Daewoo case
Introduction
The automobile industry produces automobiles and other gasoline-powered vehicles, such as buses, trucks, and motorcycles. The automobile industry is one of the most important industries in the world, affecting not only the economy but also the cultures of the world. It provides jobs for millions of people, generates billions of dollars in worldwide revenues, and provides the basis for a multitude of related service and support industries. Automobiles revolutionized transportation in the 20th century, changing forever the way people live, travel, and do business. The automobile has enabled people to travel and transport goods farther and faster, and has opened wider market areas for business and commerce. The auto industry has also reduced the overall cost of transportation by using methods such as mass production which is making several products at once, rather than one at a time, mass marketing which is selling products nationally rather than locally, and globalization of production that pertains to assembling products with parts made worldwide ( 2001).
Between 1886 and 1898, about 300 automobiles were built, but there was no real established industry. A century later, with automakers and auto buyers expanding globally, auto-making became the world’s largest manufacturing activity, with more than 53 million new vehicles built each year worldwide. As a result of easier and faster transportation, the United States and world economies have become dependent on the mobility that automobiles, trucks, and buses provide. This mobility allowed remote populations to interact with one another, which increased commerce. The transportation of goods to consumers and consumers to goods has become an industry in itself. The automobile has also brought related problems, such as air pollution, congested traffic, and highway fatalities. Nevertheless, the automobile industry continues to be an important source of employment and transportation for millions of people worldwide ( 2001).
At the start of the 21st century, the trends of global trade and manufacturing flexibility continue. Computerization continues to be a major part of auto design and manufacture, as do the search for alternative fuels and more efficient automobile designs. Computer-aided design tools are already used in the automobile industry and will continue to save months of design time and improve the quality of cars. Microelectronics will be more fully applied to future automobiles and may become as commonplace as radios are today. On-board systems are becoming available that enable drivers to find destinations through voice-activated navigation or make cellular calls using the computer. These computers can access the Global Positioning System (GPS) and display maps to help drivers avoid congested freeways and find better routes to destinations ( 1995).
Alternative energy sources for cars, such as natural gas, electricity, ethanol, vegetable oil, sunlight, and water, will vie for consumer use in the future. Many large automakers are now adapting fuel cell technology for automobiles. Fuel cells are cleaner, quieter, and more energy efficient than internal-combustion engines. Fuel cells combine hydrogen and oxygen electrochemically without combustion to supply electricity. Fuel cell engines will likely run on conventional gasoline, but with a fraction of the emissions of a normal engine (1995). The paper will give a background of Daewoo Corporation. The paper will also analyze the advertising campaign used by Daewoo. Moreover the paper will discuss to what extent did the campaign shows signs of following the IMC philosophy, reaping the rewards of such an approach. Through such information a summary and conclusion will be made.
Daewoo Corporation
Business activities are becoming increasingly global as numerous firms expand their operations into overseas markets. Many U.S. firms, for example, attempt to tap emerging markets by pursuing business in China, India, Brazil, and Russia and other Eastern European countries. Multinational corporations (MNCs), which operate in more than one country at once, typically move operations to wherever they can find the least expensive labor pool able to do the work well. Production jobs requiring only basic or repetitive skills such as sewing or etching computer chips are usually the first to be moved abroad. MNCs can pay these workers a fraction of what they would have to pay in a domestic division, and often work them longer and harder. Most U.S. multinational businesses keep the majority of their upper-level management, marketing, finance, and human resources divisions within the United States (2002).
They employ some lower-level managers and a vast number of their production workers in offices, factories, and warehouses in developing countries. Mergers and acquisitions are also becoming more common than in the past. With large mergers and the development of new free markets around the world, major corporations now wield more economic and political power than the governments under which they operate. In response, public pressure has increased for businesses to take on more social responsibility and operate according to higher levels of ethics. Firms in developed nations now promote and are often required by law to observe nondiscriminatory policies for the hiring, treatment, and pay of all employees.
Some companies are also now more aware of the economic and social benefits of being active in local communities by sponsoring events and encouraging employees to serve on civic committees. Businesses will continue to adjust their operations according to the competing goals of earning profits and responding to public pressures for them to behave in ways that benefit society (2002). Daewoo an international corporation has such problems and it continuously adjusts according to what the environment dictates. The company has many branches and a global network. It has merged with different kinds of companies to be successful and maintain its operations in some parts of the world. It continuously strives to be the best in its industry and give a good contribution to the automotive industry. Daewoo is a trading company that offers different services with regards to automotives, electronics and media, textiles and many others.
Body
Marketing is the process by which a product or service originates and is then priced, promoted, and distributed to consumers. In large corporations the principal marketing functions precede the manufacture of a product. They involve market research and product development, design, and testing. Marketing concentrates primarily on the buyers, or consumers. After determining the customers’ needs and desires, marketers develop strategies that are designed to educate customers about a product’s most important features, persuade them to buy it, and then to enhance their satisfaction with the purchase. Where marketing once stopped with the sale, today businesses believe that it is more profitable to sell to existing customers than to new ones. As a result, marketing now also involves finding ways to turn one-time purchasers into lifelong customers.
Marketing includes planning, organizing, directing, and controlling the decision-making regarding product lines, pricing, promotion, and servicing. In most of these areas marketing has overall authority; in others, as in product-line development, its function is primarily advisory. In addition, the marketing department of a business firm is responsible for the physical distribution of the products, determining the channels of distribution that will be used, and supervising the profitable flow of goods from the factory or warehouse (1967). Marketing is about satisfying customer wants and needs and in the course of doing so facilitating the achievement of an organization’s objectives. By paying attention to customer wants and needs, organizations are more likely to achieve their objectives in the marketplace. Of course, organizations have to compete with each other and so also have to satisfy customers’ wants and needs at least as well as their competitors. Fortunately, organizations can do this in different ways ( 2000).
Competition involves finding a different way to satisfy customers from other organizations in the market place. In the pursuit of this end, products and services need to be seen as more than physical entities. It is the benefits they offer customers that are being purchased. Competition involves positioning products and services in the minds of customers in such a way that the products and services are perceived to be different from one another. Marketing is about the competitive positioning of products and services in the minds of the customers. It is also about the communication of messages and images and the means which are used to convey these messages and images to the customers (2000). Daewoo advertising campaign can be analyzed by the income statement of the company. Figure 1 will show the income statement of the company in millions of US Dollars.
Year
Revenue
Gross Profit
Operating Income
Total Net Income
December 2004
4,789.9
444.1
91.7
108.9
December 2003
3,457.4
307.6
65.3
45.6
December 2002
5,340.6
174.4
68.4
65.4
As shown in the first figure the company experienced ups and down over the three years. The things that happened to the company in the first few years can be attributed to different factors that will be discussed later. The figure shows that in 2002 the company had made use of advertising campaign to give the company a boost in its income statement. The following year the company experienced a downfall. This can be attributed to two reasons. First the company may not have used the advertising campaign well. Second the advertising campaign is not updated to current trends and changes in the society. It may not attract consumers anymore.
In 2004 the company regained some success it previously had. The company’s income increased during this year. This can be attributed to an upgraded and better use of advertising campaign. The advertising campaign of the company is effective when used properly and when it is continuously upgraded to meet changes in the world. The advertising campaign of the company helps it to be known by the people and it increases the consumers of the company. Once the client of the company increases it profits increases as well. If this happens the company’s status in the industry will improve. The advertising campaign is vital for the company in the present and in the future. It can create wonders for the company and misuse of it can give the company problems.
The IMC philosophy and the advertising campaign
IMC is the process of developing and implementing various forms of persuasive communication programs with customers and prospects over time. The goal of IMC is to influence or directly affect the behavior of the selected audience. IMC considers all sources of brand or company contacts which a customer or prospect has with the product or service as potential delivery channels for future messages. Further, IMC makes use of all forms of communication which are relevant to the customer or prospect, and to which they might be receptive. In sum, the IMC process starts with the customer or prospect and then works back to determine and define the forms and methods through which persuasive communications methods should be developed ( 2004). The advertising campaign used the IMC philosophy as its basis of what to do. The campaign made the philosophy a basis for its action. Everything done in the campaign came from the philosophy. The IMC made the campaign more effective and more adaptive to the changes in the society.
Summary and Conclusion
The auto industry has also reduced the overall cost of transportation by using methods such as mass production which is making several products at once, rather than one at a time, mass marketing which is selling products nationally rather than locally, and globalization of production that pertains to assembling products with parts made worldwide. Daewoo is a trading company that offers different services with regards to automotives, electronics and media, textiles and many others. It continuously strives to be the best in its industry and give a good contribution to the automotive industry. Advertising concentrates primarily on the buyers, or consumers. After determining the customers’ needs and desires, advertisers develop strategies that are designed to educate customers about a product’s most important features, persuade them to buy it, and then to enhance their satisfaction with the purchase.
The advertising campaign of the company helps it to be known by the people and it increases the consumers of the company. Once the client of the company increases it profits increases as well. If this happens the company’s status in the industry will improve. The advertising campaign used the IMC philosophy as its basis of what to do. The campaign made the philosophy a basis for its action. Everything done in the campaign came from the philosophy. Through the advertising campaign the company gains a better understanding with the clients. The advertising campaign helps the company give a better understanding of the things a client wants and do not want. It helps in making sure that the company is having a clear communication with the client. The advertising campaign also helps in strengthening the relationship of the company with the client.
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