Marketing Strategies of Ford Galaxy - Essay Example

Marketing Report On Ford Galaxy By Rowan Holland ID: c33148190 Yorkshire First Foundation HND Business and Management Introduction to Marketing Module Tutor: Judy Strachan Submission Date: 8th May 2006 Word count: 0000 INTRODUCTION The thrust of this paper is to evaluate the current competitive landscape in UK Light Car Industry and analyse the marketing strategies of Ford Galaxy. Market statistics and trends will be presented to provide a crystal-clear understanding of the dynamics in the car industry. This will be followed by thorough evaluation of the current marketing mix and programs of Ford Galaxy relative to intense competition. In the end, a series of marketing recommendations will be presented primarily to augment the current practice and challenge the company to move forward aggressively. SITUATIONAL ANALYSIS Ford Galaxy is a seven-seater luxury large Multi-Purpose Vehicle (MPV) developed jointly by Ford and Volkswagen and was first introduced in 1995. During the Frankfurt Motor Show held last September 2005, the latest Ford Galaxy model was unveiled. It will be available in the market in the middle of 2006. Market Summary In the Motor Industry Facts 2006 published by SMMT (Society of Motor Manufacturers and Traders Ltd.), total car registration in UK reached 2.4 million as of 2005. In table 1 below, Lower Medium segment remains to be the most dominant car type in the industry owning 31.2% of the market. Ford Focus, Vauxhall Astra, and Renault Megane are among the products included in this category. However, total car registration was down by 5% compared to 2004. Major factors attributed to such decline were lower consumer spending, increasing interest rates, and intense competition in the industry. Very evident in the last three years in the industry was the shift of consumer preferences in terms of car type. Share of Superminis like Corsa, Fiesta, and 206 went down by 3.9% while its alternative Lower Medium increased market share by 2.8%. Furthermore, SUVs or Dual Purpose 4x4s and MPVs increased share in the industry New car registrations can be classified as non-private (fleet and business) and private. An estimated of about 44.1% of total car registrations were categorised as private vehicles. In terms of non-private, 49% were contributed by business segment and the remaining 7.3% for fleet. Table 1 MPV's or minivans are slowly gaining popularity in the industry resulting to a 3-year compounded annual growth rate (CAGR) of 7.6% against total industry CAGR of -1.6%. However, total MPV declined by 8% which is somewhat similar to the situation of the total car industry. MPVs are also known as people carrier, multi-utility vehicle, or to some extent as minivan. A typical MPV can seat 7 people or more, relatively higher than normal sedans, and can be characterised as a family car. It is further segmented in three major categories - mini-MPV (e.g. Hyundai Matrix), compact MPV (e.g. Vauxhall Zafira), and large MPV (e.g. Ford Galaxy) depending on its body size and seating capacity. Market Needs In the survey involving 3,000 new car buyers conducted by Vauxhall Motors last 2003, reliability turned out to be the most important consideration affecting car purchase. Price which was the primary consideration in year 2002 fell to 4th position. Comfort, fuel economy, price, exterior size and space in vehicle are other leading considerations influencing car purchase in UK. Market Forecast Car registration forecast in 2006 is still negatively skewed according to SMMT. Expected new car registrations will be around 2.375 million or -2.7% compared to actual car registration in 2005. Weak economic forecast which is directly related to weakening consumer spending is considered as one of the significant deterrents in 2006. Conversely, diesel demand is predicted to increase in the coming years. Competition General target buyers for MPV are young families with children age 6 to 11 years old who want better fuel economic savings. The growing fierce competition both in total Car industry and in the MPV segment consequently increased consumer standards in purchasing a new car. These elaborate changes in interior ergonomic designs, new exterior finish, service warranties, loaded engines, and audio-video accessories are constantly improving and upgrading to capture the consumers' needs and wants. Table 2 In table 2 above, Vauxhall Zafira remained the undisputed dominant market leader in the total MPV segment despite its 5.4% dip in 2005 market share and 20% decline in growth. VW Touran benefited from Zafira's attrition gaining 5.6% market share with 10% growth. Far third is Ford Galaxy registering a trivial 2% growth. Note that more than 50% of the market comprises the newer generation compact MPV subsegment while the remaining share accounts for other MPV subsegments i.e. mini-MPV and large MPV. In terms of direct competition in the large MPV subsegment, Ford Galaxy still has the foothold but currently facing tough competition from Kia Sedona and Chrysler Voyager. Kia Motors Corporation is a Korean-based car manufacturer recognised as the fastest growing car company in 2004. It is very renowned through its corporate theme called "The Power to Surprise" focusing its relentless efforts on innovation, manufacture of affordable cars, and global expansion. The brand name Kia Sedona is based on southern American state of Arizona recognised for its open spaces. Hence, it connotes a roomy vehicle. The main selling point is low price claiming that it is indeed possible to enjoy delightful luxury at a very minimal price. At the same time, they are pushing for togetherness among family members. Retail price can be as low as 15,052 for 2.5 V6 L model and as high as 20,492.00 for 2.9 CRDi Se + Auto. Undoubtedly, this is the biggest bargain in the MPV segment. Standard model includes: 7 flexible seats, twin sliding doors, in-car DVD player, and twin airbags. Chrysler is part of the DaimlerChrysler Group and is noted for their strict values related on responsibility, open-mindedness, and top performance. Pioneering technologies is their main source of competitive advantage Chrysler Voyager tags itself as the "Premium MPV without the Premium". Price ranges from 18,540.00 (2.4 SE) to 23,220 (2.8 CRD LX). According to Yahoo! Cars (UK & Ireland) review, this is intended for consumers who want luxurious long distance travel, legroom, and value for money. Standard offer includes 2.4 litre 16 valve petrol engine, 6-speaker CD sound system, and dual zone air conditioning. Furthermore, Voyager gives car buyers more freedom to customise his MPV. In their website, the Indirect competition like mini-MPV and compact MPV subsegments must also be carefully monitored to determine its market impact and influence on consumer preferences. Incidentally, there exist a very lucrative opportunity to go after the market of Vauxhall Zafira. However, this can prove to be a daring task considering the image established by Zafira in the industry. As the leading brand in the total MPV segment, Vauxhall Zafira gained several recognitions. As of 2003, numerous awards were received by Zafira and very esteemed are the following: - Best MPV - Auto Express New Car Honours - Best MPV - What Car Car of the Year awards - 3rd year running - Best Used Car of the Year - Auto Express - Best MPV - Fleet Excellence awards Given the intense competition in compact MPV, technical capability of Vauxhall Zafira, and its strong brand image, Ford Galaxy must try to avoid direct confrontation with Zafira to prevent war of attrition and increase chance for survival. FORD GALAXY MARKETING MIX Product Ford Galaxy is harping on the following product features to gain competitive edge: Driving dynamics. Renders the feel of driving a luxury car, power steering, and great handling agility particularly on turning corners. Driving environment. Allows adjustments on seat height, arm rests, and head rest ensuring overall driving comfort. Passenger Experience. Guarantees that each passenger has an enjoyable riding experience given its spacious legroom, exciting multimedia system, and seven individual seats. Protection. Aside from the standard front, front side, and side curtain airbags, it also has ABS anti-lock break system and remote central locking. Seating and storage versatility. Provides 52 different combinations on seating arrangement hence gives car owners more freedom to decide on the best possible seating plan based on the number of passenger and baggage. Multimedia. The 2 LCD screens allow passengers to watch DVD, VCR, or play games thus easing boredom and providing more relaxing travelling experience. What is more interesting is the capability of customers to configure and customize her own Ford Galaxy according to her preference in terms of colour, series, engine & transmission, and payment options. Price Range Minimum price is 18,340 for Galaxy Silver model and 22,765 as highest price for Galaxy Ghia model. As part of the corporate discount called Drive for Value 2006, Ford Galaxy offers 2,000 off to all buyers of Galaxy LX and Zetec models. Price range is competitive with Chrysler Voyager but more expensive than Kia Sedona. Place Ford Galaxy can be purchased from the numerous duly certified Ford dealers in UK Promotion Ford Galaxy targets family specifically 30-44 years old women with children who are overtly concern about their families' well-being and safety. To these women, calmness and free time are the ultimate association with first class experience. The current marketing slogan is "Travel First Class at Economy Class Prices". Ford Galaxy prides itself in providing luxury travel experience giving passengers with high-tech accessories, sleek body, classy interior, and most importantly updated safety features such as airbag to attain the level of calmness needed and wanted by target buyers. OBJECTIVES The overall objective is to be a threatening challenger in the MPV segment and fortify market leadership in the large MPV sub segment. Hence, major marketing objectives are: To sell 10,004 units in 2006 to maintain market leadership in the large MPV sub-segment. This is equivalent to 7.6% growth over last year despite the lower car forecast. To expand customer base by tapping the total family market segment rather than focusing on 30-44 years old women with children. To gradually reposition Ford Galaxy's Travel First Class positioning and promote CAREconomics (a coined term for Car Economics) RECOMMENDATIONS Overall Marketing Strategy The current clout of Ford Galaxy in the large MPV sub-segment is clearly not a picture of market dominance. In order to fortify leadership and leave competition behind, Galaxy must cut through the clutter by getting more consumer insights and breaking away from the "luxury" war. Notice that these three major competitors i.e. Kia Sedona, Chrysler Voyager, and Ford Galaxy are all communicating the same tone - an affordable luxury. These bombardments of affordable luxuries no longer create USP. Rather it has become a must-have in the MPV segment and its point of differentiation is close to zero. In view of its strong connection with the concept of luxury, Travel First Class strategy can be viewed as a weak stance amidst competition. Hence, a new perspective must be formed and inculcated in the marketing mix. Presented below are marketing proposals in the marketing mix that will enable fruition of objectives set and building differentiation for Ford Galaxy. Product A redesign of Ford Galaxy is imperative given the plan to shift target market from 30-44 years old women with children to young families including husband and children as part of making decisions. Colour is one aspect that must be addressed initially. There are only 10 colour options for Ford Galaxy and understandably very feminine such as radiant red, candy white, and shadow blue. Perhaps car colours like dark blue or silver beige will entice not only target women group but also the male market. Even the exterior or body design must be scrutinised thoroughly to eradicate its feminine designs. The product benefits promoted by Ford Galaxy are mostly available with the competing brands. Thus, these product features must remain as part of standard model to avoid migration to competition. Furthermore, a new concept or product feature must be introduced to differentiate Ford Galaxy. As learned from the survey of Vauxhall Motors, reliability is considered as the most important factor in buying a new car. To maintain consistency with market needs, product improvements must focus on building the concept of reliability in Ford Galaxy. In the end, new product benefits must highlight the overall toughness of Galaxy amidst different weather conditions and tragedies such as winter, summer, flash floods, and heavy rains. The important thing is to highlight its functionality given all occasions and all conditions. The caveat is that all those improvements must not push the prices upward. Price General approach to pricing must still be competition-based. The intense rivalry in the sub-segment limits the ability to pursue value-based pricing. Price range must be at most 20% different compared to other leading brands. A cross-functional team must be set up to study market dynamics and make quick cost adjustments in case there is sudden price increases. Place While the traditional distribution mode is through authorized dealers, Ford Galaxy must consider alternatives like their company website. This can be a very efficient and cost-effective method of prospecting up to closing on new car purchase. The current website is already equipped with several programs that allow visitors to check out, review, play around, and inquire about anything regarding the product. It can be a more powerful tool if there is a link that initially process reservation or screens the visitors right away to determine their preferences and apprehensions. Promotion The Travel First Class is already pass. It is being claimed by Kia Sedona's heavenly luxury at affordable price and Voyager's Premium MPV without Premium. This is the time for Ford Galaxy to break away from that "luxury" angle of competition. Incidentally, it is very opportune occasion to evaluate the new target market. A new approach must be considered carefully utilizing the insights provided in the survey by Vauxhall Motors. The suggested new campaign will be called CAREconomics, a fusion of car and economics. This simple concept captures the major considerations ranging from reliability, comfort, lower fuel consumption, up to practical retail price. This will depict Ford Galaxy as the preferred partner who cares for your family's concerns by providing reliable cars where luxury and comfort are already given. At the same time, Ford Galaxy shows concern regarding financial needs thus it is provides competitive prices and fuel-efficient engines. In order to effect this crucial transition, tri-media and effective PR programs must be set up. Advertising thru TV, radio, and print will bolster awareness and educate car buyers of the new and improved Ford Galaxy. These campaigns will be aired in family-oriented networks or shows like the Hallmark channel and even perhaps Lifestyle network to sustain the established relationship with women car drivers. Car reviews and write-ups will be published both in print and in net to update car aficionados of this new beginning and new direction. Effective PR campaigns will support below-the-line activities. Sponsorships will be implemented on family day and other occasions celebrated by family like graduation day. A big event resembling the Amazing Race will be orchestrated recruiting young families to participate and get the chance to be overall champion. The rules are somewhat similar with Amazing Race but only Ford Galaxy will be used in the entire event. This will not only foster bonding within family members but it will dramatically show the passionate caring side of Ford Galaxy. CONCLUSION The intense competition in the entire car industry most especially in the MPV and the declining demand for cars are just but simple reminders to us all to push more innovation, encourage creativity, and inspire forward-thinking. Clear understanding of the market dynamics and effective planning are very critical in identifying threats and opportunities. What is critical is our ability to discern and connect all marketing elements necessary to runt the product. While Ford Galaxy already had established its foothold in large MPV, there still exists vast opportunities waiting to be conquered. What Ford Galaxy needs now is a thorough review of its performance and its operations to determine if they can adjust their sails to support a better more lucrative business. References Motor Industry Facts - 2006 (SMMT). Retrieved April 28, 2006, from http://lib.smmt.co.uk/articles/news/News/pr4361%20Industry%20Facts%202006%20final.pdf Sustainability Review 2003. Retrieved April 28, 2006 from http://www.vauxhall.co.uk/vx/morefromvauxhall/sustainabilityreport.do Ford Galaxy Introduction. Retrieved April 28, 2006 from http://www.ford.co.uk/ns7/galaxy/-/glx_intro/-/-/-/- Sedona. Retrieved April 28, 2006 from http://www.kia.co.uk/sedonahome.asp Chrysler Voyager. Retrieved April 28, 2006 from http://www.chrysler.co.uk/chrysler/vehicle.aspxID=335,8 Read More