Professional Documents
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Amar Mishra & Group
Amar Mishra & Group
Rani Gupta
Amar Mishra
Introduction
Automobile industry, the business of producing and selling self-powered
vehicles, including passenger cars, trucks, farm equipment, and other
commercial vehicles. By allowing consumers to commute long distances for
work, shopping, and entertainment, the auto industry has encouraged the
development of an extensive road system, made possible the growth of
suburbs and shopping centers around major cities, and played a key role in
the growth of ancillary industries, such as the oil and travel businesses. The
auto industry has become one of the largest purchasers of many key
industrial products, such as steel. The large number of people the industry
employs has made it a key determinant of economic growth.
Industry History
Although ancient Chinese writers described steam-powered vehicles, and
both steam- and electric-powered cars competed with gas-powered vehicles
in the late 19th cent. Frenchman Jean Joseph tienne developed the first
practical internal-combustion engine (1860), and later in the decade several
inventors, most notably Karl Benz and Gottlieb Daimler, produced gaspowered vehicles that ultimately dominated the industry because they were
lighter and less expensive to build. French companies set the design of the
modern auto by placing the engine over the front axle in the 1890s and U.S.
manufacturers made important advances in the mass production of the auto
by introducing cars with interchangeable machine-produced parts (one such
car was created by Ransom E. Olds in 1901).
In 1914 Henry Ford began to mass produce cars using assembly lines. In
addition, his practice of providing loans to consumers to buy cars (1915)
made the Model T affordable to the middle class. In the 1920s, General
Motors further changed the industry by emphasizing car design. The
company introduced new models each year, marketed different lines of cars
to different income brackets (the Cadillac for the rich; the Chevrolet for the
masses), and created a modern decentralized system of management. U.S.
auto sales grew from 4,100 in 1900 to 895,900 in 1915, to 3.7 million in
1925. Sales dropped to only 1.1 million in 1932 and during World War II, the
auto factories were converted to wartime production.
Passenger Vehicles which include passenger cars, utility vehicles and multipurpose vehicles
15. Mitsubishi
Company
Toyota
Volkswagen
General Motors
Others
Market
bases?)
11.6
11.1
8.2
69.1
Share
(on
what
Market Share
11.6; 12%
Toyota
11.1; 11%
Volkswagen
General Motors
8.2; 8%
Others
69.1; 69%
Toyota
Toyotas uses both differentiation and low cost as generic strategies to try
and gain a competitive advantage over their competitors in the automotive
industry.
The market scope that Toyota uses is a broad one that
encompasses nearly every type of customer that is in the market to
purchase an automobile. Toyota is able to target such a large market
because they have something for everyone. Toyota has four wheel drive
trucks and SUVs for the outdoor types or those who live in areas that face
severe weather conditions, hybrid models like the Prius for the eco-friendly
customers that are interested in saving the environment, along with the
Volkswagen
This section gives different definitions what branding means, its elements,
functions, and why it contributes to a business success. Furthermore, the VW
brand is discussed; what VW stands for, its brand values, brand groups, and
finally, why a luxury car has been launched under the VW logo.
Doyle (2002) states that the purpose of marketing is to create a preference
for the companys brand. A customer who perceives a brand as superior will
be willing to pay more for the product or service. But what is a brand? The
literature provides various definitions from different perspectives. For
example, Duncan (2002) defines a brand as a perception of an integrated
bundle of information and experiences that distinguishes a company and/or
its product offerings from the competition. A similar definition is given by
Kotler (in Esch, 2000), a brand is a name, term, sign, symbol, or design or
combination of them which is intended to identify the goods and services of
one seller or a group of sellers and to differentiate them from those of
competitors. This means that the function of the brand is mainly
differentiation and identification. To reflect the importance of the brand
influence on the buying decision, and to position the customer into the
centre of branding; Bruhn (1999) defines a brand as a promise to the
customer. This promise stands for a continuous supply of standardised
quality to the customer. A further element of a brand is its added emotional
value. The emotional notion leads to a psychological product differentiation.
For example Coca-Cola has a strong emotional brand. Another essential
aspect of a brand is its image, which is in the mind of the customer in the
form of pictures, feelings, attributes, values, content of the brand etc.
(Knoblich, 1992). The buying decision depends on the difference between the
communicated brand image and the consumers personality. In summary,
the various definitions include the three components: promise, emotional
values, and rational values (see also De Chernatony, 2003).
A brand has various functions for a consumer as well as for the seller, which
contribute to the success of a business. As mentioned above, a brand allows
the producer to differentiate the product - through generic product
advantages, emotional attributes and brand personality from its competitors
(Esch, 2000). According to Porter, differentiation does not only protect the
company from its competitors, it also increases customer loyalty and reduces
price sensitivity (in Esch, 2000). This means a brand leaves the marketer
more price flexibility. On the other hand, customer loyalty leads to long term
profits, and positively supports brand transfers (Bruhn, 1992; Doyle, 2002).
For the consumer, a brand provides orientation in the product jungle, and
facilitates the identification of a specific product among competitive ones.
Furthermore, it lowers the purchasing risk, as the customer can trust the
functional and emotional quality of the brand (Biel, 2000). Last but not least,
a brand allows the customer to transfer the brand image to him. Bugdahl
(1998) describes this as a personalisation function or snob syndrome, for
example, a BMW owner has the physical respectively emotional experience
of being sporty and having friends (Herrmann, 2000).
McKinsey (in Limbach, 2003) investigated the importance of brands, and
therefore, the importance of branding. On a scale from 1 to 100, luxury
goods including cars count 95 percent. This is followed by food/ drinks with
90 percent, telecommunications with 82 percent, ending with 2.5 percent for
energy suppliers. This demonstrates the importance of branding and
positioning in the automotive industry as the customers of cars are highly
brand sensitive.
Volkswagen established an image of reliability and good, honest German
engineering at an affordable price (Britt, 2002). The slogan of Volkswagen is
AusLiebezumAutomobil (in English: from love to the car), which implicates
the brand value of Volkswagen (Limbach, 2003).
VW groups his brands into two groups known as the classic brands (VW,
Skoda and Bentley) and the sporty brands (Audi, Seat, and Lamborghini).
The company is concerned with the proliferation of its brands. Consumer
could notice that the Skoda made by VW is little different from the more
expensive Golf (The Economist, 2002). This could lead to cannibalisation of
cheaper VW cars, and therefore, reduce the overall profits.
On the one hand, Volkswagen gives his brand a little bit of a hello by
polishing the brand with the launch of the Phaeton. Rod McLeon the head of
luxury cars at Volkswagen describes this launch as moving the centre of the
VW brand more upmarket (Sweney, 2003). MrPischetsrieder admits that the
Phaeton would not contribute to VWs profits but would set a benchmark for
excellence within the company to add emotion to the VW brand. His current
vision is to break even with the Phaeton (The Economist, 2002). On the other
hand, Volkswagen launched a luxury car under a brand, which is associated
with a peoples car and not a prestige product. Volkswagen employed a
Installed Capacity
A. Four Wheelers
C. Engines
5.81
18.95
1.00
A. Four Wheelers
6.59
20.74
1.10
12.
Motorcycle Retailers Association(MRA)- A body that is part of the
retail motor industry federation (RMIF) and represents motorcycle
retailers in Britain.
13.
Motor industry research association(MIRA)- An independent
provider of testing information and certification for the automotive
industry.
14.
Motor Insurance Repair Research Centre(Thatcham)- A body that
aims to reduce the cost of motor insurance whilst still maintaining
safety standards.
15.
Motor
vehicle
dismantlers
association(MVDA)a
body
representing motor vehicle dismantlers.
16.
Motor vehicle repair association (MVRA)- An association that
offers support to businesses involved in the repair of motor vehicles.
17.
National Motorcycle Council(NMC)- an umbrella group for the
main motorcycle organization including manufactures and dealers
associations rider groups and training/safety organizations.
18.
National Type Distributors association(NDTA)- A body that
represents the specialist tyre retailing industry and offers technical
and training services.
19.
Retail Motor Industry federation(RMIF)- A motors trade
organization representing several sectors of the retail motor industry.
20. Scottish Motor Trade Association(SMTA)- An association that represents
members of the motors trade in Scotland.