Marketing Plan for V8 Muscle Cars - Case Study Example

Executive Summary There are growing changes into the consumer preferences in terms of their preference for V8 Cars in Australia. There are many factors responsible for this change including rising oil prices; global credit crunch as well as increasing commodity prices however despite those key players in Australian Market witnessed slow but steady growth in V8 Market. Ford’s new V8 Supercar model will also be entering into this market with the intended aims of further penetrating into a market which dominated by Holden and Toyota. Based on our proposed marketing plan, we intend to penetrate into this market through price reduction as well as improvements in our quality. We also aim to expand our distribution through creation of online channels so that we can reach as many customers as we can. Our promotion strategy would also include providing extra benefits to our dealers so that we can achieve more shelf space. This plan will be implemented with overall budget around $ 400,000/ in first year and with its implementation, we intend to achieve an increase of 1% in our market share and have set a baseline of 10,000 units to be sold through our traditional network of dealers as well as online distribution. As a contingency, we also aim to improve and change our entire communication mix by enhancing our efforts in terms of personal selling as well as direct marketing. Contents Executive Summary 1 There are growing changes into the consumer preferences in terms of their preference for V8 Cars in Australia. There are many factors responsible for this change including rising oil prices; global credit crunch as well as increasing commodity prices however despite those key players in Australian Market witnessed slow but steady growth in V8 Market. 1 Contents 1 Introduction 4 Situational Analysis 5 Internal Analysis 5 Pricing 6 Quality 6 Service 6 Distribution 7 Promotional Strategies 8 Distribution 8 External Analysis 8 Market Analysis 8 Customer Analysis 9 Competitive Analysis 9 Macro environment 9 Economic Trends 9 Political, Legal and Social Trends 10 Goals and Objectives 10 Segmentation 10 Marketing Strategy 11 Product 11 Place 11 Price 11 Promotion 11 Budget 12 Action Plan 12 Evaluation and Control Procedures 13 Bibliography 14 Introduction Muscle V8 cars are high powered cars mostly from American and Australian models. The most important characteristics of such types of cars is the fact that they are two door rear wheel cars and are considered as midsized cars with typical V8 engines. These cars were mostly used for street driving and in some cases for racing. Recent trends however suggest that new models have been developed particularly for racing purposes. The history of V8 Cars in Australia is one of the great achievements in terms of cars production of V8 model now run in millions. During last sixty years, GM Holden Ford has been two most important players in Australia who have dominated the market for V8 cars especially through a continuous process of improvements. This improvement, made according to the customer tastes and preferences, saw a shift in the design and use of V8 cars from just street cars to the V8 super cars for racing purposes. The typical romance for such types of cars is still on rise as during 2007, the V8 engine cars made bigger breakthroughs in terms of sales. Over the period of time, the best selling passenger car in Australia is Holden’s Commodore which it was able to sell 11,500 units during 2007. (Park, 2008). Such trends clearly indicate a potential to tap the market and significantly increase it through effective planning and understanding of market dynamics in country. However, as the consumer preferences keep on changing over the period of time due to different factors therefore recent trends are again showing a shift in the consumer preferences where companies like Ford Australia are now focusing more on producing fuel efficient compact cars rather than producing V8 super racing cars. (McKay, 2007). One factor which is often being cited as the main reason behind changing preferences is rising prices of oil which are fast making V8 cars more irrelevant for general use. Therefore the trends are clearly showing a drift towards more radical changes to be made in the fundamental thinking of companies in terms of producing and selling V8 cars. Under these circumstances, what companies may require is to make more changes into the design and use of the V8 cars so that a new and more focused approach can be adopted to revive V8 cars in Australian Market. This document will present a comprehensive marketing plan for the Ford Motor’s V8 supercars with more of an Australian perspective to it while considering the current prevailing situation in the market. Situational Analysis This portion of marketing plan would present a comprehensive situational analysis of the internal as well as external environment related with product. Internal Analysis Year 2008 has not been as good as perceived by many for V8 cars as the traditional enthusiasm in large V8 cars in Australia is dwindling making the performance of the brand a little shaky during current year however previous years saw a considerable and consistent growth in terms of sales growth. The increase in the oil prices also reduced the demand patterns for the large engine oils and much bigger brands like Ford are planning to retract from their initial positions and are now conceiving of diversifying into different areas including production of more fuel efficient and compact cars. Besides, the demand for new cars is also increasing as the consumers are probably putting off their buying plans for new cars to rely more on old cars. V8 Engine cars, as discussed above, have been positioned initially as street cars however, over the period of time, firms also diversified into racing cars for sports purposes. Thus in order to judge the positioning of the V8 cars, it is important that we assess it by using the four variables of positioning. Pricing Normally, V8 cars were considered as mid ranged cars falling between luxurious cars as well as cheap cars. Historically, therefore the V8 cars have been priced between these two classes of cars. Normally, a Ford V8 Super car is sold in the range of $60,000 to $45,000/-. For our proposed V8 Supercar, we intend to lower the prices in order to penetrate the market through price cuttings as well as our own cost cutting. Quality V8 Cars are considered as state of the art cars with most advanced engines and designs being used in their production. In their own class, V8 cars are considered as most durable and of high quality. However, it is also important to discuss that quality wise, Australia’s favorite brand has always remained Toyota which do not manufacture V8 Cars however, GM Holden’s V8 cars are considered as more superior to Ford’s. However, with the support of our R&D, we intend to position this new brand of V8 Supercars at higher band of quality which at least matches that of our competitors. Service Most of the car manufactures tend to sell out their cars through a network of distributors and dealers often offering after sales services in different forms such as repair and maintenance. For our proposed new brand of V8 supercars, we intend to expand the network of our dealers by penetrating into those areas where our services were not historically provided. In this regard, we intend to raise the overall positioning level of our brand in terms of service. Distribution We have large network of distribution through which Ford sell its products. Coupled with our online purchasing facility plus our traditional network of dealers, we intend to expand upon that network. Our customers traditionally buy through our network of dealers. High Quality High Quality Low Price High Price Low Quality The above perception map suggest that Holden is clearly a leader in the market however with our accurate planning as well as new and innovative approach we aim to surpass Holden in terms of our position in V8 market. Promotional Strategies Traditionally, our promotional strategies remained focused on delivering specific message targeted to our specific market segment however; we intend to change that strategy by focusing more on being more focused by adopting a customized strategy focused on our target customer base. Over the period of time, promotional strategies have been associated with the product however we now planning to make a shift into that perspective with adoption of more focused promotional strategy. Distribution Over the period of time, Ford has relied more on the traditional channels of distribution i.e. selling through network of dealers. Presence of middle man however eroded some of the margins for the company and it is because of this reason that Ford has concentrated on offering V8 supercars through its own network by offering financing options to the buyers also. External Analysis Market Analysis Market trends, especially during 2008 have not remained satisfactory for V8 Class of cars. Due to increasing oil prices, they are becoming less and less attractive therefore coupled with high cost of maintenance is even making the purchase of used V8 cars a costly option for the buyers as the focus is now being shifted more on purchasing small and fuel efficient cars. (Williams, 2008). Customer Analysis Rising oil prices are one of the key factors which are contributing towards a radical change into the way consumers used to perceive V8 cars. Ford and other competitors in the market are finding it difficult to match the changing consumer demands because the focus is clearly now on more compact and fuel efficient cars. Competitive Analysis Holden is clearly a major player in this segment of the market with Toyota also catching up the spot however; Ford is still lagging behind in terms of competition. Holden’s registered a growth of 1.4% in its V8 market segment with overall 57,307 sales made of its Commodore brand. (Park, 2008). Thus Holden is a clear leader in this segment of the market however, Ford, due to its traditional strengths and especially its 2008 Falcon Orion brand, is certainly going to capture the competition. Macro environment Economic Trends World is currently grappling with the global credit crisis which has sprung from the US and increasingly affecting the international financial markets especially banks. The situation on the economic front may not seem healthy and this may increasingly have great impact on the purchasing power of the customers. Political, Legal and Social Trends Australia has relatively stable political as well as legal system. The governance system is time tested and is considered as one of the best in the world. Social trends also suggest that with the increasing income levels over the period of time, people prefer to keep luxury cars such as V8 Supercars. Goals and Objectives The proposed objectives include penetration into the market through effective marketing strategies. We aim to achieve a total increase of 1% in our total market share during next 1 year with estimated increase of 10 to 15% in our profitability. Segmentation It is generally argued that racing cars still provide the necessary excitement and thrill therefore they still hold a key for being one of the hottest selling brands in the market. Capitalizing on the psychological segmentation, we intend to target young to middle aged population who are not only earning but also like to engage into activities which provide them opportunity to thrill and get excitement. Apart from this, our intended V8 car would also target those consumers who are willing to sacrifice fuel savings with time savings. Our promotional strategies therefore would go hand in hand with our target market where we will be targeting our desires customer base with a clear message of saving time and reach their destinations early rather than waiting in lines for fuel. Therefore based on our intended segmentation, there are potentially two classes of customers i.e. Young persons who like excitement and thrill and those customers who prefer speed and power over fuel saving i.e. working class customers who would like to reach their offices early and on time. Marketing Strategy Product Our proposed product is Ford V8 Supercars with possible extensions in coming years. However, currently this will be the only line of product with one year Place The product will be distributed through network of dealers and our online purchasing facility thus there will be both a direct as well as indirect approach to be adopted while distributing the vehicles. We also intend to increase benefits to our dealers so that we may be able to acquire more shelf space. Price We intend to sell out our V8 Supercars at prices 5% lower than the competitors. We intend to achieve this through cost cutting in terms of our administrative costs. Pricing strategy to be adopted will be based on Cost plus approach where a certain margin (mostly in the range of 25% to 35%) will be added to our costs. Promotion We aim to use push strategy with this product as our proposed aim is to further penetrate the market. Our promotional theme would be based on the obtainment of thrill and excitement and will be targeted at our customers. We also intend to use personal selling as one of the options for our promotional activities. Budget Based on our historical patterns, we intend to use following budgets: Advertising; $ 100,000 (in first year) Lucky Draws; $50,000 Development of online facility: $20000 Recruitment of Sales Force including their compensations: $ 50,000 Free give-away to dealers; $50,000 Action Plan Our intended marketing strategy would be implemented through our Marketing Department. We will coordinate with different departments such as production, supply chain etc to explain our plans for this new product. Our aim would be to achieve complete synergy within the departments where our marketing department would collect the customer info and would be passed to our R&D department. Based on our sales forecasts, we will be coordinating with the production department to start production of the vehicles which will be sold through our dedicated network of dealers. We anticipate that our commercial production will start at the mid of next year. Evaluation and Control Procedures We will measure the results of our proposed plan through the number of units sold. For the first year, we intend to sell at least 10000 units and we will be measuring our performance against this yardstick. Since our prime objective is to increase our market share by 1% therefore our primary focus will be to measure our performance against this with focus also on increasing the number of units sold. Our contingency plans include personal selling, direct marketing as well as more penetrating advertising based on promotional activities. Bibliography 1. McKay, P. (2007, May 17). Ford considers V8 Supercars pull-out. Retrieved Oct 07, 2008, from The Sun-Herald: http://www.drive.com.au/Editorial/ArticleDetail.aspx?ArticleID=39409 2. Park, B. (2008, January 08). Theres vroom at the top as car sales roar and soar. Retrieved Oct 07, 2008, from The Age: http://www.theage.com.au/news/national/theres-vroom-at-the-top-as-car-sales-roar-and-soar/2008/01/07/1199554571403.html 3. Williams, L. (2008, June 20). Used car dealers slash V8 car prices as petrol costs soar. Retrieved October 07, 2008, from The Daily Telegraph: http://www.news.com.au/dailytelegraph/story/0,22049,23893146-5006009,00.html Read More