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1 MASTER OF BUSINESS ADMINISTRATION AWARDED BY NOTTINGHAM TRENT UNIVERSITY ASSIGNMENT SUBMISSION FORM Note: Students must attach this page to the front of the assignment before uploading to WECSERF. For uploading instructions please see the help file online Name of Student: ZUBAIR SALEEM Student Registration Number: KL Module Name: MANAGING STRATEGIC MARKETING Module Number: WEC-MBA Assignment Title: Strategic analysis of Marketing Mix and its strategies Submission Due Date: APRIL 12, 2009 Student s Electronic Signature: Zubair Saleem Plagiarism is to be treated seriously. Students caught plagiarizing, can be expelled from the programme Assignment Form MBA Jan04 Prepared by: - Zubair Saleem April 12, 2009 Page 1/25

2 EXECUTIVE SUMMARY This piece of work is done to meet the requirements of the module Managing Strategic Marketing of MBA program and to create a strategic way of thinking by doing some research and practice on my selected company of PROTON HOLDINGS BERHAD. In this analyzing report I have initially tried to give a review of Marketing and marketing management followed by the writings on Marketing Mix and its 4 Ps. After having a strategic review of 4 Ps of Marketing Mix for a Product oriented marketing I have analyzed the selected company based on the different marketing strategies and strategic thinking with data found from the company and some primary as well as secondary sources. Based the analysis of Marketing Mix strategies of Proton Holdings Berhad I have given some suggestions for the possible improvements of the organization for its 4 Ps or Marketing Mix. Ending the report by having some strategic conclusions of Marketing mix of the Proton Holdings Berhad I have tried to discuss some very important points of our analysis. Prepared by: - Zubair Saleem April 12, 2009 Page 2/25

3 CONTENTS Executive Summary Introduction Company Profile Competitors of Company Strategic Marketing Mix Product in Marketing Mix Pricing in Marketing Mix Place in Marketing Mix Promotion in Marketing Mix Existing Marketing Mix of Proton Holdings Berhad Product (Current) Pricing (Current) Place (Current) Promotion (Current) Suggestions And Proposed Marketing Mix Product (Proposed) Pricing (Proposed) Place (Proposed) Promotion (Proposed) Conclusions References. 23 Appendix Appendix Prepared by: - Zubair Saleem April 12, 2009 Page 3/25

4 1.0 INTRODUCTION Marketing is an organizational function and a set of process for creating, capturing, communicating and delivering value to customers and for managing customer relationships in a way that benefits the organization and stakeholders. (Dhruv Grewal & Michael Levy, 2008) Marketing is the way of organization s presentation of products to their target customers and target markets. Marketing management is always thought to be a challenge for the organizations because of always changing marketing environment and due to these innovations in markets day by day most of the organization, even the globe oriented that are focusing global markets are also not following one fixed marketing plans. Markets are customer based and customers are culture and innovation based, whose requirements are always changing and in changing environments it is a challenge to market your products or make a way to attract customers and sell your products under one particular methodology is very much challenging. Because of these reasons organizations always keep innovations in their target markets and try to continuously change their marketing plans according to the customer requirements to meet their needs and wants. Prepared by: - Zubair Saleem April 12, 2009 Page 4/25

5 2.0 COMPANY PROFILE Proton Holdings Berhad is the Malaysian national brand in car manufacturing industry producing automotives, related parts and accessories. Proton was established in 1983 and launched its first product with the trade name of Proton Saga in 1983 in the local automotive market of Malaysia. This project was mainly introduced to produce the national brand of Malaysia for Malaysian citizens to provide them cars in their range of affordability. With the goal of Driving Malaysia s transformation into a leader in technology and quality, Proton is working under the helping shadow of Malaysian government and was also introduced as Malaysian brand by former prime minister of Malaysia Mr. Mahathir Muhammad. The marketing of Proton products is followed by customer focus of Customers are the source of our income. We deliver on our promises to our customer s satisfaction. But since a long time company is loosing its brand name and brand image because of increasing customers and consumers requirements in quality and performance of the cars. Since the start of the organization, it has faced many industrial up and downs in market because it don t have its own engineering and organization was initially started with the engineering services of Mitsubishi Ltd: but since year 2004 company is facing continuous downfall in its market shares and earnings per share which was thought to be because of less interest of Mitsubishi Ltd: in Proton s quality and plant improvement which company was trying to improve but after having no way of success it has replaced its engineering services with Lotus Engineering and now its is using Lotus Engineering services to produce more effective and competitive cars of the current innovative global market and according to the annual report of financial year 2008 Proton is again retaining its earnings per shares with comparatively higher sales which were increased from 4,687.3 Millions of 2007 to 5,621.6 millions in According to its Board of directors and its annual report of financial year 2008 also Proton is again increasing its earnings per share which were continuously dropping since year 2004 as given below. Prepared by: - Zubair Saleem April 12, 2009 Page 5/25

6 Earnings per share (Sen) of Proton Holdings Berhad (107.3) Source: Self made from Proton annual report of financial year 2008 Proton have produced many cars like, Proton Aeroback, Proton Gen.2, Proton Iswara, Proton Perdana, Proton Perdana V6, Proton Putra, Proton Saga, Proton Satria, Proton Satria GTi, Proton Tiara, Proton Waja, Proton Wira. Proton is also exporting its products to other right hand driving countries like New Zealand, Ireland, South asia, Australia and United Kingdom since COMPITITORS OF COMPANY Proton since its start is mainly dealing with Malaysian local automotive market which is gradually increasing and looking to be more competitive by the entrance of many other automotive industries as given in appendix 1. But most of these organizations have marketing strategy of Prestige pricing with very much high quality and high speed cars while our organization Proton Holdings Berhad after a continuous crises is using Market or price penetration strategy to sustain in the market. Prepared by: - Zubair Saleem April 12, 2009 Page 6/25

7 3.0 STRATEGIC MARKETING MIX Marketing mix is an imperative concept in modern marketing and academically it is referred to as the set of controllable tools that the firm blends to produce the response it wants in the target market, so it consist of everything the firm can do to influence the demand for its product. (Philip Kotler and Armstrong, 2004) More simply Proctor, 2000 has given scope of Marketing mix as, It is very important to realize that Marketing mix strategy of any company can have one major function, i.e. Strategic communication of the organization with its customers. Marketing mix of any organization is its positive strategy to add values to its products in order to increase its sales and profitability by attracting more customers and to create barriers for its competitors. Marketing mix is thought to be very important mean for a company when it launches its new products as well as its improvement helps company to stabilize its position in the market and even the strategies of marketing are very much helpful on the decline of market shares of the company. Thoroughly marketing mix and its strategies are very much important for the profitability and create barriers for its competitors for its product and are applicable and helpful to all stages of product life cycle. Also its main focus is on the target market whether the current or the new market and marketing mix help company to sustain in the competitive market and also to enter new markets. In a marketing plan formation, the marketing mix and its strategies formation always come after formation of marketing objectives on the basis of organization s internal and external analysis and its capability of meeting the customer requirements and organization objectives. Also the analysis of marketing mix of any organization comes after the internal and external analysis and marketing objectives of the organization. Marketing mix in depth comprises of four main factors to target the markets by which with marketing mix Strategies Company add values to increase its market shares. These four main factors are also called as 4 Ps of the marketing mix which firstly were introduced by McCarthy Prepared by: - Zubair Saleem April 12, 2009 Page 7/25

8 in 1960 These 4 Ps of marketing mix are as given in following figure which refers the company to its target market. Product Place MARKETING MIX Pricing Promotion TARGET MARKET Source: Self Made These four main factors of value addition to the product of organization are simultaneously discussed below; 3.1 PRODUCT IN MARKETING MIX Products in terms of marketing mix and strategic marketing are combination of all goods and services which are provide along with these goods to the customers. E.g. Pizza as a product of Pizza Hut includes all the beverages, time value of money, sales and home delivery services. Though Pizza is a service and not the product but in marketing mix it is referred as service products For service like CIMB bank, Olympia College and any Malaysian airlines and likewise other services will be termed as service products according to Philip Kotler and Armstrong, Prepared by: - Zubair Saleem April 12, 2009 Page 8/25

9 Marketing mix strategies refers the products to be value added and must be able to compete in the existing as well as the new markets which depends upon the target market of the company. Marketing mix refers the product of any company to following main features or the terms of adding values to the product. But these features differ from company to company and are also dependant on the type of product of the organization. Design of Product Style of Product Branding of Product Packaging of Product Variety of Product Safety of Product Quality of Product Life of Product Source: Self Made Looking on the limitations of words and size of the assignment we will be discussing briefly only those features which Proton Holdings Berhad is using or proposed for improvement of marketing mix of its product Proton SAGA. 1. Design of the Product 2. Branding of the Product 3. Style of Product 4. Quality of Product For analysis and marketing mix strategies it is very useful to discuss each and every factor given above in detail but I want to give more importance to the analysis of the company, so I will discuss them not separately but as w whole. Also there are some experimentally proved marketing mix models and their strategies, which we will use in analysis of our chosen product i.e. Proton SAGA. Also the suggestions we will make from these strategies. Prepared by: - Zubair Saleem April 12, 2009 Page 9/25

10 But we will discuss briefly only those strategies which we will be using or will suggest after analysis. The most common methods of evaluation of Product position in the market to have a focused view of the product are Product life cycle and its strategies, Ansoff s Matrix, BCG matrix. I am not able to define all of them because of limitations of words, so just giving the graph of Product life cycle which we will be using in our analysis. Also Ansoff s matrix which is very important according to current and new products and markets can not be defined and we will focus on our view point from product life cycle PRODUCT LIFE CYCLE PLC is the total life cycle of the product through out its age in market. PRODUCT LIFE CYCLE V O L U P R O F Product Introduction Growth Maturity Decline Development M I Sales E T saga S A L E S 0 Profitability L O S S TIME Source: Self Made Prepared by: - Zubair Saleem April 12, 2009 Page 10/25

11 3.2 PRICING IN MARKETING MIX In marketing and marketing mix Pricing is termed as the set prices for the product of the company. These prices are set by different marketing strategies looking on the competitive advantages of the company, marketing objectives of the organization like if a company is using market penetration strategy to switch internationally to increase or restart its product life cycle then it will not be good idea for the company to increase the prices and trying to compete in same prices of its competitors. E.g. Proton Holdings Berhad tried to stretch product life cycle of its product SAGA and switched to European markets where it is selling in very cheaper prices and is not focusing on its competitor s prices. According to marketing mix, the pricing is also very important factor and according to McCarthy with value addition to the pricing of the products also the companies can improve their market shares. Like discounts, setting different prices on geographical basis or reduction of prices for competition like TESCO and GIANT. But this also depends upon the marketing objectives of the organization. In order to analyze our company we will also be looking some pricing strategies which our company is using for its product and will also discuss the proposed strategies to support our analysis and have a background and focus of those used pricing strategies. The pricing strategies used by the companies for their marketing mix are as given below; 1. Penetration Pricing Strategy 2. Skimming Pricing Strategy 3. Expansionist Pricing Strategy 4. Prestige Pricing Strategy 5. Pre-emptive Pricing Strategy 6. Extinction Pricing Strategy. Prepared by: - Zubair Saleem April 12, 2009 Page 11/25

12 All those marketing strategies are used to set the marketing objectives of the organizations and at the same time they also help us to evaluate and suggest the different pricing strategies to add value to our products and improve its marketing and marketing strategies as well. As our chosen company Proton Holdings Berhad is following Expansionist pricing strategy in its international market to penetrate into the market and increase the product life cycle of the product but at the same time it is using penetration pricing strategy in its local market where a large segment of the market or high number of consumers are very conscious about prices. 3.3 PLACE IN MARKETING MIX Placement of a company involves all the number of activities that make the product available to the customer. (Philip Kotler, 2004) Different companies are using different best possible ways to insure the provision of their products easily to their customers by using different channels. These channels can differ according to the type of product and also according to the company marketing strategies. The most common channels to place the products of the organizations are either direct provision of goods to the customer or by putting a third party in between company and customer or consumer. For example Wall mart is using network marketing as a channel and also at the same time has different warehouses all over the world but both of the ways can be said direct dealing of goods and exchange of values to the customer itself. This is only because of the marketing strategy of Wall mart in which it is insuring the customers to remove the channels in between manufacturer and customer with reduction of price and sell them in cheap price. Toyota or any other car industry is dealing with the customers directly as well are putting their products to their dealers who are channel between Toyota and customer etc. Prepared by: - Zubair Saleem April 12, 2009 Page 12/25

13 3.4 PROMOTION IN MARKETING MIX Promotions are company strategies of the organization by which it add values to its product and give them other benefits and services along with their sold product. These promotions may be in terms of addition of features or extra functions of the product, discounts or installment facilities, presentations, warranties and after sales services etc. In promotion organizations follow different strategies based on their products like Sales promotion, Personal selling, Advertising campaign and Public relations. But we will be looking in a general view in this section as our selected industry Proton Holdings Berhad is following almost all of the promotion strategies looking on their market position and historical data of their sales and profits. Prepared by: - Zubair Saleem April 12, 2009 Page 13/25

14 4.0 EXISTING MARKETING MIX OF PROTON HOLDINGS BERHAD Proton for its new product Proton Saga model 2008 have tried to change a lot of features in its production as well as in its marketing in order to increase its sales and the sales of the year which risen up to 5,621.6 millions in 2008 from 4,687.3 millions of 2007 also shows that these changes made were helpful (See Appendix 1). To evaluate these changes we will have a view of marketing mix strategies applied for all 4 Ps of marketing mix below, which company has implemented to sustain in the market and recover its market shares and also earnings per share which gradually went down since 2004 from 90.6% to (107.3%) of PRODUCT (CURRENT) Proton Holdings Berhad as we discussed was using Mitsubishi engineering for its car manufacturing which is thought to be very effective reason in company s loss of market shares. This obligation is also reflecting from company s annual report with increasing results of sales and profits of 2008 in comparison of last 5 years. Here we will be discussing some of the main features of the Proton Saga adopted by the company to improve its product, added features to improve its marketing and marketing mix strategies to reposition the product of Saga in its life cycle. I have analyzed the historical data of the sales and consumers view in general which is not discussed here because of limitations of words. But I will given a reference of earnings per shares which year by year are reflecting the sales of Saga as well and we can also see the sales of Proton Saga from Appendix 1 which relate more to Proton Saga and not the previous stocks of company because it is the launched product of same year. In product by Product life cycle our product Proton Saga as whole starting its life since 1983 was previously lying in the maturity stage and company was continuously trying to improve its sales Prepared by: - Zubair Saleem April 12, 2009 Page 14/25

15 but was not able to do so. To give the existing strategies we have discussed below different features of marketing mix. Because of limitations of words again we will discuss the overall strategies of the organization for its Product feature and will not go for discussion of each feature of Product separately. Proton Saga as was launched in different generations but company was continuously loosing its brand name after entrance of many automotive organizations in Malaysian automotive market as whole. This also affected its Proton Saga and the sales were continuously going down. To cover this gap Company made a try and launched Proton Wira as a replacement of Proton Saga but this effort was also not successful and company in 2007 went in loss in terms of earnings per share of (107.3%) which are very much for an automotive industry and the reason also can not be some else coz an automotive industry always require a lot of capital to run. This launching of Proton Wira was the Co-branding strategy of company which fail when company made losses and to regain the market position company thought for Re-branding of the product which was only possible if all the features were changed in production of new Proton Saga in Also this was very much important to repositioning of the product. For this re-branding and repositioning of Proton Saga company completed changed the engineering services of the company and went for Lotus engineering which had completely different features and this effort succeeded for this year as per company s annual report where sales of the company increased from sales of 2007 i.e. 4,687.3 millions to 5,621.6 millions in 2008 as given in company income statement in Appendix 2. Also to increase sales company is exporting this car internationally in UK, Australia and other related left hand markets. This also increased company sales on whole. But this is more concerned to increase sales and not much to re-branding and re-positioning of the product. Therefore we can say company is working on the strategy of Re-branding and also re-positioning of Proton Saga and which it did by Proton Saga model Prepared by: - Zubair Saleem April 12, 2009 Page 15/25

16 With this Company also have added some new engineering in Proton Saga for improvement of its quality, Style and Status which is organization s marketing strategy as well. Also Proton have followed the mass market or combined market strategy by providing different ranges of B-line, M-line and N-line products of Proton Saga model 2008 which differ with respect to the fuel consumption. This difference is provided looking on different ranges of customers in the market. 4.2 PRICING (CURRENT) For Pricing of Proton Saga company is using two main strategies of Penetration Pricing and selling price of Proton Saga ranges from RM 36,048 to RM 42,998 depending upon the dealers and also the features ordered by the customers in different ranges of B-line, M-line and N-line products which are based on different fuel consumption ranges. The source of prices is This is a cheaper price in Malaysian automotive market where different automotive industries like Toyota, Honda and Mercedes Benz etc are selling their cars at prices more than RM 150,000 but they are focusing prestige pricing but if we compare to Produa automotive industry and its product of Myvi model 2008 the prices are about same to saga but people are still more preferring Produa car than Proton s because Proton have just started its Re-branding and still need much more to improve its quality and brand name to create willingness of its consumers to buy its cars. Prepared by: - Zubair Saleem April 12, 2009 Page 16/25

17 4.3 PLACE (CURRENT) Proton on whole is selling all of its products by different channels and trying to create ease for customers to buy its cars. The main channels of means of sales of Proton Saga are also the same as given in below figure. PROTON Internet Marketing Car Dealers CUSTOMER Source: Self Made Here Internet marketing is not the direct source of provision of Cars but Proton is using it for marketing of its cars and can be said a channel for the customer, which are also the consumers of Proton Cars. Prepared by: - Zubair Saleem April 12, 2009 Page 17/25

18 4.4 PROMOTION (CURRENT) In Promotions which are added values to the product to attract the customers, Proton is offering different promotional features to its customers. Some of those main features are as follows; Provision of Car on installment based payments on the payment of almost 10% of the total amount and also these installments or loans are very long term. Proton has introduced Proton Saga model 2008 in different colors of Black, White, Grey, White, Red and Silver in order to cover the requirements of mass market. Proton has offered scrap policy along with Proton Saga 2008 which is now also offered by the government of Malaysia in which any car owner can buy a new car in replacement of the old one on very cheap price. In engineering Proton is giving promotions of Power steering, Tilt steering, RadioW/CD player, Central door lock, Reverse sensor and small cup holder etc. Also the M-line of the product is with driver s safety air bag. Proton is also offering after sales services to provide ease to its customers. Other promotions of addition of different features and car insurance are also offered on requirement of the customer. Prepared by: - Zubair Saleem April 12, 2009 Page 18/25

19 5.0 SUGGESTIONS OR PROPOSED MARKETING MIX In terms of marketing mix which is very important factor for the success of the company and also of increase in sales of any organization, following are some suggested strategies based on the analysis made before; 5.1 PRODUCT (PROPOSED) Proton Holdings Berhad have made a good step by re-branding its product Proton Saga in 2008 but still its consumers and customers are not seemed to be satisfied. This is because Proton Holdings Berhad replaced their engineering services but they also had to re-train their workers and also had to go for some changes in their marketing strategies and even on their website I never found any particularities which can attract their customers. Looking on this aspect I will suggest improving their websites and providing sufficient information which can attract the customers. Also company should focus small segments of market and can produce small cars, high speed, large size cars and cars only for ladies from which large size cars and ladies cars is large number requirement of the local Malaysian market where for guys and also for large families company can launch large size car like Toyota and other companies are focusing and ladies is in very large number in market and give them separate car is also very much beneficial in terms of marketing and sales of the company. Some days before one of my friends was working on a project, this was launched by Produa automotive industry to have their customer s feedback about their reactions towards their product, promotions, sales, experience and after sales services. This was looking a very good step to create an image in the customer minds and also to have a feedback of company brand image which can help the Proton as well to improve its brand, quality, style, shape, status and other features of Proton Saga. Prepared by: - Zubair Saleem April 12, 2009 Page 19/25

20 To improve their product Features, Company should also go for benchmarking with its other competitors. 5.2 PRICING (PROPOSED) In terms of Pricing Proton is following penetration Pricing and according to the current market segmentation and brand image company should still follow same strategy but to re-position the brand image company market its low price products and can go for cost focus strategy looking on the large quantity of customers of Malaysian market who are price conscious and want low price products. This also can be said as re-branding of the company but in terms of pricing like TESCO, GIANT, and CARREFOUR. Company have launched different colored products at different prices but still company is seemed to be following mass market strategy which company can enhance and produce range of products to focus all large segments of the target local market to which other companies are focusing. Price is also a barrier for the competitors and low pricing always increase sales and profitability but the marketing of low pricing and low pricing logo is very important for such company which company can promote as a Malaysian national brand. 5.3 PLACE (PROPOSED) Proton Holdings Berhad is following good plan in terms of its distribution but the marketing of its distribution is also important and for that company can use internet facilities. Prepared by: - Zubair Saleem April 12, 2009 Page 20/25

21 5.4 PROMOTIONS (PROPOSED) Proton Holdings Berhad is giving a lot of promotions along with its product Proton Saga model 2008 as we have discussed in the current Promotion and its strategies of company. Most of the promotions are seems to be company s willingness to facilitate its customers to afford its cars easily which is best way of company by which company is mainly focusing the large market segment of those customers who are price conscious and want cheaper price. This marketing strategy of the company is better choice as per its goal and marketing objectives but company should also focus prestige segment of the market who want status and some who want style, for whom company can give promotions of high speed and can also increase the size of the product which in marketing sense are also promotions if company is providing these facilities in cheaper price. Prepared by: - Zubair Saleem April 12, 2009 Page 21/25

22 6.0 CONCLUSIONS Proton Holdings Berhad is a national brand of Malaysia and also after its establishment given very satisfactory results but due to some reason of innovations and challenges of competitive automotive market it faced a lot of losses / decline and was trying to reposition its brand and improve its quality to satisfy its customers. But from many years it fails to do so. But looking on the last year sales it is again seems to have capability of regaining its position and can re-brand its products. From Marketing mix Point Of View Company has a better focus in terms of its pricing, place and promotion strategies but its product still need a lot of focus to re-brand the lost brand image of Proton Holdings Berhad. Marketing mix as a whole seems to be very much focused on the focus of company itself and is not providing sufficient view of customer s focus and it will be essential if customer views are kept in sight and along with marketing mix must also analyze them by either internet analysis or direct feedbacks. Prepared by: - Zubair Saleem April 12, 2009 Page 22/25

23 REFERENCES 1. Principles of Marketing, 7 th Edition, Prentice Hall Inc, Philip Kotler & Gary Armstrong, 1996, 2. Lazer, W (1971), 'Marketing Management: A Systems Perspective' New York: John Wiley & Sons. 3. McCarthy, E J (1960), 'Basic Marketing - A Managerial Approach', Illinois: Irwin. 4. Proctor, T (2000), 'Strategic Marketing: An Introduction', London: Routledge. 5. Richard M.S Wilson, 1997, Strategic Marketing Management, 2nd Edition, Butter Worth- Heinemann Publishing Company Reviewed on 1 st April Reviewed on 1 st April, Reviewed on 10 th April, Reviewed on 28 th March, /freeuk-co-factsheet.xhtml, Reviewed on 22 nd March, Reviewed on 23 rd March, Prepared by: - Zubair Saleem April 12, 2009 Page 23/25

24 APPENDIX MAA Vehicle Sales, Market Share and Ranking Summary for Passenger cars & Commercial Vehicles in Malaysia For Jan to June 2008 Source: Prepared by: - Zubair Saleem April 12, 2009 Page 24/25

25 APPENDIX 2 Income Statement of Proton Holdings Berhad For Financial Year 2008 Prepared by: - Zubair Saleem April 12, 2009 Page 25/25