Strategic Option for AMW...
2.1. Segmentation and Targeting.
2.2. Growth Strategy for AMW...
2.2.1. Market penetration.
2.2.2. Product development
2.2.3. Market development
2.2.5. Suitable strategy for AMW...
2.3. Positioning in the Business Strategy Model
2.3.1. Cost leadership strategy.
2.3.3. Cost focus.
2.3.4. Differentiation focus.
2.3.5. Suitable generic strategy for AMW...
2.4. STP for Scenario.
2.5. Value Proposition Canvas for the Selected Scenario.
2.5.1. Customer Profiling.
2.5.2. Value Propositions.
2.5.3. Four P’s.
AMW (Associated Motorways Private Limited) is the Sri-Lankan organization established in the year 1949. So far, it has accomplished 65 years of service in Sri Lanka and made itself a reputed company. It deals in providing world recognized automotive products and services to its worthy clients. Moreover, it has been a manufacturer of rubber-based goods and monetary services. The brands represented by this company entail Nissan, Piaggio, Ceat, Castrol, Renault, Maruti, and more.
The identified plausible scenario for the company is “The Road to Zero” in which a more healthy option for common mobility is linked with the limiting controlling environment. This is considered to be most important from the safety of the environment by using electric vehicles as they are emission-free and noise-free. Furthermore, the electric vehicles will enter the market originally by the political and controlling means rather than the economic demand arrangement.
The major objective of the consultancy report is to use “The Road to Zero” as the base that the company must use to develop its strategy shortly. To be more specific, this report aims at outlining the strategy for AMW regarding the chosen scenario.
This report outlines the marketing concepts to make a credible strategy for the company. It generally involves the concepts like STP model, Ansoff matrix for growth strategy, porter's generic strategies, and value proposition canvas for the company using customer profiling that leads to defining four P's of marketing.
To develop a strategy for the company in regards to "The road to zero", this section discusses the segments and targets of AMW. Further, it entails the growth strategy for the company using the Ansoff matrix tool. Additionally, it discusses the porter's generic strategies to define its position in the market. It also uses the STP framework to analyze more about the chosen scenario and set to make strategic choices accordingly. Moreover, it describes the value proposition framework for the scenario so that clients may find a reason to but the products and services of AMW. The main goal of the company is to offer the EV (Electric vehicles) to the clients to compete in the competitive environment by focusing on the goal “The road to zero”. Currently, it is offering Nissan Leaf electric cars in this respect.
Indeed, the companies that desire to attain a competitive advantage over their rivalries must have to know their clients and their extraordinary preferences. Therefore, there is a need for a company to identify the parts of the market that are different and the company can better satisfy the demands of clients (Venter, Wright and Dibb 2015). The segment in the market means the range of individuals who share common features. Likewise, AMW Company needs to know its customers and it can be segmented based on income, age, lifestyle, gender, and more aspects (Bohnsack, Pinkse and Kolk 2014). The current market segments of the company are business people who need cars on lease to visit the clients. Further, the company serves people of all ages above 18. It serves the segments including urban, rural, and semi-urban areas. It thrives to deliver quality services, successful delivery of outstanding performance, and client convenience via its wide network throughout Sri Lanka. The electric vehicles by AMW will be offered to wider markets to fulfil its dream of “the road to zero”. The expanded market for this particular goal covers countries east Africa, and South East Asia. Furthermore, it decides to recognize the niche areas in the chosen segments and customize its product offerings to suit the particular needs.
The target market represents a set of clients to whom a company desires to sell its services and products. Additionally, it means the segment on which a company puts its wholehearted marketing efforts is the target market for the company. It is focused on assessing the prevalent division’s appeal and selects one or more segments to serve (Weinstein, A. 2014). The AMW Company must have to target the business individuals for its electric vehicle like the Nissan Leaf. It is because these officials need cars regularly so they can either buy or hire from the associated motorways private limited (Widmer, Martin and Kimiabeigi 2015). As far as “the road to zero” scenario is concerned, the company must extend its target market by evaluating deeply the attractiveness of the major segments of the company. Some people believe in quality products while some need products at reasonable costs.
The Ansoff matrix is the best suitable planning model that assists businesses to define their market growth strategy and product. According to this model, there are four strategies to help the company grow and analyze the risks linked with each strategy. The four strategies are named market penetration; product development, market development, and diversification (Hussain et al., 2014).
2.2.1. Market penetration
This strategy is focused on augmenting the market share of the company by selling its existing products to existing markets. Further, this strategy can be effective by increasing promotional and distributional activities; by declining prices to appeal to novel clients; and by acquiring a rival in the identical market (Bocken, Fil and Prabhu 2016).
2.2.2. Product development
A new product is introduced to the existing market by the firm in this strategy. Moreover, product development requires widespread research and development and growth of the product range of the company. This strategy is effective in case when a company has a clear understanding of its existing markets and it wants to serve them with innovative products. It can easily be done by creating partnerships strategically with other companies to attain access to each partner’s distribution channels (Benur and Bramwell 2015).
2.2.3. Market development
In this strategy, the company enters a novel market with its present clients. In this respect, expansion means expanding into diverse geographical regions, and segments. It can be done by catering to a diverse range of customers or entering into the global market or overseas market.
An entirely novel product is to be introduced to the novel market in this strategy. It is the riskiest strategy as it is entirely new both from market and product perspective. However, it can be profitable also as it opens up a novel revenue stream for the organization (Holder and Zhao 2015).
2.2.5. Suitable strategy for AMW
Since the company, AMW is already offering an electric vehicle in the form of Nissan leaf. It must adopt a market penetration strategy to focus more on the needs of existing customers. Furthermore, the clients in the automotive industry are indeed becoming more conscious of the environment. Also, they are concerned about clean air, rising rates of fuel, urban congestion, and more. Therefore, it constantly sets challenges for automotive companies to modify their products in such a way that all concerns of people could be resolved. With regards to this goal, AMW must have to use a product development growth strategy to modify most of its products like cars, trucks, vans, and more into electric vehicles that can be appropriate for individual and last-mile connectivity. It is also recommended to the company that it must partner itself with certain ecosystem stakeholders that could drive prompt adoption of electric vehicles. Moreover, AMW can also associate with establishments who can spread awareness about the lower energy prices, market awareness, strict pollution controls, and readily available charging stations that can lead to developing fast impetus for its adoption in future endeavours. The new products can be made by modifying the existing ones with certain ecological and sustainable features. These may include easily chargeable at home, lithium-ion battery, advanced technology, e-pedal facility, UV cut glass, auto light system, VCD (vehicle dynamic control), cup holders, kicking plates, headlamps with LED low beam, auto leveller, and LED high beam.
To adapt to the changing needs, and demands of the customers, technological advancements, globalization, competition, and innovation, AMW Company must have to create a niche in the corporate strategies that can successfully help it in positioning itself (Islami, Mustafa, and Latkovikj, 2020). Porter's generic strategic model is suitable to understand the positioning of the company. The generic strategic model by Michael Porter advocates four strategies namely cost leadership, cost focus, differentiation, and differentiation focus. In the automotive industry, this framework will help AMW to preserve competitive advantage, and appeal early adopters for electric vehicles. It provides the company direction in planning incentive systems, review processes, and corporate provisions. It has been suggested by the porter that by adopting any of the generic strategies, a company can secure a sustainable competitive advantage in the industry (Moon et al. 2014).
2.3.1. Cost leadership strategy
The companies use this strategy by targeting to cost restricted clients to attain market share. The firms that want to become the lowest-cost producer in any industry can adopt this generic strategy. The suitable traits that a firm must have to adopt this strategy are as follows:
This strategy requires companies to offer unique product design, quality service, and technologically supremacy to the users. This generally is linked with charging premium prices for the goods as there is a higher cost associated with creating unique products. The features of the companies adopting differentiation generic strategy are robust research, and innovation; high-quality products; effective branding, industry-wide distribution within all vital channels (Atikiya et al. 2015).
2.3.3. Cost focus
The firms that want to serve smaller segments and also seek to establish a lower-cost advantage can adopt the cost focus generic strategy. Furthermore, it means that when a company pursues a competitive opportunity, it chooses a segment in the industry, and adapts its strategy to help them to the prohibition of others.
2.3.4. Differentiation focus
This strategy requires firms to develop product differentiation however in a lesser number of sections. These organizations have to put their efforts into recognizing the customer segments rather than the wider population (Keiningham et al. 2020).
2.3.5. Suitable generic strategy for AMW
The most suitable strategy for the AMW Company to position itself in the market is the differentiation strategy by making its products ensures sustainability. This generic strategy creates a competitive advantage reliant on the growth of products that differentiate AMW from other automotive companies in the industry. Furthermore, the electric vehicle's products it offers currently or will offer in the future are competitive due to the reason that it integrates advanced sustainable and ecologically friendly technology. This strategy is perfect for fulfilling its goal “the road to zero” as the company will be able to attract more potential customers who are progressively concerned with environmental issues or want to have environmentally friendly products. Additionally, there must also be an investment in R&D (research and development) to develop unique differentiated products that satisfy the demands for enlarged renewable energy solutions like batteries for numerous purposes (Bayraktar et al. 2017).
It is the most familiar strategic tool in contemporary marketing and is the most commonly applied model in practice (Ghahnavieh 2018). The steps of this model are described below.
There are numerous criteria based on which a market can be segmented namely geographic, demographic, psychographic, and behavioural. It involves dividing the wider population into groups as per particular features like social status, age, lifestyle, benefits, gender, personality, region, and more (Haider et al. 2017). For the chosen scenario “the road to zero”, the market of AMW must be segmented based on people's perception of eco-friendly products like electric vehicles. Further, it can also segment itself based on the age group of people and price sensitiveness of individuals for a product. The segments of AMW are as follows:
It includes the most attractive and worthy segments out of the chosen segments by the company for a particular product. The specific criteria that must be used for knowing the worthy segment are money, difference, market size, accessibility, and benefits. It is a fact that mainly the younger generation individuals are concerned for the environment and are ready to adopt the technology-based products in any industry (Nadube and Didia 2018). Therefore, AMW must target the individual’s ages between 20 to 40 and most preferably the young business professionals who need cars daily. Furthermore, its semi-urban segment is to be chosen to serve them with electric vehicles solution and particularly serve middle-class families or individuals. The customers who are knowledgeable and educated are more concerned about the environmental issues and get attracted to the electric vehicle more promptly than others Bohnsack, Pinkse and Kolk 2014).
Market positioning refers to the presentation of companies' products to diverse segments of the target market (Andaleeb 2016). The positioning of the AMW must position itself by offering innovative and cutting edge technology of clients in the form of its sustainable products. Since electric cars are not common thus, distinctive positioning will be better for AMW. The efforts that the company must put on are to create awareness of climate change and global warming to the people so that they could be made aware of the use of electric cars for the preservation of the environment. Also, the awareness program by the company can help make clients socially responsible towards the environment (Larcher and Tarascon 2015).
There is indeed no business without clients and worth generated to fulfil their desires and preferences. Value proposition refers to the value that the firm promise to offer to its clients. The value proposition canvas is the framework that offers a tool to explore further the tastes of clients and value creation. Moreover, it is the rational extension of value proposition and customer segment elements of BMC (business model canvas). The key to this model is the interaction between clients and businesses initiating with design and indicated in the market. This tool was developed to ensure that there is a fit between the market and the product (Pokorná et al. 2015).
2.5.1. Customer Profiling
A customer profile must be developed for each of the chosen customer segments as there are certainly diverse jobs, pains, and gains associated with each segment. There are three aspects of customer profiling as described below:
Gains: It includes the benefits that the client expects and needs and the things that may enhance the probability of adopting a value proposition (Kyhnau and Nielsen 2015). The gains that can be offered to clients with the electric vehicles of AMW are high-end battery technology, Brand recognition, differentiation in designs, higher safety ratings, and many more.
Pains: It entails the negative emotions, experiences, and risks that the client experiences in the procedure of getting the job done. In terms of offering electric vehicles to the clients by AMW, there can be fear of dead battery, lack of charging stations, frequent charging, harm or accident, and buy before the price drop.
Customer jobs: It generally includes the emotional and social tasks that clients are trying to act. Further, it entails the problems they are trying to resolve and the desires they wish to fulfil. The customer jobs in regards to electric vehicles are commute to perform business and family activities, their mobility. Furthermore, the problems the clients are facing nowadays are of pollution that is being present in the environment due to non-electric vehicles so they want companies to offer some exclusive set of features in the form of electric vehicles to curb the issue (Hidayat, Suci, and Saliha, 2016).
2.5.2. Value Propositions
Value proposition refers to the benefits that the company delivers to its clients, and its USP (unique selling point). It is the bundle of benefits that can be judged through services, products, and the marketing strategies of the company (Payne, Frow and Eggert 2017). The value proposition of AMW in respect of offering electric vehicles must be to offer a diversity of electric cars for the diverse needs of individuals, offer reliable and consistent customer service; there must be a connection with the public conveyance. Furthermore, safety enhancements by introducing better designs to products can be its value proposition. Repair services and the after-sale services must be offered to clients to maintain their retention for the long term.
The value proposition includes elements such as gain creators, pain relievers, and products & services.
Gain creators: It describes how the products and services of the company create customer gains for customer profiling. Gain creators plan how the company commits to creating results and benefits that the clients expect like social gains, cost savings, and more. In the case of AMW offering of electric vehicles, the gain creators are autonomous cars, emphasis on style and design, performance with 0-100 Km/h, and high-tech feel touch screen attached, and more.
Products and services: It describes the list of all the products and services that offer the gain creators and pain relievers on which the value creation depends. In this respect, the products and services that are to be offered by AMW is Nissan leaf, warranty for about eight years for the battery, diverse brand models for the electric vehicles, mainly cars.
Pain relievers: It describes how exactly the goods and services of the company lessen particular client pains. The pain relievers for the electric vehicle of AMW are charging 45-90 km/h available, robust charging networks, and 5+2 seats in most of its offerings Prof and Fojcik 2015).
2.5.3. Four P’s
There are four Ps considered to be the marketing mix that refers to elements that link to capture and reinforce the unique selling point of a brand as compared with its rivals. The four Ps are named as the product, price, place, and promotion that all assist the company to create value for the business, and deliver value to the customers (Išoraitė 2016).
Product: As per the value proposition and customer profiling, the new product that AMW is going to serve customers with green sustainable products focusing on electric vehicles concept to reduce the effect on the environment and emission of effluents. It is a highly economical vehicle available at reasonable price ranges for its clients (Günther, Kannegiesser, and Autenrieb 2015).
Price: There will be an affordable price for its target market. However, due to the unique products of AMW, customers are willing to pay higher prices for innovations, and ecology. It used a premium pricing strategy that is in line with the differentiation generic strategy used by the company (Dumortier et al. 2015).
Place: The product of AMW is going to distribute via numerous platforms like official websites of the company, charging stations, company-owned service centres, and its galleries & stores.
Promotion: There are numerous methods used by the company to promote its products. These include public relations, personal selling, social media marketing, viral marketing, direct selling, and sales promotions. Furthermore, online campaigns are there to spread awareness about environmental concerns and how its product is going to solve the environmental issues (Zolkifly, Yusof, and Baharom 2017).
From the above consultancy report on the AMW’s strategy for the scenario “The road to zero”, it can be concluded that for this objective, the company focuses on delivering and offering electric vehicles mainly cars to the clients so that the issue could be resolved. Additionally, it can be inferred that the current market segments of the company are business people who need cars on lease to visit the clients. The AMW Company must have to target the business individuals for its electric vehicle like the Nissan Leaf. Furthermore, AMW must have to use a product development growth strategy to modify most of its products like cars, trucks, vans, and more into electric vehicles that can be appropriate for individual and last-mile connectivity. It is also recommended to the company that it must partner itself with certain ecosystem stakeholders that could drive prompt adoption of electric vehicles.
The most suitable strategy for the AMW Company to position itself in the market is the differentiation strategy by making its products ensures sustainability. This generic strategy creates a competitive advantage reliant on the growth of products that differentiate AMW from other automotive companies in the industry. Moreover, the value proposition of AMW in respect of offering electric vehicles must be to offer a diversity of electric cars for the diverse needs of individuals, offer reliable and consistent customer service; there must be a connection with the public conveyance. The resources and capabilities that are needed to offer this value proposition is heavy investment in research and development activities to spread awareness to clients. Further, there is a need for knowing the customer behaviour to reach prospective clients. Additionally, financing is needed to offer these bundles of value propositions to the customers.
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