Thursday, 21 April 2016

Sound market positioning helps expand global reach


For 2015, the world's automotive production is estimated at 72.9million cars. This is a huge market with numerous segments for different types of customers.
Toyota, the world's largest manufacturer by volume, is only able to capture around 11 per cent of this market.
Lexus, Toyota's luxury vehicle division, is not even listed in the top producers list of the world, yet holds high respect among consumers for its premium value.
The same goes for brands such as BMW and Mercedes: Despite producing only 1.7 million to 2.1 million cars a year, they are marques that many of us dream to own.
Despite our aspirations to be a global carmaker, it is important to ponder - is there such a thing as a "global customer"? The paragraphs above point to a definite "No".
A car, just like any product, must first fulfill legal requirements of a specific country. The global markets refer to the three major standards, the United States Federal Motor Vehicle Safety Standard (FMVSS), Europe's UNECE Regulations and the Australia Design Rules (ADR).
Malaysia is a currently a signatory to the UNECE World Forum for Harmonization of Vehicle Regulations (WP.29).
Our national models have conformed to these safety standards for some time now.
This is proven through the numerous high ratings awarded through the ASEAN and Australasian New Car Assessment Program (NCAP).
As examples, the Perodua Axia received 4 stars from the ASEAN NCAP, while the Proton Preve received 5 stars by the Australasian ANCAP.
The burning question remains – why aren’t our cars selling outside of Malaysia?
To even begin answering this complex question, we must first shed the idea that cars are created homogeneously.
For each model, global car manufacturers have specific target markets in mind, which is a matrix of price classification (low, mid-range, premium) and utility (family, offroad, sports, etc).
The positioning of brands is also an important factor, as car makers aim to develop an “image” of their brands – further affecting how their pricing is determined.
This makes it important to change how we look at production volume. As we have established - premium models such as BMW, Mercedes and Lexus, do not compete with Toyota or Volkswagen for their share of sales volume.
This is because premium models have a higher profit margin per car to make the same as mass producers.
However, premium customers naturally have higher expectations of quality, not just at the point of sales, but far into their dealings with the service centres.
These brands, therefore, place high importance on their customers’ entire purchase experience, from their first step into the showroom to the many years of visits to the service centre.
Inversely, the lower-end customer is looking for an affordable and reliable machine to get from point to point. They would love the added features, but ultimately have fundamental needs when they buy a car.
Therefore, the market positioning of these models leaves little profit margin, and more cars have to be sold to be profitable.
Consumers in the various markets also have diverse and unique preferences in the cars they buy. This makes homogeneous marketing strategies futile when attempting to expand their customer bases to the various export markets.
It would be more strategic to identify the uniqueness of their products and positioning, and aim for markets where there is a similar demand for their products.
Market analysis, as well as sound market positioning, enables car makers to redirect their business strategies to ensure sustainability of their business models.
In order for our national brands to succeed in the global market, it is important to look back at branding, market positioning and customer experience strategies – and work towards more defined business goals.
“Don’t make what you want to sell, make what people want to buy”.

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