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Introduction to Segmentation and Targeting in Automotive Industry

The interface of intense competition and technological interventions are pushing the automotive industry to espouse strategic ways of targeting the customers. The automotive industry is being driven to take on novel strategies for effectively managing the existing resource allocations and optimizing the current business activities (Kalverkamp and Raabe 2018). For well-defined execution of the core practices, it is crucial that the effective targeting and segmentation strategies are incorporated. It not only contributes to the elevated performance and profitability but also inflates the consistency and clarity in the dealings. This assessment envisions enlightening the segmentation and targeting strategies being trailed in the automotive industry.

The automotive industry is a summation of enormous companies indulged in the processes of the developing, designing, manufacturing and marketing of the motor vehicles. In terms of revenue, this industry is a large economic sector (Kalverkamp and Raabe 2018). This assessment maintains a key theme of the stratagems adopted by this industry to reach potential customers. The initial segment builds a context of this industry. The second segment lays prominence on the key tactics of targeting and segmentation adopted by automotive companies. It is supported by the authentic literary pieces and presents valid arguments of the authors. The concluding segment highlights the key underpinnings of the assessment.

Context: Automotive Industry

Automotive industry commenced with the inauguration of the steam-powered road vehicles in the 1860s. The commencement of this industry stems from the gasoline engine which principally initiated in Germany and France. Since then, this industry has witnessed enormous transitions and alterations in terms of design and development. As of the year 2007, there are around 806 million cars on the roads in the world. The automotive vehicles consume around 980 billion litres of diesel fuel and gasoline per year (Raff 2018). For many developed economies, it has become the principal mode of transportation. Countries like the United States, Iraq and Australia are emerging as the dominant markets of the automotive industry. A total of 5 per cent change has been witnessed in the production of cars and other automobiles between the year 2018 and 2019. In terms of the mass production and quantity, Toyota, Volkswagen Group, Hyundai and General Motors are the top producers of the cars in the world.

Targeting and Segmentation in The Automotive Industry

The global competitiveness in this industry has led to complexity and difficulty of surviving. Targeting is basically a process of breaking down the market into smaller sections and analyzing the specific group of individuals within the audience. For safeguarding that the marketing practices resonate more efficaciously with the customers, marketing campaigns are more emphasized on the behaviour and buying choices of the customers. Authors Niemand et al. (2020) have stated that the automobile industry is inclining towards comprehending the needs of the customers so that the better marketing campaigns and robust innovations are introduced. Tesla is one of the famous automotive brands. Tesla effectively understands the needs of the young generation to have compliance with sustainability. Tesla employs mono-segment positioning. It manufactures alternative fuel vehicles contributing towards a sustainable world and ensuring that the negative environmental implications of oil and gas consumption are reduced (Falát and Holubčík 2017).

The automotive industry has begun understanding and effectively recognizing the requirements of the customers and has recognized the weaknesses embedded in their traditional franchised-dealer distribution channels. It is cardinal for the businesses to ensure that the targeting process is done in an efficient manner so that the right segment of the market is determined (Adetunji et al. 2020). They are now laying more prominence on the customer life-cycle value chain and are using the internet and the social media platforms to acknowledge the requirements of the customers. They have also effectively managed to make use of market research for effective customer targeting. Tesla has targeted the market by disseminating its mission statement which is to accelerate the world's translation into sustainable energy.

The organisation has laid prominence on electric auto making and employs more than 37500 people across the group. It is focused on electric cars. Like other automobile companies, Ford incorporates demographic, geographic and psychotropic segmentation variables for targeting as per the changing needs of the consumers in the industry (Paul 2018). It uses a well-differentiated targeting strategy for offering specific products to the well-segmented section of customers. Ford motors make use of value-based positioning strategy for crafting an inspirational and emotional touch with the customers to effectively communicate the vision to segment the customers which are to collaboratively work in the global enterprise for bettering the lives of the people with effective leadership in the automotive and mobility sector. The key customers of the Ford motors are the middle income and upper-middle group of customers and also transportation enterprises which are looking for the automotive solutions which are technologically advanced.

Tesla is the market leader and the best-known brand in terms of the electric cars and has established itself as a must-have item for all the early adopters. The car manufacturing industry has initiated to incline towards the sustainable eco-friendly cars for competing in the customer base of sustainable and electric cars and has continuously positioned itself in the competitive market (Akgun et al. 2017). It has positioned itself as the sustainable and electric car in accordance with the changing cultural and market environment which is accepting electrical vehicles and is driven by the design and innovation.

Considering the diverse geographic regions, Tesla inaugurated different models such as the Model S, Model 3 and Future Consumer and Commercial Evs in North America and Asia. These models were introduced by the firm to specifically for the customers over the age of 30 (Akgun et al. 2017). With the introduction of these models, the organization had a purpose to make sure that the people who have a concern regarding the environment and are looking towards the long-term cost. It makes use of its strengths to ensure that the targeting and segmentation are done in an effectual custom. With the amalgamation of the first-mover advantage, inflating levels of sales and high recognition of the brand value on an international level. Tesla’s operations concerned with the marketing procedures involve lack of bureaucracy throughout the company. It has maintained the prestige pricing stratagem and follows the data-driven target market segmentation. It has also efficaciously positioned itself as the premium sports car firm despite being a newbie in the alternative fuel automobiles. Also, it has a wide array of energy sources such as Powerpack 2 and Powerwall 2 (Akgun et al. 2017).

Considering the needs of the young generation to have technologically advanced motor vehicles, it is extremely imperative that the organizations effectively target them by introducing the products that are in line with their needs. Ford introduced the FORD FIESTA model for targeting young customers and ensuring that the people falling in the age group of 18 and 25 years. The teenagers and females were specifically targeted by the organization with this product. Also, it targeted customers who have an average income and can easily afford this model (Johnson and Chvala 2017). Automotive manufacturers have dissected cost-value equation for coming up with the new retailing concepts.

Segmentation, Targeting and Positioning (STP)

STP is a key approach employed in the modern marketing for identifying and reaching to the potential market segments. It is employed by the organizations to make sure that the prioritization of the propositions is done in an effectual custom. The automotive industry employs the STP marketing approach to make sure that the right section of the customers is targeted. This model is employed by car manufacturing companies to safeguard that commercial effectiveness is attained (Bose et al. 2020). This model is quite relevant to digital marketing as it facilitates marketing communication. It can be considered in relation with the Volkswagen. Volkswagen offers a wide portfolio of cars in the comprehension of the needs of the customers. Segmentation, targeting and positioning is a three-stage process. Segmentation strategy is trailed by the organization by considering the demographic factors.

Volkswagen initially determines the needs of the customers and makes sure that their behaviour is identified. The organization instead of adhering to the single-segment strategy follows the multi-segment strategy for targeting. It majorly targets the high-end customers and safeguards that the customers between the age group of 18 to 49 years are targeted (Beukes and van Wyk 2016). It has dotted its assembly points in different countries. In terms of the fuel consumption of petrol and diesel, the Volkswagen also delivers the fuel-efficient cars considering the environment-friendly practices and sustainability. The organization has efficaciously placed itself in an eminent position in the market by delivering high value. It produces its cars in countries like India, North America, Japan, Germany and many more (John 2016). The key competitors of the firm are Mazda and Toyota. The organization has effectively positioned itself in the market by introducing the BlueMotion technology and reducing the size of the engine.

Strategies for Targeting the Customers

Automotive is robust and is witnessing incredible growth as more and more players are entering the automobile industry.

  • Geographic segmentation is one of the most important criteria used by the automobile sector for targeting the large-sized customer segments aligning with this segmentation strategy. The manufacturers of automobiles and different companies ensure that the sizeable land holdings, commercial vehicle enterprises and the luxury car buyers determined on the basis of the states, different metropolitan regions, townships and cities are targeted (Adetunji et al. 2020).
  • Demographic segmentation is another criterion used for serving as a base for marketing the products on the basis of age, income, the status of the consumers. The small car manufacturers use this criterion to target the middle-income customers and luxurious car manufacturers use it for targeting the high-income segment.
  • Psychological segmentation has been largely employed in the sector for coming up with more than two or three variants of the same model. Different taglines are used by automobile sector such as the Maruti Suzuki employs taglines such as ‘Men Are Black' for launching its new car and‘ Definitely Male’ for its popular bike model to target the psychological buying behaviour of the customers (Adetunji et al. 2020).
  • Psychological segmentation is employed by the automobile industry to target the status, benefits sought and the loyalty of the customers. Daimler which is one of the manufacturers of luxury cars employs this and customises its cars according to the requirements of the customers.

Conclusion on Segmentation and Targeting in Automotive Industry

This assessment has effectively brought forward a picture of the targeting and segmentation strategy of the automotive industry. This assessment has efficaciously discussed the stratagems of the industry in terms of placing the products in the market. The automotive industry encompasses a wide array of companies involved in the processes of the developing, designing, manufacturing and marketing of the motor vehicles. For different developed economies, it has become the principal mode of transportation. For ensuring that the marketing practices reverberate more prominently with the customers, marketing campaigns are more relied on the behaviour and buying choices of the customers.

The automobile industry is inclining towards understanding the wants of the customers so that the better marketing campaigns and robust innovations are introduced. This assessment has also discussed the STP approach. It is used by the organizations to make sure that the prioritization of the propositions is done in an effectual custom. The automotive industry employs the STP marketing approach to make sure that the right section of the customers is targeted. Volkswagen follows the multi-segment strategy for targeting. It crucially targets the high-end customers and safeguards that the customers between the age group of up to the age of 49 are targeted. It can be inferred from the assessment that the automotive organizations have efficaciously placed themselves in an eminent position in the market for delivering high value.

References for Segmentation and Targeting in Automotive Industry

Adetunji, R.R., Rashid, S.M. and Ishak, M.S. 2018. Social media marketing communication and consumer-based brand equity: an account of automotive brands in Malaysia. Jurnal Komunikasi: Malaysian Journal of Communication, 34,1.

Akgun, A.E., Keskin, H., Ayar, H. and Etlioglu, T. 2017. Why companies go positive marketing innovations: a new theoretical prototype for 4ps of innovation. Journal of Business Economics and Finance, 6,2 pp.70-77.

Beukes, C. and van Wyk, G. 2016. An investigation of the marketing performance measurement practices in Hatfield Volkswagen group. African Journal of Business Management, 10,6 p.131.

Bose, D., Mukherjee, A. and Mitra, G. 2020. Energy recovery prospects of fuel cell technologies: sustainability and bioremediation. Australian Journal of Mechanical Engineering, pp.1-13.

Falát, L. and Holubčík, M. 2017. The influence of marketing communication on the financial situation of the company–a case from automobile industry. Procedia Engineering, 192, pp.148-153.

John, K.K. 2016. The Volkswagen Lifestyle: Hitler, Hippies, and a Hint of Viral Marketing. Americana: The Journal of American Popular Culture, 1900 to Present; Hollywood, 15,2.

Johnson, W.C. and Chvala, R.J. 2017. Total Quality in Marketing Requires Vision. In Total Quality in Marketing, pp. 133-145. London: Routledge.

Kalverkamp, M. and Raabe, T. 2018. Automotive remanufacturing in the circular economy in Europe: marketing system challenges. Journal of Macromarketing, 38,1 pp.112-130.

Niemand, T., Kraus, S., Mather, S. and Cuenca-Ballester, A.C. 2020. Multilevel marketing: optimizing marketing effectiveness for high-involvement goods in the automotive industry. International Entrepreneurship and Management Journal, pp.1-26.

Paul, J. 2018. Toward a'masstige'theory and strategy for marketing. European Journal of International Management, 12,5-6 pp.722-745.

Raff, D.M., 2018. GM and the Evolving Industrial Organisation of American Automobile Manufacturing in the Interwar Years. In Coping with Variety, pp. 35-57. London: Routledge.

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