Segmentation, Targeting, and Positioning in Automobile Industry - Essay Example

Marketing Strategy Contents Review of the STP Strategy 3 Marketing Activities inAutomobile Industry 4 Perceptual Map: 6 Marketing Mix Tools and their Comparison 6 Reference List 8 Review of the STP Strategy Modern marketing is characterized by Segmentation, Targeting and Positioning (STP). For structuring a targeted plan for marketing, marketing consultants rely upon this three-step approach. In STP, “S” stands for segmenting, “T” stands for targeting and the “P” stands for positioning (Hollensen, 2015). Weinstein (2014) believes that segmenting the market is essential to identify the target market of a company. So, a company conducts market survey to determine the important features of each market segment. Niche companies can have one target market while other businesses can have 4 or 8 segments or even more. Market segmentation is used to divide the customers into groups with common preference and characteristics. This allows the marketing consultants to tailor their approach so that each group’s needs are met through cost effective techniques. Some of the methods used are demographic, psychographics, geography, lifestyle, benefit and belief and value to segment the customers. Demographic basically includes personal attributes like gender, sexuality, age, occupation, ethnicity, etc. Country, state, neighbors can also influence a person’s decision to buy products. Personality, values, benefits, lifestyle can also affect trading. Targeting aims at identification of the best audience of the product. After segmenting, targeting helps to modify marketing campaigns that appeal to each market segments. For that, it is necessary to identify that group from where maximum profit can be extracted. Then the next step includes analyzing the potential expansion and size of each consumer group (Kapferer, 2015). Other factors need to be addressed like possibility of a steady growth, comparison between other segments, etc. This process concludes after the company has recognized steps to service the market efficiently. So, it is vital to notice the legal, social restrictions and scope of the technology that create an impact on marketing. It is advisable to conduct PEST analysis for better examination of the opportunities and threats that may influence each segment (Dibb, 2010). Positioning aims to identify how the product has been positioned to target the most important customer segment. This procedure terminates with the selection of marketing mix for each of the segments. Marketing Activities in Automobile Industry This section deals with the automobile industry and the STP strategy employed by the four different brands namely, Rolls Royce, Audi, Mitsubishi and Tata. Rolls Royce is a high branded car. Its exclusive features and superior design differentiates it from other cars. There are some customers who are attracted by its premium price and brand value and they buy such cars so that they can maintain their status in the society. It is the ultimate symbol representing a person’s status. Its brand value is high because of its attention towards minute details. It is famous for the level of comfort it provides and sensational automotive luxury. Though the brand carries the tag of being the ultimate automobile manufacturer, it is marked by simplicity. The cars are not only handmade but also hand finished thereby making its features unique. To meet the customer’s satisfactions and their standards, each car is tailor made accordingly. That also includes personalized features. To deliver unique ownership experience, it is delivered according to their demand. It has one of the best after service facilities delivered by skilled technicians (Toften and Hammervoll, 2009). Audi is renowned for its signature designs and accurate engineering. The story of progressive luxury that is offered by the company is accomplished by the suite of driver assistance and high class service options. Its wheels get the power through its Quattro all-wheel drive system which helps in improving the control and performance in all driving situations. There is also Roadside Assistance which is available 24 hours per day. It always has paid huge attention toward the safety of the customers. As a result, Audi has been recognized with high safety picks by Insurance Institute for Highway Safety (IIHS), the National Highway and Traffic Safety Administration. Audi also represent a royal and lavish class (Dibb and Simkin, 2009). Wilson and Gilligan, (2012) argued that Mitsubishi Motors are fashionably engineered fuel efficient cars. Its features include MIVEC engine attached with powerful but lightweight equipments and aerodynamic designs make it one of the best fuel-efficient cars. This is one of the reasons for attracting middle class customers. Panoramic glass roof makes it even more desirable where the ambiance is created at night with LED illumination. Keeping in mind the safety of the passengers, it has also installed rear view camera thereby making reversing easier and safer. It has also implanted automatic climate control facility to improve its comfort feature. Tata Motors provide an excellent driving experience to the customers. They also offer high safety features for the whole family. Though it is not essentially can be called a high class luxury car but the facilities that it provides are quite appealing and covers a larger customer base than the others mentioned here. Tata has sustainability group that primarily focuses on embedment of sustainability in their trading strategies. It has vast range of cars that include expensive luxury cars as well as moderate priced cars. Tata motors cars are efficient in fuel keeping in mind the requirements of average income class customers (Lantos, 2015). Gaubinger, et al., (2015) suggests that the primary target market for each brand varies a lot. Though automobile companies target a wide range of customers and modify their market plans accordingly, Rolls Royce only targets the possible customers who have liquid assets in surplus of $30 million. The buyers are generally self-employed, entrepreneurs or royalty and heir to large fortunes. Hence, it is implied that it does not target the mass market. Rolls Royce which is the symbol of nobility and position has been the favorite of the famous and rich personalities. It is considered a status symbol all around the world. It is enjoyed by the extreme rich who own royal and lavish status for a luxurious, speedy drive. It is also possessed by those who want personalized car to experience its uniqueness. Audi on the other hand, targets executives, professionals and rich families. It basically focuses on young, cool, urban customers who are looking to improve from their non-premium car into an Audi as well as other A-listed consumers who have fascination towards the brand. Audi is basically for tech-savvy customers. Mitsubishi aims to target upper middle class customers thereby increasing their customer base. The brand is known for its safety, fuel efficiency and price. It covers diverse audience who are energetic and enthusiastic. Even Tata offers cars at reasonable prices. It targets middle class people. So, Tata also covers a large consumer base which is greater than Mitsubishi (Wilson and Gilligan, 2012). The marketing personnel of each brand applied wide variety of market segment variables. Like in case of both Rolls Royce and Audi, upper high income class and high income class are targeted respectively; those who want to maintain their status and prefer luxurious cars. These cars are purchased more in developing countries like the US, UK, Australia, Japan, etc. However, Audi has opened its manufacturing plant in India in 2006 (Braithwaite and Christopher, 2015). Both have targeted middle aged persons who are financially established. Mitsubishi covers moderately high income class. It is expanded both in developed and developing countries. It has targeted young customers below the age of 35 years (Lei and Moon, 2015). Tata has attracted medium income class people of all ages. The company flourished mainly in developing nations. Hence, we can deduce that three main segmentation variables have been used such as personality, occupation or income, geography and age. Perceptual Map: For Sedan Class- High Brand Value, High Price Rolls Royce Low Brand Value, High Price Mitsubishi High Brand Value, Low Price Audi Low Brand Value, Low Price Tata This map explains how sedan class cars of different brands can be placed in four quadrants. Marketing Mix Tools and their Comparison The purpose of marketing is to convey to customers what the company has to offer and how it is better and distinctive than its alternatives. Kapferer (2015) defined marketing mix as the set of strategies that a company applies to promote and advertise its goods or services. It is the root of marketing process. It has to be reviewed continuously to meet the changing requirements. The changes in the external environment and changes within the firm necessitate alterations in the mix. There are 4P’s which typically constitute a marketing mix. They are Place, Price, Promotion and Price. However, it has started including other P’s as well like positioning, people, packaging and politics. Product mix is defined as the total variety of goods or services offered by the company. Place mix is concerned with various techniques of storing and transporting goods and services to the consumers at the exact place and at the exact time (Wilson and Gilligan, 2012). Promotion mix is the process of informing, persuading and influencing customers regarding a product to help them make a choice which is favorable to the company. There are four elements of Promotion Mix: Advertising, Personal selling, sales promotion and publicity. Price mix is the process by which a company can determine about its earnings for the sale of its goods or services. The price of a product is affected by the type of good that is marketed (Maritan, 2015). Rolls Royce offers some of the best luxury cars such as Rolls Royce Phantom, Rolls Royce Phantom Drophead Coupe, Rolls Royce Ghost, Rolls Royce Phantom Coupe and Rolls Royce Wraith. These are super expensive vehicles with superior designs and exclusive features. They are personalized according to customer’s tastes. Audi also manufactures high-tech and high quality, modern cars like Audi S4, Audi S8, Audi RS 4, Audi R8, Audi RS 6, Audi Q3, Audi A7, etc. These cars are characterized by their flamboyant features and high level technology. Mitsubishi is famous for its Sports Utility Vehicles (SUV) like Mitsubishi Pajero, Mitsubishi Endeavor, Mitsubishi Montero Sports and Mitsubishi Outlander. Other cars are Mitsubishi Lancer and Mitsubishi Galant which are sedan class. Tata offers different types of vehicles such as Tata Zest, Tata Indica, Tata Bolt, Tata Vista, Tata Manza, etc. and other SUVs like Tata Safari, Tata Movus, Tata Nano etc. These cars are fuel efficient and are economical (Hollensen, 2015). Dibb, (2010) explains that each of these brands has a unique method of pricing their products. Rolls Royce pricing strategy is based upon the concept of value based pricing. Since, the company produces handmade and hand finished cars with personalized strategy of supply, they are expected to be highly expensive. However, pricing depends on its brand value and royal status that it provides to the customers. Hence, its products are not price sensitive and the pricing strategy is based on skimming pricing. Audi uses the average pricing techniques. Their cars are supplied at an average price in the market. They keep a proper balance between quality and price. Prices are made keeping in mind the middle class audience. Mitsubishi applies premium pricing methods for its SUVs to cover its Research and Development costs. However, charges low price for other cars. Its prices are at par with its competitors. The pricing of Tata motors are oriented for general customers at large. Even for the lower income class, it offers low cost Tata Nano which is considered to be their trump card. They provide discounts and special promotions each month for particular types of vehicles. To maximize profit, three distribution strategies can be adopted. Intensive Distribution Strategy that places product wares at numerous distributors in various places. It is applied for the products which are high in demand. Selective Distribution Strategy is a technique of distributing products through a few selected distributors in a particular market. In Exclusive Distribution Strategy, exclusive distribution rights are given to one of the two distributors in a local market (Weinstein, 2014). Rolls Royce has a wide network across 28 nations around the globe. Huge investments have been made to construct workshops in past three years in 13 locations. It established Global Distribution Network in 2011 with its main centre in Helmond, Netherlands and regional centers in Singapore and Houston to administer all parts of spare delivery. It is trying to expand its market in India as well. Since it uses premium pricing, hence it applies exclusive distribution strategy. Audi is the third largest luxury carmaker in India. It has made its presence in 18 locations globally. It also applies exclusive distribution channel. Mitsubishis has its showrooms in the US, South Australia, Netherland, India and South East Asian Countries. It uses selective distribution technique. Tata Motors, on the other hand, has widespread dealer network covering Indian and International markets (Toften and Hammervoll, 2009). It employs Intensive and Selective Distribution networks since its products are highly demanded due to low price. All the mentioned brands have their official websites from where they offer online distribution services. There is Third Party channels through which products can be sold online. Various social networking sites are also used to promote the goods. Reference List Braithwaite, A. and Christopher, M., 2015. Business Operations Models: Becoming a Disruptive Competitor. London: Kogan Page Publishers. Dibb, S. and Simkin, L., 2009. Implementation Rules to Bridge the Theory/Practice Divide in Market Segmentation. Journal of Marketing Management, 25(3), pp. 375-396. Dibb, S., 2010. Market Segmentation Success–Making it Happen!. Strategic Direction, 26(9), pp. 50. Gaubinger, K., Rabl, M., Swan, S. and Werani, T., 2015. Product Concept. Innovation and Product Management. New York : Springer Berlin Heidelberg. Hollensen, S., 2015. Marketing Management: A Relationship Approach. New York: Pearson Education. Kapferer, J. N., 2015. Kapferer on Luxury: How Luxury Brands Can Grow Yet Remain Rare. London: Kogan Page Publishers. Lantos, G. P., 2015. Consumer Behavior in Action: Real-life Applications for Marketing Managers. London: Routledge. Lei, N. and Moon, S. K., 2015. A Decision Support System for Market-Driven Product Positioning And Design. Decision Support Systems, 6 (9), pp. 82-91. Maritan, D., 2015. Strategic Matrices and Customer Analysis. In Practical Manual of Quality Function Deployment , New York: Springer International Publishing. Toften, K. and Hammervoll, T., 2009. Niche Firms and Marketing Strategy: An Exploratory Study of Internationally Oriented Niche Firms. European Journal of Marketing, 43(11), pp. 1378-1391. Weinstein, A., 2014. Segmenting B2B Technology Markets via Psychographics: An Exploratory Study. Journal of Strategic Marketing, 22(3), pp.257-267. Wilson, R. M. and Gilligan, C., 2012. Strategic Marketing Management. London: Routledge. Read More