Marketing of Nissan - Case Study Example

Marketing Plan for Nissan Executive summary The plan focuses about Nissan and how Nissan can increase its market share in automobile industry in UK. Purpose is to target middle and lower class people by providing the comfortable and affordable cars. Creating and enhancing awareness among the target audience in order to get the attraction and enchasing the use of Nissan’s vehicles. 1. Product Statement Nissan is a Japanese multinational company and automotive manufacturers. Company’s headquarter is in Nishi-Ku, Japan. Nisan has joint ventures and alliances with different auto-makers worldwide. Infiniti, NISMO and Datsun are some famous brands of Nissan; and under these brand names Nissan motor Co, sells its products. Nissan has leading market in Russia, Mexico and China. In year 2012, Nissan was ranked as the sixth largest automotive manufactures (World Motor Vehicle Production, 2012). Jidosha Seico KabushikiKaisha (“an automobile manufacturing company limited”) was found in 1933 after a year the company replaced its name and was known as Nissan. Nissan was introduced in 1934; the name is an abbreviation of Nippon Sangyo. In 1935, Nissan produced its new brand by the name of Datsun and started exporting these vehicles to Australia. From the beginning of 1938 to the end of Second World War; company changed its manufacturing from small cars to military vehicles and trucks. In 1960, company has become the first automaker of the Japan. With many successes, company expands its business in 17 countries, and in Japan, known as the third largest auto producer. In 1970, company started manufacturing marine boats through the introduction of marine engine. In 1983, Datsun was not able to achieve appropriate earnings therefore; the name was changed into Nissan. After having struggle in 1990s, company started making alliances with other companies in order to renovate its car line. In the same year, collective production exceeded 50 million units of the company. In 1986, in order to cut-down the delivery cost, company established a plant in Sunderland, North East of England. In 1990 cumulative production crossed 10 million units in Zama plant. Till the end of 2007, company was able to produce four hundred thousand vehicles per year and was recognized as the most productive company in Europe. In 2001, company launched a new production plant in Brazil. In 2011, company entered in US commercial vehicle market and introduced NV3500, in 2012 the brand infinity, launched headquarters in Hong Kong. It has been found that the market share of the company globally especially in UK market is declining. UK however is a growing market for vehicles (BBC, 2014). There is a need of promotional and advertising strategies in order to increase the global sale of Nissan Corporation. Nissan is the first company to set up the own independent manufacturing plant in United Kingdom (Toma, and Marinescu, 2013). This report aims to present the promotional and advertising strategies; in order to increase the global sale and growth of the company. Report also discusses issues Nissan is suffering from. 2. Situation Analysis With the increasing population the world’s sale of automobiles is also increasing. According to the ACEA the sale of vehicles increased by 5.5% and reached to 935,640 in the year of 2013 and the growth is continuously growing along with the demand. In European Union the sale of Nissan is behind the 9 leading companies (VW Groups, PSA, Renault, Ford, GM, FIAT, BMW, Daimler and Toyota). In UK which is a very growing market for cars , the market share of Nissan is declining. Even in Europe sale decreased by 651,476 units (Nissan, 2014). Due to economical changes, the buying power of buyers is decreasing; the vehicle industry depends upon the spending level of consumer and the consumer income depends upon economic condition. Other economic conditions are also responsible to influence the sale of any company such as; if UK had taken exit from the European Union, according to Ghosan (Head of Nissan’s Sunderland plant) Company would have to re-think on its strategy and its investments (Independent, 2013). The increasing prices of fuel making consumers reluctant to buy the heavy cars and trucks (Camecon, 2014) Technological changes are the most dramatic forces that shape the destiny of business. Businesses are trying to meet up the technological changing environment. Companies are creating dream cars in which auto start engines, cameras, recent safety devices and other equipments are placed to provide comfort and quality drive. Technology has immense impact on automotive industry and gives consumer options to buy their favorite car on reasonable price. On the other side, it has created huge competition for manufacturers. Internet usage has increased approximately 60% buyers searched on internet before having or purchasing vehicle. Internet gives the industry opportunity to be efficient and lower down the cost. Political and legal regulations are designed for the safety of environment and human. In 1966 congress passed a safety act in which manufacturers were compelled to produce passenger safety cars, and they were also forced to improve the driver visibility and braking system of car. According to this act, manufacturers would be responsible to inform the public if there had recall. In 1965, “The Vehicle Pollution and Control Act” in 1970s, “The Clean Air Act” was passed by congress in order to reduce the air pollution produced by vehicles. Due to energy crisis, “the energy policy and conservation act” was introduced. In that act, it was clear that all cars must meet the specific mileage for each gallon. Moreover, according to the act, company must have to meet-up the specified standards of 20mpg by the model of 1980 and 27.5mpg by the model of 1985. In 1992, the “Intermodal Surface Transportation Act” was introduced and the requirement was to install the front airbags. Competitor analysis: There are many competitors of Nissan. However, three are considered as the major competitors: General Motor Company, Honda Motor Company Limited And Toyota Motor Corporations. General Motors has high presence in globe with the sale of 14 brands which is more than Nissan, it has strong portfolio, great knowledge of home market and 4 (GMC, Buick, Chevrolet and GM’s Cadillac) very well performing brands (Business Week, 2014). Honda’s revenue in 2012 was ¥7.984 trillion and profit was ¥211.48 billion (Stock Analysis, 2014). Honda also has great brand recognition, diversified portfolio, has motorcycle share in Asian market and also a strong investment in R&D. Toyota had ¥18.583 trillion revenue in 2012, and profit was ¥283.55 billion (Yahoo Finance, 2014). Toyota is also an important competitor of Nissan and Toyota is competing by having innovative culture, strong brand portfolio and known as an industry leader in sale and production. Toyota is also a leader of green cars development (strategic management, 2013) 3. SWOT ANALYSIS Strengths: Global brand reputation: Nissan is a growing brand. However the growth is slow due to many factors. It has become the 73rd brand worldwide with the rising value of $5 billion. There is a growth in the brand value which can be observed by the increasing numbers of customers. Nissan has achieved significant improvements in innovation, reliability and quality. (Interbrand, 2013) The brand equity provides a company competitive advantage. Company has successfully established its image as global brand by focusing on style and technology. Strategic Alliance: Company has made partnerships and alliances with more companies in order to advance its functions. In 1999, Nissan made an alliance with Renault; the most beneficial alliance of Nissan company from which both partners have achieved huge benefits. Nissan made another alliance with Daimlar AG this was also a notable partnership. Nissan has obtained imperative technologies from the partnership of Daimlar AG and still looking to create more synergies (extra energy and power) with these two partners. Innovation: Nissan has invested 4.5% of its returns in research and development. Through the research development strategy, Nissan developed a most accepted automobile called LEAF, and also did some innovation in manufacturing process. Through the research and development capabilities Nissan has competitive advantage over its competitors. Weaknesses: Recall on cars: Due to bulk manufacturing, some faults occur in the manufacturing of cars. During the year of 2013, from the road of Britain; Nissan recalled more than 850,000 cars because of the increasing rate of recall (Reuters, 2013), Nissan has lost its reputation of reliability and quality (The Telegraph, 2014). Manufacturing in overseas countries: Nissan is manufacturing in different countries and the ratio of overseas manufacturing unit is far above than those units that are produced at home land of Nissan. There is a huge risk of dependency and this risk is connected with the policy of government, financial transactions and economical changes. Time lacking in product innovation: Company is late comer in the process of innovation. For example, Nissan made fuel efficient car very late and currently there is a fear of the decline in fuel prices due to which Nissan has to face low profit issues. Opportunities: Asian market: The Asia market is a growing market for automobile industry. Recently significant growth has been encountered and due to the emerging market it is expected that the market will grow. The spectacular increase in the demand of vehicles is the opportunity for Nissan. Environment friendly cars: There is a great impact of vehicles on greenhouse and this negative impact is being reduced by reducing the production of CO2. People are much aware with the negative impact of such polluted gases therefore, people prefer to buy environment friendly automobiles that are fuel efficient and produce lesser CO2 Threats: Rising prices of material: The rising prices of raw material will increase the manufacturing cost and companies will not be able to get high profit. Decreasing prices of fuel: There is a possibility that in future oil prices will get decrease; and due to this reason cost conscious customers may not attract towards electric cars, hybrid and hydrogen cars. Sale of the company may decline due to these reasons. Market situation: Automobile market is getting competitive with every passing year and Nissan has to face great competition with General Motor Company, Honda Motor Company Limited, Toyota Motor Corporations and many other companies. Natural catastrophe: Nissan has manufacturing operations in China, Thailand, Indonesia and Japan. These locations are repeatedly focused of natural disasters and these disastrous situations can damage the manufacturing processes and in result can slow-down the volume of sale. Increasing rate of yen: Most of the business of Nissan is in other countries if the prices of yen increases the profit of Nissan will decrease. Issues analysis Issue analysis provides the detail of those problems due to which company is suffering from losses or from lower growth. Some issues with Nissan are presented as follow. The major issue of the company is that the bulk production and it has to recall on the vehicles especially from the Britain which is the fastest growing market for automobiles. Therefore, market share of the company is declining in European countries. Company lacks behind its competitors as it is a late-comer in technological changes. Company is not well recognized as compare to its competitors. Goal and Objective: To increase the market share in the automobile industry in UK by 10% in next two years. Increasing the shares and sales by 15% from middle and lower class people by providing the more comfortable car at lower cost within 2 years. Creating and enhancing awareness among the target audience in order to get the attraction and enchasing the use of Nissan’s vehicles. Marketing Strategy Marketing will be important for the enhancement of market share and brand image and loyalty. With the increasing number of vehicle in UK market, Nissan has an opportunity to enter in market with new product. Promotional strategy: The Company should make partnership with companies that provide cars on rent such as Zipcar in order to capture the attention of customers. And people that would use the services of Zipcars will surely use the Nissan’s car without thinking. Company should also increase its marketing mediums such as more TVCs and focusing more on social media. Pricing strategy: Making cars affordable for people would be an important pricing strategy. The price of the new products of Nissan should be lower than its competitors. Advertising strategy: Advertising strategy is important for the success of the company (Zentes, Morschett, & Schramm-Klein, 2007). Company should advertise and promote its product through big print Medias. Medias such as reader’s digest, Motor Trend and Car and Drivers. Here company will get benefit of having attention of diverse people. Company should also place bill board at bus stops and streets where people have detailed look on these billboards. TVCs should also be used. Distributional strategy: Nissan has distribution groups but these groups are in specific divisions and Nissan’s competitors have a huge benefit of having good sales through their wider network of distribution. If Nissan sales its products by making alliances with major dealers it will be beneficial for it. Product strategy: If the company introduces its product with the aim serving UK people or other around the globe with high quality, safety and comfort, it will benefit the company. Target market geographic segment: If the target market of Nissan new product will be geographic segment then it will have ease to attract customers globally. Through targeting the geographic segment Nissan will cover the worldwide market. Target market demographic segment: Demographically if Nissan will targets the middle class and upper middle class people whose income is £2168 to £2610. This strategy will give the Nissan chance to capture the market share as compare to its competitors. The customers must have knowledge of prices and functionality for this purpose company should place the all required information related to car such as size, color, price, service qualities, comfort level and other important features. Telephonic communication with customer will be a good option for convening the customer and for this purpose the number will be placed on website of the company that will be on 24/7. Similarly, social media can be another fruitful option. Recommendation: Company should keep the design different from its competitors in order to capture the attention of consumers. And the design should also be monitored on regular basis to maintain differentiation. The company must increase the capability of its research and development department in order to capture the global market share. Company should also increase the budget for its promotional and advertising activities. REFERENCES: BBC. (2014). European car sales rise 5.5% in January, ACEA says. Retrieved February 21, 2014 from http://www.bbc.co.uk/news/business-26242197 Business Week. (2014). Income statement of GM . Retrieved February 21, 2014 from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=GM Camecon. (2014). Fuelling Europes Future. Retrieved February 21, 2014 from http://www.camecon.com/EnergyEnvironment/EnergyEnvironmentEurope/FuellingEuropesFuture.aspx Independent. (2013). Nissan’s chief executive warns of consequences if Britain quits the EU. Retrieved February 21, 2014 from http://independent.co.uk/news/business/news/nissans-chief-executive-warns-of-consequences-if-britain-quits-the-eu-8930313.html Interbrand. (2012). Best Global Brands. Retrieved February 21, 2014 from http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx Nissan. (2014). Nissan Production, Sale and Export Results For December 2013 and Calender year 2013. Globle Sale Report, (Jan 29, 2014). Retrieved February 21, 2014 from http://nissannews.com/en-US/nissan/usa/channels/Global-Sales-Reports/releases/nissan-production-sales-and-export-results-for-december-2013-and-calendar-year Reuters. (2013). Nissan to recall 908,900 vehicles globally for accelerator sensor flaw. Retrieved February 21, 2014 from http://www.reuters.com/article/2013/09/26/nissan-recall-idUSL4N0HM1UN20130926 Stock Analysis. (2014). Income statement of Honda motors. Retrieved February 21, 2014 from http://www.stock-analysis-on.net/NYSE/Company/Honda-Motor-Co-Ltd/Financial-Statement/Income-Statement The Telegraph. (2014). Safety fears led to recall of 850,000 cars from Britains roads. Retrieved February 21, 2014 from http://www.telegraph.co.uk/motoring/10598110/Safety-fears-led-to-recall-of-850000-cars-from-Britains-roads.html Toma, G. S. and Marinescu, P. (2013). Global Strategy: the Case of Nissan Motor Company. Procedia Economics and Finance, 6, 418-423. World Motor Vehicle Production. (2012). OICA correspondents survey, 2012. Retrieved February 21, 2014 from http://www.oica.net/wp-content/uploads/2013/03/ranking-2012.pdf Yahoo Finance. (2014). Income statement of Toyota. Retrieved February 21, 2014 from http://finance.yahoo.com/q/is?s=TM+Income+Statement&annual Zentes, J., Morschett, D., & Schramm-Klein, H. (2007). Strategic retail management. Betriebswirtschaftlicher Verlag Dr. Th. Gabler GWV Fachverlage GmbH, Wiesbaden (GWV). Appendix Budgeting of promotional and selling activities GM spends approximately 9% of its revenue on operational activities (financial statement of GM), Honda spends 14% of its sales on 2013 (income statement of Honda, 2013), and Toyota motors spent 10% of its revenue on selling and promotional activities in 2013. In 2013, Nissan spent 9% of its revenue on selling and administrative expenses. 9,629,574; the company spent much of its revenue on promotional and selling activities but in order to enhance the sale company need to spend more. Even some time companies prefer to spend 25% to 30% on promotional activities for the enhancement of sale. Nissan’s competitors have strong image in market, but still they are spending 9% to 14% on their promotional activities. Therefore, for good image building Nissan needs to spend more on its promotional and advertising activities. Budget figures: Sales 100% Total spending on Promotional and selling activities 17% Bill boards 5% Print media 3% Alliances 7% Television 2% Nissan should spend 17% of its revenues on its selling and promotional activities through which company can enhance its sales. The large amount of budget is allocated to market alliances because getting people into car is a most difficult task as mentioned before. Read More