2.3. Production of the company
Fig. 2.3.1. Production of the company in the years 1999-2003
(Annual report of Skoda for the year 2003, www.skoda-auto.com)
In 2003 Škoda Auto manufactured a total of 437,554 vehicles. Compared with the previous year, this represents a decline of 4,915 vehicles (-1.1%), which was caused by the overall worse performance of world markets and the resulting reduction in the demand for new cars. The Fabia model line accounted for 59.8% of the Company’s overall production in 2003, with 261,787 vehicles produced. Production of the Octavia model reached 156,497 vehicles in 2003, representing 35.8% of the year’s total manufacturing unit volume. In 2003, production of the Superb was in line with market demand at 19,270 vehicles. (Annual report of Skoda for the year 2003, )
2.4. Promotion to customers
Promotion mix is specific mix of advertising, personal selling, sales promotion and public relations that a company uses to pursue its advertisind and marketing objectives (Saunders 2002).
Advertisements are used mainly in TV spots and Billboards and exclusive magazines. Main face for the last TV spots for the last advertised model is Adriana Sklenarikova, model performed space and luxury for model Superb. For the most recent model Octavia II. was launched only promotion through Car show in Geneva and journalist testing drives in Athens, Greece. Promotion is made through charity actions Cultural (National Theatre in Prague) concerts and Sport events (World championships in Ice Hockey main sponsor every year from 1992, official car of the UK second football league, rallye teams etc.).
3. New segment of the market
3.1. Market share on the market of new cars
Fig 3. Market shares “sold new cars” in the years 1999-2003 in following regions
Source Annual report Skoda 2003
The above figure shows unrepeatable market share (in other countries) in the Czech Republic and Slovakia, which is slowly declining during the years. Market share in the Eastern Europe is high as well. In the UK and Western Europe is possible other growth with regards to that share is only 1.7 per cent of sales of new cars (more information in appendix 2).
3.2. New segment of the market – Family cars
Skoda has not entered this segment of market. Attractiveness of this market is very high. Because, in this segment are sold cars of the higher price category with a luxurious equipment. See the next page for the portfolio of customer segments (Dreher, Ritter, Muhlbacher, 1992). The picture shows attractiveness of the new segment of the market for the company. There is also shown high competitive position of the models Fabia, Octavia and Octavia II. Superb is not so good in the competitive position, because of prejudices of customers against the brand Skoda emerging from the past.
This segment (Family car is smaller Van) is in big growth with more than 800.000 sold cars a year in the Western Europe. In the Czech Republic are sold (total amount) more than 140 thousand new cars a year. Family cars involve 9.1 per cent (about 13 thousand new family cars) of the total market with new cars in the year 2002 in the Czech Republic (source car magazine Auto Bild – September 2003). This segment is operated by competition especially Citroen, Ford, Peugeot, Fiat and VW in Europe.
The stability and reliability of the company after launch of the new product will be stronger and after launch are covered all basic model series on the car market by the Skoda company which is going to fixate image of the brand among wide public.
4. Marketing plan
These questions are going to be answered: How do we communicate our strengths to the customer? How do we identify customer requirements and changes in customer requirements? (1998, Scholl)
The marketing plan will be about differentiated marketing strategy which is a market coverage strategy in which a firm decides to target several market segments and designs separate offers for each. In this case it is one segment with one design (Kotler 2003).
Differentiated marketing
4.1. Time scale
Car industry in presence is defined by long term development of new products and also with high requirements on safety and comfort . The car for the new segment of the car market can be build until three years with using the common platform with partner Volkswagen which produces family car Touran, and other models of the Volkswagen Group with the help of the study from the last year 2003 (see chapter 4.2.)
4.2. Entering the new market with - Skoda Roomster – The Family Car
At the start must be clear idea to whom the car offer. It may be a car for the family, for sport, and business use as well. Company at the present time produces for the car market of low middle class cars (Fabia), middle class (Octavia), high luxury class (Superb), and in the future is the company going to operate on the market of the higher middle class (Octavia II). Company after stopping the production of the first Octavia will have 3 model series.
My idea is to launch a new product Skoda Roomster based on the study performed in Frankfurt in the year 2003 (see Appendix 1 – last picture). The five-seat compact family vehicle will have exceptionally flexible interior with a wide range of options for family, sport and business use. The Roomster will have an attractive and dynamic outer design and should have the same shape of the front mask as other Skoda models, but for this new market segment should look seriously, but with lot of features and possibilities inside of the car.
4.3. Advertisement and promotion
Advertisement which helped the company to change image from starting in 90’s “It is a car” to a slogan “Simply clever” can stay the same. Skoda need not to introduce brand, so can be concentrated on advertisement campaign only for the new type Roomster and its features and improvements. I recommend use the same ways of the advertising as in the last 10-15 years. It means TV, magazines and billboards. Promotion with charity, social, cultural and sport events may support the brand as it was in the past. (Marketing case study tutor2u.net/business/marketing/casestudy_skoda.asp) Public Relations campaigns should be first (started with introduction of the Study in Frankfurt). Journalist drives and introduction in all exclusive and family magazines as well.
4.4. Cost of the entering of the new market
In the last days was in the news papers story about launching the new product from the company Opel (Vauxhall in the UK). The cost of development of the new Opel Astra was in total about 1 billion Euros.
Skoda Company is not so big company in production and in assets so the costs maybe with cooperation with Group partners about 1/8 of the sum introduced above. We can count with 100 million Euros for development of the car and 25 million invested into the TV, magazines and billboards 3 weeks campaign across the Europe as in the last cases of launching the new model by Skoda. (http://www.tutor2u.net/business/marketing/casestudy_skoda.asp). Small sum should be invested into introduction of the car at some Car Show.
4.6. Expected market share
In the Czech Republic and Slovakia company has approximately ½ of the market share in produced categories of cars (See chapter 3.1. – Figure 3). It may be predicted that Skoda will have the same share with the new product on the Market in Slovakia and the Czech Republic. It means that with sold 12000 new family cars in the Czech Republic the market share may be 6000 cars. There is in the Western Europe, market with 800.000 family cars. If the company Skoda will be able to hold the standard about 2 per cent of the market share it may be 16000 cars sold only in Western Europe. We have result of 22000 cars sold in the Czech Republic and Western Europe, with other European and world markets there may be expected sales of 30000 new family Skoda cars a year.
4.6. Action plan
The questions that should be answered:
What will be done?
When will it be done?
Who is responsible for doing it?
How much will it cost?
(Kotler 2003)
Year 2004 may be started the development of the new family car on the base of Skoda Roomster from the year 2003. Development of the car and realization of prototype may be done till 2006. In the year 2007 may be car introduced at Geneva Car Show and after introduction can company start reaching the market share (chapter 4.6.). It should cost 125 million Euro, but from my point of view is very hard to appraise the cost, because this information are kept in the silence. Responsible will be management of the company Skoda, with the management of the Volkswagen Group.
4.7. Potentional drawbacks to this market segment
Problem:
The Skoda Company can have problem if the new model will be not accepted by the wide public as a “good value for good money”. That’s spoken about the brand Skoda among people.
Solution:
Price should be set in conditions and terms in which the brand Skoda is widely accepted.
Problem:
The development of the new product will not start because of the disapproval of the top management in the Volkswagen Group.
Solution:
None
Problem:
The low birth rate in Europe. Simply, that there are not so much children in the Europe, and demand for the family cars will decline.
Solution:
The car and advertisement should be targeted on other possibilities of usage of the car (business car, sport, to the country, image making car etc.)
References
Dreher, A., Ritter, A., Mulbacher, H., (1992) Systematic positioning, European Marketing Academy Proceedings, Aarhus, Denmark, pp. 324
Kotler P., Armstrong, G., Saunders J., Wong V. , (2003), Principles of Marketing, Pearson Education Limited, Third edition
, R., W., Organizational Strategy, Professor of Management, University of Rhode Island, Revised: November 14, 1998
Autobild September 2003, Car magazine– Article about Family cars
Annual report of Skoda Company from the year 2003
Internet:
tutor2u.net/business/marketing/casestudy_skoda.asp – marketing case study about Skoda
Official internet pages of the Company Skoda:
, ,
– Official page of Volkswagen Company
Appendix 1.
Fabia – Inspiration for the life
Octavia – quality family car
Octavia II. (new version) – dynamic, strong and original in the detail
Superb – most spacious and most luxurious model
Skoda Roomster – The Family Car – Study introduced in Frankfurt
Sources: www.skoda-auto.cz
Appendix 2
Source: Annual report of Skoda from the year 2003
