Global Marketing Strategysunyu - Coursework Example

GLOBAL MARKETING STRATEGY FOR DONGFENG, A CHINESE CAR MANUFACTURER SEEKING TO ENTER THE NORTH AMERICAN MARKETS Executive Summary The paper examines the expansion options and processes that can be utilised by DongFeng, a Chinese car manufacturing entity in entering the North American markets. To this end, the paper evaluates the circumstances of the host market and how the Chinese car manufacturing firm can change its system to meet the demands on the ground. The study recommends that DongFeng must use an adaptive strategy. To this end, they must change their products and services to American standards so they connect to the American system and make a strong market penetration. 1. Introduction This paper examines and critically evaluates elements and aspects of global marketing. To this end, the paper will apply important ideas and concepts in the field to a practical issue of significance. This will be done through the study of global marketing practices for DongFeng Motor Corporation and how they can market and promote their vehicles in North America. The paper will critically evaluate the company’s background, as well as the marketing processes used by the company. The North American markets will be critiqued and analysed to identify the competition situation and assess it. From there, the realism of the North American market will be assessed in relation to various models and processes in order to draw recommendations on how to promote DongFeng vehicles in North America. 1.1 Company Background DongFeng was established as the Second Automobile Works by the Chinese Communist government in 1969 as an attempt to industrialise and modernise the nation (Tang, 2012). The DongFeng brand was formulated in 1981 and this paved way for the creation of the third largest motor works industry in China (Resnick & Sommer, 2013). DongFeng is a respected Chinese car manufacturer now and they do things according to the highest standards and levels (Ellis, 2012). DongFeng signed a joint investment with Japanese Nissan Motor Corporation and this was meant to promote research and development in the company (Ellis, 2012). However, DongFeng is still a very local Chinese brand and has potential for international growth and expansion. 1.2 Introduction to Marketing activities The production scope of DongFeng is about 500,000 cars per annum (Baker, 2009). Most of these cars are sold in China and the Asian-Pacific region as well as other parts of the developing world (Ramesh, 2010). However, DongFeng’s internationalisation strategy is ahead of all other motor manufacturing in China. The main production and sales system used by DongFeng in China is under the control of the Communist Government. This involves producing the vehicles for local units at very low prices. DongFeng Commercial Vehicle Company is one of the strategic business units of DongFeng Motor Company and it is related to research and development as well as the marketing of DongFeng vehicles in China and outside China (Ellis, 2012). This is also under the influence of the planned and centrally monitored system and processes of China. 1.2.1 What are marketing activities The marketing process of DongFeng Motors involves the use of a network of distributors and service centres scattered throughout China and other parts of Asia including Pakistan and India (Hoovers, 2014). This forms the core of the marketing strategy which is mainly national in nature. It controls a given scope of a nation and this is the main network through which the marketing processes and systems are shaped in a local Chinese context. 1.2.2 Definition of marketing mix The marketing mix forms the main system through which the marketing strategy and system of an organization is put together. This includes the presentation of the methods used by a company in terms of product, price, place and promotion (Kotler, Marketing Management, 2001). However, in a further analysis of his conception, he added people, physical evidence and process to formulate the 4Ps (Kotler, 2006). 1. Product: DongFeng produces motor vehicles and this include heavy duty trucks and other vehicles as well as smaller domestic oriented vehicles; 2. Place: The products have an association with China but they are sold through various individual distributors who use fairs and other showroom systems to promote their products; 3. Price: The prices of DongFeng products are generally lower. However, due to the fact that they seek to promote competition, DongFeng’s prices are skewed upward to meet competition in the country they sell within; 4. Promotion: National adverts are run to complement local distributors’ local promotion campaigns. This is dome through the use of various catalogues and other media approaches that brings their cars to bear; 5. Process: The sales are done through traditional channels in which consumers have to purchase cars by paying directly for it. No credit card systems exist in China so everything is done over the counter; 6. People: Wherever possible DongFeng uses local agents. However, in most cases, they provide labour from China which is quite cheap and lower than what others offer; 7. Physical Evidence: The DongFeng logo is used in most showrooms and premises that they hire. This is done to meet Western standards and levels. 1.3 Objectives The objectives of DongFeng’s marketing strategy are to attain the following ends: 1. Effective sales to the highest numbers of people possible (Medeiros, Cliff, Krane, & Mulvenon, 2012); 2. Relatively low profit margins as a means of making the cars popular and providing transportation to as many people as possible (Colpan, Hikino, & Lincoln, 2011); 3. Attaining the highest levels of sales and selling more car units to attain the highest volumes of sale possible (Navarro & Autry, 2011). Main Finding It has been established in this section that DongFeng is a Chinese state-owned enterprise and it is ran like any other Chinese public-sector oriented entity. The marketing philosophy is mainly steeped in selling higher volumes at lower prices and through the channels of traditional sales outlets and systems. This system is mainly inappropriate for Western markets where profitability is mainly the cause of changes and modifications. 2. Automobiles Market culture in America and the situation of DongFeng The American automobile industry is highly competitive and it is fuelled primarily by competition and innovation (Warner, 2010). So far, the market is led significantly by main leaders of the automobile market which include Ford, GM and Chrysler (Warner, 2010). However, the American automobile industry is influenced by foreign car manufacturers like the Japanese and German car manufacturers (Heneric, Licht, & Sofka, 2009). The American automobile industry is also heavily regulated by various regulations that play a significant role in defining the way firms operates and this include high safety standards that must be adhered to by all producers (Lahr, 2012). American market The American automobile market is consumer-driven and it is defined by the preferences of consumers (Wong, 2012). This implies that car firms will have to respond to changes in the external environment and modify their strategy and processes regularly. DongFeng’s situation DongFeng is used to the Chinese ideology of dealing with the consumers as a means of equitably distributing resources. Research and development was not traditionally a responsive mechanism to deal with competitors. The defensive marketing posture will not be able to survive in the United States or Canada because DongFeng will not have that privilege of controlling rules in the way the Chinese government does in China. 3. Major marketing mix of DongFeng The current marketing mix of DongFeng is focused on trying to sell at very low prices and also to sell to large numbers of consumers. This is successful in China and because of the Communist arrangements of the government and the traditional system of dealing with the masses, the system has worked significantly in marketing the cars of DongFeng around the world. 3.1 Standardised Marketing Mix The standardized process involves the processes and systems that are meant to present heavy duty products and cars that are of the best level and standard. This involves the sale of low-cost cars through various distribution outlets that are linked directly to DongFeng. The promotion is done through major outlets and systems that have national and international promotions that spread the brand and this is supported by fairs and other local processes that are ran by the local distributors. The process of sales includes the use of local systems and local policies. The people are mainly local but in most cases, China sends local Chinese workers to provide cheap labour to these firms. The logos are upgraded to international standards. 3.1.1 Ethnographic Model The American system and process is such that there is no system or easy method of identifying the sales systems, but through adherence to consumer needs (Williamson, Cooke, & Jenkins, 2013). This can best be done through the use of a proactive system and process that will enable the company an automobile company to identify changes and modifications that will be changed to fit the needs of the cars. The ethnocentric approach will mean the need to find ways and means of dealing with the existing system and responding to it. 3.2 Adapt Marketing Mix In order to sell successfully internationally, there is the need for a firm to analyse the elements of the host country in order to blend it with the original strategy that is used by the firm to ensure the best results (Grunig & Morschett, 2011; Dick & Merret, 2012; Jansson, 2012). This means that DongFeng will need to modify its marketing system in order to meet the sales and acquisition requirements of the consumers. 3.2.1 Polycentric Model A polycentric model will ensure that the firm adapts and uses different approaches as and where necessary and this will enable the firm to address its domestic and international needs as required (Paul, 2009; Vasudeva, 2012). To this end, DongFeng will use a system and an approach that will adapt the different needs and expectations of the different American consumers and the different needs that they present. This will mean DongFeng can find a different strategy that will reflect the realities of America and avoid imposing aspects of their Chinese marketing strategy. 3.2.2 Geocentric Model Geocentric models are used on the assumption that a firm is operating directly through a unified method and system of dealing with the markets through the assumption that the world is one unified market (Cherunilam, 2012; Srinivasan, 2012). This will mean DongFeng will present their products as a single unified market and process. 3.2.3 Standardization vs Adaptation DongFeng will be better off if it seeks to adapt to the American market and the American process. This will involve the presentation of DongFeng’s cars in a way and a method through which the infrastructure and system of marketing will be done through a system based on the American culture and American consumer needs. DongFeng will need to adapt and modify their system and their methodology of marketing. And this will need to modify its system rather than try to force the Chinese marketing process and the marketing process at home in America, which is the host country. 3.3 Relevant Marketing mix for successful FDI The method must adapt and accept the methods and processes that are relevant to DongFeng internationally. This will involve the following methods and processes: 1. Product: The product of DongFeng must be done in a way and manner that will be modified and improved to meet local conditions. 2. Place: The main method and the system that will be used will involve selling through the mainstream methods and processes in local markets. 3. Price: The price of DongFeng cars must be modified and changed in order to fit local conditions. 4. Promotion/: The promotional system must be done in a way that will reflect local conditions and situations 5. Process: The use of Chinese processes must be limited. Everything must be localised 6. People: Few workers should be brought in from China. Most workers should be locally source 7. Physical Evidence: A blend of Chinese and local showing methods must be employed. 3.4 Examples of other car companies An example of such a car company is Toyota which localises its systems significantly in foreign nations. Their failure to do so completely in the United States led to major recalls in 2005-2012. 3.4.1 Marketing Mix of DongFeng in North America Product: In North American, Dong Feng can modify their cars according to American standards. This will include the presentation of models in vogue in the United States. Place: The sales must be done through local American distributors who will sell through traditional American channels Price: The price must be raised to the levels just below American cars on the North American market Promotion: American car shows and American online sales and use of credit facilities must be presented People: North American employees must be used. Fewer Chinese employees must be sent to the markets Process: The sales process must be similar to the American systems. This include the use of online sales and credit card facilities Physical Evidence: The brand must be modified for a North American experience 3.4.2 Marketing Mix of DongFeng in Germany The German market must be modified and the cars must be modified and sold through traditionally accepted German processes and methods. The setting must employ German sellers and the methods must be very local and similar to German methods and processes. 4. Conclusion It is ideal for DongFeng to go adaptive in their international strategy. This is because there are major and significant gaps in the markets of China and North America. Whereas the Chinese market is controlled by the Chinese authorities, the North American markets are controlled by consumers. Hence, they must adapt to their local trends and processes. 5. Recommendation It is recommended that DongFeng uses an adaptive process and utilises American partners in the sale of their cars in America. This will involve changing the system to involve major local brands and processes. Bibliography Baker, K. J. (2009). Economic Tsunami: Chinas Car Industry will Sweep away Western Car Makers. New York: Rosenberg Publishing. Cherunilam, F. (2012). International Business: Text and Cases. New Delhi: PHI. Colpan, A. M., Hikino, T., & Lincoln, J. R. (2011). The Oxford Handbook of Business Groups. Oxford: Oxford Handbooks Online. Dick, H., & Merret, D. (2012). 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