PESTLE and SWOT Analysis of Aston Martin - Essay Example

Aston Martin Module Group Module Assessment Assignment ID Number Table of ContentsTable of Contents 1 Introduction 3 PESTLE Analysis 4 Political Factors 4 Economic Factors 4 Socio-cultural Factors 5 Technological Factor 5 Legal Factor 6 Environmental Factor 6 Customer Analysis 6 SWOT Analysis of Aston Martin 8 Strengths 8 Weaknesses 8 Opportunities 9 Threats 9 Recommendation 10 Conclusion 10 References 11 Introduction In the recent times, as the standard of living is increasing and there is an improvement in the overall quality of life lived, a rising number of consumers are willing to spend on luxury goods. Aston Martin comes under the luxury car segment and is a highly reputed brand in the global automobile market. UAE is represented as a wealthy country with high GDP having a relatively higher consumer purchasing power (Conner, 2008). This study would focus on the viability of Aston Martin entering the United Arab Emirates automobile market. This essay analyses the country and the market specific factors and strategies to be implemented by Aston Martin in order to deal with the macro environmental market changes. The essay analyses the company and the country by performing PESTLE, SWOT and customer analysis to assess the market change. Finally, the study recommends how the company should plan its marketing strategies to survive in the UAE market. PESTLE Analysis Political Factors The Government of UAE focuses on trade development other than the oil industry. After the build-up of the credit boom, UAE had turned itself to an international trade hub as well as a financial gateway of the Middle East (Khamis, Al-Hassan & Oulidi, 2010). UAE is among world’s tax-free country where the government uplifts international as well as national trade and has set up tax free zones where the citizen enjoys the liberty of no tax policies. Custom duties are exempted and allow 100% foreign investment ownership (Tribe, 2011). There is no tax levied on capital gains, sale of product and individual salaries, therefore, income level and standard of living is high as well as attracted foreign investors to invest in the country (Britain, 2008). Economic Factors United Arab Emirates is a modern country and has a high standard of living. It has strong market opportunities in national as well as international trade in product and services among all sectors due to its high per capita income. It implements attractive trade, economy and tax policies for foreign investors thereby encouraging FDI and other global trade investments (Tribe, 2011). UAE earns its major fiscal revenues from its oil exports. Finance inflow is high in the country due to strong trade in all industrial sectors. High quality infrastructure, roads, aviation, electricity and power, low oil prices has uplifted automobile industry in all segments (Conner, 2008). The major long term economic challenges in the UAE are high debt issues in Dubai, major dependence on the oil business sector and growth of inflation. Hence, the government has structured its policies to regulate existing problems by focusing on diversified economy (Neal & Strauss, 2008). Socio-cultural Factors The main population centred on Dubai and Abu Dhabi. Workers from different nations come to UAE for work. It has high employment rates and is the hub for labour market with mainly youth workers. The country has both high level and mid level income group setting opportunities for consumer as well as luxury brands (Tribe, 2011). The country lacks infrastructure, expenditure and policy development for educational system and has a high illiteracy rate which affects the social development. The UAE government has now taken initiatives and launched agendas for improvement of educational qualities and facilities (Al-Ansari, 2014). Technological Factor The country’s main area of importance is on the Information technology and telecommunication sector. The dependence on international technological workforce, knowledge and facilities is high but its lack of knowledge in educational science decreases its technological development in the home country (Mennen, 2011). Therefore, high technological advances in industries are welcomed by the country from the foreign investors leading to top global brand investments in all sectors like automobiles, apparels, manufacturing companies etc (Al-Ansari, 2014). Legal Factor The legal system in UAE is highly organized. Each emirate can take part in the federal legal system and retain its legal polities. The law and regulatory policies implemented by the government of UAE and followed by the country is beneficial for foreign investments and international trading corporations (Mennen, 2011). There is no tax and custom duties in the trade free zones though the government instructs that all the companies in UAE needs to own 51% of local ownership stake which has an undesirable effect on foreign direct investments (Al-Ansari, 2014). Environmental Factor The water resource scarcity is high and carbon dioxide emission is high in UAE due to the petroleum industries and automobile emissions (Goldstein, 2009). These factors lead to environmental depletion and obstruct sustainable growth. The government of UAE has taken strict measures on the environmental degradation issues and has initiated developmental programs to bring equilibrium between environment and economy growth. It has taken initiative to implement plants and processes on desalination of water as well as recycling of waste water to meet water needs (Hill & Alexander, 2006). Customer Analysis The target customers who dominate the luxury car segment in UAE are the young buyers having higher annual family income. They are well informed about their specific needs and which brand to go for (Taylor, 2013). They gather most of the information through the internet as well as the traditional medium like showroom visit or magazine advertisement where the car features are consumer specific. Though the consumers resort to internet research for their future purchases but their final buying decisions are influenced through sociological behaviours (Pride & Ferrell, 2012). The decisions are taken on the basis of information and influences from trusted sources like friends, families and word of mouth. The car purchaser in UAE are well versed with their buying behaviours and therefore luxury automobile companies tend to draw their knowledge on the consumer needs, experience, satisfaction and loyalty through consumer interactions (Uhlein & Claussen, 2006). As buying decision for luxury car takes a longer span of time therefore, pre purchase interaction and post purchase interactions are very important. Through these interactions, the luxury car companies analyse the view point of the consumers, rival brand preferences, the consumer specific buying process, the importance of prepaid maintenance, the financing preferences of the buyers (Hayes & Dredge, 2009). The consumers prefer features in the luxury car brands like the class, brand image, identity, the brand equity, aesthetics, comfort, style, excitement and functionality which sets them way apart from their peers and reflects a sense of superiority as well as authority (Mikhayhu, 2012). The growth of the luxury car market in UAE is due to the economic growth of the country resulting in higher purchasing power of the consumers. Dubai and Abu Dhabi is fast growing in tourism and is positioned as the shopping destination for the ultra rich and high income group. Therefore, establishment and growth of luxury brands in all sectors are booming in the market at an international level (Cemal, et.al., 2011). The consumer segment of the luxury car industry in UAE are brought up in a brand conscious society and the main customer base of UAE in the luxury brand market are the rich citizens of UAE, high earning group of western emigrants and tourists from China and Russia. From the age perspective, younger generations are more attracted towards luxury goods and the demand of it increasing due to the heightened interest on products of quality within the social group (OGuinn, Allenn & Semenik, 2011). The increase in consumer awareness on brands leads to a better positioning of the luxury brands like automobiles. Since luxury brand market is fragmented as well as highly competitive, it depends on customer experience and brand awareness which is both present in the UAE luxury market (Timm, 2009). Moreover, the tax free policies of the country have led to affordability of the luxury products due to decrease in its price range hence increasing the spectrum of customers (Kumar, 2009). SWOT Analysis of Aston Martin Aston Martin is a luxury car brand dealing mainly on sports cars in the premium car automobile sector. The company’s tagline is “Power, Beauty & Soul” and its unique selling proposition focuses on powerful performance and ultimate luxury(Aston Martin, 2015). The car brand targets on ultra high income group and elite class consumers and is positioned as the car with exclusive luxury, delivering unmatched performance consistently for several years, hence, providing high value to its customers (Kapferer, 2012). Strengths Aston Martin is among the market leaders, delivering a higher brand value and brand worth. Increased customer experience and strong consumer connect due to its rich historical heritage (Goldstein, 2009). Creates a sense of class among the customer due to its rich brand image (Macinnis & Park, 2009). High in performance and among the best sports car brands proving speed, power, style and luxury in one car (Kapferer, 2012). Innovative and advanced technological features providing the best experience to its users (Kapferer, 2012). Weaknesses Low penetration in the market due to high competition from other luxury car brands. Lesser product portfolio and low presence in developing countries due to premium pricing and low potential customers (Kapferer, 2012). High maintenance cost. Poor after sales service. Fuel inefficient car. Opportunities High potential of growth in the UAE market. Increase of demand due to high affordability of the consumers in UAE. As per Reuters (2010), the sales of car to increase to 240,000 units after 2011 (Kapferer, 2012). Sales increase due to low regulation and no barriers on import of automobiles in the UAE. Brand image leads to higher customer acquisition. Through upgraded promotional strategies and widespread distribution can gain higher market penetration (Kapferer, 2012). Threats High competition from other luxury car brands like Ferrari and Rolls-Royce. After the Dubai financial crisis and oil price rise posing challenge to the premium car sector. Non compliance with the low carbon emission regulations and it is a fuel inefficient car segment (Kapferer, 2012). Recommendation On analysing the potential macro environmental factors of the UAE automobile market in the luxury car segment, Aston Martin might face strategic challenges in order to survive in the competitive market (Fombrun, Gardberg & Sever, 2008). The main challenges the company can face in the UAE market is the threat from competitors. Then the environmental regulation policies introduced in the country may affect the sales of the cars as they are not in compliance with the carbon emission policies. As the customer base in USA has a high income level and are socially influenced by status, class therefore almost every consumers are premium car owner leading to market saturation, hence, it would be a challenge for Aston Martin to penetrate into the market (Mennen, 2011). Aston Martin should concentrate on new product development for the UAE market by introducing environment friendly premium car segment like electric cars or hybrid engine technology. It should expand its customer base and enhance customer experience and loyalty through well structured customer relationship management processes leading to higher market penetration (Little & Marandi, 2007). Conclusion The entire discussion of the report analysed the macro environmental factors and consumer analysis of the UAE automobile market in the luxury car segment. On basis of the analysis, the micro environment of the company Aston Martin was estimated and recommendations were made on the new marketing strategies the company can implement in the UAE automobile market. References Al-Ansari, Y. D. Y. (2014). Innovation practices as a path to business growth performance: a study of small and medium sized firms in the emerging UAE market. Southern Cross University ePublications, 1-368. Aston Martin. 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