Jaguar Cars on Car Market in the UK - Essay Example

Industrial Visit Project (Visit to Jaguar Cars) Task Marketing Mix Marketing mix in general is a combination of marketing tools that a company uses to satisfy customers and take care of company objectives. This mix produces "the offering" for the consumer. Traditional marketing mix concept, first proposed by McCarthy in 1960, consisted of Product, Price, Place and Promotion (better known as the 4Ps). Each particular marketing mix adds up to a certain amount of effort the company is making for the purpose of generating sales. Any plan to develop a competitive advantage must be based on a sound analysis of the company's competitors. The following variables are often referred to as the four Ps in marketing: Product: Jaguar car is the product in this case. The new XK is available as either Coupe or Convertible, with the option of a normally aspirated 4.2 litre V8 engine or as the Supercharged R version. The XK 4.2L V8 Coup is a 6-Speed automatic car with acceleration 0-60 mph in 5.9 sec with a top speed of 155-250 Kmph. Its fuel efficiency is around 17 kmpl. The company proudly pronounces that Jaguar is dramatically beautiful, powerful and luxurious car. Its available in different variants like Coupe or Convertible, 4.2 litre V8 XK or Supercharged XKR. Ford focuses on its exhilarating lines and muscular intent in next-generation lightweight aluminium to attract the young consumer. Its interior too is designed quite aesthetically. A cockpit designed around the driver - intuitive controls, inspired by a sporting pedigree and tailored to respond precisely on demand. The XK features a host of intelligent technologies, each engineered to empower the driver and enhance the pleasure of driving. Jaguar has axed its S-Type model and replaced it with a new sports saloon called the XF. Place: The Ford Europe and Premier Automotive Group (PAG) recorded strong revenue growth in fiscal 2005. The Ford Europe and PAG primarily include the sale of Fordbrand vehicles in Europe and Turkey as well as sale of PAG brand vehicles. Jaguar form an important component of this brand identity together with Volvo, Land Rover and Aston Martin. Revenues from Ford Europe and PAG reached $60,258 million in 2005, up 11.3% over 2004. Ford Europe and PAG accounted for 34% of total revenues. Growing Ford Europe and PAG has enabled the company to offset revenue decline in the Americas division. Therefore Ford strategically placed its Jaguar brand in UK and other EU nations. From the financial figures so far it appears that Ford's strategy has worked well. In fact, Jaguar pitted couple of its models against BMW, but The S-Type, which was launched as a direct competitor to the BMW 5-Series in 1999 was widely criticized for being overly conservative, and the model is now ready for being discontinued. Price: The car is competitively priced. The base end 4.2 litre V8 Coup is available with a price tag of 59,995.00. In the fourth quarter of 2006 Ford suffered some losses owing to ending of its employee-discount pricing incentives, rising gas prices, and rising interest rates. Now a days the pricing strategy is also influenced by the growing trend of users purchasing used SUVs. Fuel economy plays a major role in deciding the price factor and attraction for the customers. Promotion: Marketing communication in turn helps a company in building a brand, creating brand loyalties, increase in sales, cutting costs, etc. UK market is a very diverse market in general which caters to customers/ consumers from different walks of life, different cultures, ethnic groups and age groups. In today's market driven economy concept, the art of communication to existing consumers as well as prospective consumers takes a great deal out of the managerial brain storming sessions. Jaguar launched a wide ranging online and mobile campaign in September 2006 for its new XKR sports car, which was officially unveiled at The London Motor Show. Interactive marketing took the lead for the car's launch, with cinema and press advertisement backing up. There were downloadable videos for mobile devices, and interactive banners. Digital agency Global Beach created the integrated campaign, along with a microsite featuring interactive, full-screen video. Users texting XKR to the company were offered a 10 second video of the car. Ring tones were also made available to the customer to further boost the chances of the car. In fact, Jaguar was encouraged to devote more energy to mobile activity after finding in test campaigns earlier in 2006 that it gained better response rates from short-codes than from 0800 freephone numbers. Task-2: Structure of the Market/ Industry in the UK A major issue affecting the car market in the UK is its cost. While such costs are not new, and include the cost of purchase, taxing, insuring, repairs and maintenance, and running the car, a number of recent developments have raised the profile of this area considerably. These include: Recent hikes in the price of oil on international markets have fed through to increased prices at the pump. The conflict during the summer of 2006 between Israel and Lebanon, for example, led to the price of unleaded reaching, and in some cases surpassing, 1 per litre for the first time. Insurance costs continue to be a major area of concern for many motorists. Recent years have seen significant increases by many insurers in their policies in order to fund rising costs and the fact that around one in ten motorists now carry no insurance at all. Congestion Charging. This is already a reality for those in Central London with the prospect that similar schemes will be implemented in other towns and cities over the coming decade. Reports from the scheme operating in London have proved that the Congestion Charge has led to a reduction in traffic volumes which is expected to prove attractive to other urban areas faced with rising traffic numbers. ELV Directive. The End of Life Vehicles (ELV) Directive seeks to increase the level of reuse and recycling of ELVs and limit the use of material harmful to the environment in new vehicles. The Directive came into effect in the UK on 1 January 2006 with all vehicle producers having to operate Authorised Treatment Facilities (ATFs) and/or collection points and be in a position to offer a free take-back facility as of 1 January 2007. The operation of such facilities extends the cost base of manufacturers by having to deal with scrapping the vehicle. It is thus highly likely that manufacturers will seek to pass on this cost to consumers. Strengths Growing number of qualified drivers with every prospect of further increases in the long term. Declining car prices have allowed consumers to trade up to higher-specification models. Continual boost being given to market by the launch of new makes and models. Intense levels of competition within both new and used segments of the market. Importance of youth and grey markets for new car purchases - numbers of both of which are increasing in size at present. Increasing shift of UK-based manufacturers towards targeting export markets eg Landrover. Strength of the used car market. Extensive dealer network with recent opening of new channels such as car supermarkets and the Internet. Growth in the number of households demanding two or more cars. Weaknesses High costs associated with running a motor car with increases in several areas (fuel, tax, insurance). Cooling consumer confidence, due to slowdown in house prices rises over 2005 and 2006. Consumers showing a greater tendency to service their existing debt rather than taking on new debt. Government policy to reduce reliance on use of car through improvements in public transport and direct/indirect taxes. Increased prominence of environmental issues that may further impact on cost of motoring as well as consumer awareness but creates the opportunity to get people to buy a different car. Competition faced by cars from other high-ticket items such as foreign holidays and household improvements. Fall in new car sales from peak of 2003. Intense price competition within market makes margins for dealers tight. Limitations to fully liberalised new car market by existence of Block Exemption. Weakening performance of UK-based manufacturers in the domestic market. Task-3: Car Makers in UK: The car industry in Europe and UK is dotted with many well known brands like DaimlerChrysler AG, Fiat S.p.A, General Motors Corporation, Genuine Parts Company, Honda Motor Co., Ltd., Hyundai Corporation, Isuzu Motors Limited, Komatsu Ltd., Lex Service PLC, Mitsubishi Motors Corporation, New United Motor Manufacturing, Inc., Nissan Motor Co., Ltd., PACCAR Inc., PSA Peugeot Citroen S.A., Renault S.A., Suzuki Motor Corporation, Toyota Motor Corporation, Volkswagen AG, Kia Motors Corporation, Dr. Ing. H. C. F. Porsche AG, Aftermarket Technology Corp., Audi AG, MG Rover Group Limited, SEAT S.A., Subaru, GM Daewoo Auto & Technology Company, Daihatsu Motor Co., General Motors Acceptance Corporation etc. This goes on to say that the UK car market is a very diverse and highly competitive market. Ford has the strength of Strong Ford Asia, Africa and Ford Mazda operations as compared to its competitors. Britain's car manufacturing industry took a big blow when Peugeot Citroen's ceased production at the Ryton plant, with the loss of 2,300 jobs. This indicates towards the severity of the competition and shrinking margins. Task-4: Levels of Profits for Fords The company recorded revenues of $177,089 million during the fiscal year ended December 2005, an increase of 3.2% over 2004. For the fiscal year 2005, the Americas, the company's largest geographic market, accounted for 55.4% of the total revenues. Ford generates revenues through two business divisions: automotive (86.7% of the total revenues during fiscal year 2005) and financial services (13.3%). Ford Europe and PAG accounted for 39.3% of the total revenues in the fiscal year 2005. Revenues from Ford Europe and PAG reached $60,258 million in 2005, an increase of 11.3% over 2004. Task-5: Recommendation Jaguar is indeed a formidable company. The company had seen many ups and downs in the recent past, and now seems to be on a recovery path. The Jaguar XK was crowned 'Car of the Year' and 'GT of the Year' at the 2006 Top Gear Awards in London in January 2007. This was the first time Jaguar received this prestigious accolade from the UK's biggest selling motoring publication. This not only indicates towards the success of its marketing mix strategy but bodes well for the future as well. The new Jaguar C-XF concept car - a major UK initiative - was hailed the star of Detroit's International Motor Show in the first week of January 2007. The losses that the company made owing to restructuring and cost disadvantages have been converted to profitable proposition by Ford. The company has indeed become very attractive for an entrepreneur now. References: 1. Company Profile: Ford (Nov 2006), Datamonitor London. 2. Peugeot to cease production at Ryton plant in UK (19 Apr 2006), News item 3. Laura Lake, 'Developing Your Marketing Mix,' available at, http://marketing.about.com/od/marketingplanandstrategy/a/marketingmix.htm/ 4. Jaguar website, http://www.jaguar.co.uk/ 5. Philip Kotler, (1974), Marketing Management, 2nd Ed., Prentice Hall Read More