Question

ou Decide Scenario Summary Aero Motors, a subsidiary of GenMax world-wide, has a great reputation for producing high-end, luxury cars for primarily the European and Asian markets. The flagship model, the Pinnacle, starts at $50,000 and goes up from there. While the cars enjoy a devoted following and great customer reputation in those markets, the sales of the cars have never taken off in the U.S., primarily because the cars were not attractively priced and had a very limited service and dealer support system in the U.S. There is no real following for the cars in the U.S., and most U.S. consumers have never seen one. Those people who do own the cars in the U.S. are extremely devoted and have clubs and associations such that owning a Pinnacle is a lifestyle decision into which an owner can build a lot of social status. Now, Aero has access to a leading market technology that will allow them to build very fuel efficient automobiles in the compact and subcompact range. The cars can be produced and sold in the $15,000-$20,000 range. GenMax has decided to attempt to penetrate the U.S. and North American markets with these new cars. Your task is to decide what branding strategy to use, how to organize the U.S. unit, and even to decide how to brand and name the cars. They are asking you to develop the strategy, and how to develop the relationship with Aero in the U.S. market – basically run the show! Internal Influences on Consumer Behavior You are the new Director of Business Development for Aero Motors, a subsidiary of GenMax. The Board of GenMax has tasked you with managing the introduction of the Aero Motors brand to the North American market. You are going to need to review a few possible combinations of branding strategies for the introduction of Aero Motors to the North American market segments – in particular the United States. What is Your Role in this scenario? With our lack of infrastructure in the U.S. market, we need to focus on an alliance with an existing U.S. company and basically private label the new car. We can't just start trying to sell this car without a dedicated, trained support system to service the new technologies. If we don't establish it, we will have a lot of unhappy owners when the cars need service and repairs. We will need to seek out an existing company in the U.S. market, enter into a non-disclosure agreement with them, and go to market that way. You'll have to figure out how to control the brand and reputation from there. We will not be able to keep our technology advantage for more than two years before our competitors fully understand it and are able to completely utilize it in their models. We must get as wide a footprint as possible, as quickly as possible, in this market or we will lose our competitive advantage! Everything regarding this vehicle has to be controlled by us from the beginning. Otherwise we will never get a chance to make our mark again. I think we must introduce the car on a very limited basis in urban regions, set up our own dealers and service centers, and market to green-oriented consumers. We want to be known as a lifestyle type of company and use the existing, very loyal customer base for our cars to do viral and buzz marketing type activities for us. Although the price of the cars will be entry level, I think we can build a certain status around the Aero ownership experience and give our cars a desired, even somewhat elite, status. You have to decide what sort of marketing approach you want – do you want to appeal to frugal consumers or an eco-savvy customer who wants to drive something different than the status quo? I don't know if you want to go with a mass-appeal, "every man" type of campaign, or make the model introduction more for a discriminating few? My thoughts are to try to minimize risk and capital exposure as much as possible. While branding entirely on our own has advantages, I believe that it will be more expensive and offer less return on investment for at least the first five years. Partnering with an existing company would offer much less control, but we would almost certainly sell more units and have less growing pains than going it alone. What would you do to resolve this scenario? Activity Primarily, you'll want to prepare a 350–700-word brief to the CEO and Board of GenMax, one in which you weigh the pros and cons of the go-it-alone strategy and the partnering strategy. You will want to give a high-level rationale justification of the strategy. For each strategy, you'll want to explain risk/reward; how you want to use the existing Aero brand, and the practicality of using current Pinnacle owners as part of your promotion effort; and how you'll make your recommendation.

Answer 1

Go-it alone strategy:

Pros:

1. Unlimited Flexibility: Aero, if goes alone, will have unlimited flexibility in making strategic and tactical decisions.
2. In a go-it alone strategy the focus would be on strong objectives, which is not possible in a partnership mode.
3. A cultural cash can be avoided in the go-it-alone strategy.
4. The employees will take much pride in promoting their own company and its brands rather than brands of other company, even if it is a Joint Venture or strategic alliance.
5. Entry and exit is easy and unconditional in a go-it-alone strategy.

Cons:

1. A go-it-alone strategy can be very expensive and financially draining.
2. There is a chance of losing out on using the expertise of an established brand and its distribution network.
3. Access to better resources can be blocked by the existing players.
4. Branding gets difficult as it takes a long time to create the brand.
5. Time for reaching break-even can be long as too much of financial implications will be incurred to create the distribution network and in other infrastructural issues including hiring of employees and creating offices and showrooms.

Partnership Strategy:

Pros:

1. Experience and expertise of the established partner can help the brand perform well.
2. Starting finances cost can be shared and this often results in reaching break even in a quick time.
3. The risk and costs are shared by both the parties.
4. Business insights about salient aspects of distribution and marketing can be gained through a partnership.
5. In International scenario, it saves huge costs of advertising and prevents risk of discrimination by the customers.

Cons:

1. Restriction in flexibility for the business owners.
2. Risk of losing business patents and intellectual property rights.
3. There is always a risk of fall out with the partner.
4. Lack of clear communication and shared objectives might result in vague goals.
5. Sometimes there are exit barriers which prevents the organization from exiting the partnership.

The above points must be included in the report. Pinnacle owners utilization is risky because of the different positioning of Pinnacle in the minds of the consumers. Pinnacle is a very expensive luxury car brand costing $50,000 unlike Aero which is in the range of $ 15,000 to $ 20,000. This would create a suspicion among the minds of the consumers. A potential buyer of Pinnacle would not like to see a customer of Aero in the posh and luxury showroom of Pinnacle.

An overall study can result in finding a more established partner who sales car in the same range as Aero at least for the the initial years till Aero does not gather sufficient information about the consumer[preference, tastes , distribution and knowledge about the distribution and marketing.