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Automobile Industry Marketing Principles and Issues Essay


Introduction

Kotler and Armstrong (2010, p.32) assert that marketing is aimed at converting the consumer’s needs and wants into profitable opportunities. In their marketing activities, firms are aimed at creating value for consumers by offering solutions to their needs. To be effective, managers have to tailor their operations in line with market needs (Young, 2008, p. 332). Firms that take into consideration consumers needs and direct their efforts towards satisfying these needs tend to be successful in the long term (Young, 2008, p. 332). One of the ways through which they attain this is by minimizing the consumer search for products and services (Kotler & Armstrong, 2010, p. 32).

However, this can only be attained through the incorporation of effective marketing practices. In an effort to attain this, managers of firms in different economic sectors are required to take into account various marketing principles. There is a wide range of marketing principles that firms have to consider in developing their competitiveness. Some of these principles include understanding the customer’s needs and offering products and services, which lead to a high level of customer satisfaction. Additionally, firms should create and sustain a strong relationship with customers.

Despite incorporating these principles, the firm’s success is affected by external environmental forces. External environmental forces entail the forces which originate from the external business environment. According to Lancaster and Reynolds (p.29), the core external forces include the political, social-cultural, technological, and economic forces. In order to understand the application of marketing principles by managers, the researcher sought to evaluate the automobile industry. The aim of the analysis is to understand the various issues affecting the automobile industry.

The Automobile industry

The United States is ranked amongst the leaders with regard to the consumption of passenger cars, light trucks, and light vehicles. The three main players in the industry include General Motors, Daimler/Chrysler, and Ford Motors. These firms account for approximately 50% of all the light cars manufactured in the US.

In the 21st century, the automobile industry is faced with a wide range of issues arising from the business environment. For example, oil prices have been rising rapidly. This has led to a decline in the consumption of automobiles. Secondly, the cost of raw materials has become prohibitive, leading to price pressures. The US automobile industry has been continuously affected by laws and regulations instituted by the government since 1960s. Most of these rules and regulations arise from increased consumer concerns in their consumption patterns.

Change in consumer behavior

According to Change Agent (2007, para. 1), there is a change in consumer buying behaviors. For example, consumers are increasingly re-evaluating their usage of private vehicles. One of the factors contributing to this change arises from the fact that consumers are increasingly being concerned with the high rate of global warming. BBC and Synovate revealed that seventy-five percent of respondents interviewed are concerned with the existing rate of climate change. Ninety-five percent of the respondents interviewed said that they were ready to change their automobile consumption patterns as one of their contributions to minimize climate change. Some of the respondents interviewed said that they intended to achieve this is by purchasing small cars.

To meet the market demand, Automobile companies consider integrating the concept of concentrated targeting strategy. According to Lamb, Hair, and McDaniel, 2009, p.221), the strategy entails selecting a niche market and targeting all its marketing efforts to the particular niche market identified. However, this can only be successful if the firm has developed a comprehensive understanding of the target market’s needs, satisfaction, and motives.

According to Change Agent (2007, para. 7), there is an imminent change in the United States with regard to the consumption of automobiles. Over the next few years, there is a high probability that the US will experience an increase in small cars. Currently, the United States automobile consumers are known for their preference for large cars.

Additionally, automobile consumers are inclining their consumption towards energy-efficient automobiles. Automobile consumers are becoming more aware of the need to uphold the concept of environmental sustainability in their automobile consumption. Environmental sustainability is mainly concerned with ensuring that the environment is not polluted through various forms of pollution (Mikler, 2009, p.59). As a result, their demand for automobile products is being influenced by the need to have automobiles with minimal emission of carbon dioxide. Automobile consumers are increasingly considering purchasing automobiles that can use alternative forms of energy, which result in minimal or no carbon dioxide emissions. One of the main forms of energy that is being considered is green energy, such as biofuel.

In an effort to meet the market changes, various automobile marketers around the world are re-evaluating their product offering to satisfy the consumer’s needs. One of the ways through which they are attaining this is by re-evaluated their market segmentation strategy, which entails subdividing the market to meet the specific needs of the target customers (Vieceli & Valos, n.d, p. 137). By adjusting their market segmentation strategies, automobile companies will be able to align themselves with changes in consumer behavior. For example, some firms are focusing on producing energy-efficient automobiles and those who do not pollute the environment.

For example, some firms such as Toyota have invested a substantial amount of their resources in research and development. The main focus of these firms is to develop an electric car. Additionally, a substantial proportion of automobile consumers are considering purchasing cars that are quiet. In order to meet the changes in market demand, automobile companies have to undertake product development from time to time. This will aid in incorporating new features. The resultant effect is that their automobile products will be appealing to the customers.

To ensure that their efforts to produce energy-efficient cars are successful, some governments such as the United Kingdom have instituted policies to ensure that the cars developed are successfully marketed. One of the ways through which the UK government is attaining is by charging a higher duty on automobiles that emit high levels of carbon dioxide. The high duty makes these automobiles to be expensive for consumers. As a result, their only alternative is to purchase fuel-efficient cars (Donnelly & Linton, 2009, p. 61).

Social, cultural forces

When purchasing a product, a consumer undertakes a comprehensive decision-making process. The buying process is made up of five steps. These include

  1. Need recognition,
  2. Search of information,
  3. Evaluating the available alternatives,
  4. Purchases
  5. Post- purchase evaluation

In the search for information, the consumers buying decision may be affected by social forces. Social cultural factors are a crucial consideration in a firm’s effort to understand the market trends. The success of a firm in marketing its products and services is dependent on its understanding of the consumers’ behavior. According to Lantos (2011, p.167), consumers’ purchasing decisions are influenced by sociological forces. These forces arise from friends, colleagues, family to the overall society.

Lantos further asserts that society have a significant impact on the consumers lifestyles and the products they purchase. A consumer’s reaction towards a product or service is affected by various socio-cultural factors. Some of these factors include personal choices which are determined by age, aspirations, exposure, needs and convenience amongst others. In addition, an individual’s consumption is also influenced by the reference group in which he or she belongs. This means that the various aspects of societal norms, attitude, beliefs, customs and expectations influence his or her decision making.

Therefore, a firm’s production decision is determined by the type of product or service offered. With regard to the automobile industry, the society currently judges individuals on the basis of the car they drive. For example, every individual who drives a nice car is considered to be wealthy. Additionally, customers feel better if the car they are driving elevates their social status. Automobile manufacturers have to improve on the features of their automobiles so as to meet the consumer’s tastes and preferences.

In an effort to deal with the competitive nature of the Automobile industry, firms in this industry should consider incorporating the concept of product differentiation. Product differentiation entails creating products and services which are unique from other competing products. To be successful in their operation, automobile manufacturers have to conduct a comprehensive understanding of the society’s perception of its automobiles. One of the ways through which these firms can achieve this is by conducting market research. The market research will enable them to develop automobiles which are inline with the consumers needs. For example, considering the fact that cars are rated according to their features, automobile companies are faced with a challenge to continuously conduct innovation of their automobile products so as to improve their competitiveness.

Globalization

In the 21st century, the global automobile industry is faced with increased challenge arising from a high rate globalization. This has led to a rise in the intensity of competition amongst the principal global automobile manufacturers who include Ford, General Motors, Toyota, DaimerChrylser, Honda, and Volkswagen (Domansky, 2006, p.1). In an effort to enhance their competiveness, most of these firms have integrated the concept of internationalization as one of their business strategy.

One of the main reasons which explain why automobile manufacturers are increasingly venturing into the foreign market is to expand their market coverage. Additionally, decision to enter the foreign market is motivated by the need to minimize the cost of production. In their internationalization strategy, these firms have adopted different investment strategies such as foreign direct investment (Domansky, 2006, p.1).

Due to the intensity of competition, firms in the automobile industry have also considered establishment of global alliances in entering the foreign market. The firms consider alliances as an effective way to attain their global competiveness. Formation of strategic alliances has enabled some of these firms to attain an efficient market position. For example, Chrysler merged with Daimler-Benz with the objective of attaining an effective market position in the United States automobile industry.

One of the factors which have enabled automobile firms to venture into the international market successfully relates to the fact that countries have entered into trade agreements with other countries. These agreements have led to emergence of trading blocs. As a result of globalization, firms in the automobile industry are increasing their investment in their production. A firm operating in the global market must offer products which are competitively attractive. This arises from the fact that the success of a firm is dependent on the acceptability of the product in the market.

Automobile companies have appreciated the fact that they have to create effective market awareness regarding their products. As a result, they have reevaluated their marketing mix strategies. One of the strategies which has been intensely reviewed relate to promotion. For example, automobile companies are increasingly adopting integrated marketing communication. Their core objective is to create and sustain a relationship with the customers.

Most of these firms have adopted both traditional and emerging marketing communication techniques so as to create comprehensive market awareness. One of the techniques which these firms are using is advertising. The manufacturers are using different mediums such as the television, radio and print media in their advertising campaign. Additionally, these firms are adopting emerging marketing communication technologies. Some of these technologies include advertising through social networks such as Facebook, You Tube, Blogs and Wikis. As a result, they have been able to establish a strong relationship with the customers. To entrench their relationship with their customer, automobile companies enter into contract with celebrities who endorse their new automobiles.

Ethical issues

Consumers have a right to safety in their consumption process. During the 1960, there was an intense debate over automobile safety. Some interest groups argued that the safety of the various parties such as drivers, pedestrians, and passengers was entirely their responsibility (Conley & McLaren, 2009, p.111). However, in an effort to ensure the safety of various parties, most governments have instituted safety requirements which automobile companies are required to meet. Some of these requirements relate to fitting the cars with safety devices such as safety belts and airbags.

Despite the implementation of these standards, some firms may be guided by profit motive which may lead them to ignore product safety by manufacturing products which do not meet the standards. The resultant effect is that the life of the consumers is endangered. In addition to the safety standards instituted, automobile consumers are increasingly being concerned over their own safety. For example, in purchasing automobiles one of the key considerations is safety. Automobile manufacturing companies should understand that failure to take into account safety may adversely affect an automobile company’s brand image. One of the ways through which automobile companies can ensure safety is by testing the automobiles prior to launching their brands to the market.

Conclusion

The analysis above illustrates that the success of firms in the automobile industry is dependent on their effectiveness in implementing marketing principles. One of the most important principles relate to understanding the customers needs. This can be achieved by conducting a comprehensive market research. Market research would contribute towards these firms attaining a high competitive edge. This is due to the fact that the firms would be able to manufacture products which are inline with the customers needs. Additionally, automobile manufacturers are charged with the responsibility of ensuring that they create and sustain a strong relationship with the customers.

Despite consideration of the various marketing principles, the success of these practices is affected by macro-environmental factors. Some of the macroeconomic factors relate to changes in consumer behavior, high rate of globalization, policies instituted by the government and social-cultural factors. For example, consumers are increasingly shifting towards small and energy efficient automobiles. There is also a shift towards consumption of automobiles with minimal carbon dioxide emissions. One of the factors which have led to emergence of this trend is the increased concern over the high rate of climate change. Product safety is another factor which consumers are taking into account in their purchasing patterns.

The high rate of globalization has led to an increment in the degree of competition. To survive in such a market, automobile companies are reconsidering their business strategy. This is being attained through incorporation of different strategies such as formation of strategic alliances and internationalization.

Reference List

Change Agent. (2007). Climate change and consumer behavior.Web.

Conley, J. & McLaren, T. (2009). Car troubles: critical studies of automobility and auto-mobility. Farnham, Burlington: Ashgate.

Domansky, L. (2006). Automobile industry: current issues. New York: Novinka Books.

Donnelly, R. & Linton, C. (2009). CIM coursebook; delivering value through marketing. Oxford, UK: Butterworth-Heinemann.

Kotler, P. (2011). Marketing insight from A to Z: 80 concepts every manager needs to know. New York: John Wiley.

Kotler, P., & Armstrong, G. (2010). Principles of marketing. Upper Saddle River, New Jersey.

Lamb, C., Hair, J. & McDaniel, C. (2009). Essentials of marketing. Mason: South-Western.

Lancaster, G. & Reynolds, P. (2002). Marketing: the one-semester introduction. Oxford: Butterworth Heinemann.

Lantos, G. (2011). Consumer behavior in action: real life application for marketing Managers. Armonk, NY: ME Sharpe.

Mikler, J. (2009). Greening the car industry: varieties of capitalism and climate change. Cheltenham: Elgar.

Vieceli, J. & Valos, M. (n.d). Marketing management. Atlantic Publishers and Distributors.

Young, A. (2008). Principles of marketing. New York: Rex Bookstore Inc.

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