Marketing (0)

Indroduction

This assignment will examine Britain ’s car market and shows how the external and internal environment factors influences it, mostly on Mini Ltd. External marketing environment is divided into 4 different groups; socio- cultural , economic , technological and political factors. Internal marketing evironment is divided into 6 different groups; which are customers, competitors, suppliers, distributors, employees and stakeholders. Also this assignment is provided with the SWOT analysis , where strengths, weaknesses , opportunities and threats are examined.

Mini

Mini was at first manufactured by the Austin Motor Company Ltd. In 1957 Alec Issigonis was commissioned to develop a new type of small car. At the same year were the first sketches of Mini made and after that the Mini model is been created from wood and also the most important mechanical parts for Mini has been developed . Four years later the Mini hits the streets. In 1965 the first Mini with an automatic transmission enters the market and in 1969 Mini gets itself an own badge. In 1971 Mini was the best - selling British car in the world. 1994 BMW group bought the Mini and year after that Mini was voted as the best car of the century by the car magazine readers in the UK and four years later Mini earned the same award in Europe . In 1998 the Mini was listed in the Guinness Book of Records as the Britain’s most successful car. For now Mini has three different types of models: hatch , clubman and convertible. Mini is still owned by BMW Group. (www.mini.co.uk A)

External marketing evironment analysis

Socio-cultural

Socio-cultural factors
Socio-cultural factors take into account the views and trends of society. It is essential for companies to take into account socio-cultural factors, because they need to know what their customers are looking for. In the UK where the streets are narrow and everybody is parking on the roadside; it is much comfortable to own a small car then a big one.
Vehicles generally have been considered to be more a men’s subject . Although over the years more women have started to use a car, but the change between male and female car users have still persisted. Females have started to make working -career by themselves and the need for transportation has increased; one of the comfortable ways to get to a work would definitely be a car. Housewives can also use car to do the grocery shopping or to take children to school. ( http://academic.mintel.co m A)
Since 1998 more and more households are owing 2 cars. The percentage has been raised 6,4 per cent from 1998 to 2004. Although the overall percentage of car owning have went down by 0,7 per cent at the same period.
The survey taken in 2004 december shows that people who are using car to go to work is 29 per cent and 25 per cent use car to take out their family. 26 per cent have a household at size 4 and to take family out they will propably use a bigger car than mini because it will not be so comfortable to squeeze four people in to a mini. ( http://academic.mintel.co m B)
Recently people are started to think more about the environment where we all are living . Most people take in consideration if the product they buy and consume is recycable and also how it will affect on climate change wether it is environment friendly or not. Car manufacturers have made their results out of that and are producing cars more environment-friendly. They are using car parts that can be recycled after their time when economic useful life has reached to an end. Also they have to take into account the pollution law; it means that their cars have to work more economically then they were before . ( http://academic.mintel.co m C)
Because of that Mini’s bodies are made recycable; Mini’s bodies are meltable and afterwards a new Mini’s body can be created or from mini body you can create a go-kart for example. Also Mini’s windscreens are sended back to the glass - factory where it is unprocessed and new windscreens for Minis produced.(www.mini.co.uk B)

Economic

The car market is one of the first markets that goes down with the recession but it also is the first one to rise again . Because of the credit crunch car sales have declined. The new car sales decreased 11 per cent and used car fell 3% in 2008; although the car selling has been a downward trend since 2004 for used cars and since 2003 for new cars. The decline is notably been high on the 4x4 and SUV segments. That is because of their high fuel consumption . Although in the small car segments the drop has not been so significant. That might be because more people have started to think more about the environment and started to use more public transport or because of the high insurance taxes they are not able or willing to invest so much money for purchasing a car and have started to use bicycles or public transport instead. During the credit crunch people do not have enough finance to make a major outgo like buying a car. Also because the interest rates have decreased on the mortgages and people cannot buy car on credit anymore because their household value has dropped . During the recession there is a good chance to make profit of it, will be for cheaper car brands like skoda , vauxhall and kia. Besides that customers are likely to change over form new car market to the used car market, when they are in need for a new car.( http://academic.mintel.co m D)
Oil prices have been rising notably during the last years. While the oil price is rising then the purchases for new cars have been falling. Although there has been arise in diesel engine cars 6,5 per cent and petrol cars declined 5,3 per cent. Consumers are purchasing more diesel engine cars which have smaller fuel consumption. For that reason drivers can save money on the fuel.( http://academic.mintel.co m E)

Political

Drivers are more likely to buy a small car with a smaller engine; then they will have lower taxes for their vehicle . The government is also trying to lead UK car production and car demand towards the fully electrical and hybrid electric cars. But it is not so easy because of the low demand and high production costs . Although in 2009 fully electric and hybrid electric cars have made a rise from 16000 to 20000. It might be because of the scrappage scheme, when customers get £2000 discount for buying a new car. Also when consumer wants to buy himself /herself a new Mini then the discount will apply . The government started scrappage scheme to get drivers to replace their old more polluting car with new and more environment friendly one. ( http://academic.mintel.co m F)
Car manufacturers have to take into account also the environment while they are producing products and also what impact their products will have on environment when they are used afterwards. That is why government has set a law about air pollution. All new cars have to abide by the EU vehicle emission standards, known as Euro standards. ( http://www.environmental-protection.org.uk )

Technological

Nowadays technology is evolving in an immense speed and that is why car manufacturers have to develop their products continuously to stay in the competition . Thanks to the technology development companies can increase volume of the production and also reduce the cost of product or improve car performance .
Fuel consumption can be serious factor when people are buying a car. Because when fuel consumption is low then it will not harm consumers’ financial status as much as cars with higher fuel consumption and also can be more neutral against environment. Mini Cooper with 1,6 litre diesel engine takes 3,9 litres of diesel for travelling 100 kilometres. The test was done by using both freeway and urban travelling route. That is even less than some of the hybrid cars.
Mini has also equipped their vehicles with automatic start-stop system to keep the fuel consumption low. If driver stop behind the traffic light then car will shut down by itself and when car is not working then there will not be any fuel consumption and the system does not shut down the air conditioner or your stereo , all the electric devices are still working and if you want to move again, then just push the clutch and car starts immediately. However the automatic start-stop system at the moment is available only for 6-speed manual gearboxes. ( http://www.themotorreport.com.au )

Internal marketing environment

Competitors

Mini has a lot of competitors in the car market. Both direct and indirect competitors have an enormous part on Mini’s success . Because Mini is a premium car brand ; that means Mini’s direct competitors are other premium car brands and indirect competitors are volume car brands. For example Audi as premium car brand and Ford as volume car brand. Substitutes for Mini are public transport, bicycles and motorcycles. Also one type of competitors would be new entrants.

Costumers

Most of the drivers will look for the premium cars first when they are buying a car, because premium cars have a high reputation and better driving qualities than volume car brands. Although at the end they still are more likely to buy a volume car brand because of car’s price. Buying a volume car brand consumers will look for economic fundamentals such as price and fuel consumption. While buying a premium car consumers are making their decision on emotional factors such as style, brand and comfort. However the most important considerations when buying a car are price, reliability and fuel consumption. Mini has a good resale value, because Mini is considered as durable car and thanks to that it is still highly valued after few years of usage time. Also Mini is notably preferred more among females then males. The research shows that among females Mini is preferred 11 per cent and among males it was less than 3 per cent. ( http://academic.mintel.co m G)

Suppliers and employees

Minis are manufactured in BMW factories and during the recession Mini had to let go its workers . 850 agency workers of Mini’s plants were redundant in the UK. The redundancy was made in BMW’s plant in Oxford which had 4500 employees in total . It means that almost 19 per cent of them were let go. It was because of the fall in sales as a result of the global recession. During the credit crunch demand for Mini’s and also for other car manufacturers’ products has been decreased. In January Mini’s sells were down by 35 per cent. Employees have to work in the fear because their job is undependable. Because if the demand decreases even more than company has to make another redundancy. ( http://news.icm.ac.uk )

Distributors

Minis are sold by local dealers or by 2nd hand car sales. Local car dealers can be found in the most of the cities. Customers can search product availability online. Also distributors do not have to have Minis in their stock , because they can easily send an order to the factory where the car is sent to the distributor . Then distributors do not need so much room for stock. The system will decrease distributors cost of property. However customers have to wait longer for their car.

SWOT analysis

Strengths

Mini’s one of the strengths in the UK market is definitely its brand name. Also now when Mini is under BMW group it has became very popular all over the world. Another strength for Mini would be continuous innovations. Mini is innovating cars continuously and thanks to that they have managed to stay in competition or even getting ahead a little bit. They are keeping Minis up to date and are heading towards the better economic; they have tried to bring Mini’s fuel consumption as low as possible. Thanks to Mini’s low emission, consumers can save money because they will be congestion charge exempt. Also car size would be one of the Mini’s strengths, because of that it is easier to drive in the city and also easier to find a parking space . Although Mini may look small outside it is still commodious inside. Besides that Mini has a good resale value; consumers can get high percentage of their money when they decide to resell their Mini.

Weaknesses

Mini is a premium car brand and because of that it has a higher price compared with the volume car brands. Because of the hard financial times , consumers cannot afford themselves a premium car brands and might switch over to the volume car brands. Volume car brands have been very innovative in the last years and are not so much behind from the premium car brands in qualities anymore. Therefore in the car market the biggest sufferer would probably be premium car brand manufacturers like Mini. Their demand has decreased already notably during the credit crunch and redundancies have been made in the plants. Mini is only focusing on the small cars and it makes their customer range much narrower then it could be when they would move on to the bigger cars.

Opportunities

Consumers have started to think more about the environment where we are living and are looking for economic cars more than before. The government has even set laws against high emission for the cars. Mini is doing really big innovative steps towards environment welfare and for example Mini diesel is even more economic than some of the hybrid cars. Also there are more households with 2 cars now than before. When first bigger families are in need for a MPV or other bigger car than Mini, then now the second car can be Mini. Because if there is a need to go somewhere with family then they can use the other car, but when going to work, Mini would be better choice because of car’s driving qualities especially inside the city.

Threats

One of the biggest threats that Mini might face in the future will be consumers going over to hybrid cars. Because hybrid cars are more economical than Minis and also hybrids have lower taxes. Also hybrids are much quieter compared with the petrol or diesel cars. Another threat would be that volume brand cars are getting closer to premium car brands’ technological systems. Because of that the difference between them has became narrower. Third threat will be oil price changes ; if the oil price keeps rising rapidly then it will have serious consequences on Mini’s demand.

Weaknesses to strengths

Because Mini is a premium car brand then its price is also higher than most of the car in Mini’s size- class . They should start producing bigger car models to be considered for more customers, who need a bigger car for their lifestyle. Although it might have a negative impact on their brand name that obviously refers to small cars.

Opportunities to strengths

Mini should try to make their petrol version Mini Coopers also as economical as diesel ones . That might bring new customers to use Mini Coopers and it will also be better economically. Also from the new customers who decide to join with the Mini’s customer group will create revenue for the Mini Ltd.

Threats to opportunities

Hybrid cars have got more popular in recent years and have lead many customers from their former car manufacturer to hybrid cars. Mini should also consider about launching a hybrid Mini. That might get them new customers who are looking for economic cars. However they have already launched a very economic diesel Mini, but producing an actual hybrid would make Mini even more economical. Because when oil prices arise then even more drivers would be looking for hybrid and fully-electrical cars.

Conclusion

To summarise, this essay gives a small overview of how does different external and internal factors lead the market demand and supply . Also how Mini Ltd might use SWOT analysis to create their marketing strategy. At the final part I tried to make some recommendations for Mini Ltd what they can do to increase their revenue.

References

Brassington, F. and Petitt, S. 2006. Principles of marketing, fourth edition, Prentice Hall: London. Chapter 2 and chapter 21.
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