RSM251 case assignment 2 PDF

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Land Rover North America RSM251H1 – Marketing Management Luciano Volpe Nikolina Granic 999 648 323

Land Rover North America Marketing Strategy Analysis Tuesday, November 4, 2014

Nikolina Granic 1

Table Of Contents: Introduction -

Before The US Market

-

The US Market

Issue Statement Situational Analysis -

BCG Matrix (internal analysis)

-

5 Competitive Forces that Shape Strategy (external analysis)

Marketing Decision Options Decision Criteria Recommendation Action Plan Conclusion Appendix

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Introduction As a member of the President’s Cabinet along with Charles Hughes, president and CEO of Land Rover North Amaerica, we have been tackled by the relatively difficult task of designing marketing strategies that would make Land Rover of North America the number one Land Rover market worldwide. Within this report I will place particular focus on the US Market and our next steps in developing market share effectively.

Before The US Market The Rover Group stemmed from Solihull, England in 1860 as a sewing machine and bicyclemanufacturing firm that capitalized on opportunities to allow design engineers to produce their first fourwheel drive (4WD) utility vehicle in 1947. The original vehicle: The Land Rover was known for its versatility and its use on the land, a characteristic valuable to farmers at the time. The Land Rover provided a dual role for consumers as: a) A private car with the ability to perform valuable duties other than transport or as b) An all purpose countryside work vehicle capable of providing comfortable, efficient transportation.

In the UK the brand was a well-established and recognized part of the rural, industrial, civil and especially military scenes whereby 60% of sales were attributed. The next product on the line, the Range Rover model capitalized on the opportunity of providing the unmet benefit of luxury and comfort while adhering to its recognized performance standards. This luxury vehicle was marketed under its model name, Range Rover, to accentuate the dignity and style associated with it.

Further growth in the company allowed the innovative multi functional team and application of justin-time manufacturing principles to successfully launch another product on the line: The Discovery. This model positioned itself as the most advanced 4WD vehicle with dual benefits of Land Rover authenticity and modern comfort. The Discovery emerged as the best selling model in the Land Rover product line.

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The Us Market Since the doors first opened in the US market in April 1986 the Land Rover company has become a major player in the worlds largest auto market making drastic improvements and changes to their marketing strategy to adhere to changing consumer preferences and competitive marketplaces. When first entering into the US Market, Hughes decided to only sell the Range Rover model. Over the years of expansion and progress the company developed the capability of being able to compete on a larger scale with the addition of The Land Rover Defender and The Land Rover Discovery models to their US product line. The firm has approached a point where consideration and analysis of key marketing strategies within the companies’ belt are crucial for further trajectory of the firm. Issue Statement Within my report I will touch on profitable marketing initiatives and tactics that will aid in making a final decision on how to implement our marketing strategy for continued company growth. The main issue at hand is making a final decision on the marketing strategy for Land Rover North America to begin implementing by specifically targeting their positioning, the marketing mix allocation and retail strategy. It is our duty to consider a new branding strategy, a new product strategy and a new retail strategy that complement one another and strategically link Land Rover’s position in the marketplace to how they allocate their funds across models and their distribution methods. Whilst considering which approach to take it is useful to advantageously use consumer research to ensure the innovative marketing strategy connects to its target consumers and potentially reaches more.

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Situational Analysis For analysis purposes it is important to define the industry that we are in and observe both internal and external factors at play in our marketing decision. It is evident that Land Rover North America is a top player in the auto industry further narrowed down to the specific SUV models or Luxurious models offered in the auto industry. Internal Assessment – BCG Matrix Internally I will asses the company using the BCG Matrix which evaluates the strategic position of the business brand portfolio and its market potential. The matrix provides insight on further investment strategies. By comparing the industry attractiveness and the company’s competitive position, specific SUV models from Land Rover North America can be classified. Considering the Land Rover North America company and their goals when entering the US market I have classified their 4 models: The Land Rover Discovery, The Land Rover Defender, The Land Rover Hunter and Range Rover amongst the matrix. Exhibit 1: BCG Matrix (High)

RELATIVE MARKET SHARE

(low)

(High) STARS

QUESTION MARKS

- The Land Rover Discovery MARKET GROWTH RATE

(Low)

STARS:

CASH COWS -

The Range Rover The Land Rover Defender

DOGS - The Land Rover Hunter

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Stars are considered high growth and maintain high market share being both a cash generator and cash user for the company. Investments are required to maintain the competitiveness of the product and turn into cash cow. The Land Rover Discovery would be considered a Star for Land Rover North America. Its dual positioning as a family 4x4 and as the all-purpose centerpiece of the product line. In its first 4 months of being on the US market, 2000 units were sold. Customers were placed on waiting lists, as supply at the dealers was not large enough to meet the high demands being generated by the vehicle. This in itself demonstrates the survival of the Land Rover Discovery in a high growth industry and is seemingly gained high market share with its sales comparing to the Range Rover. (Discovery selling at rate 2-3 for every Range Rover). CASH COWS: Cash Cows are products or vehicle models in this case that command a large market share with slower or moderate market growth. The Range Rover and Land Rover Discovery would be considered cash cows for Land Rover North America. They require little investments and generate huge returns for the company as proven over the past years. It would be effective to think of these models as the stable income generating resource for the firm. Strategic choices for the firm would be to maintain market share by continuously developing their products, which is exactly what LRNA (Land Rover North America) did with the revampment and creation of The Range Rover 4.0 SE. DOGS: In comparison to competitors, dogs operate in a slow growing market and hold low market share. They are not necessarily worthwhile to invest in because cash generation tends to be low. The Land Rover Hunter that was only available on the market for a short period of time is an example of a dog. The strategic choice would be to liquidate if deeming unprofitable, which is exactly what happened. Insights:

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a) Cash generated from cash cows (Land Rover Defender and Range Rover) can be used to invest in the development and further growth of stars (Land Rover Discovery). b) Cash cows should maintain market share by maintenance of the product including product development and retrenchment for current market conditions (economy) c) The Land Rover company has been strategically capitalizing on the right products and have created successful positions in the marketplace

External Assessment - 5 Competitive Forces that Shape Strategy Externally I will asses the company using Porters Five Forces that Shape Strategy which evaluates thee five forces that determine competitive intensity and attractiveness of the market. The Five Forces provide insight on the specific industry Land Rover has defined for itself. Industry: Land Rover North America is most evidently in the automotive industry but more specifically in the SUV industry with a time frame of 1994 Force 1: Barrier to Entry measures how easy or difficult it is for new entrants to enter the SUV market in the auto industry. Force 2: Threat of substitution measures how easily a product can be substituted considering switching costs and product availability. Force 3: Threat of rivalry assesses your position in comparison to the existing competition. Force 4: Bargaining power of buyers measures the customers leverage in dictating prices. Force 5: Bargaining power of suppliers refers to the relationship we have with our suppliers and their power over us or vice versa. It is important to note that the automobile industry is an oligopoly.

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THREAT OF NEW ENTRANTS (VERY LOW) -Auto industry is labour and capital intensive making it costly to enter the market -Key auto players are already involved in the SUV industry and the strength of most recent entrants have saturated the marketplace not leaving room for newbies -Large research and development costs associated with creating a differentiated product from its predecessors (learning curve) -There is highly focused brand loyalty and recognition involved creating difficulty for new entrants to grab customers

THREAT OF SUBSTITUTE PRODUCTS

THREAT OF COMPETITIVE RIVALRY

(HIGH)

(HIGH)

-There are many substitutes for SUV such as other models of vehicles like cars, trucks, minivans that can be substituted based on product offerings and benefits

-There is high number of competition and they are highly capable of it

-There are also many other forms of substitute transportation with land capability such as train, bike and bus -If the operating cost of the SUV increases, this gives individuals incentive to switch to a lower cost substitute -Price elasticity of demand -If Land Rover prices increase then demand of a substitute will increase

-Rivaling American brands that stand for American heritage has advantage over the British heritage Land Rovers. -Introduction of the global scale and scale economies involved - Japanese invasion -Differentiated products based on brand and product benefits such as quality, safety, performance, comfort, technical innovations, economics and off road capability - Oligopolistic industry that such few sellers actions materially affect price - Minimizing price based competition

BARGAINING POWER OF BUYERS (MEDIUM)

BARGAINING POWER OF SUPPLIERS (VERY LOW)

-With dealerships there are exclusive agreements prearranged - With end buyers or consumers willing to pay high prices does not give them much power - Buyers are knowledgeable and have a lot of selection in the marketplace which gives them the power to switch brands but not necessarily contain power over Land Rover -Buyers are price sensitive but lack power because they don’t purchase high enough volumes of cars

-Commodity parts -Low switching costs between suppliers -Little control over the brand -Could potentially devastate the suppliers position if switch to a different supplier of you are their main source of revenue (this leaves them powerless) -Susceptible to changes in demand

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to compete on actual vehicle features and quality.

Insights: a) Land Rovers biggest concern should be how to remain highly competitive and maintain their market share relative to their rivals b) Land Rover should be considerate of the economic times and threat that substitute methods of transportation or vehicles will win over consumers c) Accentuating key product differences to consumers provides retention

Marketing Decision Options Below I will outline three options the firm can take in order to successfully target their positioning, marketing mix allocation and retail strategy. Option 1: STATUS QUO 1) Positioning: maintain brand culture centered around consumer lifestyle with Land Rover Marque values of individualism, authenticity, freedom, adventure and supremacy. Maintain dual positioning in the 4x4 sector with different classes of vehicles targeting different consumers. (Range Rover as prestigious, Defender as original land vehicle with 4x4 capabilities, and Discovery as pragmatic) 2) Marketing Mix Allocation of Funds: maintain current budget and work within its means. Maintain corporate sponsorships and experience marketing programs. 3) Retail Strategy: Maintain current retail strategy with exclusive agreements with dealerships

Option 2: CORPORATE BRAND

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1) Positioning: Focus on brand culture, consumer lifestyle and overall mission as company. Each vehicle will be named under the corporate brand name Land Rover and recognized for belonging to that larger brand umbrella. Range Rover by Land Rover would be the new name given to the originally individualized Range Rover. Position itself on heritage, prestige and originality with a focus on what brand offers as a whole. 2) Marketing Mix Allocation of Funds: 3) Retail Strategy: Land Rover Centre Concept

Option 3: INDIVIDUAL BRANDING 1) Positioning: Focus on the brand culture but place added attention to the individual models, their names and personalities. Leverage on the key features and differences each model offers. Each vehicle would target a different segment specifically to widen market share. The Range Rover would focus on the image concerned, the Defender would focus on original users and bringing consumer perception up, and the Discovery would focus on its extensive safety features and family orientation. 2) Marketing Mix Allocation of Funds: increase budget to $15 Million, allocate 50% to advertising. Continued support of Camel Trophy Sponsorship and La Ruta Maya Expedition but discontinue Hours of Aspen and Tread Lightly to allocate funds in a better way. Extend Academy concept locally to dealerships as to not rack up individual program fees and costs. Direct mailing for champagne events maintains image and lifestyle of consumers. 3) Retail Strategy: maintain exclusive agreements with dealers and take advantage of consolidation

Decision Criteria

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a) Cost Effectiveness of implementation b) Ease of implementation c) Long Term Advantage d) Profit Maximization e) Brand Awareness f) Consumer perceptions Recommendation: After careful analysis of the three above options and consideration of their effects on the company and our brand I recommend Option 3. With the specific targeting of individual positioning, strategic allocation amongst the marketing mix and maintenance of exclusive agreements with dealers will ensure the growth we as a company are looking for. Amdist this decision I have considered the branding and product strategies along with which retail strategy that will best compliment our brand at the time.

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