This paper would seek to provide an understanding of the advantages that would be gained by Continental Tires by expanding into the Asian Pacific Market and what advantages would be offered by Continental Tires to this new market. In order to expand or to increase the size of operations, it I imperative that the organization understand the sort of issues that would come across its way in terms of the different economic, political, social factors along with the way it would have to go about highlighting the competitive advantages that are possessed by its own product relative to this established competitors.
Continental Tires might have a strong foothold in its own domestic market but what cannot be ignored is the fact that the Asian Market is entirely different in structure, organization and methodology. This paper would seek to outline a possible marketing strategy and plan which would allow the organization under scrutiny to establish it in a market which is quite different from the domestic market of Continental Tires.
The paper would examine the market and the company by looking at certain important factors such as the Industry Analysis, Company Background, and a detailed marketing strategy that would encompass the four Ps along with the methodology of introduction and implementation.
Before stepping into any new market, it is imperative that an industry analysis be carried out in order to understand the sort of market the company is entering. The sort of competitors that operate the economic climate, the social factors that in the Asian market play a strong role in determining the sales strength of any product and lastly, the sort of laws and regulations which would pertain to Continental Tires.
The market which would be analyzed in detail would be the Chinese market which is a source for immense attraction for any global market since not only has the market developed to a great deal but the booming population is a sure shot huge sales revenue.
If one was to analyses the tire industry as an industry in it, it would mean looking at the rate of at which the tires are being bought and sold within a time period. If one was to analyze the tire industry all over the world, what would come across would be a substantial or rather exponential increase in the global tire industry. The global tire industry has experienced as of recent a stage of stable growth which has had positive effects for those companies which want to venture into other markets.
The sales trend form 2003 to 2006 alone was of an increase of around nine percent which means that the industry grew at quite a steady rate. As for any downturn in economic downturn, the global tire markets have always shown to start a new round of readjustment.
The sales value of the world’s 75 top companies has accounted more than 97 percent of the World’s total. These companies have highly contracted production methods and the entire global market is in effect controlled by these top 75 companies. In the case of the Chinese market, and what has been its impact on the global market and what it could mean for Continental Tires, a number of factors would need to be looked at.
The Chinese companies entail around22 percent of the world’s top tire companies which means that the Chinese region holds strong presence of local competition and hence, that means in order to establish itself Continental Tires marketing strategy would have to be comprehensive and attractive to potential clients.
An input of around US$3.5 billion has been made within the tire industry of China in the past four years only hinting at the strength that the Chinese market has had on the global market. If one was to examine the trend form 2005 till 2006, the investment in the expansion projects was more than US$ 900 million which hints at the sort of attractiveness that the Chinese market holds for the global markets and the tire manufactures operating on a global scale.
In fact, as of recent China became the biggest exporter to USA which has resulted in a number of companies setting up their operations in China. The lower costs of production have meant that China is in fact the next best destination for all global companies. As not only are the production costs quite low but in fact the large sized population means that the demand is quite high.
In the case of the Chinese industry, the total output of the used tires was equivalent to 330 million automobile tires and by the end of the last year, the auto-holdings of China had come up to 57 million with 170 million discarded tires. The Chinese market holds a lot of potential as each day 1000 new cars come on the roads of China every day. That means 1000 new customers every day whose demand would rise substantially as the tires would get used out with increasing speed.
As the Chinese market grows, so does the renovation market as a result of huge quantities of the discarded tires and the continuous growth of the tire outputs? In the case of the Chinese market, the discarded tires hold more importance since the production of new tires means a he loss in terms on environmental damages. The new tires could be adequately replaced by the used tires which could be renovated for the purposes of the Chinese.
Therefore, in the case of the Chinese market, continental tires would not only have to analyze it current production capacity and strength but would also have to analyze its ability o reproduce the discarded tires in order to cater to a large section of the market which believes in the use of the discarded tires.
If one was to look at the current major process methods which are being used for the purposes of discarded tires in China, that would entail tire renovation, Production of renewable plastic and powder production.
After USA, China is the second largest exporter passenger tires and light truck tires and the constant improvement which has been witnessed in the tire industry can also been attributed to the growth in China of the Tire industry. In fact most of the international global giants have joint ventures or wholly-owned tire plants in China.
The example can be quoted of Shenyang Plant which was established by Bridgestone of Japan which hints at the sort of competition that would be faced by Continental Tires. Hence, the tire industry of China is presented as a market which has emerged as a strong force which has attracted great attention in the global tire market as it has been seen as , having contributions to the world’s top 75 tire enterprises and even the global tire market.
If one was to analyze the Asian Pacific Market, the growth in the Production and the consumption is that of eight to nine percent putting it in the limelight for the global markets.
The company; Continental Tires began their operations from their production line and from the very beginning this organization was involved with figuring out the methodology regarding all the steps that were entailed in the production of goods and services. Their motto of team spirit, creativity, openness, flexibility, enthusiasm, commitment has made them the success story that they are today. It is one of the leading automotive industry suppliers, as it invests in making individual mobility much safer, more comfortable, and also having products which are much more forward looking than its competitors.
It was founded in the year 1971 in the city, Hanover, and is at current one of the five largest automotive suppliers in the world and if one wanted to analyze its dominance even further, the fact that it’s only second largest in Europe adds to this fact.
As a supplier of tires , brake control systems, Driving dynamics control, driving assistance systems , sensors, systems and components for products such as the power train and the chassis, instrumentation, infotainment solutions, vehicle electronics and technical equipment, which has resulted in this organization becoming one of the largest contributors towards safe driving and the protection of the global environment.
It is also recognized as a competent partner in the networked automobile communication business and industry. It has six different divisions which include the Chassis and Safety, Power train, Inter Passenger and Light Truck Tires, Commercial Vehicle Tires, and Continental Tires.
It is widely recognized as a driving force behind the future mobility concept just as it has been in the automotive industry. By the end of the year 2008, it had employees amounting to around 14,000 people located in around 35 countries. The various business units are recognized for having their own competitive advantages such as being number one worldwide for hydraulic brake systems, assistance systems, sensor technology airbag control units, air suspension systems, telemetric, vehicle instrumentation, and fuel supply system.
It is recognized as being number two for their electronic brake systems and the brake boosters.
In the tire industry alone it is recognized as being the forth best company while it is a market leader in Europe for passenger and light truck tires and industrial tires. It is the world leader for the foil of automotive interiors, conveyor belts, vehicle air springs, as well as the other sectors. Each different division and employee is considered as to be in their own right specialized forces that have the training of some of the best trainees in this business. The holistic approach which is taken by this organization has resulted in a well-connected and satisfied customer base.
This paper would seek to encompass certain vital marketing ideas and strategies which would allow Continental Tires to create a viable consumer base for it in China which is already home to some of the leaders in the tires industry. Hence, in order to cater to a clientele force which is already aware and educated enough about the different global leaders in tire industry, Continental Tires’ marketing strategy would need to be comprehensive.
This paper would seek to fulfill the following objectives:
- Understand and assess the Master Dynamics of the Chinese Market
- Target Customers by Online/Offline Channel Preferences
- Assess the strengths and weaknesses of continental in relation to the competitors
- Test Impact of Online Marketing Efforts
- Build Detailed Profiles of the different Market Segments
- Gain deep insight into the customers’ attitudes
The market analysis focuses the paper’s purpose in entailing the additional value to the target customer segments along with ensuring that Continental Tires establishes its aim of differentiating itself from other competitors in the market by providing such services and products which are a cut above and available extensively. The marketing challenge that has befallen continental tires is that of positioning the product and services in a manner which highlights the high quality, high value that is associated with all continental tires products.
Any strategy is about ensuring that your strengths are build upon while at the same time ensuring that that the weaknesses are reduced to a bare minimum. The marketing strategy would seek to outline the customer needs and target them accordingly. The marketing strategy would hence, being on this note that the target market and its needs would be looked at accordingly.
The SWOT analysis would therefore play a vital role in this regard as it would look at the strengths, weaknesses, opportunities and threats of the company and the competitors in order for Continental Tires to position it accordingly.
Other key factors would also be analyzed along with the SWOT analysis in order to evaluate all the possible external and internal areas of interest.
This marketing strategy would place special emphasis on the local market’s needs by analyzing the market in different segments such as income, demographics etc. the market has been broken down into standard classifications according to which the customer segmentation has been carried out along with the targeting strategy.
General definitions would be used for the purposes of this marketing strategy e.g. that of the price strategy etc. The issue that is being faced by Continental Tires is that of positioning itself adequately in China at a time when its competitors having established steadily in the market.
Strategic Marketing Components
The branding strategy that would be used by Continental Tires would be one that would build upon the company’s advantages and the specialized products which are being offered it. The image that Continental Tires has established for itself has been that of a market leader by offering high quality products and is a market leader in several of these products especially in the European Union.
In order to create this identity, the sort of branding strategy that would need to be showcased by Continental Tires would have to be one in which the company would be highlighting these strengths along with the high value products that it has for offering. A strength of any brand strategy is to focus on the right audience and in this case, the right audience is that of the working class and the younger Chinese who as they become more and more “westernized”, become more accustomed to material items and the 1000 cars which are coming on the roads of China everyday are an indicator of this fact. (Abell)
Hence, in order to present the high quality of its sensor systems, braking system, airbags, fuel supply systems it would need to target aforementioned audience in order to ensure that the marketing audience is targeted appropriately. But at the same time, what the branding strategy would need to entail would have to be the Chinese sensibilities as the Chinese are a race which is proud of their history and hence, this cultural factor would have to be taken into consideration when creating any branding strategy.
In order to enhance the brand equity, what continental tires would have to do is that it would have to reassert it s global position as one of the leading tire manufactures while at the same time trying to disseminate this information through as many channels of information dissemination as possible.
This brand is renowned world over for being a company which is socially conscious and renowned for its research and development faculties and since, these aspects are highly regarded by China, these factors would need to be made a part of the branding strategy in order to ensure that the customer satisfaction aspect is fulfilled. Since, continental tires would be entering at a time when the other tire manufactures have already established themselves in this region.
Therefore, the branding strategy would need to be strong and also the marketing reach would have to be strong in order to leave a lasting impact.
Image and Positioning
The way the company positions itself relative to its competitors plays a strong role in the eventual success of the organization. The process can be defined in a number of steps which would be covered by Continental Tires during the marketing strategy. The first step involves defining the market in which Continental Tires would be operating.
This would entail anal sing the relevant buyers as well. The market which continental tires is trying to branch out is the Chinese market and the fact that has come across has is that market has developed to a great extent and in fact has created a strong position for itself in the global market as well. Not only is it hugely attractive for a number of global manufacturers who have settled down in China but the fact that is one exports to the global markets are huge in number adds to the strength of this market.
Therefore, in order to define its position , Continental Tires would need to have extensive marketing which would encompass the relative strengths of this organization such as the fact it s products are market leaders in their own right and that the research and development faculties are amongst some of the best in the world.
The next step would entail identifying the attributes which is also defined what is called the product “space”. The different attributes would include the airbag, sensors etc which Continental Tires has a reputation for having quality ones and hence, If the customer would have to be targeted according to these advantages, that would allow this company to create a valuable consumer base for itself.
Since the Chinese market is relatively different from the current markets of Continental Tires, it would need to collect information from a sample of customers about what they believe continental tires is and would have to determine each product’s value according to the customers.
The company managers would need to decide what would be most appropriate attributes which would have to be advertised to the targeted market as the different economic, social, political factors would have to be kept. Continental Tires would have to maintain a balance between the way the product is positioned and the way the consumer views it.
In order to improve the value of the product, Continental’ strategy would have to emphasize on its strong quality of products, outline the various success stories which it has achieved till now especially in Europe, highlight the top quality customer service which it has been renowned worldwide for, stress on convenience, improve the design of the product’s packaging and labeling especially since Continental Tires place strong emphasis on safety of the products and environmental effects. These aspects would allow it to have a competitive edge over its competitors.
The target market includes the working class and those amongst the younger generation who can afford to buy the product. In the case of China, in the recent decade this region has witnessed growth exponentially especially in the cities and hence, in order to ensure that the company is able to generate substantial profits, it would have to target the city clientele initially as it makes up most of the consumer demand. Hence, in order to ensure that it is able to target this clientele Continental Tires would have to come up with innovative ways of targeting the younger generation while at the same time highlighting its quality features to the business class which are more interested in the “value-added” aspect. (Abell)
Sustainable Competitive Advantage
The sustainable competitive advantage would be the fact that not only does this company produce products which are environmentally safe but the sort of attention which is paid to safety and research and development have allowed it to create a niche for itself in this market.
The products of Continental Tires are renowned for the sort of performance that they deliver and the fact that are of high quality. This very aspect has ensured that that this company has been able to keep ahead of its competitors through constant innovation and hence, by introducing products such as sensor technology, airbag control units, air suspension systems etc, the idea of differentiation has been clearly met in all regards.
The competence it has achieved in networked automobile communication is a formidable achievement which would allow it creates a niche for itself in a market which is congested by some of the market leaders and hence, cater to a larger audience as a result. (Abell)
The distribution channel would be one which would require the services of the current retailers and the current channel structure operating in China until Continental Sales sets up its own retail stores which it would so in different cities at first in order to establish a strong foothold in the nation. Continental Tires would establish its own retail stores in cities such as Beijing while at the same time supply its products to retailers operating all over China in order to increase its consumer bass. The number of intermediaries in this case would be the retailers and it would be put Continental Tires, whether would want the wholesalers to also play a role in the distribution of their products.
The set-up of its own retail outlets would allow this company to have an edge over all those who are merely selling through wholesalers and retailers as it would have a separate identify and would have first hand information from the customers along with creating a vital connection with the customers.
The pricing strategy would be competitive but certainly not which would be low-since the products being offered are high quality products. Hence, the pricing strategy would one which would at par with the competitors but at the same time would be priced keeping in mind the sort of quality which is in the offering. The difference in the pricing strategy would be that the prices would be revised once the production costs are revised but still they would be kept at competitive rates.
Advertising and Promotion
The sort of advertisement which would be carried out would be one which would include using national channels, international media channels, personal selling at retail outlets, different supermarkets would have the flyers, posters, sample products lined up, leaflets would be sent to different manufactures of cars in order to keep them aware of this new tire manufacture in mind, offering discounts to certain retailers to advertise the continental products more, having famous Chinese race drivers in the advertisements or businessmen in order to cater to the younger and the business class generations.
The website would be launched by making it a media and public affair and there would be an option of the website being in Chinese language. The sort of colors used would be keeping in mind the sort of aesthetic sense that the Chinese have. At the same time, it would include a number of promotional activities and offers available online as the Chinese nation is one of the most technologically advanced nations in the world. The website would have to be updated with all the latest product offerings along with all possible options to buy the products online in order to ensure that the customers are allowed to keep their options.
The competitive advantage is the fact that this organization relies heavily on the safety of driving and hence, that would become an important part of its marketing strategy and hence, along with the products it would give DVDs/ cads on safe driving and even in certain instances, safe driving lessons etc in order to make the customers feel that continental tires does really care.
The Human resource would have to be large in number due to the fact that it cheap and readily available hence, around 800-1500 employees would need to be hired over the initial implementation period in order to initiate the production and selling processes. The company would have to make use of local hiring agencies and the help of universities. The training period would have to be three-four months since the company heavily releasing quality production and in certain cases; it would have to provide management training courses as the management structure of the company might differ from the local standards.
The company would need to set up the retail outlets in various cities and would have to start with 10-20 at least within the first three months and would have to pick up its pace thereon.
The timeline for this purpose would be a minimum year as the production, setting up, advertisement and then the research in order to establish appropriate know-how about the nation would require certain time.
Market Research Reports: China Automotive Tires Industry. ISBN : 978-981-4163-06-4. Web.
Marketing basics: Marketing strategy based on market needs, targets and goals.
Abell, “Defining the Business: The Starting Point of Strategic Planning” J. B. Quinn, “Strategies for Change: Logical Incrementalism” (Richard D. Irwin, 1980).