In my previous submission (assignment 1, March 14, 2018) I took the example of the Dutch vehicle developer, Lightyear and examined the company from a situational point of view. Taking this same example further to apply the principals of strategic marketing to further develop the narrative.
Mcdonald (1999) lays out a clear marketing planning process over 5 stages. The focal points are the mission and objectives, understanding the situation, the marketing strategy, marketing mix and finally the implementation and control. This stepped process breaks down in phases the key tasks a company should go through to obtain marketing success. Mcdonald (1999) goes on to differentiate between tactical and strategic marketing plans by longevity; tactical plans focusing in detail a period of a year or less whilst strategic plans the longer term of 3 to 5 years. He goes further suggesting that a clear cooperative between both must be executed in order to thrive citing the importance of strategy over tactics in the first instance for longer term success together with the inclusiveness of all layers of management and departmental functions rather than to focus strategy only to the board and tactics being carried out cross-functionally. To thrive according to Mcdonald (1999) one must have effective strategy combined with efficient tactics. In other words, Mcdonald (1999) supports the view put forward in more detail by Wilson and Gilligan (2005) that in order for marketing to be successful it must encapsulate a strategy that is overarching and universally supported across an entire organisation which creates a vision for all to work towards. McDonald (1989) suggests that the strategy must satisfy the needs for both organisation and selected consumers be one successful. Only once established and agreed should an organisation begin the more detailed tactical strategy for a particular fiscal year.
This perspective is particularly important to Lightyear in that it is a new company attempting to enter an existing and competitive market place where understanding the customer, the market needs and implementation are vitally important.
McDonald (1999) makes a distinction between corporate objectives and marketing objectives. He states that corporate objectives are those concerned with profitability while marketing objectives being those about selling products into designated markets. When setting objectives the Ansoff matrix is a good starting point (McDonald, 1999) and in the case of Lightyear we have existing market bordering with new markets in electric vehicles which suggests Lightyear should be in product development and diversification. In fact this is precisely Lightyear’s product strategy having developed a new product that can target market share in the existing market but at the same time offer a diversified product to the new electric vehicle market. Keeping with this rhetoric I have set the marketing objectives according to McDonald; products and markets as such.
1. Launch Lightyear One into EU market by 2020
2. Create a recognisable brand identity that polarises Lightyear’s mission statement
3. Sell 100 vehicles by 2020 producing €12mil in revenue
4. Sell 500 vehicle by 2022 producing €60mil in revenue
2. A Deeper Look at Strategy
2.1 Why Have a Mission?
For a strategy to be successful it must be goal driven (Wilson & Gilligan, 2005). The organisation needs a measurable to which it can demonstrate success but also to provide direction and motivation. A Distinction should be made between what is a mission statement and a goal or an objective. The mission statement should create a vision of what the company is about and what it wishes to become, an ‘invisible hand’ (Wilson & Gilligan, 2005) that guides collective working and integration between company and stakeholders. An objective on the other hand provides a clear measurable for performance using key business indicators (sales targets and market share for example). Wilson and Gilligan (2005) suggest that objectives should meet the SMART criteria (Measurable, Actionable, Realistic and Time-based) and should cascade as the framework for planning and control.
In the case of Lightyear they already meet the generality of a mission statement with their mission ‘to provide zero-emission mobility for everyone everywhere’ (www.lightyear.com). Their statement is short with a clear overarching catchment that can be easily understood by both the company, stakeholders and customers. The work of Williams (2008) indicated that it is a logical conclusion that an organisation with a mission statement will become a better financial performer owing to leadership and organisational alignment.
What is not clear from their literature is a clear set of objectives although it is common for these to be internal metrics.
2.2 Identifying the Customer
Lightyear’s mission statement eludes to the vision that the company wishes to sell to everyone. Whilst noble in its intent to change the world towards energy neutral mobility the goals of the organisation need to be more specific and targeted. The key to achieve the mission statement is to focus on the tactical and strategic objectives. In section 1 I define four key marketing objectives that target the EU market but why this market? The marketing strategy of segmentation, targeting and positioning is critical in answering this question by breaking the overall potential into strategically manageable parts that can then be targeted and satisfied more precisely. It is not to say that no other market is suitable for Lightyear’s product it may be a matter of placement, timing and distribution that will dictate where a product will be launched within the objective timeframe. What segmenting allows Lightyear to do is understand the consumers’ response to their product. Research by Cobb (2016) shows that geographically China is the largest electric vehicle market followed by the EU and then the USA; it would appear that since Lightyear is based in The Netherlands that targeting the EU market in the first instance is reasonable from a market size point of view; in fact according to the same research The Netherlands is the second highest purchaser of electric vehicles in the EU. Of course segmentation should be taken further by subdividing the chosen geographical location; the product is expensive at €119,000 so segments according to demographics, socioeconomic, lifestyle and behaviour need to be considered. By considering the product, a solar powered luxury vehicle at high cost, using the VALS framework to establish a hypothetical buyer, they are likely an ‘innovator’ or ‘thinker’ since both groups have high net-wealth but are driven by ideals and purchase on the edge of change (Rogers, 2003). Since the objectives set for sales are relatively low compared to the market size, immediately Lightyear can think of the sales strategy to these two groups. The VALs framework although very high level and simplified can quickly determine if the potential market has a focal point.
The process of segmentation should logically follow to selecting the target market. In this case study the potential market is global but unreasonable within the resources of a new company to promote to so segmentation has broken down the market geographically but also by values and lifestyle. Clearly any organisation will want to sell to as many people as possible but the process of strategic marketing is about targeting a promotional campaign to specific groups. For a company like Lightyear, limited resources need to be considered when thinking about promotion because the budget may allow only one opportunity to achieve its objectives (Iyer & Soberman, 2005) and therefore a specific target market is essential to maximise its outcome a view supported by Wilson and Gilligan (2005) that describes the concept of niching where disruptive innovators (Danneels, E, 2004) can avoid better funded competitors with high-end encroachment. The effects can be immediate and significant, meaning that innovations that enter markets via high-end encroachment are disruptive (Schmidt & Druehl, 2008).
This focal point will allow Lightyear to decide on a promotion strategy which in this case could be either concentrated because the potential buyers are quite similar or differentiated because the innovator may be more motivated by the social status of owning an innovative product.
2.3 Product Positioning and Branding
Positioning is one of the most powerful marketing concepts and primarily concerns the place a brand occupies in the mind of customers (Maggard, 1976). Positioning gives Lightyear the opportunity to analyse how its product differs from competitors and helps create a unique selling point (USP). The highest funded competitor is Tesla with a market capitalisation of $51.4bil (Reuters, 2018) which sells an electric vehicle requiring plug-in charging and a large logistic network to allow this charging. The Lightyear USP is clear from literature, it is solar powered (www.lighyear.com) and does not require a charging network. The fact that their main competitor is so large reinforces further the importance of positioning in going further than identifying a USP, it creates a value proposition for the customer and details what the brand stands for when compared to a competitor. The pricing structure for the Lightyear One suggests their positioning is in the prestige sector of the market with the differential advantage compared to Tesla being solar power. The Tesla pricing (www.tesla.com) is competitively lower than Lightyear so there is a risk that the already established brand will be consumer primary choice. This factor should drive Lightyear to highlight in a marketing campaign the importance of their USP and the value that gives to their potential customers packaging that into a brand. Lightyear demonstrates its branding within its literature; the name Lightyear itself defines a clear market position. The company’s research identifies that worldwide combined vehicle mileage is roughly 5.9×1012 miles (the distance light travels in a year). Their message to customers is that they wish to change these into energy neutral miles. Their branding goes further by using the mathematical symbol for infinity (∞) representing the theoretical notion that based on solar power their vehicle has unlimited mileage capability. Lightyears brand positioning takes an ethical approach (Okoye, 2009) and can enhance its identity (Balmer, Powell, & Greyser, 2011) to its customers. What Lightyear must do is be true to its mission because consumers are becoming increasingly turned off by organisations that sway from ethical positions (Bartkus & Glassman 2008)
Brand positioning according to Wilson and Gilligan (2005) has further input factors such as the marketing mix, customer experience and word of mouth.
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