Strategic Marketing Report

This report examines the strategic marketing plan for McLaren Automotive's expansion into the French market. It includes a PESTLE analysis, an evaluation of market entry modes, a discussion of market segmentation, and an application of Porter's Generic Strategies to recommend the best approach for McLaren's success in France.

Strategic Marketing

Executive Summary
Expansion of business provides great benefit of exposing the business to a wider
audience. This often results in increasing sales and profit figures which ultimately provide high
competitive edge to firm. France is the world's 7th largest economy with over 20,000 foreign
businesses established in the country. The market of France provides ample number of business
opportunities that significantly contributes towards an organizational growth and development.
Ashanti Marketing Solution is a consultancy company that is being hired by McLaren
Automotive to get suggestions and consult in order to expand its business in new market. The
given report laid stress on the expansion of McLaren business operation & activities in the
market of France. The company is expanding its existing product line by launching Hybrid Car,
which is going to offered in new market. The main motive for developing this report is to exploit
all possible solution or options to assess the viability of new venture by conducting PESTLE
Analysis, Modes of Market Entry, Market Segmentation & Porter's Generic Strategic.
PESTLE Analysis is included in this report that helps company in identifying
opportunities and threats. Being a developed country, political stability becomes one of the key
reason for enlarging operation in France market.
Different modes of market entry are included such as strategic alliance, franchise and
mergers & acquisitions. Post evaluation of all the market entry modes, it has been identified that
strategic alliance with Peugeot will be one of the safest approach for McLaren Automotive to
venture into French market.
Market segmentation is done in order to choose appropriate market for business
expansion. The demographic segmentation is being considered which helped business in
selection of niche market which will be offered upcoming product of the company.
Porter's Generic Strategies are also defined in this report. Selection of appropriate
marketing strategies will result in achieving higher market share & profitability ratio for the
company as it will be convenient for this business to effectively communicate to its distinct
market.

INTRODUCTION
Strategic Marketing is defined as the way a company differentiates itself effectively from
its rivals by capitalizing on its current and potential strengths so as to administer better value to
customers than competitors. It is used by organisations in order to develop a plan to reach target
audience and satisfy them while maximizing productivity and profitability of the business.
Strategic Marketing concept examines coordinating a firm's competence with customer's wants
(Proctor, 2014). In the present assignment, chosen organisation is McLaren Automotive which is
a British auto-mobile manufacturer company of Surrey, United Kingdom. The firm is planning to
expand its business in market of France with advanced technology hybrid car named as
'EcoSpeed'. France is a developed country and has seventh largest economy of world measured
in terms of GDP. The main reason behind selecting this particular country increasing demand of
electric hybrid cars and favourable economic circumstances offered by the country. This report
includes macro environmental analysis to determine possible threats and opportunities for
company. As a senior marketing consultant of Ashanti Marketing Solutions, this report is
prepared to provide suggestions to McLaren Automotive for expanding its business in new
market.
TASK
PESTLE Analysis
It refers as an analytical tool that is utilized by organisations in order to assess macro
environment factors which may influence operations and activities of business. For McLaren
Automotive, it is very important to apply this framework as it will assist firm in determining
opportunities as well as threats which exist in marketplace. These can be ascertained by proper
analysis of business surroundings of France (Hahn and Kühnen, 2013). Various factors that
involves in PESTLE Analysis are defined below:
Political factors:
Political factors includes various variables such as tax policies, trade restrictions,
government stability and policies etc.
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Opportunity: In France, political stability of country is big opportunity for McLaren
Automotive as there is less political tension exist in market place that helps company in
legitimate expansion of its business.
Threat: Terrorism is one of the biggest threat for company as country faced many terror
attacks in recent years. This may hamper business activities and operations of McLaren
Automotive in negative way.
Solution: In order to overcome this threat, McLaren Automotive requires to consider
safety of their workforce to run their day to day operation successfully. To lower down the
impact of terrorism, they should design their outset in such a manner that reduces the
vulnerabilities of attack (De Villa, Rajwani and Lawton, 2015). For example: selecting non
brittle facade materials, providing adequate stand-off and good space planning.
Economic factor:
Interest rate, employment rate, level of inflation and deflation are the factors which
includes in economic factor.
Opportunities: France has 7th largest economy of world. In last year, the growth rate of
country is grew by 1.8% which can be capitalised by the organisation through venturing in that
economy (GDP growth, 2018). To expand business operations and activities, France is the
suitable country for McLaren Automotive as it is a developed country and large opportunities are
available there for its growth.
Threat: Inflation rate of nation i.e. 2% which is a threat for company as it affects the
bargaining power of suppliers that makes it difficult for business to avail inputs at the same
prices which indirectly increasing cost of production (France Inflation Rate, 2018).
Solution: To overcome this threat, company requires to maintain good relation with its
suppliers so that they can easily get adequate amount of raw materials which are used in
manufacturing of car. Firm also requires to reduce its production cost that is incurred in
manufacturing of Hybrid car named as 'EcoSpeed'.
Technological factor:
Technological factors includes variables such as emergence of new technology,
automation and rate of technological change in the market. Country spends about 2.2% of its
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GDP for industrial growth and technology development which can be considered as an
opportunity for a business to expand (De Villa, Rajwani and Lawton, 2015).
Opportunity: The economy of nation has been highly emphasize on technology oriented
firms which provides an opportunity to McLaren Automotive to establish its new business in
French market. For attaining high profits, high end technology such as Accelerometer 3 axis,
Sensor Node SN-320, Display Module PCU-8D etc. can be used by company in its
manufacturing process of Hybrid car 'EcoSpeed'.
Threat: Rapid changes in technology is the biggest threat for company as is decreases life
of product. Use of obsolete technology in manufacturing of cars may impact on its quality which
directly influence sales of McLaren Automotive.
Solution: To overcome this threat, company needs to keep update with emerging
technologies so that they do not become outdated. It must be ensured by firm to use new and
innovative technology in its business operations to ensure its sustainability.
Environmental factor:
It involves environmental and ecological aspects such as climate, whether etc. Increasing
awareness regarding potential influence of climate change affects how firm operate and products
they offer.
Opportunity: Approximately 31.3% of land in France is enclosed with forest and it has
isolated ministry for environment (France - Forest area, 2018). This comes out as a biggest
opportunity for McLaren Automotive as it deals in manufacturing of high technology hybrid cars
and which indicates that company will significantly contributes in protecting and preserving
environment of country.
Threat: Being an industrial economy, France faces issue of air pollution which is a threat
for company as if McLaren Automotive use such processes that may pollute air or harm
atmosphere then it will put negative impact on its image.
Solution: To overcome this threat, company must ensure to follow all the laws and
policies related to environment and make sure that their operations and manufacturing process
does not add to the environmental challenges encountered.
Legal Factor:
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It include legislation, regulation and laws formulated by Government that will impact the
way in which business operates. Written contracts are obligatory to all levels and grades and it
must be in French language.
Opportunity: If McLaren Automotive will follow regulations which are made by
government then they have an opportunity to become eligible for the subsidiaries which is
provided by government to the private organisations.
Threat: The main threat cover in this section include tax regulation. Since the company is
going to manufacture high technology hybrid car for which several parts are imported from other
developed country and company has to pay high tax on it which is a threat for McLaren
Automotive (Tyler and Jackson, 2014).
Solution: To overcome this situation, McLaren can tie-up with other automotive firm of
France who deals in producing that spare parts of car which firm gets via importing. With this
approach, company can save themselves from paying higher taxes.
Above mentioned are all the factors of macro environment that provides various
opportunities as well as pose some threats for company. So, it is required by management of
McLaren Automotive to consider all these factors and formulate strategies and take decisions
accordingly. This will assists firm in gaining competitive advantage over rivals which exist in
the French market.
Market Entry Modes
Market Entry Modes are defined as the ways by which new goods and services will be
offered to new market. Different types of entry modes are available by which McLaren
Automotive will be able to expand its business operations in other country. Some degree of risk
is associated with each entry mode which is required to be taken into consideration by business.
Evaluation of various market entry strategy is necessary for firm in order to select the most
appropriate one. McLaren Automotive is a sports car manufacturer which intent to enter into
France market with its newly developed hybrid car. So, critical consideration to each entry mode
will be assistive in identifying the best approach to enter into new market (Gubik and Karajz,
2014). Different market entry modes are defined below:
Mergers & Acquisitions:
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These are the entry modes in which ownership of business concern and their operating
units are consolidated or transferred to other entities. It can allow companies to grow and change
their competitive position or nature of business. From legal view point, merger is defined as the
legal consolidation of two entities into one, while acquisitions takes place when one takes
ownership of other entity's equity interests, stock or assets. This entry mode can be considered by
McLaren Automotive in order to expand their business activities and operations in France
market. Key advantage of using this entry mode is that it creates synergy that enables new
business entity to expand its value efficiencies and decrease risk by utilizing innovative financial
risk methods. Mergers and acquisitions entry mode provides competitive advantage to company
in France market and enables it to attain high profits (Bailey, 2014). Apart from this, one of the
major disadvantage of this entry mode is successful integration of workforce of merged
companies as it becomes very difficult for them to cope up with new management, culture,
employees which may hinder their capacity to perform better.
Strategic Alliance:
It is a cooperative arrangement that takes place between distinct companies. It is a
situation in which two or more companies combines their efforts with the aim of attaining a
particular strategic goal. Organisations are require to possess similar goals to enter into strategic
alliance without any kind of disruptions. It can be formed with customers, suppliers and
competitors for a specific time periods. In this mode of market entry, organisations comes
together to attain a particular purpose and after its completion, they again work as separate entry.
Major advantage of selecting this entry mode is shared risk which allow involved entities to
offset their market manifestation. Shared resources, technical know how and knowledge leads to
synergistic effects which is more valuable than isolated resources. It will also helps in reducing
costs in non profit areas.
For instance, if McLaren Automotive enter in market of France by strategic alliance with
Peugeot, it will provide various benefits to company such as decrease administrative cost,
improve agility, reduce risk etc. Shared resources, brand name and technology helps firm in
gaining high competitive advantage in market and administer benefits in terms of good economic
returns. On these other side, sometimes conflicts might arise between partners which may leads
to disruption of operations or activities. Another disadvantage is that it creates a competitor, as if
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partner in alliance is profited enough to end partnership then is enable to operate their own
business in same segment.
Franchising:
Franchising refers as an arrangement in which a grant is given by one party to another
party to utilize its trade name or trademark as well as some processes and systems of business to
market goods and services as per the specifications. It is a simplest entry mode for expanding
business operations and distributing products by licensing relationship. Various advantages are
associated with this market entry mode as success rate in Franchise is high than a start up
business (Franchise Business Is Better Than Start ups, 2018). By expanding business in France
market with this entry mode, McLaren Automotive gets benefit of cost effective expansion as
firm do not require to raise its capital to grow business. It is an additional source of revenue for
company in the form of royalties paid by franchises. Some disadvantages associated with this
entry mode is that all the profits or proportion of sales are shared with franchisor. Apart from
this, rigid nature of franchise might restrict the ability to implement changes within business in
order to respond market and make the business grow.
Recommended market entry mode for McLaren Automotive in France:
After assessing different modes to enter into new market, Strategic Alliance can be
considered as the most appropriate approach for McLaren Automotive to expand their business
in France market. For developing and launching its new hybrid car, high end technology as well
as adequate amount of resources are required. If firm do strategic alliance with other similar
company, its capacity, skills as well as resources are increase which will ultimately provides an
advantage to company in terms of developing high quality hybrid car. As the company is new to
market, it is required by them to get detailed information related to likes and preferences of
target customers, existing factors that affects operations of company which can be best provided
by the partner organisation. If McLaren Automotive expand their business with strategic alliance,
it becomes easy for them to get success in France markets as by this their capacity as well as
resources are increase and alliance with a well known firm of country will make it easier to
sustain their position in the market. With the help of strategic partner, firm will collaborate its
resources and technologies with other company that enables it to grab available market
opportunities and deliver high technology through their latest developed product 'EcoSpeed'..
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Market Segmentation
Market segmentation is identified as the process where company divides its overall
market into small homogeneous sub divisions. This concept has been taken into consideration by
every business organisation as it assist in identifying particular target segment and designing
market campaigns accordingly. These divisions involves customers who respond equally to
strategies & share some traits like similar needs, interest and locations (Market Segmentation,
2018). Overall purpose of market segmentation is to recognize high yield segments which can be
targetted by business for the purpose of availing better economic returns. There are various
grounds on the basis of which segmentation is done. It involves psycho graphic, demographic,
behavioural and geographical division. Brief description of these market segmentation
approaches are defined below:
Demographic Segmentation:
Under demographic segmentation, market is divide on the basis of age, occupation,
income etc. This type of market division is seen in every sector like beauty products, auto
mobiles, apparels etc. and is set on the premise that buying behaviour of customers is highly
affected by their demographics. In auto-mobile sector, this approach is employed by businesses
like Toyota, Nissan, Volkswagen etc. in order to effectively cater needs of people and satisfy
them by providing high quality cars for the premium buyers. Companies mainly emphasize on
fulfilling requirements of those people who people who are speed enthusiast and possess
exceptional disposable income.
Behavioural Segmentation:
Main grounds on the basis of which this segmentation is done are buying behaviour as
well as decision making of customers which reflects by their loyalty, benefits etc. Before
expanding operations in new market, firm requires to analyse behaviour of customers. This
approach is mainly used by mobile phone segment as each individual have different choice
regarding smartphones (McDonald and Dunbar, 2012). They purchase phone according to their
its features, use, storage capacity etc. For example: Samsung provides each range of android
phones so, major part of population can think of buy it as they are available at budget friendly
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prices. But in case of Apple, only premium class people buy these phones as these are expensive
and people consider it as a part of status symbol.
Psycho-graphic Segmentation:
This market segmentation is done on the basis of attitudes, beliefs, lifestyle and values of
people. In this, mind set of people is required to be assess properly so that products can be
delivered according to that. Lifestyle and personality are the two factors that influence habits and
buying decision of an individual to greater extent. This segmentation approach is utilized by
those companies which deals in fashion brand or luxury goods. For example: A person who have
lavish lifestyle may prefer to go at branded outlets such as, Versace, Louis Vuitton etc. for
buying clothes whereas, an individual having conservative lifestyle will consider it as luxury.
Geographic segmentation:
Population density, location etc. are the variables on which geographic segmentation is
done. Market is divided as per the areas such as countries, regions, cities etc. This approach is
commonly utilized by large business organisations that serves wide customer base in regional or
local territory. This segmentation is crucial in recognizing need of potential customers on the
basis of their geographical location. It is one of the easiest way of dividing market or customers
according to the location. For instance: in some regions, there might be scarcity of water which
increase the demand of bottled water but, in regions where water is abundant, the demand is very
less (Herrera and Martens, 2015).
On the basis of above mentioned segmentation approaches, demographic segmentation is
considered to be the most appropriate strategy for McLaren Automotive for launching its hybrid
car in market of France. Income, age and occupation are the basis on which firm divide its target
audience. It helps in determining requirements of target market and designing promotional
campaigns according to that so as to maximise demands and enhance sales as well as
profitability of company. For super hybrid cars such as 'EcoSpeed', business and service class
people of the nation have been targeted primarily due to the buying power which is possessed by
them. The main reason behind undertaking demographic segmentation on the basis of their
occupation and income is that it makes easy for firm to target market according to their income
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level and clearly ascertain needs of people and satisfy them by providing high quality hybrid car.
This will help McLaren Automotive in retaining more customers and attaining their loyalty
towards brand.
Target Market:
Target market of firm is business and service class people of the country who belong to
premium segment and carry a passion for driving super cars. The regular customer for this
organisation can be considered can be undertaken in the target market as well.
Porter's Generic Strategy
Porter's Generic Strategies defines how firm seek competitive advantage in its selected
market scope (Porter's Generic Strategies, 2018). It is very essential for administrators to
identify the most appropriate strategy in order to run their operations smoothly and maintain
good position in market place. Various strategies could be opt by administration to enter into
new market. Porter generic strategies are the approaches that helps McLaren Automotive in
gaining competitive advantage in market. Strategies includes in this are:
Cost leadership strategy:
Cost leadership strategy is utilized by company to reduce production cost and increase
efficiency of business. It is basically related with offering goods for the lowest price than
competitors. This approach helps in gaining competitive advantage by attaining cost leadership
in market. Firm requires to possess high market share so that it enables to attain economies of
scale (Balsam, Fernando and Tripathy, 2011). McLaren Automotive have good relations with its
suppliers which will assistive for them in reducing production cost of hybrid car 'EcoSpeed'.
Differentiation Strategy:
This approach aims to develop and offer unique goods for different target segments.
Firms opt this strategy in order to provide high value to customers so that strong position can be
attained and maintain in market. Product positioning in consumer's mind assists business in
attaining increased profitability. To make their product distinct from others, McLaren
Automotive incorporates innovative feature such as, comfortable seats, navigator, high power air
conditioner etc. in its hybrid car so that which will assistive in maximizing profits.
Focus Strategy:
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This strategy emphasize on targeting niche market to offer products with unique features.
It includes strong brand loyalty among customers. It is very essential for firm to have distinct
product in order to maintain their position in market and stay ahead in competition.
The most appropriate approach that can be adopted by McLaren Automotive is Focus
strategy. They should emphasize on niche market, i.e., Business and Service class people for
selling their hybrid cars. Target customers for this product is business and service class people.
The hybrid car offer by company has comfortable seats, high power air conditioner and a
navigator which helps in making their lifestyle luxury.
CONCLUSION
As per the above mentioned report, it has been concluded that for gaining high
competitive advantage in market, company can use the concept of strategic marketing which
effectively differentiate them to that of other competitors. There are various external factors that
affect overall operation and functioning of company either positively or negatively. However
these forces can be determined by conducting PESTLE Analysis which also help firm in
attaining high competitive advantage over other rivals. Different market entry modes are also
discussed through which firm can expand its business operation by entering into new market.
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