Internet Marketing and Automotive Industry - Case Study Example

Internet Marketing: Situational Analysis for Automotive Industry Name Course/Unit Instructor 19 September 2012 Table of Contents Table of Contents 1 Introduction 3 Industry overview 4 Impact of political-legal environment 7 Holden marketing strategy 8 Analysis of competitors 9 Customer analysis 11 Conclusion 12 References 13 Introduction The automotive industry in many parts of the world remains dynamic with numerous changes to note. According PwC Australia (2012), automotive industry across the globe faces many changes such as credit markets in capital intensive industry are being tightened and governments are increasing their involvement in the sector. In Australia, automotive industry shows signs of growth but business analysts still regard the auto industry business environment to be shaky (Bhatt, 2012). These challenges are further compounded by the fact that auto industry in the country has not escaped from key challenges such as costs of raw materials that remain volatile, complex and tightening regulations and increased level of competition (PwC Australia, 2012). The dynamic business environment being witnessed today has forced major players in the Australia’s auto industry such as Ford, Toyota, and Holden to develop new marketing strategies and opportunities that can enhance their market competitiveness (Asia-Pacific Economic Cooperation-Australia, 2006). Holden, just like other players, has identified the need for adoption and utilisation of electronic marketing strategies such as internet marketing (Holden Australia, 2011). This is a new area the company aims to derive and establish a competitive position as compared to its competitors in the market. Therefore, subsequent sections in this study deals with conducting market situation analysis for Holden Company with regard to internet marketing. Industry overview Three major automotive companies operate in the Australian automotive market: GM Holden, Ford Motor Company of Australia and Toyota Motor Corporation Australia (Commonwealth of Australia, 2008). The three companies are fully owned subsidiaries of big overseas producers. Graph showing sales of automotives in Australia Figure 1: Sale of automotives in Australia, 1988-2007 Source: Commonwealth of Australia, 2008 Diffusion and adoption of technology in Australia continues to grow at a faster rate (Spesti, 2011). From the use of social media like Facebook, yahoo, goggle, and many more social sites, to the use of mobile phones and internet, Australia’s population has been found to be one of the fastest growing in the world in terms of technology adoption and usage (Spesti, 2011). For example, by the year 2010, online shoppers in the country spent between $10 and 12 billion to buy products and services over the internet (The Sydney Morning Herald, 2011, January 8). This constituted about 5 percent of total retail sales that was estimated to be about $250 billion (The Sydney Morning Herald, 2011, January 8). At the same time, predictions made in 2010, indicated that online shopping would realise a growth of about $18 billion by the year 2014 in the country (Spesti, 2011). On average, it has been established that online shopping in the country is growing annually at about 12%. Holden Australia is a subsidiary of GM Holden Limited, which was established in 1856 (Holden Australia, 2011). At the moment, the company is part of the seven fully-integrated companies by General Motors in the world that carry out full operations such as designs, build and selling of vehicles both in the Australia and outside markets. The Company has its headquarters in Port Melbourne and has established about 270 dealerships (Holden Australia, 2011). The company has manufacturing plant located in Elizabeth, South Australia, and is known as Holden’s Vehicle Operations (HVO), which at the moment produces a total of 51 models across six body styles and variants (Holden Australia, 2011). The company produces both large and small vehicles: Commodore and Cruze in the Australian market. Graph showing Holden’s automotive sales Figure 2: Holden's figures for car sales from 1991-2006 Source: Jacoby, 2007 The 2010 performance results for the company indicate that Holden Australia realised a profit of $112 million, which was the first in a period of five years (Holden Australia, 2011). The profit is for both online and brick and mortar sales. In 2010, the automotive industry in Australia realised a total sale of 1.035 million units, and Holden had about 132,923 units (Holden Australia, 2011). This was an increase of about 11.2 percent as compared to the sales of the previous years. At the same time, the market share of the company starting from 2010 continued to grow at 12.8 percent. Table showing how Holden performed in 2009 and 2010 Economic Performance Year 2009 Year 2010 Revenue $ 4.13 billion $ 4.54 billion Net Profit/ (Loss) ($ 210 million $ 112 million Holden Vehicles Sold 119,568 132,923 Holden Vehicles Manufactured in Australia 66,764 66,061 Holden Vehicles Manufactured in Australia and Exported 6,922 7,817 Holden Built Engines 87,771 98,146 Source: Holden Australia, 2011 The company’s growth strategy remains clear; to build profitability of the business even during poor economic environments, and to achieve this, the company has no intentions of deviating from manufacture and import of quality vehicles that respond to market needs and gain advantage in the market from Holden brand (Holden Australia, 2011). Impact of political-legal environment Australia’s automotive industry continues to be greatly impacted by the government and political environment in the country. This can be evidenced in the numerous instances the government has participated in undertaking automotive industry reviews (Commonwealth of Australia, 2008). Aspects like trade liberalisation initiatives, exchange rates, petrol prices, environmental sustainability programmes, motor vehicle taxes and green technologies, constitute some of the visible areas the government and political leaders have influenced the activities, strategies and performance of the automotive industry in the country (Commonwealth of Australia, 2008). Government of Australia has continued to undertake numerous reforms related to purchasing policies, export policies, import policies, taxes and prices policies; a situation that has had far-reaching impacts on the automotive industry in the country. The growth of internet marketing is recognised across the board in Australia by different stakeholders. The evidence of growing internet market is profound from the increasing level of information acquisition in the country in the recent times (Australian Competition and Consumer Commission, n.d). But, even as growth in internet marketing become inevitable, Australia has no specific laws that deal or regulate online shopping and marketing (Australian Government, n.d). Instead, the internet marketing activities in the country are regulated within the available consumer protection laws and the Electronic Funds Transfer Code of Conduct (Australian Government, n.d). The Australian Consumer Law, contained in the Competition and Consumer Act 2010, has become another way government of Australia takes part in the regulation of online shopping and marketing activities in the country. Therefore, it can be expressed that the participation of Australian government in influencing internet marketing environment for automobile industry is minimal; a situation that provides opportunity for automobile companies to enhance their business activities through internet marketing. With increasing prospects in the information sector, the automobile industry should utilise the available friendly and minimal government regulations to establish superb internet technologies that can enhance their business activities and performance. Holden marketing strategy The current marketing strategy that Holden Australian Company has adopted can be described to be in line with the company’s vision and mission. For example, the vision of the company is to become the top most Australian company in the automotive business that is premised on excellence and remain committed to consumer needs (Jacoby, 2007). On the other hand, the mission of the company is to continuously provide quality products in the market that satisfy customers. Promotion activities are carried out through traditional advertisement methods such as mass media, outdoor displays, and strategic billboard advertisements (Jacoby, 2007). The marketing strategy of the company is considered to be effective that add value to the products of the company. Besides, the marketing strategy is viewed to enhance brand recognition and image for the company (Jacoby, 2007). Effective public relation is also another way the company exploits especially during the launch of its product. But in recent times, the company has progressively discovered the power of internet and has gone ahead to develop a website that is customised, making it possible for customers to view products of the company and possible make pre-orders (Jacoby, 2007). Although this is a great development, Holden still lags behind its major competitors in terms of developing and running an effective internet marketing technology. Customisation of the technology is inadequate, as well as creation of an effective and captivating internet marketing technology. Analysis of competitors Australia’s automotive market is dominated by the big three companies; Holden Australia, Ford and Toyota. Apart from these, there are about 200 auto firms that have largely specialised in producing automotive components for vehicle manufacturers (Commonwealth of Australia, 2008). Globally, Australian automotive firms face stiff competition from established companies from major companies across the world. Nevertheless, the relative small scale production in the country has given Australia’s firms opportunity to remain flexible with changes in demand, efficient in addressing niche markets, and cost-effective management (Commonwealth of Australia, 2008). Market competition has become fierce for Australia’s automotive companies; the situation has resulted in the companies adopting enhanced marketing strategies such as internet marketing to improve their competitiveness. Holden Australia, as well as Toyota and Ford, have actively been involved in innovating and implementing superb internet marketing strategies that integrate social media marketing strategies. Holden Australia, just like Ford and Toyota, continues to emphasise on utilising the most effective internet marketing strategies (Holden Australia, n.d). Holden Australia, when compared to Toyota, seems to lag behind in implementing a savvy internet marketing strategy with regard to advertisement, marketing, and customer service and relationship (Toyota Motor Corporation, n.d). At the same time, Ford Company tends to have a better web advertisement strategy as compared to Holden Australia (Ford Australia, n.d). Web strategy is one way a company can use to improve and enhance its internet marketing strategies. Moreover, Toyota tends to have a clear product positioning strategy on its website as compared to Holden Company. For example, Toyota runs automatic web advertisement of its vehicle models that are fully accompanied with information and features about the products and services (Toyota Motor Corporation, n.d). As a result, Toyota’s and Ford’s websites have updated review of content, layout and visitor conversion capabilities, which are critical to the success of internet marketing. Nevertheless, Holden Australia and Toyota Company, tend to have integrated social media marketing strategies in their overall internet marketing strategy. This can be evidenced from the way the two companies use Facebook, twitter, email and YouTube, to run internet marketing and enhance customer relationship and service management (Toyota Motor Corporation, n.d; Holden Australia, n.d). Customer analysis Richa (2012) observes that factors such as gender, marital status, where people live, age, education, and household income, determine online consumer purchasing behaviour. According to Nielsen Report of 2011, female and young people in the bracket age of 18-40 years constitute the largest number of those likely to purchase a product online. At the same time, the report indicated that most Australians spend most of their time visiting social networks and blocks that average 7 hours per person (Nielsen Report, 2011). With regard to the Australian consumer market, Holden Australia Report of 2010 indicate that competition is high given that there are 62 different brands that are chasing one million annual sales (Holden Australia, 2011). As a result, consumers are looking for quality and cost-effective products. According to McDermott (2000), the share of internet marketing and shopping in Australia reflects greater possibilities of growth and that online purchasing in the country is associated with different demographic profiles (cited in Chang and Samuel, 2004). The study established male aged between 24 and 44 years to be frequent shoppers over the internet due to their high-income (Chang and Samuel, 2004). At the same time, those living in metrolitan areas in the country have exhibited high chances of purchasing using the internet. Besides, the report established that those aged 45 years and above tend to be affluent; a situation that motivates them to spend higher amounts on purchases since they earn higher incomes and are rich. Therefore, Chang and Samuel (2004) indicate that companies interested in internet marketing need to establish purchasing behaviours of consumers based on demographic aspects of gender, age, income and location. Conclusion Automotive industry in Australia is wide and encompasses numerous auto activities that include vehicle production, component production, tooling and design and design. It is one of key industries in the country that contribute heavily to the GDP and provides thousands of jobs to the people in the country. Subsequently, reforms that have been pursued in the automotive sector have led to the industry to become more competitive in the globe sphere, where the focus has largely shifted towards exports. In recent times, there is growing shift in consumer preferences towards smaller, lower fuel consumption vehicles and the SUVs. This trend has dealt a big blow to the local vehicle assemblers, which largely specialise in large vehicle segment. As competition increase and key demographic aspects among the population change, automobile companies like Holden Australia have no option, but to develop and implement effective internet marketing strategies. The strategies should be able to endeavour to diverse stakeholders of the company. References Asia-Pacific Economic Cooperation-Australia. (2006). Automotive Profile-Australia: Motor Vehicle Industry/Market Snapshot. Retrieved September 17, 2012, from http://www.apec.org/Groups/Committee-on-Trade-and-Investment/~/media/Files/Groups/AD/06_ad_au_autoprofile.ashx Australian Competition and Consumer Commission. (n.d). Online Shopping When Things Go Wrong. Retrieved September 17, 2012, from http://www.accc.gov.au/content/index.phtml/itemId/268478 Australian Government. (n.d). Consumer Protection. Retrieved September 17, 2012, from http://australia.gov.au/topics/economy-money-and-tax/consumer-protection Bhatt, N. (2012, September 4). The Future of Australia’s Auto Industry. Retrieved September 17, 2012, from Technology Spectator: http://technologyspectator.com.au/future-australias-auto-industry Chang, J., & Samuel, N. (2004). Internet Shopper Demographics and Buying Behaviour in Australia. Journal of American Academy of Business, 5(2-2):171. Commonwealth of Australia. (2008). Final Report: Review of Australia’s Automotive Industry. Retrieved September 17, 2012, from http://www.mskills.com.au/DownloadManager/Downloads/Bracks%20report%20on%20auto%20industry.pdf Ford Australia. (n.d). Ford Company. Retrieved September 17, 2012, from http://www.ford.com.au/ Holden Australia. (n.d). Holden at Glance. Retrieved September 17, 2012, from http://www.holden.com.au/corporate/about-holden Holden Australia. (2011). Holden Business Report: Writing Our Own Future. Retrieved September 17, 2012, from http://www.holden.com.au/resources/documents/2010_Holden_Business_Report.pdf Jacoby, L. (2007). The Aussie V8: Marketing Plan. Retrieved September 17, 2012, from http://www.liz-mo.com/The%20Aussie%20V8%20Marketing%20Plan.pdf Nielsen Report. (2011). State of Media: The Social Media Report. Retrieved September 17, 2012, from http://cn.nielsen.com/documents/Nielsen-Social-Media-Report_FINAL_090911.pdf PwC Australia. (2012). Automotive Industry. Retrieved September 17, 2012, from http://www.pwc.com.au/industry/automotive-industry/index.htm Richa, D. (2012). Impact of Demographic Factors of Consumers on Online Shopping Behaviour: A Study of Consumers in India. International Journal of Engineering and Management Sciences, 3(1): 43-52. Spesti, T. (2011). Latest Digital Statistics Compilation Australia. Retrieved September 17, 2012, from Digital Marketing Lab: http://digitalmarketinglab.com.au/index.php/2011/01/18/latest-digital-statistics-compilation-australia/ The Sydney Morning Herald. (2011, January 8). Switched-on Consumers Signal Sea Change in Retail. Retrieved September 17, 2012, from Business Day: http://www.smh.com.au/business/switchedon-consumers-signal-sea-change-in-retail-20110107-19iq7.html Toyota Motor Corporation. (n.d). Toyota Website Privacy Policy. Retrieved September 17, 2012, from: http://www.toyota.com.au/privacy Read More