Marketing Strategies for Chery Automobile Corporation

ISSN 1712-8056[Print] Canadian Social Science ISSN 1923-6697[Online] Vol. 9, No. 4, 2013, pp. 177-183 www.cscanada.net DOI:10.3968/j.css.1923669720130904.2560 www.cscanada.org Marketing Strategies for Chery Automobile Corporation ZHANG Junjie[a],*; DAI Xiajing[b] [a] Lecturer of Business and Management, Department of Business and Management, Business School, Jiaxing University. Jiaxing, Zhejiang, 1. RESEARCH BACKGROUND China. INTRODUCTION [b] Business School, Jiaxing University. Jiaxing, Zhejiang, China. *Corresponding author. In our modern consumer society, any organization which aims to survive and develop in the market should be marketing orientated. Satisfying customers’ needs and Abstract meeting their expectations are the most crucial ways to A marketing strategy is a road map for the marketing retain, expand a business. While marketing plan plays activities of an organization for future period of time. It a key role in the actualization of marketing activities. A always helps the organization to understand clearly about marketing plan is a road map for the marketing activities the questions like these: what are we now? Where do we of an organization for future period of time. In this want to go? How do we allocate our resources to get to business report, we mainly recommend a marketing plan where we want to go? How do we convert our plans into for Chery Automobile Corp through the studies about its actions? How do our results compare our plans, and do external business environment and internal environment deviations require new plans and actions? The paper tries by some useful business analytical tools like PEST to formulate a marketing strategy for Chery Automobile analysis and SWOT analysis. Corporation which is a Chinese local car manufacturer Chery Automobile Co. Ltd. was founded in 1997 with short history. Chery’s business mission is to improve in the city of Wuhu, in China’s Anhui Province, living standards of Chinese people and people around the specializing in the production and operation of world by providing automobiles with reliable quality but automobiles and auto components. By 2005, the total affordable price. PEST analysis and SWOT analysis are assets of Chery stands at 11.8 billion Yuan ($1.5 billion). conducted to help Chery to know its external business So far, Chery personnel number amounts to 13,000. environment as well as internal environment well. And Chery has developed complete product lines, and then marketing strategies as well as detailed marketing the company’s own R&D projects have enabled the mix including product, price, placement and promotion development and production of vehicles, engines, actions are recommended for Chery, finally, suitable gearboxes and other core components. So far, Chery has organization structure and effective control mechanism introduced six types of car onto the market: Eastar, Tiggo, are also stated. A5, Cowin, V5, and QQ. The present production capacity Key words: Marketing strategy; PEST, SWOT; for whole vehicle and gear box is respectively at 400,000 Marketing mix and 300,000 units per year. In 2005, Chery achieved a sales volume of 189,100 cars with a total increase rate of ZHANG Junjie, DAI Xiajing (2013). Research on Marketing 118%, and exported 18,000 cars overseas, ranking No.1 in Strategies for Chery Automobile Corporation. Canadian Social Science, 9(4), 177-183. Available from: http://www.cscanada.net/ the export of domestically made cars. Meanwhile, Chery index.php/css/article/view/j.css.1923669720130904.2560 is engaged in a number of R&D projects, in anticipation DOI: http://dx.doi.org/10.3968/j.css.1923669720130904.2560. of introducing a number of brand-new models onto the market in 2006 and the short future. As a staged target, it expects to produce more than one million cars by 2010 and enhance exportation share to 40 percent of Chery total sales volume on overseas market. 177 Copyright © Canadian Academy of Oriental and Occidental Culture Research on Marketing Strategies for Chery Automobile Corporation 2. CHERY CORPORATION’S BUSINESS 3.1 Political-Legal Environment MISSION AND MARKETING AUDIT China is a political stable country although lots of people think Chinese do not have democracy in politics and are Initially, an organization or a company should have a dominated by Chinese communist party. business mission in the whole process of market planning Chinese government’s legislation on automobile process, which means “what business are we in and industry will be more comprehensive, the legislation what business do we want to be in? It could be seen as a includes strong encouragement of Chinese automobile means of giving direction to an organization in the sense companies’ R&D, innovation capabilities and protection of deciding what activities to focus upon and where the on automobile industry’s Intellectual Property Rights, boundaries of these activities lie.” (David, 2001, pp.35- which is good news for Chery because the company’s 37) we think Chery’s business mission is like this: we aim strategy is to enhance company’s core competence by to improve living standards of Chinese people and people improving its own R&D capabilities and innovation. around the world by providing automobiles in reliable Therefore, it means Chery’s strategy will be encouraged quality but with affordable price. and supported by central government; besides, as the “The marketing audit is a systematic examination of a largest corporation in Anhui province, Chery is also business’s marketing environment, objectives, strategies supported by provincial and local government abundantly. and activities with a view to identifying key strategic “The Chinese government has placed resources saving issues, problems areas, and opportunities.” (David, and environmental protection in an important strategic 2001, p.39) in fact, we do marketing audit to analyze position as it works out the country’s development goals.” the external environment and internal environment of an (2006 White paper on environmental protection, Chinese organization, that’s because any organization conduct its government). China is now at a stage of accelerated business activities under the business environment, no industrialization and urbanization when the contradiction organization can run its business successfully without between economic growth and environmental protection considering about its external and internal environment. is particularly prominent. In some regions environmental External environment refer to Macro environment like pollution and ecological deterioration are still very Economic forces, Social/Cultural forces, Technological serious. China’s population will keep growing, and its issues, Political/legal influence; The market like market total economic volume will quadruple that of 2000. size, customer, market segmentation and distribution; As the demand on resources from economic and social competition: who are the major competitors, what are development is increasing, environmental protection their objectives and strategies, what are their strength is facing greater pressure than ever before. Therefore, and weakness, market shares and size of competitors, Chinese government will impose stricter control profitability analysis, entry barriers. on automobile emission pollution. They encourage Internal environment refer to our own organization’s development of energy-saving and environmentally- operating results like sales, market share, profit margins, friendly cars were long overdue like some battery Hybrid and costs; strategic issues analysis like marketing energy or mixed breed energy. segmentation, core competence, positioning, portfolio analysis; marketing mix effectiveness: Product, Price, 3.2 Economic Environment Place, Promotion, etc. As we all know, as a developing country, china’s economy There are two traditional, important tools, PEST grows very rapidly, especially in year 2006, “China’s analysis and SWOT analysis are very helpful to analyze economy accelerated at the fastest rate in more than a an organization’s internal environment and external decade in the second quarter, growing by 11.3 per cent environment, although they seem simplified some year-on-year on the back of a swelling trade surplus and complex analysis process, they still serve to highlight rapid expansion in investment. The surprisingly strong major issues. growth in gross domestic product, which was up by 10.9 per cent in the first half of the year” (Richard McGregor, Financial Times, Jul 19, 2006) therefore, china’s fast 3. PEST ANALYSIS OF CHERY economic growth will definitely spur the development CORPORATION of automobile industry and people’s consumption of “Analysis of the external environment may be expressed automobiles. by the acronym PEST, standing for political, economic, With the fast development of economy, Chinese social-cultural, and technological factors, the PEST people’s income have also been increased, for example, analysis is a useful tool for monitoring and evaluating “The income of Beijing’s urban citizens grew 13.7 forces which affect the organization over the long term percent and rural residents’ revenues rose 10.4 percent (Janet, 2002, pp.23-25). in the first 10 months of this year, sources with the local When we apply PEST analysis to Chery, we find: statistical bureau announced on Tuesday.” (China Daily, Nov15, 2006) More Chinese people become capable of Copyright © Canadian Academy of Oriental and Occidental Culture 178 ZHANG Junjie; DAI Xiajing (2013). Canadian Social Science,

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