core business is concentrated in only six countries. The company plans to expand into new merging markets and have a target of capturing ten core markets in the next five years. They have identified and targeted the next emerging markets where they can reap profits. The company aims to develop a marketing base to achieve objectives and target the right market within their 7 P’s of service marketing. The report contains a situation analysis of the company that is whether the company is capable of meeting its marketing and strategic objectives. The target markets have been identified and the most profitable is Singapore so they depend mostly on Asia for profit generation. The company has two marketing options it can endeavor and being a consultant the latest issues in service marketing can be adopted by the company for customer satisfaction, increased market share, competitive advantages and profit generation. The latest issues in service marketing are RFID technology and biometrics technologies that help enhance business and make it easier. These technologies will help attain competitive advantages and provide cutting edge services to satisfy consumers. Cutting Edge issues in Services Marketing Introduction Inchcape is a leading International automotive retailer with scale operations spread all over in Australia, Belgium, Greece, Hong Kong, Singapore, U.K, Eastern Europe, the Baltics, Russia and South America. The company has 50 years of experience in the automotive industry. The group is looking into new prospects to expand their business in potential regions. The company represents leading automotive brands and operates either retail or a vertically integrated retail model that is exclusive distribution or retail and all depending on the market it is operating within. Their core brand partners include Audi, BMW, Honda, Mazda, Mercedes Benz, PAG, Subaru, Toyota/Lexus and Volkswagen. They aim to work hand in hand with all their manufacturing partners to deliver them the best retail services like no other. The company has a unique model with retailing and distribution operations. The company also has the “Inchcape Fleet Solutions” that is the UK’s largest independent leasing company and it is managing a fleet in excess of 53000 cars. The company’s vision is to be the most customer-centric automotive retailer group. According to them the cutting edge in the services industry is the quality of service provided to the customers. They believe that consistent provision of quality services increases loyal customers and also helps them achieve their financial and industrial targets. The company has 208 retail outlets and 85 distribution sites all around the world, each boasts of superiority and excellence in service. The company’s strategy is simple and that is to focus on customer service and operational excellence to strengthen their business. They have four crucial elements to support their strategy. First are their people, since they believe that people and human resources are of prime importance to any businesses success. Second is performance management, since they have set the “best in class” gold standards to achieve excellence in performance. Third is their technology and service infrastructure, since they aim to improve the infrastructure to reduce cost and time in order to focus more on customer satisfaction. Lastly, is efficient allocation of capital in order to make good use of growth opportunities. They aim to work within the 7 P’s namely; product, price, promotion, place, people, process (customer satisfaction) and physical evidence. Their strategic priorities are to strengthen their existing core business and expand in potential markets. Situation Analysis Inchcape is very much capable of expanding their business in potential markets and also to strengthen their core business. Their main focus is operational excellence and their activities include retailing and distribution. Customer satisfaction is essential to them since they are aware of the fact that customers can easily switch to their competitors. In order to support their vision that is to become the most customer-centric automotive retailer group, the company has been consistent in investing in dealership premises, staff training and improving the technology infrastructure so that the company can excel in customer service and satisfaction compared to their competitors. All their retail outlets have been equipped with specially strained sales staff for retailing, fleet and business vehicle sales, along with staff trained by the manufacturer to assist with parts and service requirements. Inchcape is a focused and strategically strong company. They have the capability to expand. Their main strength and cutting edge in the business is that its activities include retail and distribution operations. Through these activities they represent their brand partners in the developed and emerging markets. Their unique model is their major strength. The model the company operates within gives various opportunities to boost growth. The company’s model for expansion has been established upon the retail and distribution operations in developed and emerging markets. Thus, the company has opportunities to grow within all these segments. Their model is efficient and gives them the base for immense opportunities to expand and grow within segments. The company has made sure to strike a balance in their operations since extremism is a dangerous game. They have a decentralized structure but co-ordination is present to integrate the company. This balance is essential since it provides them with empowerment and resources in the market, also enables fast decision making so it reduces the time spent by the management and they get enough time to spend on their valuable customers. This structure helps them retain their best world class gold standards and also leverage their best practices all over the organization that is spread in various countries in the world. The company does not have any major weaknesses but expansion can pose certain threats to the company. Expanding in different markets or potential markets comes with its problems and threats that the company has to face. Any regulations or antitrust policies of the government where that market exists is a major threat since it brings with itself price controls, advertising restrictions, foreign exchange controls, lack of infrastructure, cultural differences, political instability and local competition. But the company is very much capable of facing these threats in the face and it is strong enough to bring about the desired changes. The company’s unique model that includes retail and distribution operations is their major strength that will help them overcome the threats posed by expansion in potential markets. In retail operations their main focus is their scale. The company makes sure to expand within developed markets where it can provide customer services, sell vehicles and also provide after sales activities. This enables good management, well managed infrastructure and high profits. Thus, they look before they decide to leap. They invest in potential geographic areas where they can enhance economic and operational advantages. In order to achieve marketing efficiencies they develop effective scale relationships with their brand partners by representing 10% of their partner’s network in every country. Their core value is to understand their partner’s brand values in order to focus on them and to develop plus maintain efficient relationships with their partners. To support their vision their retailing is extremely customer-centric and they aim to provide the best and cutting edge customer experience by understanding and building their brand partner’s customer programmes to achieve competitive advantages. Their retail business earns income from the sale of new and used vehicles, finance and insurance products, servicing, parts and accessories. Since their brand partners are looking forward to do business in emerging markets with their learning experiences gained from doing business in developed markets. Thus, the present industry provides fewer, bigger and better retail sites and their brand partners can benefit by operating through these retail sites to provide world class retail standards and Inchcape is in a leading position to support their partners in their exclusive growth plans. This is the cutting edge and strength of Inchcape as a retailer for its brand partners. This cutting position provided them the best opportunities to expand their business in potential markets, strengthen the existing core business and gain competitive advantages. The company also has fleet management under the name “Inchcape Fleet Solutions.” Their main aim is to provide the best and the most feasible fleet management solutions tailored according to the customer’s needs. Thus the company has a complete array of services to provide to their customers and they are in a leading position in the market makes it easier for them to achieve their objectives to expand into potential markets and gain further competitive advantages. Marketing Objectives Their main marketing objective is to target new potential markets to expand and reduce their dependability on the Asian markets that is not as lucrative as before since profits are falling. They are looking into Russia and China as their next core markets and they have decided to increase their core markets from six to ten in the next five years. Second, is to achieve and maintain a market share. Sine targeting new markets to gain profits from expanding into potential markets can be done by maintaining a market share. Since they have a considerable market share in Singapore, up to 28.9% but they wish to reduce their dependability on Asia being their prime area for profit generation since profits from Asia are falling. Third, is to increase profitability and revenue. Obviously, they wish to expand into potential markets to increase profits since profits in Asia are falling. A favorable market position is their fourth objective and they give utmost importance to customer service and satisfaction. They aim to provide the best and cutting edge services. Their vision and strategies support this objective. Their vision is to be the most customer-centric retailer group. They have positioned themselves in a similar way and they work hard to maintain that position in new potential markets as well. No wonder they are a leading company in the market. Their last objective is to achieve and gain competitive advantages. Their unique model and structure along with their aspiring vision and strategy supports this objective and has also helped them achieve competitive advantages in all their core markets. They are a market leader in the markets they operate within. But they aim to gain similar competitive advantages in their new target markets as well. Their customer service has given them competitive advantages as well. They have strong and enduring relationships with their brand partners and they ensure the best and outstanding customer service which is their cutting edge. (Hall, Jones & Raffo, 2000, p.264-268) Identification of the Target Market Inchcape operates in 26 countries around the world. Their core markets are Australia, Belgium, Greece, Hong Kong, Singapore and UK. The company has its retail and distribution operations in these areas and they sell at least 25000-30000 vehicles in each of these regions. Since their expansion strategy needs an effective process of identifying potential target markets for growth. They plan to expand from six core markets to ten core markets in the next five years. Russia and China are their new targets for expansion and imputation of their retail and distributive operations. Asia is the primary region for profit generation for the company although the profits fell from 42% to 35%, thus they are trying to reduce their dependability on Asia and focus on other potential regions. Their profits outside Asia have contributed up to 34% to growth. They have been successful in this strategy. Other than Asia, the other 5 core markets are considered to be emerging markets by Inchcape. They define emerging markets as regions where their total new vehicle sales by International brands are growing by 10% per annum. Thus, they target those markets that they believe are emerging or developed. Their business in Singapore is doing exceptionally well. Thus, their experience in developed markets will help them operate in emerging markets to expand their business. In Singapore they import and retail only Toyota, Lexus and Suzuki. The government of Singapore requires a Certificate of Entitlement to buy a new vehicle and automotive retailers like Inchcape have to bid for these certificates online on behalf of their customers every fortnight. Their business Borneo Motors have held the Toyota franchise since 1967 and they have been leading the market since 1982 and that is 22-25years. Borneo is known for its luxurious customer lounges and discussion areas since they operate with the best technologies and always turn out to be different. They have 135000 Toyota owners only in Singapore alone. Their business Champion Motors that was founded in 1975 and they have been handling the Suzuki franchise since 1977. Suzuki is Singapore is a value added product with a sporty image and is a lifestyle brand. Their target market is the youth who want value for money and also a car that suits their active, luxurious and individualistic lifestyle. The company’s services include new vehicle sales, vehicle financing and insurance, after sales services and vehicle parts. This way the company expanded its customer base by more than 26% between 2005 and 2006. In 2006, these businesses sold 33,328 units and their combined market share is 28.9% in Singapore. Marketing Options Inchcape has two options to meet its marketing objectives and expand into potential markets. The first is that now they are looking forward to establish their business scale and operations in Russia, Eastern Europe and China. These three areas have the capability to add to their six core markets and make their objective of reaching to ten core markets in the next five years. The advantage is the profit generation and increase in market share due to expansion into potential markets. They have already identified the three regions that will help them generate profits plus the company has been able to find partners in these areas as well. These are emerging markets and they can target the segments in this market since these emerging markets have the potential to grow. The Russian market is growing continuously as imports grew by 65% in 2006 with over one million vehicles annually. China is the second largest market for vehicles in the world with 4.3million vehicles sold in 2006. These lucrative markets will give Inchcape more growth opportunities and since it’s cost effective to enter these emerging markets they will generate numerous profits and help meet their marketing objectives. But expansion into new markets comes with its problems that have been mentioned above and it will take time for the company to establish itself and increase market share plus profits. The second option is to reduce dependability on the Asian market for profit generation and look up to other emerging regions for profit generation by improving services there. Already for 2006, the emerging markets have generated 34% profits which are good enough since Asia generates 35% which has fallen from 43%. They must focus on emerging markets and make business better in these regions to reduce dependability on Asia for profit generation. But for emerging markets to come up to that level and add to profit growth will take time. Though they aim to add four more core markets in the next five years, they have to be sure that expansion into new markets will not pose the common problems that hinder growth. Recommendations for Service Improvements The first interesting issue in services is the Radio-Frequency Identification (RFID) which is a method of automatic identification that relies on RFID tags or responders to store and retrieve data. The RFID tag can be incorporated in a person, animal, product or anything else. It uses radio waves for storing and retrieving data. The RFID tag has two parts. One is an integrated circuit that is used for storing, processing and other specialized functions. The second is an antenna that receives and transmits signals. The RFID is now used in supply chain management and has made inventory tracking and management very effective. The technology is yet to grow and become cost effective for firms. But it is being used in passports, transportation payments, product tracking, automotive, lap scoring, animal identification, inventory systems, human implants, libraries, in schools, in universities and in various other forms in countries all over the world. RFID tags are being used in the automotive industry for long range access of vehicles. Since the 1990’s RFID tags have been used in car keys and without the correct RFID the car does not start. RFID as started by Michelin for tire tracking has spread since due the TREADS ACT in the USA when the company licensed its new use of RFID and under the licensing requirements it has to offer their “etire” to all manufacturers by November 2008. In 2004, Toyota came up with “Smart Key” in its new model Prius which was a hit. The Key has a RFID circuit that enables the car to detect the key from 3 meters away from the sensor and it enables the driver to open the doors or switch on the car without actually taking out the keys from the pocket. RFID has helped make business easy and also provide the best customer service. It also enables companies to gain competitive advantages over their competitors with providing convenience to their customers. Inchcape can use RFID in their distribution activities and make that operation even more efficient. They will be able to provide the best and cutting edge distribution services to their brand partners. They can use RFID for inventory management and in their supply chain management. They can adopt the advanced AUTO-ID system that uses RFID technology. This system enhances visibility of inventory and helps to replenish stock at the right time. This system also reduces the sources of errors in inventory management. Thus, RFID will help reduce labour costs since the system will be automated and it will make business easy. The technology helps monitor the business processes and also helps to integrate them to provide cutting edge services to the customers. It’s mandatory in various countries to put a RFID tag on shipments to improve supply chain management. Inchcape can adopt this as well for efficient delivery and distribution of shipments. This technology will help them provide better plus cutting edge retail and distribution services to satisfy their customers and strengthen their brand partnerships. This will help them achieve their marketing objectives and competitive advantages. The use of this technology will also support their vision and strategy. The second interesting issue in services are biometrics technologies that is used to identify the identity of an input sample with a template that has already been stored beforehand so that a comparison can be made to check if it is the same input sample or not. Biometrics can be possession-based like a card etc; or it can be knowledge based like a password or any form of encryption. There are human biometrics classified into physiological (face, fingerprint, hand, iris and DNA) and behavioural (signature, voice, keystroke etc). Biometrics can be used within certain parameters that help differentiate and those are uniqueness, permanence, collectability, performance, acceptability and circumvention. Biometrics help verify and identify. This technology is said to cause some kind of physical harm at times and it erodes privacy because if biometric information is stolen then anyone can gain access and erode privacy. There has been a case in Malaysia when thieves cut off the finger of the owner of a car to since the car could be used through biometric information (finger of the owner). But it’s widely used all over the world. Inchcape can use biometrics in retailing outlets to develop a proper automated system at the outlet that uses biometric technology to ensure that only the authorised users have access to the important information or data and to enter certain territory. It will also help to support their disaster recovery planning process so that it ensures business continuity and prevents any loss of important data. This way their brand partners will be sure that their product is in the right hands. A secure and safe environment gives a good impression to the customers and they feel it is the right and a responsible place to buy from. They can also use biometric technology in the alarm systems (in case of a fire or attempted theft of anything in their luxurious discussion rooms and lounges) in their retail outlets. The system can go off only when certain biometric data is provided to the system. Thus the company can use these technologies to gain competitive advantages. References Christopher Lovelock and Jochen Wirtz; (2007) Service Marketing, 6th edition, Pearson Prentice Hall. Peter J. McGoldrick; (2002) Retail Marketing, 2nd edition, McGraw Hill Companies 2002. Dave Hall, Rob Jones & Carlo Raffo. (2000) Business Studies; 2nd edition, Causeway Press Limited. Frank R. Kardes. (2002) Consumer Behavior and Managerial Decision Making; 2nd edition, Pearson Education Inc. Borneo Motors in Singapore. Retrieved December 29, 2007 from http://www.borneomotors.com.sg/main/main.htm Customer Service. Retrieved December 29, 2007 from http://www.inchcape.com/search/?query=Customer+service Fleet Management. Retrieved December 29, 2007 from http://www.ifs.inchcape.co.uk/pages/site/home.html Introduction of the company. Retrieved December 29, 2007 from http://www.inchcape.com/aboutus Retail activities. Retrieved December 29, 2007 from http://www.inchcape.com/ourbusiness/activities/retail/ Retail at Inchcape. Retrieved December 29, 2007 from http://www.ir.inchcape.co.uk/index.aspx Services Marketing and 7 P’. Retrieved December 29, 2007 from http://en.wikipedia.org/wiki/Services_marketing Strategy and Vision. Retrieved December 29, 2007 from http://www.inchcape.com/aboutus/strategyandvision/ Target Market (Singapore). Retrieved December 29, 2007 from http://www.inchcape.com/ourbusiness/regions/singapore/ Their business. Retrieved December 29, 2007 from http://www.inchcape.com/ourbusiness/ Articles for RFID from research publications. Symbol Technologies Buys Matrics, Accelerating Its Move Into Radio Tags (April 4th 2006) The New York Times. TECHNOLOGY; Guidelines for Radio Tags Aim to Protect Buyer Privacy (May 1st 2006) The New York Times It Tracks Your Every Move...at the Water Park (May 30th 2006) The New York Times Report of Cancer Hurts Maker of Chip Implants (September 11th 2006) The New York Times Symbol Technologies Buys Matrics, Accelerating Its Move Into Radio Tags. (July 28 2004) The New York Times TECHNOLOGY; Symbol Technologies Buys Matrics, Accelerating Its Move Into Radio Tags (July 28, 2004) The New York Times Trolley of the future (December 4th 2007) Daily Mirror Technology Briefing | Software: VeriSign To Operate Product ID Directory (January 13 2004) The New York Times Technology Briefing | Patents: Symbol Technologies Sues Intermec (April 29 2005) The New York Times High Tech, Under the Skin (February 2, 2006) The New York Times The Route from Research to Start-Up (January 18 2007) The New York Times Study Says Chips in ID Tags Are Vulnerable to Viruses (March 15, 2006) The New York Times Articles for Biometric Technologies from research publications Adding to Security but Multiplying the Fears (February 26, 2007) The New York Times TECHNOLOGY: The Year Ahead: Consolidation and Competition as an Industry Grows Up -- Security Technology; For Global ID Systems, The Tried and True (December 29, 2003) The New York Times Driver’s License Emerges as Crime-Fighting Tool, but Privacy Advocates Worry (February 17, 2007) The New York Times. Technology Briefing | Internet: Bioscrypt Excels In Fingerprint Technology Tests (August 16 2002) The New York Times THREATS AND RESPONSES: IDENTITY DOCUMENTS; Report Suggests Use of Facial and Fingerprint Scanning on Foreigners (February 12 2003) The New York Times THREATS AND RESPONSES: THE BORDERS; Progress Seen in Border Tests of ID System (February 7, 2003) The New York Times. Technology & Media; A Surge in Demand To Use Biometrics (December 17 2001) The New York Times Your Thumb Here: Newest ID of Choice At Store and on Job (February 20 2002) The New York Times A NATION CHALLENGED: RECORD KEEPING; Upgraded Driver's Licenses Are Urged as National ID's (January 8 2002) The New York Times. A Watchful State (October 7 2001) The New York Times No cash, no card, just a fingerprint (November 26 2007) Daily Mirror Hi-tech border plan (November 14 2007) Daily Mirror Articles for RFID. 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