Analysis of Skoda's Position in the UK Car Market

by posey2008 (student)

University Degree Business and Administrative studies

INTO UNIVERSITY OF EAST ANGLIA

ACADEMIC YEAR 2012

BUSINESS REPORT

EVALUATE THE CURRENT STATE OF SKODA’S BUSINESS IN THE UK WITH REFERENCE TO BOTH INTERNAL AND EXTERNAL FACTORS. BASED ON YOUR ANALYSIS CREATE A STRATEGY FOR FUTURE ACTION IN THIS REGION

BOXI YU (POSEY)

BUSINESS 3

STUDENT NUMBER: 0010080974

DATE OF SUBMISSION: 28/08/2012

WORD COUNT: 984 WORDS (EXCLUDING REFERENCES)

Table of Contents

Section Page

Executive summary 3

Introduction 4

Background of Skoda UK 4

SWOT analysis 4-5

PESTLE analysis 5-6

Conclusion and Recommendations 6

Bibliography 7

Appendices 8-10

Executive Summary

Skoda is a famous car manufacturer which has established a successful market in the UK. However, with the fierce competition, it appears to face some crisis in UK.

This report attempts to analyse the external factors and internal factors through SWOT and PESTLE analysis. Based on the analysis, this report creates a future strategy for Skoda UK.

According to the analysis, the biggest strength is its customer satisfaction. On the other hand, there are some weakness such as the poor brand position and small market share. This report suggests some methods to help Skoda to turn the weakness and threats into the strength and opportunities.

Introduction

Since Skoda was founded, it went through some big innovations from 1895 to 2009 (Engineering & Technology, 2009). Nowadays, Skoda has become a famous car manufacturer in the world. This report, firstly, uses SWOT analysis to explain the current state of Skoda in the UK. Secondly, PESTLE analysis is used to evaluate external elements of Skoda UK market. Finally, based on above analysis, this report attempts to give a future strategy for Skoda’s product launching in the UK.

Background of Skoda UK

Skoda is one the oldest car manufacturers in the world which was founded in 1895 (The Times, 2008). However, during the period from 50s’ to the 90s’, Skoda’s reputation was not good for the UK consumers. Low-quality position for Skoda still root in the reflection of British. (James, 2002).However, with the successful marketing strategy, Skoda sales and percentage of UK car market increased rapidly from 2000 to 2012. In 2012 Skoda’s market share in the UK is 2.3% (see appendices ①) which was up from 0.8% in 1999 (Skoda, 2012). However, Skoda appeared to face ...

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Background of Skoda UK

SWOT analysis

There are four factors with SWOT analysis for Skoda UK market (see appendices ②). Firstly, Skoda delivers its concepts about products directly. This strength supplies a clear image of Skoda’s product for its products. Furthermore, its satisfaction of UK consumers is higher than most brands – 98% of its drivers would recommend Skoda to their friends (The Times, 2008). Based on this circumstance, Skoda receives an excellent feedback from its customers and keeping a high level of customer loyalty (The Times, 2008). However, the brand position of Skoda is not clear, which appeared to influence the attraction of consumer buying. Furthermore, Skoda’s market share in the UK is small which just occupied 2.3% in 2011(Skoda, 2012).It means that its competitive edge is not enough to compete with the other big brands such as Toyota (The Times, 2008).

Whereas many car manufacturers nowadays focus on product itself, Skoda is aware that consumers seem to need a special service and experience not only product (The Times, 2008). This is an opportunity for Skoda because it discovers that its customers love the experience when they use Skoda’s product which is related with the concept of ‘happy Skoda customers’ (The Times, 2008). This means that UK clients might differentiate the brand between Skoda and the competitors (The Times, 2008). However, a price war has emerged between Skoda and its competitors. The other manufactures launched cheaper product, which means that it is difficult for Skoda to increase their market share in the future (The Times, 2008).

PESTLE analysis

This section uses PESTLE analysis to analyse the external element of Skoda UK (see appendices ③). VAT has increased from 17.5% to 20% in 2011 (HM revenue & Customs, 2011). This political element will affect the price of new car launching directly. For Skoda, if it increases the price of new car, this measure might influence the sales quantity. Because price of its cars is not expensive, which is one reason that to attract the customers to buy Skoda’s car. Another change is that carbon dioxide tax has increased (Murray, 2011). This will impact on the cost of a Skoda vehicle.

Moreover, because of the UK economic recession (see appendices ④) (BBC, 2012), consumer spending confidence becomes less. This economic state also would reduce the sales volume of Skoda. Moving onto the social element, an increasing trend of ageing in the UK (see appendices ⑤) (BBC, 2009) may affect the style or design of the car. For Skoda, its car pays more attention about the experience of customers (The Times, 2008). Depending on this social element, this is good news for Skoda because this may attract more old clients to buy Skoda.

Because the price of fuel has increased rapidly, car manufacturers are attempting to create a new economy mode (Ningthoujam, 2011). This circumstance for Skoda is a challenge that it requires Skoda to create new technology to decrease fuel use to meet the customers’ demand. Finally, the last element is concerned with legal issues. In the UK, there is a strict speed limit (see appendices ⑥) (Driver’s area). This element for Skoda may be good news because Skoda’s strength is not the speed of its cars.

Conclusion and Recommendations

Skoda claims that it wants to achieve the goal of selling 1.5 million vehicles in 2018 (Skoda, 2012). For Skoda, UK market is a vital part in its launching map. Therefore, these three methods below might help it to occupy more market share and increase the sales volume in the UK.

Firstly, Skoda needs to maintain high levels of customer satisfaction. This is the main reason why people will buy Skoda’s products. Therefore, Skoda needs to insist on its concept of ‘happy Skoda customer’ and keep on improve the quality of servicing. This helps Skoda to differentiate itself from other manufacturers. Secondly, there is the need for correct brand positioning for its customer, which will help Skoda to meet the demands of its target market. Thirdly, attempting to create more new technologies is vital in order to be competitive, such as new engine which can use less fuel.

Bibliography

BBC. (2009). The squeeze on pensions . Available: http://news.bbc.co.uk/1/hi/business/8294251.stm. Last accessed 25th Aug 2012.

BBC.(2012). UK recession less deep than thought.Available: http://www.bbc.co.uk/news/business-19366621. Last accessed 25th Aug 2012.

Brownsell. (2010). Skoda loses another top UK marketer. Available: marketermagazine.co.uk. Last accessed 22th Aug 2012.

Drivers area. (2012). UK Speed limits. Available: http://www.smartdriving.co.uk/Driving/DefensiveDriving/Speed/UK_Speed_limits.html. Last accessed 25th Aug 2012.

Engineering & Technology. (2009). The rise of Skoda.Available: www.theiet.org/magazine. Last accessed 20th Aug 2012.

Fifield, P (1992). Marketing Strategy. Oxford: Buterworth-Heinemann Ltd. pp 29-39.

HM Revenue & Customs.(2011). Increase in the standard rate of VAT to 20 percent. Available: http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-increase.htm. Last accessed 25th Aug 2012.

James, D. (2002). Skoda is taken from trash to treasure. Marketing News.Vol (3), pp 4-5.

Ningthoujam, S. (2011).New Technology in Cars. Available: http://www.buzzle.com/articles/new-technology-in-cars.html. Last accessed 25th Aug 2012.

Murphy, J. (2011). Car CO2 taxation and it's impact on the british car fleet. Available: http://www.lowcvp.org.uk/assets/presentations/Car%20CO2%20tax%20in%20the%20UK%202011%20-%20Jonathan%20Murray.pdf. Last accessed 25th Aug 2012.

Skoda. (2011). Skoda Annual Report 2011. Available: http://www.volkswagenag.com/content/vwcorp/info_center/de/publications/2012/03/SKODA_Annual_Report_2011.bin.html/binarystorageitem/file/SKODA-annual-report-2011-ENGLISH.pdf. Last accessed 25th Aug 2012.

The Times.(2008). SWOT analysis action at Skoda. Available: www.thetimes100.co.uk/downloads/skoda/skoda_13_full.pdf. Last accessed 21th Aug 2012.

Appendices

Appendices ①

Appendices ②

Appendices ③

Appendices ④