Marketing Strategies of Mercin Daviro - Essay Example

INTRODUCTION Australia’s low population density, large land area and the small role played by rail and bus travel in the transport system have encouraged car use. Car ownership is high even by developed-country standards, with around 523 cars per 1000 people in 2003, a level close to that of Germany (Economist Intelligence Unit 2005). Australia has one of the highest car ownership levels in the world, an estimated one car to every two people. Despite a slight decline in 2001, the new car market in Australia has grown strongly following a subsequent surge in 2003. Australia’s strong employment growth and rising wealth coupled together with car manufacturers’ strong discounting and cheap finance schemes have cultivated growth in new car sales. With a strong economy, low interest rates on car financing and tariff reduction on vehicle imports will increase consumer confidence and encourage consumers to spend. Therefore, projected growth remains strong and stable over the next five-year period. In this paper, the author focuses on the product launch of new product line for Mercin Daviro. Mercin Daviro is a New Australian car manufacturer that specializes in the small, compact and economic range. The company is derived from Europe where it matches the features of the small European cars. Trends in the demographic environment, economic environment, natural environment, technological environment, political environment and cultural environment have been analyzed and Mercin Daviro had used this information to structure their car. TARGET MARKET The automotive market can be segmented by product type such as four-wheel drives, people-movers, Sports utility vehicles, and light commercial vehicles. Strong sales growth has continued in most segments in 2004, particularly for four-wheel drives, people-movers and light commercial vehicles, pointing to another record year for total vehicle sales, even though new passenger car registrations are likely to have fallen slightly. Local demand have been rising strongly between 1999 and 2001, the value of total automotive exports fell by 2.2% in both 2002 and 2003. Total earnings from automotive exports were A$4.72bn (US$3.1bn) in 2003, of which A$2.99bn came from vehicle exports and A$1.74bn from component exports. The Middle East is by far the largest market for Australian vehicle exports, accounting for 40.1% of export earnings in 2003, followed by New Zealand (17.5%) and North America (16.6%). The current key players in the Australian automotive market are Toyota, General Motors, Ford, Mitsubishi, Mazda and Nissan. Traditionally, the Australian market has been protected and the four manufacturers that produce cars locally still dominate sales. However, with market growth having been accounted for mainly by imports, their share of the domestic market has fallen from over half in the early 1990s to one-third by 2003 (Datamonitor 2005). The market leader, Toyota, accounts for over a fifth or 20.5% of new car sales in Australia. Holden, local company of General Motors, follows closely with 19.3% market share and Ford comes third with 13.9% market share (Datamonitor 2005). The target market that Mercin Daviro focuses on is segmented into different niche markets. Spread into different variables such as, demographic, geographic, psychographic and behavior variables. Under the demographic variable, Mercin Daviro targets people of the median age range from 25 to 35 of both sexes all races and ethinicity. Mercin Daviro have priced the car so that people who earn an average income of “$30,000- $40,000 (www.abs.com.au)”1 can afford the vehicle. Targeting people who mainly works in low-medium income occupations as people with these attributes occupy a majority of the country. In the geographic variables the car line targets the area of NSW as it has the largest population as shown the “ABS of 4232100 (www.abs.com.au/ausstats)”2 in Sydney only, coming second in population is Victoria then Queensland. Its main focus is to distribute a larger amount of vehicles throughout NSW and then slowly moving into states with the higher population growth. Queensland comes first with an average of 2.3% compared to Sydney only at 0.8%. (www.abs.com.au/ausstats) The Australian climate consist of four seasons, winter, summer autumn, and spring with mostly humid temperature rather than cold. With this in mind mercin daviro has a special feature that not much economic car has whichis a black tinted sunroof blocking out the rays or the sun. Mercin daviro is distributing their range throughout the whole country. Lifestyles, personality and motives of the consumer plays also a crucial role in the psychographic variables. Lifestyles of consumers who are more hectic are the Daviros main focus as it is built to be smaller and compact allowing easy access to parking spaces in areas of high traffic and gives a smoother drive with its inbuilt suspension systems. The motives for consumers to purchase this vehicle are due to factors such as its size, petrol saving attributes. Personality of the consumers that the Daviro focuses is mainly consumers who are more energetic and vibrant. Now comes the behavioral variables. This car line is designed for full usage made so doing an average or 30-40 thousand kilometers each year with smaller amounts of fuel consumption starting at 1.3 liter engine. 1.3 liter will last the consumer 2 weeks on the road with maximum usage. It will cost a household an average cost of $30 of petrol to use for 2 weeks where an average car will consume an average of $50 per week for maximum use. The car is priced at $15,000 drive away with extra features such as free interior leather and a MP3 player with iPod synchronization. Its trendy, modern, saves fuel which equals to saving money and cost only a fraction of the amount compared to a brand new car. Its brand is derived from Europe so the consumer can know the will be driving a European designed car at the cost of $15000 drive away. MARKETING OJECTIVE With the Marcin Deviro still being a new entrant to the industry and having established competitive rivals such as Toyota and Holden, in the market, the marketing objectives of the Mercian Daviro range are as follows: 1. To develop a product line that is both aesthetically attractive with product features customized to the target market’s needs. 2. To build on traditional and electronic distribution channels such Marcin Deviro’s car showrooms and online showroom. 3. To roll-out a marketing communications plan to increase brand awareness and to build on brand equity for the company 4. To sell at least 5,000 units in the first two years, and 7,000 units by the third year. Product Strategy. The product of Marcin Deviro is to develop a product line that is both aesthetically attractive with product features customized to the target market needs. Daviros main focus as it is built to be smaller and compact allowing easy access to parking spaces in areas of high traffic and gives a smoother drive with its inbuilt suspension systems. The motives for consumers to purchase this vehicle are due to factors such as its size, petrol saving attributes. The company expects to sell the car priced at $15,000. The buyers can drive away with extra features such as free interior leather and a MP3 player with iPod synchronization. Its trendy, modern, saves fuel which equals to saving money and cost only a fraction of the amount compared to a brand new car. Distribution Strategy. The company plans to build traditional distribution channel such as showrooms to entice buyers to visit its retail stores and to established geographic presence. Marcin Deviro plans to invest in 2 showrooms in Sidney in the next 2 years and 2 more in the next 3 years. In the short term, the company plans to create a corporate website to promote its cars to the Australian market. Promotion Strategy. Marcin Deviro plans to roll-out a marketing communications plan to increase brand awareness and to build on brand equity for the company. The company will focus on communicating the features and benefits of the purchasing Marcin Deviro as their cars. Financial Strategy. The company targets to sell at least 5,000 units for the first two years and 8,000 units by the third year. The company will be selling its cars at $15,000 per car. The company expects to generate revenues of AUD 75 million in the first two years, and AUD 105 million by the third year. MARKETING MIX The four Ps form the basis of the marketing mix. Getting this mix right for Marcin Deviro is critical in order to successfully market their product in Australia. The 4Ps are Product, Price, Promotion, and Place which will be discussed. Product. A product can be either a good or a service that is sold either to a commercial customer or an end consumer. A customer buys a product and a consumer uses it. More commonly, there will be a number of sellers forming a chain of distribution. For example, in the automotive industry, a tire company sells tires to an automotive manufacturer, who in turn will sell cars to retailers, before consumers get to buy them in the high street. Each is a customer, but only the final user is the end consumer. Therefore, it is important for a marketer to identify who his/her target market is, what they want, and sell it to them at each stage in the chain. Marcin Deviro designs based on the lifestyle of its target market. The company expects the lifestyle of consumers to be more hectic. With this in mind, the company focuses on building a smaller and compact cars allowing easy access to parking spaces in areas of high traffic. In conjunction, the driving experience of Deviro should give its consumers a smoother drive with its inbuilt suspension systems. With its size and petrol saving attributes, the company expects consumer to find this aesthetically designed and low-priced cars to be very attractive. Price. No matter how good the product is, it is unlikely to succeed unless the price is right. This does not mean just being cheaper than competitors. In fact, most people associate a higher price with quality. Currently, based on the price average of cars by product engine performance and affordability ranking reported by Economic Intelligence Unit, Marcin Deviro will be positioning its product as the compact car with engines ranging from 1300-1799cc. Marcin Deviro expects its consumers to have a monthly disposable income of 1,474.55 AUD. The pricing of the goods is 1,017.26 % of monthly personal disposable income. This is much affordable than the current compact car segment with percentage of monthly personal income of 1,993% of monthly personal disposable income. With sales promotion and financing scheme, Marcin Deviro will be able to penetrate its target market with its price. Item Price % of monthly personal disposable income Affordability rank Low-priced car, 900-1299cc (low) 14,893 1,010 13 out of 53 Low-priced car, 900-1299cc (high) 26,710 1,811 23 out of 53 Compact car, 1300-1799cc (low) 29,389 1,993 23 out of 52 Compact car, 1300-1799cc (high) 31,145 2,112 18 out of 52 Family car, 1800-2499cc (low) 61,679 4,182 23 out of 53 Family car, 1800-2499cc (high) 71,221 4,829 19 out of 52 Deluxe car, 2500cc upwards (low) 167,176 11,335 22 out of 53 Deluxe car, 2500cc upwards (high) 196,870 13,348 20 out of 51 Regular unleaded petrol, 1 liter (av) 0.74 0.05 5 out of 53 Source: Promotion. The main aims of promotion are to persuade, inform and make people more aware of a brand, as well as improving sales figures. Advertising is the most widely used form of promotion, and can be through media of TV, radio, journals, cinema, or outdoors (billboards, posters). The specific sections of society (market segments) being targeted will affect the types of media chosen, as will the cost. Fournier (1995) explains that branding has been an input factor in influencing consumer perceptions and attitudes in enabling the company to develop profitable relationships. While, researches have emphasized brands as an input factor, evaluating the branding strategy provides insights in how marketing supports the brand and ultimately it is reflected in the improvements of business process of automotive manufacturers. As Maklan and Knox (1997) explains consumers are now looking holistically on the value-added process of the company that enhances customer value not only on the individual product features. Marcin Deviro aims to focus on communicating the features and benefits of the purchasing Marcin Deviro as their cars. Aaker (1991) decomposed brand equity into loyalty, awareness, perceived quality, associations and ‘other proprietary brand assets’. Having a clear marketing communication strategy will enhance the company’s brand equity among its consumers. Place. Distribution channels are the key to this area. A firm has to find the most cost-effective way to get the product to the consumer. Direct marketing through catalogues, via a TV shopping channel and through the Internet have become popular because the consumer can shop from home. The company plans to build traditional distribution channel such as showrooms to entice buyers to visit its retail stores and to established geographic presence. Marcin Deviro plans to invest in 2 showrooms in Sidney in the next 2 years and 2 more in the next 3 years. In the short term, the company plans to create a corporate website to promote its cars to the Australian market. CONCLUSION In conclusion, the automotive market experienced strong sales growth has continued in most segments in 2004, particularly for four-wheel drives, people-movers and light commercial vehicles, pointing to another record year for total vehicle sales. The industry is dominated by Toyota and Holden cars manufacturers accounting for 39.8% market share of the industry. Despite the strong market presence of Toyota and Holden, Marcin Deviro sees an opportunity of operating in a niche market. the company will target consumers of the median age range from 25 to 35 of both sexes all races and ethinicity. Mercin Daviro have priced the car so that people who earn an average income of “$30,000- $40,000 (www.abs.com.au)”3 can afford the vehicle. Targeting people who mainly works in low-medium income occupations as people with these attributes occupy a majority of the country. The company’s objectives are as follows: 1. To develop a product line that is both aesthetically attractive with product features customized to the target market’s needs. 2. To build on traditional and electronic distribution channels such Marcin Deviro’s car showrooms and online showroom. 3. To roll-out a marketing communications plan to increase brand awareness and to build on brand equity for the company 4. To sell at least 5,000 units in the first two years, and 7,000 units by the third year. References Aaker, D. (1991). Managing Brand Equity: Capitalizing on the Value of a Brand Name, The Free Press, New York Fournier, S. (1995), "Toward the development of relationship theory at the level of the product and brand", Advances in Consumer Research, Vol. 22 pp.661-2. Maklan, S. and S. Knox (1997). Reinventing the brand and bridging the gap between customer and brand value. Journal of Product and Brand Management 6 (2): 119-129. Available via: Emerald Database [accessed 11 January 2007]. The Economist Intelligence Unit (2005). Australia Automotive Industry Forecast: June 2005. [Online] Available: http://www.eiu.com Datamonitor (2005). New Cars in Australia: Industry Profile. [Online] Available: http://www.datamonitor.com Read More