SEAT Car Company Analysis - Term Paper Example

 Report on SEAT Company Introduction SEAT is a modern company that manufacture cars that suits the specific needs of its target buyers. The success of SEAT in the UK market can be noted with the significant increase in the number of SEAT registered new car sales. As of September 2009, the Society of Motor Manufacturers and Traders reported that the official statistics of SEAT registered new car sales has reached a total of 5,628 which is a total of 40% increase in the UK market share as compared to the same month last year (Dumitrache, 2009). In line with analyzing the internal and external environment of a SEAT company, PESTLE and SWOT analysis model will be used in determining the factors that has contributed to the success of SEAT. Based on the PESTLE and SWOT analysis, a full marketing plan will be designed to enable SEAT management increase its competitive advantages as compared to its competitors. As part of this report, a full competitor analysis which includes the market share, competitor’s size, strengths, weaknesses, objectives and strategies of the actual and potential competitors will be tackled in details. Likewise, the bargaining power of SEAT over its distributors and suppliers will also be analyzed. Objectives The main objective of this report is to determine the best target market and develop a marketing plan for SEAT based on PESTLE and SWOT analysis. Based on SEAT’s marketing mix (7 P’s), a 12-month marketing plan will be presented prior to conclusion. External Factors Political Climate For cars registered before the 1st of May 2009, the UK government is charging a 12-month rate of vehicle tax of £125.00 for vehicles with less than 1549cc engine and £190.00 for more than 1549cc engine (Direct Gov, 2009). In line with this, vehicle taxes for registered cars after the 1st of May 2001 will be based on the fuel type used and CO2 emissions. The same principles applied when purchasing a new car such that the vehicle tax would depend on the fuel type, manufacturer, model, euro standard, specification, and transmission (Carfueldata, 2009). In general, vehicle taxes signficantly affect the sales of SEAT cars in the sense that the higher the tax rate, the harder it is for the company to sell brand new cars. (See Appendix I – Tax based on CO2 Emission on page ) Economic Factors The local employment rate in UK varies depending on selected regions. In Wales alone, 70% of the total population is currently employed (Office of the National Statistics, 2009b). On the other hand, unemployment rate in Wales is around 7% as of March 2009 (Office for National Statistics, 2009c). In line with this, the issue on the current employment and unemployment rate becomes significant factor that could affect the demand for SEAT cars in UK. Basically, the higher the employment rate would mean higher demand for new cars since people will be able to pay for brand new cars (See Appendix II – UK Employment and Unemployment Rate on page 14) Imported cars can harm the potential domestic sales of SEAT given that buyers can save between 10% - 40$ out of purchasing imported cars like Toyota, Nissan, and Honda (All Car Imports Ltd., 2009). Social or Socio-demographic Trend The total number of UK population has reached a record of more than 61 million as of 2009 (Whitehead, 2009). Even though there is an increasing ageing population in UK of more than 85 years of age, the sudden increase in the number of total population in the country caused by baby boom and immigration would mean a potential increase in the demand for SEAT cars in the near future. Technological Trend The technology for SEAT cars improves each year. In line with this, SEAT has come up with different vehicle models including SEAT RANGE, Ecomotive, New Ibiza, Leon, Altea, Altea XL, Freetrack, New EXEO, Alhambra, and FR Series among others (SEAT, 2009a). Offering the drivers a special safety feature, SEAT uses technology that provides the driver with sharp-looking headlights that can turn wherever the car is heading and a hill hold control. With regards to the sound system, SEAT cars enables\ the user to readily hook iPod and other auxiliary device depending on the required USB port (SEAT, 2009b). For fuel saving consumption, SEAT cars are using 2.0 TSI direct injection engine with whooping 200PS (SEAT, 2009c). Legal Aspects In UK, importing new cars from other countries such as in the case of Europe is legal provided that imported vehicles come with a document called Certificate of Conformity (All Car Imports Ltd., 2009). UK law honors the importance of trademark law. In line with this, SEAT as a brand has already been established a name in UK’s automobile market. Environmental Factors The presence of an extremely bad weather, natural calamity or the practice of using mobile phones while driving increases the risk of car accident. In line with this, serious damage in road vehicles increases the demand for brand new SEAT cars. SWOT Analysis Strength Strength of SEAT includes having a strong brand name and technical expertise when it comes to designing and manufacturing car engine as well as the interior and exterior design of SEAT vehicles. SEAT offers the public with competitive product designs using high-quality materials such as engine technology, metal, leather, and fabrics that have been tested under extreme environmental conditions. For better quality control, SEAT has been certified as an ISO 9000 automobile company (Myriad, 2009). As a sign of product excellence performance, SEAT Sport reported that “SEAT has won the FIA World Touring Car Championship for Manufacturers after winning both races in Japan” (SEAT Sport, 2009). In line with this, the company has established an internal procedure on how to make prospective consumers drive test a specific car model they wishes to purchase (SEAT, 2009d). With regards to SEAT’s automobile engines, the company continuously improve its existing car technology and design in order to attract new prospective buyers. Aside from having a strong brand and good quality products, SEAT was able to develop a close cooperation with most of the local car dealers (SEAT, 2009f). In line with this, the company’s success in sales contributes to the ability of the company to survive the business despite the global financial crisis. Likewise, SEAT also offers its consumers with an outstanding customer service (SEAT, 2009e). SEAT offers its target consumers with not only a driving comfort, safety, and style of car seats for adults but also a competitive price. In line with this, SEAT offers its target buyers a wide-range of product design and model which includes SEAT RANGE, Ecomotive, New Ibiza, Leon, Altea, Altea XL, Freetrack, New EXEO, Alhambra, and FR Series among others (SEAT, 2009a). Every now and then, SEAT introduces new product design in the UK market as a strategic way of catching the interests of its target buyers. In line with this, the introduction of Exeo saloon and practical Exeo ST estate models had been a significant factor behind the sudden increase in the total car sales of SEAT last September 2009 (Dumitrache, 2009). Another strong point of SEAT is the hard working employees who are behind the production and marketing of SEAT vehicles. Despite the fact that the team behind the selling of Exeo saloon and practical Exeo ST estate models are new with the company, the good leadership and communication skills of Nick Andrews – SEAT UK Head of Fleet and Business Sales enabled the group of employees to become motivated in working as a team (Dumitrache, 2009). Weaknesses With regards to the vehicles that SEAT is manufacturing, the company seems to be focused on manufacturing sedan. The company does not manufacture much SUVs aside from the Alhambra (SEAT, 2009g). In line with this, the limited vehicle types that SEAT manufactures narrows down the potential consumers who would purchase SEAT vehicles. For instance: Some people prefer a van or SUVs for some personal reasons which include the size of the family. Opportunities Although there is a high demand for SEAT vehicles in UK, expanding the business outside the country could open more business opportunities for the company. Since there is a tight competition in car manufacturing industry, continuously investing on R&D for special safety features, engine improvements, fuel saving technology, and interior and exterior vehicle design could bring in more business for the company. Likewise, expanding SEAT’s existing product line can open new business opportunities for the company. In line with this, SEAT should try to manufacture special car models like sports car which SEAT can use to compete with Ferrari sports cars and Nissan Type Z. Threats There are several threats that can endanger the business performance of SEAT. In case the UK government would decide to increase the existing vehicle taxes and VAT, the total annual sales of SEAT are more likely to decline. Likewise, the inability of the company to have a competitive advantage with regards to penetrating the global markets and coming up with more interesting product features and designs could make the company lose its potential market to its competitors. Competitor Analysis There are quite a lot of local manufacturers that produces car in UK. Among the SEAT’s major local competitors includes: (1) Fiat; (2) Peugeot; and (3) Renault (Hoovers, 2009b). With regards to import competition, SEAT’s major competitors includes: (1) Ford; (2) Chrysler; and (3) General Motors (Hoovers, 2009a). SEAT’s competitors does not only depend on direct sales. Most of them are negotiating with competitive individual dealers who are selling a wide-range of vehicle brands and model. There are also some instances wherein SEAT’s competitors are selling vehicles online. Distributors and Suppliers Analysis As a general rule, SEAT will have more bargaining power over its suppliers in case the company order its raw materials by bulk. To be able to do so, the company will have to establish a strong business relationship with its existing and potential distributors that can help the company sell as much car seats as possible. Core Marketing Strategy With a total of 20% of the world’s population, China is considered as one of the most populated countries around the world. In line with this, entering China as part of the company’s marketing plan could open up a bigger business opportunities for SEAT. Considering that the total population in China has reached 1.3 billion as of mid 2008 (Rosenberg, 2008), encouraging only 1% of the total population to purchase SEAT vehicles would already cause a huge impact over the total sales of the company. Strategic Objectives The main market strategic objective is to expand SEAT’s market in countries with large population such as China, expand its existing market penetration in UK, improve the quality of its existing vehicle model, and develop new market for the business. Strategic Thrust Within the next five years, SEAT will be able to expand its existing market penetration and market development in UK by extending some promotional activities that could invite more people to consider purchasing SEAT vehicles. For new product development, the company will continuously invest on R&D to develop new automobile design, technology, and safety features that could attract new customers. As part of entering new markets like China, SEAT will have to enter into a business partnership with large-scale automobile distributors that are already well-established in China. This strategy will not only save the company a large sum of money out of establishing its own showroom in a foreign country but also save a lot of time and business errors due to cultural differences between the two countries. Detailed Segmentation Socio-Demographic Segmentation The socio-economic factors that can affect the sales of SEAT products include the type of employment each of the target buyers have. In line with this, the target market for SEAT products are individuals who are currently employed with high paying salary who are seeking to own a car or additional car in the future. Lifestyle or Psychographics Segmentation The lifestyle of individuals who are the target consumers for SEAT include those individuals who prefers to drive their own vehicle than to take public transportation. The target market for SEAT includes those individuals who are willing to pay competitive price for a car. Geographic Segmentation Regardless of the geographic segmentation like state, region, city or community, the target market of SEAT is not sensitive to geographic segmentation. One thing that matters most is the financial capability of its target buyers to purchase SEAT products. Marketing Mix (7Ps) Product and Price SEAT manufactures competitive cars that can provide the drivers comfort and safety while driving. Although the product design and safety features of SEAT products is very competitive, the company is charging its potential consumers at a higher price as compared to some its competitors. Promotion As part of promoting SEAT vehicles, the company should use a combination of television advertisement, print advertisement on news papers and magazines as well as on-line news report and advertisements. This will inform the public about the advantages they can get out of purchasing SEAT vehicles. Since the special safety features and product design of SEAT can sell on its own, the company should offer discount to encourage more buyers to purchase the product. Place SEAT should market the vehicles along with other less competitive vechiles. This strategy will give the public the chance to compare and contrast the special features of SEAT with other brands. People There is a tight market competition for SEAT vehicles. For this reason, providing SEAT’s employees with sufficient training with regards to the importance of customer-friendly services and product orientation is necessary. Process Upon releasing the SEAT vehicles in the market, the company should inform its target consumers with a procedural flow of activities related to: (1) where to purchase; (2) when the product will be available; (3) how much would each car seat cost; and (4) the terms and conditions associated with purchasing the product. Physical Evidence With regards to the physical evidence, marketing manager of SEAT should keep track on the number of vehicles sold in each target region/state/territory. Keeping a record of the number of vehicles and car models sold will enable the marketing manager to determine the demand for each vehicle model and design. Over production of slow moving vehicles would mean a business opportunity loss on the part of SEAT. Therefore, the marketing manager of SEAT should constantly communicate with the production manager, supplier, or subcontractors on which vehicle model to produce in order to make the product available at the time a prospective buyer inquires for a specific product design. This will increase the ability of the company to sell SEAT vehicles effectively. Conclusion Analyzing the internal and external factors that significantly affect the business performance of SEAT is necessary to enable its marketing manager develop an effective marketing plan. Although there will be a continuous demand for SEAT vehicles in the UK market, expanding the business in China will open up better business opportunity for the company. *** End *** Appendix I – Tax based on CO2 Emission Source: Direct Gov, 2009 Appendix II – UK Employment and Unemployment Rate Source: Office of the National Statistics (2009b) Source: Office of the National Statistics (2009c) References All Car Imports Ltd. (2009). Retrieved November 8, 2009, from Car Import FAQ: Carfueldata. (2009). Retrieved November 8, 2009, from New Car VED Calculator: Direct Gov. (2009). Retrieved November 8, 2009, from The cost of vehicle tax for cars, motorcycles, light goods vehicles and trade licences: Dumitrache, A. (2009, October 8). Auto Evolution. Retrieved November 9, 2009, from SEAT UK September Sales: Going Up!: Hoovers. (2009a). Retrieved November 8, 2009, from SEAT Competition: Hoovers. (2009b). Retrieved November 8, 2009, from Competition: Myriad. (2009). Retrieved November 8, 2009, from Michigan Seat Company - Meeting ISO 9000 Standards with MYRIAD: Office for National Statistics. (2009c). Retrieved November 7, 2009, from Local Unemployment: Local Unemployment rates vary between 2.4% and 12.2%: Office of the National Statistics. (2009b). Retrieved November 8, 2009, from Labour Market: Local Employment:< http://www.statistics.gov.uk/cci/nugget.asp?id=252> Rosenberg, M. (2008, July 30). About.com. Retrieved November 8, 2009, from China Population. The Population Growth of the World's Largest Country: SEAT. (2009a). Retrieved November 8, 2009, from Welcome to SEAT UK: SEAT. (2009b). Retrieved November 8, 2009, from An Introduction to High Tech Sports Courture: SEAT. (2009c). Retrieved November 8, 2009, from Performance Lies on the Inside: SEAT. (2009d). Retrieved November 8, 2009, from Altea: SEAT. (2009e). Retrieved November 8, 2009, from Contact Us: SEAT. (2009f). Retrieved November 9, 2009, from Dealer Search: SEAT. (2009g). 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