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Posted on March 13th, 2013, by

Obviously, each company conducts its own pricing and promotion policies, which should meet its target customer group. In fact, the influence of the chosen target market on pricing and promotion can hardly be underestimated because, if the company like Ford or Lexus, manufactures cars for its target customer group, it should set the price affordable to customers and beneficial for the company. Otherwise, the company will either distract customers and will lose its position in the market or the company will suffer substantial financial losses. For instance, if Lexus sells its cars at low price, the revenues will not cover costs spend by the company on development and manufacturing of its cars. Or, if Ford establishes the high price for Ford Escort, at the level of the premium segment, for instance, customers will never buy this car. As for promotion, it is also extremely important for successful marketing of products. To put it more precisely, Lexus aims at the premium segment and promotes its product to reach the target customer group and the company should promote its products to attract customers and to make them buying their products. Otherwise, the promotion of the product will be ineffective. For instance, if Lexus promotes its products for the audience, which cannot afford buying Lexus cars than the promotion will be ineffective and, similarly, Ford Escort’s promotion will be ineffective among the upper-class audience because these customers are more concerned with luxury cars, whereas Ford Escort fails to meet their status and social standing. In such a way, the pricing and promotion should meet the target customer group. Obviously, the pricing and promotion depend on the targeting and positioning of companies but, it is necessary to take into consideration the fact that companies establish prices of their products and conduct promotional campaigns that cover costs spent by companies on manufacturing products and their promotion and bring certain benefits to companies.

In such a situation, the change in the introduction of a new target market would affect consumer perception. At this point, it is possible to refer to the case of Ford Escort, which introduced the ZX2 model, which had some elements of a sport car. In fact, such transformations increased the price of the car consistently and elevated its status but this car failed to match its traditional target audience and the company had to look for new target customer group because the traditional customer group would not buy the new model en masse. Instead, the company should promote its new product to meet new customer group that could buy Ford Escort ZX2.

On the other hand, it is not only changes in the company’s policy that may change the behavior of customers and their choices but also general trends and the situation in the economy. In fact, customers will be influenced by changes in the economy consistently because they are dependent on the situation in the economy. At this point, it is possible to refer to the recent economic recession. Customers cut their spending substantially because their incomes have dropped and they had to save money. In such a situation, they could not spend their money on new cars, when they had to maintain their business or to earn for living. In this regard, the target customer group of Ford Escort would rather save money to earn for living instead of buying a new Ford Escort, whereas Lexus’ target customer group would rather prefer to invest in business than in a new car. However, it is worth mentioning the fact that Lexus’ customers were less affected by the economic recession because their level of income remained quite high and they could buy new cars but they did it rather of necessity than of a will to purchase a brand new car.

At the same time, these customers will be also influenced by social environment. In this respect, it is possible to refer to growing customers’ concerns with the environment protection. In actuality, customers grow anxious about the negative impact of vehicles on the environment because of CO2 emissions. In such a situation, customers would prefer buying hybrid vehicles instead of conventional cars like Ford Escort. As a result, if companies failed to introduces respective changes, they would face a risk of losing their target customer groups, which would shift to companies offering environment-friendly vehicles. In this regard, Lexus has proved to be capable to introduce essential changes and developed hybrid vehicles to attract customers concerned with the environment protection, whereas Ford Escort failed to do so.

Nevertheless, Ford Escort as well as Lexus could benefit from their brands and names. In fact, the impact of the product brand and name on purchase decisions being taken by customers is very significant. Ford is a renowned brand and customers purchased Ford Escort often due to the popularity of the brand and its name, especially in the US. The same trend can be traced in relation to Lexus, although, its brand and name has not so long history as Ford does.

The target markets of Ford Escort and Lexus shops the bargains, although Ford Escort may have a potential to grow more but, in the time of the economic recession and consistent downturn in the development of the car manufacturing industry, the rise of price will lead to negative effects on the company’s performance and the position of Ford Escort in the market. The latter means that Ford Escort may lose its position in the market because customers may prefer other vehicles of the same class manufactured by Ford’s rivals at lower price.

Thus, both Ford Escort and Lexus have their own target customer groups and companies develop their marketing strategies to meet needs and wants of their target customer groups. To put it more precisely, the companies developed their pricing and promotion strategies to attract customers from their specific target customer groups. Otherwise, their cars would be unattractive for customers and their marketing would fail because customers from Ford Escort’s target customer group cannot afford buying Lexus, whereas customers from Lexus’ target customer group would not buy Ford Escort because this vehicle does not match their status.

 

 
References
Farell, Alexander E., et al. (2006, Jan. 27). “Ethanol Can Contribute to Energy and Environmental Goals”¯. Science, 311, p.506-508.
Gomory, R.E. (2002) Globalization: Causes and Effects. New York: Touchstone.
Gitlow, H. S. (1997). The Deming guide to quality and competitive position. Englewood Cliffs, N.J.: Prentice-Hall.
Khor, M. (2001) Global Economy and the Third World. New York: New Publishers.
Sanna, L. (2005, Fall). “Driving the Solution: the Plug-in Hybrid Vehicle”¯. EPRI Journal, p.8-17.
Yasuda, Y. (1991). 40 Years, 20 Million Ideas: The Toyota Suggestion System. Cambridge: Productivity Press.

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