Contemporary Marketing Mix for New Fords Model - Assignment Example

Marketing Mix Introduction Among the several concepts of marketing, ‘marketing mix’ is found to be one of the most important one. Over the years, management experts and researchers have studied various aspects of marketing mix. While defining the term ‘marketing mix’ Philip Kotler and Joanne Scheff said “marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.” (Kotler & Scheff, 2007) These tools were further classified by McCarthy. He formulated the concept of four Ps which are product, place, price and promotion. Contemporary marketing environment refers to marketing mix in relation to these four Ps. However these four Ps are found to be more relevant in the context of tangible product rather than service which is intangible, heterogeneous and perishable. Therefore, in the context of service, three more Ps’ have been added to form the marketing mix. These three Ps are people, physical evidence and process. In this paper, marketing mix is dealt in the context of product and hence the focus will be on the four Ps. According to Gary Armstrong and Philip Kotler “product means the goods-and-services combination the company offers to the target market.” (Kotler & Armstrong, 2001) Price is referred as the monetary value of the product. It is the amount of money that must be paid by the customers in order to obtain the product. In the words of Kotler and Armstrong “place includes company activities that make the product available to target consumers.” (Kotler & Armstrong, 2001) The final P, promotion is referred to the activities that are performed with the intension of communicating the merits and features of the product to the target customers in order to persuade them to purchase it. Marketing mix, in this paper is analyzed in the context of Ford motor cars. Different levels are involved in marketing the product; these levels are illustrated in this report in the context of Ford. Furthermore the paper includes an analysis of the pricing objectives as well as pricing strategies of Ford. Finally the paper provides a proper description of the marketing communication mix conducted by Ford. Each of these analyses is done considering the company’s presence in the Singapore market. Question 1 Any product needs to be seen and analyzed from five different levels. Product planners need to think about each of these levels while planning and developing a product. These five are core level, actual level, expected level, augmented level and potential level. Core level is the most basic level; it answers the question “what is buyer really buying?” It is clear from the picture given below that all the other product levels are developed keeping the core level at the center. The core level of a product comprises all the problem solving benefits. These benefits act as the main drivers of consumers’ decision regarding the purchase of the product. The next level is the actual level. At the actual level the product is expected to possess five main characteristics. These are: a certain level of quality, specific features, specific design, proper packaging and a brand name (Kotler, & Armstrong, 2001). The third level is the expected level. According to Philip Kotler, product planners need to take into account the consumers’ expectation from the product while planning the product. For instance hotel guests expect that they will get a clean bed, working lights, safety and privacy in a hotel room. The fourth level is the augmented level. The augmented product is developed around the actual product. At this level additional services are provided to the consumers. These benefits are generally in the form of warranty, after sales service, installation, finance and delivery. Philip Kotler said that “competition takes place at the augmented level, because most organisations can successfully build satisfactory products at the level of the expected product.” (Kotler & Keller, 2007). Marketers try to analyze the product from consumers’ perspective. Since consumers want to enjoy some additional benefits, marketers try to include additional attributes or benefits to the existing line of features. [Source: Marketing: fresh perspectives] In addition to these three levels, there is another level where the product is attributed the title ‘potential product’. At this level all the probable ways of modifying or augmenting a product are conducted. This concept of five product levels is applied in the context of Ford. In Singapore, the main distributor of Ford is Regent motor company. It has been found that the core product in case of any Ford car is similar to any other product. This is quite expected as each and every car is built with the objective of providing two core benefits, taking the rider to the preferred destination and a reasonable speed. It is found that all the Ford cars have these two core benefits. Consumers of Ford are mainly buying the car mainly because of these two core benefits. Keeping these core benefits at the center the actual physical products are formed. It is already mentioned that there are five characteristics (certain level of quality, specific features, specific design, proper packaging and a brand name) in this actual level. In case of Ford cars these five characteristics are very much prominent. As far as quality is concerned Ford is globally renowned for its quality. Furthermore each and every Ford car has some specific features. For example the new ford fiesta that is recently launched by the Ford Motor company through its main distributor Regent Motor has the capacity of 1388 c.c. and its Maximum Power is found to be 96PS/71kW@5750rpm (Regent Motor, n.d.). As far as brand name is concerned, Ford is a globally renowned brand; hence Ford fiesta is also expected to enjoy that brand image. The next product level is the expected level where product features are developed on the basis of the customers’ expectation regarding the product. In case of Ford, consumers’ expectation is much higher than any other car manufacturing company. This is mainly because Ford is one of the largest and respected automobile manufacturing companies. Consumers expect that every time the company will come up with something for them. They expect a ford car will have excellent look, advanced technology, all required safety measures etc. At the fourth level the product is called augmented product. Earlier it is mentioned that competition takes place at this level. Organizations differentiate their products from the competitors’ one at this level. Ford has also differentiated its products from the competitors like General Motors, Toyota, Honda etc. If the latest version of Ford fiesta that is recently introduced in the Regent Motors Showroom is concerned, it is available in both 5-door as well as 3-door model. Such models are not very common in the Singapore car market. Electric Power-Assisted Steering (EPAS) and Ford Durashift Automatic Transmission, these two features also provide the competitive advantage to this model of Ford. The Ford DNA is also found to be very much differentiated from its peers as it is powered by famous German technologies. Technologies like ‘Independent Control Blade Suspension’ give this car additional uniqueness (Regent Motor-a, n.d.). Question 2 It is very important for the marketers to identify the pricing objectives before establishing the price of a product. Some common objectives of pricing are survival, market penetration and market skimming. Selection of any of these objectives depends on the current situation of the organisation and the marketing objectives of the organisation. Survival is a common objective as any organization needs to cover its costs by charging a certain amount of price to its customers. On the other hand in order to achieve objectives regarding market penetration, prices are kept as low as possible by the organizations with the purpose of increasing their market share. The objective of market skimming is generally achieved by introducing an innovative product and making it available at a very high price at the initial days. Then as the consumers become accustomed with the product, price is brought down gradually. Another major pricing objective is maximizing profit. It is observed that most of the organizations set such a price that will help them to achieve maximum profit. As far as Ford is concerned, it is found that its main pricing objective in the Singapore market is found to be profit maximizing. Automobile market in Singapore is found to be very much competitive in nature as almost all the major global automobile players have their strong presence in the market. Each and every of them are trying to come up with something unique for the customers. With each and every new offerings they are improving their value propositions. In such a competitive business scenario maximizing profit is one of the most common pricing objectives. Ford sets up the prices of its products in such a way so that maximum amount of profit can be achieved. Another important factor that acts as a driver behind focusing on this objective is the global financial turmoil. This recent turmoil has resulted to reduced demand of cars. As a result profit has also reduced. Hence, at present, most of the car companies including Ford are focusing on profit maximization. There are several price adaption strategies. Some important pricing strategies are cost based pricing, value based pricing, competitive pricing, ongoing pricing, psychological pricing etc. Selecting pricing strategy is also dependent on the overall marketing objectives and the present situation of the company. It is observed that Ford use both competitive pricing as well as value based pricing strategies. Competitive pricing is mainly used for staying ahead of the competitors like Mazda, Volkswagen etc. Recently Volkswagen introduced latest edition of Golf hatchback, where as Ford also launched its newest edition of Fiesta hatchback. In such cases it is very important to set up price considering the competition. On the other hand company also practice value based pricing especially in case of those products that offer unique value to the consumers. For example the new ford fiesta with 3-door, it is a special model that is innovatively designed and it offers unique value propositions to the users. The customer, who will have this model, will be recognized by this car only. Customers also buy this car because of its uniqueness; they will certainly not compare its price with any other common ford car or any other car. As a result the price of this model is established on the basis of the value proposition. Question 3 Marketing Communication Mix: Marketing Communication is the process by which the target market segment of a particular brand is made aware of the brand. It is a process through which a brand tries to reach out to its target market segment. The existence of a product has to be informed to the buyers in order to make them try the product. This is achieved through marketing communication. There are various modes through which a brand can communicate with its target segment. They are as follows: (Varey, 2002). Advertising Promotions Public Relations Direct Marketing Word of Mouth Personal Selling Promotions: Sales promotions refer to all those activities undertaken by organizations to increase the sales of the products. It may be through discounts, exchange offer, free samples, buy one get one free and various other forms depending on the product (Anonymous, n.d.). Ford Motors promotes its cars in various ways which are as follows: Ford Collection: Ford offers a range of exciting merchandise in line with the Ford brand. Merchandises starting from Ford Oval to Ford Racing are offered by Ford to suit the needs of the customers. It has come out with belt pads, key chains, window cleaners and t-shirts with the Ford logo attached to all these products (Ford, n.d.). World Rally Championships: Ford also participates in World Rally Championships and has been a winner 71 times. Recently it has again won the first place in WRC. This is a promotional tool which has helped Ford increase its sales by 43.4% globally (Ford, n.d.). After sales promotions: It promotes various after sales promotions by offering spare parts at discounted prices. In addition to the discount it also offers complimentary products on purchase of spare parts. For example, in April, 2010 the radiator coolant flushing is being offered at a promotional price starting at $80. This also includes a complimentary coolant level check up. It is offering brake fluid flushing at a promotional price of $80 which includes a free brake fluid check up. For May, 2010, it has already lined up a series of discounts on various products like clutch kit, windscreen wiper, solar film package etc. Moreover a ‘Live Station’ has been set up for customers to learn about the basic maintenance tips of a car like grooming and polishing. In June, 2010 it is offering a free of cost long distance safety check for those who love travelling long distance in their cars. It also offers several after sales promotional schemes to add value to its customers (Ford, n.d.). Birthday Discounts: Ford offers exclusive discounts on birthdays on various Ford merchandises. The discounts can be availed throughout the birthday month (Ford, n.d.). Refer a friend program: This is a great promotional offer used by Ford. A Ford buyer needs to share his experiences of driving a Ford vehicle with his friends. With every referral, the Ford owner wins a $500 service voucher which is a one-time offer (Ford, n.d.). Advertising: Ford uses various means of advertising to reach its target market segment. It uses television advertisements, print adds and most importantly digital marketing for communicating with its customers. In Europe, it has launched an advertisement campaign which combines interactive billboards and SMS for promoting Ford Fiesta. The billboard looks like a TV Pinball game. Any passer-by can stop by the billboard and win a Fiesta by sending a SMS mentioning the code in the billboard. Based on the SMS the billboard responds by asking further questions or showing a “good-luck” message on the screen (Textually.org, 2004). Ford Fiesta used a mix of posters, local radio, and deployed street teams to create a buzz around the “Inspired by Color” campaign (Ford, n.d.). It advertises itself in various motor shows. For example, Ford Fiesta was displayed at Frankfurt Motor Show in 2007 and had gained wide popularity. In the recent years Ford has undertaken massive online initiatives. It uses social media websites like Face book, Twitter, YouTube and Flickr to communicate with its target segment. The digital world is a virtual economy and a virtual market place with large number of customers. In order to tap the digital world; Ford gave a car each to 100 customers and gave them different tasks with different objectives every month. The customers had to write about the tasks and post them in websites like YouTube, Twitter, Flickr and Face Book (Harvard Business Review, 2010). Personal Selling: Personal selling is a push strategy to sell the products. Ford maintains a database of their own customers and that of competitors. It keeps communicating with its existing customers to get further references of prospective buyers. Moreover it also targets its competitor’s customers. Ford’s sales force is well trained to serve the customers. They provide excellent after sales service which helps in building a positive brand image of the company. Car is a highly technical product. The sales force of Ford is well trained technically to help customers in selecting the cars. Recommendations: Ford has traditionally been known for big cars. Increased gas prices in the recent years, has lead to a significant increase in the demand for small cars and hybrids. Hence Ford needs to focus on manufacturing small cars and it has to be supported with effective marketing communications to revamp the brand image of Ford which is known for big cars. The recent digital initiatives taken by Ford to promote themselves in Face Book, Twitter, Flickr and YouTube has been able to create awareness, but has failed to create an impact. The campaigns were not exciting and it has failed to drive word of mouth communication. Hence Ford should try to design campaigns which have an impact on its target segment. Ford also needs to focus on its advertisements in Singapore. While it has advertisements at a national level in American and European markets, it does not have an effective national level advertisement in Singapore. It needs exploit the local mediums like radios, televisions, and print media and out of home forms of communication fully to create an impact. The company should run heavy promotional campaign mainly in electronic media. It can hire some local movie or sports stars in order to attract new customers. It can also run some public relation campaign. It can organize automobile conferences where the brand Ford can be promoted. Local FM channels are also needed to be selected for promotional purpose. References Annonymous. No Date. Meaning of Sales Promotion. Sales Promotion. Retrieved April 28,2010. From http://www.nos.org/Secbuscour/24.pdf Ford. No Date. Ford Collection. Retrieved April 28, 2010. From http://www.regentmotors.com.sg/promotions/ford-collection/ Ford-b. No Date. Ford Comes up on top. Retrieved April 28, 2010. From http://www.regentmotors.com.sg/what-s-new/ford-comes-up-on-top/ Ford-c. No Date. Ford Exclusive After Sales Promotion. Retrieved April 28, 2010. From http://www.regentmotors.com.sg/index.php?cID=90 Ford-d. No Date. Exclusive Birthday Discounts. Retrieved April 28, 2010. From http://www.regentmotors.com.sg/promotions/e/ Ford-e. No Date. Refer A friend Program. Retrieved April 28, 2010. From http://www.regentmotors.com.sg/promotions/refer/ Ford-f. No Date. Are You Inspired by Color? Ford’s Social Media Press Release (SMPR). Retrieved April 28, 2010. From http://ford.digitalsnippets.com/2010/04/12/are-you-inspired-by-color/ Harvard Business Review. January 7, 2010. How Ford Got Social Marketing Right. The Conversation. Retrieved April 28, 2010. From http://blogs.hbr.org/cs/2010/01/ford_recently_wrapped_the_firs.html Kotler, P. & Armstrong, G. 2001, Principles of Marketing, Pearson Education Kotler, P. & Scheff, J. 2007, Standing room only: strategies for marketing the performing arts, Harvard Business Press Kotler, P. & Keller, K. L. 2007, Marketing Management, Pearson Education Regent Motor, No Date, Ford Fiesta 1.4(A) Trend, Vehicles, Retrieved April 28, 2010 from http://www.regentmotors.com.sg/vehicles/new-ford-fiesta/ Regent Motor-a, No Date, Ford Premium DNA, Vehicles, Retrieved April 28, 2010 from http://www.regentmotors.com.sg/vehicles/ford-dna/ Textually.org. July, 2004. Ford Fiesta ad campaign combines interactive billboards with SMS. Retrieved April 28, 2010. From http://www.textually.org/textually/archives/2004/07/004640.htm Varey, R.J. 2002. Marketing communication: principles and practice,NetLibrary Inc. Routledge, 2002. Read More