Marketing MIX for Chery Cars China Automobile Manufacturing Company - Essay Example

Marketing Mix for U.S.A car market – Chery Cars China Contents Contents Introduction 3 Company Background 3 Introduction to Marketing activities 3 What are marketing activities 3 Definition of marketing mix 4 Objectives 5 Main Finding 6 Major marketing activities of Chery 6 Cherry’s FDI strategy and its activities in US market 6 Relevant Marketing mix for successful FDI 7 Key Cultural forces in Chery influencing organisation’s decision 10 Examples of other car companies 11 Marketing Mix of Ford in India 11 Marketing Mix of Cherry in Brazil 12 Conclusion 13 References 14 Bibliography 16 Introduction Company Background Chery Automobile Co., Ltd. is an automobile manufacturing company located in Anhui, China. It is a state owned corporation and the main offerings of the company include minivans, passenger cars and SUVs. Presently it is the tenth-largest automobile company in China as measured by output in 2012. The vehicles are assembled in 15 countries and have two domestic R&D centres. Chery company is presently looking for expansion into US to get a piece of the growth story of automobile sector in US. Chery has to develop appropriate strategy for entering into US. This report looks at the marketing mix of Chery as it enters into US. Introduction to Marketing activities What are marketing activities An organisation has to deal with a number of activities and decisions in marketing their products and services to the customers. The main marketing activates include Strategic Planning: A strategy outlines the game plan of an organisation for its success. An effective marketing plan requires sound strategic planning at many levels in an organisation. At the top level and mid level planners deal with the strategic decisions which focus on long term development of the product (Kapferer, 2008, p. 182). Research and Analysis: Strategic planning is dependent on availability and interpretation of information and hence it is considered to be the lifeblood of an organisation. Thus it is important for marketing planners to have right information for making right product. Thus marketers regularly conduct and analyze the opinions, needs and attitudes of their customers. In addition to it, there is internal analysis and external analysis for getting useful information for the company (Chery, 2014, p. 1). Developing Competitive Advantage: Competitive advantage is important to set the tone or strategic focus of the entire marketing program. With this the firm can offer customers a compelling reason for them to purchase their product. Without competitive advantage, the company and its products are just like any other company offer commoditized products (Jobber, 2012, p. 172). Definition of marketing mix Product: Product is developed to meet the needs and demands of the consumers. It must be developed at the right level of quality to meet the present and future needs. Thus the perfect product must create value for the consumer and it is not necessary for a product to be tangible. Price: The price of a product is actually the perceived price of the product in the eyes of the customers. A company must make the price competitive, not necessarily the cheapest. A company can compete with large companies by offering better value to the customers for their money (Henry, 2008, p. 112). Place: The place indicates the location where customers buy their products. It is crucial for a company to make the product available at the right place in right quantity at right time while keeping distribution, inventory, storage cost within acceptable level (Burrow, 2011, p. 59). Promotion: It concerns the way a company communicates with their customers. It encompasses activities like advertising, branding, corporate identity, PR, special offers, sales management and exhibitions and special offers. It is intended at gaining attention of the customer and giving them a reason for choosing their product instead of someone else’s (Brown, 2009, p. 96). People: Most of the organisation are customer centric and tries to build strategies to increase the customer satisfaction level. Hence the employees must be trained and motivated enough and develop the right attitude. The reputation of the company actually rests in their hands and the must be taken care of (Keller, 1998, p. 149). Process: Organisation must focus on the process of service delivery and the behaviour of individuals to delivers the service. The company needs to take care of issues like waiting time, speed of redressing customer complaints, helpfulness of staff etc. which is important for making customers happy (Burgemeister, 2003, p. 54). Physical evidence: This includes making the customers see even before they buy the product. Keeping their showroom clean, well-decorated and tidy reassures the customers of what they are about to expect. Objectives The main objective of Chery is to establish its presence in United States of America car market as soon as possible. This report will provide a suitable marketing mix design for the market entry strategy so that they can capitalize on their internationalization strategy. Main Finding Major marketing activities of Chery Cherry’s FDI strategy and its activities in US market Chery needs to do research on the US automobile market and try to position its products among other competitors. Chery needs to collaborate with a number of US companies to grasp the knowledge of the automobile market and the preference of the consumers. It is quite possible that the production line which Chery uses may be inferior and needs to be updated. Thus Chery needs to establish collaborations with professional technological consultant companies of US (Thakkar, and Shyam, 2014, p. 1). Chery needs to establish technical cooperation with Italian design companies to obtain latest car model. The technological knowledge which they can learn can help in manufacturing cars suited to US customers. Chery should apply a conservative strategy while penetrating into bigger and developed market like US. Through proper collaboration with the leading automotive players, the company will increase their technological capability and marketing skills. Chery needs to strategically access the US market by collaborating with marketing and logistics partners in US. This will help the company in successfully avoiding high-risk and grasp the chances to improve the product quality (Kotler and Keller, 2006, p. 211). Chery should shift from passive international trade to active marketing. Chery should establish initial foothold in US market by building KD factories and later trying to fully upgrade the vehicle production system in US. Chery should adopt a strategy of conservative development which will mainly sell high performance and high quality models. It should aim at selling high quality to price performance ratio. Across the years it should try to set up more after sales service outlets to promote sales of its different vehicles in US (Kotler, 2001, p. 272). Chery should focus on speed of response, service network coverage, after sales service management etc. Chery must enter into acquisition of national suppliers and location strategies. With acquisition of national suppliers, Chery will be able to gain vital knowledge of entire systems and modules and along with it will provide them with new customers who are attached with the acquired firm. Chery should depart from their traditional growth pattern and depend solely on FDI. Chery needs to exports its parts to US and assemble the car in US. It will reduce the tax liability. Chery needs to establish wholly owned subsidiary and control the overseas marketing channels. Chery not only needs to compete with the local competitors with respect to low-cost but it also needs to prepare itself for entering into other advanced markets (Pride and Ferrell, 2011, p. 241). With their low cost advantage along with their rapid learning capability it will strengthen their competitive advantage. (Stepahn and Pfaffmann, 2013, p. 11) Relevant Marketing mix for successful FDI The Marketing Mix of Chery for successful FDI in US automobile market is described below. Product: Chery will introduce its successful models Cher QQ and Chery Feng Yun in US market. Chery Feng Yun is a low emission vehicle which have low price and will target the middle class segment. Chery needs to give special importance to branding, packaging, warranties and after sales service. Chery needs to shift from pursuit of scale and speed to pursuit of quality and brand. It needs to narrow the product lines and concentrate their resources. Chery needs to adapt to the strategy of manufacturing good and competitive vehicles. Hence the company needs to revalue all its new model projects. Chery should invest over 7% of total revenue in R&D of streamlined model projects which will improve the quality of elite models for US consumers. They need to optimize their export structure with models like Fulwin 2, A3 and Tiggo delivered in large numbers in US. Chery needs to promote the formation of international brand of Chery through competitive pattern in the future (Aaker and Joachimsthaler, 2000, p. 81). Place: Chery should focus on improving their distribution system. They should aim at effective utilisation of their resources in a sustainable and concentrated manner. They should aim at building over 1000 sales service outlets so that it can be easily accessible to US customers. Chery should try to make their product available across major US cities like New York, Los Angeles, Chicago etc. so that the customers can easily access them. Chery should try to adopt more practical and flexible methods to expand their coverage (Stafford and Faber, 2005, p. 271). It should try to set up some repair workshops so that it provide quick services and more convenient after sales service centres. It should establish after sales service standards to constantly improve the after sales service management (Wenderoth, 2009, p. 219). Price: Chery should try to sell high quality and price performance ratio for their compact car models. It should adopt a conservative development strategy which will aim at selling high performance cars at affordable prices. Thus Chery must position its automobiles according to its quality and service. It should try to use some pricing strategies like discount, promotions etc. to attract prospective customers. It is best for Chery to adopt cost –leadership strategy and hence set its initial price below the average industrial level. Since it has to gain substantial market share it has to set ties price lower than similar models of its competitors. To attain profit it should effectively control its cost (Handy, 1996, p. 312). Promotion: Chery must cooperate with its retailers to improve promotion and advertising for its product. It should look for building a mutual –dependent and cooperative way to make the promotion more effective. It should try to conduct promotion in a fashionable way since the target market of Chery is mainly young people. Thus Chery needs to carry out its promotion in a special way to suit the needs of the young consumers. Chery must organise competition and vote for the most fashionable and coolest decoration and reward accordingly. They should try to connect promotion with events like football league, car racing, basketball match etc (Kotler and Pfoertsch, 2006, p. 116). Process: Chery should try to improve the service standards and improve the customer satisfaction. Chery should establish after sales service standards to continuously improve the after sales service management. Chery should build and develop a strong R&D framework which should integrate with international practice so as to ensure high product quality standards. Chery should try to improve on its four stage R&D management process and four level product decision making process to further enhance their quality standards. Chery should aim at narrowing their product lines and concentrate their resources. It should continuously re-evaluate all the new project models. Stress must be put on after sales service with minimizing the waiting time for their customers (Álvarez and Marín, 2014, p. 21). People: Chery should try to inculcate new culture within the employees. It is important for them to properly train their staffs so that they have full information about the product which they are presenting to the customers. Thus Chery should concentrate on hiring local US people who understands the culture of US. This will develop a cultural mix within the company and is vital to the success. Proper training should be given to after sales service guys so that they are efficient in providing after sales service (Zhang and Filippov, 2009, p. 18). Physical evidence: The showrooms and service centres should be tidy, clean and well decorated such that the customers gets to know what they can expect from the company. The customers will look forward to services like test drive to create a positive image in the mind of the customers. Chery should try to make the customers comfortable and make them knowledgeable about all the financial options available to them for them to buy their favourite car (Wang, 2003, pp. 287-290). Key Cultural forces in Chery influencing organisation’s decision The Key cultural forces which affect the decision making process of Chery are Standardization or ethnocentric pricing: Chery should aim at having a common price for all its products all over the world. It will serve as a global standard price. Such similar pricing across the markets will eliminate gray markets. Chery would use China as a test market for the world. Thus if the price of an automobile gets changed in China it will also get changed in US and thus management must decide carefully before implementing change of price. It is advantageous because no information on market conditions or competitive conditions. But there is major disadvantage to this model is that it does not respond to the market and competitive conditions of each national market or globally. Adaptation or polycentric pricing: The polycentric or adaptation pricing permits subsidiary or affiliate managers or independent distributors to establish the price which they feel is most desirable under the circumstances and there is no requirement for the prices to be coordinated from one country to another. Such an approach is sensitive to local market conditions but the experience and valuable knowledge within the corporate system concerning effective pricing strategies which are not brought to bear on each local pricing decision (Warren, 2009, p. 381). Invention or geocentric pricing: Geocentric pricing is more proactive and dynamic than other two methods. If Chery uses geocentric pricing will neither fix a single price worldwide or allows local distributors or subsidiaries to make independent pricing decisions. Here the pricing is based on the fact that unique local market factors should be considered will arriving at pricing decisions. These factors include income levels, local costs, local marketing strategy and competition. The Price must also integrate other elements of the marketing program. Examples of other car companies Marketing Mix of Ford in India Let the other car company be Ford which has entered into India. The marketing mix of Ford is Product: Ford has a range of products ranging from cars to SUVs which caters to all segment within Indian Society. Place: Ford has its dealers present all across India which helps in reaching out to customers better. Price: Ford has used penetrative pricing strategy in India and thus has low end cars to high end cars. People: The employees are adequately trained for improved customer service delivery. Promotion: Ford uses variety of promotional strategy like Social media, TV, Sponsorships etc. to promote its product. Process: Ford has streamlined all its operation for better customer experience. Physical evidence: Ford has taken care of its physical environment for making the customers develop positive image in their mind. Marketing Mix of Cherry in Brazil Product: Cherry has entered into Brazil with products which cater to Brazilian economy class. Place: Chery has its dealers present all across Brazil which helps in reaching out to customers better. Price: Chery has used cost based pricing strategy in Brazil and thus has low end cars to high end cars. People: The employees are adequately trained for improved customer service delivery. Promotion: Chery uses variety of promotional strategy like online media, TV, Sponsorships etc. to promote its product. Process: Chery has streamlined all its operation for better customer experience. Physical evidence: Chery has taken care of its physical environment for making the customers develop positive image in their mind. Conclusion Chery is a Chinese automobile company which offers passenger cars, minivans and SUVs. Chery is about to enter into US automobile company through FDI. Chery will collaborate with many US companies to acquire knowledge of the automobile companies. Chery will apply conservative strategy by penetrating into bigger and developed market like US. Chery needs to adopt conservative development strategy so that they can sell high quality product at substantial price. Chery needs to take care of marketing mix so that they can have an effective strategy to implement it in US. References Aaker, D. and Joachimsthaler, E. 2000. Brand Leadership. New York: Free Press. Álvarez, I. and Marín, R. 2014. FDI entry modes and host country differences. Available at: file:///C:/Documents%20and%20Settings/omkar/Desktop/suman/March/25-03-2014/entry%20star.pdf. [Accessed on: 25 March. 2014]. Brown, L. 2009. Marketing and Distribution Research. New York: Ronald Press Company. Burgemeister, S. 2003. 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