If we analyze the automotive sector we can understand very well the reaction of Mr Marchionne against Volkswagen. The new data tell us that our market has lost 24%, and even the second hand market marks a loss of 12%. Analyzing the European market we notice that there is an overcapacity of cars linked to a growth of the oil price in more Countries. Considering the good economic situation in Germany and the growth of export in China and Brazil , Volkswagen decided to attack the market with an aggressive sales strategy. At the same time, FIAT Group is required to wait because the efforts to acquire Chrysler in this scenario doesn’t let Marchionne to find resources to invest in innovations and new models. In my opinion problem is that there is not a sales strategy for other market . The growth of FIAT is based only on the acquisition of USA company , but there is no efforts to develop for example a hybrid city car to match the request of low cost coming from consumers. So the reaction of Marchionne seems to discover the pressure created by an absence of strategy. But this problem is common in other sectors . Even in electronics distribution when at the beginning of 2000th arrived korean brands like Samsung or LG bringing with them a strong sales strategy based on marketing investments and a reduction of price, many “Old European brands” disappeared because they were not able to react in right way. In the cell-phone market the Scandinavian Nokia started twenty years ago leading the market , now Apple and Samsung exploiting of App trend and of multimedia convergence with PC and TV ,control the world market.
So, if we want to find a solution we cannot speak how is terrible that a company offers its goods with important discount, because this is the market that we must approach . We cannot ask to change the rules because we are not able create a good strategy of penetration. Some people ask to introduce again barriers to entry , but “Is this the solution?”. Is it possible to survive only with domestic market? I think that if there is no strategy or we have only one strategy , may be, it’s better to change the staff of managers. When we speak about the invasion of Chinese products , we have to underline that after the first period in which many costumers stocked up of any sort of goods, now they search good quality at the better price.
For example the operators of consumer electronics market in this period are changing their distribution strategy. The value of the space is the only item that counts, to maximize this value they have to choose the product and the brand that ensure this. To create value it’s important to create efficiency: new protocols, new processes , a new space management , a new marketing selection and a new policy on shopping center distribution .
It’s impossible to control the market, setting rules among the members of producers association , this is a typical trust against the market. What Marchionne asks is to fix the price setting the numbers of cars in the market. But why they don’t speak about investments in alternative power ? How they can boost the market without analyze the request of consumer regarding new low cost model with cheaper fuel . For sure it is possible to force the market but it’s not possible to upset it.
Luigi Del Giacco
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