There are several features that makes Method One a globalised brand. Firstly, it is highest course of one-seater automobile racing on earth, driving the quickest cars on earth. F1 holds the most exhilarating car races, young males aspires to be F1 racers, a huge number of men and women buy tickets to the races and subscribe to media that channels every year to view. Regarding to Levitt (1983), different ethnic preferences, national preferences and worth, and business companies are vestiges of days gone by; some inheritances die slowly but surely; others prosper and develop into mainstream global choices. F1 became a mainstream most liked sport of the world. The state-of-the-art technology found in the race such as engineering of the cars, time keeping, changing of tyres at the shortest time etc. allures people of the current generation. Everyone everywhere would like what they have found out about, seen, or experienced via new technology (Levitt, 1983).
The unpredictability of F1 allows it to attract viewers constantly. It really is a distinctive experience that cannot be duplicated easily e. g. crashing as different parts of the keep tabs on, the seriousness of the accidents, different final results etc.
Organising the competition is too costly thus owning a team is mainly and sometimes totally sponsored by various big international brands that wish to gain exposure from F1. And therefore, consumers of the brands would be aware F1, for the custom logo will be exhibited on all kinds of products and marketing like advertisements, information and publication interview articles etc. , and deals for F1 will include the brands' custom logo as well; hence creating maximum recognition to F1 and the international brands' market.
F1 is a season consisting of series of races held across the world on purpose-built circuits and open public roads. The total annual calendar is global, taking 19 races in countries such as Australia, Asia (Malaysia, Singapore and Japan), the Middle East (Bahrain), European countries (the mainstay of F1), and North and SOUTH USA (Canada and Brazil). It undergoes major developed countries and with the gigantic range of the event, F1 is known throughout the countries and their neighbours.
Standardisation VS Adaptation
According to Levitt (1983), most executives in multinational organizations are tactlessly accommodating; they wrongly presume that marketing means offering the consumer what he says he wishes rather than attempting to comprehend exactly what he'd like, thus persisting with high-cost, customized multinational products and methods rather than pressing hard and pressing properly for global standardization. They are afraid to standardise for dread that the strategy will fail. But Levitt (1983) says that poor execution is often the cause of failure, not the standardisation.
According to Levitt (1983), the world's desires and needs have been irreversibly homogenized. This makes the multinational organization outdated and the global company absolute.
Thus we have successful global brands like F1 that happen to be usually standardised than adaptive to the countries and cultures they are in, with correct execution. F1 is known worldwide for its attributes as mentioned above, and therefore it does not have a need to adapt when entering a fresh market in another country as what's expected of these is their personal races. The products and ways of the industrialized world play an individual tune for the whole world, and the whole world eagerly dances to it (Levitt, 1983). You can find 19 races, 50 % which are presented in other continents aside from its traditional bottom part in Europe. Even though, really the only adaption is probably the aspect of the course monitor built for the race or the public roads composition in the countries. For instance, from the common circuits, now countries such as Singapore, Monaco, Melbourne etc. , have street circuits, utilizing a combination of general population roads and circuits for the contest.
F1 Grand Prix event spans over a weekend and throughout the techniques sessions it offers a specific set of rules and control. This group of polices is by the F1 and is also standardised.
According to the case study, merchandizing is through specialist F1 shops worldwide, selling imitation model cars, football caps, spencer and other memorabilia, all custom-made and packed with the F1 emblem. These subsidiary products of the brand are also standardised, not adapted to whichever country the merchandise can be purchased.
Product Globalization Strategy
Adapted from Jim Riley (2012), global strategy of F1 calls for appreciating that success requires a presence in every part of the world to be competitive effectively, which is exactly what F1 had been doing; increasing to number the races at other continents.
F1 make its product similar for each and every market by using the same group of restrictions and control for the races, same technology and security and other elements in the functions despite being in several countries from European countries. Centralised control where the final say still belongs to F1 Management and F1 Administration. Ecclestone founded the F1 Constructors' Association (FOCA) to deal with for commercial control with Fdration Internationale de l'Automobile (FIA).
Taking benefit of customer needs and wants across international borders as F1 lovers are spread across the globe, rather than only watching from screens, F1 made it live by web host at major countries where their aim for markets were. Finding value adding activities where F1 can achieve greatest competitive advantages, thus the extension to the most developed countries on earth. Integrating and co-ordinating activities across edges, F1 does insurance agencies management and supervision team to be there at each seperate location. This part is significant where Ecclestone set up the F1 Promotions and Supervision (FOPA). Corresponding to Levitt (1983), so long as the marketing is good, consumers would be affected to accept the product regardless of what they claimed they need. This is where Ecclestone succeed in influencing people to crave to watch the competition.
The changing patterns and constructions of communication typically related to the demands of globalization require versatility, responsiveness, acceleration, and productive knowledge production, technology, and dissemination (Cynthia Stohl, 2004).
A global industry is where organizations compete in all world markets to be able to survive (Jim Riley, 2012). Thus be like F1 where they endeavor into all the potential markets.
A successful global company does not abjure customization or differentiation for the requirements of market segments that differ in product choices, spending patterns, shopping choices, and institutional or legal preparations (Levitt, 1983).
A global strategy is successful when there are very minor dissimilarities between countries and competition is global, it offers advantages in terms of economies of level, lower costs, co-ordination of activities and quicker product development (Jim Riley, 2012). Given what is everywhere the purpose of business, the global industry will condition the vectors of technology and globalization into its great tactical fecundity; companies that do not adapt to the new global realities will become victims of those that (Levitt, 1983).
Environment - Qantas
Identify the Marketing Environmental Factors
This newspaper will express how factors in the surroundings affect each other in 'Qantas Second'. The global marketing environment consists of 4 main environments. Refer: Appendix A.
Organization environment can be handled by the company.
Company Image and brand collateral are a essential parts in marketing as they help increase financing, form joint projects and alliances seeking marketing intermediaries, get purchase or sales contract, launch new products etc. (Ebstudies, 2012). From the case we can see it takes very long to create a good rapport, but just one single event to tarnish the reputation.
The technological features decide company's capacity to innovate and compete. The look and safety of the Trent engines are extremely important as one minor blunder might tarnish the renowned reputation and injure people as seen from the Qantas moment.
Rolls-Royce and Airbus aim to manufacture the required quality and amount products. Factors which influence the competitiveness of a company or to support the organization are production capacity technology and efficiency of the effective apparatus, circulation logistics etc. (Ebstudies, 2012). Marketing resources like quality of marketing and distribution network have immediate link to marketing efficiency. They are crucial for new product launch and brand extension (Ebstudies, 2012).
In intermediate environment, it is semi controllable by company.
Purchasing goods and services from reliable exterior sources to help make the engines and maintain motors is important. Thus suppliers can transform firm's competitive position and marketing functions e. g. fresh materials suppliers (for engine unit parts), energy suppliers, labour and capital. Regarding to Michael Porter, the partnership between suppliers and company epitomizes a power formula between them; this formula is based on the industry condition and degree to which all of them is reliant on the other (Ebstudies, 2012).
The seller is a monopoly or oligopoly firm.
The buyer is not important customer.
The supplier's product is important suggestions to buyer's business and completed product.
The provider poses real risk of front integration.
Every producer really needs several intermediaries for promoting, advertising and distributing the products and service to consumers (Ebstudies, 2012). The intermediaries for Rolls-Royce and Airbus are the airlines and the best consumers are the flight people.
In the case study, the Qantas Instant had affected the stakeholders greatly. Airbus' parent company Western european Aeronautic Defence and Space (EADS) talk about prices dropped 3. 5% when it just happened.
Rolls-Royce, the plane engine manufacturer dropped 5% in talk about prices right it happened. Rolls-Royce tried to avoid the slip in talk about prices by convincing the town and investors that the event is a one-off thing than a design fault. However within 2 times, share prices decreased to 9%, shedding 1 billion in market value. When leader of Qantas blame the occurrence on the engine maker, the problem got most detrimental. Rolls-Royce engineers was required to decipher the problem in Singapore and London to discover what is the primary problem to address the market favorably within a few days. Pictures of the blackened, shattered aircraft engine distributed across the world broken the consumers' confidence on its protection record. Qantas grounded all its A380 aeroplanes equipped with Trent 900 engine for three weeks, other airlines postponed flights for considerable flights and expensive checks to be carried out.
It was found out that it was indeed a design mistake; the report in to the Trent 900 failure states that engine oil flames is the probably reason behind the explosion, leading Qantas to get compensation claims. It was also found that there is a potential processing defect in the engine oil pipes. Thus Rolls-Royce is likely for financial compensation of at least 19 million to earth and replace the engines for Qantas and Singapore Airlines.
Hence, the occurrence in November 2010 hasn't only caused damage to Rolls-Royce in financial conditions, as well as its hard-earned reputation and the trust of its clients and the general public. Only until February 2011 performed Rolls-Royce improve its situation when they earned a 1. 4 billion service deal from Emirates to keep up the Trent machines on 70 Airbus aircrafts that the carrier was anticipated to have delivery over the next few years, a 700 million service deal for Emirates and a 3. 2 billion engine unit deal for British Airways.
Macro environment factors are external to the business and are uncontrollable. They don't affect marketing straight but indirectly influence marketing decisions of the company.
Marketers are thinking about the size and development rate of populace in different metropolitan areas, regions, and countries; educational levels; get older distribution and ethnic mix; households habits; and regional characteristics and movements (Ebstudies, 2012).
Social forces try to make marketing socially liable; means that Rolls-Royce and Airbus should take a lead in removing socially unsafe products and produce only what's good for the culture (Ebstudies, 2012).
The monetary environment also offers a direct effect on the business enterprise of an organization; example would be the talk about prices of Rolls-Royce.
Technological changes have also become specifically significant in the post-millennium world; this is particularly true in conditions of modern communication systems (Business Case Studies LLP, 2013). Thus the talk about prices dropped almost instantly as information was sent rapidly.
The technological environment involves factors related to knowledge applied, and the materials and machines found in the development of goods and services (Ebstudies, 2012). E. g. Rolls-Royce and Airbus produce top-notch machines to support commercial airliners.
Political and Legal
Marketing decisions have to take into account government, pressure communities, law etc. Regulations influence production capacity, functionality, product design, charges and advertising. Usually federal intervenes in marketing process whatever their political ideologies are (Ebstudies, 2012).
Legal factors are essential as organisations have to work within legislative frameworks; legislation can prevent business by inserting onerous obligations on organisations if not handled properly (Learning Marketing, 2013).
The physical environment includes ecological factors beyond the organisation's control. Physical pushes such as non-renewal natural resources are finite e. g. petrol, coal, nutrients etc. Especially resources that contributes to the fuel the motors need to be able to operate, affects the development greatly.
Pricing - AirAsia
Steps to Implement Pricing Strategy
Firstly, prices is one of the main element global strategic decisions as the concept of exchanging money for goods and services received, by means of exchange of bank records or credit or other credit facility, is broadly accepted in today's world (Lee & Carter, 2009). Price component of the marketing mixture is one of the most controllable and fast in place, it is the element that creates income (Lee & Carter, 2009).
Identify and analyse factors influencing prices e. g. cost and revenue models, customer identified value, legal requirements etc. which is to apply the no-frills, low-cost strategy, a distinctive cost and income model that is proven successful from short-haul to long-haul
Set rates in the context of corporate aims which is mainly low-cost flying
Develop and select best suited price option of low-cost long-haul and low-cost short-haul flights
Implement preferred option of low-cost long-haul with AirAsia X
Manage and funding international transactions
Account for terms of trade
Factors to Consider in Pricing
According to Lee & Carter (2009), based on Terpstra and Sarathy (2000), there are a few factors to be considered in costs products and services internationally. They are categorised under three main categories; organization-specific, environmental and market-specific.
Corporate and marketing aims of AirAsia can be seen from the CEO, Tony Fernandes' saying, "Our group thrives on advancement in disruptive market by firmly taking the opportunities to soar where others dare not soar or have abandoned. " Thus AirAsia proposed clear-cut relatively lower fares, going against the tide believing on brighter part of its future. Based on the case, AirAsia also has very positive corporate culture, leadership, and entrepreneurial skills and the right management school of thought. Home and targeted countries' federal influences aren't significant in AirAsia's case aside from the gasoline hike nonetheless it was eventually offset by its unique charges model. Consumers' expectations; the management believe most customers don't have commitment to any particular brand, because their choice is driven by prices, location; AirAsia's set up network of plane tickets to over 60 cities in 16 countries with 126 home and international routes from and within Malaysia, Thailand and Indonesia, and connects to China, Taiwan, India, Sri Lanka, Bangladesh, Australia and United Kingdom caters to a larger target markets anticipated to operations in these countries, ability to pay; concentrating on the standard budget vacationers and new customers who turn from premium flights to AirAsia due to the big difference in airfare prices, market development potential; getting rid of some regular tourists but gaining new travellers from premium plane tickets, rate of recurrence of purchase; focusing on maximising sales during off-peak times but setting up attractive deals and discount rates.
The cost framework of AirAsia is basically to decrease to leaveonly the absolute necessary costs to use a flight, minimizing fixed costs and eliminating most of varying costs. This is done by keeping a simple plane fleet and a path network predicated on low-cost international airports, without complicated code-sharing and legacy overheads that ponder down traditional airlines. During economy fluctuations such as inflation and deflation, people always look for cheaper alternatives, especially in recession times. Fluctuations also be based upon seasonal changes during summer time and school vacations. AirAsia adapts to the marketplace as it the key airline deals with short-haul flights and the new subsidiary is a long-haul carrier, suiting needs of more customer sections.
Product range of AirAsia is from the key short-haul plane tickets what they started out with to AirAsia X where they give attention to long-haul flights. As being a low-cost carrier for short distances, they grew to fly further when they developed AirAsia X, providing options to vacationers from more countries to use the airline. AirAsia can be viewed as a monopoly in Malaysia, Thailand and Indonesia due to the many hubs they have, and the number of home and international flights from these hubs, dominating from other low-cost carriers like them. A hike in fuel costs triggered several low-cost carriers to cease procedures as they cannot deal with the increase and thus increase AirAsia's market share and improves its position as the ultimate leader in the region's low-cost air travel sector. Market experts expected that the AirAsia group could have the marketing know-how and X-factor to capitalise on such opportunities that come up from its competition falling out in clumps of the game.
Marketing factors such as product positioning; positions itself as a top-notch low-cost carrier, segmentation of customers by providing to brief haul flights in ASEAN and longer haul plane tickets in Asia and UK, image retained as a good and affordable flight and differentiation of long and short distances plane tickets. When confronted with competition in the market, AirAsia targets towns least ventured to, to get a competitive benefit. And due to its innovative business design, with the ability to tide through the fuel price hike better than their opponents.
Cost Lowering Strategies
According to Lee & Carter (2009), we can identify how AirAsia has used cost reduction strategies to contribute to their profitability and support from the ongoing potential gasoline hike. Make reference to Appendix A.
Economies of scale are available by the increased range of local and international plane tickets after the establishment of AirAsia X to soar new places in China, Australia and UK.
Economies of size are shown when the case said that AirAsia has nine local hubs in Malaysia, Thailand and Indonesia instead of just one base in 2009 2009.
Learning curve can be seen from the distributed service contract where AirAsia and AirAsia X share pilots, cabin crew, service personnel, website, IT program, marketing and circulation to optimise efficiency on operating costs. AirAsia also spent heavily to construct its brand and association with globally accepted organizations such as AT&T William F1, British MotoGP etc.
The significance in release of new solutions by AirAsia is the New Skies; a state-of-the-art arranging system that added to expansion of scheduling capacity, allowing up to at least one 1 million flights booking every day.
The major competitive advantages over other airlines is that passengers may use the Kuala Lumpur hub to hook up to an array of routes. And relocating by positioning more local hubs in Malaysia, Thailand and Indonesia, they are areas with low labour costs to attain the same advantage on the airlines at the metropolitan areas too.
Economies of Scale
When additional expense per product of creation reduced overall per product cost, given similar set costs
Economies of Size
Achieved from much larger scale of procedure through better bargaining power
Cost reduction from greater labour productivity, better designs, and learning resource mix
Introduction of New Technologies
Improved efficiency gained through new solutions in development and processes
Relocation of Production
Moving production facilities to countries with substantially lower labour costs
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