Marketing Industry, Essay Example

Introduction

When choosing the industry for discussion, it was defined that it should be very competitive and represent all marketing principles in a full. Thus, automotive industry was chosen. Companies in automotive industries have well qualified marketing teams, which show the best implications of four marketing principles.

These main marketing principles, analyzed in this paper are also called four P’s and are the following:

• Product
• Price
• Promotion
• Place (distribution)

Product refers to all qualities of the manufactured good. Design, structure, options technical characteristics and feasibilities are included in the first marketing principle. A Price principle concerns the price of the product, discounts and payment methods. Promotion refers to advertisement campaigns, their forms, amount of money spent for them. This Principle also includes different activities aimed at formation of good image of the company and its product. Targeting is also included in this principle. A Place principle concerns such activity as distribution, which is the last, but not the least principle. This principle also refers to decision where the main part of produced goods will be delivered.

These principles are the main, which the company should concern while producing a product. Without reasonable decisions on these four principles the company cannot successfully compete with its rivals. While making these decisions management should know that there are several types of influences, which can worsen the position of the good of the market in case of taking a wrong decision. The main influences are the following: social, psychological, ethical and political. Without taking into consideration these influences, management can fail to meet clients’ expectations and lose the market game. When being able to turn these influences in the right way, company have a good chance to reach the summit that means great profit and capitalization growth.

So, the analysis of these influences concerning each of principles is the key to the success on the market.

Product

Social influence. When talking about cars, the most important topics concerning the Product marketing principle is air pollution and safety of other people. The impact on public health has substantial influence on customers decision whether to by the car of the particular company. Thus, concerning the social influence companies have to take into consideration that society wants to lower the amount of car emissions. So the low level of pollution by the car grants to the model the higher probability of being bought. One of the best examples here is Toytota. Soaring fuel prices virtually killed the demand for the expensive, large, and powerful cars of the American dream. When the energy crisis became obvious and finally hit the car industry, Toyota was virtually the only large company ready for that. By 2006, there were two hybrid vehicles mass-produced in significant volumes: Lexus RX 400 and Toyota Prius. The first one is luxury SUV, which however, consumes 30-40% less gas than the similar vehicles, yet not compromising comfort or dynamic capabilities of the car. The second one, Prius, is a champion in energy efficiency among the full-size sedan vehicles. In fact mass sales of Toyota Prius are saving the company from the financial hardships of the recession. Thus, Toyota manage? to satisfy needs of several social groups, who demend for different cars without moving aside from its image of the greenest and the most environment-friendly vehicle manufacturing company.

Psychological influence. This type of influence concerns the opinion of each particular buyer. Nowadays there are much more people, who care about the environment and do not want to spend a lot of money for fuel. Thus, these people will try to purchase a low-emission and low-power car. So they can feel themselves caring about the environment and saving their money. Another group of people likes powerful cars and do not care about the level of emissions the car has. Thus, the management should take into consideration preferences of its clients. These can be made with creation of the big range of different products. One of the best examples here is Toyota. It has Prius model for the first group of clients and Land Cruiser for the second. Meeting expectations of both groups the company increases sales.

Ethical influence is also connected with the level of pollutions. People do not want to feel themselves causing the harm to other people and to nature. That is why the will chose low-emission and safe cars. That means that to benefit from this influence, company should meet higher standards. That means that the cars should have better filtering system and the car construction should be also as safe as possible for the pedestrians. Pedestrian safety refers to the Product principle as the construction of the car has direct influence on the amount of mortis causa on the roads[1].

Political influence refers to different acts, issued by government, which regulate the operations in automotive industry or can influence these operations. Such limitations are aimed at reduction of car emissions and at increasing of safety standards. The example is Muskie Act or Clean Air Act issued in 1970[2]. This act was the first try aimed to control car emissions. Thus, political influences can change decisions concerning Product principle – without satisfaction of government requirements the company cannot sell cars on the market.

Price

Social influence on the price of the company refers to the setting of prices for different social groups and setting of the price corresponding to the level of prices, which was set in the particular country. The first influence, the influence of variety of social groups with different spending power makes management to think over the price policies thoroughly. Let’s compare to different people in two social groups. The first man is a clerk in a bank and the second is a billionaire whose behavior on the market can be defined as a “snob effect”. To reach the first customer, company has to ask for the lowest reasonable price for the car. For the second, the car should contain a lot of expensive and hi-end features with a markup, which is several times higher than a cost price of the car. When the company can define such group and clearly define the price policy, it can easily get a substantial market share on the market. In this example on luxury car market and market of low-price cars.

Psychological influence. To cope with this influence and make it to work for the company, management has to define, how it can convince the client that he gets more than he pays. For automotive industry it means that company should add additional features, which increase the inner value of the purchase. These features are: longer period of free service, better packaging arrangement (e.g. installed DVD-player or acoustic system) and so on. Thus, the customer can see that for the same money he gets the better product.

Political influence on the price strategy can be very substantial. As the automotive market is an oligopoly market, the government control on the price is stricter than on the other markets. But still there are few examples of market influence that the government defines maximal or minimal prices for car producers. Every government is interested in development and competitiveness of national automotive companies and tries to protect it from the foreign rivals. Several years ago such measures ago governments have influenced on the price of imported cars by setting a high duties. Due to agreements on free trade, which most of developed countries have signed, such measures are not available for governments. But still they have an ability to stimulate domestic automotive industry (but it its recognized as unfair policy also). The examples are USA and Germany. This year Senate decided to spend several billions more as a help package – every buyer, who is going to buy a new car was given a $10,000 rebate[3].  The same method used German government to help the industry. It has providing car buyers with €2,500 rebate[4]. These measures are not the regulation of prices – just help for the industry, But, in fact, the make cars, produced inside the country cheaper than foreign analogues. So, politics has positive influence on the cars price and should be considered by the management as a advantage but not a problem, which they have to resolve.

Promotion

Social influence on the promotion of the can is made by society – the impression, which will the new model of a car make will either increase sales, or will lead to substantial losses. The first example is Edsel car from Ford Motors. One of the reason of failure was its name, which was quite hard to spell and was similar to the name ‘Edson’ – producer of tractors. So, the greater part of customers decide? not to buy the car and the other part has followed the decision of the major part. Thus, Ford failed to create a successive car. Another example, opposite to Edsel is Toyota Prius. It is a new hybrid, which is the first hybrid so popular all over the world. This car still has some problems, for example with battery[5]. A big amount of experts were sure that Prius won’t have a big success. But, fortunately for Toyota, a lot of famous people, such as Google top management have purchased Prius and it became a hit in automotive industry, hurting US national car manufactures[6].

Ethical influence. Toyota tried hard to position itself as the greenest and the most environment-friendly vehicle manufacturing company. Such Approach eventually worked and proved itself to be a brilliant strategic move. “Green” cars are becoming a really popular trend today, as plenty of people buy it for the nice image rather than the real concerns about the CO2 emissions. Having such strategy Toyota build an image of a company, which is responsible for environment and in the same time meets demand of customer, who want now greener cars.

Place (Distribution)

Social influence. Each geographical market, which automotive companies want to reach, should be thoroughly analyzed first. Without information on specifications for desired market company cannot have success on it. For example, a company wants to enter the market of developing countries and third world countries. If the company of developed country would try to use the domestic strategy for reaching markets in developing countries the company will fail. So, if the company’s strategy doesn’t meet requirements of new market, sales on this market will be inefficient.

Psychological influence. This type of influence is also connected with the company’s strategy. Japanese like small and economy cars. Most of buyers in Japan don’t want to by a powerful car. If American company decides to sell powerful cars of the American dream, it will suffer losses, because it haven’t come to know customers’ habits.

Political influence concerning distribution should be also concerned by managers of automotive companies. In order to protect domestic car producers governments can set special rules concerning distribution. Government can require to sell with the help of certified distributors. This can increase price and decrease amount of cars sold.

Conclusion

Every automotive company strives to get a greater part of domestic and foreign car markets. While building a strategy, management should consider major influences on marketing strategy of a firm.

First, management has to consider political influences. New acts, issued by government and regulating car emission and setting new quality standards can cause losses if the company doesn’t change its strategy according to the new rules. Also the management should consider the positive political influence – protectionism. It shall consider it in order to get the highest benefit from protectionist measures.

Another type of influences is ethical. The right image of the company which cares about people and environment can substantially increase sales. Only ethical companies can now get substantial profits. If the company doesn’t have ethical standards it can become a loser on the market even having low prices and high-quality car.

The last but not the least factors which are similar are social and psychological ones. Customers’ habits and preferences should be considered while developing product, promoting it, setting prices and distributing it. In other case, even having good car, big advertising budgets and relatively high price, the company can fail to attract potential clients.

Reference List

World Bank. Road safety. Retrieved from: http://www.worldbank.org/transport/roads/safety.htm#standards

Toyota official website. Glossary. Retrieved from: http://www.toyota.co.jp/en/environment/communication/glossary/glossary_02.html#g05

CherniakT. Trade Lawyers Blog. There They Go Again – U.S. Auto Protectionism at its Worst. (2009, February 09). Retrieved from: http://tradelawyersblog.com/blog/archive/2009/february/article/there-they-go-again-us-auto-protectionism-at-its-worst/?tx_ttnews[day]=09&cHash=760941b80e

BBC News. Incentives boost German car sales. (2009, March 3). http://news.bbc.co.uk/2/hi/business/7921827.stm

Garret The New York Times, 2009 Prius: Not So Fast. (2009, June 19). Retrieved from: http://wheels.blogs.nytimes.com/2007/06/19/2009-prius-not-so-fast/

McIntyre D.A. Toyota (TM) Prius Success, Another Detroit (2009, June 19). Retrieved from: http://247wallst.com/2009/06/19/toyota-tm-prius-success-another-detroit-failure/

Stillman, J. (2007) Toyota, Hypocrisy and Green PR. BNET. Retrieved from: http://blogs.bnet.com/intercom/?p=1053

[1] World Bank. Road safety.

[2] Toyota official website. Glossary. Muskie Act.

[3] Trade Lawyers Blog. There They Go Again – U.S. Auto Protectionism at its Worst.

[4] BBC News. Incentives boost German car sales.

[5] 2009 Prius: Not So Fast

[6] 247wallst.com. Toyota (TM) Prius Success, Another Detroit Failure