Consumer Vehicle Brands in the UK

Introduction

Skoda and BMW are among the world’s largest prosperous motoring companies. Skoda is an automobile manufacturer registered and headquartered in Czech Republic with multiple branches all over the world including UK and India. On the other hand, BMW is a German automobile manufacturer that has hitherto gained world class recognition in the automobile industry. For many years, BMW has made international market extensions in many continents including Europe, Asia, America and Africa. (Margolius & Meisl 58)

This research paper introduces the reader into understanding the concepts of marketing and different aspects such as communications, strategies and mix by comparatively analyzing Skoda and BMW in the UK automobile industry. The entrance of many motoring firms’ including Audi, Volkswagen, and many others into the UK market has intensified competition. This means that every firm must struggle for its survival. This paper therefore presents the reader with interesting scenario of how BMW and Skoda have managed to position themselves in the competitive UK markets. (Margolius & Meisl 59)

Statement of the problem

The motor vehicle industry in the UK is threatened by stiff competition in the industry. Most companies in the automobile industry are increasingly finding it difficult to operate as competition heightens. This is likely to spell doom for some infant domestic and foreign firms as they begin to record reduced margins. The cumulative effects become more apparent when employees begin to lose jobs. (Arnoff 2009)

Purpose

The reason for the study is to understand the causes and the effects of competition in UK’s automobile industry taking Skoda and BMW as case studies. Many companies in the world are suffering from the hiccups of the current global economic and financial recession. Managers are therefore expected to make decisions which are either profit maximizing or cost minimizing. In such situations, efficiency and effectiveness become top on the organizational agenda. Analyzing the competitive environment will provide a leeway for the management to make informed decisions and judgments concerning the market requirement. (Plowright)

Significance

Comparative analysis of marketing trends and communication strategies adopted by Skoda and BMW will provide valuable information on whether there are any gaps and mismatch between consumer expectations and what the companies actually present. The information received is then used by marketing executives and any other relevant stake holders in the automobile industry. The study becomes more important for the motoring firms in understanding the market and the magnitude of competition only if the information is implemented. (Windecker 10)

Hypotheses

• The UK automobile industry is flooded.
• Most of the automobile firms in the UK are foreign.
• What is the current trend of competition?
• BMW and Skoda do not employ aggressive marketing strategies.
• Do BMW and Skoda operate electronic marketing?
• Is there any government assistance granted to BMW and Skoda?
• How strong are the two companies positioned in the market?
• What was the impact of the credit crunch on the companies?

Objectives of the study

• To find out on whether there is any government assistance granted to the automobile firms in the UK.
• To investigate whether there are any gaps existing between the consumer expectations and what companies do offer.
• To find out the height of competition in the UK’s automobile industry
• To study the marketing strategies employed by BMW and Skoda in the UK market. (Urde 82)
• To find out the respective shareholdings of BMW and Skoda in the UK.

Literature Review

Skoda has used an intensive marketing strategy in order to try to persuade its customers from the old perception to a near success. In its first attempt to enter the UK market, Skoda had difficulty in convincing its clients. The company had the poorest reputation among the industry players, culminating in to the worst performance recorded between the years 1990 and 1997. This was a period of loss making and soon afterwards i.e. from 2000 the swords were drawn and the managers went back to the drawing board. This saw the company devising an integrated marketing strategy that was comprised of all marketing communications system that occasioned a transformation from the old traditional to a modern value for money marketing strategies. This was made possible by the introduction of VW Skoda brand after the sale of Volkswagen’s 30% stake in the company. (Plowright)

Since 2001, Skoda has maintained a stable lead in the industry despite harsh economic and environmental circumstances currently prevailing in the UK market. Integrated marketing communication is defined as an easy theory that puts together all types of communication in to an end result. This result allows companies to become more focused when it comes to communication that is meant to put across an important piece of information to clients. This can also be defined as a model of communication preparation that acknowledges the increased value of a complete plan that looks at the important functions of communication regulations. The planning and discipline are then combined to provide precision, constancy and complete communication through flawless of mixing different messages. Skoda has again streamlined its business through integrating its marketing communications with other tools. (Plowright)

Integration marketing communications come with change. This was evidenced when Skoda first introduced an Octavia brand that hit the market with an estimated promotion cost of ten million pounds. During this period, the company had employed a departmental marketing mix but only a few cars were sold. Many researchers have cited that only about 40% of the population would have considered buying Skoda at that time. Strong marketing communications campaigns reduce negativity amongst potential consumers. This involves those people who would never in reality purchase your product. (Davidson 2008)

On the other hand, BMW employed a totally different marketing strategy. While Skoda relied on integrations, BMW embarked on a product offensive strategy that involved flooding the market by producing a new line of product after every three months. This move saw the introduction of new cars like Mini One, Mini Cooper, new BMW 3 Series Compact, new BMW 7 Series and Z4 Roadster. Through this period the BMW was identical with consistent marketing policy that ensured particular emphasis was paid solely to Quality, Performance, Exclusivity and Technology. As a result, BMW had gained a worldwide market share surpassing its industry rivals including the American Mercedes brand. The marketing was only achieved through advertisements which were very responsive to market requirements. (Kumorowski 2008)

Research Methodology

Having studied the broad outline of the research on the comparative analysis of different marketing communication strategies as outlined in the introduction, this paper goes further to define the borders of this research field namely, Research approach, Research Strategies, Data Collection Methods and distribution of the data and information to reach the final conclusions of the research. In this respect, deductive and inductive approaches to this paper are eminent. The UK automobile market is very competitive. This means that the market is flooded with numerous car manufacturing firms. (Arnott 2009)

The research strategy revolves around collecting data from different car manufacturing firms within industry, electronic media and online libraries as well as advertising agencies and then applying different theories based on the data collected so far to provide valuable information regarding the industry performance. The data is then presented in a realistic manner to make a conclusion on the data provided. In this report the main sources of data were mainly secondary i.e. electronic media and online libraries. These were www.skoda.co.uk , www.bmw.co.uk, and etc. There was also massive analysis of marketing and advertising trends used by marketing agencies mainly from the UK. (Plowright)

Limitations of the report

• This report relies mostly on secondary data that include electronic media and online libraries. These sources are subject to manipulation and stereotyping in order to suit the personal interest of the researcher and therefore may substantially impair objectivity and integrity of the report.
• Some advertising agencies may not be accurate in compiling and presenting their data and therefore the report may not fully meet the users’ requirement by incorporating all the aspect.
• The report is costly in terms of the resources i.e. human personnel, time and materials employed. (Windecker 10)

Report Structure

To present the reader with a detailed and comprehensive report on comparative analysis of marketing communications strategies adopted by Skoda and BMW in the UK automobile industry, this report presented as follows; chapter 1 provides a brief description of the main reason for the study. Chapter 2represents the main body of the text and extensive literature review on marketing communication strategies adopted by BMW and Skoda in the UK’s automobile industry as well as research methodology. Chapter 3 then details analysis and discussions of the study. (Davidson 2008)Chapter four gives the reader an insight of the report finding and analysis. It then continues to provide recommendations and conclusion based on the research findings and analysis.

Analysis and discussion

Findings

From the thorough review of literature, the following information can be obtained

• Strong marketing campaigns can reduce negativity in a product demand. This was experienced by Skoda in its first attempt to produce the Octavia brand in the UK market. There was a warm reception despite having incurred tremendous marketing and promotional expenditure amounting to nearly ten million pounds. (Barlow., & Maul 2009)
• Strong marketing campaigns and strategies can be used as a positioning strategy by a firm especially in a highly competitive market. This was seen with BMW when it flooded the market to its competitors by producing and launching new brands after every three months.
• A flexible firm can adopt speedily in moments of unprecedented uncertainties. Skoda was a poor performer from 1991 to 1998. (Windecker 15)
• When the managers changed from departmental advertising to integrated marketing communications it then began to record profits. In fact, Skoda Audi brand is still the official police vehicle in the United Kingdom.

BMW and Skoda are doing a lot to survive. BMW has adopted the use of electronic marketing characterized by internet marketing where products are sold on a run-of-site basis and therefore products can be seen on every result of the search page accessed by client. Online advertisements are also making a tremendous progress with every advertiser being given password-protected access. (Davidson 2008)The BMW’s business structure is also characterized by high automation as it uses electronic commerce to explore and devise new marketing strategies. This has led to a dramatic growth in market share. BMW presently uses email marketing, e-catalogue brochure registrations for test drive, mail alert personalization, message news alerts, new car launches and etc.

• Skoda on the other hand has adopted the use of integrated marketing communications strategy. (Urde 84) This strategy is working for the company and has since led to the rise of revenue collection.
• The UK’s automobile industry is dynamic comprising many foreign as well as domestic car manufacturing firms like Toyota, Mercedes, BMW and Skoda.
• Most consumers in the industry were hard hit by the global financial and economic crisis. This was evidenced by a drop in the consumers’ purchasing power as the British pound lost strength against other world’s major currencies.
• The marketing agencies and organizations are doing a lot to highlight challenges facing the automobile industry in the United Kingdom. This presents managers and marketing executives with valuable information regarding the consumer behavior and market trends in the industry. (Nicky, etal 22)

Both BMW and Skoda are using the guerilla public relations campaign tactics that include seeding news about their brands films at the key internet entertainment rumor sites and main radio stations around the market place. (Arnott 2009)Skoda on the other hand is currently sponsoring rally championships with the youth as the target group. This has made the car to be the most preferred among the youth.

Analysis

• From the above findings it is clear that strong advertising communication strategies adopted by the companies have led to growth in sales. This was evidenced in BMW when their sales increased by 12.5% in 2001 for the first time clocking 200,000 units. Skoda had also made an increase in sales immediately an integrated marketing communication strategy was adopted. (Roll,2008)
• The companies have established a strong marketing and advertising strategy through the use of internet, online and electronic commerce. BMW in particular has created a big barrier in the market by re-engineering and automating its business structure right from production, reordering to sales. (Barlow., & Maul 2009)
• Innovation and change can make firms to be very competitive. BMW and Skoda have demonstrated a clear strategy for others to follow. Despite having experienced a long period of loss making, Skoda i.e. from 1991-1998, the company did not quit. Instead they had to change their marketing and advertising strategy. This was followed by a success culminating to introduction of new brands like Audi, Octavia and etc. BMW proved to be very Innovative when it adopted a strategy of producing new cars after every three months. This provided these companies with a strong competitive advantage throughout the industry. (Urde 86)

Conclusion and recommendation

This chapter gives a conclusion on the basis of findings derived from the subject matter and analysis of the comprehensive literature review on the marketing communication strategies adopted by Skoda and BMW in the UK’s automobile Industry. (Kumorowski 2008)

Conclusion

Marketing and advertising are the only mechanisms through which BMW and Skoda communicate to the public. These organizations are using marketing as a vital tool to help them achieve a competitive advantage. Consumers in the UK and all over the world have become more sensitive to quality products than cost and are therefore forcing various firms to intensify their knowledge base in order to meet the market requirements. The use of information technology has also provided most clients with opportunities to enjoy tailor made services i.e. customers can order for cars online, access different brands at every search page through the run-of-sale system. (Barlow., & Maul 2009)

Recommendations

Based on the study it would be important if the following are done for the benefit of these companies

• Competition in the UK’s automobile industry is very stiff and therefore Skoda and BMW should intensify their marketing and advertising strategies in order to continue being in operation for the next unforeseeable future. Training and motivating the existing staff is just but one of the techniques that could be used to increase knowledge base. Companies with outstanding knowledge tower are always confident and competitive. These include the Toyota, Ford, General Motors and Mercedes. (Nicky, etal 27)
• The business environment is shifting the alliances. There are big corporations which are working in partnerships including in telecommunication and information technology industry like Dell, Yahoo, and Google among others. BMW and Skoda could as well form an alliance in their attempts to woo UK customers. This could provide them with some competitive advantages.

Works Cited

Arnoff. Craig. Heightened competition driving creative sales approaches.2009. Web.

Arnott, S. UK car market: Stuck in reverse. 2009.Web.

Barlow, M.J., & Maul, D. (2009).Maintaining superior customer service during periods of peak demand. 2009. Web.

Davidson, N. Integrated marketing must change for the digital world. 2008. Web.

Kumorowski, S. Integrated marketing communications. 2008. Web.

Margolius, Ivan & Meisl, Charles. Škoda Laurin & Klement. London: Osprey. 1992. Print.

Nicky Mee, Debbie, Clewes, Paul S. Phillip S, and Adam D. Read. “Effective implementation of a marketing communications strategy for kerbside recycling: a case study from Rushcliffe, UK”. Resources, Conservation and Recycling. 42.1(2004): 1-26.

Plowright John. VW- Skoda Fabia- intergrated marketing communication. 2000. Web.

Roll, M. Strong Branding. 2008. Web.

Urde, M. ‘’Brand Orientation-a strategy for survival’’, marketing Journal of consumer, 11.4(1994): 74-98.

Windecker R. “Upsize and Upscale Lead the Way “, Automotive Industries, 184.6 (2004): 1-18.