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Sunday, 22 March 2015

General Motors and Saturn


Case Study

Saturn: An Image Makeover


Questions for discussion:
Q1: Using the full spectrum of segmentation variables, describe how GM has segmented the automobile market?
GM is a company that produces a lot of car models which are directed towards various segments of the market. A complete structural breakdown is discussed below that provides detailed information about GM’s market segmentation.

Demographic Segmentation:
If one arranges market segments on a demographic basis, one finds that the company basically targets young to middle age customers. It does not distinguish between the gender of its audience and targets both male and female people. The Saturn models are designed to provide a life cycle of vehicles that can follow the history of young people who may be married or not. This means that Saturn models start from compacts and gradually increase in size to offer SUVs for large families. The company targets people with low income as most models are cheaper than the competition and designed to provide people with good experience. Saturn models are available for everyone whether be a salaried person or a person with professional job position.

Geographic Segmentation:
The case study does not mention people of different ethnicities or cultural entities. This means that the company targets the general people that are available in the target market of United States. The company is also targets its models for urban situations such as those found in New York City.

Behavioral Segmentation:
The Saturn brand offers safety, economy and personal experience in their car models. They believe in providing different models for different stages in a man’s life. This business model strongly relies on creating loyalty status with its customers. The company targets this kind of segmentation by providing personal services and offering gradual improvements in its models.

Psychographic Segmentation:
The Saturn brand targets people of a lower social class who are looking to move ahead in the society and occupy a position that offers prestige due to the use of good quality cars.

Q2. What segment(s) is Saturn now targeting? How is GM now positioning Saturn? How do these strategies differ from those employed with the original Saturn S-series?
Targeting :
The company is targeting various customers. These customers include high quality imported car users as well as mid-level income people. The company also targets its loyal customers to change models. It targets young people with compacts, roadsters and sedans. The company also produces luxury SUVs to target people who only have an eye for class and luxury travelling.

Positioning:
The company is set up to offer a new brand by introducing European Opel. GM also constantly attracts people who want to buy imported models. The company has also positioned itself in sports car market by introducing two models of roadster and sports sedan. The brand is now shifting to provide higher quality vehicles that are more costly yet provide better services.

How do these strategies differ from those employed with the original Saturn S-series?
The company is now offering two lines by the name of red and green line. The red line is designed to provide the improved Opel Astra and will take the place of Ion model. The green line is designed to offered car models that are completely based on hybrid technology which are offered at the most cheapest rates in the region.

Q3. What segmentation, targeting, and positioning recommendations would you make to GM for future Saturn models?
Segmentation recommendations:
GM should work more on providing high quality luxury cars for its high end customers. These customers are loyal to the GM brand and this market segment should be given more importance. These luxury models should also be improved by offering more options for sports accessories as well provide various style options.

Targeting recommendations:
GM should move ahead from targeting the mid income market and move towards both the high end customers as well as low income customers. The company profits will definitely improve if the market segmentation and targeting improves and covers different groups of people with different ages and social positions. The company should add more options of comfort, style and sports in its car models to increase its loyal fan base.

Positioning recommendations:

GM must create their own brand name effectively by targeting not only the local but also the global market. It must work to produce a good quality name among its competition. GM should consistently improve its car models by providing more features and offering higher quality. 

Thursday, 12 March 2015

Marketing process and its elements (Part 9)

Q. Plan marketing mixes for two different segments in consumer markets

Marketing Strategy for other segments
The analysis of the trajectories and performance of airlines in the Twentieth century has updated two essential conditions for profitability. The first is the relevance of "profit strategy" to the "growth mode" countries in which the firm operates. The second is the construction of a "compromise of corporate governance" between key actors to implement means consistent with the profit strategy, in other words, to invent or adopt a "productive model" (Boyer et al, 2010).
For marketing for other segments, AirAsia will follow the innovation and flexibility strategy while targeting the middle and lower income people for whom the cost is most important (Anderson & Narus, 2010).
Q. Show how and why international marketing differs from domestic marketing

Local versus Foreign Markets
In this changing context, AirAsia is engaged in two possible internationalization scenarios, i.e. globalization at one hand and the regionalization on the other. However, the implementation of internationalization strategies reveals more complex configurations. The scenario of globalization involves homogenization of the global market, which tend to unite through the gradual convergence of services offered in different countries.
The success of a policy of internationalization depends primarily on the relevance of the strategy to profit of the firm with respect to growth patterns of new countries invested.  While entering into the new international market, AirAsia closely consider the cultural dimension of the market.
In order to remain active and progressive in the market AirAsia has to identify new routes and markets (Davies & Lam, 2001). Being a low-fare airlines, AirAsia has to identify such potential new routes and markets which have the following characteristics:
·         The area of the potential new market is large enough to introduce new profitable routes;
·         The demand of a low-fare airline is high among the local population;
·         The region is economically viable and new industries are emerging;
·         The region must have a large population;
·         Maintenance facilities are available
·         Cross cultural business is growing etc.


Marketing process and its elements (Part 8)

Q. Explain how distribution is arranged to provide customer convenience

Distribution Strategy
For AirAsia, major investment in marketing is carried out and the distribution is done in a selective manner. AirAsia positioned itself exclusively in highly selective and demanding circuits and has dedicated specific ranges. Distribution networks thus seem well diversified geographically and adaptation is desired and achieved (Fitzgerald, 2008).
The distribution strategy can be improved by increasing the intensive distribution strategy, which increases the selling point through different outlets. The distribution can also be extended by co-branding and aligning of brands with different channels, which is also very good in globally standardizing brands.
Q. Explain how prices are set to reflect an organization’s objectives and market conditions

Pricing Strategy
AirAsia airline is introduced at much lower cost to attract persons of middle and lower income groups. The price would cover all marginal or incremental costs- that is, those costs specifically incurred to get the added business. In the long run, however, all overhead costs must be covered as well (Haynes, 1962). Customers typically choose products and services that give them the greatest value. Thus, AirAsia also wants to position itself on the key benefits that it offers relative to competing models. AirAsia, though, emphasizes on lower cost but also offers good quality, design and style.
Q. Illustrate how promotional activity is integrated to achieve marketing objectives

Promotional Strategy
In contemporary corporate mainstream some of the novel media that have emerged to play pivotal role in the field of advertising is the social media and networking. With the help of these venues and frontiers a business can also easily track the traffic that is arriving at the website and the place which is attracting massive attention the company can take subsequent steps in formulating their very own corporate strategy and hence can target their vehicles at the correct niche market and as per their requirements (Paul, 1997).
Q. Analyze the additional elements of the extended marketing mix


From among the many media available, AirAsia chooses those that will provide the greatest return for the advertising dollar. Selection of the right combination of advertising media depends upon the type of business and its governing circumstances. In this particular case Television, Internet, magazines, billboards and newspapers are the most appropriate mediums for advertising. It is necessary to plan the budget for adverting very wisely.

Marketing elements and its elements (Part 7)

It is among the few airlines that has explored the frontier of introducing air services that can be run and operated on the basis of using technology that is renewable and ecological friendly. At present no other airline is offering such innovative price and packages to their consumers. With the help of all these distinctive features and characteristics AirAsia has ample opportunity to establish its strong and stable base in the region which can be effective for the organization and all other related stakeholders in the long run.
Q. Propose new positioning for a selected product/service
The concept of positioning stems from the fact that consumers always have a certain perception of the products and brands on the market. Positioning the company to identify the product or brand in the consumer's mind, clearly indicating its difference over competitors. This is the place of the brand or outlet in the consumer's mind that he is clearly different from its competitors and meets the expectations of the target.
AirAsia has established its positioning strategy as cost differentiation policy and positioned the airline as a low cost airline which is very affordable to the middle class families. This positioning strategy provides a solid ground to AirAsia to fight against their customers in order to achieve the major market share.
Q. Explain how products are developed to sustain competitive advantage

How to sustain competitiveness?
Scholars are of the opinion that value and competitive advantage can be created either by reducing the cost of the product or differentiating the product from other similar products (Ceccagnoli, 2005). In order to sustain its competitiveness, AirAsia faces the constraint of presence in emerging markets, whose growth rate is high.

Homogenized in a market, AirAsia avails the benefits of high volume of customers. Such a configuration would allow a division of labor across the world to specialize areas of activities for which they offer comparative advantages and cross-flow generating assets and services in a liberalized world trade. This implies that the convergence of the request is made possible by the reduction of differences in development levels between countries, a relative homogenization of lifestyles (urbanization, highways) and shared cultural references. The heterogeneity of the world would be more than the specific resources.

Marketing process and its elements (Part 6)

Air Asia has 105 aircraft and has ordered 315 more. What company is confident enough to estimate that demand will be multiplied by 4 in a few years. It is as if EDF with its 60 nuclear decided to build 180 new; even Ryanair did not order as many planes. AirAsia ordered 200 A320 Neo list price: $18 billion. It probably negotiated a huge discount for this order, the largest in the history of aviation. But it did not talk about it, especially in Europe supporting the European industry. Not bad for a company establishing itself gradually in Europe. Aircraft ordered by AirAsia are 15% more fuel efficient. What to save and offer even lower prices, while reducing maintenance costs (one model, new aircraft), killing the ecological criticism in the bud (flight Greenest its class) while promoting its brand.
Q. Choose a targeting strategy for a selected product/service

Targeting Strategy
Before deciding upon the different ways through the help of which AirAsia can be promoted it is also important to have a thorough idea about the nature and quality of the service. It is basically the nature of the service that determines the target audience and niche market to which the service can cater and interest to. In order to filter the demographic segment of this target segment and make it more customized, it is important that the nature and type of Airline is being created and marketed is also worth considering that will ultimately determine the demographic and psychographic segments of the target population.
It is important to develop and incorporate features through the help of which the facility of interaction with customers can easily be promoted. In order to fulfill this objective it is important that the AirAsia do contain and encompass features through the help of which it can easily facilitate this practice. As AirAsia adopts cost differentiation policy, hence its target market is middle or lower class families.
Q. Demonstrate how buyer behavior affects marketing activities in different buying situations

Buyer Behaviour
Some of the reasons due to which AirAsia have gained immense popularity are because of two prime determinants in the design of their service. Firstly, an organization like AirAsia in order to cater its massive target audience that can appeal to a wide population of the country in terms of affordability and economic value. The prices of AirAsia are extremely affordable for customers all over the country (Bordenave,  Belis-Bergouignan & Lung, 2008).

Buyers of other similar economies are also looking for places and areas where they can easily find an airline at an affordable price, hence the pricing quality and strategy that the organization has been following will come in handy for AirAsia to establish its place and subsequently stabilize it, in similar economies, despite the presence of major competitors. Along with all this, there is yet another area where AirAsia on the whole have an added advantage over its competitors is also in the form of innovation that it has introduced in the region with its latest technologies.

Marketing process and its elements (Part 5)

It is necessary that the advertising media should reach but not overreach the present or desired market. From among the many media available, AirAsia chooses those that will provide the greatest return for the advertising dollar. Selection of the right combination of advertising media depends upon the type of business and its governing circumstances. In this particular case Television, Internet, magazines, billboards and newspapers are the most appropriate mediums for advertising.
Q. Propose segmentation criteria to be used for products in different markets

Segmentation Criteria
The question of purchasing power is a key issue for companies. It particularly impacts on the sensitivity of consumer prices and hence the intensity of the competition by the suppliers offering the lowest cost. In a situation where the purchasing power is declining, especially develops a request for an offer, the least expensive possible. Positioning a company as "low cost" literally cost low, then seems to be the key winning strategies, responding to concerns of consumers who are concerned about the "cost of living", combining profitability and social responsibility of the company.
Air Asia is one of the most profitable airlines in the world: 25% of net profitability, as well as Nintendo, Google, the luxury industry or the oil industry. Just fill it to 50% its aircraft to be profitable. Its employees are three times more productive than its competitors (Meghan, 2002). Seat / km costing 2-3 cents in Air Asia, 3-5 against its competitors in low-cost and 10 cents for traditional companies. Air Asia sells tickets below cost price of any of its competitors, to 4 cents per passenger kilometer, when its competitors have to charge at least 7 or 8 cents to be profitable.

Despite its concrete price (40 Euros for Chiang-Mai/Bangkok or € 250 a go / single Paris / Kuala Lumpur) Air Asia is continuously hiring hosts and hostesses to look young, beautiful, smiling and attentive to clients. Air Asia is known for its amazing punctuality as well as it is also the best low-cost airline in the world in 2009, 2010, 2011 and 2012. Enough to reassure customers.

Marketing process and its elements (Part 4)

Contemporary analysis of the aviation industry shows that major stakeholders are not threatened with competition, but it is basically the number of suitable alternatives available that serve as a key threat to their progress. Keeping this in mind we can now look at the case and challenges that AirAsia encounters in the planning of a counter culture market and advertising strategy. It is a low-fare airline, hence the mode of its marketing is restricted through the kind and nature of products that they deal with,
In these competitive times all organizations intend to introduce measures that can bring creativity in the way they market and advertise the products that they manufacture. In order to fulfill this objective the importance of exclusivity has enhanced phenomenally in contemporary business. One of the basic benefits that this element helps in obtaining is that such businesses are able to cater their own niche target market through the way they intend to advertise their market.
Secondly, it is the exclusive nature of the business and their market strategy that entices different demographic segments to know about the brand and its dynamics.
Third and most important is that such measures collectively help in increasing the revenues that are produced by the organization which is the most important in contributing to the success and development of the organization (Dwyer and John, 2006).

In contemporary corporate mainstream some of the novel media that have emerged to play pivotal role in the field of advertising is the social media and networking. Facebook, Twitter and MySpace have emerged as hot beds of advertising as well as for the effective conduction of promotional campaigns for any venture that the business is going through. With the help of these venues and frontiers a business can also easily track the traffic that is arriving at the website as Google provides this facility in the form of Google analytics. By means of the traffic that is arriving at the website and the place which is attracting massive attention the company can take subsequent steps in formulating their very own corporate strategy and hence can target their new designer’s bag at the correct niche market and as per their requirements (Paul, 1997).