Promotional and Advertising Strategies, Research Paper Example

Many car companies use similar marketing plans to advertise these products, however these endeavors result in dissimilar degrees of success. Two automobile companies that sell vehicles in similar price ranges are Chevrolet and Ford. However, since both companies remain in business with comparable sales records, it can be concluded that their marketing campaigns are both successful. Therefore, it would be useful to compare the specific strategies these car manufacturers use in order to determine the reason behind their eminence. A comparison between Chevrolet and Ford will be conducted to determine the unique ways in which each company advertises its product, ways in which each company could use its standing to differentiate itself from similar businesses, propose promotions that could be used by either company to maximally compete, to determine how these companies make their pricing decisions, and to determine the most effective form of advertising in this particular industry. Ultimately, this analysis will help marketing professionals understand the major difference between two major automotive companies and information regarding their successes and failures could be utilized in other marketing applications.

Overview

The automotive industry is involved in designing, developing, manufacturing, and selling cars, and marketing plans occur primarily at the selling level. Since there are approximately 806 million cars on the road around the world, competitors in the automotive industry have a unique opportunity to reach millions of customers. Furthermore, this industry is unique in that demand for the product is growing exponentially; as the world population grows, there will continue to be a greater need for automobiles. In addition, the technology incorporated into these vehicles are improving, which provides consumers with a greater choice concerning the luxuries that their automobile will provide. For example, Ford has begun selling a hybrid car that allows users to purchase less gas over the vehicle’s lifetime, which Chevrolet has released its first fully electric car at the beginning of 2014. These decisions factor significantly into the choices that consumers make when deciding which car to purchase, although the way these features are marketed could have significant influences on preference. Car design and price are also important factors that consumers consider when purchasing a new car, while word of mouth advertising from friends and family in addition to previous experience with cars of a particular company tend to sway decisions. The United States is in a unique situation to sell cars to a large market because after China, it is the second largest car producer in the world, producing a total of 10,328,884 cars in 2012 (World Motor Vehicle Production, 2012). Chevrolet and Ford are both leading American car companies, so a significant portion of this amount has been produced by them.

Promotional Strategies

Chevrolet advertises directly using posters and related ads on bus stops and in public transportation in addition to taking advantage of television commercials (Gustin, 2008). The advertisements on public transportation typically feature one of their new cars and is placed in a location that its target market is likely to visit. For example, advertisements for the Chevy Spark were placed on bus stops that potential customers would be able to view as the walk past the bus stop or as they wait for the bus. The least expensive model of the Chevy Spark runs about $12,000, and the company intended to market the car to individuals with lower incomes who wish to own a car rather than lease it. In particular, this car was aimed towards young adults, and additional feature that was advertised for this purpose is that the car comes in a variety of unique colors. Another car that Chevrolet advertises in this manner is the Chevy Cruze, which is the second least expensive car offered by the company. The lowest model could be purchased for approximately $22,000 or leased at about $180 per month with $2000 down. Therefore, this car was intended for middle class individuals who have a low budget for automobiles. As a consequence, marketing at bus stops is ideal to reach these two groups because both the young adults and middle class potential customers are likely to utilize public transportation to travel if they do not have a car. Occasionally, Chevrolet’s luxury cars are advertised in this manner as well, but rather than placing them in middle class neighborhoods or office districts, they are placed in areas in which more affluent individuals live.

Chevrolet also issues a television commercial that is updated approximately bimonthly and is used primarily to indicate what promotions nearby dealerships have. It is used primarily to show consumers what the car looks like and to explain its unique design compared to previous models. The Chevy Cruze is the car that is most commonly advertised using this platform because a majority of the individuals who still subscribe to cable television are middle class working adults. The commercials used are what one would typically expect of a car commercial, and shows the car driving to a catchy song that the viewer is likely to remember. A third way that Chevrolet advertises is through brand association; many individuals who have driven a Chevrolet car in the past continue to choose to drive them due to brand loyalty. Furthermore, individuals who do not drive a Chevrolet are more likely to buy one if they are given a positive review of the car from a friend via word of mouth.

Ford advertises primarily by using television advertisements, which include featuring its latest model on the screen to show how the car drives. This company shows a diverse array of its available products in commercials in order to better inform customers what they could expect in the dealership. Although Ford motors occasionally has poster advertisements on the streets in urban areas at bus stops and on billboards, its marketing campaign focuses on word of mouth. Ford Motors is a well-known company that was founded in 1903 that produced the Model T car that is iconic of old films (Gunnell, 1987). Since the implementation and success of this vehicle, people have generally trusted this car, and the company remains successful as a consequence.

Comparison of Promotional Strategies

Both Chevrolet and Ford focus on television advertisements, word of mouth, and poster advertisements in order to inform customers about their products. This appears to be the standard in the industry, as it has essentially been broken down to a science and determined that these methods best reach the target market for vehicles in different price ranges.

Contrast in Promotional Strategies

Although Chevrolet and Ford use similar promotional strategies, they do so with different degrees of success. Ultimately, Ford Motors was more profitable in 2013 with a net income of $8.6 billion, which General Motors, which produces Chevrolet cars, earned $3.8 billion. Ford Motors was more successful due to the word of mouth reputation it has. Since it was one of the first major car companies in the United States, people are more likely to trust the brand name. Although Chevrolet was established only 8 years later, it was unable to quickly gather the acclaim that Ford Motors had as a consequence of its beloved Model T (Bardou et al., 1982). Ultimately, Ford is seen as an all-American company and Chevrolet is viewed as such to a lesser extent. Therefore, Chevrolet must rely more on direct marketing via television and posters than Ford, who is able to rely primarily on its reputation.

Recommendations for Differentiation

If Chevrolet intends to compete more effectively with Ford, it must differentiate itself. A major way this could be done in the modern word is to implement additional technological features into the car. For example, several Chevrolet models include Bluetooth, have a USB plug that allows for cellphone charging and music playing, and a built-in GPS. If Chevrolet extends these luxuries to all of its vehicles and focuses on marketing these features in advertisements, it will stand out from Ford.

A second way that an automotive company can distinguish itself is to produce a lower quality vehicle that sells for a lower price. While this has been done to some extent with the low price Chevy Spark and Ford Fiesta, each car could reach as high as $18,000. Therefore, it is important to focus on releasing a vehicle that ranges from $8,000 to $15,000 depending on added features so that individuals who would not usually buy a car due to price will have a greater option. Doing so would open an additional target market, such as college students, who would usually not be able to afford a new car at all.

Consumer Oriented Promotion Uses

An effective consumer oriented promotion use that could be taken advantage of in this industry is occasionally reducing the price of the vehicles during peak gift buying times. For example, offering a $2000 discount off the price of any car during Christmas or graduation season will encourage more individuals to buy their loved ones a car as a gift. Furthermore, many consumers wait to buy cars during this time because they expect that prices will be lower.

A second effective consumer oriented promotion would be to only require buyers to pay tax and title for a car that they intend to lease. By waiving the money that is required to put down for a lease, the automotive company could raise the monthly payments for the car slightly, but this would be more appealing for an individual who is unable to save up the money that is required for a down payment.

Leading Company Price Decision Analysis

Ford Motors, the leading company in this industry, uses pricing objectives to determine what its cars will sell for. A major contributor to this decision is the type of cars and associated price that their competitors sell and a second focus is on profit. Ultimately, Ford Motors is able to profit more than other companies in the industry due to its reputation, so it is able to invest money into the development of products rather than on direct marketing. Since Ford has established a car in each price range, it much ensure that it has the best quality car in each price range for the lowest price to continue to be successful.

In order for a competing company to gain an advantage, they would simply lower the price of their car for a particular vehicle in a high-selling price range. A second way to gain competitive advantage would be to improve the quality of the vehicle in comparison to Ford’s.

Most Effective Advertising Medium

The most effective advertising medium for Ford Motors is word of mouth. As demonstrated above, Ford Motors does not have to initiate many direct advertising campaigns. Rather, it uses the few it does implement to remind consumers of the company’s reputation, which drives sales. This is supported by the fact that Ford was more profitable than Chevrolet; both use the same direct marketing methods, but Ford is more successful because it has better word of mouth.

Conclusion

In conclusion, Chevrolet and Ford are competing companies in the automotive industry that use similar methods of marketing to advertise their vehicles. They are major competitors because they sell cars of similar quality and in a similar price range. However, Ford Motors is more successful due to the company’s reputation. Ultimately, word of mouth sells cars better than the marketing that Chevrolet has implemented. If Chevrolet wishes to compete, it must improve the quality of its cars and lower its prices.

References

Bardou Jean-Pierre, ChanaronJean-Jacques, Fridenson Patrick, Laux James. (1982). The Automobile Revolution: The Impact of an Industry. University of North Carolina Press.

Gunnell, John. (1987). The Standard Catalog of American Cars 1946–1975. Kraus Publications.

Gustin, Lawrence R. (2008). Billy Durant: Creator of General Motors. University of Michigan Press.

World Motor Vehicle Production. (2012). World Ranking of Manufacturers. Retrieved from  http://www.oica.net/wp-content/uploads/2013/03/worldpro2012-modification-ranking.pdf