Ali Abdurahiman

Strategic marketing planning VOLVO

Current market analysis of Volvo.

Volvo is a relatively small car manufacturer with only 0.7% market

share Of 62 million cars sold worldwide annually.
The Volvo name is over 90 years old and has become a Swedish
international icon.
Volvo developed a range of cars that seemed to turnaround the
fortunes of the company, and deliver stable revenues and profits for
the firm.
Volvo became one of the most successful automotive brands for its
parent Ford Motor Corporation. However sales for Volvo in 2005 were
down 11% and sales are continuing to under-perform in 2006.
Volvo produces models ranging from SUVs, station wagons (estates),
and sedans (saloons), to compact executive sedans and coupes. With
approximately 2,300 local dealers from around 100 national sales
companies worldwide, the US is Volvo Cars' largest market, followed by
Sweden, the United Kingdom,
Volvo is known for its high safety standards. Owners are often proud of
achieving high mileage; one well-documented 1966 Volvo P1800 has
been driven over 2.8 million miles, a Guinness World Record for most
miles driven by a single owner in a non-commercial vehicle. According
to some figures, the average age of a Volvo being discarded is 19.8
years, second only to Mercedes.
MISSION
Create the safest, most exciting car experience for modern families.
Create shareholder value by optimizing the cost of capital in the Volvo

Group.
Limit the impact, but also take advantage, of macroeconomic

developments under stipulated risk mandates.

Provide the Volvo Group companies with treasury and cash
management related services.

VISION
To be the worlds most desired and successful premium car brand
To be a world-class provider of treasury services, valued as the natural and
integrated business partner to the Volvo Group companies. Volvo also aims
at being the World Leader in sustainable transports solutions.

creating value for customers in selected segments

pioneering products and services for the transport and infrastructure
industries
driving quality, safety and environmental care (Values)
Working with energy, passion and respect for the individual.

VOLVOS CORPORATEVALUES

Quality as a core value

Focus on the customers' needs
Quality is an expression of our goal to offer reliable products and
services. In all aspects of our operations, from product development
and production, to delivery and customer support, the focus shall be on
customers' needs and expectations.
Our goal is to exceed their expectations
With a customer focus based on everyone's commitment and
participation, combined with a process culture, our aim is to be number
one in customer satisfaction. This is based on a culture in which all
employees are responsive and aware of what must be accomplished to
be the best business partner.

Safety as a core value

Safety is part of our soul

Safety has been our guiding star since 1927. The Volvo founders
stated that Safety is and must be the basic principle in all design

work.
Our vision: Zero accidents We have worked diligently for more
than 80 years to develop increasingly better protection for people in
the case of an accident.

Our Accident Research Teams have given us good insight into the
causes of accidents and injuries and what can be done to prevent
them. Our products are built to minimize the consequences of
accidents. In recent years we have also launched intelligent safety
systems with the potential to prevent accidents from happening in the

first place.
Our ultimate goal is zero accidents with Volvo Group products.
This vision of zero accidents guides our product development. We are
committed to work hard to prevent accidents, but we are also aware of
the fact that most accidents involve factors that are out of our control.
Therefore,

the

Volvo

Group

cooperates

with

users, authorities,

scientists and other actors in society who want to create a safer world.
Safety innovations: A series of pioneering safety innovations has
made Volvo a world leader in automotive safety over the years. It is our

firm ambition to maintain this position.

The new Volvo FH series: The worlds safest Volvo.

The new cab is Volvos strongest so far. And the worlds toughest
crash tests show that drivers have a good chance of survival in an 50
mph crash with a stationary object

Environmental care as a core value

We all depend on transports
Smoothly functioning transportation is one of the cornerstones of
modern society. The distribution of daily supplies to people in cities,
the trade between companies and the personal mobility are all
examples of how dependent we are on transports.
Core value Environmental care is a Volvo Group core value. Already
in the mission statement, we state: "we use our expertise to create
transport-related hard and soft products of superior quality, safety and
environmental care".
Volvo has a responsibility
As one of the world's biggest manufacturers of heavy
commercial vehicles, Volvo bears a clear responsibility for reducing the

environmental impact of its products. However, a long history of

proactive environmental programs has also provided us with an
opportunity of strengthening both our own and our customers'
competitiveness, while contributing to positive societal development.
Taking the lead to reduce climate impact
The Volvo Group is the first heavy duty vehicle manufacturer to
develop seven different demonstration trucks that can all be driven
without any emissions of climate-impacting carbon dioxide.

PESTEL ANALYSIS
Political factors.

There has been an increased regulation on the car industry and also automotive
industry is facing a huge taxation on trade.
Growing environmental concerns are forcing governments around the world
to introduce harsher regulations for the automotive industry. These include
strict regulations on carbon emissions, increased taxes for cars with higher
carbon dioxide emissions, rise in insurance prices and new safety regulations.
Volvo's main markets (US and Europe) are affected by the above the
strongest.
Government foreign policies are important to the industry. There are extreme
tax policies adopted by developing countries for local automotive industry
protection.
Low - emission cars benefit from tax incentives, such as free road tax, lower
insurance prices, free parking and so on.
BRIC economies are gaining substantial power against of those of the
Western World.

Economic factors.

There is rise in the fuel prices, and this economic factor has hit the automotive
industry fiercely and leads to reduce the performance of the company.
2008 economic recession has hit the automotive industry immensely. Many
companies field bankruptcy and many auto brands have disappeared.

Fuel prices are on the rise.

Commodity prices are on the rise.
China is on the rise to become world's largest economy. Other BRIC
economies are also experiencing high growth rates.
As the recession is over, we can expect world-wide economic recovery.
However the uncertainty remains high.
Flat growth rates in developed markets, but good prospects in emerging
markets such as Asia.

Social factors:
The major problems Volvo is facing is shift in the consumers preferences from a luxury,
large engine cars with huge carbon emission to a fuel-efficient, and small cars, due to
many reasons like rise in the prices of oil, and also governments are providing tax
incentive to those who buy fuel-efficient and eco-friendly cars and other incentives
include free parking and road tolls. Volvo much emphasis on family sector but in Europe
there is decline in the number of families. Hence Volvo market segmentation is wrong
and may not be useful for sales growth.

Declining birth rates are seen within Europe and USA.

Smaller families and childless couples are becoming more and more common.
"Many cars on the road today are used by singe occupants, commuting to
work" ('Volvo Case Study, n.d.)
People are becoming more conscious of their environmental impact and they
are becoming more eco- friendly.

Technological factors:

More ecofriendly technologies are introduced at an increasing rate.

Shared technologies can provide substantial benefits.
Focus is placed on improving energy efficiency and health- related
technologies.
Availability of new materials and recycled materials for production can
provide many possibilities.
Self- driving vehicles are on the way as such technologies are being
developed by major corporations.

Environmental factors:

Due to the emission of large carbon from the big size cars increased the pollution and
hence have caused many problems like polluting air, etc.Because of global warming the
concern of society towards environment safety has increased.

Legal factors:
New laws on the protection of the environment have started rallying and this has hit the
whole automotive industries. Due to these environmental protection acts and Clean air
Act, which was passed by the legislation, brought about a changes in the preferences
and shift the needs and hence as discussed above choosing for eco-friendly cars.
The governments are proving more tax incentives for those who choose fuel efficient
cars, like free road tolls and parking etc. Volvo has introduced flexi-fuel cars but they did
not show a good sign on the profits of the company.

SWOT ANALYSIS
Strengths:

Safety of both the environment and driving is the main strength of the
Volvo cars, and hence the Governments policies on safety in driving
will not have much influence on the performance of Volvo.

Volvo has a reputation for big estate cars and last for long periods of
time.

Goteborg safety center which is a world renowned, and hence after the
acquisition, Volvo has introduced ten new models for its customers,
and hence earned more profits for FORD.

Volvo has 2400 dealers worldwide and has its presence in 120
countries of the world.

Huge investments in safety research and development programs.

Volvo is a wholly owned subsidiary of ford motor company which is a

world famous company and this helps the Volvo can draw synergies of

technical innovations and improvements for its parent company. And

also the buying power.

90 years of brand heritage, where Volvo has gained much expertise in

manufacturing a car which is very safe in driving and this is the corecompetence which has played a vital role which has brought glorious
years to Volvo's brand.

Weakness:

No change management programs in its product strategy. There has

been no innovations and improvements in the product, improvements
like fuel-efficient, best performance, etc, which is quite important for
Volvo to meet the intense competition.

There is a decline in the sales of the Volvo's bi-fuel cars.

Cannot meet the customer requirement of fuel-efficient cars.

Even though the prospective customers of Volvo are shifting their

interests from the big engine cars to fuel-efficient cars, Volvo still stress
only on the safety in their mission statement, where its core
positioning strategy to face the present changed perceptions of the
consumers and external environments demands should be fuelefficient and reliable cars.

Moreover the mission statement aims at providing safest and more

exciting car experience for modern families, the brand concentrating
on the family sector. But in Europe there is decline in the number of
families and many couple is opting to be childless, hence this mission
of Volvo would badly hit its performance in future.

Most of the market for Volvo is in US and Sweden and consequently it

is open to irregular economic and political circumstances of those
markets.

Volvos most of the production is from the Belgium and hence, the cars
produced in Sweden is very expensive for the US consumers. This is
due to the less facilities of production of Volvo cars in US.

Volvos flexi-fuel cars only in certain geographic markets.

Opportunities:

further growth for the business ,start new business in china and
India
Develop a production plant in third world countries.
Expanding Automobile market
Acquiring more market share in integrating with current entities involved
in automobile business.
The increasing per capita income and purchasing power.

Threats:
Has the Volvo only concentrates on the Safety in its product design,
and ignoring on the other aspects like eco-friendly and fuel efficient
cars (Toyota Lexus), performance, styling, reliability, handling and

value for money, which are all vitally important.

Dominance of big international automobile companies.
Dominance of big international automobile companies.
Improved and innovative features included by competitors.
Increasing usage of government transport and high fuel costs.

Competitor Analysis:

Volvo industry faces competition from international market. Face the

competition from each segments in luxury brands. The comparisons has
been shown that the brands as Volvos main competitors in four versions
of the premium-segment

car

models

are

Audi,

BMW,

Infinity, Lexus, Mercedes-Benz, Volkswagen and Toyota so on. And all these
brands are quite competitive in the automobile market, especially about
the premium-segment cars.

Marketing objectives and objectives

The main problem Volvo cars is facing is the external pressures and changing
perceptions and requirements of its customers. Volvo who strategy of
"Safety" was very popular during 1990's but with the changing needs of its
customers and external environmental factors, the strategy of Volvo did not
change hence Volvo has faced such a downturn in its sales during the period
of 2004 to 2006. The external challenges are demanding for a more reliable,
fuel-efficient and eco-friendly cars, which Toyota have understood the need
of its customers and hence have concentrated heavily on fuel-efficient and
eco-friendly cars, and therefore have become the world largest and most
successful car manufacturer. Moreover, most of the car manufactures have
integrated safety into their product design and hence "safety", key element
or the core positioning strategy can no more help Volvo to retain its position
in this fierce competition.
To outline the strategies for the Volvo cars Ansoff product/ market grid
(Ansoff, 1957). This model would help the business identify the strategy that
gives business the way to grow their business. The four strategies proposed
by the Ansoff let us find which would help the Volvo cars to improve their

business. This model helps to identify what have to be marketed and at what
time and risk involved in marketing these products.
The alternatives available to the Volvo cars are:

Price strategy, as the cars of Volvo is unaffordable for the common

man and hence has to introduce such a model of car for the middle
class people. This is the market penetration strategy where with the
same product and same market the company has to reduce the cost
and hence in turn can reduce the price of its products compared to its
competitors.

Market development strategy, where the same product is sold in

different markets.

Product development strategy, where a new product is developed and

is sold in the current and existing markets, extensions in the product
features which make it different from its competitors and this can also
be called as product differentiation.

Diversification strategy is one where the new product is sold in new

markets, but this is more risky then the market penetration.
Let us find which will be best strategy for Volvo cars from the available
alternatives from the Ansoff matrix.

Market penetration strategy, this strategy of selling its same products

in the same market, for lower price by reducing the costs may not be
useful for Volvo cars, this is because challenges Volvo is facing is the
price rises of complimentary goods and environmental protections
laws, which have changed the preferences of its customers from large
engine luxury cars to the fuel-efficient cars because of government

taxation policies, etc. hence , reducing the price of the cars will not be
the best solution to face the challenge.

Market development strategy, If Volvo adopts this strategy may not

succeed as most of the current markets of Volvo is the developed
countries and hence the consumers are in position of afford to buy a
premium car. But, if Volvo looks for a market in developing and under
developed countries, there is much risk factors involved for the growth
of the industry.

Diversified strategy will not have a positive effect on the growth of the
business as this is risky, and Volvo which is facing a huge performance
crisis should not be risk taker but should be risk averter.

Product development strategy, this might be the best strategy for

Volvo, as in this strategy there is product development according to the
changing trends and requirements and hence this would help the Volvo
for growth, if it produces cars not only safety and reliability its cars, but
integrating safety, fuel-efficient, styling, performance and this leads to
differentiation among the players in the industry. If the company
integrates all the requirements of the demands of its customers, would
automatically increase sales and will enjoy a rapid growth for the
business. Volvo being the wholly owned subsidiary of Ford motors
enjoys shared research and development. Therefore an investment for
further product development is easy and hence it can meet the
requirements of the customers. There are Volvo's flexi-fuel cars which
distributes only to certain geographical areas, and hence Volvo should
even have to perform certain product development programs and
innovations

in

these

flexi-fuel

cars

and

there

should

make

improvements in distribution networks for these cars so that they are

available to all the 120 countries, where Volvo has its network.

The reasons for choosing the product development strategy as the best
alternative for Volvo cars is, because product development is the only
alternative which meets the target customer's (especially Volvo's target
segment of last 15 years) needs and this is the only possible solution to
withstand with the challenges Volvo is facing, and Volvo should also consider
the some of the aspects like the competitors of Volvo has already met the
needs of the customers who are seeking fuel-efficient cars, and hence Volvo
have to integrate all the aspects like safety, performance, reliability, fuelefficient, with low carbon emissions and comfort to compete with their
competitors, as Volvo is already reputed for safety and reliability, Volvo has
to some other elects in list of product design to provide a best alternative for
its customers. Volvo's introduction of Flexi-fuel cars to reduce the sales
shrink as the customers are moving to fuel-efficient cars shows a positive
sign in its performance in the future. Future Product development programs
also helps Volvo to achieve its programs like Volvo 2020, where it is trying to
differentiate itself on two factors safety of both the environment and driving.
Volvo should conduct a budgetary process on the available resources as
product development process requires an excess investments into many
aspects like research and developments and raw materials and advertising
campaigns.
The Volvo Car Corporation is one of the car industrys strong brands. The company
is committed to :

Support Business Areas and maximize Customer satisfaction through

superior product performance and excellent service
Offering customers the best value in selected segments
Sound portfolio structure/renewing of the groups product portfolio
Supporting safety of the community and the protection of environment
Stability in earnings over a business cycle
Developing the talents of its people through employee empowerment,
working with energy and respect for the individual
Profitability in all business segments