Global Marekting and Ethics - Coursework Example

? GLOBAL MARKETING AND ETHICS Primary focus This paper is focused on the interaction between global marketing and ethics related to it and for this purpose concentration is led on a particular sector (automobile industry) involved in global marketing and cultural factors affecting the products’ success in the global market. Lifestyle and preferences of people affecting the global automobile industry The success of the vehicle companies largely depends upon supplying vehicle models keeping in parity with the customers’ tastes and preferences. In this world of perfect competition, continuous innovation is ushering among the companies for building up new design of cars. Attracting customers along with product innovations, customers taste and preferences must be given prime emphasis for success (Bruno, Miedzinski, Reid and Yaniz, 2008, p.13). In 1980s and 1990s the main thrust of the automobile companies was to produce so called “world cars”. The term “world cars” mean that several automobile multinational companies like Ford, General Motors, and Toyota during that time targeted to sell cars in a same design produced in their centralised units in their overseas global market with a perspective that it would reap them huge benefit over their cost coverage. But the ultimate scenario in the reality was reverse. It was found that consumer in different market showed different taste and preference orientation as for example in North America the consumers demand were biased towards pick up cars while in European countries pick up cars were treated as utility vehicles purchased by firms for production use (Hill, and Jones, 2007, p. 275). Life style and preferences of the consumers can be referred to as a chief driving force in global marketing of automobile industries. Social norms affecting global automobile industry Social norms play a significant role in global marketing of automobile industries. Several firms mix their strategies (pricing, cost calculations, product differentiation etc.) to sell their models in different market segments depending upon varied social norms of those respective places. It was seen that Toyota used its Lexus division for selling high priced luxury cars to high income consumers while selling its entry level model like Toyota Corolla to lower income consumers. In many cases the firms may have to adopt unique mix in their marketing strategies in order to appeal purchasing behavior of a certain segment in a certain region. Management studies have revealed that African-Brazilian market is completely different from African-American market –the causal factor being the differences in social norms. In another example it was seen that group of people in China aged 45-55 who had few parallels in other countries during 1960s and 1970s were highly sensitive to price change and produced negative attitude towards entry of new products (Hill, n.d., p.491). So the firms had to rethink and formulate their marketing strategy mix in order to find a solution. Gender bias can also be regarded as a strategic factor in the global automobile industry. In the American society, in the automobile industry initially there was a trend in mixed workforce (both male and female) but gradually that trend changed and focus was diverted towards male dominance in the workforce and the famous Ford Company were in favor of this policy and promoted the same and gained unparalleled success. From table 1 (appendix), it can be seen that percentage women employment in Ford Company gradually declined (Robertson, 1999). Role of religion in global marketing of automobile industries Religion also acts a chief driving force in global marketing paradigm. In United States of America, there is predominance of small groups and they have deep belief in spirituality. There is no certain rigorous rigidity in joining different religious group only following few simple rules and some informal meetings (generally couple of months in that religious group) will suffice. These small religious groups rather behave like product lines. The automobile industry in America would have long been defalcating if they continued to produce only family sedans. The automobile industry strives on diversified products like sports cars, minivans, pickups, SUVs which have maintained customers’ interests and helped in achieving success in business (Wuthnow, 1996). Role of values and global marketing in automobile industries One of the important cultural parameters responsible for varying market conditions can be attributed to general “values” attached to different geographical boundaries. Considering the Indian market it can be considered that it is a society predominated by middle classes. Social taboos and prejudices have been a long prevailing event in the Indian society. Still in this period, the Indian husbands still regard their wives jobs as an offense to their masculinity and prefer their wives to sit back at home and carry out their traditional household jobs. As a result this acts as a hindrance to the economic growth and thus the society gets trapped in a vicious circle of poverty and thus the predominance of middle class society finds its very evidence. As a result of a business insight the Indian and foreign car companies focus on developing small, fuel efficient and cost effective cars in large scale in order to capture the market of this growing Indian middle class (Stuckler and, Siegel, 2012, p.259). Lifestyle and preferences influencing marketing mix strategies to enter a potentially new market [A focus on an illustrative real life example] Through already well established brands access to potentially new markets is much more convenient and less time consuming than building a new brand and reputation from the beginning in an already saturated and fiercely competitive market. But for entry into these markets for a multinational firm, certain factors have to be kept in mind like the lifestyle and preferences of that market which can act as hindrance for the entry. So the firms have to make an optimal strategy mix keeping in mind the cultural barriers of that potential market. Lifestyle and preferences of a particular geographical boundary plays a significant role for an automobile industry to enter that market. For example, Tata Motors (India) targeted the UK market for the sales of commercial vehicles and sports utility vehicles. Again exaggerated preferences would be identified for highly fashionable SUV cars in US and UK according to Windecker (2005). But the market for USA has declined by Tata Motors due to high quality requirements, other non tariff barriers and highly competitive market. But the UK car market dynamics and language similarity as well as life style and preferences induced Tata Motors to enter the market. According to Mintel (2006) preference for lifestyle factors such as fashion and luxury preferences are so strong that it removes the negative effect of market maturity and oil prices in luxury car segments. But preferences varied among different age groups like between 25-40 years old who are basically fashion oriented and demanded affordable SUV cars. Thus market for fashionable SUV equipped cars have raised dramatically and it was the prime target for Tata motors in UK. The company decides to enter the SUV market seeing the growth dynamics during the period. According to SWOT analysis also Tata Motors found the UK market potentially rich for entry (Tata Motors Entry into UK market, 2010). In this case the famous Stackelberg leadership output can be exposited as a theoretical foundation where the first mover advantage will reap the highest benefit and will help to catch the market and influence price mechanism (Pindyck, Rubenfeld and Mehta, 2009, p.350). Marketing mix strategies adopted 5 Ps of marketing Strategies adopted Product advantage  In order to hit the market the company would launch the model X1, compatible with the ambience and a mini- sport utility vehicle with 5 speed automatic transmission and 140 HP 1,8L hybrid engine with comparatively low fuel consumption which gives product advantage over the market predominance of high fuel consuming BMW and Mercedes ‘luxury saloon’ class cars (Tata Motors Entry into UK Market 2010). Price  The UKs luxury car market has been dominated by BMW and Mercedes Benz. However as the fetish for luxury cars is huge thus the company strategy should provide a model with almost all amenities present compared to these existent dominant player but at a lower price, which is an attraction for the price sensitive individuals. Place & Product differentiation Since UK’s history is backed by royal tradition yet quite a flamboyant youth culture the company also developed variations in the model targeting the preference pattern of different places. Also for greater product availability local dealers would be appointed (Tata Motors Entry into UK Market 2010; Anurit, Newman and Chansarkar, n.d.). Promotion Media in UK is very powerful and targeting the customer base a sizeable amount of the budget (25%) has to be spent in the promotion of the model through car and life style magazines (Tata Motors Entry into UK Market 2010). People As mentioned earlier a large group of people in the age group of 25-40 shows their preference towards buying affordable SUV equipped cars. This age group in UK forms a huge market so the decision was to influence this huge customer base. So depending on people’s age group preference this decision to enter the market is feasible (Tata Motors Entry Into UK Market 2010). Appendix: Year Percent of women in workforce 1912 1.5 1914 1.9 1917 1 1921 1.6 1925 1.3 1926 1.2 1927 1.5 1928 1.3 1929 0.8 1941 0.3 (Robertson, 1999, p. 178) References 1. Anurit, J. Newman, K. and B. Chansarkar, (n.d.) Consumer Behaviour of Luxury Automobiles, available at: http://www.economicswebinstitute.org/essays/carthai.pdf (accessed on March 11, 2012) 2. Bruno, N. Miedzinski, M. Reid, A. and M. Yaniz, (2008), Socio-cultural determinants of innovation in the automotive sector, Europe Innova, available at: 3. http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cts=1331290911357&ved=0CEYQFjAD&url=http%3A%2F%2Farchive.europe-innova.eu%2Fservlet%2FDoc%3Fcid%3D9931%26lg%3DEN&ei=0-FZT7WFC4vLrQfV6ajpCw&usg=AFQjCNHLJ0npdVy5Fi4TelKh6ra2gOoodg&sig2=D8C1S4HGyYanKizskWLiqA (accessed on March 11, 2012) 4. Hill, C.W.L. and G. R. Jones (2007), Strategic Management: An Integrated Approach, Cengage Learning 5. Hill, (n.d.) Global Business Today, Tata McGraw-Hill Education 6. Robertson, P.L. (1999) Authority and control in modern industry: theoretical and empirical perspectives, London: Routledge 7. Stuckler, D. and K. Siegel, (2012), Sick Societies: Responding to the Global Challenge of Chronic Disease; Oxford University Press 8. Tata Motors Entry Into UK Market (2010), Articlesbase, available at: http://www.articlesbase.com/international-business-articles/tata-motors-entry-into-uk-market-1733631.html (accessed on March 11, 2012) 9. Pindyck, R.S., Rubenfeld, D.L. and P.L. Mehta (2009), Microeconomics, Dorling Kindersley Pvt. Ltd 10. Wuthnow, R. (1996), Sharing the journey: support groups and America's new quest for community, Simon and Schuster Read More