Conquest Marketing Plan
Prepared by:
LISHI HE (110136841)
2015-2018
1. Executive Summary
1
This report describes Alec’s marketing plan and sets the strategic objectives
from period 7 to period 10 contains:
To increase the market share in Economy class from 61% to 70% (a
change of 9%) and remain the dominant position.
To increase car sales from 718K units to 818K units (a change of
14%).
To increase product distribution from $2.9B to $3.7B (a change of
28%).
To increase margin percentage from 28% to 36% (a change of 8%).
According to the past data (from period 1 to period 6) analysis, as an
economy vehicle, Alec is focusing on 1E and 2E customers especially 2E with
the lower price, the smaller size, hot buttons (safety and quality), and the
largest amount of manufacturing.
In order to reach the brand’s objectives, there are some strategies are
recommended:
To increase specifications (interior, styling, safety, and quality) via
minor upgrades.
To increase advertising and promotion the entire investment from
$220M to $240M.
To decrease MSRP from $17.3K to $17K, to utilize the penetration
pricing strategy.
To increase dealer rating totally from 65 to 70.
To increase the corporate technological capabilities for styling, safety
and quality.
To increase the corporate manufacturing capabilities to 2750K units.
Expect for corporate and product analysis, also mentions different
environmental influences such as macro-environment will affect car sales.
2
Contents
1. Executive Summary..............................................................................................2
2. Corporate Strategic Focus................................................................................4
2.1 Vision and Mission....................................................................................................4
2.2 Objectives.................................................................................................................4
3. Situation Analysis..................................................................................................5
3.1 Industry.....................................................................................................................5
3.2 Company...................................................................................................................6
3.3 Competitors..............................................................................................................7
3.4 Customers.................................................................................................................8
4. SWOT................................................................................................................................9
4.1 Internal Environment................................................................................................9
4.2 External Environment.............................................................................................10
5. Marketing program.............................................................................................12
5.1 Product Strategy.....................................................................................................12
5.2 Communications Strategy.......................................................................................13
5.3 Distribution Strategy...............................................................................................13
5.4 Price Strategy..........................................................................................................15
5.5 Organisational Resources........................................................................................16
6. Financial Data and Projections........................................................................................17
6.1 The past..................................................................................................................17
6.2 Period 7 to 10..........................................................................................................17
7. Implementation Plan......................................................................................................19
7.1 Corporate technological capabilities.......................................................................19
7.2 Alec development...................................................................................................19
7.4 Alec marketing and the advertising theme will be Safety.......................................19
7.5 Corporate distribution............................................................................................19
7.6 Corporate manufacturing.......................................................................................20
7.7 Alec manufacturing.................................................................................................20
7.8 Dividends paid........................................................................................................20
7.9 Potential factors to affect car sales and profit........................................................20
8. Control and Contingencies..............................................................................................21
8.1 If success.................................................................................................................21
8.2 If failure...................................................................................................................21
3
2. Corporate Strategic Focus2.1 Vision and Mission
Our company is struggling for providing the best vehicle (the great quality
and services) for customers and satisfy their various needs.
The company offers four types of vehicle including economy, family, utility
and AEV which cover different consumer segments.
In order to offer the affordable price, safe and qualified cars to consumers,
also create the distinctive image through continual product upgrades and
communication.
In light of customers’ expectations, we provide the worthy cars and the wide
communication to increase our distinctiveness for customers.
For the long-term operation, the corporate business aims to be profitable
(increasing margin) and continually boosts the sales to make more consumers
purchasing.
2.2 Objectives
Financial:
We aim to increase the stock price from $88 to $168 from period 7 to period
10.
To raise the market value from $37K to $77K from period 7 to period 10.
To decrease COGS from 72% to 60% from period 7 to period 10.
To decline debt from $6K to $o from period 7 to period 10.
Non-financial:
We aim to increase the units of sales from 1.9M units to 2.7M units from
period 7 to period 10.
To rise the dealer rating from 65 to 73 from period 7 to period 10.
4
3. Situation Analysis3.1 Industry
Economy trend and macro-environment:
Period 1 2 3 4 5 6 7
GDP Growth 1% 1.5% 2% 2.5% 2.5% -1.5% 1.5%
Gas price ($) 3 3.15 3.45 3.45 3.5 4.9 4.3
Dealer Car
Sales (units)
2.8M 2.7M 2.7M 2.7M 2.8M 3.1M 3.4M
Above table illustrates three main factors will affect car sales:
GDP Growth describes the national economy, from period 1 to 5, GDP
Growth kept increasing, however in period 6, GDP Growth decreased to
negative 1.5% which means the economy recession. But in period 7, GDP
Growth is recover to positive, and the economy will be revived.
Gas price rose from $3 to $4.9 form year 1 to 6 also hurt the auto sales since
consumers did not afford the auto cost. But in period 7, the cost is declining
and purchasing will increase.
Moreover, basing on the Industry News that industry marketing expenditures
increased from $1.9B to $4B from year 1 to 6 to boost the car sales. Thus the
Dealer Car Sales increased from 2.8M units to 3.1M units from period 1 to 6
which means more cars were sold.
Corporate resources:
Perio
d
Technology
capabilities
(Interior,
Styling, Safety
and Quality)
Marketing
capabilities
(North, South,
East and West)
Distribution
(North, South,
East and West) +
Training
Manufacturing
capabilities
(000’S)
1 5, 5, 4, 6 20M, 25M,
10M, 20M
10M, 20M, 7M,
10M +30M
+100
2 5, 6, 5, 7 20M, 10M,
30M, 30M
5M, 5M, 20M,
20M +40M
+200
5
3 5, 6, 6, 8 20M, 20M,
20M, 30M
15M, 8M, 15M,
20M +50M
+100
4 5, 6, 7, 9 30M, 22M,
20M, 25M
20M, 10M, 5M,
15M +60M
+200
5 5, 7, 8, 9 25M, 30M,
15M, 20M
15M, 20M, 5M,
10M +70M
+200
6 5, 8, 8, 9 10M, 30M, 0M,
0M
0M, 20M, 0M, 0M
+80M
+150
The main markets for Alec’s consuming are value seekers which are the larger
consuming groups having highly sensitive for price and preferred attitudes
are safety and quality.
The corporate resources contributing to support Alec’s development:
Technological capabilities were invested by ISSQ in 5, 8, 8, 9 in period 6,
particularly safety was 8 and quality was 9 to ensure Alec had enough
resources to improve hot buttons.
Regional Corporate Advertising rose of $40M and value market share arrived
at 35% in year 6.
Distribution capabilities and training supported dealers to sell more cars and
the company had already 735 established dealers and 86% coverage in year
6.
Manufacturing capabilities was 2M in period 6 to ensure brands production,
especially the largest scheduled production for Alec 714K units.
3.2 Company
Alec:
Period Technology (I,
S, I, Q)
Size MSRP ($) Marketing
(Advertising &
promotion)
Manufacturing
(000’S)
1 2, 1, 3, 2 14 15K 40M +20M 540
2 2, 1, 4, 3 16 15.5K 80M +50M 620
3 2, 1, 5, 4 18 16K 100M +70M 610
6
4 3, 2, 5, 4 20 16.6K 110M +80M 665
5 4, 2, 5, 4 22 16.9K 120M + 90M 650
6 4, 2, 5, 4 24 17.3K 125M +95M 670
As an economic vehicle, Alec stresses the position to satisfy target customers
including 1E and 2E, and because 2E had the larger amount for units
purchased for each period, thus 2E should be focused on. Therefore until
period 6, all decisions for satisfying 2E, containing specifications (interior,
styling, safety and quality), especially safety and quality were hot buttons,
and safety was more important than quality), size range was 15-35, and price
range was 14K-20K, also the customers had high sensitivity for price.
Moreover the communication investment was continual increasing to gain
the wider brand awareness, and schedule production were planned for the
higher amount since the large projected demand was 709 for period 6.
3.3 Competitors
Alec Delite Cruza
MS by economy class 64% 26% 10%
Leader for consumer
customers
2E 1E No
MSRP 16.9K 13K 13K
Size 22 7 9
I, S, S, Q 4, 2, 5, 4 1, 1, 4, 4 1, 1, 2, 3
Advertising & promotion 210M 40M 250M
Dealer discount 9.0% 9.0% 8.0%
Meeting customers’ needs:
According to above competition table for period 6, obviously Alec was the
winner in the economy class and the market share remained 64% in period 6,
however, new entrant Cruza was the strong rival since its market share
increased from 9.7% to 10.4% form period 5 to 6 (increased of 0.7%).
Furthermore Alec aimed to 2E target customers while Delite and Cruza were
focusing on 1E target customers since they made the lower price and smaller
7
size, also the I, S, S, Q were similar. And importantly Delite was the leader for
1E customers in period 6.
Cruza was not a neglected rival since its market share was lowest in economy
class, it is easy to ignore its communicational investment which reached fairly
high to 250M in period 6 and the dealer discount was lower to 8% in period
6, as a result it will boost its car sales and brand awareness.
Competition forecasting:
For period 7, Alec’s market share is decreasing from 64% to 61%, since Cruza
is increasing its market share from 10% to 13%, and Alec’s market share may
be continual decreased. For this situation, I consider boosting the car sales via
decreasing current price from 17.3K to 17K and expanding the
communication investment from $220M to $240M by period 10.
3.4 Customers
1E 2E
Units purchased 395 660
Expected price range 10K-14K 14K-20K
Preferred size range 1-20 15-35
Preferred engine (HP) 75-125 100-150
Hot buttons Quality, Safety Safety, Quality
Price sensitivity High High
Alec’ customers include 1E and 2E, however, the preferences between them
are very different. It is hard to satisfy both of them, thus I decided to focus on
2E mainly since its 660 unit purchased in period 6. For 2E customers they
required the relatively basic features such as the smaller size (the size was 24
in period 6), less powerful engine (HP was 130 in period 6), and safety and
quality focusing (safety was more important than quality), also they were
high sensitive for price (the current price is $17.3K, but it will be decreased by
period 10).
8
4. SWOT4.1 Internal Environment (using PLC, BCG Matrix, and GE Matrix) Strengths
According to Alec’s Portfolio Analysis illustrates the brand was migrating
between Cash Cow and Star position.
When Alec was mainly in the Cash Cow, it had the high market share but the
low growth since it was the leader in the maturity market thus I needed less
money to produce.
However, when Alec was in the Star, it had high market share and growth
since it was the leader in growth market, therefore, I needed to continual
investment to remain the market’s synchronous growth and compete the
rivals.
Industry Attractiveness was high until year 6, since:
The company’s stock price was increasing from $51 to $68 from period 1 to 6.
The market value was increasing from $21K TO $29K from period 1 to 6.
The car sales was rising from 1.2M units to 1.9M from period 1 to 6.
The company was dominant position during the period 5 and 6.
Business Strength was also strong until period 6, since:
From period 1 to 6, Alec was remaining the highest market share in economy
class and it arrived at 64% in period 6.
The car sales were rising from 581K units to 718K units from period 1 to 6.
The specifications ISSQ were 4, 2, 5, and 4 higher than other competitors in
period 6.
The brand awareness increased from 56% to 85% from period 1 to 6.
Weaknesses
The company’s debt was higher to 9K in period 6.
COGS was continually increased from $15K to $26K from period 1 to 6.
9
Alec’s price was $16.9K higher than competitors (both Delite and Cruza were
$13K) in period 6.
Alec’s lower margin percentage was 24% in the company in period 6.
The customer satisfaction decreased to from 75% to 69% from period 1 to 6.
4.2 External Environment (using PESTLE, and Porter’s 5Forces) Opportunities
Political: according to the Economy Outlook, the prime rate remained 5%
from period 1 to 6 which the central bank allows the lower rate to the auto
industry for stimulating production.
Economic: GDP Growth decreased to negative 1.5% and gas price increased
to $4.9 by period 6 to hurt car sales. However since the industry marketing
expenditures increased to $4B to boost the car sales.
Social: during period 5 and period 6, there were new customers identified
such as 4S and 5A.
Technological: basing on the Industry News, companies had added more
development centres, new brands and existing brands had upgraded for
every period.
Environmental: the macro-environment influenced the car sales, such as in
period 1, the stable economy provided a good environment for vehicle sales.
Until period 6, competitors Delite and Cruza had the low market share in
economy class. And their specifications and price showed the preferred
consuming group was 1E which had low unit sales rather than 2E.
Threats
Threat of new entrants: in period 3, company added a new development
centre to introduce AEV and in the period 6 new car Alex was launched with
an advertising campaign of $80M.
10
Bargaining power of buyers: for Alec, 1E and 2E customers are highly
sensitive for price, as result the car features are relatively basic and the MSRP
cannot be high, and the pricing of Delite and Cruza is lower than Alec to easily
attract more customers purchasing.
Threat of substitutes: for the economy vehicle, family car is the substitute
since it is more advanced features with the reasonable cost, in our company
the suitable substitute is Alfa and its market share was increasing to 32% by
period 6.
Bargaining power of suppliers: the company’s dealerships were 685 and
entire coverage was 86% in year 6.
11
5. Marketing program5.1 Product Strategy
Overall product strategy:
For Alec, I will still focus on 2E customers and will continually improve the
product attributes especially for hot buttons safety and quality to boost the
car sales and meet customers’ desired specifications.
Expected product specifications by period 10:
Interior Styling Safety
(Hot)
Quality
(Hot)
Size HP
Maximum 5 8 8 9 15-35 100-
150
Period 10 4 4 6 5 28 130
By period 10, the product specifications will be continually upgraded to 4, 4,
6, 5 and this range will be determined by the maximum and the preference of
2E customers, as shown for above table, the largest amount improving will
concentrate on safety will be 6 and quality will be 5, and size will be 28 and
HP will remain to 130 are referred from 2E’s requirements.
Required technological capabilities of the company by period 10:
Interior Styling Safety Quality
Maximum 11 12 11 13
Period 10 5 10 10 10
Company’s technological capabilities are essential for brands’ development,
by period 10, the technology investment will continually aim to styling
(increases from 8 to 10 from period 7 to 10, since it is the more important hot
button for two brands—Alex and Awesome, and safety will increase from 8 to
10 from period 6 to 10 also since it is the more important hot button for two
brands—Alec and Alfa, also quality will be changed from 9 to 10 because it is
the considered hot button for three brands—Alec, Alfa, and Alex.
12
5.2 Communications Strategy
Brand advertising and promotion:
Advertising Promotion Expected
brand
awareness
Theme
Period 10
(mill.)
135 105 95% Safety
By period 10, Alec will continually invest the communication, for the
advertising investment will be increased from $125M to $135M from period
6 to 10 (increases of 8%) and promotion investment will be increased from
$95M to $105M by period 10 (increases of 11%). The communication spend
will create the distinct brand image and gain the highest awareness amongst
2E customers.
Furthermore, the safety will be still the theme for Alec’s advertising since it is
an essential hot button for 2E customers and driving purchases for this key
market.
Corporate advertising and public relations:
Regional
corporate
advertising
Direct Mail Public Relations
Period 10 (mill.) 1o for South 4 9
The corporate advertising will boost brands’ sales and company’s image, by
period 10, the regional corporate advertising will increase of $10M for South
since the current coverage is 73% and other regions’ coverages are higher
closing to 100%, and direct mail will be increased from $3M to $4M,
moreover the public relations will be risen from $8M to $9M by period 10.
5.3 Distribution Strategy
Overall distribution strategy:
13
North South East West Total
Unit sales by
regional (000’s) in
economy class
269 286 274 358 1186
Alec 63% 60% 59% 60% -
North South East West Total0
200400600800
100012001400
269 286 274 358
1186
Unit sales by regional (000's) in Economy class
Alec’s distribution strategy is expanding the larger coverage for four regions,
particularly for West which is the largest amount of unit sales in economy
class, in period 7, Alec’s unit sales are 60% for West, and it means I need to
contribute more dealers for this area to boost the car sales.
Dealer numbers and coverage:
North South East West Total
Full
coverage
200 250 150 200 800
Established
dealers
185 183 172 195 735
Coverage 93% 73% 115% 98% 92%
14
North South East West Total0
200
400
600
800
1000
Distribution in period 7
Full coverage Established dealers
In period 7, the existing dealers are already 735 and the company’s entire
coverage reaches 92%, but for the South region, the coverage is still small to
73%, thus for later periods, the company will aim to South region and
continual increase dealers (increases of 10 for the South in period 10).
Dealer training and development
For the past years, dealer training investment was continually rising to $80M,
but since in the latter periods, company will continually increase dealers for
South, the training investment will be increased from $80M to $110M
synchronously (a change of 38%).
5.4 Price Strategy
Overall pricing strategy
Alec used a penetration pricing strategy since the market demand is fairly big
that projected demand is 750 of 2E customers in period 7 and the target
customers are highly sensitive for price but not large preference for this
brand, also the scheduled production is large to 718M units in period 7, thus
using the lower pricing approach to compete other rivals and speed up the
market growth and reach the higher sales and market share. Currently, the
MSRP is $17.3K and it will reduce to $17K by period 10.
Expected pricing (and dealer discounts) by period 10
Currently, the dealer discount is 9% to encourage dealers to sell more
products thus I will remain the discount at 9% until period 10.
15
Consider in-line with expected product contribution and margin
In period 7, the product contribution is $2.9B and margin percentage is 28%,
but I will struggling to rise more and reach to expected product contribution
to $3.7B and perfect margin to 36% by period 10.
5.5 Organisational Resources
Technology capabilities of the company by period 10
Interior Styling Safety Quality
Maximum 11 13 12 13
Period 10 5 10 10 10
Due to the company technological capabilities are supporting the brands
product development, and it will be the largest amount investing in styling
(from 8 to 10) since it is the more important hot button for two brands—Alex
and Awesome, then Safety (from 8 to 10) is the more important hot button
for Alec and Alfa.
Manufacturing / production capacity
Manufacturing capacity should be more than brands’ entire scheduled
production to ensure brands have enough capabilities to produce, currently
the manufacturing capabilities are 2.2M units and total production is 1.9M
units. And because the dealer car sales forecasting will be larger for period 8,
thus the capabilities will rise more 150K units.
16
6. Financial Data and Projections6.1 The past
Sales revenue: from period 1 to 6, Alec’s per unit revenue was increasing
from $14K to $15K since the MSRP rose from $15K to $16.9K (increased of
13%) during periods.
Unit of sales: from period 1 to 6, Alec’s car sales were increasing from 581K
units to 714K units (increased of 23%).
Product contribution: from period 1 to 6, Alec product contribution was
increasing from $2B to $2.4B (increased of 10%).
Margin percentage: from period 1 to 6, Alec margin was decreasing from 26%
to 24% (decreased of 2%).
6.2 Period 7 to 10
(Four major variables):
Customer behaviour: the main target customer will be still 2E which unit
purchased to 725K units and the projected demand will arrive at 750 in
period 8.
2E customers’ maximum expected price rises from $20K to $22K in period 7.
But they are still highly sensitive for the price.
Past planned strategies: trough the past improvement, Alec’s ISSQ (4, 2, 5,
and 4) were better than competitors, particularly hot buttons safety and
quality remained the good state until period 6.
MSRP was increasing from $15K to $16.9K (increased of 13%) from period 1
to 6.
Through invested for advertising (from $40M to $125M) and promotion
(from $20M to $95M), the brand awareness is increased from 56% to 85%
from period 1 to 6.
17
Since the car sales were increasing from 581K units to 714K units from period
1 to 6, thus the scheduled production was increasing from 540K units to 714K
units.
Competitor actions:
Delite is the leader of 1E customers with $15K, ISSQ (2, 2, 6, 6), and
advertising investment as $50M and promotion investment as $30M in
period 7.
Cruza: the new entrants for economy class with $13K, ISSQ (2, 1, 3, 4), and
advertising investment as $150M and promotion investment as $50M in
period 7.
External environment (forecasting):
GDP will increase from 1.5% to 3.5% from period 7 to 8.
Gas price will decrease from $4.25 to $4.15 from period 7 to 8 result in
boosting car sales.
Dealer car sales will increase from 3.42M units to 3.43M units from period 7
to 8.
(Therefore forecasting):
Sales revenue: from period 7 to 10, Alec’s per unit revenue will increase from
$14K to $15K since the MSRP rose from $15.7K to $16.7K (increased of 6%)
during periods.
Unit of sales: from period 7 to 10, Alec’s car sales will increase from 718K
units to 818K units (increased of 14%).
Product contribution: from period 7 to 10, Alec product contribution will rise
from $2.9B to $3.7B (increased of 28%).
Margin percentage: from period 7 to 10, Alec margin will rise from 28% to
36% (increased of 8%).
18
7. Implementation Plan7.1 Corporate technological capabilities
Period 7 8 9 10
ISSQ 5, 9, 8, 9 5, 9, 9, 9 5, 10, 9, 9 5, 10, 10, 9
7.2 Alec development
Period 7 8 9 10
Size
HP
ISSQ
26
130
4, 2, 5, 4
28
130
4, 2, 6, 4
28
130
4, 2, 6, 5
28
130
4, 2, 6, 5
7.3 Corporate marketing will target Value Seekers, Families, Singles, and
Enterprisers
Period 7 8 9 10
Advertising ($) 10M for North
& 30M for
South
30M for South 20M for South 10M for South
Direct Mail 3 3 4 4
Public
Relations
8 8 8 9
7.4 Alec marketing and the advertising theme will be Safety
Period 7 8 9 10
MSRP ($) 17K 17K 17K 17K
Advertising ($) 130M 130M 135M 135M
Promotion ($) 100M 100M 105M 105M
7.5 Corporate distribution
Period 7 8 9 10
19
Dealerships
(NSEW)
0, 20, 0, 0 0, 20, 0, 0 0, 10, 0, 0 0, 10, 0, 0
Training ($) 90M 100M 105M 110M
7.6 Corporate manufacturing mainly basing on the Dealer Car Sales from
Economy Outlook
Period 7 8 9 10
Capabilities 2.3M 2.45M 2.6M 2.75M
7.7 Alec manufacturing mainly basing on Dealer Car Sales and 2E projected
demand
Period 7 8 9 10
Scheduled
production
(units)
720K 722K 724K 726K
7.8 Dividends paid
Period 7 8 9 10
($) 500 600 700 800
7.9 Potential factors to affect car sales and profit
The GDP may decrease to the negative percentage in the latter periods.
Gas price may increase to the higher level in the latter periods.
Dealer car sales may decrease to less amount in the latter periods.
The market share of Cruza may surpass to Alec in the latter periods.
20
8. Control and Contingencies8.1 If success
Goals: to boost Alec’s car sales from 718K to 818K from period 7 to 10
(increases of 14%).
Market share: to gain more market share for Alec from 61% to70% from
period 7 to 10 (increases of 9%).
Profit: to increase Alec’s product contribution from $2.9B to $3.7B from
period 7 to 10 (increases of 28%). And to rise Alec’s margin percentage from
28% to 36% from period 1 to 10 (increases of 8%).
Dealer rating: to increase the company’s dealer rating by regions by period 10
as:
North— from 64 to 72 (increases of 13%)
South—from 65 to 73 (increases of 12%)
East—from 65 to 73 (increases of 12%)
West—from 67 to 75 (increases of 12%)
Coverage of regions: to increase the company coverage by regions by period
10 as:
North— from 93% to 100% (increases of 7%)
South—from 73%to 90% (increases of 17%)
East—from 115% to 119% (increases of 4%)
West—from 98% to 102% (increases of 4%)
8.2 If failure, I will
Continually reduce the cost including the product upgrades since current
specifications are good enough, and the price will be declined to $16.5K to
boost more car sales.
And in order to increase the unit sales by regions in economy class, I will ask
for the company to invest more dealers for West which has the largest units.
21
22