In the last few years, the expansion in production and management systems has transformed the automobile industry. The automobile industry is now facing new and pressing challenges. Globalization, digitalization and increasing competition in the market are changing the face of the industry. The companies that find new innovative techniques to create value can prosper in the future.
Besides, increasing safety requirements and voluntary environmental commitments by the automotive industry have also contributed to the changes ahead read more to know the marketing strategies for the automobile industry in 2020.
The global automotive industry is subjected to a range of factors that are increasing complexity and influencing the economic options available to automobile manufacturers. The majority of these factors interact with one another and have strong interdependencies. However, some of these factors are market-induced and, consequently, cannot be influenced directly by the automobile manufacturers. These factors include:
Globalization, regionalization and market convergence
Liberalization has made the national markets increasingly globalized. This gives companies a chance to expand into new markets but also poses the threat of new entrants and increased competition.
Increasingly diversified consumer behavior
Consumers are no longer accepting standardized products, but want products that satisfy their requirements. Target groups thus have been downsized by companies so that customers will be attracted by the products being offered. However, because of the increased global competition along with a stronger focus on price and not on brand loyalty, consumers generally are not drawn towards companies for their individualized products. As a result of these factors, automobile manufacturers have new demanding requirements within their field of activity.
Accelerated modification and diversification of the product portfolio
The companies have to shorten the lifecycles of their models to react to the expectations of individualizing and fast-changing consumer demands with innovative products. In the past, an average product lifecycle in the automotive industry was about eight years, whereas today the automobile industry change or modify their products within two to three years.
Increased pressure for innovation and flexibility in development and manufacturing
Development departments are not just overburdened by the complexity of digital technology, but also by the shortening of product lifecycles. Another aspect is the increasing number of parallel development projects since companies develop more and more niche models for special target groups. This certainly requires the use of new development techniques such as virtual reality. For example, this technique enabled BMW to shorten the development time of its Z4 model to just 30 months.
The Challenge of Competitive Environment
The only way to succeed is by being focused, responsive, variable and resilient, which can be accomplished by converting to an on-demand company. The emerging trends and technology in the field have forced the business to adopt certain marketing strategies in the automobile industry. Adapting to the ever-changing environment has become the core business requirement, having problem-solving tools and methods to be identified, selected and implemented as fast as possible.
Different Managements to Manage:
Brand management– The function of marketing that implements techniques to increase the corporate value of a product line or brand over time. Brand management strategies help the companies to focus and differentiate their products from competitors.
Customer relationship management– It relates to all aspects of interaction that a company has with its customer, whether it is sales or service-related. CRM helps a company become focused on customer requirements.
Core competency management –
It is the combination of pooled knowledge and technical capacity that allows a business to be competitive in the marketplace. Core competency management allows a company to focus on its internal strengths and become more variable and resilience by entering into strategic partnerships with suppliers with competencies in new technologies or niche operations.
Software management – Software management is key to making a company focused on software standardization and strategic partnerships, which helps the business to become variable and resilient.
Quality management – Helps the business become a cross-functional and cross-company concept over the whole value-add chain. This, in turn, helps ensure that the company will grow to its maturity in resilience.
Product development management – Managing product development together with a focus on broadening competencies in new technologies will help enable the organization to become more variable by the optimization of collaborative engineering. Increased resilience can be achieved by standardized processes and the extended use of virtual testing. Decentralized and regionalized development activities will help to increase responsiveness to customers’ desires.
Expansion management – Management of expansion into new geographies and cultures requires that they are focused on the requirements in these new markets and responsive to changing market conditions and requirements.
Let’s talk about Toyota:
Toyota began work on a small car, a niche that was neglected by Detroit. Toyopet was introduced in 1947. They then reinvested profits from small cars into research and development.
In 1957, Toyota performs its first American road test. The modified Toyopet performed poorly, failing the road test due to heat and vibration. Toyota then started from scratch and by 1960 Toyota introduced a new Toyopet that could withstand American conditions.
After further research and development activities, Toyota introduced Corona, in 1965 and was able to sell over six thousand models in the same year. Toyota then introduced the smaller Corolla in 1968, hoping that by introducing a smaller car they will differentiate themselves from Detroit cars, which at the time are big heavy cars loaded with horsepower and options. By entering the American market with small cars, they were able to prevent head-on competition with the leading American car companies. They had a first-mover advantage in their small cars and were able to achieve terrific economies of scale in this category.
Toyota’s pricing was geared towards lower to middle-class customers and not the customers who are buying cars loaded with expensive options.
Toyota’s entrance into the United States:
This is an exploration of Toyota’s entrance into the U.S. market during the 1960s-1970s. Toyota’s success was a result of a significant cost advantage over its American competitors. Toyota’s cost advantage was the result of its innovative Toyota Production System (TPS). Detroit carmakers were unwilling to adopt new manufacturing techniques and therefore lost tremendous market share. By 1982, 30% of the cars sold in America were Japanese cars.
Automobile industries that have newly entered this market can study and use Toyota’s entrance, growth and dominance in the United States as president in planning and implementing their growth and development strategies. They should understand the importance of investing in a strong production system which can cut down Labour and other unnecessary costs.
They should study the geodemographics of the country before they enter their market, form a strong network in the country they want to start production and distribution, and develop strategies to overshadow their competitors. They should also understand the importance of market forecasting and have an up-to-date research team that can help make accurate and bold decisions. These marketing strategies for an automobile industry can help upcoming automotive companies grow rapidly in the early stages of their business cycle and can improvise on their strategies once they have a strong platform.
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