Elfin Sports Cars - Marketing Challenges - Case Study Example

Investigate a managerial practice Name Institution Tutor Date Executive summary This paper aims to investigate the opportunities and the marketing challenges that Elfin Sports Cars would face in introducing its products abroad: France, Russia and India. One of these countries should be selected as the main target market. To help decide which country should be selected, this paper will investigate the various factors that may influence the market for sports cars. The paper will begin by introducing the company, its history, products and the scope of operation. This will form the basis for understanding why Elfin is seeking to expand its market. This will be followed by outlining the product line services, the current market profile and SWOT analysis for the company. Later, the paper will investigate the market situations in all the three countries based on economic, legal, political and cultural parameters. A comparison and contrast of these parameters will help decide which country is the most favorable to be the target market. A discussion and analysis of the findings will help decide which country will be the most suitable. The recommendations of the paper will select one of the three countries and explain why it was selected and propose the entry strategy for Elfin Sorts Cars into that country as well as the advertising methods to be used. Table of contents Introduction 3 Opportunities and challenges in marketing Elfin Sports Cars abroad 5 Current Market Profile 5 Product/Service Industry Analysis 6 SWOT (Company Analysis) 6 Global Market Search 7 Economic Criteria 7 Demographics 8 Economic Criteria 8 Political/Legal Environment 9 Discussion and analysis 10 Conclusion 12 Recommendations 12 References 13 Introduction Competition and recent economic recession have posed major challenges even to huge companies like Elfin Sports Cars. The company has been forced to fetch for market of its products elsewhere in France, Russia and India. Elfin Sports Cars is a company that has successfully manufactured vehicles for a period of 50 years. The company has been offering a wide range of sports cars which are modernized with dynamism that facilitate stylishness, comfort, as well as enhanced performance. For the 50 year period that the company has been in operation, it has managed to manufacture competitive open-wheeler and sports cars in the market (Ichijo & Kohlbacher, 2007). The company has managed to retain its competitiveness as a result of its quality and timely production. Operations at Elfin Sports Car are guided by a strategic policy which is designed to enable it retain its competitive edge on the global stage. The process of designing the policy involves all the stakeholders so as to ensure its inclusiveness, and this mitigates the chances of dissent while running the affairs of the company (Beise & Rennings, 2004). This paper elaborates the products that the company offers as well as their marketability abroad. The primary role of this paper is to investigate the challenges and opportunities in marketing of Elfin Sorts cars abroad. Over the last 50 years, Elfin Sports Cars has manufactured a variety of vehicles which ranges from the Streamliner of 1959 to the Formula Vees. Other models include the 1980’s MR9 Formula 5000 and the Big Banger sports cars. The quality of these products has been exhibited by the fact that the Cars have won at least 29 major titles, including championships. Most notable of the wins are the Australian Sports Car Championships for 5 times, the Australian Driver's Championships for two times, Formula Ford Title for 3 times, and the Australian Tourist Trophies for 4 times (OECD, 2004). The company hopes to bank on this reputation as it seeks to expand its international market in the near future. The Formula Vees brand is believed to have the capacity to sell significantly in such countries as France, Russia, and India. The most appropriate business model for Elfin Sports Cars is that which facilitate the implementation of the best methodology while using the appropriate materials and in the right time so as to realize the best results. The best methodology is to utilize market targeting so that the company does not misuse resources on unnecessary activities (OECD, 2004). The advantage of exporting is that the company is able to absorb the shock in one market by utilizing the opportunities in other markets. This means that, in addition to enhancing profitability, exporting positions a business enterprise in a manner that enables it overcome turbulence at the home market. The most notable disadvantage of exporting is that Elfin Sports Cars would need to utilize significant resources on marketing. Additionally, exporting does also complicate the management of the organization ((Rao & Monroe, 1999). Opportunities and challenges in marketing Elfin Sports Cars abroad Current Market Profile Elfin Sports Cars target middle to high income customers since the cars are a bit more expensive than most others in the market. They are classy and stylish, and this means that a significant number of individuals would consider their acquisition as being extravagance. The biggest market for Elfin is in the sporting organizations since the sportsmen and women have to acquire such motor vehicles. In most instances, individual owners utilize these cars during the weekends, meaning that they are usually bought by people with multiple vehicles (Ichijo & Kohlbacher, 2007). The international market being targeted by Elfin has characteristics which are relatively similar to those in Australia. The products are not necessities: they are usually acquired for sports or as status symbols. Bearing this in mind enables the management to strategize and target the most appropriate market and avoid wasting time and resources (Rao & Monroe, 1999). Product/Service Industry Analysis There are several substitutes for the products manufactured by the Elfin Sports Cars. These substitutes include products by Joss from Australia; Aphine and Danvignes from France; Marussia Motors from Russia; as well as Adrenaline Motorsports, Delfino, and Ultima Sports from the United Kingdom. The advantage of those manufactures operating from France, the UK, and Russia is that their home countries have greater economies as compared to that of Australia. This means that they are able to sell more, meaning that they have much powerful economic base (Lambert, 2000). The disadvantage that these companies face as compared to Elfin is that their cost of production and overheads are high, meaning that they are forced to sell their products expensively. It is important to note that all these products are of relatively similar quality. Nonetheless, price varies significantly based on the factors outlined above as well as such others as the type of management, research and development (Beise & Rennings, 2004). SWOT (Company Analysis) Elfin has been successful for 50 years due to the ability of the management to strategize appropriately. At Elfin, the leadership institutes a style of management where everyone’s view is heard and respected. This mitigates the level of disagreement, and stakeholders are able to work closely in teams. Among the internal weaknesses is that the company is yet to attain a financial base which is as strong as those of the competitors. The management hopes to overcome this as soon as the international market is secured (Ichijo & Kohlbacher, 2007). Elfin is a reputable company in Australia. Indeed, one cannot fail to notice Elfin while assessing the motor sporting industry in Australia. This gives the organization an edge while offering its products for sale in Australia as well as abroad. Among the external threats that the company is faced with is the fact that the sporting industry of Australia is yet to attain remarkable levels of profitability as is witnesses in such countries as Italy, France, and Germany (Lambert, 2000). Global Market Search This section compares the socio-economic dimensions in France, Russia, and India with regard to the export of products from the Elfin Sports car manufacturer. The section utilizes both qualitative and quantitative pieces of data so as to eliminate the intrinsic biases which may result if only a single set of data is utilized. Eventually, a conclusion is drawn based on the analysis of the data in question. This facilitates the ranking of the economies based on the prospects for profitability (Beise & Rennings, 2004). Economic Criteria France has the 9th largest economy in the world, which is also 3rd in Europe. These statistics are based on the purchasing power parity. Being home to 39 out of the 500 largest companies in the world ranks France as 4th as per the Fortune Global 500 and this is ahead of the UK and Germany. The country’s economy is mixed as it combines substantial state enterprises with extensive private enterprises. This means that there is significant government intervention in the business world. It has a GDP of $2.613 (Ichijo & Kohlbacher, 2007). Russia is an economy worth $3.380 trillion. The country has per capital income of $14,037. Russian economy is ranked the 8th as per the nominal GDP and 5th based on the purchasing power parity. Russia is a great power that has a lot of influence. India is the world’s 10th largest economy with a GDP of $1.824 trillion. This means that it is a significant power, both regionally and in the world (Beise & Rennings, 2004). Demographics The citizens and residents of France are faced with a number of pressing economic challenges, amongst them a persistently significant unemployment rate. Efforts by the French government to reduce the level of unemployment have not been successful. Nonetheless, the French household income and social welfare are still among the highest in the world, and this means that the citizens can still afford luxuries. With regard to the human development index, France is ranked the 20th (Beise & Rennings, 2004). Based on the 2010 census figures, the Russian population density stood at 8.4 persons per kilometer squired, meaning that the country is sparsely populated. Nonetheless, the population is mainly concentrated in St. Petersburg and Moscow. In these two regions, there is a higher household income as compared to the rest of the country. This means that Russians in Moscow and St. Petersburg can afford luxuries such as sports cars. India is the world’s second most populated country in the world. It follows that India is home to a sixth of the world’s population, and it is projected to have overtaken China by the year 2025 (Lambert, 2000). In India, over 50% of citizens are below 25 years of age. Additionally, it is important to note that 65% are below 35 years of age. This means that India’s strength is in the future. It is expected that by 2020, the average age in India will stand at 29years, as compared to France with 43, and Russia with 47. Half of the Indians live in the rural areas, and a significant number of those who live in the cities dwell in slums. This means that human development index in India is slow (Lambert, 2000). Economic Criteria France is a stable economy where the rate of inflation stands at 0.90%. In Russia, the case is different, with the country experiencing a rate of 6.10%. Russia and India are at the same level with India also recording an inflation rate of 6.10%. This means that with regard to inflation, France is the best country to work from. This is because the economy is far more stable than those of Russia and India (Button, Ngoe & Hine, 2005). One US dollar is equivalent to 4.84 French Franc, while 1 Australian Dollar is equivalent to 4.58 French Franc. Rupee is the Indian currency unit, and it is currently changing 57.76 Indian Rupee to 1 Australian Dollar. It is currently changing 61.01 Rupees to 1 US Dollar. With regard to Russian Ruble, 1 Australian Dollar is equivalent to 30.57 Russian Rubles. One US dollar is equivalent to 32.29. Such conversions are important so that the organization can manipulate statistics with similar figures (Button, Ngoe & Hine, 2005). Political/Legal Environment France is relatively a corruption free country. Nonetheless, the score of 71% means that it is well behind such Nordic nations as Germany, Netherlands, the United Kingdom, and Belgium. Indeed, there is a difference of 29 points between New Zealand, Finland, and Denmark. Being ranked at 133th position out of 176 countries, it is evident that Russia is among the most corrupt nations in the world. The country ties with such other nations as Guyana, Comoros, Honduras, Kazakhstan, and Iran. As compared to Russia, India is relatively free of corruption since it is ranked 94th in the world (Lambert, 2000). Among the three countries, France ranks the highest with regard to the ease of doing business. It is followed by India while Russia ranks the last. Indeed, there is more economic freedom in France as compared to the other two nations. Among the three nations, Russia ranks the worst as far as political stability is concerned. India is second, and Russia is at a distance third. France is a member of the European Union, an organization that has been facing a number of challenges in the recent past. On their part, Russia and India belong to a group referred to as the BRICS which constitutes Brazil, Russia, India, China, and South Africa. Russia is also a powerful member of the Commonwealth of Nations (Lambert, 2000). The three nations are also members of the World Trade Organization. Russia and France are also powerful members of the United Nations by virtue of being members of the UN Security Council. France applies tariffs which are common to the European Union, and this means that they are highly regulated. In Russia and India, tariffs are applied as per the wishes of the respective governments (Lambert, 2000). Discussion and analysis France is relatively a corruption free country. Nonetheless, the score of 71% means that it is well behind such Nordic nations as Germany, Netherlands, the United Kingdom, and Belgium. Indeed, there is a difference of 29 points between New Zealand, Finland, and Denmark. Being ranked at 133th position out of 176 countries, it is evident that Russia is among the most corrupt nations in the world. The country ties with such other nations as Guyana, Comoros, Honduras, Kazakhstan, and Iran. As compared to Russia, India is relatively free of corruption since it is ranked 94th in the world (Button, Ngoe & Hine, 2005). Among the three countries, France ranks the highest with regard to the ease of doing business. It is followed by India while Russia ranks the last. Indeed, there is more economic freedom in France as compared to the other two nations. Among the three nations, Russia ranks the worst as far as political stability is concerned. India is second, and Russia is at a distance third. France is a member of the European Union, an organization that has been facing a number of challenges in the recent past. On their part, Russia and India belong to a group referred to as the BRICS which constitutes Brazil, Russia, India, China, and South Africa. Russia is also a powerful member of the Commonwealth of Nations (Button, Ngoe & Hine, 2005). The three nations are also members of the World Trade Organization. Russia and France are also powerful members of the United Nations by virtue of being members of the UN Security Council. France applies tariffs which are common to the European Union, and this means that they are highly regulated. In Russia and India, tariffs are applied as per the wishes of the respective governments (Button, Ngoe & Hine, 2005). India is an emerging economy, and with a population of over 1.237 billion people, the market is among the largest in the world. The number of Indians who can afford vehicles and other luxuries is increasing tremendously with time. The case is quite different in such markets as France where the economy has reached its optimum level. Investing in developed nations like France is proving to be a bit challenging since such nations have their own homemade products, and the clients do not have the motivation to try imported products (Ichijo & Kohlbacher, 2007). As it has been indicated by the data in the last module, Russia is not an attractive market especially for organizations with moderate financial base. This is because the country’s political establishment interferes with the manner in which businesses are managed. The level of skepticism is high and as a result, business organizations’ strategic policies have to keep on changing to accommodate the political dynamism. This introduces undue pressure and challenge which can eventually push organizations out of business. This may actually explain why the economy of the country appears to have stagnated in spite of the fact that there are numerous resources and the population is significantly high (Button, Ngoe & Hine, 2005). India proves to be the best country to invest in since there is the political will to support business endeavors as well as a significantly high labor force, market, and adequate resources. The country is also strategically positioned, and this means that the cost of importing and exporting raw materials and products is significantly reduced. It is based on these factors that Elfin Sports Cars ought to consider championing investments in India before considering other markets (Ichijo & Kohlbacher, 2007). Conclusion This report has explicated the opportunities that Elfin Sports Cars have with regard to sourcing external market. Elfin is, however, faced with the challenge of competition from other manufacturers. Some of the manufactures are more financially endowed, and this means that they can afford expensive means of advertising and operation. Strategically, Elfin Sports Cars can outdo the competitors through appropriate advertising and implementation of the most effective strategies. India appeals since based on the assessment undertaken while completing this report, it is an emerging market where more and more individuals are capable of acquiring luxury vehicles. The market does also have adequate labor force which can be attained cost effectively. Elfin Sports Cars has managed to survive for 50 years in spite of the competition in the home country as well as a host of other challenges. Elfin Sports Cars can manage to dominate the Indian motor sports and the sports cars industry will appropriate planning and timely implementation of policies and strategies (Beise & Rennings, 2004). Recommendations As it has been explained in the paper, India is the preferred market of choice for Elfin Sports Cars. With target marketing, it would be possible to concentrate on the sections which would avail the highest level of income for the company. The firm will utilize a pricing strategy that allows even the middle-income earners to be in a position to acquire the vehicles. In order to facilitate effective distribution, it would be important for the firm to manufacture motor vehicles in India. This would be important since it will avoid import agents. The firm can manage to sell to the wholesale distributor, retail distributor, and indeed the final customer (Rao & Monroe, 1999). Rates of exchange have been discussed extensively in this paper. Rupee is the Indian currency unit, and it is currently changing 57.76 Indian Rupee to 1 Australian Dollar. With regard to the US Dollar, it is currently at 61.01 Rupees to 1 US Dollar. This information is important as it enables the stakeholders deal with universal currency while evaluating situations in various markets. For effectiveness, prices will have to be set at the destination market since that is where all information regarding factors of production is readily available. Forward contracting will ensure timeliness as well as quality (Rao & Monroe, 1999). Elfin Sports Cars should market the products through advertising in brochure, journals, and newspapers. From time to time, the company will also be conducting promotions so as to cement its relationship with the clients in India. Promotions will include personal selling so that the organization’s representatives can get into personal contact with the clients. Another method will include direct marketing where sales representatives establish direct contact with the potential clients. Sponsorship will also be employed since it will enable the society appreciate having Elfin Sports Cars in India (Beise & Rennings, 2004). References Beise, M. & Rennings, K. (2004). The impact of national environmental policy on the global success of next-generation automobiles. International Journal of Energy Technology and Policy, 13(2): 272-283. Button, K., Ngoe, N. & Hine, J. (2005). Modelling Vehicle Ownership and Use in Low Income Countries. Journal of Transport Economics and Policy, 27, (1): 51-67. Ichijo, K. & Kohlbacher, F. (2007). The Toyota way of global knowledge creation the 'learn local, act global' strategy, International Journal of Automotive Technology and Management, 7(2): 116-134. Lambert, Z. (2000). Product Perception: An Important Variable in Price Strategy. Journal of Marketing, 34, (4): 68-71. OECD (2004). Can Cars Come Clean? Strategies for Low-Emission Vehicles: Strategies for Low-Emission Vehicles, New York: OECD Publishing, pp 69 - 70 Rao, A. & Monroe, K. (1999). The Effect of Price, Brand Name, and Store Name on Buyers' Perceptions of Product Quality: An Integrative Review. Journal of Marketing Research, 26, (3): 351-357. Read More