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Retailer Profile of Land Rover

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Fall 2012 MARK 360 Final Retailer Profile See full original version at www.storify.com/jhostetler
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  • Jacob Hostetler MARK 360-20WStacy NeierFinal Retailer ProfileLand Rover December 4, 2012 1

DB 1. An Introduction to Land Rover Land Rover is one of the most iconic automotive companies, with a tremendous historyand instantly recognizable branding. Ever since the original Land Rover debuted in 1948,customers have sought their products for their off-roading prestige. These days, the company isrepresented by several models, most notably the Range Rover. The Range Rover is the pinnacleof luxury off-roading and is world renown for its agility and status. Leading the company intothe future is the 2013 Range Rover. In contrast to many retailers that use the "classic model" when it comes to distribution,automotive companies such as Land Rover get rid of the middlemen. Auto manufacturersgenerally use forward integration, overtaking some of the retailing responsibilities themselves.New car dealerships are almost always franchises, so the vehicles travel through companiesretailers to the final consumer. In the diagram below, Land Rover and its competitors arerepresented by the second row of Consumer Goods. The third and fourth rows aremore representative of industries such as grocery and clothing. Land Rover is strictly a first-tier retailer, catering to consumers with higher incomes. Itsentry-level model - the LR2 - starts at over $35,000, while the Range Rover goes from $80,000to nearly $200,000. This is a rather narrow target market. In a case study by AdMob for theautomaker, Land Rover identified its target audience as an "active male, high net worthdemographic between the ages of 35-54." This is represented in many of their commercials, suchas the video below featuring the Range Rover Evoque Convertible concept. While the company is best known for its Range Rover SUV, Land Rover has beendiversifying its portfolio. The automaker makes a lone variety of car - sport utility vehicle - but isincreasing its assortment. Recently, in collaboration with Victoria Beckham, Land Rover2 designed and released the Range Rover Evoque, a significant departure from the companyshistory. A coup version is available, and the above convertible concept has been so wellreceived by the companys customer base its likely to be produced. Development of new modelsis helping Land Rover to maintain and increase its competitive advantage over Mercedes-Benz,Porsche, and BMW. The following article details how this diversification has helped thecompanys sales immensely. There is no electronic channel available that allows consumers to purchase Land Rovers.In fact, no automaker features this option, though almost all allow potential customers to "Build& Price" their various models. However, this can be used to entice customers to buy. In theRetail Communities text the author writes, What goes on inside the store is often theculmination of a host of other external forms of marketing, communication and societalinfluences, which come together at the point of sale. In addition, the fact that the dealers arefranchises of the manufacturer means that both ends of the distribution channel benefit from oneanother. Retailers "have direct access and control over the final transaction with the ultimateconsumer," whereas "manufacturers...often have the advantage of product knowledge and,sometimes, larger marketing budgets."DB 2. Once Upon A Time In a Land (Rover) Far AwayA Brief HistoryBorn of the aluminum left over from World War II aircraft, the first Land Rover vehicle emergedfrom the skunkworks of the Rover Car Company in 1948. Modestly entitled "Series I," it was"ingeniously designed and engineered for extreme capability and strength." However, Land 3 Rover did not become its own entity until the late 1970s. These days the company carries on withpartner Jaguar under the ownership of Tata Motors.Recent EventsThe automotive industry as a whole has been tumultuous over the past decade, the landscapemarred by most notably the worldwide economic downturn. Land Rovers history has beenheavily affected by the resulting industry changes. In 2000, BMW Group sold the off-roadingautomaker to one of the most iconic companies in the world: The Ford Motor Company.However, in 2007 Ford put its high-end subsidiaries Jaguar and Land Rover up for sale. Thecompany was losing money, investing much less than its German rivals in the brands, and in2008 it sold Jaguar and Land Rover to Tata Motors, an Indian automotive group.On thesale/acquisition of Land Rover and Jaguar, Alan Mulally, president and CEO of the Ford MotorCompany, said, "Jaguar and Land Rover are terrific brands. We are confident that they areleaving our fold with the products, plans and team to continue to thrive under Tatas stewardship.Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implementour plan to create a strong Ford Motor Company that delivers profitable growth for all."Mission StatementsWhile Land Rovers and other large, powerful SUVs have been seen by many as wasteful,inefficient, and harmful to the environment, the automaker has made strides in conservationefforts and keeps environmental sustainability at the forefront of decisions. This philosophy isevident in the companys video environmental mission statement, which speaks volumes abouthow dedicated the automaker is to providing the vehicles its customers know and love while4 creating some of the "greenest" SUVs.Parent company Tata Motors mission statement is "To beworld-class automotive innovators, and to help Tata Motors to develop world-class vehiclesthrough the advancement of its technical knowledge and its product engineering processes." Thismission statement is carried through to the Land Rover brand, with more innovation,diversification, and competitive products that better meet the needs of consumers.What Changes Might We See In the Retail Format and Target Market?Land Rover already has an ideal consumer (active male, high net worth demographic betweenthe ages of 35-54) but might be able to use some of the data in Retailing Communities to itsadvantage. While targeting "singles [who] are less likely to live in a rural area" would be a greatstart, a key selling point to "families [who] make slightly more trips and spend more money pertrip" would be the efficiency, luxury, and driving experience of the Land Rover lineup. Thesecustomers spend a great deal of time in their cars, and might appreciate what the automaker hasto offer.Sales figures for Land Rover are increasing rapidly and significantly, though the new carmarket has been shrinking. There are no plans to change the retail setting, described by theautomaker as: "The Land Rover Retailer setting is unique in the realm of retail automotiveexperiences, with an ambiance reflecting warmth, adventure and world exploration. Our relaxed,respectful sales process is one where a friendly and knowledgeable sales representative attends toyou the entire length of your visit." Because of the uptake in sales, mainly attributable to thepopular Evoque and the Asian market, Land Rover only plans on further expanding its retaillocations.Will the Automaker Remain Relevant? 5 Land Rover has made it out of a dark period in time during Fords ownership and is on the cuspof the "hyper-SUV" trend. After the big SUV/crossover boom in the early 2000s, a new trend ofexpensive, high-performance SUVs is starting to emerge. In 2002, Porsche defied all when itlaunched an SUV called the Cayenne, which has since become widely popular. Withnew/upcoming SUV offerings from Maserati, Lamborghini, and Bentley, consumers are willingto pay much more for "trendy" sport utility vehicles. Though many Land Rovers start at a muchlower price point, the new flagship supercharged Range Rover will easily compete at the low endof the market and with similar vehicles from BMW. Not to mention the upcomingAutobiography Range Rover, which starts at a mere $230,000+.The automaker is also beginningto diversify its portfolio, most notably with the Range Rover Evoque. One generally doesntassociate a Spice Girl with an off-roader, but the vehicle was in fact designed in team withVictoria Beckham. This diversification is slated to continue in order for the automaker to remainand become even more relevant.DB 3. Why Get a Car When You Can Own a Land Rover?Target MarketFrom Jeremy Clarkson of BBCs Top Gear to daddys little 20-something, Land Rovers arebought and driven by a very diverse group of consumers. There are consumers who purchase thehighly capable Range Rover with the intention of actually driving off roads, and then there arethose who think [and can afford to think] Cadillac Escalades and BMW X5s are clich.However, the automaker has a fairly narrow idea of its target consumer. A recent case study byAdMob describes their clients target customer as "an active male, high net worth demographicbetween the ages of 34-54." The brand is successfully targeting these individuals according to a 6 2008 article from Cars.com: "As the flagship of the Land Rover brand, and with its high pricetags, the Range Rovers demographics are impressive. The typical buyer is a professional orexecutive male, college graduate, with an annual household income of about $375,000."Trade AreasAccording to Chapter 8 of Retailing Management,many retailers use geographic informationsystems such as Claritas to define trade areas. In Claritass PRIZM segmentation, "Movers andShakers" are described as well educated, without kids, wealthy, and business-oriented. Thissegment is also said to drive a Land Rover Range Rover. Another (potentially untapped) group isthe "Winners Circle" who are similar but have children.The retailer should locate itself so theprimary trading area is in regions inhabited by these young, wealthy, adventurous demographics.The size of the primary trade area is quite large; Land Rover retailers are few and far betweenrelative to those of large department stores and even higher volume automakers

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