The Australian Automobile Market - Essay Example

The Australian Automobile Market 1.0 Executive Summary The Australian automobile market has experienced sliding sales and most companies are finding it difficult to survive. The Holden SS Ute – sports utility trucks have been popular and keep upgrading the product. However, they too need certain changes in their marketing mix to enhance the sales. This report recommends additional functional features to the product mix with customized interiors and colour of the vehicle. The price mix should adopt differential pricing and volume discounts. The promotions can be widely varied. To maintain public relations, racing and sporting events should be organized regularly and the existing customers involved through active participation. Videos of new launches and product features should be hosted on YouTube which would draw an attractive viewer ship. Traditional mass media advertising has to be maintained through TV, radio, Billboard advertising and outdoor advertising. Distribution channels should be both direct and indirect. The direct channel should be through the internet which would allow the customers to place orders, make suggestions, see the presentations, and customize their own vehicles. The indirect channel through the dealers is necessary as many would first like to physically see the product before ordering for it. Thus a change in the marketing mix can help the company to face the challenge of the downturn. 2.0 Situational analysis The car sales in Australia have been steadily decreasing through out 2008. Recorded sales of the automobile industry in November 2008 were lowest for five and half years. As such the current position of Holden SS Ute would help to suggest recommendations for its future marketing mix. 2.1 Current Product The Holden SS Ute was launched in Australia in August 2007. It is a coupe utility built by Holden, the Australia subsidiary of General Motors. This car-truck hybrid range has a number of models in its series and is a sports utility vehicle. It comes with 6-Disc CD Audio system with MP3 compatibility and its safety and security system are in place. It also has side curtain and side impact airbags for the safety of the passengers and the crew. The vehicles have 17” alloy wheels and Sports Suspension. Customers find the interiors extremely comfortable and the service costs are very cheap (Product Review, 2009). Overall it is a premium performance product with high-end performance. Customers have more choice, more flexibility and more features. The vehicle integrates sports car performance, ride and handling, together with a functional load carrying capability (Blogspot, 2008). 2.2 Current Pricing The pricing differs according to the model and the facilities provide in the vehicle. The entry level cars are cheaper and they bring in the maximum sales. The prices are not readily available on the internet and one has to request for prices by filling up a form. 2.3 Current Promotion The name Ute has been aptly used because Ute is a colloquial term in Australia for utility. The company is planning to export the vehicle to South Africa and has a tremendous appeal with a set group of buyers. To create awareness of the product and its features, the company organizes racing contests. The vehicle plies through plenty of bump and grind through the fields and such a promotional strategy highlights the durability of the vehicle (V8Utes, 2008). In addition, Holden cars owners are offered fuel at 99 cents per litre for up to 20,000 kilomoters or two years, whichever comes first (Fallah, 2008). The company also offers an additional bonus rebate of 2% over and above the 10% for credit purchases (Holden Card, 2009). 2.4 Current distribution Currently the company uses indirect marketing channel as the product comes from the distributor to the dealers who then sell to the customers. Even though the company has its own website but all sales are directed through dealers. Exports are an essential part of their strategy and they are already exporting to South Africa. They sell through a dealer network in South Africa and expect to export about 50% of their production in Australia. Trained technicians are available at the Service Centers nationwide. 3.0 Recommended Target market Earlier people would drive a pickup truck because it was cool but today such customers have exited the market (Buss, 2009). Today it is no more the “lifestyle” buyers that would buy these trucks. The industries have to be targeted for material pick up and not the individual customers. The industries should be those with light-duty transportation required frequently. For instance, the construction contractors or small businesses or even farmers should be the target segment. In addition, the niche customers that still want to be different and these would be in the age group of 25-35 years male customers. Women as yet have not been using this vehicle and hence they should also be targeted. The niche customers would be those that could use their trucks for recreational purpose such as fishing or hunting. The fuel-conscious customers as well as the environmentally conscious customers would also be targeted as they make up for 31% of the market share in Australia (Jacoby, 2007). 4.0 Recommended marketing objective The Holden Ute has strengthened its position in the market by introducing an all new SS V model to its Ute range. There is a market for this kind of vehicle (Blogspot, 2008). The marketing objective should be not to sell the cars during recession but to promote the truck with ensuring that messages about the functionality of truck are clearly conveyed. The marketing messages have to focus on the durability and utility of the truck and these should be highlighted to the core customers. The objective should be to maintain the branding presence and reach the messages in a smart way to the customers. The objective is not merely to retain the existing customers but to attract new customers that are fuel conscious. Overall, the objective is to achieve at least 25% of the Australian market share by 2011. 5.0 Product recommendations The customers are not comfortable with the rubber floor mats that wear off in six months. Hence this feature should be done away with. In addition, the vehicle should be customized to suit individual preferences. For instance, the customer should be offered flexibility on the features he/she chooses to have. Many might like to have minimum add-ons if it helps to reduce costs during the recession. For instance, not all would be interested in blue-tooth facility within the vehicle. The interiors should also be custom-designed to suit individual needs and comfort. The vehicle should add features such as fuel-efficient and environment-friendly cars as customers have become as of these two features. The Government has allocated Green Car Innovation Fund and the company should utilize this to upgrade the vehicle (Economy Watch, 2009). However the government is sponsoring Green Car projects and Holden should take benefit of this assistance especially because most auto companies in Australia are finding it difficult to survive. The vehicles should be available in a variety of color to suit individual tastes along with the interiors designed to taste. 6.0 Pricing recommendations The pricing has to be competitive compared to other models in the market. Additionally, the customers should be able to see value added for the added functionalities for the vehicle. The demand for the product is variable and customers have choices. Hence the price should not be too high or too low compared to competition. Differential pricing strategy should be adopted. Prices should vary according to the features required by a customer. In this way, when vehicles are customized, pricing too can be customized. Differential pricing can also be applied to different customers such as senior citizens or repeat customers of the company. For exchange of vehicle also this strategy can be applied. Multi-channel price strategy should be applied as this would enable the organization to exploit many pricing strategies and improve upon them. This suggests that if the order for the vehicle is made online, 50% the dealer margin can be passed on to the customer. The dealer would still have to service the customer but since the sale has not taken from his premises, the benefit is passed on to the customer. Sales commission should also be offered to the in-store sales people which would motivate them to push the sales of Holden SS Ute. 7.0 Promotion recommendation Focused marketing is essential for products such as these which are packed with hi-tech features because the success of such products depends on how much the target group understands their uses and benefits (Teo). The sales and promotion approach has to be more aggressive. Mass media advertising through Billboard display and outdoor advertising in addition to television and radio can help educate the general public on the new technology used in the vehicle and the special features that make the product unique. The promotional strategy should demonstrate and convince the customers of low fuel consumption and low emissions. To meet this objective, Motor shows and racing events should be organized more frequently over rugged terrains. This would demonstrate the durability of the vehicle, the low emission even in difficult situations and low fuel consumption. Relationship marketing has to be applied to retain the existing customers. CRM is the new tool used for developing and maintaining customers. Through networks and interaction this is possible. Videos of such events should be put up on YouTube to get the maximum number of viewers as only a handful can attend such events. Virtual communities and networking should be utilized for promotions. The company should have its own blog where it invites the users to post their experiences with the vehicle. These posts serve to attract other customers that find it difficult to make up their minds. The existing customers have to be treated with utmost importance and their words valued. Towards public relations strategy, the existing customers should be invited for any features upgradation or new product launches. Incentives can be offered to the existing customers who introduce new customers to the company for Holden range. 8.0 Distribution recommendation The organization should use both direct and indirect distribution channels for this product. There should be selective distribution through well known dealers that already have a good reputation in the market. The second distribution channel should be through the internet. As technology has advanced, and people have access to the internet, the organization can afford to reduce the number of dealers. This would result in massive savings while brining closer interaction directly with the customers. It would also help the company to know and understand its customers better. Thus, both direct and indirect channels should be used for distribution of Holden SS Ute. For the corporate accounts, sales people should be deputed to approach them directly and give a presentation on the product, Corporate sectors should be offered special discounts for volume purchase. Showrooms are necessary because even though the customers can get all details through the internet, many would still like to physically inspect the vehicle before taking placing an order. Hence, dealership networks are essential in addition to company owned showrooms. However, the number of dealers can be reduced in each region. 9.0 Conclusion To enhance its marketing mix, Holden should bring about changes in its product mix such as customized colors for the vehicles, and add functional features to create product differentiation. Once the product differentiation is created, pricing becomes easier to set. Holden should apply differential pricing to suit different age groups and features. Promotional strategies are the most important and have to be based on the target segmented. These include mass media marketing through the traditional methods of promotion such as TV and radio. In addition, the public relations should be maintained through events and racing and the existing customers should be invited for all such events including new product launches. Today it is all about customer relationship management and this has to be taken care of. The distribution should be both direct and indirect. The internet should be used as a direct channel not merely to obtain orders but to facilitate better communication with the customers. The dealers too have to be involved and showrooms are necessary. The corporate sector should be directly approached and offered volume discounts. It is expected that with such aggressive marketing mix the company would be able to survive amidst the down turn and sliding sales. References Blogspot. (2008). Chevrolet Lumina SS UTE Launched in South Africa. Retrieved online 18 October 2009 from http://benzs.blogspot.com/2008/02/chevrolet-lumina-ss-ute-launched-in.html Buss, D. (2009). In Trucks, Bare-Knuckles Marketing Continues. Retrieved online 18 October 2009 from http://www.autoobserver.com/2009/06/in-trucks-bare-knuckles-marketing-continues.html Fallah, A. (2008). Holden offers fuel at 99 cents per litre. Retrieved online 18 October 2009 from http://www.caradvice.com.au/16118/holden-offers-fuel-at-99-cents-per-litre/ Economy Watch. (2009). Australia Auto Industry. Retrieved online 18 October 2009 from http://www.economywatch.com/world-industries/automobile/australia-auto-industry.html Holden Card. (2009). Bonus Partners > Holden Dealers. Retrieved online 18 October 2009 from http://www.holden.com.au/products-and-services/gm-holden-card/bonus-partners/holden-dealers Jacoby, L. (2008). Marketing Plan. Retrieved online 18 October 2009 from http://www.liz-mo.com/The%20Aussie%20V8%20Marketing%20Plan.pdf Product Review. (2009). Holden SS Ute. Retrieved online 18 October 2009 from http://www.productreview.com.au/showitem.php?item_id=3696 V8Utes. (2008). History. Retrieved online 18 October 2009 from http://www.v8utes.com.au/index.php?page_id=25 Read More