Marketing Swot and Pest Analysis on Aston Martin

The current economic crisis has spread havoc across local and global markets. There can be no place for doubt that certain automobile manufacturers and retailers would also suffer to some extent from the catastrophe. The car industry is a huge entity that has several different subdivisions, and it is quite intriguing to see how consumer behaviour shifts across these sublevels of the automobile market and how different brands engage in dealing with the arising instability.

Aston Martin is one of the most famous UK brands and one of the top marquees for top-end sports cars in the entire world.

Established in 1914 by Lionel Martin and Robert Bamford, Aston Martin, has gone through a lot and many changes have occurred in its history including the change of ownership several times most recently in 2007, which also happens to be the company’s most successful year of sales when it brought 7300 cars to the roads.

Today the UK car manufacturer proudly occupies one of the leading positions in the market for luxury vehicles and seems like it is planning to expand further from that.

When it comes to assessing socio-cultural factors that determine the external environment of Aston Martin one has to understand this is a company that exists on an international level. It has over 100 dealerships in about thirty countries around the globe including the US, Russia, Japan, South Africa, Saudi Arabia, China (Aston Martin Lagonda Ltd).

Apart from the fact that it would be extremely difficult to collect and process socio-cultural information about possible clients in these countries, a company that deals with top-end car manufacturing is certainly not targeting the average household, or any group of people that can be denoted by a common feature other than wealth.

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The percentage of people that possess the spending power to buy an Aston Martin is rather low anywhere around the world.

Buyers of such cars occupy the higher levels of society in most countries but of course for Aston Martin it would be most profitable to establish a dealership in areas with high concentration of people with the ability and willingness to spend; example of areas of such potential are Monaco, Kuwait, and Dubai. It is a fact that the Middle East has GDP rates rising higher than anywhere else on the planet, and chief executive Ulrich Bez has taken that into account when developing the company’s future growth plan (Bowker 2008, para).

Taking technology into consideration one can see that Aston Martin is a bit old-fashioned in terms of manufacturing, nevertheless that does not hinder their ability to combine discipline in crafting with innovative approach and creativity. Nowadays car engineering is split between mechanical and electronic engineering. Aston Martin emphasizes on the use of manual labour to get the job done, whereas their counterparts from Porsche rely on the precision of computers in the assembly of their cars.

Unquestionably Aston Martin strives to utilize every unit of input in order to create perfection as a final product. Their cars represent a splendid blend of heritage and innovation in terms of design and vision, and also excel when it comes to performance on the road. Undeniably Aston Martin’s headquarters at Gaydon in the UK is one of the finest car production facilities in the world. At Gaydon Aston Martins are being assembled manually bit by bit to create a masterpiece (Aston Martin Lagonda Limited).

The “heart” of every car is its engine, and engines for Aston Martins are primarily V8 and V12, which are all products of the specialised Niehl Engine Plant that was build during the Ford regime in Cologne, Germany. Presently Aston Martin engines are still being produced at the factory in Cologne; however, recent news of a deal between Mercedes-Benz and Aston Martin (Kacher 2008) has caused speculations about the use of Mercedes-built engines in the new Astons, which would definitely be an upgrade for the British car manufacturer. Among the major victims of the economic catastrophe at the moment is the car market.

The crisis worsens is evident; figures for the UK in October 2008, historically one of the two busiest months on the calendar for car purchases, are down by 21% in comparison to the previous year (Pollard 2008). However, it seems that some car companies have gained advantage of the current economic situation. Present market conditions are beneficial for companies that offer lightweight cars with small, fuel-efficient engines such as Smart, which has more than doubled its sales with a rise of 105% in 2008 compared to last year’s (Pollard 2008).

Aston Martin on the other hand has suffered a 26% fall in its sales, year-to year figures dropping from a total of 1978 sales up until last year’s November to 1479 units up until the same month this year (Moody 2008 p. 44). As gloomy as the situation might seems for Aston Martin it is the same for their direct competitor Bentley, which is experiencing the same decline in sales. The UK Car market is in its worst condition since 1966 (Pollard 2008). The existing situation presents an unprecedented slowdown compared to the major rise of car sales in the past several years.

The credit crunch has effectively crippled the entire European car market excluding only a few countries. “Warwickshire car maker Aston Martin is suffering from the economic downturn but is hoping to offset weakness in the UK and United States with bigger sales in emerging markets – with the Middle East a key target” (Bowker 2008, para. 1). The stagnation that has seized Europe presently regarding automobile market may be the reason why Aston Martin’s chief-executive Ulrich Bez has decided to shift the focus of the company’s future growth plans towards the Middle East market where the situation looks a lot better.

However, that is not the only option for Aston Martin. Going further east China and India’s economies are undergoing such rapid development that is unparalleled by nothing before it. There are definitely many more markets for Aston Martin to explore and possibly exploit. Some of the difficulties that Aston Martin will have to face in the years to come are the regulations that the EU is imposing on CO2 emissions for cars. Currently several EU bodies are struggling to reach a consensus regarding this issue.

The scheme that is presently proposed states that by 2012 all car-making companies need to begin efficient reduction in the emission of CO2 from their products in order for all newly manufactured cars to reach a mark of 130 grams of CO2 per kilometre by the year of 2015 and supposedly a maximum of 95g/km of CO2 is the goal for 2020 (ClimateBiz 2008). These figures are quite upsetting for companies such as Aston Martin. Their cars are top-end luxury sports cars that exceed on average the 2015 maximum by approximately three times. The DBS for example has CO2 emission of approximately 388g/km (Pepper 2008).

Even though there are fierce debates taking place in the European Parliament regarding the reduction of CO2 emissions, it is certain that car manufacturers will have to lower the carbon dioxide exhausts from their engines. Turning to the internal marketing environment that Aston Martin operates in one must acknowledge that the target customer for the company is not by any means an average person. Price is a vital factor when it comes to defining consumer behaviour, and Aston Martin is aware of that fact, that is why they offer basic models of their cars at prices a lot lower than the ones of the premium models.

People buying an Aston Martin are able to choose from a wide range of accessories and specifications to go in their cars, which means that the price spectrum also fluctuates. The lowest price for a new volume-produced Aston Martin in the current market is ? 83 194 for the Aston Martin Vantage model (Pepper 2008), which is still a tremendous amount of money. Nevertheless, an exquisite product such as Aston Martin classifies as a luxury good that is designed to suit a sophisticated taste. A buyer of an Aston Martin would choose such a car to match his lifestyle, to satisfy his personal desires, not needs.

If we could apply the Maslow’s hierarchy pyramid to the case with a person buying an Aston Martin we would expect this person to satisfy one of the higher levels of the pyramid with such a purchase, whereas a Toyota Corolla or a Volkswagen Golf for example would be a necessity for one of the lower stages. If we could create a profile for the average Aston Martin buyer we would get a male, probably single with affinity for luxury and sense of style, and of course having the capital to afford an Aston Martin.

Nevertheless, changes in consumer demand do affect Aston Martin as well, so the UK automobile brand will be making changes in its production line. Among the company’s new projects for 2009 is the Rapide, which is going to be an entirely new member of the Aston Martin car family – not the usual two-door, two-seats drive, but instead it will be a saloon car. The new Rapide will offer more space, which was the major aspect that all previous Aston Martin models were lacking. This is clearly an attempt by Aston Martin to make its entry into another section of the car industry by offering its client more utility.

There is a high chance that market might witness the appearance of an Aston Martin hybrid quite soon, which would be a ‘child’ of a rumoured Aston Martin – Mercedes Benz alliance (Kacher 2008). A jewel that Aston Martin is going to add to its crown is also a new car that is due to come out in 2009 – the Aston Martin one-77, the price of which will orbit around ? 1. 2million(BBC Magazines Limited). Servicing customer’s concerns is crucial for every company that is why the Warwickshire company provides one of the best Service Works for their vehicles.

Their facility based in Newport Pagnell offers premium services that vary from fixing small flaws, renovation of heritage cars to repairing severely damaged vehicles. (Cooke and de Burton 2007, p. 62). Aston Martin evidently is striving to portray a strong brand image that is also concerned with the satisfaction of its customers, and that seems to be paying off as the car manufacturer was selected to be the coolest brand in the UK for the year 2007 (CNN 2007). The industry in which Aston Martin competes primarily is the top-end car market, and that is a market which most of the biggest car companies strive to dominate.

Direct competitors for Aston Martin’s products are Ferrari, Lamborghini, Porsche, Mercedes, and many other brands although the once mentioned are the fiercest rivals. The British car company seemed as strong as ever last year recording top sales for its 95 year history but with the already occurring market stagnation will it continue to do so well. Following the example of many other industries in the same situation, Aston Martin has launched a cooperative programme with one of its competitors, namely Mercedes-Benz (Kacher 2008).

The advantages to be seized for Aston Martin’s specialists from the deal are tremendous as the UK engineers would be gaining access to the research and development department of the German automobile titan. Another vital aspect of the deal is the future cooperation in the creation of hybrid-powered Aston Martins, which would tackle very successfully issues with fuel inefficiency and CO2 emissions. Another important decision was made by Ulrich Bez regarding his company’s future; one of the newest volume models to commence production will be built outside the UK, which is a precedent in the history of the company.

The task for the assembly and production of the Aston Martin Rapide is assigned to the Austrian Magna Steyr company. Aston Martin has undergone a turbulent transformation in the past, most of that is due to the change of ownership. The UK brand was purchased by Ford Motor Company in 1987 but twenty years later Ford parted with Aston Martin and sold the British car company to a consortium headed by David Richards’s Prodrive and part of which are two Kuwaiti investment houses – Investment Dar and Adeem Investment (Aston Martin Lagonda Limited).

The shift seems to have taken Aston Martin to new heights taking into account the company’s last year achievements, the announcement of the stunning new projects like Aston Maritn Rapide and the 177, and even the possible future cooperation with Mercedes-Benz. Nevertheless, the economic status quo raises issues which are tough to be dealt with even by a company like Aston Martin. In an attempt to tackle the problem with the financial upheaval the UK car company has decided to decimate its personnel.

In all three hundred permanent posts nd exactly the same amount of temporary jobs will be liquidated within the company from a total of 1850 people currently employed (Pollard 2008). Despite the drawbacks of this loss Aston Martin’s chief executive Ulrich Bez states that Aston Martin will not be shutting down or reducing production and the new projects will be making their market debut according to the company’s initial schemes. Aston Martin has a strong brand name existing for 95 years, during which it has acquired and developed expertise in the manufacturing of luxury sports cars.

This puts company in a leading position as a world top-end car manufacturer with a major influence on the highest levels of the car market. Recent change in ownership also proves to be beneficial for Aston Martin so far. Probable joint operations with Mercedes-Benz are likely to boost the UK automobile maker even higher in the overall car market ranking. Expansion into new markets in the Middle East has become also a top priority of the company at the moment. These factors, combined with the adequate management that has proven itself over the past, compose the strength of the company.

Currently Aston Martin only holds a tiny share of the world car market. The company has entrusted the production of a new car series to a foreign manufacturer which is clearly shows the lack of production power. The UK manufacturer is also attempting to enter new markets in terms of car diversification, but that might prove catastrophic because of the swiftness with which the plans are being executed and the current economic climate. Especially when a company like Aston Martin is forced to cut down on its operating personnel it means that production will fall and no matter what the company will suffer.

The potential mutual programme between Mercedes-Benz and Aston Martin could prove very beneficial for Aston Martin. For a small company specialised in a single branch of the car industry a partnership with Mercedes could mean access to the research and development, using Mercedes patents and technology along with Mercedes-built engines and other components. Considering the market instability at the moment Aston Martin could possibly widen their range of automobiles to the levels below the premium.

Using hybrid-engine technology implements in Aston Martin engineering is a viable option. Further territorial growth is definitely a chance for Aston Martin to win market share. Major threat to Aston Martin’s future is the EU regulations that are to be enforced in 2012 regarding CO2 emissions. Fluctuating fuel prices and possible fuel shortage also pose danger to the position of the brand on the market. Customers increasing tendency to buy fuel-efficient, environment-friendly cars will definitely put the UK manufacturer at stake.

Not last comes the threat from the potential alliance with Mercedes. A large foreign company with much interest in a small manufacturer like Aston Martin could prove to be devastating for the image of the UK brand and might threaten its future. Making the correct choices is crucial for Aston Martin in the current marketing environment. For a brand with such expertise in luxury cars it would be wise to keep the production coming, making sure the new products are upgrades of the previous ones.

Another improvement for Aston Martin would be to take their products to markets where other industries are flourishing and cash is flowing in – the Middle East and Asia. Trying to tune up with the growing concern for fuel efficiency and environment conservation Aston Martin should look more seriously into hybrid-fuelled cars like many other car manufacturers have. Advertising is an area where measures need to be taken, not only when it comes to entering new markets, but also promoting in already established ones with emphasizing the distinguishing characteristics of the brand.

References

1. BBC Magazines Limited. 2008. One-77: it’s out [Online]. Available at: . [Accessed 03 Dec 2008].
2. Bowker, J. 2008. Aston Martin targets Middle East market [Online]. Available at: . [Accessed 02 Dec 2008].
3. Brassington, F. and Pettitt, S. 2006. Consumer Behaviour. In: Principles of Marketing. 4th ed. Harlow: Pearson Education Limited, pp. 115-121. ClimateBizStaff. 2008. EU Car Emissions Agreement Stalls [Online].