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NAME: SAHR SORIE TITLE: FINAL MARKETING PLAN FOR SKODA STU NO: 1316254

EXECUTIVE SUMMARY
This marketing plan involves a marketing audit of Skoda while using tools such as
Porter’s five forces and PESTLE analysis to reveal information on competition, political,
social, technological, legal and environmental factors affecting Skoda in the UK. It also
looks at internal factors such as operating results, marketing objectives segments,
competitive advantage, core competency and the marketing mix. The audit results were
then used to do a SWOT analysis which revealed weaknesses such as avoidance of
niche markets and lack of online marketing use, strengths such as excellent value for
money and highly reliable products, threats such as poor brand image and high
bargaining power of buyers and opportunities such as economic growth in the UK and
European Union trade benefits. Using the BCG matrix, strategic marketing objectives
were made and a proposed core strategy to present Skoda as the elegant, simple and
practical/economical everyday use car of choice while high fuel consumption and high-
end cars are kept for special occasions. With the proposed marketing mix and
implementation plan, it is expected that Skoda will have an annual sales increase of
£2,500,000.

BUSINESS MISSION

The business mission is to be the leading vehicle of choice for the UK across all volume
driven segments by the year 2020.

BUSINESS VISION

Business vision is to increase UK market share to 8% by 2020, present a new model


every 10 months, increase online marketing to 20% of total marketing by 2017, at least 6
out of every 10 people in the UK should have heard of Skoda by 2018 and perception of
the brand should have improved to the point were 7 out of 10 people that can identify the
brand would be willing to be identified with the brand by 2018.

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NAME: SAHR SORIE TITLE: FINAL MARKETING PLAN FOR SKODA STU NO: 1316254

Table of Contents
1. EXECUTIVE SUMMARY ..................................................................................................... 2
2. MARKETING AUDIT .......................................................................................................... 3
3. MACROENVIRONMENT .................................................................................................... 3
4. INTERNAL AUDIT .............................................................................................................. 4
5. SWOT ANALYSIS............................................................................................................... 5
6. STRATEGIC MARKETING OBJECTIVES ................................................................................ 5
7. CORE STRATEGY ............................................................................................................... 6
8. MARKETING MIX .............................................................................................................. 6
9. ORGANISATION & IMPLEMENTATION............................................................................... 6
10. CONTROL ......................................................................................................................... 7
11. REFERENCES .................................................................................................................... 8

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NAME: SAHR SORIE TITLE: FINAL MARKETING PLAN FOR SKODA STU NO: 1316254

MARKETING AUDIT

Macroenvironment

According to Autocar (2014), in 2013 Ford had a UK market share of 13.73% while
Vauxhall had a UK market share of 11.46%. These two brands (Ford and Vauxhall) are
therefore the top two competitors of Skoda in the UK market. Skoda costs less and is
more reliable than some better selling competitors in several segments. Skoda is
generally viewed as a value brand offering solid and functional vehicles with excellent
value for money (Financial Times, 2012). This implies that Skoda’s failure to break into
the top three or four bestselling list in the UK is not cost or quality related but a matter of
brand perception.

The threat of new entry - The volume driven market in the UK is easy to enter due to
flexible international trade regulations, however it would be very capital intensive for any
new entry in an already saturated industry. The bargaining power of buyers - Buyers
have high bargaining power because there are many options for the buyer to choose
from. For example in just the Supermini segment there are over sixty different models
that buyers can choose from (WhichUK, 2013). The bargaining power of suppliers -
According to Financial Times (2013), there are over 150 component manufacturers in
the Czech Republic and approximately 85% of parts used to build Czech cars come from
Czech suppliers. With the large number of suppliers this reduces the bargaining power
of suppliers. The threat of substitutes - There is a threat of substitution from both the
UK public transportation (mainly buses and trains). This is particularly evident in London
city. Competitive rivalry - There is a high competitive rivalry. The competitive rivalry is
not only made intense by a highly concentrated market but also because the top two
brands (Ford and Vauxhall) are manufactured in the UK and have the advantage of
being identified as UK brands. Political - The Czech Republic is eligible to several
European Union trade benefits. The European Community Whole Vehicle Approval
scheme makes it possible for any European Union country to approve any type of
vehicle thereby making all of that vehicle type approved in all other European Union
countries. There are several duty relief schemes. Economical - The Office for National
Statistics (2014) estimates that from December 2013 to February 2014, employment
increased. During the same period the pay including bonuses for UK employees was
1.7% higher than a year before. May 2014 saw the lowest drop in price inflation since
October 2009 prompting interest rates to rise (Financial Times, 2014). Social- The most
trips by car for 2012 were by the 40-49 age group followed by the 50-59 and 30-39
groups. The number of households without cars in London has increased from 39% in
1995/97 to 45% in 2011/12. The North East has the largest increase in number of
households owning two or more cars (National Travel Survey, 2013). Technology -
There have been developments especially in the safety aspect with driver assist systems
such as telematics control, automatic braking, blind spot warnings, adaptive cruise
control, lane departure and many others. The market that requires state of the art
technology in cars is actually a niche market. Skoda however creates some special
editions with a few added features for buyers who would like some added technology.

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NAME: SAHR SORIE TITLE: FINAL MARKETING PLAN FOR SKODA STU NO: 1316254

Legal- The key laws regarding competition are laid out in the UK 1998 Competition Act,
the 2002 Enterprise Act and the Treaty on the Functioning of the European Union. The
Act prevents dominant trade parties from using their position to create unfair competition
for their smaller rivals. Environmental- The European Union has committed car makers
to cut down CO2 emissions from new vehicles to 130g/km by 2015 and 95g/km by 2020.
Skoda has reduced emission levels to required standards even introducing low emission
models such as the Octavia GreenLine model, Octavia Green E Line electric vehicles,
Citigo CNG powered by natural gas and Octavia CNG also powered by natural gas.

Internal Audit

Operating Results- There was a 24% increase (66,029 delivered vehicles) in vehicle
deliveries to customers in the UK in 2013. Skoda’s market share in the UK is 2.92%.

Current Marketing Objective- To increase annual deliveries to customers to over 1.5


million cars. To present a new model every six months on average.

Current Market Segments-The Skoda Citigo is aimed at City dwellers. The Skoda
Fabio is designed for everyday use. Skoda Roomster is aimed at consumers desiring
spacious vehicles. Skoda Rapid is aimed at families and serves as a family car. Skoda
Yeti is aimed at the Sports Utility vehicle (SUV) market. Skoda Octavia is aimed at
consumers looking for space and functionality. Skoda Superb is the flagship vehicle
aimed at consumers looking for class.

Competitive Advantage- Skoda’s competitive advantage is the excellent value for


money and practicality of its vehicles.

Core competency and Positioning- As the company’s mission (Simply Clever)


suggests, Skoda’s core competency is simple yet smart and practical solutions to
products and processes. Building on its core competency, Skoda has been positioned
as the reliable yet affordable car that can be trusted to take the consumer from point A to
point B.

Promotion- Skoda has been involved in cold mailing as well as television adverts but
not much online. The recent adverts have shifted subtly to creating a differentiation
image for Skoda and creating a more appealing than just practical or reliable image. An
advert for the new Octavia vRS ends with the caption “it’s not your everyday family car”.
Skoda will be the official vehicle sponsor of the 2014 London-Paris race.

Place- Skoda has a vast and efficient distribution network with over 2,000 dealerships in
the UK. Skoda also makes use of the vast VolksWagen network for its distribution
purposes.

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NAME: SAHR SORIE TITLE: FINAL MARKETING PLAN FOR SKODA STU NO: 1316254

SWOT ANALYSIS

STRENGTHS WEAKNESSES
 High reliability rating products.  Current objective of presenting a new model
 Affordable pricing. every six months could overwhelm consumers,
 Practical products. saturate the Skoda market and ultimately lead
 Excellent value for money. to poor sales.
 Vast and efficient distribution network.  Niche Markets are avoided.
 Contemporary marketing outlets such as
online advertising remain unexplored.
OPPORTUNITIES THREATS
 There is not a very high threat of new entry  Buyers have high bargaining power and
into the market and therefore Skoda can therefore there is a high possibility of them
concentrate on its current competitors. switching to competitors.
 Suppliers do not have a very high  There is the threat of substitutes in the forms
bargaining power and therefore Skoda can of the UK public transport system and a wide
dictate terms/conditions of purchase. array of competing car manufacturers.
 There are several trade benefits from  High competitive rivalry from various brands
European Union membership. and models.
 Economic growth in the UK (higher  The top two competitors are manufactured in
employment rates, higher incomes and drop the UK and therefore perceived as local
in inflation) means more people have brands which buyers relate to.
money to spend and confidence to borrow.  The Skoda brand is still struggling to receive a
 The North East of UK spends the most on mass appeal or highly desirable brand image.
cars and therefore is a potential area to  Skoda is not very technology oriented in terms
segment. of sophistication.
 Legal protection by European Union and UK  European Union Laws on environmental safety
Competition Acts. are becoming increasingly stringent.

STRATEGIC MARKETING OBJECTIVES

Octavia should be harvested.


Yeti, Citigo and Fabia need to
have a balance between
building and harvesting because
of their highly competitive
markets. Rapid should be
invested in to build market share
due to its potential to become a
star. Superb should be built
while Roomster is divested
(reduce investment) while the
brand image is revamped.

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NAME: SAHR SORIE TITLE: FINAL MARKETING PLAN FOR SKODA STU NO: 1316254

CORE STRATEGY- Skoda’s present core strategy is not really cutting across to the
emotional side of consumers. Consumers want good value for money when purchasing
but many are not willing to trade practicability for obscurity. A new proposed core
strategy is to present Skoda as the elegant, simple and practical/economical everyday
use car of choice while high fuel consumption and high-end cars are kept for special
occasions. This strategy will target the three different age groups (28-39, 40-49 and 50-
59) identified in the PESTLE analysis.

MARKETING MIX - Product- Skoda products have high reliability ratings and look
generally good on the outside. The new models are very trendy in terms of aesthetics
and therefore all that is needed is adding features (audio sound systems that
accommodate memory cards, reverse view screen, GPS and automatic controlled air
conditioning) on the technology side.

Price- The pricing system is well designed and implemented as Skoda is known as a
value brand meaning it offers good value for money.

Promotion– Skoda video adverts will feature either one of two celebrities (between ages
30-35 or 45-50) that appeal to the UK audience. A biannual competition with cash prices
could be held where competitors design their own simplified Skoda version of a high end
car of their choice. A system could be introduced whereby customers get some amount
of fuel chit reward for every routine maintenance visit to Skoda dealerships. Billboards
adverts should be placed in prime locations such as intersections to increase exposure.
Internet advertising should be done on major social networking sites, search engines
and news sites as well as creating Skoda blogs. Skoda Go Karting tracks could be set
up in some locations where people can drive miniature Skoda models.

Place – Dealerships should be setup and focused out of London and especially in the
North East as is suggested by the social aspect of the PESTEL analysis. The highest
inventory level is for the cash cow followed by the stars, the question mark and the dog.

ORGANISATION & IMPLEMENTATION - A Customer Relationship and Engagement


Management (CREM) team will be set up for responsibility of the biannual competition
as well as the Go Karting tracks. The CREM team and the engineering design
department will select winners and the competition will be held from January to April and
from July to October. The CREM team will outsource the building of the Go Karting
tracks to external contractors. The first Go Karting track will be built in the largest North
Eastern city of Newcastle upon Tyne and by the 1st quarter of 2016. The CREM will work
with the dealerships in training their staff on customer relationship and engagement. The
Marketing department will be responsible for contracting the services of actor Tom
Hiddleston or actress Helena Bonham Carter for promotional adverts starting in 2015.
The Marketing and IT teams will work together with digital advertising experts to design
online marketing strategies including creating a Skoda Youtube channel. The Supply
Chain department will work with the marketing department, Skoda dealerships and fuel
stations on setting up the fuel reward for dealership maintenance system.

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NAME: SAHR SORIE TITLE: FINAL MARKETING PLAN FOR SKODA STU NO: 1316254

CONTROL – Building a 1,000 linear foot go kart track in 45,000 sq. feet area will cost
about £600,000. Ten billboards at £200 per week for 6 months will cost £48,000. Online
advertising at £7 a day per website on 5 websites will cost £12,000 a year. Contracting a
celebrity for an advert will cost £300,000. Producing and running the video commercial
on television will cost about £100,000. Annual prizes for the competition will be £5,000.
About £5,000 is estimated to be spent on the fuel reward system annually. The CREM
team will be set up from existing staff in the marketing department. Training them will
cost about £20,000. Total setup budget is therefore £1,090,000. After the initial setup,
the cost will be about £490,000 annually. The go kart will be bringing in revenue as well
as serving promotional purposes. With one person paying £50 per hour, estimated
annual go kart earning is about £100,000. Projected annual sales increase due to
implementation of marketing plan is at least £2,500,000.

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NAME: SAHR SORIE TITLE: FINAL MARKETING PLAN FOR SKODA STU NO: 1316254

REFERENCES

Autocar (2014) New Market Car Winners and Losers [Online] Available at:
http://www.autocar.co.uk/car-news/industry/new-car-market-winners-and-losers-2013 [Accessed
25th June 2014]

Financial Times (2012) Drive on equality moves up gear [Online] Available at:
http://www.ft.com/cms/s/0/c7b0d758-5dc9-11e3-95bd-00144feabdc0.html#axzz35Aplkvef
[Accessed 25th June 2014]

Financial Times (2013) Skoda shifts up a gear into the fast lane [Online] Available at:
http://www.ft.com/cms/s/0/332791e4-663b-11e1-979e-00144feabdc0.html#axzz35Aplkvef
[Accessed 25th June 2014]

Office of National Statistics (2014) Labour Statistics [Online] Available at:


http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/april-2014/statistical-bulletin.html

[Accessed 23th June 2014]

Which UK (2013) Car reviews [Online] Available at:


th
http://www.which.co.uk/cars/superminis?new=12#fragment-1 [Accessed 23 June 2014]