Promotional and Advertising Strategies of General Motors and Ford Motors - Essay Example

Introduction In a fast changing scenario where consumer preferences change, it becomes relatively difficult for the companies actually to anticipateconsumer demand and change their marketing and promotional strategies according to the changing requirements. A well designed promotional plan can actually help companies to not only increase their revenue but can also result into an increased brand equity as well as the positioning and corporate image. However, to design an effective promotional and advertising mix, it is important that the organization fix all the components accordingly to achieve the desired results from any promotional and advertising activity. Automobile industry is going through difficult times as the leading developed markets are witnessing tough market conditions created mainly due to financial crisis of 2007. Though the markets like China are offering alternatives markets where demand is consistently on the rise however, in markets like North America, the overall scenario is relatively tough. Considering these new challenges, companies therefore have to engage into innovative and unique promotional and advertising strategies in order to improve their sales and continue to capture the market which is now being served by the low cost and fuel efficient automobiles manufactured in Japan and even in China and are flooding the traditional north American markets. This paper will discuss and explore the promotional activities of General Motors and Ford Motors in US market and how they design develop and execute their promotional strategies besides offering recommendations to improve the overall promotional strategies to make them more consumer oriented in nature. Compare and Contrast Promotional Activities For the purpose of this paper, the promotional activities of Ford Mustang and Chevrolet Camaro will be made as Camaro is being produced by General Motors and is considered as car of equal class. Ford Mustang is 50 years old brand of Ford and its promotional focus of Mustang is on highlighting its rich past and the way it has been able to serve the consumers tastes and preferences over the period of time. One of the most common promotional methods to promote Mustang is to display it at the trade show. Since Mustang is also being touted as a sports car therefore it is also being promoted at the sports events. At the consumer level, Mustang is often promoted as a car with advanced technology and new features and power which can help consumers to actually offer them best design and cockpit like interior and designs. Camaro on the other hand however, is being displayed as a car which is much more powerful with dream like power and is a racer. Its promotional appeal is based upon highlighting the way it offers speed and reliability to the end users. Apart from this, the range of Chevrolet including Camaro is being advertised through the famous Transformers movie character Bumblebee. The recent promotion of Camaro has been a cross-promotional activity wherein General Motors attempted to further penetrate into the young consumers market by cross-promoting Camaro with the latest Transformers movie” The Age of Extinction”. How to differentiate from Competition If we consider Mustang to get an edge over the competition through an effective use of marketing information, it can do so by doing following: 1. Information technology has grown to a level where sophisticated tools are offering a better insight into the consumer data to better understand their habits and preferences. In order to get an edge over the competition, Ford therefore has to engage itself into data collection and developing analytics. It must develop strong marketing insight and analytics team which can analyze and develop marketing insight from the data collected. A better insight marketing insight can only be developed by collecting end to end consumer data. (Arthur, 2013) 2. Traditionally auto manufacturers have used normal auto dealers’ networks as the distribution channels to sell and promote their products. However, considering the way technology is connecting the businesses with the consumers, it is important if Ford also attempt to gather information from the informal and different channels such as social networks, sports events and other places where consumers prefer to hang on or socialize. By tapping into informal sources of information, Ford can actually develop alternative delivery and distribution channels to get competitive advantage over the competition. The above two recommendations are based upon the rationale that making data driven decisions can actually increase the overall return from the promotional efforts. Besides, with the changes in technology, it is important that new and alternative delivery channels must be developed so that reliance on traditional distribution channels is reduced. Consumer Oriented Promotions One of the primary objectives of the consumer oriented promotions is to actually induce a purchase decision in customers. Consumer oriented promotions therefore needs to be focused upon delivering what consumers exactly want and it is because of this reason that the effective use of marketing information is necessary for making optimal promotional decisions. Considering the long term and short term benefits of consumer oriented promotions, following two benefits can be availed by Ford: 1. An immediate and short term use of consumer oriented promotion can be creation of inducement for buyers to purchase Ford Mustang. By offering free trials, discounts, additional free add-ons such as mats, fancy side-glasses, additional seat covers etc, Ford can actually create an strong desire for its customers to try out new model of Ford Mustang. 2. One of the long term impacts of the consumer oriented promotion tactics for Ford Mustang will be to develop the long term loyalty of its customers. By customizing the promotions according to the actual needs of Mustang purchasers, Ford can actually attempt to create the long term loyalty for its brand. Customer loyalty if developed on the long term basis can actually result into increase brand awareness while at the same time resulting into a boost for the sales on the consistent basis over the period of time. (Belch, 2003) Above two uses are important because in short run, it is critical to create an interest whereas on the long term basis, it is important to develop long term loyal customers through consumer oriented promotions. Pricing Decisions Ford Mustang has been a leading car in this product range and along with other Ford products, it has been selling cars by undercutting the competition and following a deliberate pricing strategy across different markets. An average Ford Mustang is priced between $25,000 to $36,0001 and depends upon the range of options available for consumers to choose. A closer analysis of the pricing strategy would suggest that Ford is strategically using its pricing strategy to actually meet the competitive objectives. Since the competition in the EU and North American markets is tough therefore Ford has deliberately and strategically priced Mustang in a manner to achieve the competitive objectives of its pricing. This has allowed Ford to remain competitive in a market which witnessed a sharp decline in the demand. If competition wants to catch on with and use pricing strategically, they need to do following: 1. Follow the competition and re-price the products according to the market demand in a manner so that the overall demand for the vehicles remains stable. Ford has been able to do it in order to remain competitive and offer its customers a constant value at low prices. (Piercy, Cravens, & Lane, 2010) 2. It is also critical to actually offer consumer oriented promotions and club them with the pricing decisions. Offering free rides and extra add-ons at no cost and at same price can help companies to attract those customers who are relatively price conscious and will respond to price changes. Advertising Medium Social media has emerged as one of the most effective advertising mediums for the businesses across different industries. Though the ad spend on the social media vary by company to company as G.M. has drastically reduced its spending whereas Ford has further stepped up its promotional efforts on social media, it has become increasingly important that the firms must have presence on the social media. (Williams & Delo, 2012) Social media is important because it is not only varied in nature but it also provides access to users with specific interests. Advertising on social media offers the option to target the customers according to their preferences and interests. As such once companies identify the interests of their consumers, they can easily reach to the target market with minimum effort. (Parry & Solidoro , 2013) One important benefit therefore of advertising through social media is the targeted reach to the customers. This reduces the overall ad spend while at the same time increasing the ROI on overall promotional strategies. Secondly, advertising through social media also offers an opportunity to actually understand your target market in a better manner. Since automobile manufacturers traditionally used dealers’ network as a primary medium to interact with the customers however, with social media advertising, they can get into touch with their customers easily and can understand their problems, preferences and consumer choices in effective manner. (Lukinova, Myagkov , & Shishkin , 2014) Conclusion Using promotional activities and advertising strategically can help organizations to actually better deal with the competition and successfully weather out from crisis. References Arthur, L. (2013). Big Data Marketing: Engage Your Customers More Effectively and Drive Value. New York: John Wiley & Sons. Belch. (2003). Advertising And Promotion. New York: McGraw-Hill . Lukinova, E., Myagkov , M., & Shishkin , P. (2014). The value of sociality. foresight, 16(4), 309 - 328. Parry, E., & Solidoro , A. (2013). Social Media as a Mechanism for Engagement? In T. Bondarouk, & M. Olivas-Luján, Social Media in Human Resources Management (pp. 121 - 141). California: Emerald Group Publishing Limited. Piercy, N. F., Cravens, D., & Lane, N. (2010). Thinking strategically about pricing decisions. Journal of Business Strategy, 31(5), 38 - 48. Williams, S., & Delo, C. (2012, May 15). GM Cuts Facebook Ad Spending, But Ford Steps on the Gas. Retrieved from AdAge: http://adage.com/article/digital/gm-cuts-facebook-ad-spending-ford-steps-gas/234781/ Read More