The US vs Nissan in Germany - Case Study Example

Marketing - Nissan U.S. vs. Nissan Germany - Table of Contents I. Introduction …………………..……………………………………. 3 II. About Nissan Z® Models …………………………………………. 4 III. Nissan Objectives ………………………………………………….. 5 IV. American’s View on Z® Car Models ……………………………… 6 V. German’s View on Z® Car Models ………………………………... 6 VI. Marketing Techniques Used by Nissan U.S. ………………………. 7 a. Setting a Clear Target Market …………………………….. 7 b. The Creation of Z-Car Clubs in New York, Rochester, Syracuse, and Albany ………………………… 8 c. Offering a Good Quality and Affordable Sports Car ……. 8 d. Having a Good Customer Complaint Service ……………. 9 VII. Recommended Marketing Techniques for Nissan Germany ………. 11 VIII. Conclusion …………………………………………………………. 12 References ………………………………………………………………….13 - 14 Introduction Nissan Motor Co. Ltd. is a Japanese carmaker that has gained a strong position in the US market. In 1958, Nissan started to penetrate the U.S. market by contracting two U.S. distributors in California and New York. It was in 1960 when NISSAN engine Corporation (NMC) was established in California. (Nissan 2007a) On the other hand, it was in 1980s when Nissan first established its production facilities in West Germany. Nissan was first known in the United States as Datsun automobiles. It was in 1981 when the company changed its name from Datsun to Nissan. Among the many product lines of Nissan, Z® has been successful in capturing the U.S. market particularly the car racing enthusiasts. (Banks, 2007) A total of 1 million vehicles were sold back in 2004 with 24% increase in sales in the year 2005 as compared to the previous year. (BBC News, 2005) This makes the company one of the most successful Japanese carmaker in the U.S. Nissan U.S. and Germany both faces a different struggle in terms of grabbing the market shares due to the increase in competition within the automobile industry. The continuous changes in the preferences of the target consumers as well as the other automobile choices made available to them by General Motors, Mercedes Benz and other Western car manufacturers makes it difficult for Nissan to position its product in the market of U.S. and Germany. The study will discuss the marketing strategies Nissan U.S. used in making the Z® cars model a classic. In line with the success of the Nissan Z® in the U.S. market, this study will make some marketing strategy proposal to increase the sales of Nissan Z® in the German market. About Nissan Z® Models It was in 1969 when 240Z was first introduced in the U.S. market. (Nissan 2007b; World Car Fans, 2005) 240Z model promises to deliver a world-class sports car performance with its high technology design at a reasonable price. It delivered a good driving performance which only the expensive European cars could produce that time. Since then, Nissan has continued to produce different designs under the same model one after the other. In 1974, 260Z was widely sold in the market. It had an improved engine displacement and was the first 2+2 sitting configuration with longer body and higher roofline. (Nissan 2007b) A year later, 280Z was made with a more powerful engine, L-Jetronic (computerized) fuel injection, with a 5-speed transmission. Having a computerized fuel injection offer drivers with more horsepower and enhance performance at a lesser fuel consumption. The first generation of the Z-cars include: 240Z, 260Z, and 280Z. The second generation was 280ZX. It was the first major redesign of the Z-car and was produced in 1979. (Nissan 2007b) It includes a turbo-charger to increase the overall engine power of the car. It also offers luxury features like a cruise control to improve its appeal and power windows. The third generation of Z-cars (Z31) is 300ZX in 1984. (Nissan 2007b) The first and original 6-cylinder engine was replaced with a more compact V6 design – a turbocharged version generating a maximum of 200 horsepower. It includes an aerodynamic design with semi-concealed pop-up headlights and a high performance-enhancing 16” wheels made of alloys. In 1990, the fourth generation (Z32) 300ZX was born. It has the features of Nissan Direct Ignition System and a Valve Timing control which helps improve the reliability and car responses on higher speeds. (Nissan 2007b) It also has a 4-wheel independent multi-link suspension to ensure a stable ride during fast acceleration. This model is the first Z® convertible with a maximum horsepower of 300. A twin turbo engine with a 4-wheel steering best suited for sports driving. The fifth generation (Z33) 350Z was launched in the market back in 2003 up to present. (World Car Fans, 2005) It has a marvelous design and features that capture the eye of the consumers. The design was inspired for motor sports driving. It offers a maximum of 300 horsepower. The latest innovation of Nissan Z® is the 2006 Nissan Z® Coupe and Nissan Z® Roadster. It has offered a wider choices of style (base - 350Z, enthusiast, touring, track, and grand touring); body type (2-door hatchback or convertible); transmission option (6-speed manual or 5-speed automatic) to suit the needs of the consumers. (Nissan 2007b; NissanZ.net, 2007; World Car Fans, 2005) Objectives Nissan’s goal is to continuously promote the Z® existence in the market and maintain its position as a successful sports car dealer worldwide. This goal has lead Nissan to constantly change, innovate, and upgrade its designs and features for every manufactured and promoted Z ® models. Since Nissan was successful in the launching of the fourth generation 300ZX in the US, it was easier for them to manage and regain the reputation of the Z-cars with 350Z (fifth generation), this project aims to distinguish some fallbacks which may cause Nissan to experience unstableness in the US market share and how the company was able to manage to come back in the US market after resolving the product defects. American’s View on Z® Car Models Nissan has made a good market standing the U.S. from introducing 240Z as an affordable with good quality sports car in the market back in 1970. The success of the Z® launching gave way for Nissan to carve a new niche and a classic brand in the market. The 240Z has inspired all the other Z® models including the success of 300ZX in 1990 and 350Z in 2003. The sudden increased in the price of 300ZX was the main reason for the slow down in sales and ceased production of the said model in the U.S. market. The four components that made the success of the Z® classic model lies on Nissan’s ability to develop the mechanical and design aspects of the sports car, having a good insight on stating the right price, a good marketing strategy to capture its target market segment, and right time of launching the product to the public. (Cummins, 2002) The good image of Z® cars was badly affected when customers in the U.S. experienced some tire-related problems with the 2003 and 2004 350Z model. German’s View on Z® Car Models Contrary to the U.S. consumers, the Germans prefer Volkswagen that bought Rolls Royce and Lamborghini, Daimler-Benz that merged with Chrysler, BMW 3- and 5- Series, Audis, Mercedes-Benzes, and Porches more than Nissan manufactured automobiles. (Feast, 1998) Since Germany is heavily exporting almost half the production of Volkswagen, BMWs, Porches and other German-made luxury cars, the German government is supporting these giant companies over the foreign-made companies like Nissan. The tight competition in the automobile industry in Germany makes it more difficult for Nissan Germany to penetrate the German market. It would take an extra great deal of marketing and proper positioning of the product in order to gradually win a portion of the market share. Marketing Techniques Used by Nissan U.S. Setting a Clear Target Market Despite the good image of Nissan Z® in the U.S. market, the company started to lose it market shares to other automobile manufacturers because many of the customers prefer a 4 x 4 cars or SUVs where the whole family could ride. Another major reason that made Nissan lose its market share for Z® cars is the fact that the company started to increase its price making the Z® cars less competitive with other cars offered in the U.S. market during the late 1990s. Back in 2002, Nissan Z-sports car made a dramatic come back to the U.S. market. The 350Z was first introduced in the North America International Auto Show in Detroit. This initial step on marketing was Nissan’s way of conducting consumers’ testing and a feasibility study. Nissan got a very positive test results because most of these people have been a solid customers since the success of the 300ZX in 1990. Its target market for the 350Z includes the entire United States and Canada. (Automotive Intelligence, 2007) The comeback of Nissan Z® has been the talk-of-the-town by many car-racing enthusiasts all over the country. The Creation of Z-Car Clubs in New York, Rochester, Syracuse, and Albany Z-Car Clubs of New York, including chapters in Rochester, Syracuse and Albany contributes a lot to the success of Nissan Z® in the country. This group of Z® fanatics makes a good advertisement and building of a good car image by spreading a positive word-of-mouth. The same group patronizes the Z® Car Convention where more than 500 Z® owners are expected to attend bringing their Z® vehicles. Most of the 240Z® cars have been meticulously restored or modified.  The highlights of 2005’s gathering is the Nissan and Datsun Z® owners all over the world that was held on a track day at the historic Watkins Glen Road Course for an autocross competition, car show including the appearance of Yutaka Katayama, the 95-year old ‘father of the Z®’ who was also the first president of Nissan Motor Corporation in U.S.A.  (World Car Fans, 2005) The Z® cars were quite successful in the racing arena particularly the Sports Car Club of America (SCCA) C-class scene, Brock Racing Enterprises (BRE), and the International Motor Sports Association (IMSA). In 2004, Sports Car International (SCI) ranked second in the Top Sports Cars list of the 1970s. (e-bay, 2007) Offering a Good Quality and Affordable Sports Car Nissan was able to successfully make a dramatic return in the US market with the launching of an affordable, dependable, reliable sports car – 350Z. The price of this car model ranges from US$ 25,000 – 30,000 per unit. The affordable selling price of the car has triggered its sales to increase rapidly in less than a year. Having a Good Customer Complaint Service A few months after the sale of the 2003 and 2004 350Z models, Nissan started to receive a long list of customer complaints regarding the ‘tire feathering problem and/or premature wearing and cupping of the inner edges of the front tires’. Majority of the first few 350Z units produce an annoying tire noise condition. Some customers has literally described as “tire roar” or “tire growl” which can be heard at low speed braking and when driving on a smooth road. The constant alignment and change of front tires every 6 months onwards would be very costly for the consumers. There were several reported cases/accidents due to uncontrollable spinning of the car (180 - 360O turn), especially during winter season, has made the consumers declare that the 2003 and 2004 350Z was really a consumer defective product of Nissan. (Lemon Law Claims, 2007) Consumers were really angry and very much unsatisfied with Nissan’s inability to correct the technical problem that causes the premature wearing of the tires. The defects encountered by the consumers with the 2003 350Z cars are still present with the 2004 350Z units. This is a very serious problem as it may anytime cause an accident. Since the purchase of the 2003 and 2004 350Z cars has been made, the customers were left with no choice but to get in touch with the Nissan North America, Inc. and suggested ways on how to solve this problem. First – Nissan came out with a service bulletin where the problems encountered by the customers are discussed. This made Nissan easily detect that the 350Z front tires are very sensitive if the front toe is misaligned. The unequal wearing of the tire causes the noise produced during slow driving and frequent braking. Second – Nissan office announced to handle tire-feathering and other claims on Nissan 350Z. They offer an individualized case assessment and handling with the presence of one (1) attorney for the claim. These cases would take about 3 – 4 years to resolve. Third – Nissan will make an effort to repair the affected cars by extending the warranty for the front wheel alignment two (2) years from the first in-service date of each car. Nissan also promised to inspect and study the wheel, tire, and the suspension equipment that was installed on the vehicle. The company will either realigned the front wheels or change the front tires for free if the car was used for less than 21,000miles. Usage between 21,001 and 30,000 miles, the cost of new tires will be prorated wherein Nissan will pay for a percentage of the tire replacement cost. In contrary to Nissan’s claim to help their avid customers to resolve the problem, many customers were not satisfied with the service they are getting from Nissan. Some customers stated that they are not getting the kind of free service that Nissan has offered for the said car and year models. This has caused the sudden decline in the sales of 350Z with the succeeding years, even up to now. In order to resolve the problem with the 350Z model, Nissan U.S. ceased the manufacturing of the 350Z. Instead, the company managed to manufacture its latest innovation the Nissan Z® Coupe and Nissan Z® Roadster in 2006. This models offer a wider choices of style (base - 350Z, enthusiast, touring, track, and grand touring); body type (2-door hatchback or convertible); transmission option (6-speed manual or 5-speed automatic) to suit the needs of the consumers. The company ensures that the ‘tire problems’ has been resolved in these two new models. (Nissan 2007b; NissanZ.net, 2007; World Car Fans, 2005) Recommended Marketing Techniques for Nissan Germany Considering that the Germans prefer to patronize their locally made automobiles, it is necessary for Nissan Germany to come up with an effective marketing scheme to encourage the Germans to check the quality of Nissan cars. In doing so, Nissan Germany should set a clear target market for the Z® models. Since Z® models are designed for sports car enthusiasts, the company should be able to penetrate the sports car enthusiasts group in Germany. In order to strengthen the relationship among the German individuals who would be very proud of using Nissan Z® sports cars, the company should create a Z-Car Clubs in Germany. As soon as the said Clubs grows in number, these people would be the once to market the Z® models to other potential buyers in Germany. Considering the fact that the sports car offered by BMW, Porches and other well-known automobile manufacturers are very expensive, it would be wise to penetrate the German market by offering a good quality, competitive style, and a reasonable price for each Z® sports car. This will make Nissan easier to grab the Germans who are sports car fanatics but have limited extra money to buy an expensive sports car. This type of individuals are the ones who would take time to join the Z-Car Clubs and be an effective advertisers by spreading good stories about their personal experience with the Z® car models. In line with spending much time strengthening the marketing system in Germany, the company should also focus on strengthening its internal processes particularly its customer complaint service. In case some technical problems arises out of production defects, a strong customer complaint service could either make or break the future market opportunities of Nissan Z® worldwide. Nissan marketing managers should be acknowledge the possibilities of technical defects. For this reason, the managers should be aware and monitor the ways the customer representatives deal with the customers. Conclusion Globalization contributes to the tight competition in the automobile industry in the market of U.S. and Germany. The increasing number of automobile manufacturers globally forces Nissan Z® to sell a good quality sports car at a reasonable price. The marketing strategy in the selling of luxury sports cars is not the same with selling a regular commodity to the public. Television advertisements and printed magazines or newspaper is not enough to convince the target customers to purchase a Z®. Nissan needs to build a strong relationship with the prospective target market in order to create a long-term business relationship with them. An effective way to boost the enthusiasm of the Z® owners is to establish and create a strong Z-Car Clubs worldwide. Through an effective word-of-mouth advertisement, it would be easier for Nissan U.S. and Germany to grab a portion of market share in the automobile industry. As part of the emergency strategy, Nissan should create a strong customer complaint service to enable the company to resolve some technical problems before it goes out to the public. References: 1 Automotive Intelligence (2007) ‘Nissan: Z-Sports Car’ Retrieved: July 18, 2007 < http://www.autointell.com/ > 2 Banks, D. (2007) ‘A Reading of Datsun History for a Wintry Day’ Retrieved: July 18, 2007 < http://www.zcca.org/ > 3 BBC News (2005) ‘US Sales Bolster Nissan Profits’ February 9, 2005 Retrieved: July 18, 2007 < http://news.bbc.co.uk/ > 4 Cummins, A. (2002) ‘Nissan Carves New Niche with Classic Brand – New product in brief – 350Z evaluation’ Find Articles. August 2002. Retrieved: July 18, 2007 < http://findarticles.com/ > 5 e-bay (2007) ‘240Z Datsun’ Retrieved: July 18, 2007 < http://popular.ebay.com/ > 6 Feast, R. (1998) ‘How Germany Bounced Back – German Automobile Industry’ Automotive Industries. September 1998. Retrieved: July 18, 2007 < http://findarticles.com/ > 7 Lemon Law Claims (2007) ‘Nissan 350Z Tire Feathering Problem’ Retrieved: July 18, 2007 < http://www.lemonlawclaims.com/ > 8 Nissan (2007a) ‘Nissan Historie’ Retrieved: July 18, 2007 < http://66.218.71.231/ > 9 Nissan (2007b) ‘Nissan official website’ Retrieved: July 18, 2007 < http://www.nissanusa.com/ > 10 NissanZ.net (2007) ‘Nissan Z, Nissan 350Z’ Retrieved: July 18, 2007 < http://www.350z.biz/ > 11 World Car Fans (2005) ’36 Years of Nissan 350Z’ Retrieved: July 18, 2007 < http://www.worldcarfans.com/ > Read More