Strategic and Marketing Analysis of Citroen
We will be discussing on the various techniques involved in the marketing plan for an organization in order to make reach the product to the customers. The report given here summarizes the various activities involved in marketing the end product named “CE 13” of Citroen which is an eco-friendly as well as helps in maintaining our greener environment.
1. Executive Summary
Citroen was founded in 1919 by Andre-Gustave, which was the first car company to mass produce outside the United States of America. Almost within eight years after it had started, it became one of the largest car manufacturers in Europe.
Citroen is all set to launch its hybrid plug-in car named “CE 13” in the UK market. As hybrid cars are already available in the UK market the competition is also the toughest. The strengths in the proposal of CE 13 is its small, economic and fuel-efficiency. CE 13 will be a challenge to the current version of both gasoline and the electric one now available in the market. Their target is specifically based on a specific proportion of consumers who needs a vehicle for commuting in their daily life. As it is compact in size it is very easy to commute between the congested traffics so helps in evading the congestion charge in the UK.
The marketing objective of CE 13 is limited to 10 to 15 percent in the UK with the unit sales of about 10000-12000 units in the next two years. Financial objective of CE 13 at the time of introduction is to achieve the sales of GBP 20 to 30 million.
2. Situation Analysis
Citroen which was established in 1919 is all set to manufacture the plug in hybrid car for the UK market which is a developed nation has a good economical growth rate. Though during recession it had seen number of problems the country has still maintained their economy stable compared to other nations. Citroen has considered the fact of the increase in fuel prices and has come up with the solution to meet this with their plan of CE 13 which will help its consumers overcome their problem of fuel prices.
As soon as CE 13 hits the market, the consumers will be overwhelmed to buy the plug in hybrid as it has an enhanced product portfolio and covers the overall worries of the car customers in terms of money as well as the performance.
GDP of UK was 0.5 percent in the latest quarter which was revised from a fall of 0.6 percent published earlier. GDP estimated during 2010 fourth quarter is now 1.5 percent higher than the fourth quarter of 2009 (National Statistics, 2011).
Also the output in the latest quarter was up 0.8 percent for the manufacturing industries. Manufacturing output has increases 1.1 percent and 4.3 percent of increase was seen in utilities output and the mining and quarrying output has fell by 4.1 percent.
2.1 Market Summary
CE 13 market comprises of customers who prefer to use sustainable energy to compensate the spending on petrol or diesel. The major segment being targeted during the initial period includes the professionals and senior citizens, who have annual personal disposable income above GBP 7000. Table 1 shows how CE 13 addresses the needs of targeted customers.
TARGETED SEGMENTCUSTOMER NEED RESPECTIVE FEATURE
ProfessionalsTo acquire modern technology at reasonable price; reasonable mileage.A smooth drive for 45 miles per charge and an automatic change to fuel after 45.
Senior citizenHave a safe mode of transport in traffic; savings in fuel expenditure.Compact structure providing ease in traffic with dual air bags
Table 1: Segmented customers (Jeroldin, 2011)
CE 13 will be available in one basic model with carbon dioxide emission below 40 g/km. The CE 13 operates entirely as an electric car for its first 25 miles, drawing energy from a 450-pound lithium ion battery and then uses the gasoline for the 1.6 liter engine that provides another 360 added miles. Thus the design of the car along with its price and technology will strengthen its presence in the UK PHEV market.
2.2 SWOT Analysis
Advanced technology from C- zero, C3 picasso, Berlingo multispace are used in building this plug in hybrid electric vehicle.
CE 13 has better fuel effiency of about of 45 miles for a single charge and covers and average range of 15 miles per liter of petrol. So this adds the strength to the CE 13 as usual vehicles have a mileage of below 13 per liter of petrol.
Towards the initiative to a greener environment the CE 13 holds the key as it emits less than 40g/km which is helps our environment for its sustainability.
Consumers are not much aware of the Plug in hybrid technology as because there are less fuel station for charging the electrically and people has less idea of these high end technological factors in mind.
As newer technology is used in the development of CE 13 the price band is as well on the higher and only the customer who have wages above GBP 2000 are able to buy the vehicle and also to be on the safer side we are providing finance option for the vehicle by having tie with the HSBC bank which will lower the tensions between the customers who are less affordable to buy which again acts as a strength for us.
Considering maintenance of CE 13, as it is a hybrid plug-in the maintenance is slightly higher than the usual ones.
As towards the step to sustainable and greener environment, UK government supports in the development of CE 13 as it is eco friendly as well as fuel efficient in compared to other vehicles on road. Due to step to greener environment, government had decided to lessen the tax and import duties of batteries being waived.
One of the major threat being faced by CE 13 is the extending of the product life cycle. As this is a newer step in the technology and offers only one single model in the market extending the life cycle of CE13 is currently not possible as it is in the growth stage of the. Later after the maturity of the product the extension will be made within next two years on a average estimation.
There are considerable amounts of rivals seen in the plug-in hybrid industries and one of the major rivals is the Volvo and another major rival is the Toyota who plays a major role in the technological development in the UK market.
Toyota prius is currently the market leader in the UK market for the plug-in hybrid version of the vehicle. So the competition is tougher and our new technology used in the development of the same is higher than usual which will support in the battle of survival in the UK market with Toyota prius.
Another rival is the BMW which is planning to introduce their plug-in hybrid car in the UK market with by launching their “i-series”. Another major rival is the Honda with their newer version of plug-in hybrid technology as they have introduced in the Japan. Though there are different rivals in the market with higher competition, we believe to withstand all the rivals in the market with our leading edge technology we have used in the development of our CE 13.
2.4 Product Offer
CE 13 is going to be introduced in a single variant as it is a newer version, currently only single variant is available and has the following features included in it:
Rechargeable lithium ion battery that can be charged connecting to an ordinary 240V socket. The battery comes along with a one year replacement warranty.
Extended cable alongside the electric inverter.
1.6 liter petrol engine
Anti theft alarm
These are the basic features included in CE 13 and with the gradual maturity of the product we have decided to enhance the features further based on the development of CE 13 later after two years based on the customer requirements.
Citroen cars are normally made available to the customers through the following retail channels such as:
Citroen motors showrooms.
Dealership with private showrooms.
Events such as Auto expo conducted in the various parts UK.
Through online booking.
3. Marketing Strategy
Citroen has currently set a realistic and achievable objective for the first and second years of the market entry.
First-year objectives: Citroen is aiming for 10-15 percent share in UK market through the establishment of CE 13 with a unit sales volume of Indian PHEV market through a unit sales volume of 10,000 to 12,000 by summer 2012.
Second-year objectives: Second year objective is set to introduce new variants with added features during the fiscal year of 2013 with a diesel variant plug-in.
Contingency Planning: In unforeseen situation of the product not satisfying the objectives, Citroen will postpone the launch of the succeeding model till the break-even is attained. The target market share will remain the same and new marketing process may be acquired (Jeroldin, 2011).
3.2 Target markets
Citroen’s targeted customers are segmented demographically and geographically. Our primary customer target for the CE 13 is upper working professionals who need to commute on daily basis, who opt to charge than fill fuel, and be entertained on the go. Our secondary customer target is senior citizens who want a simple car with savings in fuel spending. The segmented audience is between the age of 25-65 and having a personal disposable income more than GBP 7000 (Jeroldin, 2011).
Using product differentiation and comparing with other brands of the PHEV segment, we position Electra as a high quality car with comparatively low price in the Indian market. Our marketing will highlight on the affordable price, trusted brand, and environmental friendly with the quantity of carbon dioxide emission differentiating the Citroen CE 13.
The CE 13 comprises of all the normal features available in the normal market earlier during the introduction of the vehicle. Later it will include custom developed features based on the customer requirements which include spare parts warranty of one year and also offer the onsite road assistance support made available 24/7 to the customers. CE 13 will inherit the normal logo with an added eco-friendly logo to its normal logo.
Citroen has planned to price the vehicle at GBP 33,000 for the single variant which will be made available to the customers including all the necessary taxation. The price of the product is developed using the market-penetration pricing concept to acquire higher long-run profits for the company (Kohtler, 2009). We expect to lower the price of this model when we upgrade the product by launching our new model later during 2012, to be priced around GBP 42, 000.The low-priced high quality cultural requirement of the customers is fulfilled to gain shares of the plug-in hybrid electric vehicle market in the UK.
Around 70 per cent of the manufactured cars will reach its destined owners through various Citroen motor showrooms in various parts of UK, and the remaining production via private agents and showrooms. Detailed specification handouts will be provided to support our distribution partners. The company also plans to consider special payment terms for agents that place consistent orders.
Though the plug-in hybrid electric vehicle technology is relevantly is old in the UK market, creating awareness in the public will be the initial step in the promotion of the product. The primary action is to successfully launch the CE 13 in the upcoming Auto Expo to be conducted in UK later this year. A combination of “Above the line” (ATL) and “Below the line” (BTL) activities will be used in Electra’s marketing process. ATL will include the print media, mostly magazines like the Overdrive, television adverts and the internet. The latter will use automobile fairs organized in various parts of the country to pull customers and also movie theaters, which is often visited by professionals (Jeroldin, 2011).
3.5 Marketing Time Line
The CE 13 will be introduced in during June as the testing of the car is current being taking place. Here are the summarized lists of action programmes we will implement to achieve our stated objectives.
May: We will launch a GBP 0.3 million trade sales marketing campaign and take part in various Auto Expo or Fairs to support and educate dealers. This will also function as foundation by developing support for product launch in June. Key production staff with the help of marketing team will work with retail sales personnel to explain the features of the CE 13.
June: Citroen will be starting the detailed print campaign via auto magazines and also adverts in the Internet and television. The sales team will play a critical role in explaining the car to the interested customers.
July: As the multimedia promotions continue, we will organize contest in which users will post to the organization’s blog as ‘which is the best methodology to spend least on gasoline‘(an average of 40 miles/day covered)’. This private user sales promotion will act as direct feedback from the customers.
August: Citroen will organize a ‘Green home’ rally to spread awareness about the main feature of Hybrid technology and its effect on the environment.
3.6 Market Research
‘Using the research, we will identify specific features and benefits of our target market segments value’ (Kohtler, 2009). The feedback obtained from the customers through blogs, vehicle rating and review by ‘Autocar’ will set up the perfect CE 13. We are also tracking and analyzing customer’s thinking over competing brands in the PHEV market (Jeroldin, 2011).
4. Financial matters
Total first-year sales revenue for the Citroen CE 13 is projected at GBP $20 million, with an average whole sale price of GBP 32000 per unit and variable cost of GBP 21000 per unit for unit sales volume of 4000 in the first year. A first year loss of GBP 12 million is anticipated. The break-even calculations indicate that CE 13 will attain profit after the sales of 4773 units, mid way in the product’s second year. The analysis also estimates first-year fixed costs of GBP 52.5 million. Based on the assumptions, break-even calculation is
GBP $52,500,000/ ($32000-$21000) = 4773 units
The control of the marketing procedure of CE 13 will help the management to measure performance and provide an opportunity to improve in the required segments. ‘Controls are being established to cover implementation and the organization of our marketing activities’ (Kohtler et al 2009).
We have implemented the Annual-plan control in our marketing activities (Kotler et al 2009). The senior management will set quarterly goals to monitor the performance of CE 13 in the UK market and later in the European market. The management will then trace the deviation, if any, and take required action to make the performance co-inside with the goals (Jeroldin, 2011).
5.2 Marketing Organization
The marketing director of Citroen takes the overall responsibility to get all the marketing activities done in the respective allocated time. The new product manager/marketing manager is utilized to identify the opportunities of CE 13 UK market and anticipate the customer needs. They should have strong knowledge of advertising and merchandizing agencies to promote via campaigns and programs. It’s the honored responsibility of Citroen to satisfy the needs of the customer through CE 13.
Thus, the marketing plan for CE 13 of Citroen is achieved based on the various techniques given in order make reach the final product to the customers. The marketing planning helps in increasing the sales, growth and monitors these reports in order to successfully maintain the development of the Citroen in the Hybrid plug-in market. Following a structured marketing plan helps in the development of the organization and positions the market perfectly according to the needs of the customers.
Kohtler, P., Keller, K.L., Bradley, M., Goodman, M., Hansen, T. (2009) Marketing Management. England: Pearson Education Limited.
Alphone Seon Jeroldin (2011) ‘Marketing Planning’. Marketing in a Global Age 1 1-9
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