Download Management & Engineering Car —Taking Chery A3 for Example

Management & Engineering 19 (2015) 1838-5745
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Management & Engineering
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Study on the Marketing Strategy of China's Independent Brand
Car —Taking Chery A3 for Example
Zhonghua WU ∗
School of Business Administration, Jiangxi University of Finance & Economics, 330013, China
KEYWORDS
The independent brand car,
Marketing strategy,
Chery A3
ABSTRACT
Our own car brand has progressed from the imitation stage into an independent innovation
stage where product, service and brand have gradually been put on the agenda. The research
analyzes the development of independent brand automobile and the marketing strategy of
Chery A3 in-depth, then putting forward marketing strategies which is suitable to the
independent brand automobile in China.
© ST. PLUM-BLOSSOM PRESS PTY LTD
1 Introduction
After 20 years of development, China's automobile industry has made great progress, especially since China joined WTO, opening
the Chinese auto market, and achieved good results in the automotive field. As per the sales statistics released by China Automobile
Industry Association in 2011, China's annual auto production and sales reached 8,279,700 vehicles and 9,216,000 vehicles, and the
growth rate is 27.32% and 25.13%. After several years’ of development, China becomes the world's largest car market and the third
largest automobile producer. Among them, the development of independent brand car in China in recent years is very fast. In 2004,
China's automobile independent brand market is less than 20%, while in 2012, the figure rose to 30%. Therefore, the development of
China's independent brand is gradually becoming more mature, the domestic market share is also increasing, and the scale of
development is expanding. However, due to various reasons, the development process of China's own brand car has many problems
such as lacking in core technology, innovation, quality and export problems which hindered the rapid development. Therefore, in
order to develop the car pillar industry, improving the speed of development the national economy, making our country automobile
industry superpower, the first and important question is to solve the problem which lies in our own car brand.
2 Independent Brand of Car in China
2.1 The concept of the independent brand of car
The independent brands are a synthesis of a company and its products, and it covers the general characteristics of the innovation
ability of the enterprise, enterprise management, market positioning, marketing, service and other aspects. It forms a unique
∗
Corresponding author.
E-mail address: [email protected]
English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD
DOI:10.5503/J.ME.2015.19.016
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characteristic under the premise with intellectual property rights, through the integration of resources, integrated innovation in the
minds of consumers, and these can effectively promote the consumers to buy the product, and loyalty to the brand symbol, image or
design.
The automobile independent brand is under the premise of independent intellectual property rights, through independent development,
forming the unique characteristics in the minds of consumers, and these can effectively promote the consumers to buy the car, loyalty
to the brand symbol, image or design. Chinese independent brand of automobile is relative to foreign brand as well as joint venture
auto brand, as it is the product of the auto industry with Chinese characteristics. Generally, the independent brand automobile refers
to those self-development and owning to independent intellectual property rights. Chinese independent automobile brand is usually
called independent automobile brand, whose subject is Chinese, because it linked with the revitalization of national auto industry,
also known as the national brand.
The development of the automobile industry can obviously lead to the development of the upstream enterprises, which will create
more value, tax and employment, and promoting the rapid development of the national economy. In the face of globalization in the
international market, the key to improve the international competitiveness is the independent brand. Chinese enterprises should pay
full attention to the cultivation and protection of independent brand, enhancing technology R & D as well as innovation.
2.2 Current situation of Chinese Self-owned auto brand
At present, China's independent brand of automobile is divided into two categories: one is the domestic brands with imported
technology, these brands are the introduction of foreign mature models; another is independent brand using the technology
development models, its products is developed by domestic enterprises, belongs to the true meaning independent brand, which is the
representative of China National Automobile industry.
The first car that marked the start of China’s automobile industry was born in 1956, after the reform and opening up. The world
famous manufacturers with the Chinese native enterprises joint ventures, with the production of a variety of joint venture brands such
as bamboo shoots after a spring rain. However, until the 90's, the risen brands such as the Great Wall car, Chery automobile, and
Geely Automobile marked the development of China's own brand. BYD Co which is established in 2003 launches a series of the F3,
F6, and F8. BYD positioned in the high-end car production in 2004 while other brands such as Chang’an, Dongfeng, Changhe, FAW
Xiali, have also developed its own brand with foreign cooperation, forming the mainstay of China's independent brand cars.
After nearly ten years of development, Chinese independent brand car has overcome the weakness of foundation and bad competitive
environment, and has made gratifying achievements. Chinese independent brands are growing at a high-speed, where the growth rate
is higher than the average rates, and the domestic market share is about 30%. According to the statistics from national passenger car
market information united association, the Chinese independent brand car market sales is 862,500 vehicles in 2012, accounting for
20.60% of the total sales of the domestic market, but in 2008, the independent brand car sales increased to 555,500 vehicles, which
accounted for 24.70% of the proportion of total sales. Chery jumped to the top national automobile manufacturers owning to its high
sales. A number of domestic independent brand automobile enterprises such as China, Chery, the Great Wall and Geely as the
representatives are developing overseas market. These brand cars survive in tough competition with foreign brands and occupy a
certain market share in abroad.
Although the independent brand car market share is rising, the enterprise profit and loss is another new problem for independent
brand enterprises; in addition to, the independent brand automobile product is not much. Thanks to the technology, capital, market
and other aspects of the block, the switch from small volume and low car moving to intermediate car is prevented, thus limiting the
development of market. Whether domestic or foreign, independent brand is still in the low-end market and senior market possession
rate is very low. At the same time, the independent brand car also has the problem of quality defects and inadequate innovation ability
which has not formed loyal consumer groups.
3 The Problems Existing in the Marketing for Chery A3
3.1 Product design problems
The Chery A3 is a very unique model, very small in size, but the location is not low, and both the price and the platform suspension
design are beyond the conventional autonomous car. This development philosophy does not seem to be in line with the actual
situation in domestic market.
As a representative of the national brand, Chery is committed to build national cars. The so-called first come, first served, native
Chery should be more understanding of China's automobile consumption culture logically, understand the psychology and needs, in
order to make both applause and popular cars. Although after ten years of painstaking efforts, Chery A3 formed its own
characteristics models, but there are some problems, such as the short board rear space, no roof, and interior rough. When the foreign
auto giants increase body and comfort configuration, and improve the interior, Chery A3 does not adapt to this situation very much,
apparently, at least in the design of Chery A3 products, where Chery can't really respect the consumer psychological needs.
3.2 Price problem
The price of Chery A3 has advantages as well as its disadvantages. The advantage is the cost performance. Chery has publicity to
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remove the price tag, wanting to challenge the joint venture brand with the quality which is at the same level. Much lower than the
same configuration of the product, the product configuration and quality is higher at the same price. The disadvantage is the price
which is reflected in the much higher than the same level of independent brand product, the low price challenge the minds of
consumers in the independent brand image, what can’t be quickly accepted and recognized by consumers.
Consumers have very high expectations for Chery A3, where many consumers even delay the car buying plan for Chery A3.
However, the price of Chery A3 has poured a pot of cold water to enthusiastic consumers on September 26, 2008, which immediately
attracted condemning. To be fair, with respect to the product itself, the price of Chery A3 is not high. However, Chery ignored a very
important fact which is the Chery brand premium ability is low.
Compared with the imported cars and joint venture cars, Chery A3 is more sensitive to the special products (the independent brand
car) during the special period (recession) and to special consumers (consumer). The price of Chery A3 directly affect the sales as well
as consumer’s loyalty. What is worse, Chery's reputation and brand loyalty will be affected after the forced sale.
3.3 Place problems
Production of automobile is completed by manufacturers, while automobile sales and service is completed by the dealers.
Automobile manufacturers and dealers are the pursuit of profit. A car manufacturer needs good sales service to promote sales, but
some dealers slack but do not apply to the dealers, which is the key contradiction. Although Chery has done a lot of work to improve
the sales place, Consumers usually get bad treatment when they go to Chery 4S shop according to the internet datas, the poor
impression on Chery's service attitude and service quality did not have obvious difference. Even though Chery has placed a lot of
effort in channel management, its channel management rules and regulations can`t be effectively implemented. When the normal
reception work is not done well, it will be hard to say the construction of channels can be successful.
4 The Marketing Strategies Thinking About Chinese Independent Brand of
Automobile
4.1 Building China's national brands together
China's auto industry is in a rapid progress, which is the fact recognized by all the world, but the Chinese automobile is still
considered as cheap and unsafe products by foreigners. Even in the eyes of consumers, it is very difficult to combine with the high
quality, safe, reliable, elegant, position for domestic independent brand cars. In the hearts of our people, the independent brand car is
cheap, fashionable and high performance to price ratio. In order to create our own world automobile brand, Chinese national brands
should rise, in other words is the rise of China's automobile industry. The protagonist should be independent brands, Chinese auto
makers need to have global consciousness and vision, create their own brands of a mind, while holding up the entire Chinese
automobile international brand together. Automobile enterprise should promote more favorable policies, promoting
small-displacement and new energy automobile, the government can increase the purchases of the independent brand cars, and
support the development of independent automobile brand in many ways. The government and the enterprise invest and cooperate on
a new energy automobile research, with a purpose to build China's national new energy automobile brand.
4.2 Strengthening the innovation capability
In fact, markets cannot be changed to the core technology, as nobody can build brand building castles without technology
breakthrough. The independent brand automobile should increase R & D as well as innovation, striving to achieve local breakthrough
and transcendence in the traditional automotive field. In addition, great efforts should be put into new energy technology
development and commercialization. The gap between Chinese cars and foreign cars is small in the new field of energy, which is a
good opportunity for Chinese automobile brand to learn.
Geely have made a very wise development strategy—generally follow local beyond, major breakthrough, recruiting, uniting, catch up
from behind, launching the engine—the leading domestic, internationally advanced, who have developed the blow-out monitoring
and control system (BMBS). This will lay a solid foundation for Geely undoubtedly.
Changan, FAW, Dongfeng, SAIC and many other car companies have launched a variety of hybrid and new energy vehicles, in order
to build strong brand image in the field of new energy technology. It is a good opportunity to grasp the development.
4.3 Creating a distinctive brand characteristics
We should establish the distinctive characteristic for independent automobile brand. For example, the Great Wall cars should first
build and consolidate their own SUV image and brand; Changan can set the expert image in the micro and small cars; Roewe
emphasizes its British style and digital technology; Chery and Geely are outstanding image—Chinese own national automobile brand
and China’s national car; BYD can establish the green brand image.
4.4 Outstanding price advantage
The consumer income is not high on the whole in China and consumers are more sensitive to the price, hoping to buy a “good
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enough” car with a little money. This is an opportunity to the independent brand, where the independent brand automobile must
highlight the price advantage. The independent brand car has better cost control ability, whose price can be a lot cheaper than other
foreign brands. Enterprise should communicate with consumers, adding value to multinational auto brand and so on. Taking the car
as a “vehicle” and allowing consumers to understand the advantage of independent brands in the cost control, improving product
quality and service standards at the same time, to impress consumers who are eager to high quality life. Establishing the distinctive
brand image is to distinguish the high performance-price ratio, and apart from the joint venture brands. However, in the
communication, car manufacturers should not simply care about price, but cater more to consumers' spiritual needs.
5 Conclusion
China's Independent Brand Car must analyze the domestic consumer demand, satisfy the demand of the Chinese consumers, and
improve the Chinese consumer's trust to the domestic brands, so as to improve the competitiveness of independent brands.
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