Introduction to Marketing

This document provides an introduction to marketing in the automotive sector. It covers key marketing concepts, models, and frameworks used by brands like Volkswagen and GM. The document explains the consumer decision-making process, applies Porter's five forces analysis, develops GE Matrix and BCG Matrix for two brands, and discusses segmentation, targeting, and positioning strategies.

Introduction to Marketing
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Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Explaining consumer decision making process that is applicable for automobile sector............3
Application of Porter's five force to the company in automobile sector.....................................5
Selection of two brands and development of GE Matrix and BCG Matrix.................................7
Explanation of different segmentation, targeting along with positioning strategies that are used
in organisation within the automobile sector...............................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Any activity and action that is undertaken for communication with customer base in the
manner which persuade them for making purchase decision of products and services of entity is
marketing (Armstrong and Et. Al., 2014). The purpose behind the report is to asses
understanding about key marketing concepts, models and frameworks which are opted by
ventures across the world. The report is all about automotive sector in which brands like
Volkswagen and GM operate business activities successfully. For the report, Volkswagen is
preferred choice. It is one of largest manufacturer of automotive products and popular in terms of
making huge sales.
The report covers process of consumer decision making which is applicable within
automobile industry. It further applies framework of porter five forces of company and
development of GE Matrix as well as BCG matrix for two brands. At last, it includes types of
strategies related to segmentation, targeting addition to positioning strategies which are opted by
the entity.
MAIN BODY
Explaining consumer decision making process that is applicable for automobile sector
Consumer decisionmaking process can be described to a complex subprogram through
which organisations make consumers aware about their needs, collects relevant data, evaluates
options and further makes purchase decision (Bangsa and Schlegelmilch, 2020). In context to
Volkswagen, understanding the process is essential for marketers and managers of a venture so
to align their efforts with stages customer takes for decision which product to purchase.
Moreover, it aids business to recognise marketing opportunities, trends and challenges. The
stages belonging to consumer decision making process that is applicable to Volkswagen in
automobile sector are explained below:
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Figure 1: Consumer decision making Process.2020
(Source: Consumer decision making Process.2020)
Need recognition: Need is major essential element that results in purchasing products of
company. Recognition of need is principal phase of purchase process as each sale begins at the
time when an individual becomes aware about the concept that they have a want or need for
some product. In automobile sector, consumer recognises need of car or other vehicle when their
family becomes big or when they have want to travel at distance place. In this, marketers of
Volkswagen helps consumers to recognise their need and proceed towards other stages.
Information search: The moment when a person recognises the need for specific
product then they reaches to another stage in which maximum possible information are gathered
as possible. The consumers in automobile sector gathers information about any vehicle through
public sources, experiential sources and personal sources. In closest to Volkswagen, customers
collect information about its various cars through newspaper, co-workers, advertisements, sales
people, organisational website and visiting the premise.
Evaluation of alternatives: Once information are gathered then the nest stage is
evaluation of options that are available in market (Zuschke, 2020). For instance, there are various
models of car in automobile sector. In this, marketing team of Volkswagen helps customers in
evaluating options through comparison charts, trend analysis and many other aspects so that
customers are able to make best choices.
Purchase decision: Within the stage, the behaviour of an individual turns into action for
making final purchase. In relevance to automobile industry, consumer makes purchase of the
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vehicle that meets its needs. For example, making decision for Volkswagen Polo is best for the
consumers who have need for car that have automatic feature and safety attribute.
Post purchase behaviour: Results of purchase are feelings as well as satisfaction of
consumers that are analysed at this stage. For automobile sector, post purchase evaluation is
analysis of feeling if customer that where the vehicle was useful for them or it did not meet their
want. In this, managers of Volkswagen analysis behaviour of customers through taking
feedbacks and further making improvements in the model as per common issues from specific
customer segment.
Application of Porter's five force to the company in automobile sector
Porter’s five force is a framework that is originated by Michael E. Porter. It is applied by
business managers for analysing intensity of competition addition to attractiveness of industry in
perspective to profitability (Lehninger, Beyer and Heitmann, 2018). In automobile industry,
application of the model helps in recognising where the power lies within pertaining situation. It
involves five forces for understanding whether commodities are services are profitable in
potential manner. Volkswagen is a reputed automobile brand across the globe. Its main emphasis
is its automobile commodity, it also offers various financial services to potentials and prospects.
In context to Volkswagen, application of Porter’s five force model is below:
Figure 2: Porter's Five Force Analysis. 2014
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(Source: Porter's Five Force Analysis. 2014)
Competitive rivalry: In all industries, competitive rivalry is high because there are diverse
number of brands which compete to become and remain at leading positions. In Automotive
industry, number of competing businesses provides matching vehicles with similar type of
efficiency and quality. For Volkswagen, competitive rivalry is high as it competes with various
brands that are Ford, PSA, TATA, Hyundai, Renault, Geely, BMW Group and many more to
remain at leading positions. It is the reason managers of Volkswagen invest heavily in research
and development, promotions, distributions and many more for bringing effective vehicles with
new technology in the industry.
Bargaining power of suppliers: Suppliers are any person or company which provides
something required as raw materials, commodities or services. Across the automobile industry,
multiple suppliers have relationship with brands as they provide demanded materials for
production of vehicles and others. In aspect to Volkswagen, suppliers have relatively low powers
as the brand manages relations with suppliers across the globe scattered in multiple regions. The
reason for low powers to suppliers is high switching rate to new supplier when company founds
availability of materials at less prices and high quality.
Threat of new entrant: Organisations makes various efforts and attempts for entering into
a market in which they can sell similar commodities. In automotive sector, threat of new entrant
is generally low as there are high regulations or barriers of entrant that makes it complex for any
business to enter into it (Candelo, 2019). Also, new entrant needs large investment within
infrastructure such as land acquisition, research and development, production, promotion, supply
chain, distribution and so on. Being Volkswagen the leading and popular brand in automobile
industry, overall threat of entrant of any new company is low.
Bargaining power of buyers: In 21st century, customers are seen as centre for all
businesses. In this era, customers are well informed or gathers information about what is
happening in the industry through multiple resources in no time. For automotive industry,
customers evaluates all aspects of vehicle ranging from quality to environment friendliness,
safety, comfortability, fuel efficiency and many more. In association to Volkswagen, the brand
makes intense investment to bring vehicles which delivers much better than expectations of
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customer and negotiates with them so that they buys its offering. All these factors creates high
bargaining power for customers of Volkswagen.
Threat of substitute: Products that provides similar benefits to people ate classified as
substitute products. Within automotive industry, threat of substitute is high due to high
competitive rivalry among various brands. Apart from the brand, certain alternatives are
available with general population that works as substitutes for brand like Volkswagen. It is
analysed that substitute of the brand is public transportation that helps an individual to travel
from one place to another. However, the vehicles of the brand are stylish, comfortable and good
quality which results to generating more trust among customers and low threat from substitutes.
Selection of two brands and development of GE Matrix and BCG Matrix
Volkswagen and Toyota are two selected brands that operates within automotive sector
since century. The GE matrix and BCG matrix for the both brands are as developed:
GE Matrix
It is popular as McKinsey none Box Matrix that is a strategic tool which brands uses for
portfolio planning. It assist strategic business unit to evaluate their entire strength. The attributes
in which products are categorised are grow, hold and harvest which are as follows in context to
GM and Volkswagen:
Growth: The strategy involves prudent at the time a commodity have competitive edge
within attractive market (Kader and Hossain, 2020). By investing in grow, brand emphasises
towards maintaining strengths which is its key priority. The products that attracts multiple
investment because they yield huge returns in upcoming period. In relevance to Volkswagen,
companies under grow matrix are Lamborghini, Audi and Skoda as all these provides huge
return on investment in future. At same time, organisations of GM that are classified under
growth aspect are Holden, Cadillac and GMC as there investment are split into practices like
research and development, intense advertisements as well as expanding production capacity.
Hold: Products of business concern which holds huge ambiguity are part of the category.
Brands makes investment in this category when they analyse prospects of competences in
corporate capabilities. In relevance to Volkswagen, its companies in hold category are Porsche,
Seat and Volkswagen as they requires minimum cost and are sold at highest cash value.
Similarly, the companies of GM which are at hold matrix are Wuling Motors and Baojun as they
manages only to earn.
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Harvest: The products in which invest is enough for keeping it divest and operation is
harvest attribute. In other words, the products which are categorised into the quadrant are
expanded with minimal investment only. In relevance to Volkswagen, companies which are
categorised into harvest attribute are Bugatti and Bentley as they generate enough money for
equivalent in investment amount. Similarly, companies of GM which are categorised under
harvest aspect are Chevrolet, Cadillac and Buick as customers makes less purchase of vehicles of
such organisations.
BCG Matrix
It is also known as BCG Growth-Share Matrix that is a portfolio planning framework
founded by Bruce Henderson. The matrix is related to observation that an organisational business
unit are classified into four quadrants as per their market growth and market share in relevance to
largest competitor. The BCG Matrix developed for the brands is below:
Dogs: In this quadrant, the products that have low growth and low market share are
classified. It is no possible that all the products of brand achieve success in context to ROI. In
context to Volkswagen, the companies that are classified in this is Bentley as it have low growth
together with low marker share in industry. At same time, another brand that is GM whose
companies that falls under dogs quadrant are Chevrolet and Wuling Motors as managers must
liquidate and reposition these pets.
Question mark: Within the quadrant, offerings of the company which have high growth
market but low market share (Omarov, Tikhaya and Lyashenko, 2018. There are some business
offerings that the brand is able to manage to display higher uncertainty level than stable ones. In
context to the Volkswagen, the companies which are classified as question mark are Volkswagen
and Bentley because these have huge growth, however relatively low shares in the sector.
Likewise, companies of GM which are categorised into the quadrant are Baoju, Lamborghini as
well as GMC because the investment depends on chances of becoming starts in future.
Stars: Herein, the products that have high growth markets addition to high market share
are part of star quadrant. There are some organisational commodities that are high in demand and
have ability for developing further shares of market in future. For Volkswagen, the companies
classified under star quadrant are, Skoda and Seat as these all have strong financial performance
and growing market. In case with GM, companies that are stars category is Cadillac because it
have high future potential.
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Cash Cows: In the quadrant, products of business concern which have low growth
market but high shares in industry are cash cows. In a brand, each product that are produced
generates distinct quantity of cash. In relevance to Volkswagen, the companies which have well
established market and required less investment is Porsche and Audi which is centre point of
management in terms of sustainable earning. Brand like GM needs to reinvest its cash in Buick
and Holden as these are leaders of selling brands in automobile sector.
Explanation of different segmentation, targeting along with positioning strategies that are used in
organisation within the automobile sector
STP is an approach which helps an organisation to segment entire market, then target the
one for further promotion(Simpkin and Ferrel, 2016). In relevance to Volkswagen, its
segmentation, targeting and positioning strategies which are used in this brand are as explained:
Segmentation: In this, whole market is segmented or divided into different consumer
segments that shares similar attributes or traits. Various segmentation strategies are opted by
organisation for making the commodity for distinct kind of people. In aspect to Volkswagen, the
brand produces various kinds of cars to meet needs of different customer group under their
subsidiaries. The managers divides whole market as per demographic segmentation in which
consumer group are divided on the basis of age, education, income level, occupation, life stage,
family and social status. Through the segmentation strategy, the brand clarifies its vision, devises
effective future plans and optimise resources effectively.
Targeting: There are various automobile companies which do not go with single
segmenting strategy, they also selects various targeting strategies (Gama, 2017). In context to
Volkswagen, its targeting strategy is segmented market target strategy in which it targets that
group which is segmented above. With this strategy, Volkswagen target population between are
of 18 years to 50 years which have huge preference to different cars. Its target market lies
between income level of 10129.3 £ to 22345.3 £. Moreover, Volkswagen also target high end
customers through their products including Lamborghini, Audi abd many more.
Positioning: The strategy which is opted by company for one or more areas to focus on
as well as excels in such areas is positioning strategy. Within Volkswagen, managers position the
companies through flexible positioning strategy in which they find changes a challenge for their
product design along with operation. With this strategy, the brand differentiate itself from
competition of being capable to manufacture wide variants of vehicle, introduce innovative
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models, modify existing ones quickly along with respond towards needs of customer
immediately (Ziyadin and Serikbek, 2019). At same time, the brand keeps its target population
valued and employed various value delivery programs.
CONCLUSION
From the information, it is concluded that marketing is essential for brands to survive in
changing scenario. Porters five force model is a simple tool to measure and evaluate competitive
strength along with position of an entity. Consumer behaviour is determined through economic
together with psychological factors that are influenced by environmental elements. By using STP
model, brands initiate segmentation, targeting and positioning strategies to develop specific and
actionable practices.
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REFERENCES
Books and Journals
Armstrong, G. and Et. Al., 2014.Principles of Marketing. Australia: Pearson.
Bangsa, A. B. and Schlegelmilch, B. B., 2020. Linking sustainable product attributes and
consumer decision-making: Insights from a systematic review. Journal of Cleaner
Production. 245. p.118902.
Candelo, E., 2019. Marketing Progress: A Never-Ending Story. In Marketing Innovations in the
Automotive Industry (pp. 67-78). Springer, Cham.
Gama, A. P. D., 2017. A balanced scorecard for marketing. International Journal of Business
Performance Management. 18(4). pp.476-494.
Kader, M. A. and Hossain, H., 2020. AN ANALYSIS ON BCG GROWTH SHARING
MATRIX. International Journal of Economics, Business and Accounting Research
(IJEBAR). 4(01).
Lehninger, D., Beyer, J. and Heitmann, J., 2018. A Review on Ge Nanocrystals Embedded in
SiO2 and High‐k Dielectrics. physica status solidi (a), 215(7), p.1701028.
Omarov, M., Tikhaya, T. and Lyashenko, V., 2018. Internet marketing technologies in civil
engineering.
Simpkin, D. S. and Ferrel, O. C., 2016. Marketing: Concepts and Strategies. 7th ed. London:
Cengage Learning.
Ziyadin, S. and Serikbek, A., 2019, April. Internet-marketing in the sphere of higher education.
In International Scientific Conference “Digital Transformation of the Economy:
Challenges, Trends, New Opportunities” (pp. 290-297). Springer, Cham.
Zuschke, N., 2020. An analysis of process-tracing research on consumer decision-
making. Journal of Business Research. 111. pp.305-320.
Online:
Consumer decision making process. 2020. [Online]. Available through:
<https://directiveconsulting.com/blog/5-stages-of-the-consumer-decision-making-
process-and-how-its-different/>
Porter's Five Force Analysis. 2014. https://blogs.ubc.ca/willzhang8/2014/11/08/porters-five-
forces-volkswagen-ag/
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