Strategic Marketing at Mazda - Case Study Example

Strategic Marketing Introduction We live in the age of globalisation and large corporate have created a more or less shared market across the globe. It is therefore very important for brands to have public recognition and be accepted as a part of the local market as much as any small business in the area would be (Harker & Esan, 2006). While this situation is something that marketing executives strive for, it may be found that customers have different relationships with different brands and it is the strongest relationship between company and client which survives even when the product quality has suffered or the competition has offered a better alternative (Tenser, 2006). However, with the correct application of strategic marketing, a company can establish a relationship with its clients that really lasts (Blois & Dalgic, 2000). To keep this relationship alive, strategic marketing based on establishing a relationship becomes essential. This does not mean that the company should advertise itself to be best friends with the consumer; rather it signifies the idea that a company should use a marketing system in which the marketing stress is placed on creating a long term relationship with customers which comes with the promise of repeat business rather than individual sales (Stone & Woodcock, 1995). This process of strategic marketing involves a perceptive understanding of the client’s needs as the customers may have different satisfaction requirements as they develop a relationship with the company (Blois & Dalgic, 2000). This aspect of strategic marketing comes under relationship marketing which based on the concepts of marketing but it uses cross functional teams that cut across various departments in a company to provide excellent service. Rather than have the client go to different locations to get information such as pricing, servicing, promotion data and other parts of the marketing mix, the entire marketing process can be handled by a single team which is composed of various members of the company (Peck et. al., 1999). In such a process, the product lifecycle become important since different types of marketing must be used as the customer relationship goes through various stages of maturity. Since the topic of strategic marketing based on customer relationships is quite vast, it has been successfully applied to everything from consumable food items (Normandy & Sanders, 2004) to high end luxury cars (Stone et. al. 1996). The automobile segment becomes a good industry for analysis since a good car remains with the buyer for several years. However, the idea of creating a relationship with the consumer remains the same and bases itself on the continual satisfaction as per the needs of the corporate customer (Cohen, 2004). Strategic Marketing at Mazda To better understand strategic marketing through relationship building it would be better to examine a company like Mazda as to their marketing which is targeted towards business customers. The products offered by Mazda are for a specific section of the business market since Mazda is pushing the system of fleet sales under which all automobiles operated by a business come from a single dealer. This is a not an innovation for Mazda since their customer support and business services centres have been active for years. However, the strategic marketing and the relationship which is to be established between the client business, the dealer and the manufacturer is something which is very new (Cochran, 2006). Instead of merely attracting businesses and clients to the company, Mazda is looking for ways to continue a customer relationship and to make sure that fleet replacement plans do not turn into automobile manufacturer replacement plans. While both short and long term marketing related plans could be used in this situation (Parvatiyar & Sheth, 2001), Mazda is taking a long term approach with strategic marketing towards corporate clients with the addition of long term service contracts and parts replacement plan for the cars and trucks bought by their clients at discount rates (Mazda, 2005). The marketing USP here is a clear financial advantage to the business clients of the company who can save money by using a single point of reference which save them time and money while providing them superior services. The Strategy Fundamentally, once a company has decided to change its fleet to Mazda or to establish a business fleet of cars from Mazda, the company steps in with personal service levels which are very important for the individuals responsible for running the business as well as keeping the fleet. For business fleet customers, Mazda offers a special relationship counter as well as lounge facilities at the dealership where business clients are provided broadband internet access and plasma screens entertainment while their cars are being serviced or being given a quick wash (Mazda, 2005). The amenities provided to business clients are important for the company since they help retain these clients (Harker and Esan, 2006). Strategic marketing and client retention becomes essential in a market where the buyer has a number of choices available to him/her. This is certainly the case in the automobile industry where every major car company produces automobiles for nearly every segment of the market (Tenser, 2006). In fact, Ford or Honda could easily supply the same types of cars, trucks, vans, runabouts and luxury models that are produced by Mazda therefore the selection decision remains with the buyer and strategic marketing along with established client relationships help the company greatly over the long run since corporate marketing for Mazda in this fashion is certainly a new product (Narver et. al., 2004). Cars need to be serviced and maintained as a product and as a matter of fact. There is an ongoing need for service based on the mileage done by the car therefore the concept of establishing a good relationship is enforced by the company to their dealers since good service will mean continued business while bad service could result in the discontinuation of the same business (Mercer, 1996). There is also the need for parts to be replaced as well as entire cars to be replaced when the client feels that one or more of the cars in their fleet can no longer provide acceptable performance. Strategic marketing at Mazda becomes a combination of defensive and offensive plays as recommended by Fornell and Wernerfet (1987) who suggest that these two systems are necessary for strategic marketing and establishing relationships with clients. For defensive purposes, Mazda is providing their clients top quality service as well as business related amenities which would be very acceptable to many clients coming from small businesses. The defensive tactics reduce the chances of customers going away to other companies by giving them something more that the competition can offer (Lindsay, 2006). The offensive strategy for Mazda is simply to offer a total comparison of how well they and their dealers treat business customers while the competition does not treat them as well. The strategic marketing mix used by Mazda for business customers gives them dealer services throughout the week and the weekends. The company also gives business fleet owners free car washes for the life of the car and quite a few businesses would be interested in such benefits for their fleet. This means that Mazda considers the customer’s schedule to be important for the service requirements of the cars rather than to make the customers accept a dealers’ time table for when the cars could be serviced or repaired (Mazda, 2005). The company declares service, especially personalised service to be a very important part of their marketing strategy for business customers by saying: “Personal service, the introduction of innovative business concepts and the ability to ensure service, maintenance and repair work is retained within franchises are all crucial to corporate sales success, with Mazda aiming to expand relations with small and medium enterprises (Mazda, 2005, Pg. 1).” Such a statement certainly means that companies like Mazda have to keep their word when it comes to the expectations of excellent service which the clients may have. Without meeting or exceeding the customers’ expectations, the company cannot expect retention figures to be very high (Egan, 2001). The strategic marketing based relationship between the targeted company and Mazda itself can be sustained if the customer gets additional value from the relationship (Parvatiyar & Sheth, 2001). Undoubtedly, most of the cars manufactured today can be serviced at nearly the same level from any licensed automobile workshop but Mazda provides the benefits of having a business relationship only to business customers and this helps in creating a strategic marketing position of the company (Cochran, 2006). Benefits of the Strategy It is commonly known that the cost of retaining a customer is far lower than the cost of creating new markets or gaining new customers (Stone & Woodcock, 1995). Therefore, the idea of using strategic marketing principles for getting repeat business for Mazda make a lot of sense (Blois & Dalgic, 2000). By retaining customers and by establishing a relationship with the client at the point of sale, customers can be offered additional incentives to bring more customers to the company or to make personal purchases (Cochran, 2006). Mazda only has to acquire one business client to sell several automobile units and they would be losing money if they do not try to sell additional cars to the same customers. It is also in Mazda’s best interest to keep established relationships with business since such customers would be less likely to switch to other brands once they have become used to Mazda’s standards of service. As reported by Egan (2001), a satisfied customer also increases the word of mouth value for the company and this can be very useful when an SME switches to a single manufacturer for their fleet needs who can supply cars to everyone from middle management to senior executives of the company. When it comes to customers who have a good relationship with the company, Mazda will find it easier to sell them other equipment which a company might not be interested in without having a prior relationship (Harker and Esan, 2006). For example, Mazda makes industrial and specialist construction equipment which could be very useful for a company working in such businesses. Suppose that a company has an established relationship with Mazda as the supplier and service provider for their cars then they would need little convincing to buy construction equipment or heavy trucks from Mazda as well. The customer relationship created through strategic marketing would also benefit Mazda since regular customers are cheaper to handle than those who have walked in to the office or the dealership for the first time (Little & Marandi, 2003). Long time customers are intimately familiar with the ordering or servicing system and would not need to be taken through the process or to be educated on the Mazda dealer’s systems. This advantage is difficult to advertise to consumers but it is something they can come to appreciate on their own if they spend enough time with the company (Drew, 2004). The Proof Strategic marketing of a customer relationship has given Mazda significant benefits and the results obtained since the program was started have been noted by the industry analysts as well as the company. For example, Mazda Motors has more than 150 dealerships in the UK and all dealerships report rising figures for fleet related sales. Mazda reports that fleet sales rose by almost fifty percent the first year the program was initiated and it is still showing signs of healthy growth (Mazda, 2005). Before taking this strategic marketing initiative and focusing on business clients, Mazda barely had a dozen fleet specialist dealers across the country and their corporate sales were only a fraction of their total sales. By getting more dealers to join into the fleet program, Mazda only improved their own business, but also expanded their fleet dealership network to newer markets in the region. The dealers also have a lot to gain in terms of prestige by becoming fleet dealers since that in itself can be helpful their repute (Mazda, 2005). Although this program has its supporters, there are some dealers in Mazda’s network who have yet to establish a strategic marketing system for corporate clients. The Fleet and Remarketing Director of Mazda Motors, Adam Pumfrey, said that: "About half of our dealers have yet to secure any corporate business. However, they are sitting on a potentially lucrative business opportunity as companies that run fleets surround them. It is my aim to help them tap into that huge marketplace this year. By defining the fleet opportunity to them and by them discovering how some of our other franchises have secured both local small business opportunities and larger fleet success we can grow the Mazda brand together (Mazda, 2005, Pg. 1).” This appears to be one crack in the strategic marketing done by Mazda not having universal fleet dealership might be an issue for some of their corporate customers who are located across the UK. While, such continued customer service is easier to provide in other industries like computer technology (Ulfelder, 2003) where most of the customer support services can be given over the telephone, a car manufacturer requires a higher amount of investment on location before such levels of support can be provided. Conclusions Mazda has certainly been very successful in strategically marketing their products and services to business customers and this statement is supported by their relationship marketing methodology and their sales figures which show that corporate sector sales have certainly improved with their strategic marketing initiative (Mazda, 2005). However, if Mazda wants to continue the same rate of growth for their business, they have to understand that continual expansion and betterment of services is needed for customers who have a relationship with the company (Christopher et. al, 1991). To do this, Mazda needs to focus on their dealers as well as their strategic marketing mix which will let them be more oriented towards making relationships with customers from the corporate as well as the general public as they are already using consumer level strategic marketing techniques such as viral marketing (Halliday, 2003). In fact, Mazda recognises that fleet based selling may not be the most profitable sales they can make (Mazda, 2005). However, Mazda is looking at the long term business value and the connections they establish with SMEs in the area which could be beneficial to the company as well as get their newer products to a higher level of acceptability (Mazda, 2005). It seems that service and maintenance of the cars is something which is extremely profitable for all dealers while sales are what matter most to the company. By creating powerful strategic relationships and establishing a corporate customer base, both Mazda and its dealers reap great rewards and this system should be established by other companies as a part of their strategic marketing programmes. Works Cited Blois, K. & Dalgic. T (2000). Market Orientation and its Implications. Oxford. Christopher, M. et. al. (1991). Relationship Marketing, BH. Cochran, C. (2006). Seven ways to keep customers front and center. 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Catering to the Wealthy. Computerworld, 37(45), 41-43. Word Count: 2,776 Read More