The situation of the current business environment is highly competitive and to solve problems modern marketing is needed which is more than developing a good product, pricing it attractively and making it accessible. Marketing gurus like Kotler and Keller (2006) believe that every company is inevitably cast into a role of communicator and promoter. However, the main concern in the age of technology is not how to communicate but rather what to say, to whom and how often (Kotler and Keller, 2006). This is where marketing communications strategy reveals in the picture. This report will attempt to comparative analysis of Marketing Communications strategies and mix for Skoda and BMW brands in the UK.
Most of the experts require five major modes of communication. These are Advertising, Sales promotion, Public relations and publicity, Personal selling, Direct and interactive marketing. With the description of these modes of communication in mind, an analysis of the communications strategy employed by the lead players in the automobile market can be attempted. The next section would provide a general overview of the methodology used by the author.
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The methodology is a plan for collecting, organizing and integrating collected data so that an end result can be reached (White, 2002). In order to organise this report, the author used both primary and secondary data. To begin with, the report analysed the current market situation to support a better analysis of the communications strategy used by the companies. The data for this review was primarily collected from industry reports such as Plunkett Research, OICA and SMMT reports. Followed by an industry analysis, current communications strategy for Skoda and BMW brands was analysed. The company websites, current adverts and articles were the main source for this information. Textbooks like marketing management by Kotler and Koller and the others mentioned in the reference section were used to give a theoretical background to all the discussions made about the communications strategies. Additionally, the author used a personal made survey with 50 people's responses and it has been used to develop the conclusion part of the report.
The automotive industry's yearly production is rising every year. In 2007, 71.9 million new automobiles were sold worldwide ( ). According to the OICA's yearly correspondents' surveys, General Motors has been the market leader for a long time until 2008 when the Japanese automaker giant, Toyota increased its sales to 8,913,000. In 2008 more than 70 million motor vehicles were produced worldwide ( ). However, with rapidly increasing oil prices, the industry is facing pricing pressures from raw material costs and changes in consumer buying habits. On top of this, the external competition from public transport sector has been growing with the help of the media designed to protect the environment which pushes consumers to re-evaluate their private vehicle usage. The communications strategy adopted by the players in the industry would be affected by the changes in the industry dynamics. The best way to look at the relevant changes would be to employ a PEST analysis.
- Laws and regulations had affected the automobile industry which they revolved around taking care of the environmental issues in all factories.
- Taxes and government foreign policies are important to the automotive industry. These policies help us to decide the success chance in the global market. For example, heavy taxes and tariffs can drive companies to increase its automobile prices in different countries.
- Political requirements, violence and terrorism create boundaries to expand to the Asia market.
- Introduction of a new competition that is intended to produce high mileage cars with less emission.
- Excess capacity of cars produced which gave increase to high amount of revenue in marketing and new product designs. Because of this, there was lot of revenue withheld even though demand was less than supply. For example the UK auto market had 80% excess capacity in 2003 which freeze 1.3 billion euro of the automobile industry (Autofacts, 2004)
- The GDP increased globally from 2.0% to 3.1% in 2008. (Statistics, 2009)
- Exchange rate of Euro's has slowed down the European car makers. (Allen, 2006)
- Economic downturn in the US market (Copper, 2008)
- Similar to taxes and policies, increase in fuel prices also gets reflected on the price of the automobiles, which then may result in change of the customer behavior.
- Automobile manufacturers can get benefit from economical unions such as Central European Free-Trade Area (CEFTA).
- Changes in the customer preference from car being a status symbol to fuel efficiency and low emission cars.
- Changes in buying pattern of the consumers due to recession.
- Environmental issues and awareness of the harmful emissions through automobiles which affects the air quality in a great matter.
- Increase in population in some countries make their governments to redesign their traffic and make public transport more useful which decreases automobiles sales in these countries.
- The raise of using technology is preferred to gain a competitive advantage.
- Use of new elegant design to overcome the low margins in the industry.
Analysis and Discussion ( )
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The next few sections would analyse the current communications strategy u by Skoda and BMW.
Skoda is an automobile manufacturer based in Czech Republic. In 1991, Skoda became a subsidiary of the Volkswagen Group and its total sales reached 674,530 cars in 2008 ( ). Skoda is headquartered in Mlada Boleslav. Its 4 traditional manufacturing plants are in Czech Republic and the other two are in India and Russia. Also, Skoda Group has long co-operation with partner plants in Ukraine, Bosnia and Herzegovina, Kazakhstan, Slovakia and China ( ). The company recorded revenues of $11.7 billion during the year ended December 2008, a decrease of approximately 4% over 2007 ( ). The company's net profit was $627 million in 2008, a decrease of approximately 19% over 2007 ( ). With the total sales revenue in 2008, Skoda Auto is one of the largest corporate groups in the new European Union Member States measured by turnover. All over the world (except in North America), Skoda Auto Group operates in a total of 101 markets and 67.5% of sales are accounted for European Union countries ( ). In addition, the European Union segment is the largest revenue segment of the company.
Moreover, Skoda Auto Group is the Czech Republic's leading brand and exporter with a 6.7% share in country's exports. In 2008, Several Skoda Auto models won many important awards from magazines to international competitions such as Best Manufacturer in 2009 ()Auto Express Driver Power Survey in UK), Auto Trophy 2008 ( ), Car of the Year 2009 (Skoda Superb) ( ), the Automobile of the year 2008(Skoda Octavia) in China, Ukraine, Germany, and more( ). All the above has been achieved with the help of a very carefully designed marketing communication strategy consistently over the years.
Besides this, the company has recently launched its fifth model, SUV (Sport Utility Vehicle) Yeti, in 2009. The Yeti has responded well to environmental issues in the popular and growing SUV. It also meets the needs for safety, luggage space, great road holding, superb emission values and low fuel consumption ( ). To celebrate the extension of its 5th model, Skoda Auto Group launched a motor show in Geneva, 2009. ( )
On observing Skoda's latest adverts, campaigns and promotional activities it is clear that the organisation's target audience "unassuming buyers who pursue a quality life and efficiency, and strive for a balance between the contemporary and the traditional" ( ). The company has employed Archibald Ingall Stretton creative agency which is directing pop-up book illustrations to an interactive online campaign for Skoda.. One advert features a colorful, illustrated jungle complete with trees, grass and grazing animals, Signs warn "Yeti beware!" and "It's out there" ( ). Basically, the company wants to increase the awareness of internet use to encourage test drives of the new Skoda Yeti among the target audience. Additionally, Skoda created a cool campaign recently for Mediacom to spot Skoda's latest car, the Yeti ( ). The media campaign ran across the UK showing the Yeti's footprints and it's URL through a number of alternative formats such as chalk art and 3D pavement art ( ). The new cool campaign labeled as "Yeti Spotting". On top of this, Skoda has recently run a nationwide competition in the UK to follow the trail of the new Yeti and whoever get to finish it first, wins a new Skoda. There has always been an attempt to create a fun and happy image for Skoda's automobiles, which till now the company has managed to communicate effectively ( ).
Another trade-mark Skoda way of promoting its products has been the use of two medium-profile sports events to promote its brand. Support of cycling events has been one of the strategic activities of Skoda Auto since 2004. Skoda Auto Company has become the major partner of the famous events such as Tour de France and the Road World Championship. Skoda Auto has been the main sponsor of the IIHF World Championship for the past 17 years now since the event started to take place. ( )
Hence it is quite clear the target audience for the communication strategy is the families. To provide a better break down of the communication strategy employed by Skoda Auto in terms of the communication mix is provided below.
- Advertising: Investments made by Skoda in this area mainly focuses at TV commercials, magazines, newspapers, campaigns, and other ways of communication ( ).
- Sales Promotion: There are many offers that come up constantly such as black out sales with very low prices for cars and also the offers which can be found in Skoda's official website.
- Publicity and Public Relations: As mentioned earlier, Skoda as a brand has been sponsoring big occasions in sports, culture and art, and charities to create strong opportunities for publicity.
- Personal Selling and Direct Marketing: The main and most time used direct consumer interaction that Skoda seems to be using is the internet and through retailers. In 2008, Skoda created a website for UK that fully symbolizes its brand position of the "Manufacturing of Happy Drivers" and won an award which was voted by over 600 motorists out of 60 of the UK's top motor manufacturers. According to Margaret Manning, CEO at Reading Room, "The site's creative effectiveness has been demonstrated by a remarkable 400 per cent increase in requests for test drivers and brochures". ( )
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BMW (Bayerische Motoren Werke) is a German automobile and engine manufacturing company founded in 1916. BMW also owns and produces the MINI brand and is the parent company of Rolls-Royce Motor Cars. BMW is headquartered in Munich. BMW Group has 23 production and assembly plants in 13 countries ( ). It is one of the ten largest car manufacturers in the world and it is known as its performance and luxury vehicles. BMW Group's almost half of its sales are recorded in Europe which shows that the Europe is the largest revenue segment of the company. In 2008, BMW UK's total sales went down to 153,868 (BMW and MINI) from 169,236 in 2007 ( ). UK is the third largest market and the second biggest production base for BMW Group worldwide, and the only country where all three brands -BMW, MINI, and Rolls-Royce cars- are represented. BMW's revenue went down from £3,952 million, in 2007, to £3,246 million, in 2008, and also its net profit (€330 million, from €3134 million) ( ).
Furthermore, BMW Group has also won many awards from competitions to magazines like Skoda, such as "World Green Car of the Year", "World Engine of the Year" and many more. All these awards have been achieved with very carefully planned marketing communication strategy over the years. To attract customers with "the appreciation of driving sporty and fun, with elegantly designed cars" ( ), BMW launches new marketing and advertisement campaigns. BMW is also trying to increase the efficiency and dynamics of its vehicles every day.
BMW has different customer profile for every of its series and therefore the company develops and produces new automobiles for its series during a year or two to satisfy its customers' needs accordingly. BMW has recently launched new automobiles for its series 1, 3, 5, X and Z4 ( ). When the BMW Z4 was launched, it also came along with a new marketing campaign which revolved around the "Joy" word. This new popular BMW roadster was all about "the Expression of Joy" ( ). Additionally, BMW has launched a new website to build the anticipation for the upcoming BMW X1 where a series of "Joy" videos can be seen and made ( ). There has always been an attempt to create an image of Joy for the cars, which until now the company has managed to communicate extremely effective.
Another trade-mark BMW way of promoting its products has been the use of sport tournaments and exhibitions such as Formula 1 and the 2006 exhibition Albers and Moholy-Nagy ( ). Formula 1 has always been a strong part of the BMW brand and philosophy. F1 brings huge crowds to arenas and millions of people at front of the TV. This sport allows BMW to shows its brand characteristics, such as, dynamic and innovation, competence and competitiveness. On the other hand, the 2006 exhibition was sponsored to show many of BMW's historical design and creative influences that made BMW to begin designing, engineering and producing its 1st cars and motorcycles in Germany. All these are organized to strengthen the brand in many ways.
Hence it is quite clear the target audience for the communication strategy differ for every model. To provide a better breakdown of the communication strategy employed by BMW in terms of the communication mix is provided below.
- Advertising: BMW UK has worked with the WCRS advertising agency since 1979 for cars ( ). All BMW advertisements are published in many communication methods such as TV, Radio, Press, Outdoor Campaigns and Cinema & Digital. Advertisement is one of BMW's most investments made area in communication mix.
- Sales Promotion: BMW has many different promotions and offers regarding the price, tax, engine upgrade and such, for new cars, after sales, used cars and all the members of the BMW Car Club, which is an independent recognized club for BMW car owners (in UK).
- Publicity and Public Relations: As mentioned earlier, BMW as a brand has been a sponsor in many activities. In addition, BMW Group also supports Ben (Motor and Allied Trades Benevolent Fun), Chichester Festival Theatre (registered charity for 4 years) and more.
- Personal Selling and Direct Marketing: The main and most time used direct marketing and personal selling methods that BMW uses is the internet and through retailers, as same as, Skoda. Recently, BMW has started an online activity and the winners got permits to one-week test drive with BMW-C1 ( ). Many direct marketing examples and offers can be found through the internet, especially the BMW's official websites which are interactive, easy accessible and very well designed to reflect the brand's image.
Based on the above analysis a few crucial issues need to be discussed to provide a deeper insight into the choice of communications strategy chosen by each of the organizations.
It is apparent from the above analysis that the communications strategies of both the organizations are primarily based on identifying the target audience (market segmentation, for example). The essential plan is to get an image analysis and choose the right communication strategy. As I have mentioned, Skoda has identified its target audience as "happy drivers", and with the launch of Skoda's new SUV vehicle YETI, has been also targeted mostly to families and to sportive people who have attractive lifestyles. On the other hand, because BMW is one of the ten largest automobile manufacturers in the world, it launches different models for its series and they all are aimed at different distinct market segments. For example, female customers tend to prefer open driving which refers to 3 series convertible and Z4. Together with Z4 and 1 Series shows the highest share of customers aged 39 and below (40%). The current communication strategies used by the companies seem to be hitting their target ( ).
In BMW's case the objective is to clearly differentiate itself from its competitor's image by offering "joy for driving fun and sporty with elegant designed cars". It is not only for product development but also for all customer relations activities. The objective of BMW's newest marketing campaign is to reflect the power and natural excitement in the creation of art. Skoda on the other hand, seems to be attempting to generate liking among its target audience. According to the customer satisfaction survey, 98% of Skoda owners would probably recommend Skoda to a friend.
The message design needs to reflect the communication object and appeal to the target audience. BMW's latest message says "An Expression of Joy", while Skoda call there selves "The Manufacturer of Happy Drivers". Both the messages seem to be in synchrony with their objective.
The message for BMW is delivered by its new BMW Z4 roadster as an artist, creating shapes in some primary colors with tire treads, which is a great way to examine the relationship between emotion, technology and industrial creativity. ( )The message for Skoda however is delivered by a Skoda car (Fabia) 'cake' made with 'full of lovely stuff' ( )by happy people which is a great way to create a new brand strategy under the slogan and to show how Skoda's been delivering on customer service not simply with their cars but through their retailers.
Considering the size of the target audience the mode of communication chosen by Skoda and BMW are reasonable. The main channel of communication is television and internet. Adverts in papers, magazines and streets are commonly employed as well. However, the most cost intensive is the television as always, as it requires high amounts of money.
Conclusion and Recommendations
Taking into consideration of all the points discussed, it can be concluded that the current communication strategy and mix employed by the organisations under study, are a result of the changes in their external environment and are in synchrony with their apparent communication objectives. However, we can state that the overall degree of influence exerted by Skoda's communication message seems to be lower than BMW, by looking at the sales records and the customer survey made by the author that adds credibility to the statement. The analysis and discussion do provide useful approach into the communication strategy formulation process and the choice of the communication mix based on which few recommendations can be made.
- Identifying the target audience is the most important step forward to developing an effective communication strategy. While identifying the target audience and developing communication objectives, the marketer need to ensure that any gap between the current public perception and the wanted image are covered.
- When deciding the marketing communication mix, a cost benefit analysis of each tool needs to be done to ensure that the most effective strategy is produced within the optimum budget.
- It is imperative to measure the marketing communication effectiveness by asking the target audience to recall the message frequency, etc. in order to take any effective changes to an existing strategy.