The Nature of the Automobile Industry in the UK - Essay Example

? "Climate Cars" Marketing Report Executive Summary Growth of science and technology over time has proved to be advantageous for modernization in theworld. Living standards of the individuals have radically improved with the contribution of modern technologies. However, with time, ecological balance of the environment is depleting substantially. This paper would try to focus on ‘Climate Cars’, which is a company engaging in providing eco-friendly transport services in United Kingdom (U.K.). The report would perfectly analyze the market for eco-friendly transportation in U.K. and also, for rented cabs in the country. At the end of the research, the paper would comment on the tactical ways through which climate cars can augment their performance in the next three years. The learnt from the essay would help to analyze the significance of marketing and its development over time. The essay will also give a detailed view of the nature of the automobile industry in U.K. Contents Growth of science and technology over time has proved to be advantageous for modernization in the world. Living standards of the individuals have radically improved with the contribution of modern technologies. However, with time, ecological balance of the environment is depleting substantially. This paper would try to focus on ‘Climate Cars’, which is a company engaging in providing eco-friendly transport services in United Kingdom (U.K.). The report would perfectly analyze the market for eco-friendly transportation in U.K. and also, for rented cabs in the country. At the end of the research, the paper would comment on the tactical ways through which climate cars can augment their performance in the next three years. The learnt from the essay would help to analyze the significance of marketing and its development over time. The essay will also give a detailed view of the nature of the automobile industry in U.K. 2 Contents 3 Introduction 4 Analysis of the Present Market 5 Porters 5 Force Analysis 6 PEST 9 Climate Car’s Market Position 10 SWOT Analysis for Climate Cars 11 Key Competitors Position 12 Role of Marketing in Future 13 Recommendations for Growth for the Next 3 Years 14 Conclusion 17 17 Reference List 18 Introduction Development of science and technology over time has proved to be highly beneficial for new innovations in the world. Educated individuals in the contemporary world are taking prompt initiatives to ensure protection and preservation of environment. This report would try to focus on the business of ‘Climate Cars’, which is a company engaging in eco-friendly transportation services in United Kingdom (U.K.). At the end of the research, the paper would comment on the strategic ways through which climate cars can enhance their performance in the next three years (Hakim, 2000). The learnt from the essay report would help to examine the importance of marketing and its evolution over time. However, the paper would also put some emphasis on the growing consciousness of environmental protection nowadays (Casals and Garcia, 2013). History of Eco-Friendly Transportation in United Kingdom After the World War, Industrial Revolution had increased the aggregate demand and wealth thresholds in the market. From 1950 to 1979, number of vehicles in U.K. had increased by 500%. It was at this point of time when Transport Planning became a crucial segment of engineering in U.K. After the global oil crisis in 1973 and the global energy crisis in 1979, the market analysts in U.K. had started understanding the importance if Sustainable Transportation (Parker, 2009). Since then, many private companies had started to contemplate manufacturing hybrid cars in U.K. Figure 1: First Electric Car (Source: Parker, 2009) The above picture is of the first electric car built by a Victorian inventor, Thomas Parker. Over time, there were many companies who have engaged in the manufacture of electric cars in the market. Analysis of the Present Market At present, there are many multinational companies that operate in the market of U.K. for providing electric vehicles. Some of these companies are based in U.K. like, Smith Electric Vehicles or the others, which are based in other countries like, Nissan, Ford Motors and Tesla. Rather ‘e-car’ has become a common jargon these days. The individuals of the country are now allowed to use rented electric cars (Marchionne, 2009). For an in-depth analysis about the eco-friendly transportation in U.K., the report would be carrying out a PEST and Porter Five Force Analysis. Porters 5 Force Analysis The Porters 5 Force Analysis was introduced by Michel E Porter in 1979. The framework helps to implicitly analyze the nature of a business industry. The Porters 5 Force Analysis for automobile industry (especially concentrating in U.K. sustainable transportation industry) would help ‘Climate Cars’ to understand the businesses environment in which it operates efficiently. This will help the company to plan growth in future. Bargaining power of Buyers (High) The buyers demand patterns for eco-friendly cars are extremely high or elastic in the market. This is because till now, only a small portion of rich educated buyers are able to place a potential demand for the pricy electric cars in the market. Bargaining Power of Suppliers (moderate) This is because the producers of the electric cars are giant firms who have large financial resources to dictate the supply decisions of the suppliers in the market. So, the suppliers do possesses some bargaining power to manipulate the supply prices of the products (LOC, 2004). Threat of New Entrants (low) The cost involved to manufacture an electric car is very high. The companies need to invest a very high start-up capital required to initiate a new automobile company. Threat of Substitutes (moderate) This is because there are other forms of transports in the market, apart from eco-friendly rented or owned car. Sometimes, the switching cost of other modes of transport may be high for the sake of time and cost constraints (LOC, 2007). Existing Rivalry in the Market (High) The degree of competition among the firms manufacturing eco-friendly cars is very high in U.K. Many car producing companies from China and U.S. like, Toyota and Tesla are giant manufacturers of electric eco-friendly cars. The competitors of the company Like Tesla, Nissan and Ford Motors have undertaken their strategic business decisions on the basis of the Porters Generic Theory (1980). This theory explains the three main strategies that can be undertaken by firm (cost leadership, focus and differentiation). However a company can also combine among the three and establish a contingency management approach in business. Company Strategy Purpose Tesla Focus The company like a niche marketer only produces expensive electric cars for the narrow segment of rich customers. Ford Motors Cost Leadership The company tries to lead the industry by reducing their cost of production. This helps them to augment the profit and lower the sales price. Perhaps this is the reason for which the company have decided to close its manufacturing Plant in Geelong Australia (because of high cost of production in Australia as the currency value of the country is soaring). Nissan Differentiation The company producers differentiated cars of various prices ranges. The cars differ in terms of design, size and features. The company targets a wide customer base of all income groups. Thus ‘Climate Cars’ can also adopt its business strategy among the three generic strategies as followed by its competitors. PEST Political The government of U.K. has always encouraged the firms to manufacture electric cars. The public authorities of the country have introduced various types of regulations on the pollution control norms. Economical The firms engaged in providing electric vehicle services or the manufacture of electric vehicles in U.K., are experiencing high cost of production as the prices of most of the input materials have increased after the global financial crisis in 2009. Many individuals in U.K. now use rented eco-friendly cars for sustainable transportation (Wilson and Gilligan, 2009). Social The high competition in the market, for eco-friendly cars and the emergence of environmental friendly transportation means in the corporate car and taxi sector of U.K., shows the extensive social consciousness of environment protection in the country. Technological Most of the companies engaging in the manufacture of electric eco-friendly cars in U.K. use highly modern technologies. This is because the state of technological development in the country as a whole is extremely advanced (Singh, Gordon and Purchase, 2007). Climate Car’s Market Position The business of ‘Climate Cars’ had begun very recently with the active contribution of Nicko Williamson. The company engages in providing green taxi service to the individuals in U.K. In the automobile market, at present, when all the companies are actively trying to manufacture eclectic vehicles, Nicko realized that the service of green taxis in U.K. would add a feather to the cap of glory of sustainable transportation. In a very short span of time, ‘Climate Cars’ have won over a substantial share of the market as green taxis are found to generate less amount of emissions compared to the black cabs. Right from its inception, the company has received high revenues as the green cabs of ‘Climate Cars’ are much cheaper than the corporate cabs or other electric cars in the market. Nicko Williamson, the CEO of the company, has claimed that despite the severe crisis situations in the European Union, ‘Climate Cars’ in the last 12 months have achieved a growth of about 24% (worth ? 2.73 million) (Climate Cars, 2013). The productive businesses of the company have facilitated wholesome finances from the commercials banks for further growth. The Clydesdale Bank has provided a sum of about ?6000000 to ‘Climate Cars’ for the purpose of future growth (Climate Cars, 2013). Thus, it can be stated that, inspite of being a small company in the highly competitive automobile industry of U.K., ‘Climate Cars’ is a booming company. With this good performance, the company can significantly lead the market in future. In order to understand the internal business of ‘Climate Cars’, the essay will concentrate in SWOT analysis of the company. SWOT Analysis for Climate Cars Strengths The company has a high social value in the market as it serves sustainable transportation services to the public. The individuals’ awareness about the protection of environment is increasing significantly with time, thus, the brand value of ‘Climate Cars’ is high among the individuals in the market (Vezzoli and Manzini, 2008). The company enjoys access to both corporate and non-corporate clients. These projects provide them with good customer services like, i-phone app, GPS tracking systems in the hybrid cars and a good online booking system. Weaknesses It is true that hybrid or electric cars generate less carbon emissions and are good for the environment. However, in the recent studies, it has been claimed by the scientists that the carbon emissions from these cars are also harmful to the environment. The company does not enjoy a worldwide brand image even today (Moffett, n.d.). Opportunities The company has acquired access to substantial amount of finances that it can use for the purpose of future growth. The growing awareness about the protection of the environment can help the company to win over a higher future demand (Ryan and Jones, 2009). Threats There are many taxi service providing companies with much bigger business than ‘Climate Cars’ in U.K. If any such company decides to provide green taxi services, then it would be threatening the position of ‘Climate Cars’ in the market. The U.K. government is also gradually growing suspicious about the health benefits of hybrid cars as the carbon emission from these cars creates health problems related to chest congestions (Gerbeau, 2002). Key Competitors Position The competitors of ‘Climate Cars’ in the market are the other companies in U.K. that engage in providing cab services. Although ‘Climate Cars’ is also in the sustainable transportation industry (where multinational companies manufacturing electric cars operates), yet its target customers are the common people of U.K. (Mom, 2004). Radio Taxis and Xeta This is a big company that provides black cab services in U.K. The company has almost 2500 licensed Radio Taxis and Xeta vehicles. The cars of the company has inbuilt GPS systems and do not generate C02 emissions. It also provides services for corporate and household clients. As recorded in 2013, the annual turnover of the company was ?18 million (Radio Taxi, 2013). U.K. Taxi Service This is another cab service providing company in U.K. that primarily claims have taxi services at the cheapest cost. However, the special characteristic feature of this company is that, only after confirming the personal details of the clients, it offers the service (U.K. Taxi Service, 2013). Role of Marketing in Future The paper is appointed by the Senior Management Team of the company, ‘Climate Cars’, to create a report on the environmental as well as competitive analysis of the eco-friendly transportation. According to the view of the paper, the degree of competition in any segment of the U.K. automobile industry is highly competitive in nature. Thus, the ‘marketing’ is a pivotal factor which aids the growth of a company in the long run (Meidan, 1983). The contribution of marketing for future growth of a company is priceless. It is believed by the researchers that in future, marketing will not only enhance the revenue of a company, but would also improve the brand value. It would ensure that a company is able to sell its products as well as its goodwill in the market (Godson, 2009). Recommendations for Growth for the Next 3 Years As a true marketer in the company of ‘Climate Cars’, the report would recommend ways in which the company would be able to grow in the next three years. Mission The primary mission of the company would be augmenting its brand value and profit in a span of three years. The company would also try to improve over its quality of services as well as its market size. Marketing and Financial Objectives The marketing and financial objectives of the company should be SMART ones in nature. Specific: The business would aim to augment its sales and profit. Measurable: It should measure its expected rise in sales and profit such as, 20% rise in sales and 15% rise in profit (Piercy, 1983). Achievable: The measured rises expected in sale and profit must be achievable. Realistic: Achievable targets to increase the sales and profit would motivate the workers to focus on work and be realistic. Time bound: The target to be achieved by the company should be accomplished within a period of three years (Juwaheer, Pudaruth, Monique and Noyaux, 2012). Target Market In order to select its target clients, the company must use appropriate Market Segmentation Approaches (GOV, 2010). The company can use the Demographic method of market segmentation that concentrates on segmenting the clients on the basis of demographic factors like, gender, income and age. The company should select its target market on the basis of income demographics (Cvar, 1982). The rate of the green cabs rented by the company is competitive in nature and only adds special surcharges at the time of festivals. Thus, the middle and high income rich corporate customers are the potential clients of the company (Burk, 2010). Positioning High Quality Service Climate Cars Low Price High price Low Quality Service (Source: Authors Creation) As stated in the above position map, the company would be portraying itself as a low priced, but high quality green cab provider. The target customers should understand that the company is highly responsible for maintaining environmental sustainability (Kotler, 2004). Marketing Mix (4 p Analysis) Product Apart from renting green cabs, the company must introduce new brand stretching programs like, manufacturing its own hybrid cars. Price Instead of always setting non-competitive prices, the company can try to introduce lower rents especially for the short distance trips. Place Instead of only operating in the market of U.K., the company should also try to provide services in the other nations (OECD, n.d.). Promotion Sometimes during occasions, instead of taking surcharges, the company can provide special discounts to its clients (especially the members). Tasks and Budget (3 years) Tasks Budget (?) Brand Stretching Program 2730 thousand (10% of revenue in 2013) Price Changing or Discount Cost 546 thousand (2% of revenue in 2013) Sales Promotional Cost 1365 thousand (5% of revenue in 2013) Business Expansion 1092 thousand (4% of revenue in 2013) (Source: PHC Magazine, 2012) Evaluation At the end of three years, the company should recruit an efficient team for analyzing success of the marketing plan. The technique of Key Performance Indicator can be applied for this purpose (Blackburn, 2004). Conclusion In U.K., the degree of urbanization is very high and thus, automobile industry in the country is also highly advanced. It would be correct to conclude that the degree of competition in this industry is high. However, it was very interesting to observe the booming business of Climate Cars. The company not only uses modern technology, but also increases the environmental consciousness among the individuals of the company. Though there are some problems, it is still worthy to state that green cabs are gaining more popularity in the country. With the above mentioned marketing strategies, ‘Climate Cars’ would surely improve its business in the future (Benko and McFarlan, 2003). Reference List Benko, C. and McFarlan, W., 2003. Metamorphosis in the auto industry. Strategy & Leadership, 31(4), pp.4 – 8. Blackburn, S., 2004. A Case Study. [online] Available at: [Accessed 3 December 2013]. Burk W. M., 2010. Essential Guide to Marketing Planning 2ndedition. London: FT Prentice-Hall. Casals, L. C. and Garcia, B. A., 2013. An electric taxi fleet charged by second use batteries: not just economic profit. World Journal of Science, Technology and Sustainable Development, 10(3), pp.186 – 194. Climate Cars, 2013. Climatecars. [online] Available at: [Accessed 3 December 2013]. Cvar, M. 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