Auto Brand: Building Successful Car Brands for the Future

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An insightful analysis of how in today's environmentally aware, financially challenging and globalised world leading car brands have survived and thrived, and a strategic guide to future success.

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1. The car – fashion item or out of fashion?

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The car fashion item or out of fashion?

For many decades, starting in the 1930s and with a golden era in the 1950s and 1960s, the car had a central role in society as a means of transport and as a symbol of status, affluence and personal freedom. Popular culture and public policies, with relatively few exceptions, supported the car and its strong role in society. In recent years, however, the car has been questioned for a number of reasons including its impact on the environment, and increasing traffic which results in traffic agglomerations and jams, particularly in bigger cities. Consumers have turned their interest to other products and have accordingly transferred their purchasing power to other areas: cheap travel abroad, housing and hobbies, to name a few examples.

That cars may cause problems is not a new phenomenon. It has been extensively dealt with in modern history (Lutz and Fernandez, 2010). In 1914, the mayor of Cali, Colombia, decided to regulate the impact of cars since they were even though only in the hands of rich people causing a lot of problems. According to the mayor:

 

2. Competition, market structure and global challenges

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Competition, market structure and global challenges

This chapter focuses on competition and market structure conditions and how global challenges have actualized a number of crucial strategic issues of concern to car companies. New fuel technologies, changes in car taxation policies, the effects of state subsidies for different industry sectors, and the increased cost of land, making retailing in bigger cities expensive, are examples of challenges that must be dealt with through applying proactive strategies, forward-looking marketing intelligence systems and thought-through incentive systems to control behaviour in different types of markets.

The market and industry structure of the car business is undergoing considerable change. The number of car makers 40 in 1970 and 24 in 1980 has continued decreasing over time in the aftermath of consolidation and there are now only 10 major manufacturers left. Former competitors are now in the same company group. As in many industries, mergers and extensive cooperation at the manufacturer level, even among direct competitors (cf BMW and Mercedes-Benzs cooperation on hybrid technology), will continue and grow in importance. The same holds for the retail level: small operations will close down while big, international retail groups will grow. Economies of scale are extensive not only for car makers but also for insurance, finance, retailing, repairs and other areas.

 

3. Marketing channels

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Marketing channels

Marketing channels are crucial to making the offer available to customers. Due to the complexity and size of a car, there is a need for a physical point for delivering, maintaining, and repairing the car. These services have often been provided by the dealer, and its likely that automobile dealerships will constitute a major part of the marketing channels in the future too.

Marketing channels fulfil many more functions for car makers and buyers than just giving access to car ownership. Marketing channels make sure car makers provide good market coverage when it comes to after-sales services, get their products adequately exposed, and get access not only to buyers overall but, in the best case, buyers with a profile that fits with the car makers brand intentions. The more intensive the competition, the more important it is for a company to have great marketing channels.

Dealers will be necessary for the foreseeable future

There is and will be a need for a dealer from a number of perspectives. First of all and maybe most important, the buyer wants a dealer. Even for bicycles and lawnmowers compared to cars, very cheap products customers want a place to go for information, support, product demonstration, etc. In many industries, low-cost providers offer relatively complex products white goods, brown goods, garden tools, etc at low prices with very limited service. Over time, however, they tend to add personnel and expertise to be able to offer services many buyers want. Their cost advantage may remain, but its derived from scale advantages in marketing, procurement and administration and, very important, negotiation advantages with manufacturers gained through market power.

 

4. Car buyer behaviour

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Car buyer behaviour

With few exceptions, companies that have been successful in recent years have founded their ideas and strategies on an understanding of how buyers think and behave. This chapter discusses the car buying process based on recent research and puts the process into a broader framework where car makers and their dealers can relate the insights to their own business models and strengths, thus identifying potential improvements in their dealings with customers.

Customers may not know why they like, prefer and buy a particular auto brand or product, so understanding consumer motivation and how that translates into profitable marketing, product packaging and sales strategies is crucial for proactive car companies. The dangers of not understanding consumer motivation are many often resulting in poor profitability and dissatisfied buyers.

Buyers being less loyal driving forces and effects

There is little doubt that over time, buyers in general have become less loyal. This tendency is strong in all industries and car buyers are now applying a different attitude in all types of purchase situations.

 

5. Car cultures

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Car cultures

For the consumer, the car is associated with emotional and status values (Merritt, 1998; Sandqvist, 1997), which makes the car a significant expression of culture and lifestyle. To understand the emotional and cultural component of car buyers purchase considerations, its important to understand car cultures.

Car cultures are strongly influenced by the overall culture in different countries and regions, which largely may be derived from how people live and the attitudes they express. Although there are still substantial differences within each country, without any doubt one country stands out: the United States. This chapter will deal with a selection of regions and countries, with a strong emphasis on the United States in dealing with the emergence and growth of car cultures.

The car as a cultural expression a global phenomenon

A key characteristic of the car is its strong representation of different cultural phenomena. Along the road from being a symbol of distinction, typical of the bourgeoisie and the aristocracy, and some professions such as lawyers and doctors, to being a functional item and a work tool, many car cultural events and aspects have taken place. This chapter does not try to cover every aspect of car cultures in different countries and continents, but will give some insights into how car cultures have emerged and changed over time.

 

6. Automobile brands

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Automobile brands

More than in any other sector, the brand is at the heart of success in the car industry and, to car buyers, the brand is crucial attachments to brands are consciously and unconsciously established long before a potential buyer considers purchasing a car for the first time. It is not only car buyers who are essential to how a brand is perceived, but also a complex set of opinions and ideas from other stakeholders too hence, car makers have every reason to strive to establish attractive and profitable auto brands.

This chapter deals with the role of the auto brand in creating success in the car industry and how strong auto brands might be established and developed. Numerous examples of successful branding strategies are given and a few that provide insights on how not to do it. Car makers spend enormous amounts on establishing and strengthening their auto brands figures are difficult to get since branding, by its very nature, is a broad activity that, from a modern marketing perspective, covers a variety of activities including corporate identity, advertising, product design, salespeople training and personnel recruitment. Branding may be perceived as costly and it is but car makers are likely to benefit from investing in it. This chapter lays the foundations of a contemporary approach to branding and presents smart solutions to how strong brands are created in the very competitive car industry.

 

7. Sustainable business models

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Sustainable business models

Car buyers will take advantage of increased market transparency and there appear to be few other ways to create sustainable profitability than to keep costs under strict control or deliver customer value through superior functionality or an emotional appeal reflected in a strong auto brand. Key to creating a business model that is sustainable is marketing intelligence. However, marketing intelligence is reactive: a problem at hand is defined and a research process is launched, with data collection, customer clinics, project and board meetings and, finally, a new product offer or approach is made by which time the competitive situation has changed and again, reactive methods are applied to adjust the solution to the new market situation.

Car managers need to understand this problem along with influences on buyer behaviour such as demographic and geographic changes, consumer environmental concerns, popular culture, etc. This chapter provides tools and examples that illustrate how consumers and their attitudes are influenced by what happens in the environment and how these things can be used to develop more sustainable business models.

 

8. The car in the future

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The car in the future

The strong criticism of the automotive industry for its lack of interest in green strategies, ie strategies that put sustainability, environmental concerns, etc as a top priority in the short as well as the long run, could be assumed to turn the attention of car makers and the car retail trade towards green issues. Increasingly, consumers ask for sustainable solutions and the negative image of cars in this respect means it will take a lot of effort from the car industry to gain a reputation of caring about the environment. This might be a huge business opportunity in the future. This chapter presents a number of smart, effective and sustainable ways to deal with current and future challenges and how the car can have a major role in the emerging society. For green strategies to succeed, they must be implemented all the way from car maker product strategies to the attitudes that customers encounter when they enter a showroom, as evidence from other industries shows. But it must not be the traditional car maker-controlled marketing channel that comes up with the most attractive green solution. Different scenarios about how consumers and the world around will respond are presented and the dialogue among stakeholders with an interest in the car and its future is painted in broad strokes.

 

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