Introduction to marketing - Part 5
Introduction to Marketing
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Any organizations especially one dealing with business environment must encounter an era where the success of their operation depends on both internal and external factors - Introduction to marketing introduction. Under such circumstances, it is useful to carry out an analysis that takes into account not only the company’s internal factors, but also external factors such as activities of the company’s competitors and current industry situation as well.
II. SWOT Analysis
Amidst new emerging business analyses, some companies still employ SWOT analysis, which composes of strengths (S), weakness (W) as internal factors and opportunities (O) and Threats (T) as external factors. However, in this paper, I would only consider the external factors for MINI.
II.1 Opportunities of MINI
The first external factor in SWOT analysis is Opportunities. These explain elements that may help a company to gain more profit and to achieve sustainable growth. They include unfulfilled customer need, new technologies, and elimination of trade barriers, to name a few. In case of MINI, I see that the brand has some opportunities as following:
Celebrities’ preferred cars. MINI was known as the chosen car for several celebrities such as The Beatles, Mick Jagger, Peter Sellers and Twiggy. The fact becomes opportunities for MINI to conduct co-branding. For example, MINI can cooperate with recording company of the Beatles to increase the sale of MINI by giving MINI cars a body-striped of the celebrities.
Another opportunity is the historical performance of MINI that once successfully won Monte Carlo rally three times. For racing lovers, this history could be a driving force to buy the MINI cars.
Excellent new owner. In the 1990s, BMW took the wheel of the MINI. This situation is very beneficial since BMW has good brand in customers’ minds. Therefore, MINI has opportunity to sell their cars since buyers will think MINI has best quality like its parent company, BMW.
MINI has a good market position since it retains its sense of fancy looks and heart. This helps MINI to compete with other competitors since MINI target customers are past MINI drivers and BMW owners who look for second car.
II.2 Threats of MINI
In addition to Opportunities, Threats describe any changes in the external factors that may put any company in unsafe position in the market. They include a change in consumer tastes, new substitute products, new regulations and many more.
Concerning the MINI case, I see that critics from automobile analysts might be serious threats for MINI. This is because the analysts said that BMW seemed to underestimate current competition in small cars in which characteristics of today’s customers are likely to be more fickle than that in 1960s. In addition, another threat is the fact the small car market has been saturated by existing brand such as Mercedes Benz A class, Audi A2, Renault Clio, and New VW Beetle, for instances. Figure 1 shows comparison of MINI amongst its competitors in the small cars industry.
Although MINI has historical performances, but I see current trends of small cars have also shifted into more spacey and more aerodynamics that make MINI faces great challenges from its counterparts such as Mercedes A Class, Renault Clio, and Audi A2.
Another important threat is the fact that small car segment provides BMW with very few profit, if any. Therefore, BMW needs to sell more cars in order to have a profitable business from its MINI division. Golding (2001) said that BMW needs to sell at least 250,000 units of MINI cars per annum to take reasonable profits from the MINI division.
Mercedes A Class
Figure 1 MINI and Its Competitors in Small Cars Industry
III. Marketing Mix
Basically, a product is an important element in the marketing mix. Kotler and Amstrong define that a product as anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a want or need (Kotler and Amstrong 218). The two scholars also says that a product is more than just a physical (tangible) object; it is broadly defined as services, events, persons, places, organizations, ideas or mixes of these entities (Kotler and Amstrong 218-219).
As one essential element in the marketing mix, the product has a concept or terminology, which is known in marketing environment. The concept is called Product Life Cycle.
Historically, PLC (Product Life Cycle) was developed by Vernon in 1966. In general, Product Life Cycle Have four distinct stages (Gorchels, L) as following:
Introduction Stages is a period of slow sales growth as the product is introduced in the market. In the first launch of MINI in 1959, the cars experience a slow acceptance since the intention of MINI manufacturer at that time is to respond the needs for fuel economy cars.
Growth Stage is a period of rapid market acceptance and increasing profits. The MINI cars start gaining this Growth Stage in 1960s since the MINI cars was considered to be an icon for the 60’s generation since the cars represent an accomplishment for innovation style and mechanical engineering.
Maturity Stage is a period of slow down in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition.
At MINI cars, the maturity stage happened in 1970s when in 1972, the MINI brand was plummeting due to the change in fashion. Immediately afterwards, MINI brand experiences a slowing down in terms of sales volume.
Decline Stage is the period when sales fall off and profits drop. At MINI case, the declining stage happened in 1980s when the launched of the new MINI, the MINI Metro, did not succeed in the market.
1959 1960s 1972 1980s
Figure 2 Product Life Cycle of MINI
Source: Internet Center for Management and Business Administration. 2004, ‘The Product Life Cycle’, [Online] Retrieved April 9, 2006, Available at: http://www.quickmba.com/marketing/product/lifecycle/
Pricing policy should be made in accordance to the level of product maturity. As implied before, in early stages, it is better to use competitive pricing or cost plus method to ensure that we are doing our best to produce low prices (Free World Academy, 2005).
Cheaper prices are strong tools to convert a customer into buying products. Value based pricing should only be applied at the stage where our product has obtained distinct value from other products. If innovation and product image have managed to increased product value for customers, than it is possible to charge higher prices to customers without giving up market share.
Concerning the pricing policy of MINI, I see that BMW as the new owner of MINI has appropriately set up pricing scheme for its MINI. This is because BMW set the price for MINI that is suitable for the MINI market. BMW also learnt form the mistake of VW that sell its new VW Beetle at £15,000, far beyond the market’s price limit.
The situation underlies BMW to set price at £10,300 for the entry-level MINI One and ￡11.600 for the sporty MINI Cooper. The price is considered acceptable since it is competitive and is affordable for MINI target market.
Theoretically, promotion should also be designed with accordance to the nature of our customers’ characteristics. There are three elements of good promotion that BMW might consider as following:
1 In advertising a product there are three main aspect of promotion, which are reach, frequency and message (Free World Academy, 2005).
2 Public relations can help promotion by sponsoring health speeches in order to promote our product as healthy and tasty consumption for children.
3 Sales promotion in the form of free samples is also significant
Concerning the promotion, I see that MINI promotion was in line with the second elements, the public relations, in which in 1992, BMW promoted the MINI through cooperation with Oracle and other vendors. Some of the bundling promotions are as following:
Every Oracle employee who conduct test driving the MINI during the promotion will get a coupon for 10% off parts and services for BMW or MINI.
Each Oracle employee who purchased BMW of MINI will get benefits such as a discount up to $75 from Clear Mask, a 3M’s urethane film that protect cars paint from stone chips, bug damage, abrasion and weathering.
(Wood Street Inc. 2002)
In addition, BMW also promote MINI through co-branding with Long Cooper, a producer of well known jeweler. In this scheme, a customer that purchases a jeweler that priced $100,000 to $240,000 will have MINI for free (National Jeweler, 2004).
Concerning the place, I see that BMW has provided a serious plant to manufacture MINI since the plant is equipped with VMS (Vehicle Management System). The use of VMS technology at MINI’s plant is advantageous since it enable BMW to control and monitor in process of the car’s body painting. In addition, by using VMS, BMW can also map the car bodies more details, that helps the manufacturing process to increase vehicle throughput.
According to Industrial Networking (2002), VMS can handle more than 14,000 data points. It means that, BMW can sometime check the system to find out whether the facility is performing at best. By using VMS, BMS can also compare the cars throughput of one shift to another shift (Industrial Networking, 2002)
IV. Marketing and MINI New Brand
MINI is a car that has a position as the fashion cars. This position strengthens the target market that composes of previous MINI owners and people who love fancy cars. Under such circumstances, MINI should appropriately employ marketing strategy to marker MINI in order to hit large sales volume.
Some marketing knowledge that can helps MINI to be best selling cars are the comprehension of consumer behaviors, marketing mix such as product’s positioning and pricing strategy.
Historically, MINI is known to be a good performance in 1960s. The reincarnation of MINI, after acquired by BMW, shows great challenge since the small cars industry faces unprecedented demand and the customers are likely to be swinger than those in 1960s.
The situation suggests that to win in 21th market, BMW needs more than just excellent brand of BMW. In fact, BMW needs to reincarnated its MINI including its body shape since the current trends of small cars has shifted into more spacey cabin, more aerodynamics, and fuel economy cars like Mercedes A Class, Audi A2, and Renaults Clio.
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