Given a chance to be the marketing manager for a German automaker that is competing against Chinese electric vehicle(EV) competitors, I will know for sure that there will be several challenges standing in my way. To start with, the fact that Chinese EV manufacturers enjoy a cost advantage that allows them to sell their EV vehicles at approximately 40% cheaper prices in China compared to their prices in Europe meaning cost-conscious consumers may be attracted to these affordable options available. Secondly, Chinese companies continue to gain traction in major markets like Europe, Southeast Asia, and Australia due to the decision to ban new internal combustion engine vehicles in the region coupled with the growing demand for Chinese EVs which will greatly impact the market share of the German automakers in these regions. Another challenge is the existing stereotypes concerning the quality of Chinese cars with the consumers now recognizing that these brands offer high-quality EVs at affordable prices posing a great challenge overcoming these stereotypes about the Chinese EVs.Lastly, Chinese manufacturers dominate the production of battery materials thus impacting production costs. Hence German automakers have a huge task to do to secure a competitive position in the supply chain. In conclusion, the main challenges that I will need to deal with as a manager of German automakers are the Chinese EV’s competitive nature in major markets, the cost disparity, challenges related to the supply chain of EV battery materials, and ever-changing consumer perceptions.
2.(a) Environmental Analysis
As the marketing manager, environmental analysis clearly shows that the automotive industry now presents a shifting landscape at an alarming rate. There exist several opportunities and challenges, for instance, in the planned EU ban on internal combustion engine cars and the global trend that is witnessed toward EVs. Regulatory measures and environmental consciousness are the force behind the growing demand for EVs in the European market and one of the threats posed by the Chinese EVs is the cost advantage associated with it making them approximately 40% cheaper compared to other parts of Europe. Global businesses also face potential impacts from the geopolitical tensions that may include probable de-risking trends from Chinese imports.
(b) Competitive Analysis
There exists a competitive landscape in the EVs market with Chinese EV makers being considered as the formidable contenders in this market. Some of the major competitors like Xpeng and BYD, for instance, are busy leveraging their technological advancements which make them be branded as a generation ahead with their cost advantage in their favor as well. There is a looming challenge of maintaining profitability by the majority of European carmakers including German automakers once combustion engine cars are banned by 2035 as stated by the EU. With the popularity that Chinese EVs enjoy in various parts of Europe and Southeast Asia, German automakers and other brands in this industry need to call for swift adaptation. German automakers need to invest in effective marketing strategies and, sustainability measures to counter the popularity of Chinese EVs in key markets.
To survive in this competitive market dominated by Chinese EVs, the German automaker has a lot to do. As the marketing manager, I will start by adopting a multi-faceted strategy and put in place some measures that will enhance the competitiveness of German automakers in the market by investing heavily in research that will enable this brand to stay ahead in terms of technology like autonomous driving skills and improvements in battery efficiency. To address the issue of cost disparity, there is a need for German automakers to seek collaborative efforts with some companies in the automotive industry across Europe and focus on economies of scale as well as operational efficacy. German automakers also need to take some actions that will lower their manufacturing costs. For instance, they can look for strategic partnerships that will make them competitive in terms of pricing. Another challenge that is facing German automakers is the Chinese dominance in the EV battery supply chain. Some of the measures that can help German automakers in addressing this challenge are partnering with reliable battery manufacturers in Europe or engaging in local battery production. Lastly, as a way of addressing consumer perception, the German automaker needs to improve its marketing strategies that aim to convince its prospective consumers of the safety quality and high quality of its EVs.These strategies can be further enhanced by maintaining transparency in the production process and sustainability practices.
Market segmentation, target market selection, and positioning are some of the components that will help German automaker German automakers compete against Chinese competitors in the European, Australian, and Southeast Asia markets.
Market Segmentation:
Market segmentation entails geographic segmentation, demographic segmentation, psychographic segmentation, and behavioral segmentation (Madzík et al., 2021).
- Geographic Segmentation: Europe is a wide market thus German automakers need to find specific regions that have high demand for EVs taking into consideration consumer attitudes, level of infrastructure, and government incentives.
- Demographic Segmentation: As a marketing manager of a German automaker I will have to analyze thoroughly the demographics of my prospective customer’s income, lifestyle, and age since there is a high probability that younger consumers will be receptive to EVs.
- Psychographic Segmentation: Psychographic segmentation usually focuses on the lifestyles, attitudes, and values of the prospective consumers. Thus as manager of the German automaker, I will recommend EV features such as innovation and sustainability that will align with the European target audience.
- Behavioral Segmentation: Identifying the purchasing behaviors of EV consumers is the first step to success in the European markets. These behaviors may include price sensitivity and those who prefer advanced technology. Marketing messages should touch on these concerns.
Target Market Selection:
- Focus on Niche Markets: This involves finding Niche markets in Europe that will ensure the success of the German automaker in the region.
- Regulatory Environment: Regulatory measures in various countries across Europe should be weighed to determine less strict countries that will allow smooth running operations of EVs.
- Competitor Analysis: With Chinese EVs penetrating various markets, finding gaps in these markets that can allow German automakers to differentiate themselves from Chinese counterparts is a game-changer.
Positioning:
- Focusing on quality and reliability and making use of German Engineering to German automaker’s advantage to outsmart the competitors.
- Environmental Friendliness: This goal can be achieved by ensuring eco-friendly production and maintaining sustainability practices.
- Brand Image: Conquering the European market means the German automaker has a huge task in building a strong brand image in the region. German automakers need to prioritize the interests of their consumers and become leaders that will help the region in transitioning successfully to sustainability.
Coming up with a strategic marketing mix will be helpful to German automakers in securing a competitive edge in the market that is dominated by Chinese EVs.Also known as the 4 Ps, the marketing mix is crucial in developing one of the best marketing strategies (Thabit & Raewf, 2018).
Product:
- Super quality and Innovation: These features may involve cutting-edge design and advanced technology that make the EVs unique compared to those of their Chinese competitors.
- Customization: This may entail eco-friendly materials and unique design elements among others
Price:
- Competitive Pricing: As a marketing manager of a German automaker, I will emphasize premium features that will make prospective customers understand the reason behind the premium prices and also focus on the value proposition
- Financing Options: Attractive financing options such as low-interest rates will widen the market of the German automaker brand.
Place:
- Distribution Channels: Strengthening the distribution channels in European markets will increase the accessibility for consumers and may convince consumers who previously preferred Chinese models to try German automakers for their convenience.
Promotion:
- Brand Positioning: Stress the power of German engineering in enhancing reliability and commitment towards sustainability.
- Digital Marketing: Making use of influencer partnerships and using digital marketing such as social media will help reach a wider audience.
- Partnerships and Sponsorships: With many consumers currently being sensitive about sustainability, German automakers playing an active role in green initiatives and partnering with environmental organizations will be a great boost to this brand.
References
Madzík, P., Čarnogurský, K., Hrnčiar, M., & Zimon, D. (2021). Comparison of demographic, geographic, psychographic and behavioural approach to customer segmentation. International Journal of Services and Operations Management, 40(3), 346. https://doi.org/10.1504/ijsom.2021.119802
Thabit, T., & Raewf, M. (2018, March 1). The Evaluation of Marketing Mix Elements: A Case Study. Papers.ssrn.com. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3173274
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