Executive Summary
This report develops a marketing plan that is meant to improve Holden Australia to regain its popularity on the market. An analysis of the business environment has been conducted to ascertain the major challenges that the company is experiencing. The marketing plan is based on the investigation. There are effective strategies that have been put in place to ensure the company works effectively to gain a competitive advantage. Different options have been analyzed through the advantages and disadvantages of each strategy and conclusions drawn on how effectively the company can manage its affairs.
Holden Marketing Plan
Current Situation Analysis
Holden is an Australian automobile brand that imports cars under the Holden brand. Formerly, it was a local car manufacturer before the import business started. Its mother company, General motors in the US has been working towards ensuring that there is an adequate market coverage with their products in Australia. For long, the company enjoyed a huge market share with high profits from the high levels of sales they could have in the country. The brand was developed and became one of the most respected in the country. The changing times and customer preferences have seen the brand decline in sales and popularity in the recent past. Other international brands have taken over the Australian market with some corporations like Toyota, Hyundai, and Mazda becoming popular on this market. Back to the year 2002, Holden was the top seller of cars in the country (Car Sales, 2019). Moving from manufacturing to importing cars was one of the factors that contributed to the loss of market because there were other companies that could import more affordable cars into the market and Australians developed interest in such brands making them popular on the market.
In the year 2018, Toyota was the best-selling with a total of 217,061 units being sold, Mazda was second in sales with 111,280 units sold, Hyundai was at 94,187 units, Mitsubishi sold a total of 84,944 and Ford sold 69,081. Then followed Holden on the sixth position with 60,751 sales in cars (Car Sales, 2019). The company experienced a 32% fall in the sales rates and this is a major factor that needs an analysis of the main problems it has encountered.
Main Threats and Opportunities
The main threats to the company include competition and shifting customer preferences. There are many car manufacturers, who have gone global and they would like to develop their international markets better. Australia is one of the most suitable markets where the companies would like to penetrate. The companies have a good reputation and reviews on the market. They have been able to convince consumers, that their cars are the best. Japan’s Toyota is the leading in sales on Australian market (Waller, 2013). This is a company that has developed in routes in different international markets and it has a high competitive advantage. The products are highly affordable and economical. Holden has an expensive car choice of high maintenance costs. The company can be considered to have been positioned poorly on the current market.
The shifting tastes and preferences by consumers is the other major threat that the company is facing. Closing down its manufacturing operations was as a result of people wanting other vehicle varieties and this could be offered by brands outside the country. The cars were imported and the quality could match or surpass what Holden was offering (Waller, 2013). Customers’ tastes and preferences have to be satisfied. Such gratification can be achieved through the production of highly effective and efficient cars.
However, the company has an opportunity to redeem itself whereby it can engage in offshore activities that will reduce their costs of production and start developing new features in their cars that would attract customers. The low pricing strategy should also be applied on the market to suit the needs. People search for affordable and economical cars and this is what other brands are offering (Waller, 2013). If the company could focus on innovation using new technologies to come up with suitable car models, it would have had a higher chance of redeeming its reputation on the market.
Important Positive and Negative Developments in the Market
Technological improvements are positive developments that are likely to impact a strategic business positively. When a business is strategically positioned using the available technology, such technologies will give it a competitive advantage against competitors. Companies that embrace disruptive technologies tend to benefit from the resulting competitive advantage that they have in tapping the new markets first (Hitt, Ireland & Hoskisson, 2016). If the company’s strategy is to use technology as a tool, then the strategy is likely to be effective.
Changing policies can be a negative development on the market and this can affect the strategies that are in place. The external environmental factors play a vital role in the development of strategies. When these factors change, they may be detrimental to the implementation of a given strategy. Taxation policies and legal aspects are some of the changes that may lead to negative effects in the implementation of a strategy. The company may be affected by the changes since it does not have the capacity to adapt to them and competing companies can have it easy on the market since they have sufficient resources to change their strategies to meet the needs of the changes and developments that arise on the market.
Factors Contributing to Company’s Success
Holden was the leading automobile seller in Australia. This has changed over time and there are different factors that have led to this development. One of them is the one that made the company successful was the brand strength. The company had a strong brand and it was popular among people on the market. Besides, there were tariffs that made it difficult for importers to penetrate the market. The company was also manufacturing cars with the support of General Motors which was the mother company to Holden. The competition levels were low since there were few motor vehicle brands on the market and that made it easy for the company to manage the market effectively (Car Sales, 2019). The main objective of the company was to remain the top seller of automobiles in the region and this was to ensure effectiveness is achieved in the manner in which they relate with the market.
The market and business environment was favorable for the company and there was effective handling of different issues that arose. The company enjoyed a huge market and they benefited from a highly profitable venture as the business’ environment was conducive with little competition. When a company is in such an environment, the management may become comfortable and innovation may be a problem as other brands develop with new tastes and designs. People look at the features of a car and that makes them change tastes as they would like to enjoy new features of the cars.
The success factors are no longer effective on the market since the company does not command a huge market as it did in the past. Through the elimination of tariffs, an increased level of competition was realized. There were new brands on the market and people preferred them over Holden due to new features. The brand name did not work as a marketing tool anymore, because there were superior models which made people develop new tastes and preferences.
The company cannot rely on the success factors because there are changes on the market and the business environment in general. There are new technologies which need to be incorporated in their production. New marketing strategies are also supposed to be developed for the brand to regain its strength in the market. This is because people have shifted their tastes and preferences and now they prefer modern brands that can be used to achieve high levels of efficiency and effectiveness (Waller, 2013). There is a need to develop a new marketing strategy for the company in order to have a highly effective team to ensure that there is maximum market penetration.
Main Challenge Faced by Holden
The major challenge faced by the company is a failure to produce a car that suits market needs. This challenge has led to the development of other challenges such as competition which did not exist before. Australians prefer smaller cars but the company engages in producing SUVs and others that do not fit the major market’s demands. Other companies have come up with strategies that will satisfy this market and they have taken it over (Waller, 2013). For instance, Toyota comes with highly efficient small cars that have been accepted on the market. Toyota was the largest seller of automobiles in Australia in the year 2018. This was an indicator of what the market wanted and how they preferred their cars to be made. Before the company could manufacture the cars meant for this market, it was already shutting down the manufacturing operations.
Government policy was the other factor that led to the rise in competition in this industry where the company could not manage the new designs that were taking over the market. It would have been prudent for the company to develop strategies on how they would manufacture cars that suit the needs of the market. The mistakes that were made by Leyland were repeated by Holden, where the company could not satisfy the needs of the market. This is a challenge that can be related to rigidity in terms of innovation. The company was not engaging in any innovative activities to improve their performance.
SMART Objective
The main objective of the company is to increase its sales rates by 30% through partnering with IT competent companies as there is a need to increase to increase the level of innovation in the organization in the next one year.
Potential Solutions to the Challenge
Innovation is one of the potential solutions that could save the company. There are new production technologies that can minimize the costs of production and this can help in implementing a low price strategy. The designs are also likely to be improved through embracing innovation in the company. The pros of innovation include having new features and designs that suit market needs. Secondly, there is an improvement of the manner in which efficiency is achieved in the organization. Cons of innovation include costly technological infrastructure which is required. Secondly, the technologies with the time become obsolete (Hitt, Ireland & Hoskisson, 2016).
The other solution the company could analyze is to be engaged in strategic partnerships with companies from which they can derive synergies. Partnerships are essential in developing means through which different factors can be combined to give a highly effective means through which the organization can achieve its objectives. For instance, the company can partner with a marketing firm and this will help in improving brand popularity in the market (Kunitzky, 2011). The advantage of using partnership, is that the operational costs are reduced. Secondly, the company can benefit from the services offered by experts if it is an expert company. Thirdly, there is improvement in the performance of the business. Disadvantages of this option are related to the loss of the company’s independence.
Finally, rebranding can be used as a mean of improving business operations. Rebranding will eliminate the negative reputation of the company and bring about a new look of an improved company. However, making it popular may be challenging if the products are not highly differentiated.
Having strategic partnerships is the best potential solution for Holden. This is because of the nature of activities that need to be done in marketing and other operations. The strategic partnerships will play a vital role in ensuring all the functions are working effectively to ensure the company performs optimally (Kunitzky, 2011). The advantage of using partnership, the operational costs are reduced. Secondly, the company can benefit from the services offered by experts if it is an expert company. Thirdly, there is improvement in the performance of the business. For instance, if the organization goes into partnership with a marketing company, it is likely to benefit from the public relations expertise that is available. This is unlike when the company depends on its internal marketing team which may not have the insights on how to convince the market that their products are suitable for their needs. They can also partner with technology firms that can give them the infrastructure that is needed to improve their production. Therefore, partnership with strategic companies would be the best option for Holden to revive its operations effectively.
Marketing Plan
The marketing plan is meant to develop strategies that will improve the company’s competitive advantage on the Australian market.
STDP in Marketing
Segmentation – This is one of the strategies that the company can use to achieve various objectives. Demographic and psychographic segmentation is the best strategy that can be applied in this market. There are different levels of income in the society. Some of the people would like luxurious products while most would like efficiency, thefore company should consider having effective means of satisfying this market.
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Targeting – This is another important concept that should be embraced by the company. The designs that are in demand are the ones that should be targeted by the company in order to penetrate the market effectively.
Positioning – The company should have high quality products that are priced lowly. Quality in terms of efficiency and design features are essential for satisfying the market needs. The brands that are taking over the market are pricing their products lowly and this is one of the strategies that should be used.
Differentiation is also essential as this can be achieved through having an effective marketing mix strategy. Having unique products and strategies is vital in creating an effective market niche. The marketing mix entails the 4Ps (product, place, price, promotion) and how they are supposed to be handled to ensure effectiveness is achieved on the market. The product part has to be improved because this is where the company has a problem. The market need new designs and features. Through innovation, the automobiles by Holden will be improved to these standards. Place is the other factor – presence of the products in areas where they are easily accessible by potential clients is necessary. Therefore, different premises have to be sought to suit this factor. The company has highly priced products yet the market demands for affordable ones. Low pricing models will be adapted through reducing production and operational costs (Richter, 2012). Finally, promotional activities have to be carried out with regards to marketing through advertisements and other charity events to make the brand popular.
Advertisement
Advertisement will be one of the main marketing activities that will be carried out by the company. Through advertisement, it will be easy for the organization to achieve quick popularity on the market and this will require the use of different media for the work. Television commercials, print media and billboards will be used in advertising the brand.
Charity
Through charity work, the company will gain popularity with the activities they will sponsor. Charity can come in the form of CSR activities in the organization to ensure brand popularity is achieved.
Promotional activities
Promotional activities such as road shows and motor shows will be used to increase brand awareness in the market. These are some of the ways that the effectiveness of the marketing strategy can be felt in the society. The more the impact these activities have in the society, the more popular the brand becomes.
Preliminary budget
The marketing plan budget will mainly go towards the advertisement and the charity events. These are the main factors that will be considered in the budget to ensure there is an effective promotion towards achieving the organizational goals and objectives. Promotional activities will also be considered as a budget item because they need funding.
Provisional budget
Item
Cost (US$)
Advertisement
25,000,000
Promotional Activities
15,000,000
CSR
10,000,000
Total
50,000,000
Expected Income (From sales of 100,000 units)
1,000,000,000
Controls and evaluation
The effectiveness of the marketing plan has to be evaluated. The increase in sales will be one of the factors that is considered to measure the effectiveness of the plan. Whenever marketing activities are effective, sales have to increase. Customer feedback is the other measure that will be used for this case. Feedback and inquiries are essential in measuring the effectiveness of the marketing strategy (Armstrong, Adam, Denize & Kotler, 2014).
Conclusion
Holden automobiles can get its market strength back with the implementation of the effective marketing strategies. The challenges they faced due to rigidity can be eliminated by embracing innovation in the company and having the most effective strategies in the marketing function. The marketing plan that has been developed is essential in helping the company to come up with effective measures of ensuring success is achieved in the local market and the business environment made conducive for its operation.
References
- Armstrong, G., Adam, S., Denize, S., & Kotler, P, 2014. Principles of marketing VS. Sydney: Pearson Education Australia.
- Car Sales, 2019. Holden continues to bleed annual sales slump by one third in 2018: can Holden weather the storm? [Online] Available at: https://www.carsales.com.au/editorial/details/holden-continues-to-bleed-116345/ [Accessed 31/10/2019]
- Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. 2016. Strategic management. Boston, MA: Cengage Learning.
- Kunitzky, R., 2011. Partnership marketing: How to grow your business and transform your brand through smart collaboration. Mississauga, Ont: Wiley.
- Richter, T., 2012. International marketing mix management: theoretical framework, contingency factors and empirical findings from world-markets. Berlin: Logos.
- Waller, D., 2013. Lessons Holden might have learned from our worst car failure. The conversation. [Online] Available at: https://theconversation.com/lessons-holden-might-have-learned-from-our-worst-car-failure-21580 [Accessed 31/10/2019]
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