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UGB 309 Critical Issues in Marketing

Alvin Chai Ming Han

EXECUTIVE SUMMARY

The marketing concept has been changed since 19th

century to 21st century. It is basically

changing from product base to social base. Marketing orientation can be used as an

implementation of marketing concept. The marketing orientation consists of production

orientation, product orientation, selling orientation, marketing orientation and societal marketing

orientation.

The background of the automotive has transform tremendously since it was created starting from

a wind driven vehicles to combustion engines and hybrid today. However in this assignment it

will be focusing in electrical vehicles. At the model and theory part, the six market model was

used to discuss how it applies into the electric sector.

Last but not least, it discuss about the future base on model and theory used. It also discusses

how it helps marketing manager understand and make informed decision making in the future in

terms of concept and approach.




Alvin Chai Ming Han

1.0 INTRODUCTION

What is marketing concept? Marketing concept defined as the marketing management

philosophy which holds that achieving organizational goals is very much depends on

determining the needs and wants of the target markets and delivering the desired satisfaction

more effectively and efficiently compare to the competitors do. (Kotler et al, 2005). To simplify

it, the philosophical idea underlying all marketing thought. (Blythe, 2006) The corporate success

will basically come from satisfying customer.

The evolution of the marketing (Appendix 5.0) has been changing since 19th

century to the early

of 21st century. The marketing started off with production oriented in the 19

th century where it

focuses on producing cheap. The demand at that particular period exceeds the numbers of supply.

When it move to the early of 20th

century, the marketing changed to sales oriented whereby they

practicing the philosophy of “Let sell as many as we can”. However, when it moves to the late

20th

century, it changed to marketing oriented. The reason of changing is because consumers are

getting more intelligent and more educated, therefore it is necessary to find out what exactly the

markets want. By knowing what exactly the markets want isn’t enough to capture consumers.

Therefore the marketing evolution today which is the 21st century has come to the relationship

oriented. The world has become extremely competitive out there. The number of supply is

exceeding the number of demand, therefore in order to attract customer, it is a must in building a

long term relationship with the customers.

In April 1990, Kohli and Jaworski (1990) have stated that marketing orientation can be used as

an implementation of marketing concept in his book title Journal of Marketing. Marketing

orientation can be defined as the organization-wide generation of market intelligence,




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dissemination of the intelligence across departments and organization-wide responsiveness to it".

(Kohli and Jaworski, 1990)

Marketing orientation can be separate into five different types of orientation. These are:

Production Orientation

Production Orientation is basically a general approaches to business that well focuses on

production base. Companies that focus on production orientation will tend to make its

operation more efficient due to the demand of producing in bulk. This orientation was

started in 1950s. Jean-Baptiste Say – a French businessman stated in Says Law suggested

that if a company able to produce good products, the demand will eventually rise

Product Orientation

Product Orientation exists when companies started to concern about product quality. In this

orientation, companies are more focus on the product quality together with the product

features.

Selling Orientation

Unlike production and products orientation, selling orientation is more focusing in selling

and promotion of a particular product. This orientation became popular after the World War

II as products were not selling as easy as they have been.

Marketing Orientation




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Marketing orientation is to define what customers want and follow by looking for an aim to

satisfy them. This orientation became popular when the world changed to supply more

demand.

Societal Marketing Orientation

Societal marketing orientation move into the world where companies address the needs

wants and desire of customers and then deliver the desired satisfaction to the customers

more efficient and effective than their competitors do. This orientation helps to build a solid

relationship with the customers and aiming for long term run.




Alvin Chai Ming Han

2.0 BACKGROUND OF AUTOMOTIVE INDUSTRY

The automotive industry is often thought as one of the most global of all industries. It is one of

the world's most important economic sectors by revenue. Automotive was not invented in a

single day and a single inventor. The history of the automotive shows the evolution that took

place around the world. The modern automotive was created with not less than 100,000 patents.

Nevertheless, it can be point to the many firsts that occurred along the way in the evolution of

automotive industry.

PAST

Back to 1335, Guido da Vigevano an Italian designs a wind driven vehicles. However, it

does not build. Later, Leonardo da Vinci evolve the wind driven vehicles to a clockwork

driven tricycle where it has a tiller steering and a differential mechanism between the two

rear wheels.

Later on, the automotive does not evolve much until 1678 where a steam powered vehicle

was built by a catholic priest named Father Ferdinand Verbiest. Nearly 100 years later, the

first vehicle to move under its own power was designed and constructed by Nicholas Joseph

Cugnot and M. Brezin respectively in 1769. The second unit of steam powered vehicle was

built the following year which it weighed 8000 pounds and having a top speed of 2 miles per

hour. Unfortunately, the early steam powered vehicle was too heavy that it only can practical

on a perfectly flat surface.

However, the first gasoline powered car was created by Charles E. and J. Frank Duryea, two

brothers in America in 1893. The evolution from gasoline powered car to petrol powered car




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took about 3 years which built by Eli Olds in 1896. On 1906, the Rolls Royce Silver Ghost

was a six cylinder car. It represented the most modern car on the particular period. This

period therefore marked the end of beginning of the automotive.

PRESENT

Automotive todays is not about traveling form a place to another. While the road and

technology improves tremendously, people expecting more on speed. They expected to go

much faster, comfortable and safety. Cars that produce by the early of 1930s majority are

able to meet those criteria. However, as time goes by, the speed that produces by a car is

good enough. But people are looking into more fashion as the world enters the year of

millennium. Therefore, engineer and designer todays are not only design on speed but also

into a more stylist look for an automotive.

FUTURE

In the future, the automotive industry will need to react to the new market requirement in a

quick, flexible and cost saving manner. There is much concern today about the air pollutants

that automotive has put into the atmosphere. Therefore, automotive differentiation in the

marketplace is very much depends on the electronic features. To remain competitive in the

competitive world, automakers should offer better features such as multiple airbags, comfort

control, hybrid system, electronic system and so on.




Alvin Chai Ming Han

3.0 SPECIFIC SECTOR

The future of the automotive sector is still quite open mainly it might be possible to move into 3

different sectors which either electric, hybrid or hydrogen fuel-cell vehicles. The following is the

more in depth information about the three different sectors.

3.1 ELECTRIC

Electric cars (Appendix 1.0) look exactly like gas-powered cars. What makes it different

is that electric car does not have a gas tank and a tail pipe. Instead of big engine that

trigger the car, all it has in an electric car is basically an electric motor and its controller.

There are three major types of electric motors in today’s electric car . These are DC

brushless, AC induction and the Permanent Magnet motor. Each types of electric motors

has its pro and con. The DC brushless will offer higher speed but low in acceleration. The

AC induction has better acceleration but average in top speed. The Permanent Magnet

Motor falls right between the two types of electric motors.

3.2 HYBRID

Hybrid (Appendix 2.0) cars are one of the most symbolic and popular symbols of “Go

Green”. These vehicles continue the functionality of traditional internal combustion

engines and then combine it with a battery-powered electric motor. The reason of adding

the battery-powered electric motor is to takes some of the works off from the combustion




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engines. By taking off the works of the combustion engines, hybrid cars often consider as

a fuel saving car.

The on board batteries of hybrid cars are recharged by capturing the kinetic energy that

generated while using the brake. However, some of the hybrid cars use its combustion

engine to generate electricity by spinning the electrical generator. This electrical

generator will either recharge the battery or directly feed the power to the electric motor

that powers the vehicles.

3.3 HYDROGEN FUEL-CELL VEHICLES

A fuel cell vehicle (Appendix 3.0) is powered by hydrogen. This type of vehicles is

using a completely different propulsion system than the conventional vehicles. Unlike the

conventional vehicles, the hydrogen fuel cell vehicle does not omit harmful emissions.

Fuel cell vehicles use electricity to power motors that located at the vehicle’s wheel. This

type of vehicle will produce its primary electricity by using a fuel cell powered by

hydrogen. Polymer electrolyte membrane (PEM) is the type of fuel cell that most

commonly use in fuel cell vehicle.

The fuel cell vehicle is built in such a way that the electrolyte membrane is sandwiched

by a positive electrode and a negative electrode. Both side of electrode call cathode and

anode respectively. Normally, hydrogen will be introduced to the anode side while

oxygen will be on the other end – cathode. The hydrogen molecules that travel through

the membrane produced the electrons. The flow of the electrons through the external

circuit forms the electrical that needed to power up a fuel cell vehicle.




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The sectors that should be focus in the future will be the electrical sector. The reason that

electrical will be the key sectors in the future is that it come out the top compare to the hybrid

and hydrogen fuel cell vehicle.

The electrical vehicle has its advantage in energy efficient. An electrical vehicle is able to

convert 59 to 62% of electrical energy to conventional vehicle that only able to convert 17 to 21%

of energy. Besides that, electrical vehicle do have its advantage in environmental friendly. It

does not emit tailpipe pollutants compare to hybrid car yet still having half of the part of

combustion engines that need gasoline to generate. The advantage in environmental friendly

indirectly benefit to the society as the air pollutant has cause society living in a very sick

environment

While in the marketing concept, product orientation will be much more suitable in the electrical

sector. Product orientation is concerning about product quality and its features. Although there is

advantages of electrical vehicle but there is the disadvantages as well such as the driving range of

the vehicles. Most of the electrical vehicles can only run for 100 to 200 miles before recharging

where gasoline vehicle can run more than 300 miles before refueling. On the other hand, the

recharging time to fully charge will need to cost 4 to 8 hours. Therefore, the quality of the

vehicles should improve. It should extend its capability to run long stint before recharging.

Besides that, the features of recharging should improve in order to lower down the recharging

time and yet able to increase the capacity of electrical storage.




Alvin Chai Ming Han

4.0 MODEL AND THEORY

The key theoretical marketing model to the electric sector is the six markets model (Appendix

4.0). This framework identifies the six key market domains to help organizations direct its

marketing activities and where the development of detailed marketing strategies may be needed.

The six key market domains are

Customer Markets

Customer Markets are at the center of the six markets framework. It is because that

customer is the prime focus area in marketing activity. However, marketing activities

should not focus much on transactional marketing. It has to be building long-term

customer relationships. While winning a new customer, it should be keeping that

customer as the existing customer are much easier to sell and frequently more profitable.

Referral Markets

Referral markets are the best form of marketing. It is a best marketing that done by the

organization’s customer. It show how crucial is the customer loyalty and how important

it is to be to the organization.

Suppliers Markets

Organizations’ relationship with the suppliers seems to have changed. In the traditional

relationshi ps, organizations’ often squeeze its advantages to its own side. The new

relationship is to aim at close co-operation between customer and supplier starting from

the very early stage, mutual concentration on quality, commitment to flexibility, lowest

costs and long term relationships.




Alvin Chai Ming Han

Recruitment Markets

The most scarce resource for an organization no long capital or raw material - It is

skilled people for the organization. Skilled people is vital, perhaps the most vital element

in customer service delivery.

Influence Markets

Influence markets cover a range of markets. This influence markets tend to be vary

according to the type of the industry or industry sector that an organization is in. To

make it simple, the involvement in other activities may be crucial in protecting the core

business.

Internal Markets

The internal markets can be separable into two aspects. The first aspect is the idea of

every employee and every department in the organization is both an internal customer

and internal supplier. The goal is to ensure that the organization is on 100% effort by

providing and receiving excellence service from every individual and every department.

The second aspect is to ensure all working staff work together that is aligned with the

organization’s stated mission and vision. Internal marketing is an important activity in

developing a customer focused organization because it concerned with communications

and responsibility.

The six marketing model is very much important in electrical vehicle sector. In the customer

markets, the electric vehicle industry not only has to look for new customer but also need put in




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effort in keeping their customer. It is because the existing customer will be much easier in

generate profitability by providing repeating sale.

While in the referral markets, the viral marketing is crucial to the electric vehicle industry. It

helps the industry to market for free. Usually viral marketing majority was done by the loyal

customers that are happy and satisfy with the product. Therefore, it is important to keep the

existing customer that the organization do not wanted to lose its customer while working so hard

to gain a new customer.

In this 21st century, the relationship with the supplier is important. The demand has exceeded the

supplier. Therefore, it no longer likes tradition relationship where each party fights hard to gain

as much as they can. In this century, people are looking for win-win situation. The electric sector

is very much demanding in quality, a strong relationship with the supplier will definitely able to

gain a good piece of quality material. Besides that, a strong relationship with the supplier will

able to trigger flexibility in credit terms and have the power to negotiate to the lowest price.

Recruitment markets are important to the internal part of the electric sector as it involve a lot of

complicated and skillful problem. A skillful people will definitely able to bring the sector to

another height by innovate much more features in the future.

Besides recruitment markets able to bring the sector to another height, the influence markets can

does the same to lead the sector to another level. Being an electric sector, information technology

should be a field that should keep addressed.

The internal market is the key player within the sectors. Automotive industry is huge and it is

separate into different department that each department has its own duty. Although the employee

has its own duty, but built relationship with another department is important. It is because the




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departments are working together and its link. The process of producing an electric vehicle is

from a department to another. Therefore, it is important that internal market relationship remain

strong.




Alvin Chai Ming Han

5.0 CONCLUSION

As a conclusion, the six marketing model illustrate how organizations have a network of

relationship with different market. The customer market is place at the center of the other five

markets is because it is the most important after all. Without customer organization will not have

profit. In the future, the manager should implement loyalty bonus reward to the existing

customer in order to keeping them and be loyal to the organization. Besides that, referral bonus

should be reward to the loyal customer due to its effort in marketing the product. While the

automotive electric sectors should be focusing in product orientation, the relationship with the

suppliers is crucial. If the suppliers can provide materials that are quality, a strong relationship is

crucial. It is because that the automotive electric sector does need quality material to produce a

good product. The industry does not want to lose good suppliers. If a supplier provides bad

quality material and the industry produce a bad product, it surely will lose the customer market.

The relationship with the suppliers can strengthen by paying on time whenever there is a bill to

the supplier. On the other hand the recruitment market, marketing manager should provide

internship program for several engineering institution. This will allow the automotive electric

sector to haunt for skillful people. As the student graduated from the institution, the industry can

capture the student into the sector. Whereas in the influence market, marketing manager should

look into which activities involvement will able to protect the core business of the industry. For

instance, the automotive industry that focuses in electric sector should join the automotive show

that held once a year. Last but not least the internal markets. The relationship within the

organization should be strong and solid. Without motivation, the employee will not perform to

their potential. When the morale of the employee in the industry is low, the quality of the

outcome of the product will not be satisfying. Therefore, it is crucial to acknowledge the




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employee about the goal of the industry. Besides that, in order to keep their motivation high, the

industry should hold a motivation camp to boost up relationship of the employee that from

different department of the industry. With a healthy relationship, the way of working will be

much more efficient and effective.




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6.0 APPENDIX

Appendix 1.0

Appendix 2.0




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Appendix 3.0

Appendix 4.0




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Appendix 5.0

Product based approach

Least cost production Paradigm

Sellers’ market

Relationship based approach

Market led Paradigm Buyers’ market

1946 2000




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7.0 REFERENCES

Kholi, A. and Jaworski, B. (1990) The Journal Of Marketing . p.1 - 18.

Oracle Education Foundation (n.d.) How They Work . [online] Available at:

http://library.thinkquest.org/20463/howtheywork.html [Accessed: 29 April 2013].

Professor Adrian, P. (1993) Relationship Marketing. The Six Marketing Framework , p.4

- 14. Available at:

https://dspace.lib.cranfield.ac.uk/bitstream/1826/2910/1/SWP%252035-93.PDF

[Accessed: 28 April 2013].

Susan, H. (2003) Marketing Changes. Torquay: Thomsom, p.101.

Treehuger (2007) Hybrid-Electric Cars: How They Work, Battery Technology and More.

[online] Available at: http://www.treehugger.com/cars/hybrid-electric-cars-how-they-

work-battery-technology-and-more/page2.html [Accessed: 28 April 2013].

U.S Department of Energy (2013) Hydrogen Fuel Cell Vehicles. [online] Available at:

http://www.afdc.energy.gov/vehicles/fuel_cell.html [Accessed: 28 April 2013].

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