The toughest job for marketers?
So you think your marketing job is tough? Consider the challenges faced by marketers in the motor industry.
Are there too many competitors in your market? In Australia today there are 44 different brands of passenger car on sale. Indeed, there are more than 250 different models, not including variants. This count treats the BMW 3 Series, for example, as one model, when in fact there are 11 different cars on sale in Australia that carry the 3 Series badge. Include variants and you have a total of many hundreds.
The range of vehicles in the car market means that real competitors in each segment are more limited. The compact Hyundai Getz is not likely to lose any sales to the luxury Holden Caprice. Nonetheless, as Subaru chairman and our Sir Charles McGrath Award winner Trevor Amery observes, Australia is arguably the most competitive car market in the world.
Is price competition a problem for you? Again, the passenger car market is legendary for vicious price wars. Model run-outs often lead to margins disappearing as manufacturers try to get dealers to clear stock of the current model before the new one is released, as has been happening recently with Holden Commodore.
Another important aspect of pricing in some segments of the car market is that the majority of vehicles are sold ‘in bulk’, at prices the average retail punter would never see. The fleet market has accounted for up to 60% of sales of conventional ‘big six’ cars in the past and distorts the retail pricing picture.
Is launching a new product a difficult and expensive task in your market? Designing a new model motor vehicle starts up to four years before launch and requires forward commitment of many millions of dollars. This is possibly the toughest aspect of the car market, since it requires product planners and marketers to predict the state of the market years ahead.
The things you can't control
Do external market conditions make your marketing more difficult? Consider the position faced by marketers of large cars at the moment. Since fuel price rises have taken hold, sales of large cars have plummeted, falling more than 20% in the first six months of this year compared with 2005 sales.
The stand-out example of tough marketing in this segment is the Mitsubishi 380, successor to the Magna. The Magna was always a well-regarded car, but perhaps because it was front-wheel drive it never seemed to break through the conservative consciousness of the conventional six-cylinder, rear-wheel-drive buyer.
The 380 was launched last year in what many industry pundits regarded as the last roll of the dice for Mitsubishi Australia. The car was extremely well reviewed, with the RACV and its sister organisations judging it to be Australia’s best large car.
Then the unstable situation in the Middle East, combined with continuing growth in world demand for oil, leads to fuel prices rising 50% or more in a year and the whole segment in which the 380 competes more or less collapses. You would be hard-pressed to find a tougher marketing situation, but I would be pleased to hear from you if you can think of examples that compare with or exceed this one (roger.james@ami.org.au).
As a footnote, it is not all bad news in the motor industry. While the big sixes suffer, sales in the light segment, inhabited by cars such as Toyota Yaris, Hyundai Getz and Holden Barina, have risen by more than 30% in the first six months of this year.
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