Study on The Marketing Strategy of The Red Flag Car (Article)

Abstract

In the 21st century,Chinas automobile industry has developed rapidly,the entire automobile market has gradually returned to stable growth after nearly a decade of rapid development.However,it also faces great opportunities and challenges.As the well-known automobile brands entering the Chinese market successively, China`s own-brand car how to stand out in a competitive environment is so important.In recent years, China has vigorously advocated the development of independent brand innovation.The red flag as the forerunner of our car is constantly trying to enrich the product series to revitalize the road in order to be the first brand image of the national car again.Nevertheless,the rise of the red flag has been extraordinarily difficult.At present, China`s car market has been repeatedly divided by foreign and joint ventures.In addition, many independent brands have joined the competition, and more and more auto brands are coming in.So, how should the red flag not be eliminated and occupy a place in the hands of a lot of competition, to build a high-end boutique national automobile brand.Therefore, this article will find new and suitable marketing strategies for the red flag car by PEST,4P,Michael Porter`s Five Forces Model.This article analyzes the existing problems in marketing environment of the red flag car and puts forward some suggestions.It is hoped that it can play a certain role in the development of red flag automobile marketing strategy ,provide relevant theoretical basis and practical support for the revitalization of the red flag brand.

Key Words:Red flag car; Marketing strategy; Countermeasure analysis.

1 Red Flag Auto Porter Five Force Analysis

1.1 Industry competitors
    With the rapid growth of domestic car consumption in recent years, although there are many manufacturers now, more than 70 % of the domestic market share is occupied by the top five major companies. The four largest Chinese car manufacturers(SAIC, FAW, Dongfeng and Chang `an) have 62 % of the country`s market. Therefore, Hongqi`s competitors are both scattered and concentrated. The implementation of the 14-year bus reform policy has made it necessary for Hongqi to accelerate its entry into the private car market. Hongqi launched the H7 1.8 T model with low displacement and lower price in 2015. This model contributed 69 % to the sales of Hongqi in 2017. At the same time, the launch of this model has made the main body of Red Flag competitors switch from luxury models to ordinary models. Volkswagen, Toyota, and Honda`s ordinary models have become red flags. 2018-2020 H5, HS5 and other new vehicles will continue to advance the red flag exploration process, while WEY, lead, pass, Rongwei, Great Wall, Geely, Chang `an and other Chinese brands will accelerate the exploration. During the period, in addition to the competition or intensification of overseas general brands such as Volkswagen and Toyota, the competition with new brands such as WEY and Linkock will also increase rapidly. Therefore, the future red flag competition will be more and more. Compared with these brands, the power, comfort, and fuel consumption of the red flag are very different. In the final analysis, the independent innovation of Hongqi Automobile is weak, and the true core technology still comes from foreign car brands, making it difficult for Hongqi Automobile to compete with other competitors in the industry in terms of technology.
1.2 Threats from new entrants
    Under the background that the world pays more attention to environmental issues, it is imperative to save energy and reduce emissions. The country has issued many related policies. New energy vehicles are the future development trend. Although the development of new energy vehicles is still relatively slow due to the restrictions of technology, it will not completely replace traditional fuel vehicles in the short term, but with the continuous improvement of new energy infrastructure, the new energy vehicle industry will have a greater advantage. According to the report, in 2017, China sold a total of 560,000 new energy passenger vehicles, of which the total sales of pure electric passenger vehicles 450,000, plug-in hybrid passenger vehicles sold a total of 110,000 units. According to incomplete statistics, the planning of new energy vehicles by traditional car companies alone is a huge number. Guangzhou Automobile, Dongfeng, SAIC, BaIC, Chang `an, Geely, Chery and other nine autonomous car companies have announced sales targets for new energy vehicles in 2020 of nearly 4 million vehicles, with a total investment of about 80 billion yuan. The competition situation of red flag in the traditional fuel and steam industry is already very difficult and dangerous. In the case of a large number of new energy vehicles pouring into the car market, it will certainly bring more challenges and opportunities to red flag.
1.3 Impact of consumer bargaining
    In recent years, with the steady development of the Chinese economy and the steady increase in the income and purchasing power of residents, automobiles have gradually become an indispensable part of people`s lives, and people have become more and more dependent on them. The Chinese car market is full of foreign investment, joint ventures and independent brands. There are many brands for consumers to choose from. Nowadays, consumers are demanding more and more cars `quality, brand, and service. Red flag car red flag has always been positioned to build a domestic brand high-end sedan, as a high-end model naturally has higher requirements for technology, but the fact is that red flag is subject to foreign auto manufacturers and does not master the core technology. Foreign manufacturers will not transfer the most advanced technology to the red flag, so they can not attract consumers in terms of independent core technology compared to foreign investment and joint venture brands. In addition, the satisfaction of Red Flag after-sales service is also very low. At present, there are many problems in the repair and maintenance of Red Flag. There are too few after-sales service centers that can not solve problems for car buyers in a timely manner. This will inevitably reduce consumers `purchase preferences. Therefore, the ability of consumers to bargain is still very high.
1.4 Impact of vendor bargaining
    The bargaining power of the key suppliers in the automobile industry in China mainly includes the requirement to increase the price of the supplied products or reduce the quality of the supplied products. At present, the number of auto manufacturers in China is much smaller than that of manufacturers of auto parts. At the same time, the number of parts manufacturers in our country is much smaller than the size of automobile manufacturers, so suppliers will not create too much competitive pressure on manufacturers.
1.5 New patterns of competition
    In recent years, under the background of China`s automobile policy orientation and the explosion of the automobile market, more and more domestic joint-stock car companies are no longer content with merely introducing models, but are focusing on R&D in the Chinese automobile market. Create a model that is more in line with Chinese consumers `preferences and a brand that is more in line with the characteristics of the Chinese market. The development of autonomous brand is becoming a trend gradually. With the rise of the autonomous brand of joint venture, the auto industry in China will develop from the situation of joint venture and independent competition to the pattern of joint venture, autonomous and autonomous "three strong contenders".
2 Analysis of Red Flag Automobile Marketing
  2.1 Price situation
    In terms of price, the 3.0 L and entry-level model prices of the H7 are starting from 249,800 yuan. According to the plan, the Hongqi brand has H platforms and L platforms, respectively, positioning high-end cars and luxury cars. The H platform will also launch multi-functional models in the future. In the future, it will definitely be for the public, taking the civilian route, and the L platform will be positioned above D level. After mass production, it is used by national leaders. The red flag H7 for ordinary consumers starts at 249,800 yuan. It must be admitted that this price is not expensive because it is the cheapest domestic medium and large sedan that users can buy. Imagine that with the money to buy the Audi A4L, you can buy a medium-sized and large sedan with a model level and size equivalent to A6L, and a configuration level of A6L and a high match level(the Audi A6L with the same configuration costs at least 450,000 yuan)., It`s a good deal anyway.
2.2 Product Status
    After several years of development, the Red Flag has grown from the earliest version of one model to six models. The market guidance price of the new car ranges from 249,800 yuan to 479,800 yuan, and currently carries three engines. 1.8 T turbocharged, 2.0 T turbocharged engine, 3.0 L turbocharged engine. Its configuration includes equipment that should be equipped with luxury models, such as rear independent air conditioners, fore/rear parking radar, reverse video images, constant speed cruising, and air purification; In terms of multimedia, it is also equipped with a color screen, GPS navigation, Bluetooth and so on. In terms of appearance, the red flag 2017 H7 has undergone major changes. The front grille area of the front face has become larger. The vertical banner is Chrome plated with a net. The taillight group at the rear of the car is cloud shaped, and the central cross. Chromium trim connects the lamp group. Therefore, it gives people a more atmospheric and spatial feeling, and the color has also increased to three, allowing consumers to choose more.
2.3 Status of channels
    The channel mode before the red flag is mainly based on the city exhibition hall, and it is also equipped with a red flag service exclusive store and a sales service store. The city exhibition hall has assumed the role of brand display in a specific environment. In the second half of 2017, the first batch of 21 new 4S stores that joined the Red Flag brand will gradually spread in the first and second tier cities in the country. The 21 4S stores are all among the top 100 distributors in China, covering 19 provinces and 21 sub-provincial cities in the country, of which 95 % have high-end brand experience, and they operate more than 80 luxury brand 4S stores. The market share is among the best. The new channel mode of red flag will aim to "provide a perfect user experience" and create a new 4S store with red flag characteristics. The image of the new 4S store will also be more contemporary and more in line with the current social aesthetic standards. It will provide more high-end and personalized services with digital and intelligent entry points to provide users with services and experiences that exceed expectations. At the same time, the sales service level of Hongqi brand will continue to improve on the original standards with the deepening and improvement of channels, and will inject continuous soft power into the subsequent development of Hongqi brand.
2.4 Promotions

On the one hand, due to the poor brand construction and poor market sales of the Hongqi sedan over the years, the exposure of the "Red Flag" in the Chinese car market has continued to fall, and the repeated market cold encounters have further reduced the market influence of the Hongqi sedan. Even some young people do not know the status of the "red flag" car brand. At present, major brands in the automotive market have made a lot of investment in advertisements, including some TV dramas and television dramas. However, Red Flag has invested very little in this area, and advertising is essential for brand image creation and sales promotion. Therefore, the majority of consumers to red flag recognition still stays in the "royal car" level. Like red flag rivals BMW, Mercedes, they use the power of new media and the Internet to create a lot of excellent advertising, but its advertising will attract attention from all walks of life, which in turn caused consumers to pay attention to new models, earning enough consumer attention. It can be said that "see its car, first smell its name."
    On the other hand, Red Flag is currently the main two means for dealers. First, state subsidies and financial support with assessment, and second, direct support for the interests of consumers. The financial support for dealers is mainly subsidies that are not assessed. There are clear inventory subsidies and fund occupancy support. FAW also gives more than 50 % of the dealers who build the "Red Pavilion" subsidies for building stores. There are also several forms of capital subsidies for customers, and the minimum amount of zero down payment and zero interest can be enjoyed for the purchase of vehicles in phases; 4 years or 100,000 kilometers free maintenance; Free warranty for life; Purchase a car to give a year main insurance purchase car to send full purchase tax.
3 Problems in the Marketing of Red Flag Automobile
  3.1 Aging brands and single product types
    The red flag has a single product, and the only model available to consumers is the red flag H7, which is an important factor that hinders the development of the red flag brand. In addition, the red flag brand has a deep planned economy brand, brand aging problem is serious. The first is the brand`s Association, all of which are long memories. The second is the lack of innovation in the product, there is no obvious technical performance or appearance of differences. Third, channel mode or most of the use of direct sales mode, 4S stores just started, and the number of poor. Fourth, in the dissemination or hope to use the government word of mouth communication, there is no suitable for modern marketing mode of communication. Finally, in the era of marketing "4C", excellent automotive brands generally adopt a new model of consumer care and respect such as "customer clubs", and the red flag has not yet taken into account. Red flag is not yet like other high-end car brands to let consumers feel the brand`s taste, identity symbol, innovation, rich cultural connotation and the atmosphere of the times. Brand positioning is a strategic issue and can not be changed casually. Hongqi now proposes that it is a good thing to return to the high-end, but it must be firm and persistent. It must not start to produce low-end products or even produce taxis for the sake of short-term benefits, thus unnecessarily damaging the brand image.
3.2 Network sales channel construction lags behind
    Red Flag signed 21 authorized dealers in the first half of 2017, which shows the determination of Red Flag to enter the private car market. But the move has lagged behind other premium brands, which have more than a fraction of their marketing experience in the private market. As early as 2012, major luxury car brands such as Mercedes-Benz, BMW, and Audi have expanded their sales networks nationwide, increasing the number of dealers everywhere. They basically divide up the existing domestic high-quality dealer resources. After more than five years, they have established good strategic partnerships and strategic agreements with distributors. Dealers will use their own good resources to build their dealerships. Whether red flag, as a new entrant, can receive the same attention from distribution groups is uncertain. In the current fierce competition in the industry pattern, the red flag has just begun to start, and the first 4S stores have entered the private car market, and sales channels have not yet been fully spread.
3.3 Simple approach to promotion
    Red flag has neglected the important role of advertising in terms of promotion methods. When other car brand advertisements are everywhere, red flag is still very few in this regard, and consumers `inherent impression of red flag "national car" is still deep-rooted. The failure to make good use of media resources such as television and the Internet for advertising has wasted the opportunity to expand awareness and break consumer impressions. We rarely find advertisements about red flags in major mainstream media.
4 About Hongqi Automobile Marketing Strategy
  4.1 Deepen brand building and improve product system
    To enhance the overall product power of the red flag, in addition to enriching the product series, it is more important to first make the red flag on the "quality line." The so-called boutique is not a company that believes that a boutique is a boutique, but a consumer believes that a boutique is a boutique. In other words, your product should have enough reasons for consumers to like it. Every detail of your product is refined, and every link can reflect the brand`s "customer care." In the quality of products, comfort, performance, appearance of personality and taste are constantly pursuing excellence. Second, let the red flag embark on the "differentiated route." At present, the red flag product system is not yet perfect, and the ability of independent innovation is still insufficient. Enterprises can focus their energy on a rich product series. However, with the deepening of the "New Red Flag Movement" and the intensification of market competition, enterprises must shift their energy to the development and promotion of differentiated products. The "New Red Flag Movement" needs a new flag bearer after completing the first phase of brand dissemination and promotion. This flag bearer is an innovative new product with a brand image.
4.2 Accelerate and improve the construction of sales networks
    The construction of sales network is very critical to a car brand. If you want to increase the market share of Hongqi Automobile, you should speed up the laying of its sales network nationwide. First of all, we must strengthen strategic cooperation with dealers. Good partnership will prompt dealers to put forward more advantageous resources to invest in the construction of the red flag brand 4S stores, improve the conditions of service before, during and after sales. Red flag should establish a long-term, stable and close relationship with dealers throughout the country. This may make up for the gap that has lagged behind other competitive brands in recent years. After that, we must constantly optimize our sales network. We must not only carry out macro planning and introduce advanced management concepts to other brands. Red Flag should integrate all resources and make scientific and reasonable arrangements for sales plans based on the data reflected by various regions. To keep the entire sales network open.
4.3 Enrichment of promotions
   The promotion of automobiles is also an important step in promoting the final sales volume. Through the promotion campaign, consumers have an intuitive view of the price, performance, appearance, and differentiated features of automobiles, transmitting the concept of new models. This, in turn, stimulates consumers `interest in deeper understanding to form a final purchase behavior. Advertising is one of the most important promotion methods, and can play an unpredictable role in car sales. In this regard, the red flag can learn from BMW and Mercedes and design its own characteristics. We should not only intensify our efforts in research and development, but also ignore the huge role of marketing. Red flag should increase the intensity of advertising in major media to attract consumers `attention and interest. Traditional media and emerging media, including television, newspapers and the Internet, WeChat, Weibo, etc., should be used to increase the promotion of brands, so as to promote brand connotation and promote the sale of new models. For example, on television, the title sponsors some of the more high-profile variety shows "Dad Where to Go", advertising on several mainstream portal websites in China, and sponsoring concerts. In the hearts of the Chinese people has always had a special complex for the red flag, and the public is full of expectations for the revitalization of the red flag.

 

 

Posted by: Luo Yunhua, Teacher, Northeast Normal University Business School, China (01-Mar-2019)
F Twt Li YT