Global Marketing: Ascari Cars Ltd - Essay Example

? Global Marketing: Ascari Cars Ltd. Introduction Global marketing or international marketing is growing day by day because of globalization, liberalization and privatization polices implemented by different countries. Globalization means the integration of global economies through the reduction of barriers to the movement of trade, capital, technology, and people. International business and global marketing have been increased a lot in recent times as a result of globalization. Domestic market is already saturated for most of the prominent companies and hence access to global market is a blessing for them. According to Dicken (2007), “Direct investment is an investment by one firm in another firm with the intention of gaining a degree of control over that firm’s operations. Foreign direct investment is simply direct investments across national boundaries” (Dicken, 2007, p.36). Earlier, countries were bit reluctant in welcoming foreign direct investment because of the concerns about the negative impacts upon domestic firms caused by the intrusion of foreign firms. However, world has realised that these concerns are nothing in front of the huge benefits and advantages brought by foreign direct investment. It should be noted that communist China is the number one exploiter of globalization and foreign direct investments at presents. In other words, China has no hesitation in allowing foreign companies to function in its soil now. In short, global marketing has gained lot of relevance and importance in the heavily globalized world at present. Even though globalization is believed to be the brain child of capitalist countries such as America and UK, it is fact that these countries failed to exploit the opportunities of it properly. For example, recent recession affected UK immensely. At the same time Asian countries such as India, China, Japan and Korea escaped from the negative effect if recession. This is because of the fact that these countries exploited globalization to their advantages. It should be noted that Indian automobile manufacturer TATA has recently acquired prestigious British automobile manufacturers such as Jaguar and Land Rover. Even then, many prominent British companies are currently working in overseas countries. For example, British telecommunication giant, Vodafone is one of the major telecommunications company in India now. In short British companies have lot of opportunities in overseas market. Established in 1995 in Dorset, England by Dutch millionaire Klaas Zwart, Ascari Cars is one of the major automobile manufacturers in Britain now. Even though Ascari is more interested in the making of sports cars, it is making luxurious passenger cars also. Even though many of the British cars manufacturers have already established business units in India, Ascari failed to do so until now. This paper analyses the opportunities of Ascari Cars in Indian market. Reason for choosing Ascari cars  “Ascari cars” is one of the most rapidly growing British companies now. Even though it was established only in 1995, it has already succeeded in informing its presence in the market. “Ascari cars is a medium sized organization. Many people have the illusion that only prominent or huge organizations might be able to establish business units in overseas countries as part of their global marketing strategies. However, it is already proved that the size of the company is irrelevant as far as the success and failures of global marketing are concerned. “In 2006 the Ascari KZ1-R was built to compete in GT championships around the world with ultimately scooping the British GT Championship in 2009”(Ascari race resort, n.d.). Until recent times, car racing was not a popular sport in India. However, recent statistics shows that the interests of Indian people in formula one competitions or car racing is slowly increasing. In others words, Indians started to love sports cars in recent times. So, the opportunities for Ascari in Indian market are tremendous. Even though call for energy efficient or environmental friendly cars are increasing, still the demand for traditional cars is growing everywhere in the world. In short Ascari is an upcoming brand in international business circuits and its business potential in global market is huge. Justification and evaluation of India as a country for Ascari  India is one of the most prominent secular democracies in the world. People from all religions are living in peace and harmony in India. It should be noted that while religious fundamentalism grows in other parts of the world, India’s social life is almost free from these evil things. Indian political system is much more stable than its neighbouring countries. In short, business climate in India is much promising than some of its neighbours. It is often said that global wealth is currently shifting from less heavily populated European and American region to the more heavily populated Asian regions. India is a country which is benefiting from this global shift of wealth. Under the leadership of Prime Minister Man Mohan Singh, India succeeded in writing a new history in its economic development. According to the country evaluation reports of United Nations Development Programme Evaluation Office, India’s development programmes can be segmented into four broad thematic areas. I. Employment and Sustainable Livelihoods (i) Small Industry Development Programme (ii) Food Security Programme II. Access to Basic Services (iii) Primary Education Programme (iv) Health Support Programme III. Management of Development (v) Economic Reforms Programme (vi) Capacity Building Programme (vii)Community-Based Pro-Poor Initiatives (viii)Technology Programme IV. Sustainable Development (ix) Capacity building in environmental management (x) Energy and Environment Programme (County Evaluation, N.d., p.3) It should be noted that rural areas in India are developing rapidly nowadays because of the special attention given to those areas by the government. Population growth was once considered as a major obstacle in front of economic growth by economists. However, India was successful in rewriting these established economic principles with the help of special attention given to the educational sector. Currently India is supplying skilled manpower to countries and regions such as America, Europe, and Middle East where manpower resources are less. Moreover, educated Indian youths are getting lot of outsourcing works from overseas countries. In short, population growth is no more a curse, but a blessing for India now. From the above discussion, it is evident that India as a country provides suitable business potentials to Ascari Cars Ltd. Justification and evaluation of India as a target market for Ascari India is the second most heavily populated country in the world. According to latest census, Indian population constitutes 17.5% of global population according to a recent statistics. According to the 2011 census statistics, Indian population size is1.21 billion. These statistics clearly suggest that no prominent organizations can avoid Indian market in it’s search for future expansion. “India's economic growth is likely to rise to more than 7.5 percent in calendar year 2013” (Williams, 2012). Even though India’s economic growth has declined in the last few years, nobody has any doubts about the business opportunities in India. The per capita income of Indian people increased a lot in the last few decades. Huge economic growth has brought enormous changes in Indian social segments. Earlier, Indian society was divided into two different classes; rich and poor. However, a third segment of people (Mid segment) has arrived because of economic growth in India. Along with the economic growth consumption also increased a lot. Now most of the Indian families have at least one motor vehicle. The number of car owners in India has doubled in the past decade. Majority of the prominent car manufacturers such as Toyota, Honda, Ford, BMW, Benz, Mitsibishi etc have business units in India at present. In short, Indian market is a promising one for all car manufactures. Market entry method Being a medium sized company, it is better for Ascari Cars to establish collaboration with any of Indian automobile manufacturers to sell their cars in India. In other words joint venture is a better market entry method for Ascari for their Indian operations. It should be noted that Renault has strategic tie up with Mahindra Motors in India. Same way, Fiat has collaboration with TATA motors to sell their cars in India. Honda had also tied up with Hero Company earlier for selling their bikes. Above all, the most popular Suzuki has strategic relations with the most popular Indian car manufacturer; Maruti. A company that operates in a small number of countries or within in a restricted business sector may believe that its competitive advantage comes from low cost manufacturing, design capability and distribution efficiency. However when exposed to global competition it may find that its own competitive advantages cannot be transported to new countries and discover, instead, that regional or global competitors have even greater competitive advantage in their own domestic markets as wells as in the target country market (Doole & Lowe, 2008, p.430). India is a huge country with immense diversity in geography, people, social set up, customs, religions etc. Better knowledge about Indian conditions is necessary for a foreign company to set their business strategies. Strategic tie up with any of the Indian car manufacturer will give Ascari the much needed knowledge about local market. These statistics clearly justify Ascari’s decision to select joint venture as market entry method in Indian conditions. Marketing mix There are plenty of incidents in which even prominent companies failed to formulate suitable marketing strategies to exploit overseas markets. For example, during the initial part of globalization, prominent writing equipment manufacturer; Parker Pen tried to conquer global market with the help of a standardized or uniform marketing strategy. In other words, Parker Pen Company tried to sell their pens everywhere in the world with the help of same marketing strategies. They thought that same marketing strategies are enough for same product everywhere in the world. In short, Parker’s business pundits thought that their successful marketing strategies in America could be implemented in Asia, Africa and Europe like continents. They failed to recognize the fact that even though product is the same, markets are different. In other words, culture, economy, environment, politics, legal frame works etc are entirely different at different parts of the world. All these parameters can influence the marketing success in one way or another. In short, Ascari should formulate unique or custom made marketing strategies for Indian conditions. Marketing Mix is the set of controllable variables that the firm can use to influence the buyer’s response. The controllable variables in this context refer to the 4 ‘P’s [product, price, place (distribution) and promotion]. Each firm strives to build up such a composition of 4‘P’s, which can create highest level of consumer satisfaction and at the same time meet its organisational objectives (Marketing Mix, N.d., p.102) In the case of Ascari, the product offered by them for Indian customers is passenger and sports cars. The offered product should meet the requirements of the target people. The customers should feel something unique in the product so that they may consider that product while they take purchasing decisions. The offered product should be worth for the price spent by the customers. “In simple words, product can be described as a bundle of benefits which a marketer offers to the consumer for a price”(Marketing Mix, N.d., p.102). Even though India is rapidly emerging as an economic power, still markets for luxury products are not much promising in India. At the same time, medium priced products are moving well in India. In short, Ascari should not consider the introduction of its expensive luxury cars in India for the time being. They should develop suitable models for Indians conditions. All the other prominent car manufacturers did exactly that. It should be noted that Benz, Toyota, and Honda like companies have custom made cars for Indian conditions. Indian roads, especially the roads in rural areas are not in good conditions and therefore rural people are interested more in purchasing vehicles suitable to the infrastructure facilities available to them. Ascari cannot wait for the improvement of Indian road conditions. Instead they should develop products suitable to Indian conditions. Price is the second most important thing in the marketing mix. “Many factors like demand for a product, cost involved, consumer’s ability to pay, prices charged by competitors for similar products, government restrictions etc. have to be kept in mind while fixing the price” (Marketing Mix, N.d., p.102). As mentioned many times earlier in this paper, Indian people are more interested in medium priced goods. Still luxury products are unaffordable to them. So, Ascari should reduce the prices of their cars in India as much as possible. It should be noted that apart from local car manufacturers, lots of foreign car manufacturers are already in Indian market. In other words, Indian car market is heavily competitive now. In order to capture Indian market, Ascari should sell their products for competitive price. “Goods are produced to be sold to the consumers. They must be made available to the consumers at a place where they can conveniently make purchase”(Marketing Mix, N.d., p.102). Ascari should think about establishing its outlets or stores and service centres at different parts of India. Delhi, Mumbai, Kolkotta, and Chennai can be selected as the major places for establishing regional outlets in India. It is easy for Ascari to manage the marketing activities of all the regions of India from these regional outlets. Service centres should be established wherever possible. More number of service centres will bring more sales in Indian conditions. Maruti, the number one car maker in India has service centres virtually in every corner of India. It is often said that Maruti’s success is attributed to its number of service centres in India. Current customers are more interested in getting proper after sales service. In short, Ascari should consider establishing as much as service centres in India for the success of their marketing activities. Geographic dispersion of activities can help an organization to increase its competitive power. It is impossible for Ascari to compete effectively in Indian markets without establishing its manufacturing units in India. Practically it is difficult for Ascari to manufacture vehicles in England and export it to India. If they try to do so, they cannot sell it for a competitive price in India because of the heavy manpower costs of manufacturing and transportation cost. It should be noted that India is a market in which cheapest labour or manpower is available. Majority of the prominent companies outsource their jobs to India for exploiting these cheap and abundant manpower resources. Under such circumstances, it is impossible for Ascari to manufacture cars in England and sell it for a cheaper price in India. “Where the firm emphasizes customization of its offerings, proximity to customers may enable it to provide rapid response and tailoring of product and services to meet specific customer needs”(Craig and Douglas, 1999). Promotion or Adverting is one of the prominent factors in deciding the success and failures of a product in the market. Carefully formulated advertising will help a product or brand to establish in a market. If the product is manufactured keeping the consumer needs in mind, is rightly priced and made available at outlets convenient to them but the consumer is not made aware about its price, features, availability etc, its marketing effort may not be successful. Therefore promotion is an important ingredient of marketing mix as it refers to a process of informing, persuading and influencing a consumer to make choice of the product to be bought. Promotion is done through means of personal selling, advertising, publicity and sales promotion (Marketing Mix, N.d., p.103). Ascari can use David Beckham as a brand ambassador in the football crazy European region. However, he may not be a successful brand ambassador among the cricket crazy Indian people. In India people worship Sachin Tendulkar as the god of cricket. Current Indian cricket team captain M.S. Dhoni has already secured a place in the list of top 50 sports personalities in the world as far as revenue from advertisements is concerned. So, players such as Sachin Tendulkar and MS. Dhoni could be better brand ambassadors for Ascari for their Indian operations. Recommendations The firm’s ability to transfer capabilities across borders provides a firm-specific advantage relative to local competitors. For example, KFC whose business in the U.S. was built on "take-out" operations, has built its business in China around large "eat-in" restaurants, and has been able to transfer this capability successfully to other countries in Southeast Asia (Craig and Douglas, 1999). Ascari should establish manufacturing units in India so that they can control not only the Indian market, but also other neighbouring markets as well. As mentioned earlier, global wealth is shifting towards the Asian region now. So, Ascari can exploit opportunities in Asia with a manufacturing unit in India. Ascari should think in terms of developing economical as well as fuel efficient cars for Indian market. Indian customers are more interested in having fuel economy cars rather than luxury cars. They have the habit of comparing the fuel economy of cars before taking any purchasing decisions. Ascari should think in terms of establishing a strategic tie up with Indian car manufacturer TATA. Even though TATA was successful in acquiring some of the British car manufacturers, they are still number two in Indian market; behind Maruti. TATA is waiting for every opportunity to conquer Indian market from Maruti. TATA knows Indian as well as British market conditions very well. A strategic tie up with TATA may help Ascari immensely in penetrating deep into the Indian market. Conclusions Ascari Cars Lts has lot of opportunities in Indian market. Being the second most heavily populated country in the world and also one of the rapidly emerging economies in the world, India offers lot of business potentials to foreign companies. India’s political climate, economic climate, social situations etc are favourable to the entry of foreign companies such as Ascari. Ascari should think in terms of selecting joint venture as the possible market entry method in India. Joint venture with an Indian firm will help Ascari to exploit the local knowledge. Ascari should implement custom made adverting strategies for India. Moreover, they should think of establishing a manufacturing unit in India so that they can cheap labour in India effectively and compete meaningfully. References Ascari race resort. N.d. [Online] Available at: http://www.ascari.net/en/ascari-racing/cars [accessed 26 June 2012] County Evaluation, N.d. United Nations Development Programme Evaluation Office. [Online] Available at: http://web.undp.org/evaluation/documents/ADR/ADR_Reports/India/IndainCR2002.pdf [accessed 26 June 2012] Craig S.C and Douglas S.P. 1999. Configural Advantage In Global Markets. [Online] Available at: http://pages.stern.nyu.edu/~sdouglas/rpubs/config.html[accessed 26 June 2012] Dicken, P., 2007. Global Shift: Mapping the Changing Contours of the World Economy, 6th Edition, Sage. Doole I. & Lowe R. 2008. International Marketing Strategy: Analysis, Development and Implementation. Cengage Learning EMEA Marketing Mix, N.d. [Online] Available at: http://www.nios.ac.in/srsec319new/319EL20.pdf [accessed 26 June 2012] Williams, M. 2012. India's economic growth to quicken in 2013 – OECD. Reuters. May 22, 2012. [Online] Available at: http://in.reuters.com/article/2012/05/22/indias-economic-growth-to-quicken-in-idINDEE84L05120120522 [accessed 26 June 2012] Read More