Volkswagen in China, Marketing Assignment

Topics: Automotive industry, Volkswagen Group, Volkswagen Group China Pages: 10 (4026 words) Published: December 10, 2012
1.0. Introduction.
Marketing nowadays is the essential element of successful organizations (Kotler, 1999). And of course all products that are produced by companies are made to be sold and provide the profit for producers in this light marketing is the most important tool because it effects profitability and sales dramatically and provide the healthy turnover for the company. According to Kotler marketing is “the process that satisfies needs and wants through an exchange process” (1999). The Chartered Institute of Marketing enhances this definition to 'The management process responsible for identifying , anticipating and satisfying customer requirements profitably'. Marketing is based on several marketing concepts (Appendix 1). This paper will describe the marketing strategies on the example of Volkswagen Group China (VGC) , automotive industry. 2.0. Organisation back-ground.

VGC is an affiliate of Volkswagen AG. Volkswagen has been in China automotive market since 1984. Volkswagen opened its headquarter in Beijing, China ( ) . During this period of time VGC demonstrates sustainable growth and profitability, for example in financial statements (2010) its sales revenue was shown as €126.9 billion, with 20.6% in difference from the previous year profit, with 1.9m sold cars in total (Appendix 2). Net liquidity of the Automotive Division has increased to €18.6 billion in 2010 (Appendix 3). The quantity of employees reached amount of 53,000 in 2010. Current President of the VGC is Dr. Karl-Thomas Neumann (CEO). The VGC is operating through 2 joint-ventures: Shanghai Volkswagen Automotive and FAW-Volkswagen Automotive Company . 3.0 Industry analysis Pest.

3.1. Economic Impacts.
There are 2 main events that have changed the economy of China cardinally. The first is the open policy from the 1970s and the second its WTO membership in 2001, according to which China’s economic system became more market-oriented. In January 2004 the National Bureau of Statistics has provided data that China’s GDP had raised by 9.9% in 2003. According to the opinion of analytics, China’s GDP is predicted to rise for 17,84% in 2020, what means it will reach predicted GDP of USA for same 2020, this is shown in table in (Appendix 4 )( . The significant increase of GDP (Appendix 5) will influence China’s consumer spending trend. The membership in WTO has made China to be very attractive FDI destination, it has created more pressure on Volkswagen Group China by very strong competition, as before Volkswagen was one of few automotive manufacture on Chinese Cars Market and now nearly all international car producers are available on Chinese market. The wide availability of different car manufactures, brands, products is increasing the shift in customers demand and decrease of customers’ loyalty. Moreover the world economy now is facing trend of increasing price for Commodity and Raw materials, for example: steel, resins and iron that are mainly used in the car manufacture industry (Appendix 6). And it is resulting in growth of demand for it in car manufacturing industry, what means that Volkswagen’s pricing policy will be strongly influenced. New Chinese automotive producers (such as Chery Automobile) (Appendix 7) with lower prices than average market prices and support of government are trying to capture their share of the Chinese market, what makes Volkswagen Group China increase its investments. Furthermore strong fluctuations in exchange and interest rates (Appendix 8) provide another challenge for Volkswagen Group China. 3.2. Political Impacts.

FDI activities in automotive industry in China is regulated by Chinese government by laws, pacts and restrictions. Chinese government allowed the entry for foreign producers only through joint ventures and only less than 50 % in share (The Excerpt of Chinese Auto Industry Policy). Moreover Chinese government wants to develop its own production...
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