Marketing Management of Chrysler PT Cruiser - Essay Example

 Table of Contents Table of Contents 2 1. Introduction 3 1.1. Product History 3 1.2. Current Status 4 2. Marketing Strategic Plan Focus 6 2.1. Vision and Mission Statement 6 2.2. Core Competencies 6 3. Situational Analysis 8 3.1. SWOT Analysis 8 3.2. Porters Five Forces Analysis 11 3.3. Customer Analysis 13 3.4. Strategies to be granted 13 4. Market Product Focus 15 4.1 Target Market 15 4.2. Points of Difference 16 5. Marketing Program Strategy and Tactics 19 5.1. Place 19 5.2. Price 20 5.3. Promotion 21 5.4. Product 21 6. Evaluation and Control 22 6.1 Quality Control 22 6.2 The Risk Factor 22 7. Conclusion 24 References 26 1. Introduction 1.1. Product History Chrysler PT Cruiser, with its introduction in the global market claimed a remarkable position in the year 2000. The model was designed based on the retro-styled outlook and was apparently differentiated from other competitive brands present in the market. It was the only vehicle with five passenger capacity in the then market to serve its customers with high rated sophistication and fuel efficiency as well. By the subsequent year after the launch, i.e. 2001, the brand had already placed itself among the ten best car models list and became the best car in the North American Region. Worth mentioning, the model is marketed around the globe including Australia, Philippines, Japan, America and other parts of Asia Pacific region. By the end of 2006, Chrysler announced the production to mark-up a growth rate with its completion of 1,000,000 PT Cruisers. However, the company continued to add new innovative features such as scalloped headlights, updated dashboard and high output engines with 180 hp (Chrysler, 2006). 1.2. Current Status It was evident from the history that PT Cruiser had emerged as a signature brand for Chrysler, rewarding the company a constantly increasing sales volume year after year. The brand, with its strategy of continuous development for consecutive years, had a leading position in the global market, until 2008 when it was pushed back in terms of its high performance service by the new model of GT and entered its declining phase (How Stuff Works Inc., 2010). However, in the present market scenario the company has decided to end up the production of PT Cruiser. This is due to the fact that after rewarding a high volume of sales revenue to the company, the model has ultimately slowed down its earning. For instance, the model had incurred a sales volume of only 1,268 which was lowered by 41% than the previous year sales, i.e. 2,165 as depicted from the image below (Graham & Deneau, 2010). Figure1: Change in sales volume of different Chrysler models Source: (Graham & Deneau, 2010) With the continuously decreasing customer preference, followed by dropping sales revenues and increasing level of limitations in terms of competency, it is evident that the product has entered its declining phase in the global market. Hence, the model requires a well-defined and appropriate marketing plan in order to regain its growth stage according to the product life cycle theory. 2. Marketing Strategic Plan Focus 2.1. Vision and Mission Statement The model PT Cruiser is at present included in the group of Chrysler Brands after the separation with its German corporate partner, Daimler. Previously it was known as Daimler Chrysler Group, but after demerging in 2009 the company acquired a fresh formal outlook with the corporate title, Chrysler LLC. The vision and mission of the company in this relation is to introduce a bunch of newly designed brands appropriate for the modern era, along with the modification of its present brands. In this regard, the company visions are concentrated on the involvement of new technologies, emphasizing on the key attribute of fuel efficiency (Chrysler Group LLC., 2010). 2.2. Core Competencies With the above provided references, it is evident that the company has witnessed many ups and downs in its journey since the late 1980s. But the company had been successful in rewarding few remarkable parameters in the international automobile industry. Undoubtedly, these parameters have emerged as the core competency factors to assist the company in achieving its ultimate objective. Precisely, the key success factors of the company are its innovative designs. As the company sets its goal to innovate and introduce entirely new products and engineering ideas, the company simultaneously considers the facts related to safety, fuel efficiency and diesel technologies. Even in the past versions of PT Cruiser, the company had been recorded to apply its unique engineering of high power engines and other features to decorate the interior and exterior of the model (Chrysler Group LLC, 2010). 3. Situational Analysis 3.1. SWOT Analysis Strengths PT Cruiser as a model had a number of attributes which can be termed as its strengths. To be precise, the strengths of the model embrace its supreme design, providing an advantage of both space and comfort. For instance, the car acquired a comfortable theatre style seating in its second row along with features resembling rear shelf and power sunroof. Moreover, to enhance the stylish look of the model it was decorated with painted aluminum wheels and a bold retro look. On the complimentary basis, the Chrysler model also had a remarkable advantage of traction control and antilock brake system to reward the user a comfortable and reliable control (Chrysler, 2010). Weaknesses Along with the various attributes confirming the strength, the model also comprises certain major limitations in terms of marketing. First is its pricing structure. As recorded in the last year 2010, the manufacturer’s suggested retail price (MSRP) was $18,275, while the invoice price was fixed at $17,801. On the contrary, few of its competitors possessing somewhat similar attributes, such as the 2010 Toyota Matrix had a pricing range starting from a minimum of $15,615 to the highest of $20,230. Another nearest competitor, the 2010 Mazda Mazda5 also ranges from the lowest of $17,344 (MSN, 2010). Apart from the pricing structure, the model also has certain major weaknesses in its designing strategies. With a constant change brought about in the styling of the model hampered its fuel efficiency, turning radius and reliability in comparison to its competitors. For instance, the 2.4L engine used in the PT Cruiser model has a disadvantage of timing belt which requires to be replaced after a certain interval making the use problematic for the consumer. The car also uses comparatively thick rear pillars which affect the rear visibility (Samarins, 2010). Opportunities In terms of the company’s operations and industrial growth, PT Cruiser gains certain opportunities in the market as before subject to proper steering. Notably, the company is again on a path of growth after its struggle as Daimler Chrysler during the recession period. According to the third quarter result, the company’s earned net revenues stood at the figure of $11.0 billion which was surprisingly 5.2% higher than the earnings of the second quarter (Chrysler Group LLC., 2010). Figure 2: Financial outlook of Chrysler in the Q3 2010. Source: (Chrysler Group LLC, 2010). In the wider perspective, the auto industry is currently at its growth stage again in the international phenomenon. The innovations of new technologies and increasing demand in the eastern markets are two of the most significant opportunities rewarded by the industry in the global outlook (Becker, 2010). Threats The external environment and even the organizational environment introduce certain serious drawbacks which can be treated as threats to the model. For instance, the model, in the previous days was based on the market demand of western economies. But due to the fact that the demand trend is shifting from the western region to the eastern parts, the product is witnessing a steep fall in its sales. Additionally, the incentive programs also have a strong affect on the preferences of a model. Moreover, the market trends of the western region also depict the changing viewpoint of the potential customers, i.e. the role of a car is not referred to be merely a symbol of sophistication. Rather the car and other light weighted vehicles are increasingly treated as commodities in those markets (Becker, 2010). In terms of the company’s operations, the most evident threat is the recently determined mission and vision statement. According to the statements, the company has decided to abolish its old models which are expected to incur a reduction in the total sales and develop new appropriate products. With this viewpoint, the company has already announced to put an end to the production and marketing of PT Cruiser (Carty, 2010). 3.2. Porters Five Forces Analysis Bargaining Power of Buyers The automotive industry trends in the western market on which PT Cruiser is solely depended, is facing a significant change. Presently, the industry comprises of only a handful of manufacturers which are evidently insufficient to satisfy the market needs (Becker, 2010). Hence, in this situation the bargaining power has evidently shifted in favor of the buyers. This undoubtedly has a strong influence on the pricing strategies of the company. Threat of Substitute Products The threat of substitute products of PT Cruiser is also at an increase in the current market scenario. Inclusively, after the launch of PT Cruiser and its remarkable growth rate during the first year attracted many other automobile companies to focus on the strategy to introduce the old fashion in a modern design. Apparently, Toyota Matrix, Honda Fit, Kia Soul, and many other similar models based on the retro design came into existence. Moreover, the constant innovations and re-innovations compelled by various automotive companies in order to launch new models are also raising the threat of substitute products (MSN, 2010). Bargaining Power of Suppliers With an increasing number of substitute products and shift of demand with a global perspective, the product is facing the disadvantages of bargaining powers of the suppliers. To overcome the problems the price of these substitute products are also acting as means to derive further attention from the potential customers. Moreover, as the bargaining power is comparatively more in the hands of buyers, the suppliers are also in turn enjoying the advantages to serve the customer base. The faults in part of the product also play a significant role in this stage. In the case of PT Cruiser, the flaws of its designing tactics and technological aspects proved to be beneficial for its competitors which again drifted the bargaining power from the purchaser towards the suppliers. Threat of New Entrants The constraints of shift in bargaining power and the increase in the availability of substitute products also evolve as few major challenges for new entrants. Moreover, the shift of global demand from the western region to the eastern parts also proves to be barrier for western companies to emerge as new entrants. However, the recent facts about the international automotive industry reveal the rapid increase in the number of Original Equipment Manufacturer (OEM) companies emerging as participants in the automotive manufacturing industry. This certain attribute proves that the product has a considerable amount of threat regarding the new entrants in the market (Becker, 2010). 3.3. Customer Analysis The targeted customer base of PT Cruiser determined during its launch in the western market were the buyers grouped in the young generation. However, in the real phenomenon, the car attracted more number of customers from the higher age group. This was due to the model design of the car which rendered a nostalgic feeling to its owners. Gradually, the product started to be marketed on the targeted markets comprising of the middle age group customers rather than the young age group with higher income level (Pride & Ferrell, 2007). 3.4. Strategies to be granted The product as evident from the above discussion is facing certain major challenges in terms of its designing strategies and marketing strategies as well. For instance, the pricing strategy and the packaging strategies are few of them. On the other hand, PT Cruiser is also facing a serious drawback in economic terms which has been laid by the economic power shift from the western economies to the eastern markets. In addition, the product in its current status is struggling with the disadvantages of declining stage. Therefore, certain beneficial measures which the company can undertake as strategies to pull back the performance rate of the model are as follows: Eradicate the limitations of designing such as the use of thick rear pillars and 2.4L engines by replacing these features with more new efficient technologies Cut off the manufacturing costs which will in turn assist in reducing the price range of the product and provide it a better competitive edge Rather than presenting the model as a status car it should be promoted as a commodity car with consideration to the current trends of the international automotive industry However, if the company is willing to continue in representing the car as a symbol to the elite status, it should be rendered in the eastern markets on which the company was comparatively less concentric Offering high incentive structures to the marketing intermediaries in the market can also increase the sales of the model 4. Market Product Focus 4.1 Target Market Due to the fact that the demand in the developed western markets, which is the target market of PT Cruiser, is at a decrease, the product should focus on the other part of the global market, i.e. the eastern market. According to the current economic trends, the eastern markets especially the Asian developing markets are at a booming stage rewarding comparative low risk and high opportunities for the global players. Hence, the eastern markets shall be appropriate and promising for PT Cruiser to gain a feasible amount of profit. The fact can be evidently revealed from the chart below, Figure 3: The Growth Perspective of Automotive Industry Source: (KPMG International, 2010). Beside the target market concentric on the eastern region, the targeted consumers should belong to the higher and the middle class of the economy. The advantage which this market segment shall reward the product is a feasible amount of growth in demand. Moreover, the current trends reveal that Asian customers are providing more preference to the quality aspect than their total affordability. In this situation the enhanced and redefined quality service of PT Cruiser shall be beneficial to attract more customers in the target market. Additionally, with the economic power shift, the affordability of the customers in the developing region is also expected to increase within the next few years. This shall again be beneficial for the models due to its one of the main characteristics to focus on the style statement of the user. On the complimentary basis, the targeted customers should belong to the middle and higher age group in the targeted market with an average level of income. It is due to the fact that the kind of nostalgic feeling which the model renders to its owners can be a strong influencing factor for the middle aged customers. 4.2. Points of Difference Differentiating a product from the rest of the similar group is considered to be one of the key success factors to stimulate growth in the product facing the challenges of the declining stage. In this context, PT Cruiser is among the group of products facing a decline and therefore the differentiation strategy shall be fruitful for the product. Considerably, certain major industrial issues which shall be beneficial for the strategic implementation are discussed below. The Asian market trends also reveal that the customers’ preferences are inclined towards higher fuel efficiency and environmental aspects. Additionally, the rating is much more favorable for comfort, style and safety aspects which were few of the most significant differentiating areas considered while designing PT Cruiser. However, in the global trend the cost will also be a significant factor while discriminating a product from the other (KPMG International, 2010). Hence, the differentiating points for the product will be: To adhere to its core value, i.e. to hit on the nostalgic feeling of the targeted customers in the eastern region Using hybrid fuel efficiency will also be helpful to attract the customers Stylish exterior and interior designs will also be beneficial, but the company should also avoid overdoing the designing as it has been witnessed earlier that it affects the performance level of PT Cruiser Simultaneously the aspect of comfort should also be considered The cost should also be reduced as it is still an influencing factor in deriving customer preference The focus should be to represent the product as a commodity rather than a symbol of sophistication and elite choices Conclusively, the designing of the model should be a multi-focusing task combining all the aspects of style, comfort, price, performance and commodity uses into a single product. But if it is well established it can positively reward the product a certain growth. 5. Marketing Program Strategy and Tactics 5.1. Place With the previous references, it is evident that the western market trends are at a downfall to efficiently assist any luxury automobile manufacturer. Therefore, the appropriate market place for marketing PT Cruiser shall be the Asian markets. To be precise, the industry is most likely to gain rapid growth in the BRIC nations, i.e. Brazil, Russia, India and China. Certainly due to this reason the ultimate place to market the product shall be these countries. But, in the realistic phenomenon it is difficult to re-launch a product in all the four countries with an equal focus. To overcome this challenge the product shall be initially rendered in the most promising market among all the four economies. According to the collected data and the image presented below, the most promising market is the Indian market (KPMG International, 2010). Figure 4: The growth trends of the BRIC markets Source: (KPMG International, 2010) 5.2. Price Concentrating on the Indian market, the price shall be a major factor to be determined as it carries a significant influence on the customer perception. But due to the fact that the trends rank style and comfort more than the cost factor, price can be determined on the moderate range. Additionally, while determining the price, competitors should also be considered. For instance, the average rate of luxury cars in the Indian market ranges from the lowest of $440,920 to the highest of $4.4092 million (Kaur & Thomas, 2008). Therefore, the price range of PT Cruiser shall also be determined in this range based on its performance and manufacturing costs. 5.3. Promotion Promotional activities are undoubtedly one of the most crucial factors to ensure the customer reactions in favor of the product. In this context, certain promotional tactics which shall be beneficial for PT Cruiser are by acquiring sponsorships and focusing on audio-visual advertising. For instance, showcasing the car models in films, daily soaps, or even game shows can be highly beneficial for the company. Besides, the product can also be promoted through attractive advertising campaigns. 5.4. Product Based on the current market trends and the forecasts of the Indian automotive industry, it is evident that the customers’ perception in the market is strongly influenced by the need of psychological satisfaction. To be precise, certain features of customer behavior in Indian market are the splurge of specialty and superiority (Kaur & Thomas, 2008). In order to provide the customer a level of satisfaction PT Cruiser needs to focus on the aspects related to its style, comfort, safety and fuel efficiency with an overall perspective. 6. Evaluation and Control 6.1 Quality Control One of the reasons which led PT Cruiser to its decline is the overdoing of its designing which in turn affected its overall quality. With reference to the above discussions, most of the weaknesses of the product were related to its designing technology. For instance, the use of thick rear pillars, low performing engines and many other attributes concluded on the part of its gradual failure. Hence, while concentrating on the quality aspect of the product, all these matters should be significantly considered. Thus, using the hybrid technology and increasing the fuel efficiency of the product shall be of great asset to the company. 6.2 The Risk Factor The marketing plan discussed above, highlights several challenges and opportunities, which if sorted out well shall assist the product to regain its growth. But the plan also has certain major risk factors which in turn can affect the company at large. Firstly, the trends of the industry with a global perspective tend to follow a rapid increase in the overall cost of capital. This shall have a strong affect during the implementation of the plan as it is subjective to the level of capital involved by the company. Moreover, in the western regions the industry has already welcomed the downsizing (Becker, 2010). On the contrary, the eastern markets tend to be on the risk of overcapacity. To be precise, the eastern market trends reward innumerable opportunities to the automobile companies. Due to this reason there is a constant increase in the total number of participants in the eastern market which is affecting the market with overcapacity. In addition, the OEM businesses are increasingly including them in the industry which is again enhancing the fact of growing risk of challenges and threats of new entrants (Becker, 2010). According to the study by Becker, all these risk factors tend to be active till the end of 2014 and might continue longer. However, to state about the appropriateness of the plan, it can be fruitful to a maximum of two years perception. The risk factor of the plan is again enhanced by need of high capital expenditure. It is due to the fact that the company in its recent past went through a massive restructuring, forming the company with a fresh entity. Introducing a huge amount of capital in the market in this situation and that too to re-launch a declining product along with several risk factors active in the market, shall not be a promising step in the realistic viewpoint of the company. 7. Conclusion The basic trends of the automotive industry and the forecasts of the next two years depict that the industry is likely to face certain major challenges in terms of demand, capital expenditure and competition. To be precise, the industry trend reveals the fact that capital expenditure will increase along with the increasing number of global players, especially the OEM business. On the contrary, the demand of cars such as the PT Cruiser is likely to shift from the western developed region to the eastern region. All these attributes when summed up unleash the fact that the global trend of automotive industry is undergoing a massive change and therefore is itself in a restructuring phase. On the contrary, the company has also in its recent past undergone a heavy restructuring overcoming the burden of huge loan and rapid fall in its overall performance. For instance, the company was demerged with its German partner Daimler. It was again with the supervisory support of the US government set out for an agreement with the international company, Fiat and came to be known as Chrysler Group LLC. Therefore, the present status of the company states its financial weakness although it has been reported to make a rapid growth in its earning (International Trade Administration, 2010). These attributes will have a negative impact on the re-launch of the product. Conclusively, due to the fact that the plan can be expected to be fruitful only on the short-term basis, it shall be appropriate to end up the production within the time period. In this case with an in-depth perspective of the company’s decision to wind up the product can be justified. However, if the product is continued according to the market plan, it shall be helpful to originate a level of profit for the next few years. References Becker, D., 2010. Trends and Challenges in the Automotive Industry. Klynveld Peat Marwick Goerdeler. [Online] Available at: http://www.kpmg.com/LU/en/IssuesAndInsights/Articlespublications/Documents/2010.10.20_Automotive%20Breakfast%20Luxembourg.pdf [Accessed January 05, 2011]. Carty, S. S., 2010. Death of PT Cruiser Seen As a Symbol of Industry's Problems. USA Today. [Online] Available at: http://www.usatoday.com/money/autos/2010-07-08-ptcruiser08_ST_N.htm [Accessed January 05, 2011]. Chrysler, 2006. Chrysler PT Cruiser History. Chrysler PT Cruiser. [Online] Available at: http://chrysler-pt-cruiser.info/history/ [Accessed January 05, 2011]. Chrysler, 2010. 2010 PT Cruiser Classic. Features and Specs. [Online] Available at: http://www.chrysler.com/en/2010/pt_cruiser/design/exterior_styling/ [Accessed January 05, 2011]. Chrysler Group LLC, 2010. We are the New Chrysler Group LLC. Our Company Overview. [Online] Available at: http://www.chryslergroupllc.com/company [Accessed January 05, 2011]. Chrysler Group LLC, 2010. Innovation Overview. A Heritage of Innovation and Engineering Firsts. [Online] Available at: http://www.chryslergroupllc.com/innovation [Accessed January 05, 2011]. Chrysler Group LLC, 2010. Chrysler Group LLC Reports Financial Results For The Period Ended September 30, 2010. Press Release. [Online] Available at: http://www.chryslergroupllc.com/news/archive/2010/11/08/q3_press_release_financial_statement_11082010 [Accessed January 05, 2011]. Graham, K. & Deneau, R., 2010. Chrysler Group LLC U.S. Sales Summary thru February 2010. Media Chrysler. [Online] Available at: http://www.media.chrysler.com/pdf.do?id=9474 [Accessed January 05, 2011]. How Stuff Works Inc., 2001. 2001-2010 Chrysler Pt Cruiser: Full Review. Consumer Guide Auto. [Online] Available at: http://consumerguideauto.howstuffworks.com/2001-to-2010-chrysler-pt-cruiser-6.htm [Accessed January 05, 2011]. International Trade Administration, 2010. Office of Transportation and Machinery. U.S. Department of Commerce. [Online] Available at: http://trade.gov/wcm/groups/internet/documents/web_content/auto_report_roadahead2010.pdf [Accessed January 06, 2011]. Kaur, R. & Thomas, R., 2008. Luxury Marketing: India. Automobile Sector. [Online] Available at: http://www.brandchannel.com/images/papers/Luxury_marketing_in_Indian_final.pdf [Accessed January 06, 2011]. KPMG International, 2010. KPMG’s Global Executive Survey 2010. Industry Concerns and Expectations to 2014. [Online] Available at: http://www.kpmg.am/dbfetch/52616e646f6d4956d4bf33742e69a608f34556bd98df2b8b/global-auto-survey-2010.pdf [Accessed January 06, 2011]. MSN, 2010. 2010 Chrysler PT Cruiser. Competitors. [Online] Available at: http://autos.msn.com/research/vip/compare.aspx?year=2010&make=Chrysler&model=PT%20Cruiser&trimid=110579&type=Competitors [Accessed January 05, 2011]. Pride, W. M. & Ferrell, O. C., 2007. Foundations of Marketing. Cengage Learning. Pg 39. Samarins, 2010. 2001 - 2010 Chrysler PT Cruiser Review. Reviews. [Online] Available at: http://www.samarins.com/reviews/pt_cruiser.html [Accessed January 05, 2011]. Read More