Shanghai GM Adopts Western Marketing Concept as Guiding Philosophy

Marketing has become more important for organization management in recent decades. Most successful companies carry out marketing-oriented strategies such as Coca-cola, Dell and P&G. With the development of globalization, marketing is not an unfamiliar term to many Chinese companies. Shanghai GM, the largest jointrventure company in china. adopts the marketing concept as guiding philosophy to cope with the knee competition. Shanghai GM, established in 1997, not only introduces the advanced product, manufacture technology and equipment, but also the modern management concept.

It aims to own the largest market share in the car market, In order to achieve this objective, Shanghai GM develops marketing management to realize its strategic goals. ‘Marketing management is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, good. services to create exchanges that satisfy individual and organizational goals.‘

The marketing concept indicates that focusing and satisfying the customer is the vital factor to achieVing organizational goals. Therefore Shanghai GM’s managerial principle is customer satisfaction.

which shows in following aspects: target market and segmentation: relationship and networks: marketing channels: competition: and product. To begin with. the marketing concept leads to the consideration of market segmentation and targeting. ‘not everyone Will have the same needs to the fore at the same point in time.‘ Shanghai GM realizes that it must identify different needs and wants of customers in order to satisfy them. Shanghai GM‘s products are focused on organization buyers in the past few years because of the low purchase power of Chinese people.

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However the situation changes very fast, with the development of China‘s economy, Chinese people‘s living standards has been improved rapidly.

Some Chinese want to own a car of a reasonable price. The people are mainly small business owners, professors in the university, managers and senior engineers. In fact, the amounts of these people are increasing very fast. They normally can afford a car at the price between 80,000 to 120,000 RMB, Through investigation and research, GM decides to engage in manufacturing economic Buick car which has a great potential market in China. It is obvious that Shanghai GM identifies the customer‘s needs and tries to meet their demands. So it will be successful because it delivers satisfaction to the buyer. Next, relationship marketing is a newly marketing concept In China. Shanghai GM has built its market network when it set up the marketing system. ‘Relationship marketing has the aim of building long-term mutually satisfying relations With key parties- customers, suppliers, distributors- in order to earn and retain their long-term performance and business.‘

For example, Shanghai Yongda Automobile Trade Center, as the first Buick special shop, feels very lucky to be the distributor of GM, because GM is the first company that promotes the brand marketing in the automobile industry From 2001 to August 2002, Vanda has sold 4000 Buick cars, Meanwhile, Yongda extends its sen/ice through setting up the Buick Service Department, Thus Shanghai GM highlights the relationship market as Well as customer market, because relationship marketing ’embraces the entire supply chain to achieve greater customer value at every level in the chain.’ By this means. Shanghai GM can reach its objective of becoming the largest car manufacturer in China. Then to reach a target market. Shanghai GM uses two marketing channels, one is distribution channel, the other is a communication channel.

First, Shanghai GM carries out single transaction channels. i.e. the manufactory sells the car directly to the authorized sales & seNice company, and these companies must sell the product in the unitary price, Shanghai GM has established 69 authorized companies in 56 cities.  However, GM devotes to extend the breadth and depth of its distribution channels. because a company With longrrun growth objectives based on increasing market share has to do so.Therefore the single distribution channels With less medium chain can avoid the price chaos and benefit customers directly. Second, Shanghai GM uses communication channels to deliver and receive information from market. Its channels include newspapers, television. mail. posters, telephone, magazrne, and the internet.

Taking the internet for instance, the statistics, proVided by CNNIC, (China Internet Network Information Center) shows that the number of customers of the internet has reached 22,000,000 by the end of 2000 in China, Internet has become an important channel to obtain product and service for Chinese consumer. In order to provide convenient and efficient serVice to e» customers, Shanghai GM improves its internet sales capability. The customers and car-fans can receive information about products, technology, purchase, maintenance and service at home. As Hanson said: one of main job of marketing is to be the voice of the customer. With the internet, the voice of the customer becomes a shout. The days of onerway information flow from marketer to customer are over. The effective channels reduce the distance between GM and the customers.

Thus Shanghai GM may take more market share through satisfying customer. For the competing concept, Shanghai GM knows that the competition is much fierce in the economic car‘s market, although China has a large population which is a greatly attractiveness to the investors. At first GM identifies competitors who are companies that satisfy the same customer need. (Kotler,2000) The main competitors are Changan Ford, Shanghai Volkswagen and Dongfeng-Citroen. Then Shanghai GM builds the competitive intelligence system through which it can learn the competitors’ strategies, obiectives, strengths, weaknesses, and reaction patterns, For example. GM‘s competitors cut down the price in order to attractive more customers at the beginning of this year. How to respond to the competitors’ action is a crucial issue for the GM management, Price is one of the most important factors that influence the customer‘s buying decision. However GM learnt the competitors reduced several function in the car so that they can develop low price policy.

GM did not follow them, but develops its marketing strategy based on the longrterm objectives, Instead of reducrng the price Shanghai GM enhanced the quality and function of the product, improved servrce standard. All the actions ultimately benefit the consumer. The fact shows GM gained this game because its market share is improved. So Winning firms lead their competitors.‘ Finally, Shanghai GM focuses on the product for ‘product is first and most important element of the marketing mix,’ Marketing-oriented companies try to create value-satisfying products that consumers will want and buy, (Levitt, 1960) ‘All the advertising and promotion in the world won’t make consumers turn on a television show if they find it boring, irritating. or irrelevant.‘(Stanley, 1998) GM regards its product as physical product and sen/ice product.

Shanghai GM’s physical product refers to Buick car. With the strong desire to be a market leader of motor industry in China, Shanghai GM develops the following product strategy. Firstly, GM attaches importance to NPD because of variable and various customers’ needs and wants. GM managers realize the product that ‘fails to adapt to the constantly changing patterns of consumer needs and tastes, to new and modified marketing institutions and practices, or to product developments in competing or complementary industries’ (Lvitt,1960) would lead the company to decline. Thus GM set up R&D department for new products. which requires a large amount of money investment each year moreover, the Shanghai GM owns many technicians and specialists. Therefore GM differentiates the products to meet the different customers’ demands. Secondly, GM guarantees the quality of product. Quality is the life of product. No customer wants to buy the product in a bad condition. if they have bought the inferior products by misleading instruction, they would not be fooled for the second time.

Even worse they might spread the word among their friends that leads to the damage of the company‘s good wrll. Thirdly, Shanghai GM is the first motor company to pursue brand specral sales and management. Branding is more important in the marketing strategy, Many companies learn market power by building their own brands. ‘Japanese and South Korean companies spent liberally to build up brand names such as Sony, Toyota, Goldstar and Samsung. Even when these companies can no longer afford to manufacture their products in their homelands, the brand names continue to command customer loyalty.‘ ReaIiZing ‘Branding gives seller the opportunity to attract a loyal and profitable set of customers,‘ GM requires its sales and service companies to unitize their logo. equipment and design style, Meanwhile GM instructs its partners the actiVities of branding introduction and adverting promotion.

The GM‘s branding strategy makes sense in practice. Many consumers think Buick is their first choice when they want to buy car. Shanghai GM ensures customer satisfaction at all levels of the buying process, particularly for the postpurchase servrce. Due to the characteristics of servrce, which is intangible, variable and inseparable, the servrce requires more control. ‘The need to resolve a customer problem in a satisfactory manner is critical. On average, a satisfied customer tells three people about a good product experience, but the average dissatisfied customer gripes to eleven people If each of them tells still other people, the number of people exposed to bad word of mouth may grow exponentially.‘  In fact Shanghai GM has tracking service record of each customer.

Whenever customers have problem or complain, GM will response quickly and satisfy the customers’ needs and wants. Consumers still enjoy the service after purchasing and become loyalty to GM. ‘Retaining brandrloyalty customers is critical for surviva|. GM’s service level stands out among other manufactures. In 2000 GM was awarded “Customer satisfied product”. To sum up, in order to become the market leader in China‘s motor market, Shanghai GM takes the marketing concept as guiding philosophy in the fierce competitive environment. Shanghai GM focuses on customer’s needs and wants in several aspects such as market segmentation; relationship and networks; marketing channels: competition; and product. It shows that Shanghai GM is a ‘marketingcriented’ company because it regards the customer as the very center of its organizational management. ‘It sees its mission in life and its very purpose for existence as being the identification, satisfaction and retention of customers.