Summary
Brand differentiation is an effective and efficient way through which an entity can attract new customers and maintain its existing ones in a competitive market environment. Due to this fact, this paper focuses on two articles where entities have transformed their business approach as a means of increasing their market share. The first article, ‘Sonic Automotive to Start Used-Car Dealership Chain,’ expounded on how Sonic Automotive Inc. transformed its operations from selling new cars to used cars through its Echo Park stores as a means of meeting the increasing demands of consumers purchasing used cars within the United States (Rogers 1). In 2013 alone, approximately 42 million used cars were sold (Rogers 2).
This was three times the number of new cars that were sold within the same period. Therefore, by strategically placing its outlets, having an effective pricing mechanism, and offering superb consumer service, Sonic Automotive believes that this venture will be profitable in the long and will put it at a competitive edge over other dealerships that operate in the used-car industry such as CarMax.
Operating in a new environment has always been a challenge for entities that have expanded their operations into new markets. Starbucks has been operational in China for over 16 years (Jargon 1). Despite the fact that China is a tea-drinking nation, the article, ‘Starbucks Plays to Local Chinese Tastes’ expound on the strategies that this firm is planning to put in place to increase its overall brand awareness hence increasing its market share in the short run and in the long run (Jargon 1). In accordance with the article, the aim of this venture is to increase the overall market share by transforming its operations as well as its products to conform to the local taste and preferences. Moreover, the firm is planning to transform its outlets to conform to Chinese cultural insights.
Critical Analysis
Branding is an essential factor in determining the overall success of an entity in the short run and in the long run. The perception that will be developed by the target market of a given entity is determined by the brand image it develops. It is perhaps due to this fact that Sonic Automotive Inc. has decided to switch its operations from selling new cars and move into the used-car industry. The rise in the cost of living coupled with the high inflation rates has greatly reduced the income and more specifically, the savings of individuals. Due to this fact, the number of people who can afford new cars has been decreasing with time as more people now prefer to purchase used cars.
Therefore, by branding themselves as dealers of used cars, Sonic Automotive Inc. stands a high chance of attracting new customers as well as maintaining its existing ones hence creating a huge target market that is loyal to its brand. To further increase its competitive edge, this firm has come up with an effective pricing strategy. Unlike in most used-car dealerships where the price is determined at the outlet level, the price in Echo Park Stores will be determined by the central office (Rogers 3). This will ensure consistency in sales despite the outlet a client would have visited.
Product differentiation has also been considered as an essential services marketing strategy especially in circumstances where pricing cannot give an entity the edge it needs to be competitive over its rivals. To enhance its operations in China, Starbucks has come up with a localization strategy that aims at increasing its market share within the tea-drinking nation. Most firms that venture into new markets prefer to maintain their traditional practices.
Despite its effectiveness, this approach fails to capture the attention of the local target market since they cannot relate to the brand. In this respect, the Starbucks localization project focuses on the key aspects of the business. Thus, the firm has introduced new Chinese inspired flavors to its menu. The firm is also modifying its outlets to meet the tastes and preferences of its target market. Unlike the American market that is accustomed to the grab-and-go culture, people in China prefer to spend time in a restaurant and hence need more room. Through this approach, the firm will increase the number of non-coffee drinkers who visit its outlets since customers will come in groups for business or leisure purposes.
Reaction to the Articles
Services marketing concepts aim at increasing the ease at which firms can market their products. The articles covered in this paper showcase some of the approaches that can be used to realize the goals of services marketing. In the first article, Sonic Automotive Inc. has used brand differential as its main marketing strategy. By focusing on used cars, this firm has modified its operations to capture the growing used-car market in the United States.
To support this approach, this firm has come up with an effective pricing strategy that will be consistent in all its stores. Pricing on the other hand will not meet the marketing needs of Starbucks in China. Instead, this firm has focused on localization as its main approach to brand differentiation. Through brand differentiation, the articles presented in this paper show how firms can transform their products and services so that consumers can perceive them as being unique.
Works Cited
Jargon, Julie. “Starbucks Plays to Local Chinese Tastes” Wall Street Journal. 2012. Web.
Rogers, Christina. “Sonic Automotive to Start Used-Car Dealership Chain.” Wall Street Journal. 2014. Web.