Automobile Industry Is A Highly Diversifies Marketing Essay

Industry background

Car industry is a extremely diversifies sector which represent industries linked with the production, retailing, wholesaling and care of car vehicles ( Anavrekov, 2004 ) . The first car was introduced in 1885 by Karl Benz. Since that clip automotive industry has came through a batch of alterations and developments. Figure1 shows brief history of automotive industry. The industry chief focal point for many old ages was concentrated on babe boomers coevals. Presently industry switched to coevals X, which is babe boomers kids and to the coevals Y, age which allows purchasing autos ( ( Dicken, 2007 ) .

Beginning: A Brief History of the First 100 Old ages of the Automobile Industry hypertext transfer protocol: //

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Strategic Posture of Key participants

Harmonizing to Black ( 2009 ) every state ‘s car industry is dominated by four taking corporations viz. General Motors ( GM ) , Toyota, Ford Motor Company ( Ford ) , Volkswagen, and Daimler Chrysler ( Figure2 ) .

Beginning: Toyota Motor Corporation Company profile hypertext transfer protocol: // ; Daimler corporate web site hypertext transfer protocol: // ; Ford Motor Company hypertext transfer protocol: // ; General Motors hypertext transfer protocol: //

Size of the Industry and Segmentation

The automotive industry takes about 9.5 % of universe ware trade and 12.5 % of universe export of makers ( Hatani, 2009 ) . However, the universe production of vehicles was influenced by economic downswing in 2009 ( Figure3 )

The taking states that conduct foreign trade are ( informations from Business Monitor International Statistics, 2010 ) :

United States ( 37.2 % of Market Share )

Canada ( 28.67 % )

Japan ( 26.4 % )

Germany ( 14.81 % )

Mexico ( 10.21 % )

Korea ( 5.48 % )

Figure 3 Automotive Production 2007- 2009

Beginning: The planetary automotive market in 2009 hypertext transfer protocol: //

Figure4 shows cleavage of the industry.

Beginning: Automotive constituents and parts hypertext transfer protocol: //

Figure5 illustrates current tendencies of the industry.

Beginning: Greenber, Karl. ( 2009 ) Automakers maneuvering drivers into development. The New York Times. Catalan, J. ( 2010 ) .A Strategic policy revisited. Business history.

Porter ‘s Five Forces

Figure 6 illustrates the model of Porter ‘s forces. The possible net income of the industry will be influenced by the strength of all five forces together with required investings, monetary values and costs.

Figure 6 Model of Porter ‘s Five Forces

Beginning: Industry Handbook: Porter ‘s 5 Forces Analysis hypertext transfer protocol: //

Menaces of new Entrants

The automotive industry is really mature ; in order for new entrant to vie they should accomplish economic systems of graduated table and put in engineering and trade name name in order to make the same degree ( Paterson, 2007 ) . Besides menace comes from amalgamations and acquisitions, for illustration the amalgamation of Daimler and Chrysler or Daimler and Mitsubishi. Further barriers explained in Figure7.

Beginning: Porter, M.E. ( 2008 ) A ‘The Five Competitive Forces That Shape Strategy ‘ , A Harvard concern Review, January 2008.

Dickering Power of Suppliers

There is immense figure of providers in the industry ; hence the power of providers is really low. Manufacturers can exchange easy from one provider to another ( Particular Report, 2005 ) . However, large corporations like Mercedes prefer non to exchange, but to maintain good dealingss with their providers in order to maintain graduated table of operations and the entire disbursals on providers ( Taylor, 2003 ) . Presently, a batch of makers use just-in-time stock list system and this pushes providers create their mills near car manufacturers, which prove the low power of providers ( Pavlinek & A ; Janak, 2007 ) .

Menace of Substitute

The replacement for car can be train, motorcycle, walking depending on geographic location of the consumer ( Boschma & A ; Wenting, 2007 ) . However, if company operates with lading or when retailing shop necessitate to transport goods, than there is no existent permutation for the trucks, every bit good as there is no existent permutation for excavator during roadwork. At the same clip auto can be substitute by coach, metro or walking depending on the size of the location. For case, in metropoliss like Singapore or Moscow, the metro is more convenient manner to travel, while in small towns people can merely walk. However, in bulk of topographic points people should hold an entree to an car in order to travel about.

Dickering Power of Buyers

There are a batch of industries in the industry, so purchasers have assortment of picks and the shift cost is really low ( Belis-Bergouignan et. al. , 2000 ) ; hence the power of purchaser is reasonably high and purchasers are monetary value sensitive. The big figure of industries consequences in aggressive pricing schemes and in really strong competition ( Taylor, 2003 ) .

Competitive Competition

The competition is really strong due to miss of distinction chances provided by the major rivals ( Paterson, 2007 ) . The chief differences chiefly will be quality, dependability or after gross revenues services. The grade of competition if besides linked with low costs of exchanging for purchasers and fixed costs of fabrication cars ( Edmondson, 2003 ) .


In order to analyse the macro environment of the industry, the external factors that can consequence organisation ‘ supply and demand should be identified ( Kotler & A ; Keller, 2007 ) . A PESTEL analysis allows understanding industry state of affairs as a whole.


Since 1960 ‘s the authorities ordinances and Torahs impacting automotive industry ( Anavrekov, 2004 ) . The bulk of ordinances originating from clients concerns about safety and environment. Besides authorities determination to pull people to utilize public conveyance and to increase revenue enhancements for utilizing autos can take to jobs for the auto industries ( Ahman, 2006 ) . However, authorities besides can back up, the good illustration is Toyota, who has good support from Japan authorities in footings of revenue enhancement interruption ( Paterson, 2007 ) .


Car industry is affected by the moves in the economic system. Manufacturers should conceder:

Degree of rising prices in state they operate

Fuel monetary values fluctuations Employment degree per capita in the state they operate

Economic growing in the state they operate

Tax in domestic state every bit good as in the state they want to come in or come in

At the same clip automotive industry has an tremendous force on planetary economic system every bit good ( Paterson, 2007 ) , because car makers are major users of fabric, computing machine french friess, aluminium, steel, gum elastic, etc. besides, for every autoworker creates seven occupations in other industries.


One of the major influences of the tendency in automotive industry is life manner and demographic profile of the consumers. Society sentiment and prestige makes people to purchase autos like Porsche, Mercedes or BMW. Customers ‘ negative perceptual experience about trade name can besides act upon the gross revenues, illustration bad image of Skoda in Europe influence gross revenues in Asia ( Pavlinek & A ; Janak, 2007 ) . The concerns for the environment besides influence tendencies in car industry ; illustration is the new eco friendly autos, usage of electric autos. Additionally, an addition in income degree allows more people to hold a auto.


Car industry is affected by engineering in all ways. The Internet allows clients to seek information before purchase, to boot increased chances for the concern to concern market place, which reduced costs for the companies ( Edmondson, 2003 ) . Besides engineering helps makers to better safety system of car. Presently, every new auto has pilotage system, DVD onboard, WI-FI hook-ups ( Domanski & A ; Gwosdz, 2009 ) . For illustration, in Mercedes and BMW new autos voice prompts allows to ‘talking ‘ with the auto and give bids.


Environment state of affairs in runing state affect the usage of car, such as:

Physical substructure, such as roads and Bridgess

States with better physical conditions lead to more usage of cars

Development and development of alternate fuels, intercrossed autos supply entries to a new markets

Besides pollution job and Ozone ‘ consequence reflect alterations in new cars tendencies


Company should see:

Rules and ordinances of the state it want to run

Legal enrollment

Currency exchange

Green selling Torahs

Torah on environmental issues ( industrial pollution )

Legal proviso related to environmental population by cars

Legal proviso related to safety steps

Structural drivers of alteration within automotive industry

Figure8 illustrates that automotive industry face more alterations than other industries, the drivers for alterations are illustrated holla.

Figure 8 Changes in Automotive industry

Beginning: Car Industry Edition file transfer protocol: //

The drivers that shape the construction of automotive industry:

Global economic and technological growing

Political environment

Increase in fuel monetary values

Environmental alterations

Changes in supply concatenation

Changes in demographics

Inflation rates

Emissions and recycling statute law

Turning demand for more pick

Tendency towards amalgamations, acquisitions and ventures

Green Trends and environmentally friendly policies

Automotive industry Life Cycle

Harmonizing to Levitt ( 1965 ) the industry goes through life-cycle phases and the typical features of the phases are investing and curtailing activities. Figure9 illustrates Life rhythm of automotive industry.

Figure 9 Automotive Industry Life Cycle

Beginning: Automotive Industry Life Cycle hypertext transfer protocol: //

Introduction phase

The debut phase of the industry can be characterized as followers:

New, alone merchandises

Company can be entirely in the industry

The automotive industry went through its debut phase from 1672, when first steam-powered vehicle was invented till the terminal of the Second World War ( BERA, 2008 ) .

Growth phase

The growing phase can be identified as followers:

Significant investings

Differentiation from rivals

More merchandise standardisation

Life rhythm curve is really steep

Fast growing

Geographic spread

Initially automobile industry was concentrated in specific metropoliss in each state, for illustration in Russia initial concentration was in Saint Petersburg, and in US automotive industry was concentrated in Detroit country ( Roberts, 2006 ) During growing phase an automotive industry spread to environing metropoliss. During this period fully-closed organic structures began to rule gross revenues, farther front-wheel thrust was introduced ( Greenber, 2009 ) .

Maturity phase

Maturity phase can be recognized as followers:

Growth is slow

Strong selling attempt


Continuous inventions non as extremist

Presently automobile industry is in adulthood phase ( Dicken, 2007 ) . In 1960 Detroit started to worry about abroad competition, which changed the tendencies ( Roberts, 2006 ) . The every higher engineering was adopted by auto manufacturers. Manufacturers started focal point on selling and clients. Presently, industry is spread internationally. Harmonizing to Transportation Statistics ( 2009 ) there were 290,587,983 vehicles in the US in 2009 and 236 million drivers, which represent 1.23 vehicles pr licensed driver. The current adulthood degree and the grade to which the major key participant like Mercedes or Toyota are developed unrecorded small range for new companies to come in the industry, which provide bing giants a comparative advantage ( Catalan, 2010 ) .

Decline phase

Decline phase can be recognized as followers:

Industry becomes absolute

Extremist lessening in gross revenues

Prolonging the Life rhythm

Directors can increase adulthood phase by:

Production betterments ( just-in-time or thin fabrication )

Technology version


Improve efficiency

Three scenarios for long term hereafter of the automotive industry


Automotive makers can distinguish them self utilizing latest engineering and bettering design of their autos. Therefore, automotive makers can follow:

Cars which can work on Bio or H fuels

Driving manner can easy exchange between driving and relaxation in order to salvage patrol

Accent on rider amusement and information system onboard

Automation of stop-and-go traffic state of affairss

Privacy of riders from outside viewing audiences

Effective smog protection and air conditioning

About zero emanations

Increase Customer understanding

Figure10 shows that merely 17 % of introduced inventions by automotive makers are bough by clients, hence industries should pay attending on increasing client apprehension. In order to establish new invention client research on current invention can be done in order to see the demand, client apprehension of current invention, how this invention will beef up the trade name image and differentiate from rivals.

Figure 10 Gross saless successes of automotive inventions

Beginning: A comprehensive survey on invention in the automotive industry hypertext transfer protocol: //

Improve Supply Chain

Supply concatenation is one of the critical issues in automotive industry, it influence cost containment, hazard, client and globalisation concerns ( Evren, 2002 ) . To better visibleness of supply concatenation automotive industries should follow latest engineerings for communicating and real-time information exchange in order to supervise costs. Companies can utilize smart tickets to turn up specific cars across expansive tonss, cut down and command operating costs, derive entree to universe category capablenesss. Besides makers should go on to construct their mills in low cost counties.

Likely hereafter scenario

Due to the addition in ‘green ‘ trends the supply concatenation scenario can be reshaped radically through the addition of energy costs and ordinances concerns. Additionally clients demand for C footmark may wholly worsen and alter for the loanblend or Bio fuel.


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