A New Plug In Hybrid Vehicle Marketing Plan Marketing Essay

This report critically examines the marketing planning process and proceeds to analyse the internal and external marketing environment for Proton Cars, including a PESTEL and SWOT analysis. Following this analysis, various competitor positions are examined and recommendations are made as to how Proton might gain competitive advantage for its new Plug-in Hybrid Vehicle. Protons vision, mission, and marketing objectives are defined, and market segmentation and targeting for the new product are examined, and recommendations are made. The main body of the report focuses on the delivery and communication of customer value through marketing mix strategies. The importance of the consistent delivery of brand and product messages at all stakeholder touch points is emphasised. Recommendations are made for the product specification, pricing and distribution strategy as well as for promotional tools and messages. In addition, the importance of building brand equity is examined and recommendations are made about the positioning of the Proton PHEV product and the Proton brand.

Table of Contents Subject Page No.

1.0 Introduction - Background to Proton 2.0 The Marketing Planning Process 3.0 Marketing Audit 3.1 The Macro Environment PESTEL Analysis 3.2 The Micro Market Environment 3.2.1 The Global Market for PHEVs 3.2.2 Market Shares 3.3 The Internal Environment SWOT Analysis 4.0 Vision and Mission

5.0 Marketing Objectives 6.0 Market Segmentation, Targeting, and Positioning 6.1 Market Segmentation 6.2 Targeting 6.3 Positioning 7.0 Marketing Strategies Communicating and Delivering Value 7.1 Competitive Advantage 7.2 Customer Value 7.3 Branding 7.4 Product Strategy 7.5 Pricing Strategy 7.6 Distribution Strategy 7.7 Promotional Strategy 7.7.1 Promotional Tools 7.7.2 Promotional Messages 8.0 Marketing Implementation, Management, and Control 9.0 Marketing Metrics 10.0 Conclusion 5 5 6-8 6 6-7

6 7 7-8 8 9 9-10 9 9-10 10 10-14 10-11 11 11 12 13 13 13-14 13-14 14 15-16 16-17 17 Bibliography

18-19

List of Figures
Figure 1: The Marketing Planning Process Figure 2: Porters Generic Strategies Figure 3: Fills 4Cs Model Figure 4: The Primary Functions of the Marketing Manager 5 10 14 16

1.0 Introduction - Background to Proton

Proton produces four ranges of car from its state-of-the-art assembly plant in Malaysia. In total, it produces 240,000 vehicles per year and employs over 6,000 workers in research and development, production and manufacturing. Proton cars are exported to more than fifty countries worldwide including China, Australia, and the UK. In collaboration with Italdesign Giugiaro, Proton has produced a Plug-in Hybrid Vehicle concept car, which was seen for the first time at the Geneva Motor Show in March 2010 (Proton website, 2010). 2.0 The Marketing Planning Process The role of the marketing planning process is to examine, define, and present how marketing activity will support the achievement of the organisations strategic business objectives (Kotler et al., 2009). However, the true marketing planning process goes well beyond Kotlers definition. The organisations strategic business objectives need to be set taking account of its long-term vision and mission. In addition, the marketing audit forms a fundamental part of the process as it constantly feeds back data about the organisations changing marketing environment. There are a number of sequential and logical steps that follow the marketing audit which are shown in Figure 1 below (Macdonald, 2007, p. 49).

Figure 1: The Marketing Planning Process 3.0 Marketing Audit

3.1 The Macro Environment PESTEL Analysis

The PESTEL model was first conceived by Gillespie (2007, p.8) as a means of analysing the external macro environment of an organisation. Political Governments are encouraging manufacturers to produce cars with improved fuel economy by imposing high fuel taxes and/or strict limits on vehicle emissions (Pike Research, 2010). Economic

The worldwide economic downturn and rising fuel prices are forcing consumers to reduce their motoring costs.
Social and Cultural Consumers are now increasingly well informed about the major global environmental issues and actively consider the green credentials of the products they buy (Cowe and Williams, 2002, p.7). Technological Technological progress is being made in the production of batteries, which are essential for the efficient powering of PHEVs (Kalhammer et al., 2007). Environmental Fossil fuels are a major contributor to carbon emissions and there is a growing demand to reduce carbon emissions for vehicles using alternative and greener energy sources (Carbon Trust, 2010). Legal Vehicle carbon emissions are monitored and controlled by law in a number of countries including the UK.

3.2 The Micro Market Environment 3.2.1 The Global Market for PHEVs
According to a study by Pike Research (2010), the global market for PHEVs is forecast to be dominated by the USA with approximately 640,000 vehicles expected to be in use there by 2015.

The USA will be closely followed by China with 560,000 vehicles. The global sales of PHEVs are expected to reach 1.7 million by 2015.

3.2.2 Market Shares

The survey by Pike Research (2010) shows that, when purchasing a PHEV, many consumers will probably opt for a brand of vehicle that they are already familiar with, and trust. Therefore, manufactures such as Toyota and Honda are likely to benefit from their established positions in the HEV market. General Motors (GM) who entered the PHEV market in its early stages are also expected to benefit and Pike Research (2010) estimates that GM will have gained a 20% global PHEV market share by 2015.

3.3 The Internal Environment - SWOT Analysis

The identification of internal strengths and weaknesses helps identify an organisations strategic capabilities and limitations and assist in illustrating how those factors can be managed in terms of minimising threats and maximising opportunities (Johnson et al, 2008 p.93).

Strengths Weaknesses Core Competencies

Research and development as evidenced by entry into Formula 1. International engineering expertise through 100% stake in Lotus Group.

Brand Reputation
Domestic and international awards for its car models.

Distribution.
Domestic market share of 28% (Trafficmagonline.com, 2010) Strong presence in China through joint venture with Youngman Automobile Group.

Human Resources
Nearly 12,000 personnel.

Team of Lotus engineers.

Financial Resources
Cash and cash equivalents recorded an increase of 79%, in 2010 to RM1.6 billion

Core Competencies
High production costs make its cars relatively more expensive than many other makes (Netto, 2005). Cars are not suitable for US market, as they do not meet required safety or environmental standards.

Brand Reputation
Has historically suffered from quality and reliability issues some of which remain (Netto, 2005).

Distribution
Only exported 13,863 cars in 2009 - about 5.8% of total production (Chrysler, 2010).

Financial Resources
Spends a significant amount on research and development and royalties to Mitsubishi for the use of its engine. (Chee, 2003).

Opportunities Threats Market trends

Interest in purchasing PHEVs is five times greater in China than in the USA (Ernst and Young, 2010). By 2021, China is expected to have installed the most complete electric charging infrastructure necessary for PHEVs (Harrop, 2011).

Regulatory changes
Global governmental and legal pressures are working in favour of the PHEV market.

Distribution
Strong in China, which has been identified as the second most important market for PHEVs.

Market trends
Consumers are reluctant to buy PHEVs until the technology is proven (Ernst and Young, 2010).

Economic Situation.
High entry cost for PHEV ownership.

Distribution
The Malaysian domestic car market is saturated (Starkie, 2005). Note: All data sourced from Proton Annual Report, 2010 unless otherwise stated.

4.0 Vision and Mission

The stated vision for Proton is: Driving Malaysias transformation into a leader in technology and quality. The stated mission for Proton is: To strive towards excellence in all aspects of our operation. (Proton Annual Report, 2009, p.3/4)

5.0 Marketing Objectives

To launch a test PHEV in 2012 (Proton Annual Report, 2010, p.58). To achieve a 10 % share of the PHEV market in China by the end of 2015 (56,000 units). To achieve a 5% global share of the PHEV market by 2015 (85,000). To reach beak-even on the project costs by 2015.

6.0 Market Segmentation, Targeting, and Positioning

6.1 Market Segmentation

Consumer markets can generally be segmented in three ways based on: Socio-demographics - including age groupings, gender, location, family size, income levels, and educational standard achieved. Psychographics - including lifestyle and personality characteristics. Behavioural factors - including attitudes, perceptions values, beliefs and learning, cultural, social. (adapted from Kotler, 2001, p.286) Market segmentation, as a discipline, is now widely recognised as being a precondition for the successful global marketing of products and services (Hooley and Saunders, 1993, p.482).

6.2 Targeting
In view of the findings from the Marketing Audit and with reference to the study by Ernst and Young (2010), it is proposed that the target audience for the Proton PHEV be defined thus: Socio- demographics: Existing car owners and those who expect to purchase a car within the next three years; middle to high-income earners; located globally but with a strong bias towards China. Psychographics: City dwellers who drive less than fifty miles per day on average. Behavioural factors: Motorists who are primarily interested in saving money on fuel and are not necessarily concerned about environmental factors.

6.3 Positioning
Positioning a brand is an attempt by a business to influence consumer perception and behaviour (Perreault and McCarthy, 1999). For example, in the case of the Proton PHEV, the brand could position itself to appeal to its consumer segment by promoting its cost saving benefits. However, brand positioning should go beyond simply reinforcing a brands current position in the marketplace by disseminating messages about the emotional position it wants to adopt. In other words, how does the brands position make the targeted consumer think and feel and will this influence the way that the target consumer segment behaves?

7.0 Marketing Strategies Communicating and Delivering Value

7.1 Competitive Advantage

Porter (1980) believes that organisations can use certain generic strategies to exceed the performance of their competitors and thereby establish a competitive advantage - see Figure 2 below.

Figure 2: Porters Generic Strategies

Whilst Proton is currently able to compete on price in its domestic market, due to government protectionist policies, its position outside Malaysia, means that it has to differentiate its product to compete effectively. Consequently, it is proposed that Proton adopts a narrow scope, differentiation focus for its global generic strategy.

7.2 Customer Value

Customer value is the cornerstone of developing and maintaining customer relationships, which leads to customer satisfaction and ultimately, customer loyalty. Customer value is created through value propositions, which are the benefits that an organisation undertakes to deliver to its customers. Value propositions are an integral part of building differentiation and competitive advantage (Armstrong and Kotler, 2008). For example, subject to research, it may promise to deliver the lowest running costs of any hybrid vehicle. Customer value is delivered through all elements of the marketing mix and is a fundamental dimension of the brand.

7.3 Branding
To build its brand equity, Proton needs to engage with its customers, and potential customers, at all touch points for all stakeholders. These touch points include all formalised internal communication activity, such as employees magazines and intranets, all external promotional activity, such as advertising and direct marketing, customer call centres and helplines, and contacts with the supply chain. The stakeholders interaction with such touch points provides Proton with an opportunity to influence the perception of the brand in terms of whether it meets expectations or not across a range of dimensions, for example, providing an opportunity to grow the business for financial stakeholders, and delivering value for end consumers. In addition, it is vital that there is an integrated and consistent delivery of brand messages across all touch points (Doyle, 1998). Equally, however, branding messages for a global market challenger, such as Proton, must be of relevance and appeal to local markets. This ability to think globally but act locally can help to reinforce Protons competitive advantage strategy (Taylor, 1991).

7.4 Product Strategy

In view of its proposed market position as a market challenger gaining competitive advantage through a narrow scope, differentiation focus, the Proton PHEV needs to meet the following specification: Features: Such as the ease of access and use of the charger. Customisation: Chinese market tastes and preferences generally require, for example, a more formal vehicle interior than for say the US market (Bloomberg Business Week, 2010). Performance: Manoeuvrability in small spaces. Adequate acceleration for city use. Conformance: Must conform to local regulatory controls over vehicle emissions and safety standards. Durability: Resilient enough to cope with heavy usage in high population density centres. Reliability: Highly reliable with guaranteed driving distances of 50 miles on a single battery charge. Repairability: Ease of repair is important in all car market segments but especially so for new car technologies as this provides the purchaser with reassurance. Style: In view of the expected relatively high price of the PHEV, styling will be important so Protons decision to use Italdesign Giugiaro makes sound business sense. In terms of pre and post purchase customer service then the following are important: Ordering ease: The vehicle needs to be easy to order from local dealers. Delivery: Guaranteed delivery times of no more than four weeks from ordering. Customer induction training: In view of the new technology present in the car, customers need extended training such as how to charge the battery. Customer consulting: Customers need reassurance messages pre and post purchase. Maintenance and repair: An extensive network of dedicated servicing facilities with fully trained technicians. Returns: Due to the advanced technical nature of the product, there are certain to be returns and these must be managed effectively to avoid customer dissatisfaction and promote customer goodwill and advocacy, which is vital in this new marketplace.

7.5 Pricing Strategy

Even though the recommendation is to compete on differentiation, the pricing strategy, although not market leading, still needs to be competitive for a new product like the PHEV, where there will be considerable competition from more established brands. Proton needs to carry out a full evaluation of its pricing strategy including establishing the margins it wants to achieve based on expected demand and its market share objectives. In addition, of course, Proton needs to monitor competitor prices and position its pricing strategy accordingly i.e. not the lowest in the market but a price that challenges the market leader.

7.6 Distribution Strategy

China has been identified as the primary market for Protons PHEV. Consequently, Proton needs to critically examine the robustness of its supply chain, particularly with its existing distribution partner, by ensuring that it consults extensively of all aspects of the marketing strategy. Distribution of the PHEV will be based on the circular self-renewing model whereby the promotion of the technologically, fuel-efficient product innovation drives demand from the consumer. For markets outside China, especially in the USA, Proton will need to develop a strategic alliance with a major car manufacturer in order to achieve distribution,

7.7 Promotional Strategy 7.7.1 Promotional Tools

According to Fills 4Cs model (2002), four principal dimensions characterise each of the main communications tools, namely: Communications Impact Credibility Costs Control See Figure 3 below for how these dimensions apply to the component tools of the communications mix and for the strategic roles and objectives for each tool.

Figure 3: Fills 4Cs Model 7.7.2 Promotional Messages

The external promotional messages should deliver value through being emotively positioned based on the motivating factors behind the purchase decision for PHEVs.

According to independent research, the major purchase motivation for PHEVs is economic in terms of the fuel savings that can be realised. Reassurance about battery driving range, access to charging stations and vehicle price are also significant factors in the purchase decision (Ernst and Young, 2010).

8.0 Marketing Implementation, Management, and Control

The effective management of marketing projects, such as the launch of a new product like the Proton PHEV, requires a number of interrelated activities to be controlled including: The assembly and management of a dedicated project team. The setting of objectives and evaluation of activities against those objectives. The control and reporting of promotional and other expenditure against budget. The production of a calendar of key marketing events. The measurement and reporting of marketing mix activities effectiveness. It is the responsibility of the Project Manager, in this case, the Marketing Manager, to oversee the project but not to necessarily be responsible for all aspects of its implementation. At its most fundamental level marketing management involves the appropriate selection of target consumer segments and the building of mutually beneficial relationships with the consumers in those segments (Armstrong and Kotler, 2008). However, The Marketing Manager for the Proton PHEV product will also be responsible for managing all internal and external resources that have input into this plan to ensure its successful implementation, management, and control. To discharge these responsibilities effectively the Marketing Manager will need to possess a broad range of skills including effective financial and human resource management, an understanding of the relationship between marketing and sales, profit-optimisation planning and forecasting, and marketing mix planning and optimisation. It is the role of the marketing department, under the leadership of the Marketing Manager, to plan, manage, execute, control, and evaluate the marketing strategy (Kotler et al, 2009, p.4). For this to be done effectively, the Marketing Manager must make strategic and long-term decisions as well as tactical and short term marketing mix decisions (Kotler et al, 2009, p.6). The primary functions of the Marketing Manager and Marketing departments are summarised in Figure 9 below

Planning
Develop

Strategic Plans Develop Marketing Plans

Implementation
Carry out the Plans

Marketing Audit Internal and External Control

Measure Results Evaluate Results Take Corrective Action

Figure 4: The Primary Functions of the Marketing Manager 9.0 Marketing Metrics
Historically the measurement of the effectiveness of marketing activities has been a contentious and difficult process but it is increasingly recognised as an essential requirement for assessing the return on investment for any new product (Clancy and Stone, 2005). In this respect, the socalled balanced scorecard and the measurement of customer equity are important and relatively recent innovations that Proton needs to consider as part of its PHEV project plan.

As a starting point, marketing performance needs to be measured against the marketing objectives. A qualitative tacking study of stakeholder attitudes to both the Proton brand and the PHEV needs to be established in advance of the implementation of the marketing plan. This will assist in assessing likely changes in future market share (Kotler, 2001). Following this, a post launch evaluation needs to carried out with actual volume sales used to calculate actual market share. Quantitative measures of financial performance, in terms of return on investment, also need to be analysed in the short and longer term. All of these measurements need to be further analysed in causal and relative terms and fed back into the ongoing marketing planning process.

10.0 Conclusion
The successful launch of the Proton PHEV is dependant upon the effective management of the marketing plan and the adoption of the key strategic recommendations in the plan as follows: Ongoing market research through the regular updating of data in the marketing audit. The creation of customer value through the development of value propositions. A distribution focus on the Chinese market. The communication of customer value propositions using appropriate tools and messages.