Unit 4 Marketing Principles Assignment – Audi

Introduction

An organisation needs to employ a lot of strategies for its smooth functioning. Theorists like Philip Kotler have come up with the various aspects of marketing like marketing mix and the constituents of this particular marketing policy. In this unit 4 marketing principles assignment – Audi a close study has been done of the marketing strategies of an automobile company, Audi, and its marketing orientation. It has been followed by the business structure of the UK based retailer Sainsbury’s which has one of the largest store chains in the continent. The factors that influence the business of the company have been discussed along with the various policies that the company has adopted in order to survive in this highly competitive market.

Task 1

1.1

The process of marketing involves the development of a  marketing strategy  which focuses on the needs of the consumers and promotes commodities and services in order to fulfil them. A number of elements are present in this process such as:

1. Segmentation: The marketing environment comprises of various types of customers who have different needs. The consumers are grouped on the basis of their desires, geographical position and other similarities which make the process of selling easier (Kotler, Burton, Deans, Brown and Armstrong, 2015). Audi has grouped the elite class for their selling purposes. The company makes cars exclusively for the higher class of the society.
2. Targeting: The marketing experts adopt promotional strategies for the advertisement of certain products to their targeted audience. For example, in the given case study we find salesmen using cost effective statements as a means to sell their cars. Similarly, Audi involves celebrities to promote its vehicles.
3. Positioning: Companies are responsible for creating a distinct image of its products before the target consumers. This helps them to identify products which will be able to satisfy their demands (Wilson, 2010). German-based Audi has its branches all over the world including UK. It promotes style and sophistication in order to grab the attention of the financially superior class of the society.

These three elements of Segmentation, Targeting and Positioning together form the STP cycle that is extremely crucial for the process of marketing.

Marketing Mix:  Philip Kotler came up with the idea of Marketing Mix which lays stress on the 4Ps, namely, Product, Price, Place and Promotion. This strategy is also used by Audi to enhance its sales rate.

• An understanding of the behaviour of consumers results in the introduction of several types of products which forms the very first P for Product.
• It is followed by the second P denoting Price which involves deciding the price of a product making it affordable to the consumers without compromising on the profit margins.
• Promotion constitutes the third P involving the marketing of goods through various advertisements and the use of social media sites.
• Lastly, the finished good is sent to shops and outlets for selling purposes resulting in the fourth P for Place (Kotler, 2012).

1.2

When a particular company manufactures products by keeping in mind the desires of the customers, it is known as marketing orientation of that particular company. The desires of the customers are given foremost importance as compared to the types of products that the company wishes to produce. Audi is one such automobile company which has its headquarters in Germany but operates all over the world, UK being one of the primary revenue generators.

Benefits

1. Audi, an age old name in the automobile industry, targets customers who belong to the financially higher classes of the society.
2. The company’s main focus is on the technology and style and not on the speed of the vehicles keeping in mind the targeted customers.
3. It also aims at the younger generation of the upper class who are passionate about driving cars.

Costs

1. Available at high prices, the cars of this company cannot be afforded by people belonging to the middle class or upper middle class.
2. The marketing orientation involves the corporate social responsibility of that particular company along with the various forms of promotion that it adopts. Reputed companies like Audi are generally trusted when it comes to environmental concerns. Recently, several Audi cars all over the world including over a million cars in Europe were reported to have cheated the emission tests due to the presence of a certain kind of software in the vehicles (BBC News, 2015).

Such irresponsible behaviour on the part of the  business environment of company  can hamper its customer base. If we take a look at the case study we will see that the salesman focuses on the safety issues of the car in order to make a sale.

Task 2

2.1

The presence of two groups of business environmental factors, micro and macro, influence the business strategies of any given company. Sainsbury’s is a supermarket chain which is based in the UK but has its branches all over the world and is influenced by such factors.

Micro environmental factors- The micro environmental factors include customers, employees, suppliers and shareholders.

1. Suppliers- The suppliers of Sainsbury’s include garment suppliers, labour suppliers, and grocery suppliers and others who have an impact on the business of the company.
2. Employees- The company faced a lot of criticism from its shareholders who noticed that there is a wide inequality between the salary and incentive structure of the employees and their bosses (Butler, 2015). Such unrest resulted in the revision of the company’s employee policies by the management.
3. Shareholders- Sainsbury is also known to organise events for its shareholders that are based on the company’s goals for a sustainable future.

Macro environmental factors- The demographic, legal, economic, political and socio-cultural factors comprise the macro-environmental factors influencing the business decisions of any organisation.

1. Legal- One of the legal cases faced by Sainsbury’s was on an environmental issue of excessive packaging for its products (Wallop, 2010).
2. Economic- Even economic recession is likely to have a slightly negative impact on the retail stores like Sainsbury’s because consumers are going to cut down on luxury items and not on the articles of their daily needs.
3. Socio-cultural- The company has started a home delivery system of its grocery articles because customers are more keen to buy articles online in order to save time.

These factors are responsible for the various decisions that are taken by companies to improve their business operations.

2.2

As discussed earlier, companies follow the strategy of segmentation which involves the grouping of different customers on the basis of their age, geographic location, wants and desires. Sainsbury’s is not an exception to this policy which it uses for enhancing the selling rates. The range of grocery is huge keeping in mind the different tastes and wants of customers.

• Demographic segmentation- This kind of segmentation is done on the basis of profession, age, gender, and other factors. Sainsbury’s has come up with different garments for its varying customer groups. The company has also grouped women who are fascinated by the art of cooking by coming up with a magazine which helps the homemakers to develop new recipes for their families.
• Physiographic Segmentation- Here, the lifestyle patterns of people are taken into consideration. Young working couples lack the time to visit stores and buy articles of daily usage. Sainsbury’s has taken this opportunity to develop a home delivery service following the footsteps of Amazon (Butler, 2016). It has come up with the facility of delivering fruits, vegetables and other products of everyday use from door to door within the time of an hour. This would eventually help the company to enhance its customer base.
• Behavioural Segmentation- Discounts and offers must be given to attract new customers and to hold back old customers. For example, Sainsbury’s has come up with the offer of saving up to £20 for the buyers who order online for the very first time (Munbodh, 2016).

2.3

According to the STP cycle, targeting comes next to segmentation. This section involves a detailed knowledge about the consumers on the part of the company to make necessary strategically relevant decisions. Sainsbury’s claims to have studied the buying patterns of each of its customer for business purposes due to the presence of their upgraded database. It has made an extensive research on the loyalty of its customers and their buying patterns (Holmes, 2013). The various types of marketing are differentiated marketing, undifferentiated marketing, concentrated marketing, multi-segment marketing, etc. Differentiated marketing is followed by Sainsbury’s because the organisation is responsible for producing large amounts of commodities and services keeping in mind the needs of the various segments of consumers. The profit per unit is low although the overall profit is much higher. Various kinds of products are available for the diverse range of customers. Being one of the largest chains of supermarkets, all types of goods are available in the company’s stores. The desires and buying patterns of customers are kept in mind while designing a particular product. Sainsbury’s has also decided to change some of its marketing strategies to survive against its competitors.

2.4

Customers are one of the primary stakeholders of any company and all the organisations aim to satisfy the needs of their consumers. It is very important for any organisation to understand the buying patterns of its customers in order to survive in the competitive world. Marketing strategies need to be revised as well with changes in the buying patterns of the consumers (Lambin, 2013). The mentioned company, Sainsbury’s, noticed a reduction in its revenue generation due to the change in the buying patterns of its consumers. It has earned a large amount of revenue over the past several years until recently. It noticed a sharp decline in its profit margins. The company has to keep in mind the various buyers behavioural patterns while framing the business strategies.

• Straight re-buy- In this case, the customers buy a product because they are loyal to that particular brand.
• Modified re-buy- The customers will go through all the available choices before buying a commodity.
• Extended problem solving- This happens in case of highly expensive products where the consumers go through all the stages before making the right choice.

These behavioural patterns need to be considered by Sainsbury’s for adopting measures in order to improve its business. With the increasing rate of competition, the customers are facilitated with a wide range of shopping options. The Sainsbury’s management team has blamed customers for their lack of patience resulting in the fall of the company’s profit shares (Brinded, 2015). Nowadays, people also depend on online sites for the purchase of various types of products, from daily goods to luxurious goods, as it saves time and the customers can get hold of everything sitting at home. These shopping patterns seem to have a negative effect on the sales of companies like Sainsbury’s. In order to cope up with this changing buying pattern, the company has come up with the policy of home delivery of fruits as well as vegetables within an hour of placing the order.

2.5

The concept of positioning is related to the viewing and perceiving of a product distinctly by the customers of a particular company (Lamb and Dunne, 2011). It involves the usage of various social sites for promoting products. Positioning baby food will be different from fashionable garments. Different strategies are applied for various products. The wide range of food products attracts consumers from all sections of the society. Various discounts are also given in order to hold the consumers together and preventing them from drifting apart.

1. Sainsbury’s has promoted its products by using taglines such as ‘Feed Your Family for a Fiver’ that has drawn the attention for a large number of families (Saunders, 2013). These campaigns attract customers who are spoilt with choices and tend to move from one company to the other.
2. The prices of the various products are also being reduced so that customers do not shift to other companies due to price differences. In this competitive world, prices of commodities need to be revised from time to time by companies like Sainsbury’s.
3. It has also been reported that a certain section of Sainsbury’s stores will also be remodelled in order to provide enough space to goods other than the prevalent food products.

Task 3

3.1

In order to survive in this highly competitive market, a company needs to consider the following:

1. Cost leadership- This indicates that a company must be able to provide goods to the customers at lower prices than that of its competitors. An organisation will have to reduce its manufacturing cost for maintaining the profit margin (Chaston, 2012).
2. Marketing objectives- Both the benefits of the customers and the company should be kept in mind. Promoting of products by using social media does not involve much cost and can be beneficial for the company and its stakeholders.
3. Differentiation- For improving the sales, customers must consider the product to be exclusive. This can be done by working on the features which make a product different from the rest of its competitors.

Sainsbury’s has been using policies for maintaining its market share:

1. The company has started a discount offer for online offers which the customers find extremely attractive.
2. Fast delivery system has been opened to facilitate its customers with home delivery
3. It has introduced check outs where the customers can check out on their own and how they wish to without waiting for a long time (Caines, 2012).

3.2

The way in which commodities and services are arranged for their delivery is known as distribution. The main aim of this process is to make these products available to the customers. With more availability, customers will get drawn towards the organisation. This can be done by the usage of more technological processes in its distribution process (Kondalkar, 2013).

1. Sainsbury’s has moved to Paragon software to reduce transportation costs and also to increase the productivity of the drivers.
2. Logistical strategies like barcode scanning at checkouts help the company knows the products bought by customers and has also decreased the number of queues. This kind of convenience is considered to be attractive for the customers.
3.  It has also opted for the management of warehouses for easy functioning.

3.3

The prices of commodities are decided by looking in to the present market condition. Price is one of the major determinants that influence the sales rates of a company. A number of strategies are followed for deciding the prices of products. It is based on the following:

1. Market penetration: In this case, the prices of various goods and services are generally kept low so that more and more people are willing to buy them. This will in turn elevate the overall market share of the firm in question.
2. Market Skimming: Companies set extremely high prices for certain products to draw the attention of the customers towards their brand value.

Sanisbury’s has decided to reduce the amount of money that they spent on the promotion of their commodities. It has also reduced the prices of products for daily use (Butler, 2016). The  financial management  of the company has decided to provide articles at lesser prices than that of its competitors. This has helped the organisation to obtain overall higher levels of profit although the profit per unit is lesser compared to other companies.

3.4

It has been discussed earlier that one of the main constituents of marketing mix is Promotion. This is process of creating awareness among people about the existing product or a new product in the market. Various means of promotion are adopted so that people get attracted towards the product and buy them. The various types of promotion include:

• Advertisements: Almost the entire population of the world has access to television and newspapers. These means of advertisement can be used for promoting products by companies. People are made aware about any changes that are made in the existing product, about brand new products that are introduced in the market and about latest offers and discounts. For examples, Sainsbury’s has come up with Nectar coupons to provide its customers with better deals (BBC News, 2011).
• Sales promotion: Prevalent over a short period of time, this helps to increase the sales of certain products due to added incentives.
• Internet marketing: The use of various social media sites are growing for promoting products and services. This does not involve much cost and is accessible by people. Sainsbury’s tries to reply to its customers within a short period of time of their query. It is also available after the normal office hours.

3.5

The additional elements of the extended marketing mix are as follows:

• People: The employees of the organisation come under this category who are hired for providing high quality services to the customers. Over 160,000 people are employed in this company who are responsible for providing the customers with superior kind of experience (J Sainsbury PLC, 2016).
• Process: An organisation can function properly when the employees are well informed about the various decisions that being taken by the higher authorities. This policy of transparency is followed by Sainsbury’s who also restricts itself from performing any activity that might be harmful for its brand image.
• Physical evidence: The store outlets of Sainsbury’s are clean which help the customers trust the company on hygiene issues. A uniform dress code is also maintained among the employees.

Conclusion

The marketing manager of a particular firm needs to adopt various methods to enhance the profit margin of the company in question. In this assessment, the first case study deals with the salespersons of car companies. Therefore, the automobile company has been taken as an example to explain the  marketing mix  policies of the company and the costs and benefits incurred by the company owing to its marketing orientation. This is followed by a detailed study of the marketing policies of Sainsbury’s. The promotional activities of the company and the various strategies adopted to attract customers have been discussed in details.