Marketing Strategy Analysis of Holden Ltd - Case Study Example

Company Marketing strategy analysis Name Class Unit Introduction Holden ltd is a car manufacturing company in Australia. The company started manufacturing vehicles in Australia as Holden in 1917. In 1931, the company became a subsidiary of Ford Motor and renamed to General Motors-Holden’s Ltd and later to Holden Ltd in 1998. The company has their headquarters at Port Melbourne in Victoria. The company has a diverse range of products which includes Commodore, caprice and Ute (Holden, 2014). Aim A study of the marketing environment of Company Holden Ltd Background Holden Australia is primarily focused on manufacture of vehicles. The company has been in the Australian market for a very long time. The company market share has been strong up to the year 2000 when they lost 12% of their market share. The company lost its top position in the automobile market in 2003 to Toyota. The losses were attributed to the development of new vehicle models and the Australian dollar gaining strength. The company has suffered continuous losses in the following year’s leading to fears of closure in 2017. The company has tried to avert the situation by negotiating with employees to have a pay freeze. The company has been expecting to benefit from the federal government funding so that they could survive from 2016 to 2022. Holden Ltd announced that it will cease vehicle manufacture in 2013. This has been due to market loss in Australia. The areas that the company will cease working on are, engine parts but they will set up a national sales centre. Despite the challenges, the company has maintained their market production in Australia. The export market has been doing very well compared to the home market. There have also been exports to North America, Middle East and China. There are more than 6000 employees in the company who are employed on a permanent basis. The company has been involved in innovation to ensure that there is sustainability. This has been done through electric vehicles and small cars which are environmental friendly. The use of electric vehicles has been cited to be a big step toward environmental conservation. This has been carried out in a bid to ensure there is less carbon emission to the atmosphere (Holden, 2014). Competitors, suppliers, customers Holden Australia faces stiff competition from Toyota who is the market leader and more established globally. Toyota took the market leadership from Holden Australia. The company also faces competition from other vehicle companies such as Nissan, Renault, Honda and Hyundai. At the moment, Holden ltd has faced a stiff competition leading to its decision to stop production of vehicles in Australia on 2017. The company has also been faced with an increase in the cost of the raw materials from the suppliers making the production more expensive (Holden, 2014). The main consumers of the products are from Australia, New Zealand and the export market. There has been a declining customer base especially from the United States as demand for light vehicles have decreased. The rising cost of production has reduced the customer base due to the cost being transferred to the customers. Of late the company has lost their home market share to other competitors in the market (David, Marian & Joel 2005). Product description The company has strong car brands such as SUV and Minivans. This has helped the company to maintain the automobile market despite the challenges of losing to competitors. The latest line of products is Captiva5LTZ, Captiva 7LX, Barina Spark and Cruze Sri. These vehicles prices ranges from 39,000 dollars to 15,000 dollars. The company also manufactures large vehicles, small and medium cars (Holden, 2014). Pricing, promotion and distribution strategies used by the company The company has utilized several promotion techniques to ensure that they capture the market. The main aim of the promotion techniques that have been utilized by Holden is to attract new customers, increase brand, loyalty, give more information on their products, persuasion and encouraging their customers to buy their products. The company has chosen several advertising methods to ensure that they gain customers. One of the methods is publicity; the company continually publishes stories about their products for free. This is done to ensure that the company has the required publicity. This has been carried out using news release and feature articles (David, Marian & Joel 2005). Holden pricing targets the middle income earners as well as the affluent class. The pricing is determined through cost price margin, but in some instances, the company use demand based pricing. Of late, the competition in the automobile market has increased in Australia. This has led the company to reconsider their method of pricing that will be able to retain a customer. The company has an option to choose demand based pricing for their products. Discount pricing have also been utilized where customers are given discounts on the listed prices. Holden also spends a lot of revenue in ensuring that they are able to market their product through advertising. This is done through their website as well as on television and print media (Robert et al. 2004). Advertising helps in making the customers more informed on the product through giving the required information. There are also sales promotions activities carried out by Holden Company. These include discounts on their shops on selected vehicle models. This tactic helps in maintaining the customer loyalty and attracting new customers (Patterson & Ward, 2000). Another method that is used at Holden Australia for marketing is personal selling. This involves making sales attempts that are directed to the individual customers. This method though expensive as a promotional tactic have high returns to the company. This is due to the extensive amount of resources which are required in visiting the customers (Parmerlee & David, 2000). Marketing mix and comparison to competitors The company main strength is brand strength in Australia and New Zealand. The company has been able to establish a legacy, having been introduced in Australia in 1856. The company main weakness is its limited presence in the global market. Despite this, Holden have great opportunity in exploring the emerging markets in Asia. The main threats for Holden Australia come from reducing demands their products and lacks of international brand knowledge (Kevin & John, 2009). Compared to the competitors, Holden marketing mix has not been very successful. This is in comparison with Toyota who is capable of offering lower prices. The pricing technique that has been used by Toyota is based on demand but they have lower production cost. Toyota has most of their factories where labor is cheap making it possible to price their products well in the market. This has been one of the reasons why Toyota was able to capture the Australian market (McDonald & Malcolm, 2002). Recommendations for improvement of marketing mix for products Holden marketing mix has not been successful as compared to their main competitors Toyota. This is due to high cost of production and low demand for SUVs in their export market especially America. The company has lost most of their market to Toyota despite their marketing efforts. The company ought to utilize competitive pricing so as to gain their market share. This involves making their products price to be based on the competitors’ prices. This will enable Holden to attract customers who are turning to competitors due to prices. More emphasis should be put on establishing a perfect market mix that will be based on the company vision, objectives, competition level and the market conditions (Margaret & Mark, 2003). The market mix should also take into account the product life cycle on market mix. The changes in technology and variation on the consumer taste may lead to a loss on the market. The marketing mix should be accessed to ensure that it comply with changing market environment. For example, Holden Australia should consider outsourcing labor and venturing into more global markets. This can help to increase their market share (Schultz, 2001). The company foreign markets have been profitable as compared to the Australian market. The product development should be done with enough market knowledge. This is important as it ensures that there is a market for the developed product. The company should consider changing their advertising techniques so that they are able to keep their market updated. From research, up to 70 percent of the products that are launched fails. This makes marketing of new products more risky and expensive (David, Marian & Joel, 2005). Conclusion Holden Australia has a strong legacy having been started in 1856. The company has a strong brand name having been well known for SUV and Minivans. The main weakness for the company is the fact that it has less international presence. The reduced global market share has made the company venerable to market instability. The company has also opportunities in emerging markets especially in Asia. There have been threats from lack of brand popularity in other countries and reducing demands for the SUVs. The competition in the automotive industry has also been very high. This has made the company lose the market to Toyota. By comparing their marketing mix to competitors, Holden ltd has been surpassed. The main promotional tactic used by Holden is discounts offered on selected vehicles. The company has also been aggressive in marketing using the media. The pricing is mainly based on the cost margin and demand. Holden Australia needs to shift their marketing mix using competitive pricing so as to have a competitive edge. There is also need to reevaluate their marketing strategies due to changes in the global market. References David, B. M., Marian, C., M. & Joel, E. U. 2005, ‘Reasoning About Competitive Reactions: Evidence from Executives,’ Marketing Science, Vol. 1, no3, pp.138-149. Holden, 2014, About us, Viewed 13 April 2014. http://www.holden.com.au/ Kevin, P. C. & John, H 2009, ‘Predicting Your Competitor's Reaction,’ Harvard Business Review, Vol.1, no2. p. 90-97. Margaret, A. P. & Mark E. B. 2003, ‘Scanning Dynamic Competitive Landscapes: A Market- Based and Resource Based Framework’, Strategic Management Journal, Vol. 24, no.1, pp.1027-1041. McDonald & Malcolm 2002, How come your marketing plans aren’t working? The essential guide to marketing planning, London: Kogan Page Limited. Parmerlee & David 2000, Developing Successful Marketing Strategies, New Edition. Chicago: NTC Business books. Patterson, G.P. & Ward, T 2000, Relationship Marketing and Management, Handbook Services Marketing and Management, Sage Publications Inc. Proctor, T 2000, Strategic Marketing: An Introduction, London, Routledge. Robert, Karl-H., George B., Goran B., Sophie B., David., Hordur H., Lena J. et al. 2004, Strategic Leadership towards Sustainability, Karlskrona, Blekinge Institute of Technology. Schultz, D 2001, ‘Marketers: Bid Farewell to Strategy Based on Old 4Ps’, Marketing News, Vol. 35, no. 2. p.7-23. Read More