MARKETING 12/10/10. The decline of the American car industry The Importance of Marketing For decades, motor cars manufactured by American companies

MARKETINGMARKETING

12/10/1012/10/10

The decline of the American car The decline of the American car industryindustry

The Importance of MarketingThe Importance of Marketing

For decades, motor cars manufactured by For decades, motor cars manufactured by American companies were built on the American companies were built on the principle that the American consumer principle that the American consumer preferred a long, roomy vehicle with large preferred a long, roomy vehicle with large engine capacity. During the 1960s large engine capacity. During the 1960s large heavy vehicles with names like Chevrolet heavy vehicles with names like Chevrolet and Buick, produced by.and Buick, produced by.


American manufacturers, dominated the American manufacturers, dominated the market. Roads were seldom graced by the market. Roads were seldom graced by the sight of a foreign motor car and the sight of a foreign motor car and the American manufacturers tended to ignore American manufacturers tended to ignore trends taking place in the rest of the world trends taking place in the rest of the world where small, economical vehicles with lower where small, economical vehicles with lower engine capacities were capturing an ever-engine capacities were capturing an ever-increasing share of the marketincreasing share of the market


American manufacturers believed that small cars American manufacturers believed that small cars would never sell in the US market. Japanese car would never sell in the US market. Japanese car manufactures, on the other hand, disagreed and manufactures, on the other hand, disagreed and recognised a major opportunity for market growth recognised a major opportunity for market growth in the US. Marketing strategies were developed, in the US. Marketing strategies were developed, research and development programmes carried research and development programmes carried out, factories built, and a workforce was trained in out, factories built, and a workforce was trained in order that Japan could enter the American motor order that Japan could enter the American motor vehicle market.vehicle market.


During the 1970s world oil prices quadrupled, During the 1970s world oil prices quadrupled, making fuel much more expensive. Increasing making fuel much more expensive. Increasing labour and raw material costs also combined to labour and raw material costs also combined to make large American cars expensive to buy and to make large American cars expensive to buy and to run. American consumers rapidly switched their run. American consumers rapidly switched their preference to smaller, economical cars, and sales preference to smaller, economical cars, and sales of Japanese vehicles such as Datsun and Toyota of Japanese vehicles such as Datsun and Toyota rocketed because American manufacturers offered rocketed because American manufacturers offered no alternative.no alternative.


Even while this process was taking place, American car Even while this process was taking place, American car manufacturers decided against changing to small car manufacturers decided against changing to small car production believing that the trend was only temporary and production believing that the trend was only temporary and that their market share would recover when world oil prices that their market share would recover when world oil prices fell. This never happened, and by the time American fell. This never happened, and by the time American manufacturers finally changed to small car production, the manufacturers finally changed to small car production, the Japanese manufacturers had a powerful grip on the Japanese manufacturers had a powerful grip on the market. They also faced severe competition from West market. They also faced severe competition from West Germany, Italy, France and Korea where technological Germany, Italy, France and Korea where technological advances in car production enabled competitors such as advances in car production enabled competitors such as Volkswagen, Fiat and Renault to secure a market share.Volkswagen, Fiat and Renault to secure a market share.


Several American car producers went out of Several American car producers went out of business and thousands of manufacturing business and thousands of manufacturing jobs were lost. This led to the United States jobs were lost. This led to the United States having a large balance of payments deficit having a large balance of payments deficit with Japan due to the high volume of with Japan due to the high volume of imported Japanese motor vehicles. The imported Japanese motor vehicles. The domestic American industry failed to domestic American industry failed to anticipate the changes in consumer needs anticipate the changes in consumer needs and never recovered.and never recovered.

The Importance of MarketingThe Importance of MarketingThe Swatch storyThe Swatch story

In contrast, the outstanding success of a In contrast, the outstanding success of a Swiss watch manufacturer during the 1980s Swiss watch manufacturer during the 1980s was the result of a careful and well-executed was the result of a careful and well-executed marketing plan, brought on by necessity.marketing plan, brought on by necessity.

The Swatch storyThe Swatch story

For years the Swiss were world leaders in For years the Swiss were world leaders in the watch industry. In 1974 their worldwide the watch industry. In 1974 their worldwide market share was 30%. Then the Japanese market share was 30%. Then the Japanese actively began to produce and market quartz actively began to produce and market quartz watches, which the Swiss viewed as a watches, which the Swiss viewed as a passing fashion. Quartz digital watches passing fashion. Quartz digital watches were, however, no fad and by 1983 the were, however, no fad and by 1983 the Swiss share of world markets for watches Swiss share of world markets for watches had fallen dramatically to 9%.had fallen dramatically to 9%.


The Swiss manufacturer SMH carried out The Swiss manufacturer SMH carried out extensive research in its watch markets and extensive research in its watch markets and carefully analysed patterns of consumer carefully analysed patterns of consumer behaviour..behaviour..


Marketing experts advised the company that Marketing experts advised the company that a turnaround was possible if an inexpensive, a turnaround was possible if an inexpensive, good-quality quartz analogue watch could good-quality quartz analogue watch could be developed, since the market was be developed, since the market was saturated with digitals. saturated with digitals.


Gradually, a marketing plan was devised Gradually, a marketing plan was devised and implemented resulting in the and implemented resulting in the introduction of the Swatch in 1984, which introduction of the Swatch in 1984, which has since revolutionised the world watch has since revolutionised the world watch industryindustry


Based on their extensive analysis of Based on their extensive analysis of consumer behaviour and lifestyle, SMH consumer behaviour and lifestyle, SMH adopted a strategy that completely changed adopted a strategy that completely changed the concept of a wrist watch. Watches were the concept of a wrist watch. Watches were to be a fashion accessory first and a watch to be a fashion accessory first and a watch second. They would also be analogue second. They would also be analogue rather than digital. rather than digital.


Product planning developed a distinctive Product planning developed a distinctive quartz analogue watch in a wide range of quartz analogue watch in a wide range of fashionable colours and designs. New fashionable colours and designs. New models were introduced rapidly and older models were introduced rapidly and older ones quickly dropped. ones quickly dropped.


Because Swatches were sold as fashion Because Swatches were sold as fashion accessories, consumers were encouraged accessories, consumers were encouraged to buy more than one (to match different to buy more than one (to match different sets of clothes or lifestyles). The average sets of clothes or lifestyles). The average Swatch customer in Britain today owns three Swatch customer in Britain today owns three different models.different models.


In Britain, Swatch watches were distributed mainly In Britain, Swatch watches were distributed mainly through department stores and speciality shops. through department stores and speciality shops. They were not sold in high-street jewellery stores, They were not sold in high-street jewellery stores, which the company believed were an inferior point which the company believed were an inferior point of sale for the product. The marketing strategy of sale for the product. The marketing strategy was based on carefully controlling distribution to was based on carefully controlling distribution to avoid flooding the market, which would have avoid flooding the market, which would have resulted in consumers losing their desire to own a resulted in consumers losing their desire to own a Swatch.Swatch.


Today, Swatch watches sell for a relatively Today, Swatch watches sell for a relatively low price which appeals to a large number low price which appeals to a large number of consumers and encourages multiple of consumers and encourages multiple purchases. The watches are highly purchases. The watches are highly distinctive. Extensive product promotion, distinctive. Extensive product promotion, which includes advertising on TV and in which includes advertising on TV and in magazines, together with sponsorship of magazines, together with sponsorship of various concerts and sporting events, various concerts and sporting events, generates further sales.generates further sales.


Successful marketing has greatly increased Successful marketing has greatly increased market share and enabled the company to market share and enabled the company to introduce new product lines, such as introduce new product lines, such as clothing and telephones, using the Swatch clothing and telephones, using the Swatch name.name.

Points to NotePoints to Note

American car industry were resistant to changeAmerican car industry were resistant to change Ignored the marketIgnored the market Believed their product was the best and they didn’t Believed their product was the best and they didn’t

to changeto change Believed that the change in consumer trends was Believed that the change in consumer trends was

a fad and that consumers would change backa fad and that consumers would change back When they realised that things were going wrong When they realised that things were going wrong

they were too latethey were too late

Points to NotePoints to Note

Swatch realised there was a problem in the marketSwatch realised there was a problem in the market They identified the problemThey identified the problem They found solutions to the problem – analogue They found solutions to the problem – analogue

quartz watches and selling them in department quartz watches and selling them in department storesstores

Continually up dating and changing the watches Continually up dating and changing the watches Changed the use of watches and made them Changed the use of watches and made them

fashion statementsfashion statements

What is a Market?What is a Market?

A meeting place for buyers and sellers.A meeting place for buyers and sellers. Markets can be set up – in a shop, Markets can be set up – in a shop,

restaurant, over the phone, the internet, car restaurant, over the phone, the internet, car boot sale, market place.boot sale, market place.

Markets can consist of individuals or Markets can consist of individuals or organisations who are actual or potential organisations who are actual or potential buyers of a product or service.buyers of a product or service.

Consumer MarketsConsumer Markets

Made up of individuals who purchase goods Made up of individuals who purchase goods for personal or domestic use. They make for personal or domestic use. They make their purchases mainly from retailers and their purchases mainly from retailers and buy a combination of consumable goods eg buy a combination of consumable goods eg food and durable goods eg cars. food and durable goods eg cars. Consumable goods are bought more Consumable goods are bought more frequently than durable goods.frequently than durable goods.

Industrial MarketsIndustrial Markets

These are made up of organisations which These are made up of organisations which purchase goods or services to use in the purchase goods or services to use in the production of other goods and services.production of other goods and services.

They buy a combination of consumable They buy a combination of consumable goods eg raw materials and longer lasting goods eg raw materials and longer lasting durable goods eg machinery.durable goods eg machinery.

What is Marketing?What is Marketing?

Market researchMarket research Promotion and advertisingPromotion and advertising Preparation of publicity materialPreparation of publicity material Responsibility for new product developmentResponsibility for new product development Branding etcBranding etc

Aims of Marketing DepartmentAims of Marketing Department

To To identifyidentify consumers’ requirements consumers’ requirements

To To anticipateanticipate consumers’ requirements consumers’ requirements

To To satisfysatisfy consumers’ requirements consumers’ requirements

3 verbs3 verbs

TaskTask

Find out what these aims mean – how do Find out what these aims mean – how do marketing departments reach these aims – marketing departments reach these aims – what tasks might they carry out and why are what tasks might they carry out and why are these aims important.these aims important.

Product Oriented OrganisationsProduct Oriented Organisations

These orgs believe that their product or service is These orgs believe that their product or service is the best on the market and so will be easy to sell.the best on the market and so will be easy to sell.

They believe there is no need to change their They believe there is no need to change their product.product.

In some cases this may be fine eg with unique In some cases this may be fine eg with unique products or new inventions just onto the market.products or new inventions just onto the market.

For most organisations not taking the market into For most organisations not taking the market into consideration could lead to failure.consideration could lead to failure.

Market (Customer) Oriented Market (Customer) Oriented OrganisationsOrganisations

These organisations are constantly modifying and These organisations are constantly modifying and adapting their products to suit their customer adapting their products to suit their customer needs.needs.

They make the effort to find out what their They make the effort to find out what their customers want.customers want.

They have had to do this as consumers are far They have had to do this as consumers are far more aware of their options and competition is more aware of their options and competition is strong.strong.

Marketing ensures that the needs of the Marketing ensures that the needs of the customers are considered before production takes customers are considered before production takes place.place.

The Marketing EnvironmentThe Marketing Environment

The Market

Consumer Trends and Behaviour

Competition

Economy Technology

Government

The ConsumerThe Consumer

What influences a consumer to purchase What influences a consumer to purchase one product rather than another?one product rather than another?

Age distribution of the population – many Age distribution of the population – many organisations respond to the change in age organisations respond to the change in age distribution eg in the UK we are regarded as distribution eg in the UK we are regarded as having an “ageing” population+--having an “ageing” population+--

TaskTask

Find the reclassification of class tables and Find the reclassification of class tables and what each reclassification means.what each reclassification means.

Documents

MARKETING 12/10/10. The decline of the American car industry The Importance of Marketing For decades, motor cars manufactured by American companies