Promotional Strategies for Cars in India free essay sample

This project is an effort to understand these promotional strategies adopted by different automobile companies in India. This project concerns with the study of choosing the 6 most appropriate mix of advertising, sales promotion, personal selling and publicity for cars in India with a detailed study of promotional strategy of Ford Fiesta. This project also targets the customers in India regarding the promotions of cars in India by reviewing and interpreting a questionnaire. Chapter 2 Literature Survey 7 Theoretical Framework and Review of Literature Promotional Strategy A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. An organizations promotional strategy can consist of: Advertising: Is any non personal paid form of communication using any form of mass media. Public relations: Involves developing positive relationships with the organization media public. The art of good public relations is not only to obtain favorable publicity within the media, but it is also involves being able to handle successfully negative attention. Sales promotion: Commonly used to obtain an increase in sales short term. It could involve using money off coupons or special offers. 8 Personal selling: Selling a product service one to one. Direct Mail: Is the sending of publicity material to a named person within an organization. There has been a massive growth in direct mail campaigns over the last 5 years. Spending on direct mail now amounts to ? 18 bn a year representing 11. 8% of advertising expenditure (Source: Royal Mail 2000). Organizations can pay thousands of pounds for databases, which contain names and addresses of potential customers. Direct mail allows an organization to use their resources more effectively by llowing them to send publicity material to a named person within their target segment. By personalizing advertising, response rates increase thus increasing the chance of improving sales. Listed below are links to organization whose business involves direct mail. Promotional Mix 9 Message and Media Strategy An effective communication campaign should comprise of a well thought out mess age strategy. What message are you trying to put across to your target audience? How will you deliver that message? Will it be through the appropriate use of branding? Logos or slogan design? The message should reinforce the benefit of the product and should also help the company in developing the positioning strategy of the product. Companies with effective message strategies include: Nike: Just do it. Honda City: The race lies within. Media strategy refers to how the organization is going to deliver their message. What aspects of the promotional mix will the company use to deliver their message strategy. Where will they promote? Clearly the company must take into account the readership and general behavior of their target audience before they select their media strategy. What newspapers does their target market read? What TV programmes do they watch? Effective targeting of their media campaign could save the company on valuable financial resources. Communication Model- AIDA 10 AIDA is a communication model which can be used by firms to aid them in selling their product or services. AIDA is an Acronym for Attention, Interest, Desire, and Action. When a product is launched the first goal is to grab attention. Think, how can an organization use it skills to do this? Use well-known personalities to sell products? Once you grab attention how can you hold Interest, through promoting features, clearly stating the benefit the product has to offer? The third stage is desire, how can you make the product desirable to the consumer? By demonstrating it? The final stage is the purchase action; if the company has been successful with its strategy then the target customer should purchase the product. Internet Promotion The development of the World Wide Web has changed the business environment forever. Dot com fever has taken the industry and stock markets by storm. The ecommerce revolution promises to deliver a more efficient way of conducting business. Shoppers can now purchase from the comfort of their home 24 hours a day 7 days a week. 11 Owning a website is a now a crucial ingredient to the marketing mix strategy of an organization. Consumers can now obtain instant information on products or services to aid them in their crucial purchase decision. Sony Japan took pre-orders of their popular Play Station 2 console over the net, which topped a 1 million after a few days, European football stars are now issuing press releases over the web with the sites registered under their own names. Hit rates are phenomenal. Advertisers have now moved their money over to the internet as customers are on average spending more time online then watching TV. Popular ways to advertise seem to be with banners and pop ups. Promotion Process for Cars Selecting the Target Market To say that target market selection is a part of promotional/marketing strategy development is just stating the obvious. Marketing targeting simply means choosing one? s target market. It needs to be clarified at the outset that market targeting is not synonymous with market segmentation. Segmentation is actually tee prelude to target market selection. One has to carry out several tasks besides segmentation before choosing the target market. Through segmentation, a firm divides the market into many segments. But all these segments need not form its target market. Target market signifies only those segments that it wants to adopt as its market. A selection is thus involved in it. 12 Marketing segmentation is a process that throws up not one but several market segments. There may be segments that are sizeable and the ones that are not so sizeable. There may be segments assuring immediate profits and the ones that call for heavy investments in market development. There may also be segments that show great potential, but display tough barriers to entry. As such, the question, which segment/segments, the firm should select as its target market, assumes crucial importance. Markets can be segmented using several relevant bases. For example, demographic characteristics of consumers, such as age, sex, income/purchasing capacity, education level etc, form one base for segmentation. Geographic characteristics constitute another; and buying behavior of the consumers forms yet another base. The various types of segmentations are Geographic segmentation, Demographic segmentation, Psychographic segmentation, etc. Product Positioning and Brand Positioning It is essential to understand the relationship between products positioning and brand positioning. Though in discussions, the two terms are synonymously and interchangeable used, technically they are different. Product positioning denotes the specific product category/product class in which the given product is opting to compete. And brand positioning denotes the positioning of the brand viz-a viz the competing brands in the chosen product category. It is evident that for any product, before entering the market it has to sequentially carry out the two exercises, product positioning and brand positioning. In the first 13 step, the product category where the new entrant should enter and compete, i. e. against what all products it has to compete, has to be decided. In this step, it is the broad function that the product is trying to serve that matters. This choice of product category will decide the nature of the competition the product is going to face. Once product category positioning is decided, the position for the new entrant against competing brands in the chosen product category has to be analyzed and fixed. Issues in Brand Positioning In deciding the brand positioning, the issues are: Which are the competing brands in the chosen product category? What are the unique claims/strengths of the various brands? What position do they enjoy in consumer? s evaluation and perception? What is the most favored position†¦? And yet vacant? Can the new brand claim the needed distinction and take the position and satisfy the need? Promotional Decisions Promotion has been defined as the coordination of all seller initiated efforts to set up channels of information and persuasion in order to sell goods and services or promote an idea. While implicit communication occurs through the various elements of the marketing mix, most of an organization? s communications with the market. The basic tools used to accomplish an organization? s communication objectives are often referred to as the promotional mix. 14 Advertising Advertising is defined as any paid form of non personal communication about an organization, product, service, or idea by an identified sponsor. The paid aspect of this definition reflects the fact that the space or time for an advertising message generally must be bought. An occasional exception to this is the public service announcement, whose advertising space or time is donated by the media. Advertising is the best-known and most widely discussed form of promotion, probably because of its pervasiveness. It is also very important promotional tool, particularly for companies, whose products and services are targeted at mass consumer markets. It is a very cost-effective method for communicating with large audiences. It can be used to create brand images and symbolic appeals for a company or brand. Direct Marketing One of the fastest-growing sectors of the U. S. economy is direct marketing, in which organizations communicate directly with target customers to generate a response and a transaction. It has become such an integral part of the IMC program of many organizations and often involves separate objectives, budgets, and strategies; we view direct marketing as a component of the promotional mix. 5 Direct Marketing is much more than direct mail and mail order catalogs. It involves a variety of activities, including database management, direct selling, telemarketing and direct response ads through direct mail, the Internet, and various broadcast and print media. One of the major tools of direct marketing is direct response advertising, whereby a product is promoted through an ad that encourages the consumer to purchase di rectly from the manufacturer. Interactive/Internet Marketing Interactive media allow for the back-and-forth flow of information whereby users can participate in and modify the form and content of the information they receive in real time. Unlike traditional forms of marketing communications such as advertising, which are one-way in nature, the new media allow users to perform a variety of functions such as receive and alter information and images, make inquiries, respond to questions and of course make purchases. In addition to the Internet, other forms of interactive media include CDROMs, Kiosks, and interactive television. Sales Promotion The next variable in the promotional mix is sales promotion, which is generally defined as those marketing activities that provide extra value or incentives to the sales force, the distributors, or the ultimate consumer and can stimulate immediate sales, 16 sales promotion is generally broken into Consumer-oriented and Trade-oriented activities. Consumer-oriented sales promotion is targeted to the ultimate user of a product or service and includes couponing, sampling, premiums, rebates, contests, sweepstakes, and various point-of-purchase materials. Trade-oriented sales promotions are targeted towards marketing intermediaries such as wholesalers, distributors and retailers. Effective Sales Promotion Sales promotion consists of diverse collection of incentive tools mostly short term, designed to stimulate quicker and greater purchase of particular products of services by the consumer. Sales promotion is the only method that makes use of incentives to complete the push-pull promotional strategy of motivating the sale force, the dealer and the consumer in transacting a sale. Price-Off Offers Price-off offers refers to offering the product at lower than the normal price. This encourages immediate sales, attracts non-users, induces product trail and counters competition. Premium Premium refers to the offer of an article of merchandise as an incentive in or to sell the product. Coupons In order to encourage product trail, stimulate re-purchase rate and build loyalty through news papers. 17 Dealer stock display context It is a type of point of purchase advertising which uses the show windows of the dealer for providing exposure to the sponsor? s products. Dealer participating enthusiastically and creatively are awarded. Publicity/ Public Relations Publicity refers to non personal communications regarding an organization, product, service, or idea not directly paid for or run under identified sponsorship. It usually comes in the form of a news story, editorial or announcement about an organization and its products and services. Like advertising, publicity is not directly paid for by the company. An advantage of publicity over other forms of promotion is its credibility. Another advantage of publicity is its low cost, since the company is not paying its time or space in a mass medium such as TV, radio or newspapers. Public relations are defined as â€Å"the management function which evaluates public attitudes, identifies the policies and procedures of an individual or organization with the public interests and executes a program of action to earn public understanding and acceptance†. Public relations generally have a broader objective than publicity, as its purpose is to establish and maintain a positive image of the company among its various publics. Personal Selling 18 It is a form of person-to-person communication in which a seller attempts to assist and persuade prospective buyers to purchase the company? product or service or to act on an idea. Unlike advertising, personal selling involves direct contact between buyer and seller, either face-to-face or through some form of telecommunications such as telephone sales. Personal selling involves more immediate and precise feedback because the impact of the sales presentation can generally be assessed from the customer? s reactions. FORD FIESTA About Ford The modern Ford India began production in 1998, although the roots trace back to 1907 when the Model A was launched. Its manufacturing facilities are in Maraimalai Nagar near Chennai. Ford India began production in 1926, but was shut down in 1954. Production began again with the joint venture Mahindra Ford India, Limited (MIFL) in 1995, a 50-50 venture with Mahindra Mahindra Limited. Ford increased its interest to 72% in 1998 and renamed the company Ford India Limited. 19 The first model was the Ford Escort, which was later replaced by locally produced Ford Ikon in 2001. It has since added Fusion, Fiesta, Mondeo, Endeavour and Endeavour Thunder+ to its product line. Key Products Ford Ikon Ford Fiesta Ford Fusion Ford Endeavour Ford Fiesta While Fiesta continued to impress people all over the globe, Ford had different plans for the Indian market. Ford engineers in Melbourne, Australia, designed a car from scratch specifically for the Indian market and badged it as Fiesta (2005). This sedan was sold with two engine options, 1. 4 Diesel (TDCI) and 1. 4/1. 6 Petrol. The 1. 6 Petrol version was marketed for its acceleration and performance to keep it competitive with other car makers. The Diesel version saw much success as its main 20 selling point was the fuel efficiency. Ford test delivered a whopping 30+Km/L Since cost of fuel was rising this was the right time for Ford to showcase its turbocharged direct-injection diesel technology. Ford claims to have sold more diesel variants than its petrol ones. Recently Ford gave some minor facial uplift to the well sold Fiesta and also reworked on safety features. Dual Airbag was included because the competitors the Suzuki SX4 and Hyundai Verna had this and other safety features. Ford Fiesta is engineered specifically to adapt the demanding Indian road conditions. It is a mid-sized car having a perfect combination of style and solidity. Politicians, Students, Doctors, any successful professional. Income: Upper Middle Income Group, High Income Group On the basis of Psychographic Lifestyle: Exciting, Trendy, Outdoor Oriented Social Class: Upper Middle On the basis of Geographic Region: Northern, Southern, Eastern, Western region of India Area: Metro cities, Semi-Urban and other Urban areas Adopting Offer to suit Target Segment Ford modifies its models for Indian target segments as shown below: 24 Higher ground clearance to make the car more compatible to the rougher road surface in India. Stiffer rear springs to enable negotiating the ubiquitous potholes on Indian roads. Changes in cooling requirement, with greater airflow to the rear. Higher resistance to dust. Compatibility of engine with the quality of fuel available in India. Location of horn buttons on the steering vehicles. (As the India motorist uses the horn more frequently, for cars sold in India, the horn buttons are kept on the steering wheel and not on a lever on the side as in the models sold in Europe. ) Market Competition Ford Fiesta comes in â€Å"C† segment „Sedan? and is available in both Diesel and Petrol variants in Indian Market. Along with Fiesta, other cars in this segment are Hyundai Verna, Maruti Suzuki SX4, Chevrolet Aveo and Tata Indigo Manza. Strategic Promotions by Ford 25 Ford follows the promotions at two levels, they a 1) Promotions of product directly by the manufacturer. 2) Promotions at dealer level. In the first step the products of vehicles manufactured by the Ford Automotives are directly promoted by the manufacturer by himself. He follows many promotional strategies like 1. Advertising through television and newspaper. 2. Internet or interactive marketing. 3. Direct marketing. In the second step the dealer of the vehicles promotes the vehicles. The various promotional strategies followed by the dealers are 1. Advertising though news papers, radios, palm plates. In this all the features of the product and its prices are given in detail to the customer. 2. By Hoardings, the promotion about the product and its features. Hoardings A heavy picture of the product which comprises of its attributes and special features are displayed on the roadsides in the form of hoardings. It is a bit expensive strategy but attracts many people who pass by that roadside. This type of advertisement is prepared for those segments of people who cannot afford their time in reading newspapers and watching televisions. While travelling from their home to office, moving on their business activities they may watch these hoardings. These hoarding are especially setup at the road signal stops. Maintaining Data Bank 26 In this the dealer collects personal/bio-data (address and contact number) of many people from various organizations and different sector who are ready to buy the vehicles and who change the vehicles regularly. These people are met-in person or contacted through their contact number. The various new features and new offers regarding the vehicles are advocated to them and are given discounts on group purchase of vehicles, i. e. if 5 or more friends in the group purchase the cars at a time then they are given special discounts on the vehicles. Free Insurance The dealers of Ford may give a special offer of free insurance on the purchase of each vehicle to its new customers. Relationship Marketing Fortune Ford pays a special attention towards its old customers. To retain the old and existing customers it conducts a corporate meet at a luxurious hotel. The event aims at knowing the problems of the customers regarding the vehicles and also service feedback. In this way it maintains an effective relationship with the customers and gains the reputation and goodwill in the minds of the customers. Sales Promotion 27 The sales promotion is done by ford at three levels: 1) Showroom Sales: In this the customers walk in to the showrooms to know about the details of the product. Specially trained sales executives who are present in the showrooms give a detailed explanation about the product to the customers. Sales executives give a detailed note on the products features, various offers given by the manufacturer and also by the dealer to the customer and enhance the sales of the vehicles. 2) Corporate sales: A special team of sales executives are sent to some big corporate sectors and there they personally meet the heads of the organizations like C. E. O? s, Managers, etc. , and explain about the vehicles and the offers and special schemes provided by the dealer to them on bulk purchase of the vehicles and try to promote the sales of the vehicles. ) Field sales: The sales executives conduct some events with the corporate working people and try to demonstrate the product features and its benefits and try to promote the product and increase its sales. Conducting Customer Delight Program 28 This is a unique program conducted by the dealers of Ford. This is a program conducted to retain the old customers of the Ford. The old customers of Ford are meeting personally and they are requested to g ive their feedback by filling in the questionnaire which is specially prepared for them. In this questionnaire their problems regarding the vehicle and also their post sale service experience are taken. If there exists any problem, then the Fortune Ford service men try to resolve the problems of their customers as soon as possible and makes the customer satisfied. This is a technique to attract the new customers by satisfying the old customers and gaining goodwill in the market. Extended Warranty The dealers of Ford Fiesta give an extended warranty to its customers where there will be extended time duration in the warranty. What is Extended Warranty? Factory Warranty covers only for a specific period of time/mileage. After the factory warranty expires, customer is exposed to the risk of parts failures. This is applicable for any machine/equipment/vehicle. Extended Warranty: Is an extension of Factory Warranty Offers almost similar coverage as Factory Warranty Comes with a time-bound (eg. 1yr/2yrs but unlimited mileage cap) 29 Covers all Mechanical and Electrical Failures Covers labor Why is extended warranty needed? Offers peace of mind motoring Protects against unexpected and non-budgeted expenses Can be transferred, hence increases the resale value. What does it NOT cover? Does not cover wear and tear of parts Does not cover scheduled service items Does not cover accident repairs Benefits to customer Protection from manufacturing and material defects Car can be repaired at any Ford out let across the country Unlimited number of claims No excess to pay One up-front payment only Inflation protection from rising costs of parts and labor All repairs carried out by qualified Ford technicians Warranty can be transferred when vehicle is sold – better resale value Total peace of mind.