Morgan Motor Company Limited Brand Development - Case Study Example

Strategic marketing management: Morgan motors case study Lecturer: Table of contents: Place number 1.0 Introduction…………………………………………………………………........3 2.0 Morgan motor company background……………………………………….… 4 3.0 Customer and competitive analysis……………………………………………..5 3.1Motor industry environment ………………………………………………......5 3.2 Competitor analysis……………………………………………………......….6 3.3 Partnering ………………………………………………………………….....6 4.0 SMART Objectives…………………………………………………………...….7 5.0 Strategic theories and models…………………………………………...…..…..9 6.0 Strategies of future development and implementation of objectives………...11 6.1 Product differentiation…………………………………………………. .12 6.2 Price differentiation…………………………………………………..….12 6.3 Place differentiation……………………………………………………...12 6.4 Promotional differentiation…………………………………………........13 7.0 Measurement……………………………………………………………………14 8.0 Conclusion………………………………………………………………………14 9.0 References …………………………………………………………………..,.....16 10.0 Appendices…………………………………………………………………..17 10.1 Appendix 1: Porters generic strategies…………………………...……..17 10.2 Morgan motor current model ranges: classic, Aero and three wheeler....17 10.3 Industry competitive analysis and use of generic strategies………….…18 Morgan Motor Company Limited brand development 1.0 Introduction Morgan Motor Company is a private family-owned car manufacturing company that is based in Malvern in Worcestershire, England (Morgan Motors, 2014). The company has attained high customer loyalty due to adherence to its traditional brand values of making hand-built motor cars with delivery time of about eighteen months. The company cars are based on the historical concept of the fashion two-seater open cars of the 1920s. According to Charles Morgan, the Managing director, the traditional craft skills are combined with modern car manufacturing technologies and assembly techniques in order to meet the unique customer specifications in each car (Morgan Motors, 2014). The director points out that it is essential to understand the unique customer culture and developing overseas markets is a priority of the company. The paper will highlight several competitive strategies that the management can implement to reduce the manufacturing costs and attain high market share in the niche market and overseas markets. The paper will focus on how Morgan Motor Company can retain the traditional brand values and become a long-term niche player through brand positioning and implementing competitive strategies that aim at retaining customer loyalty and expanding the market overseas. The paper will also look at the impact of competition and how the company can utilise long-term partnerships with major motor manufacturing companies such as Ford and BMW to maintain the quality of its car models. Morgan motor company is experiencing stiff competition in the industry, but must retain its traditional brand values and pursue differentiation and partnership strategy in order to become a long-term niche market player in the industry. 2.0 Morgan motor company background The company traces its roots to 1909 when H.F.S Morgan designed his first three-wheeler that has remained the core of future car designs due to its charisma and luxurious design. Morgan Motor brand is the last remaining independent, innovative and family owned British motor manufacture that is focused on fulfilling the needs of the niche market in luxury car market segment. The cars are stylish and environmentally friendly since they entail high standards of craftsmanship that has remained Morgan heritage (Morgan Motors, 2014). Morgan Motor has found a niche market where it has survived the competition from other global just-in-time lean car manufacturers (Morgan Motors, 2014). Although other small-car manufacturers have disappeared because of take-over by global giants, Morgan motor has remained committed to small-scale manufacturing of exciting sports cars for more than 100 years. Most of the components including chassis are made at the factor with excellent finishes of ash wood and galvanised steel overlay (Morgan Motors, 2014). The car models have attained high market recognition due to their unique blend of quality materials, exceptional craftsmanship, charisma and performance. One of the unique selling points of the cars is the attention granted to the manufacture of each car since all are coach built and the design comprises of luxurious materials that create unparalleled driving experience (Morgan Motors, 2014). The initial four-wheel morgan was launched in 1936 and subsequent models have incorporated latest designs on safety such as the Aero 8 that was launched in 2000. The Aero has been refined to Aero SuperSports and Aero Coupe, but the company re-launched the three-wheeler in 2011 thus reinforcing the original principles of ensuring best craftsmanship and combining best technologies in car manufacture (Morgan motors.com, 2014). Although Morgan Motor has maintained its craftsmanship, it has been criticised for inefficient working processes and high cost structure. However, the buyers are interested in the sporty feel and special performance and British market accounts for almost 30 percent of the total sales. For instance, the Aero 8 model comprises of excellent features such as style, luxury and practically thus attracting high demand among the high net worth individuals in North America market segment (Morgan Motors, 2014) 3.0 Customer and competitive analysis 3.1 Motor industry environment Eight premium sports car manufacturers with more than 100 brands dominate the UK market. More than 1.5 million vehicles and 2.5 engines are produced in the UK annually with most of the vehicles destined for the export market. The economic recovery in the European market has led to high growth of the luxury car sales units and main competitors are building production facilities in emerging markets in order to meet the growing demand. Saxena (2009) is of the idea that the social environment in the motor industry is characterised by shifts towards small and fuel-efficient cars that have low levels of emission. In the next ten years, Morgan motors will have to invest in modern car manufacturing technologies such as use of gasoline and electric cars in order to counter the competition from other global giants that have invested in the provision of luxury cars (Morgan Motors, 2014). The motor industry is characterised by significant investments in research and development activities that aim at ensuring advanced motor manufacturing technologies that ensure standardised production and minimise the amount of raw materials. Although Morgan cars are customised to individual customer specifications, the company will have to concentrate on enhancing the aerodynamics and lightweight materials that are currently being utilised by competitors like Audi and BMW. Accordingly, the motor market has shifted to environmentally friendly design and fuel-efficient cars that are economical to run and conserve the environment through minimal emissions. Morgan motors has attained high customer loyalty due to the brand identity as evidenced by the Morgan owner’s club that has influenced the brand development and facilitated the brand marketing across several niche markets in the world (Saxena, 2009). The club has a relational bond with Morgan craftsmen and is a powerful symbol in brand recognition and brand positioning in the market since it has assisted in customer relationships management. Although there is a perception that Morgan Motor cars are expensive, they offer exceptional value compared with competitors’ products such as BMW. For instance, the 1.6 model costs almost 25,000 pounds compared with BMW-engined Aero that costs several times higher. 3.2 Competitor analysis Morgan motors is experiencing stiff competition from other motor brands that have entered the market. For instance, Lexus which is part of Toyota group is cheaply priced yet luxurious to the niche market while BMW luxury models enjoy high market reputation due to the historical heritage of high quality. Lincoln model is also considered stylish while Acura models from Honda offer customers high comfort and performance. Audi models and Cadillac are associated with high safety standards and higher engine performance. Aston Martin has targeted celebrities while Bentley motors and Bugatti has incorporated style and exclusivity in its models. Motor giants like Land Rover and Jaguar are currently designing luxury cars that can handle rough terrains and thus ensure the safety of the passengers (Saxena, 2009). 3.3 Partnering Morgan motors has partnered with other niche market players such as BMW and Ford for the supply of essential components such as engine, braking and transmission systems. The partnership ensures Morgan cars are CAERI certified and powered with Euro V compliant Ford and BMW engines that ensure higher reliability, perfoamnce and efficiency. The partnership with BMW is geared at building high-performance electric cars that will offer customers with new driving experience. The collaboration research will lead to lightweight and powerful solution to the luxury car market and also minimise emissions. Strategic partnership with Beijing LDYB car service center commencing 2013 will improve the number of oversea sales in that market thus improving the customer satisfaction through the 24-hour phone and onsite repair services. 4.0 SMART Objectives The marketing management plan requires setting of objectives that are specific, measurable, achievable, realistic and timely in order to facilitate the attainment of the marketing goals. The SMART objectives of Morgan Motors for the next three to five years should be as follows: 1. To increase the overseas niche market segment by 6 percent per annum over the next five years Morgan Motor company has attained distributorship networks the entire EU and United States markets and should focus on entering new overseas emerging markets that are characterised by growing consumer incomes and high demand for luxury cars. The company should enter Chinese, India and Latin American countries such as Brazil and Argentina since there is huge potential for growth. This objective is realistic and attainable since other motor giants offering luxury and sports cars have not differentiated their models and mainly emphasise on standardised designs. The objective is measurable through collection of data from motor magazines on the total global luxury and sports car sales. 2. The second objective is to increase the UK market sales volumes by 10 percent in the next five years through targeting the growing aged and high net work customers. The company will have to differentiate its products through incorporating advanced safety standards, ensuring fuel efficiency and customisation of the cars to meet the unique customer requirements. The objective is attainable and realistic since the UK demographics indicate the number of aged individuals especially retirees from big corporations and businesspersons has increased thus the demand for luxury and stylish cars will increase in the next ten years. 3. The third objective is to commit at least 10 percent of the annual budget to research and development activities for the next five years in order to ensure advanced motor manufacturing technologies and improve the craftsmanship. This objective is attainable and realistic since it will lead to future superior designs and differentiated models that offer additional benefits to the customers. 4. The fourth marketing objective is to enhance the partnerships and build strategic alliances with companies like BMW and Ford for the supplier of critical components such as power engines, braking systems and fuel transmission systems in order to reduce the overall production costs per unit and time to market cycle of the new models. The attainment of the objective will enable the company to meet the changing customer needs in the niche target market segment. 5.0 Strategic theories and models According to Porter’s the basis of competitive advantage depends on the nature of the industry and positioning within the industry since competitive edge must develop from an understanding of the rules that dictate competition within the industry. The five forces model will determine the driving forces within the industry through considering the entry barriers, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes and degree of rivalry in the industry. In this case, the entry barriers in the luxury car manufacturing market are high due to the high financial outlay required to establish operations, the motor giants like BMW, Ford, Nissan, Toyota and KIA have high economies of scale and access to excellent distribution networks thus creating entry barriers to new entrants in the industry. Accordingly, the motor production raw materials like aluminum and steel are expensive. Morgan motors has attained superior performance due to its brand identity of sophisticated craftsmanship and elegant finishes (Morgan Motors, 2014). The second factor is the bargaining power of suppliers such as the power engines and transmission systems and suppliers have a higher bargaining power due to their ability to determine the supply of critical components. Morgan motors depends on BMW and Ford for supply of the power engines and other essential components and must control this threat by enhancing the partnerships and utilising several powers. The third force is the bargaining of the buyers since it will determine the profit margins and purchase volumes. Morgan motors has attained brand identity through ensuring high quality and involving customers during the design process of their unique cars. The fourth force is the threat of substitute products and this threat is high due to availability of several substitute brands offered by competitors like Audi, Mercedes, Ford and Toyota , but Morgan motors can control this threat through creating customer switching costs, enhancing innovation and differentiation of the future models (Saxena, 2009). The last force that will determine how the firm will attain competitive advantage in the industry is the degree of rivalry that is determined by the structure of the industry, the switching costs, product differences, exit barriers and brand loyalty. The degree of rivalry in the luxury car market will increase over the next ten years due to high exit barriers, low switching costs, declining brand identities and minimal products differences. In this case, Morgan motor must control rivalry in the industry through utilising emerging technologies, offering differentiated products , attaining brand loyalty through cordial relationships with customers and strengthening partnerships with strategic alliances like BMW and Ford (Morgan Motors, 2014). The company should focus on growing both the domestic UK market and overseas markets especially in the sports cars segment. According to the Resource-based view of the firm, Morgan motors has internal core competencies and valuable resources such as the three-wheeler property rights and technological advancements that it can leverage in order to attain competitive advantage. The company has excellent heritage of superior craftsmanship and highly talented employees who can deliver differentiated products to the customers (Doyle and Stern, 2006). Doyle and Stern (2006) assert that companies must segment their market in order to attain differential advantage over the competitors. According to Kotler and Keller (2012), market segmentation refers to dividing the entire market in to distinct groups of buyers that have similar needs, characteristics and buying behaviours to as to easily serve their unique needs. Some of the customer characteristics or bases for market segmentation that are common include geographical segmentation, psychological segmentation, lifestyle segmentation, income segmentation and demographic segmentation. The companies must understand the strategies, resources and core capabilities that will effectively implement the product solutions and also the product benefits or offerings that will meet the needs of the target segment (Kazmi, 2007). 6.0 Strategies of future development and implementation of objectives According to generic strategies, companies can either attain competitive edge through cost-leadership, differentiation or focus strategy. Morgan motors must focus on serving the niche market that is characterised by recession-resilient customers who require stylish cars for different purposes including sports and luxury. Kazmi (2007) asserts that focusing on this niche market will enable the company to build customer loyalty. The cost-leadership strategy will entail attaining economies of scale and investing in superior technologies in order to drive the manufacturing costs down (Kazmi, 2007). Accordingly, Morgan must be capable of securing raw materials at lower costs from the strategic partners like BMW and Ford and ensuring continuous improvement in the craftsmanship in order to minimise material wastage (Kazmi, 2007). Differentiation strategy is the best for Morgan motors since competitors have higher economies of scale and have focused on serving the same niche market. Differentiation strategy must offer customer benefits since the car features must correspond to the customer expected and perceived value. For instance, if the customers require stylish, quality and high performance, the product should deliver the expected value to the customers in order to satisfy their needs (Wilson & Gilligan 2012). The differentiation strategy must ensure the products are unique and that such benefits are not available in the competitor brands in order to create customer loyalty. The differentiation strategy should be economically sustainable and profitable since customers will be willing to pay a premium price for the added benefits (Kazmi, 2007). The management must understand the current customer perceptions about the brand and customer expectations in order to offer the expected benefits to the customers. The management must position the brand according to the differentiated benefits that its offers to the customer in order to create brand intimacy and customer loyalty (Wilson & Gilligan 2012). The differentiation strategy can be applied across the four marketing mix of the brand that include the product, price, place and promotion since they are the unique drivers of customer benefits (Doyle and Stern, 2006). 6.1 Product differentiation According to Kotler and Keller (2012), product differentiation is a critical aspect of brand positioning in the motor industry and customers are always looking at common features like performance, durability, quality, price and safety. In this case, Morgan motors must add superior brand benefits its design process that will enable customers experience luxury, fun, elegance, charisma, craftsmanship and originality in the car models (Wilson & Gilligan, 2012). As illustrated in the background, loyal Morgan customers value these features while buyers of luxury car models are always looking for performance, safety, and luxury features of the cars. 6.2 Price differentiation Although it is difficult to offer cheaper prices for the high car models, the company can offer lifetime discounts for repeat purchases and offer low priced spare parts in order to attract higher market share. In addition, sourcing raw materials at lower cost can enable the company to reduce its prices for the basic car models. 6.3 Place differentiation This refers to differentiation of the brand along the distribution channels and can be attained using various distribution channels (Kotler and Keller, 2012). For instance, the company can utilise the existing distribution channels of the strategic partners like BMW to reach higher market share in the emerging markets such as China and Latin America. Extended distribution network will yield high global brand recognition and increased sales volumes (Kazmi, 2007). 6.4 Promotional differentiation This is concerned with the marketing communication strategies that are used to inform, remind and persuade the potential and existing customers to buy the brand. Wilson & Gilligan (2012) highlights that the promotion must have a differential impact and should be directed to the target niche market through highlighting the brand variables such as the superior quality, higher performance, enhanced safety, luxurious design and uniqueness of the brand. Some of the marketing communication tools that will assist in sending the targeted messages include public relations, direct marketing and mass advertisements. The marketing managers must understand the characteristics, behaviours and attitudes of the target market and include marketing messages that resonate with the consumer expectations (Kotler and Keller, 2012). Accordingly, Morgan motors must capitalise on the recent advancements in digital technologies such as the internet, social media websites, blogs and websites to overcome the location barriers in their promotional activities. Direct marketing and word of mouth is also essential since customers have the opportunity to experience the product during design and Morgan club plays a critical role in enhancing the corporate reputation across the globe. A critical element that needs to be incorporated in the promotion is the sponsorship of various motor sporting events especially for the elegant cars and sports cars in order to maintain the unique customer group (Wilson & Gilligan, 2012). (Michael porter’s differentiation strategy) 7.0 Measurement The measurement of the objective must done on regular basis and the company must implement operational plans that will ensure the marketing managers ascertain the progress of the attainment of the objectives. The increase in overseas sales volumes will be determined by the yearly sales data while the number of unit sales and growth in customer retention will determine the expansion of the market share. The progress of research and techbnollogical development will be measured by the number of new models introduced in the market within the five years while the benefits from the strategic partnerships will be determined by the cost reductions, the access to new markets and shared costs in research activities. 8.0 Conclusion Morgan motors brand values include tradition, craftsmanship, exclusivity, and fun due to the ability to maintain its original design while incorporating new technologies in order to meet the changing customer needs in the niche market. The company has attained high brand loyalty due to customisation of the car models to each customer’s unique needs and ability to allow the customers to tour the company during the production and incorporate the needs of the customers. Morgan motor company is experiencing stiff competition from other motor companies that have entered the luxury and sports car niche market such as Cadillac, Bentley, Honda, Lexus and Acura models and must differentiate its brand and focus on the niche market. The company should retain the traditional brand values of elegance, craftsmanships and utilise modern technologies to improve on the performance, efficiency, reliability, safety and environmentally friendly aspects of the future models. Accordingly, the differentiation must focus on additional features such as stylish finishes, luxury aspects and maintenance of the cars. The company must offer lifetime discounts to repeat customers, use digital platforms in the promotional strategies and partner with other companies in order to improve the distribution network in overseas markets. Morgan motor must strengthen its relationships with partners like BMW and Ford in order to access the input components at lower prices, improve the distribution network and minimise the adverse impacts of stiff competition in the industry. 9.0 References Doyle, P. and Stern, P. 2006. Marketing management and strategy. 4th ed. Essex: Pearson Education Limited Kazmi, S.H.H. 2007. Marketing Management: Text and cases. New Delhi: Excel Books. Kotler, P. and Keller, K.L 2012. Marketing management. Essex: Pearson Education Limited Saxena, R. 2009. Marketing Management. New Delhi: Tata McGraw-Hill. Wilson, A., 2005. Marketing research: an Integrated Approach. 2nd ed. Essex: Pearson Education Limited Wilson, R.M.S & Gilligan, C. 2012. Strategic marketing management. New York: Routledge. Morgan motors.com (2014). About Us’ accessed on 11th August, 2014 from http://www.morgan- motor.co.uk/mmc/aboutus.html. 10. Appendices: 10. 1Appendix 1: Porters generic strategies 10.2Appendix 2: Morgan motor current model ranges: classic, Aero and three wheeler 10. 3Appendix 3: industry competitive analysis and use of generic strategies Read More