History Of The Fiat Strategic On The Market Marketing Essay

History Of The club Strategic On The market place place disdain EssayThe intention of this merchandising strategy proposal is to examine parliamentary procedures original and historical grocerying strategies and apply academic casts and principles to make recommendations for their future merchandising strategy. We pass on examine what the Agnelli family and its sh atomic snatch 18holders want to achieve for the accompany, which direction they argon brisk to take the company to achieve their goals, and what techniques they implement to evaluate their success. It is chief(prenominal) to appoint to clubs long history, to understand some of rewrites tradeing strategy options available today, and appreciates that sluice in this modern constantly changing milieu, rescript understands that it rump non completely mislay sight of its underlying principles.HistoryThe rewrite cross was started by Gianni Agnelli in 1899 under the name Societ Anonima Fabbrica Italiana A utomobili Torino (Turin). In the 1920s, utilising the same methods as those employed by Ford, guild began mass producing its graduation four seat railway cable railroad car, the 509. Post valet War II, Italys economy was booming and much of this dissolve be attributed to the automobile indus deform. edicts cars and farm machinery point of intersectionion grew rapidly cod to the recent production facilities that FIAT set up realitywide. In 1967 FIAT released the 124 model, a model that went on to win FIAT its first title of political machine of the year1. FIATs success continued into the mid 1970s when the field experienced the oil color crises which began when the affection East decl bed an embargo on the U.S. During the 80s and 90s when it was experiencing heavy competition, FIAT drived itself-lf as an innovative brand proposing avant-garde technological solutions at affordable tolls.2and false its snap to producing vehicles in developing grocerys. Post Millenni a purchase order was f eaching so-and-so with the times and invested into changing its core structure, examining its corporate culture and building a relationship with the customer by lumber and be after innovations and to symbolise this refreshing-fashi oned start, FIAT changed its traditional round badge to a square much formal badge.Chapter II2.1. The FIAT BRANDFIAT has changed and developed as a car manufacturer by more(prenominal) than a nose kittydy of outlastence. The company has had s even off logos, symbolising the different development stages, time, age and legitimate post. FIAT has been selected nine times directly and trine times by means of its subsidiaries as the over exclusively winner of the europiuman Car of the Year award. No new(prenominal) company has received this premier automotive award more times than FIAT. The FIAT brand today has the power to evoke all the stages that build made the history of FIAT and its cars being close to masses, their require and desires, with concrete answers that are flexible and customised.32.2. Why did FIAT need the untested start?Once the primero name in the Italian automobile market, due(p) to increasing competition from transnational manufacturers such as the lacquerese, ordering had been inefficient to hold on to the number one spot. Historically imported cars were prohibitively pricey as utmost taxes were levied at customs so close to people bought domestic cars, which contributed to the success that rewrite enjoyed for decades. Today these tariffs lose been distant and social club is losing out to the Asian car producers who throw off the technological advantage with processing and production.4FIAT has been struggling and losing business over the prehistoric 10 years. A failed collaboration with General Motors (GM) only made this position worse.5FIAT has concentrated in designing down in the mouth cars, alternatively than producing a gamut of models kindred i ts peers. The lack of segregation of Fiat model range and the placement of the brand means that its almost unidentifiable in the market. Fiat is predominantly dependent on the home market and concentrates its labours in that respect.Fiat cars are sold at competitive equipment casualtys, but it is these rugged prices that are potentially having a evil effect on sales. FIAT cars are considered by many as being of an inferior prime(a) which skill very substantially be the physiological consequence of FIAT signaling a meeker price.2.3. Automotive industriousnessThe automotive industry is one of the largest industries in the world. Although the traditional markets prepare reached fecundation point for the conventional burning at the stake engine (excluding vehicle replacement), acclivitous markets such as China and India are impetuous new demand.2.4. Internal and extraneous Analysis2.4.1. S.W.O.T. AnalysisThe Internal analysis of strengths and weaknesses focuses on inter nal factors that eat an organisation certain advantages or disadvantages in the market.2.4.1.1. StrengthsFiat has a beefed-up historical brand name.Fiat is very good at producing small cars such as the Fiat 500.Fiat has a strong mien of Plants overseas.The senior get alongment of Fiat are open-minded to new technologies and are very good at reviewing different ways to organise the organisation.Fiat has a strong senior management team.2.4.1.2. WeaknessesPoor economies of scale. Fiat tries to localise into operation economies of scale, even though it does not the financial power to keep open them.Fiat is rarely a pioneer in introducing new models for the target market.Fiat has a weak marketing network. Their marketing department does not understand market inclinations and customers expectations. Meaning that Fiat tries to shit something which is not in line with what the customers wants.Poor product quality.Focus on small car segment which has busteder margins.The External an alysis of opportunities and threats focuses on external factors that exist in the environment. Both of them exist separately of the firm.2.4.1.3. OpportunitiesEmerging markets such as the Chinese market or the Indian market. The Chinese automotive market is one of the most rapidly growing in the world.Fiat wishes to focus on expanding into third world countries, markets believing that they are the only markets where firms can expect branch. With little stringent sanctuary requirements, and people happy to trade off non-essential features for a cheaper car, Fiat does not need to invest in development of new models and features. For example, most lack air-conditioning. In fact, Fiats specialisation in smaller cars puts it at a benefit in those markets.A cosmopolitan trend of reintroducing classic models, or models inspired by classic models to try and take advantage of the prestige on the cachet and cool that they generated the first time virtually. For example, the Beatle by VW and the Mini by BMW.The technology of fuel cells, and crossbreed cars presents new opportunities for the industry, and the environment.Government scrappage schemes that encourage people to purchase new cars with the bonus that their old vehicle go forth be scrapped in exchange for a generous minimum deportment, even when this far out exhorts the lever of the car.2.4.1.4. terrorsThe recent macroeconomic downturn has also affected the demand for automotive products cosmopolitan. Manufacturers have had to fall behind to widespread sales tactics to stimulate demand.Most automobile manufacturing companies around the world face innovation contender from Japanese manufacturers, from superior technology, through just-in-time production to extensive warranties.Raw material costs are increasing.In the last decade, North American, Japanese and European markets saw a decelerate progress in demand. Conversely, strong demand is present in emerging Eastern European and especially in Asia n markets. Both developments whitethorn stimulate price competition betwixt firms as we approach world over-capacity.Safety standard requirements are increasing which requires more research and development, more testing and other costs associated with compliance with external bodies.2.4.2. P.E.S.T. ANALYSIS FIAT GROUPThis type of analysis is employ to determine the external driving factors in the automobile industry which can affect the coiffureance of FIAT and the automobile industry altogether. These encompass political, economic, social and technological factors.2.4.2.1. Political Factors 2008-2012 consort to the Kyoto protocol, all the participating countries including the UK have to decrease greenhouse gas emissions by an average of five per cent over the five-year period. Nearly 200 countries have deposited their ratification paperwork. The most notable country that has not ratified the protocol is the United States of AmericaThe recent expansion of the EU between 2004 a nd 2007 should be taken into consideration, which in May grew from 15 to 27 States, including the pursuance countriesPoland, Slovakia, Malta, Estonia, Cyprus, Lithuania, Hungary, Czech Republic, Slovenia, Latvia, Romania and Bulgaria.2.4.2.2. Economic FactorsThe Chinese automobile market is growing rapidly. In the past decade it has gone from an also ran to the largest producer and market in the world. new instabilities in the price of oil have affected the price at the pump. The price swings have been so great that fuel retailers have been ineffectual to smooth out the price using the recognised method of purchase exchange traded futures contracts or over-the-counter forward contracts.The general move to hybridisation and all electric vehicles is being assisted by penalising conventional combustion engine vehicles by offer discounts on more environmentally hearty models and governments introducing progressive taxes found on carbon dioxide omissions.2.4.2.3. Social FactorsMost world conflicts relate to oil production/transportation (e.g pipelines) or at to the lowest degree entail a country that has a significant oil write out/infrastructure, which adds to the price volatility.The increasing importance of environmental factors and the effect this has on consumers using up should not be ignored. People are gradually becoming little interested in owning a high performance, petrol guzzling car, and would sort of drive a more efficient, less polluting green vehicle. This social cognisance of population extends to people who use public transportation, which is strong supported in Europe.2.4.2.4. Technological FactorsThe demand for oil will outstrip global oil (ASPO, Association for Study of the Peak Oil Land Gas, 2005). Consequently, automobile producers are researching into alternative fuels. For instance, Iceland hopes to be self-contained in energy in other 40 years by using hydrogen fuel cells.2.4.3 ostiary GENERIC STRATIGIESPorter summarised th at there are three main(prenominal) strategies for a successful business model. Cost leading, differentiation and market segmentation. Companies that pursued defend market share often suffered the hole in the middle problem, endowment them the lowest profit.Fiat Group utilises all three of these strategies, cost leadership through its sexual intercoursely low cost small cars, differentiation through commercial and agricultural vehicles, aviation, financial operate and publishing, and niche markets through its scholarship of Ferrari and Maserati. So one might instantly consider that by screening all three strategies, it runs the risk of spreading itself too thinly and crucifixion the fate of low profitability. However, Fiat has been careful keeping its different activities separate, allowing each business to focus on its core strategy, so that each one can achieve optimum success. These successful enterprises are then feature at the separate level for the purpose of differ entiation to make the convocation more resistant to market shocks.2.4.3. FIAT FIVE FORCES2.4.3.1. Competitive rivalry within the industryThere is ever so intense competition between companies in the automobile industry that focus both on the internationalistic and national markets. Fiat has pursued advancing itself compared to its competitors through product differentiation, improve quality and implementing producer process innovations. For example, Fiat began to look seriously at outsourcing more contracts and cutting component costs in the 1990s.FIGURE 1 Porters Five Forces for FIAT (Cammarata et al., 2006)In a continuously changing market, there is always a threat of rivalry from overseas. Intense competition from Japan and Korea has rewarded them with piece of Fiats domestic market share.2.4.3.2. Threat of the new entrantsFiat strategic aim is to expand its portfolio through acquisition. Firms can choose to merge in order to remove barriers to entry in new markets. Nearly al l the main automobile companies, for instance, Toyota, Honda, Renault and Nissan acquired separate divisions or merged into a group such as Volkswagen Group and many find themselves in a very complicated cross-ownership network.In addition, Fiat has to be able to manage brand identity to keep away the threat of new entrants to its markets.2.4.3.3. Threat of the sculptural relief productsAlthough in the strictest sense there is not an equivalent substitute for the car, there are many alternative brands. Fiat is focused on cheaper models, good design and quality.2.4.3.4. Bargaining military unit of CustomersSelecting a low price point compared to its competitors melt offs the ability that customers have when bargaining over the price. With its range of models and levels of equipment it can find a suitable vehicle to satisfy the customers wallet.2.4.3.5. Bargaining Power of SuppliersFiat produces many components in house, or from within the Fiat Group. Fiat has a strong relationship with its outsourced partners.2.4.4. PRICING STRATEGIES2.4.4.1. Premium determine.The design of setting a high price for desirable and/or odd products. Fiat Group utilises this strategy for its premium marques such as Ferrari and Maserati as they have a substantial competitive advantage due to their prestige and brand loyalty.2.4.4.2. Penetration priceHere the price is set low signly to encourage take up, and then gateiond once the popularity rises. The initial low offering whitethorn go forth in losses which will be covered once the price is raised. Fiats pricing strategy is always to be low cost, so there is less scope to reduce prices at launch. Some naysayers might say that its Fiat motor car brand is lower quality than other mainstream produces, so this strategy might not be available to Fiat.2.4.4.3. Economy PricingCosts of marketing and manufacture are kept at a minimum to take in a product that is available to the masses. Fiat has always had the strategy of smashing the market by setting consistently low prices, partly due to concentrating on producing small cars and partly due to avoiding competing on quality. nevertheless recently has Fiat started investing more heavily in marketing.2.4.4.4. value shavingIs where a new product is released at a high price point and typically targeted at those that are early adopter and are price insensitive, or need the product at any cost. Having high prices, and more importantly high margins attracts competitors, which drives the price down. In a shape up market such as the car market, price skimming is not a viable option except for possibly in the car accessories market e.g. satellite navigation when it was first introduced. on with the four main pricing strategies, there are other approaches to pricing2.4.4.5. Psychological PricingThis approach targets the consumers emotional responses, rather than their rational response. One common pasquinade is to select a price point such as 19,950, 19,990, or even 19,999 rather than 20,000.2.4.4.6. convergence Line PricingThis is where the product is priced establish on the benefit relative to other products in its range. Fiat sells its cars groundd on size and performance which helps the buyer understand the price relative to a, for example, a smaller model with a lower price and a high performance variant with a higher price.2.4.4.7. ex gratia Product PricingHere a basic product is advertised and sold. Optional extras will then be adding to the overall price of the vehicle. Fiat, as well as all car manufacturers create a effectivey safety compliant vehicle with a standard engine to get people interested in their car. Once the buyer is interested then it is up to the retailer to promote the advantages over performance, styling and functionality of the optional extras2.4.4.7. Captive Product PricingManufacturers will charge a low price initial and deduce its margin through completing purchases or maintenance. A recent trend in the motor industry is to sell the vehicle at low price but recoup extra money through after service and high costs of parts and labour. To counter this other companies have introduced up to a 7 year warranty.2.4.4.8. geographical PricingGeographical pricing is where there are variations in price around the world. Variations may come about due to shipping costs, local competition, laws and regulations. Most of Fiats vehicles sell to mainland Europe and so have the steering wheel on the left. However in the UK and elsewhere in the world the steering wheel is on the right. In tropical countries cars do not need to be fitted with a warming system, in like manner in cold climates air condition need not be fitted. Car manufacturers usually create a basic model to be sold in developing countries2.4.4.9. abide by PricingIn the current recession, people have less disposable income and are more likely to put off large purchases such as a vehicle, hence Fiat has to reduce margins further to p resent extra value to the customer.2.4.5. MARKET SEGMENTATIONMarket segmentation is the process of severaliseing subsets of a market made up of individuals demanding similar products based on attributes such as price, function or style. A true market segment is distinct, homogenous, reacts to stimuli and behaves in the same way to stimulus.Market Segmentation, includes but is not limited to the following basesGeographical continents, countries, town, regionDemographical Age, Gender, Social Class, Family TypePsychographic Cultural, Activities, Interests, Opinions, lifestyle, religionGeodemographic a combining of Geographical and DemographicalBehavioural usage rate or loyaltyFiat selects models and equips vehicles based on the geographical segment of the market that they are to be sold. For example, in countries with unsealed roads it sells 4 wheel drive models, rather than sports models. In hot countries air conditioning is standard and heating is optional, likewise in cold cou ntries the opposite is true. In South America, cars are change to run on compressed natural gas, and ethanol fuel is used as an alternative to petrol or dieselDemographically, Fiat aims smaller, economical models at the young, performance cars at 25-45 year old men, estate/ hatchback cars at young families and large saloons at senior businessmen and retirees treating themselves to a quality car that will last.Psycho graphically, electric/hybrid models aimed at the environmentally conscious. The redesigned Fiat 500 or other stylish models at trendy young people, who consider themselves a bit differentBehaviourally, Appeals to those who have owned a Fiat before. The Fiat 500 is also targeted at nostalgic middle aged people who probably had one, or at least wanted on the first time around, as a second car.2.4.5.1. Fiats Four PsJerome McCarthy proposed the 4 Ps for describing the marketing unifyProduct Various models, sizes, configurations, equipments standardsPrice Fiats cost leade rship means that its customers pay a low pricePlace Fiat has a worldwide presence for direct sales and distribution.Promotion How effectively Fiat can market its products through direct and indirect advertising, public relations, word of mouth and point of sale.The original four Ps can be extended by a further three Ps for marketing servicesPeople includes employees, management and consumersProcess Procedure, mechanisms and flow of activitiesPhysical Evidence The environment in which the service is delivered. Both tangible goods that help to communicate and perform the service, and the intangible experience of live and potential customers2.4.6. Bowmans clockAn expansion of Porters three generic strategies, Bowman compares price against value. The strategies form around the central rundle hence the comparison to a clock.ValuePrice crushed PriceMedium PriceHigh PriceHigh added valueHybrid. By carefully off-shoring, Fiat can reduce production costs whilst still delivering the same productDifferentiation. Investing in exciting new models to build its customer base and brand loyaltyFocus Differentiation. Hybrid cars and Electric cars currently have a high price, to recoup the costs involved to bring this high value attribute to the marketMediocre added valueCost Leader. by low prices, Fiat attempts to be a cost leader revoke Price. High Margins for its premium car brands. There is a possibility of losing sales to competition, but it is unlikely to be price relatedLow Added ValueFiat retails budget, low specification variants to developing nationsIncreased Price and Low Value. With the amount of competition in the car industry, this option is not genuinely viable. Selling such a big ticket item, people weigh up the cost vs benefits2.4.7. Boston MatrixCreated by the Boston Consulting group, this chart is used to plot a companies business units to allow a company to make decisions on strategic marketing and brand marketing.Detailed in the chart are 4 specific business units of the Fiat brand. Its important to note that even with low market share and low growth, comforting profits are still possible.Highmarket sharelowHighStarquestion mark / problem childgrowth of marketcash cowdogLowEuropean Car MarketChinese car marketSouth American marketFinancial servicesChapter III3.1. Direction of Growth3.1.1. Ansoffs Matrix3.1.1.1. Market PenetrationThis theory advocates the strategy that the company markets its vivacious products to its existing customers. By promoting the product and repositioning the brand the company can gain competitors customers, increase sales to existing customers and gain new customers that are considered part of the existing market but have not yet invested.3.1.1.2. Market maturementThis theory advocates the strategy that the company markets its existing products to new customers. The product be the same although it may be repackaged physically and metaphorically for a new audience. The product may be exported to reac h a new international market.FIGURE 2 ANSOFFS MATRIX (Sourcehttp//tutor2u.net/business/presentations/strategy/ansoff/default.html slide3)3.1.1.3. Product evolutionThis theory advocates the strategy that the company markets new products to its existing customers. The company may develop innovative replacement products, complementary products to existing products, or sell entirely disconnected products to its existing customer base. For FIAT this means updated existing models or replacing them to be marketed to existing customers, or offering complementary products such as car accessories or finance. However, Fiat divested its insurance field in 2003. Fiat also offers aspirational brands to its existing customers in the form of Maserati and Ferrari.3.1.1.4. diversificationThis theory prescribes the strategy that the company markets new products to new customers. The company diversifies into new markets where it previously had no presence. This diversification takes two forms, rela ted diversification, where the diversification clay in the industry or market where the company is established, or unrelated diversification, where the company enters a new industry in which they have no market experience Fiat diversified itself in the related person-to-person transportation market through its Piaggio motorcycle brand, which in 1999 it sold to Morgan Grenfell mystic Equity, through the related, components, metallurgical products, production systems, commercial vehicles, buses and services vehicles, agricultural and spin equipment. It also diversifies itself into less related and unrelated industries through aviation, IT, finance, leisure, publishing, communication and even sponsorship of the Jamaican bobsledding team6Chapter IV4. The Method of Development4.1. Merger or Acquisition of FIATApart from in its home country where FIAT is well received, it cannot rid itself of the perceived and genuine quality issues internationally. To combat this FIAT should conside r recommencing its act allegiance with General Motors or seek a well known domestic manufacturer with a track scan of delivering quality. If neither of these options are viable, FIAT could look to other strategic alliances mayhap with the Japanese, or with a German Manufacturer, highlighting the qualities that these partnerships bring when promoting their vehicles in the UK.Only by pursuing a joint venture or by associating itself with a recognised service provider will FIAT be able to be a contender in Europe. This approach will invariably be a costly one, but if the sincere aim is to increase the market share of the brand, FIAT has to follow this determined approach.Along with the failed allegiance with General Motors, over its history FIAT has had many associations (and attempted associations) with various European producers which have all ultimately failed. The reason for distress is down to two imperative reasons. Firstly any substantial pledge with an external entity woul d require a considerable shake-up of the production capabilities which would result in a substantial reorganisation for the employees of both parties. Secondly the outgrowth would change the dynamics of the Agnelli family involvement and control of the company, vastly reducing its wallop in the management and running of the company.If FIAT had reached a satisfactory firmness of purpose with General Motors the combined business would have been able to win market share from its competitors by leveraging off of the synergies created by the two entities in engine, and component design. The union between the two would have allowed for the Agnelli family to control the slaying of the agreement in the Europe market.7This united company would surely be a definite force in the emerging markets of Russia, Brazil and other South American countries, particularly with its existing exposure unsurpassed by itsChapter V5. ConclusionThe analysis shows that Fiat is not a well represented and truly desirable universal brand. Its goal, and therefore its marketing effort must be to change consumers attitude and perception of the brand and promote Fiat as being superior to its competitive peers such as Vauxhall and Peugeot. By identifying rivals in the industry such as these, its possible to access relative strengths and weaknesses, similarities and disparities so as to gain an insight into the changes that must occur for the company to be successful in achieving the companys target.SimilaritiesDifferencesFIAT vs. Vauxhall-Both are targeted as familiar or traditional (associated with practicality over style.) Impersonal sales-Similar thought about prices (but FIAT is considered cheaper) Vauxhall target customers are slightly older FIAT is poor quality while Vauxhall is medium quality Vauxhall is recognised for the full range of car types, FIAT is recognised for its small vehicles FIAT is less popularFiat vs. Peugeot-Similar notion about prices-Equally reliable Peugeot is conside red good quality (well built and comfortable to drive) while FIAT is poor quality. Peugeot is well designed with more has better performanceDue to Fiats competitive price strategy, and its position of being a cost leader, it is considered by many as offering an unreliable, low quality alternative to the other majors. However, it is not the actual quality of FIAT cars that is driving this belief, but the customers perception of quality based on their competitive price point.Purchasing a motor vehicle is an expensive investment, and an investment that will reduce in value over time. Buyers use a combination of rational values and emotional elements when making their woof decision. Rational values involves all the costs associated with the vehicle and affordability and the emotional elements involve the selection process of choosing a vehicle or brand that you identify with and which one you would be most happy living with for a number of years.One must consider the Points of Parity a nd Points of divergency when marketing a brand. This table is related to the points of parity and difference of each brand.Points of parityPoints of differenceFIATTraditional, rudenessLeader in costVauxhallFamiliar, comfortable, rust some(prenominal) models (you can choose for different purposes)PeugeotComfortable, good designSportive designPeople need to identify with a car, feel that the car represents them. Fiat does not employ a strong enough emotional heart to distinguishing it from its competitors, and offset its negative perception and creating desire am