Marketing Mix for USA Car Market-Chery Cars China - Case Study Example

MARKETING MIX FOR USA CAR MARKET-CHERY CARS CHINA By Location Executive summary Chery is one of the most established car manufacturing companies in the world. The company has managed to use the marketing mix to its advantage. The paper compares how Chery and Ford have put the marketing mix to use in order to have a competitive advantage (Nevins & Hill 1954). The paper offers recommendations that Chery can use to compete effectively. 2. Introduction a. Chery company background Chery Automobile Company Limited was founded in 1997 with a capital of RMB 3.98 billion. The plant construction for the company started in March that year, while the first car came out in December. Today, Chery has an annual production capacity of about 900,000 cars and 450,000 transmissions (Chery International 2013). The products of Chery Company include commercial vehicles, passenger vehicles and minivans. There are about 20 models of Chery vehicles on the market, dozens more of vehicles will be released soon. Chery accomplishes development by engaging in research and detailed preparations as it produces autos. For some years, the products of Chery Company that take Zero Defect have managed to win accolades from the vast customers. In the year 2011, the company sold around 643,000 units around the world, winning itself the top title in auto making for 11 consecutive years. In addition, the company has been the top China’s vehicle exporter for nine continuous years (Chery International 2013). b. The special culture of U.S.A market for car (about size, status, need) The U.S car market has many players who compete for a share of the market (Anonymous 1982). The market is very big due to the economic status of the citizens. Every year, citizens buy vehicles in large numbers as the need arises (Falter 2011; Klepper 2007). c. What is Mix Marketing Marketing mix refers to tactics, set of actions, that a company or business organization uses to promote its product or brand in the market. 4P’s makeup the marketing mix - Price, Promotion, Product and Place. In modern days, the marketing mix includes other Ps as Packaging, People, Positioning, and even Politics (Bowman & Gatignon 2010; Hoffman 2012). 3. Main Finding a. Change of the marketing activities for Chery into U.S.A market i. Price Price ranks highly in the marketing mix. It is the price that creates sales revenue (Borden 1964). The price of an item determines the value of sales made. Chery uses both cost and customer oriented approach to set its prices. The company considers the cost of manufacturing a vehicle, the cost of transportation to the market and other expenses that the company may have to pay. Since the company manufactures vehicles for all the classes of people, the vehicles’ prices vary from vehicle to vehicle (Goldberg 1995). The company ensures that its prices are about the same as other companies producing the same product. Depending on the area, the company’s prices vary (Von Corswant & Fredriksson 2002). ii. Promotion Promotion involves communicating with customers. It provides the necessary information that aid towards decision making to buy a product. Promotion plays a critical role in ensuring that the company’s products attract sales. Promotion helps to reach out to potential customers and also help to maintain the existing customers (Freedman 2011). Chery employs several ways to promote its products. The company uses the mass media and organized trade fairs to reach out to customers. The company has sales representatives who help in marketing of the company’s products. The representatives help with marketing and sales of the company’s vehicles. In the U.S, the company mostly uses the internet for promotion. iii. Place Although figures may vary from product to product, about a fifth of the product’s cost goes on getting to the customer. Place involves various ways of transporting and storing products, and making them available for customers to purchase (Friedlaender et. al 1983). Getting the cars to the right place and at the right time involves a distribution system. The company uses a ship to transport the cars to the U.S market. Using its representatives, the company takes the vehicles to the market for customers to purchase. The company has designated places where customers can go and purchase as need arises. iv. People ‘People’ refer to the employees or staff involved in selling the companys product. When a company provides customer service is top, it creates a positive experience for customers, thus marketing the product to the customers (Waterschoot & Van den Bulte 1992). In turn, these customers will spread information about the excellent services of the company leading to winning referrals. Chery gains a competitive advantage when it recruits the right people, training and impacting them with skills. The company ensures that it recruits top-notch employees who can help the company progress in terms of sales. The company offers the employees skills on how they can deal with customers. v. Process Solid policies and procedures that a company employs pertaining to its products are valuable elements of the marketing strategy. It involves the process that a company uses to deliver products to the market (Bowman & Gatignon 2010). Chery has an effective “sales system”, sales system involves how the company is going to get paid and finally deliver products. The company uses online and cash methods to receive money for the products. It depends with the location of the customer. A customer can put an order for a car and pay online. Alternatively, the customer may visit the various places where the vehicles are sold and pay in cash. The company meets the cost of transportation, if there is any need. vi. Physical environment Physical environment refers to the way a company appears from outside and how its products appear. The company needs to ensure that the size, colour, shape, and material of its products are presentable. The characteristics need to be updated and be customer tested when needed. Many business people agree that the image carries a big message as far as a company is concerned (Borden 1964). Chery ensures that it maintains a positive image with its customers. The company has managed to manufacture vehicles of high quality, something that has boosted the confidence of customers into the company. vii. Product The term "product" is as anything tangible or intangible that is offered by a company. The products offer solutions to the wants and needs of customers. Product refers to a mix of all the advantages, features, and benefits that a company offers to a target market (Borden 1964). It involves specific characteristics such as quality, after sales support, and customer services. The Chery into the other countries i. Product Chery’s headquarters is found in China, but the country has other manufacturing plants in countries such as Argentina, Malaysia, Thailand, Taiwan, Vietnam, and Russia among other countries. The company’s products include minivans, cars and SUVs. In 2012, Jaguar formed a joint venture with Chery for the production of Land Rover and Jaguar cars in China. ii. Price The price of the product will determine if customers will buy it. The company studies the prices of similar products from other companies. In addition, the company will also consider the cost of production. The company ensures that it manufactures high quality products that will justify its prices. iii. Promotion Chery uses music concept to promote its cars. For instance, free iPod, electric guitar, and other types of musical programs. Cherry also provides schemes for graduate University students. Cherry also employs web technology such as podcasting to market its brand through the internet (Luo 2005). The company uses mass media such as TV, radio and newspaper to promote its products in foreign markets. In order to promote sales, the company from time to time offers discounts on the purchase of cars from the company (Chery International 2013). iv. Place After a company has decided about the product, price, and promotion, the product has to be made accessible to the customers when and where they want to purchase. A product must be available to customers when they need it. That is, it must be in the right place. Chery uses some channels to get its products to the market. The company utilizes agents in countries it does not have manufacturing plants. The agents assist in the promotion and selling of the products (Wilkins & Hill 2011). In some countries, the company sells directly to customers without using agents. The company has several places where it sells its vehicles. The specific places act as car lots where customers can come and check the vehicles. v. People Chery understands the role of its employees in the process of selling its vehicles. Employees conduct plays a critical role in the process of ensuring that the company excels. Chery recruits high calibre employees who have a track record of good performance. The company trains employees to ensure that they have the right attitude for the job (Schrott 2013). Chery’s company employees are taught to exercise honesty and courtesy towards customers. These virtues are critical in boosting customers’ confidence in the company. Training of employees for them to acquire important skills will help the company have a competitive advantage over other companies (Chery International 2013). vi. Process Processes are associated with customer service in making an organization’s marketing effective (Little 1975). For example, processes of handling customer complaints, identifying requirements and needs of customers, and processes of handling orders. Chery has managed to make most of its processes online to ensure efficiency. Customers can order and pay for a car online. Moreover, a customer can make inquiries and receive feedback online at any place in the world. The process involves the buying experience a customer receives when he/she buy a product (Richter 2012). The company ensures that customers get value for their money. viii. Physical environment The physical environments where Chery sells and deliver its products have a critical impact on how the companys customers experience its business. Cherys physical environment involves furnishings of high quality in the companys showrooms (Gao, Africa & America 2008). The company also boasts of a wonderful website that attracts many people. The company emphasizes on cleanliness of its premises. The company policy is that its employees are well dressed. Additionally, Chery ensures that their vehicles are good looking as well as being of high quality (Kotler, Keller & Taihong 2009). a. Choose another car company in U.S.A market The Ford Motor Company Limited is a global automotive manufacturer based in U.S. Ford boosts of manufacturing operations in six separate continents. In Europe, the company has 35 factories found in nine countries (Kimes 2004). The family of Ford includes the Austin Martin, Volvo, Land Rover, Jaguar, as well as Mondeo, Fiesta, and Focus models. The Ford is well-known; its logo identifies the brand worldwide (Banham 2002). i. Product Ford serves both commercial vehicles and private car markets. The company serves different markets from commercial vans to the Ford Focus. Ford Focus is one of the cars sold highly around the world. ii. Price Ford prices for all vehicles fall within a price range of $13,990 to about $49,325. In 1913, Henry Ford managed to change the world of car manufacturing when he made a mass production the Ford Model T. The production led to a reduction of Ford prices. The production helped to make personal vehicles affordable (True Car 2012). iii. Promotion Ford uses a pan-European strategy of promotion to attract attention to its services and products. Ford does this for the purpose of attracting new customers and maintaining existing ones. Ford sponsored Champions League sponsorship. The sponsorship acted as an advantage since it was a promotional vehicle. Ford uses the mass media for the purposes of promoting itself. The mass media include T.V, radio and newspapers; they reach out to many potential customers. To Ford, Promotion is more than just mere advertising (Constantinides 2002). The company employs below-the-line strategies by showing vehicles at exhibitions and events. Ford engages in online promotions and direct mailing to customers. The company has good public relations (PR) schemes. iv. Place Ford always ensures that its cars reach the right place at the right time. The company has designated places where its products are sold. From time to time, the company involves the services of other companies to transport vehicles into the right place. In places where the company has its own manufacturing plants, it transports by itself. In countries where the company lacks has no presence, it utilizes the services of agents. v. People Ford boasts of having highly qualified employees. The vehicle manufacturing company employs a staff that can meet the standards of the company. The company trains its employees from time to time to ensure that they measure to the expectation. vi. Process Most of the processes done by Ford Company are done electronically and online. Customers can enquire for various products online and get the response. Orders can also be made online, and so is payment. Customers can make complaints online, and be attended to appropriately. vii. Physical environment Ford produces products of high quality, high quality in terms of physical appearance and also mechanical ability. The companys stores are attractive in nature, and the employees dress in a specific manner that identifies them (Falter 2011). Conclusion Chery is one of the most established vehicle manufacturing companies around the world. The company has managed to use the marketing mix to its advantage. The company has good financial power since it is government-run. It has done a number of activities to ensure that it expands its market share. However, the company has not penetrated into many markets around the world. The company has not yet utilized effectively the modern platforms of marketing that can help the company to increase sales. j. Recommendation i. Product The company needs to diversify into other models of vehicles. Various models of vehicles will help Chery to have a wide market, thus increasing sales ii. Price The company must study the country of operation market and determine the best price. The price determines if customers can or cannot buy a vehicle. The company needs to manufacture low cost vehicles that can be attractive to small income earners just as Ford Company did. iii. Promotion The company needs to increase the use of the internet in order to promote its products. Many people are now accessible to the internet, thus can easily access promotional materials. iv. Place The company must increase the number of places where it sells its products. Increasing the number of selling places brings the products near to customers who may want to buy vehicles. v. People The company can do itself a favour by ensuring that it recruits additional sales person. Sales persons are people on the ground that helps to increase sales. The company needs to have continuous training to add skills to the sales representatives. vi. Process The company must introduce various user-friendly processes that will help customers access its services. The company can do this by automating all of its services that are done manually. Automation helps to improve efficiency by saving time. vii. Physical environment The company has done so well in terms of the physical environment. However, the company should do a market research and establish what customers require the company to change in its physical environment. References Anonymous, 1982, The Competitive status of the U.S. auto industry a study of the influences of technology in determining international industrial competitive advantage. National Academy Press, Washington D.C. Banham, R 2002, The Ford century: Ford Motor Company and the innovations that shaped the world, Artisan, New Yolk. Borden, NH 1964, The concept of the marketing mix. 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