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

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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).

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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.

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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.

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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.

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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%).

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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

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