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Rymco Blue Ocean Strategy

In: Business and Management

Submitted By MigsRagudo
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ANSWER TO QUESTIONS: 1. How would a consumer’s level of involvement, need for cognition, and level of information search affect the purchase of a new car?
THEORY: The consumer buying decision process is a five-stage purchase decision process which includes problem recognition, information search, evaluation of alternatives, purchase, and post-purchase evaluation. The problem recognition occurs when a buyer becomes aware of a difference between a desired state and an actual condition.After the consumer becomes aware of the problem or need, he or she searches for information about products that will help resolve the problem or satisfy the need. Repetition, a technique well known to advertisers, increases consumers’ learning. Repetition eventually may cause wear-out, meaning consumers pay less attention to the commercial and respond to it lessfavourably than they did at first. A successful information search within a product category yields a consideration set (aka evoked set), which is a group of brands that the buyer views as possible alternatives.Purchase selection is based on the outcome of the evaluation stage and other dimensions.After purchase, the buyer begins to evaluate the product to ascertain if the actual performance meets expected levels. Cognitive dissonance is a buyer’s doubts that arise shortly after a purchase about whether it was the right decision.
REALISTIC: During the daily using a car or a public transportation, he will realize if he need to buy a new car instead the old one or buy a car. After aware the need, he will search a lot of information through memories for information about the cars that might solve the problem. Since the internal research might notsupply enough information for a decision, buyers will seek information from friends, relatives, public sources, such as government reports or publications, or marketer-dominated sources of information, such as salespeople, advertising, websites, package labelling, and in-store demonstrations and displays. During this process, RYMCO ran a series of IMC messages using outdoor advertising, TV commercials, radio spots, print ads, and SMS message to increase the learning of one-stop-shop. After comparing with other cars, consumer makes a decision and purchase the product and after using makes an evaluation. 2. Explain how cognitive mapping could be used to demonstrate a customer’s reaction in RYMCO’s one-stop-shop package.
a. Cognitive map (also: mental map or mental model) is a type of mental representation which serves an individual to acquire, code, store, recall, and decode information about the relative locations and attributes of phenomena in their everyday or metaphorical spatial environment.
b. A group of mental processes that involve acquisition, coding, storing, manipulation, and recall of spatial information.

3. Did RYMCO succeed in using the informative approach in its IMC messages? Explain.
Yes, RYMCO succeed in using the informative approach in its IMC messages. The company use the blue strategy to raise the customer value by focusing on features that are perceived beneficial the customers. The strategy successfully shifts the buyer decision of the purchase of a new or used car from a product perspective toward acomprehensive offer of greater value in a one-stop-shop solution for one great brand coupled with multiple financial services. With a series of IMC message running, the customers' value and knowledge are increased.

4. Which model best explains the evaluation of alternatives when it comes to cars; the evoked set model, the multi-attribute approach, or affect referral?
Evoked set model is defined as the set of choice alternatives activated directly from memory. Multi-Attribute Approach are designed to predict consumers’ attitudes toward objects (such as brands) or behaviors (such as buying a brand) based on their beliefs about the evaluations of associated attributes or expected consequences. While affect referral is sharing one’s positive/negative feeling that consumers experience (emotions, specific feelings, moods and evaluations) towards a specific brand.
The multi-attribute approach best explains the evaluation of alternatives when it comes to cars. When people choosing cars, they have a lot of brands come to their minds, but how to choose the correct one. During the decision making process, people will search a lot of information relate to the cars include the quality, service, price and other attributes. After gathering all off this information, the customers will compare the different products by their attributes.
The MADA process, in its simplest form consists of four stages:
a. Framing of the decision and identification of the goals and objectives to be achieved by the decision maker
b. Identification of all decision alternatives and any related attributes that address the decision making objectives
c. Specification of preferences, both for each of the individual attributes and between the attributes in the framework
d. Ranking of the decision alternatives according to the specified preferences, given the attribute data for each of the alternatives

COMPANY HISTORY
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Company Background
Originally launched to deal with general merchandising, the Rasamny brothers founded Rasamny Brothers Inc. in the Liberian Republic in 1934. The family owned and operated a large business conglomerate that included representation of brands such as Chrysler, Ford and Honda in the automotive industry in addition to Palmolive, Colgate and other brands.
In 1957, the Rasamny brothers went on to expand their business and opened the first showroom and back-offices under the umbrella of Rasamny Younis Motor Co. (RYMCO) in Beirut and launched their operations as exclusive dealers of Oldsmobile and GMC. As a strategic move to grow the company, in 1964 RYMCO built up its own showrooms, back-offices and after-sales facility in Chiah and added the Australian brand, Holden, to the company portfolio.
Three years later, RYMCO introduced the first DATSUN to the Lebanese market constituting a major turning point in the company's profile. Unfortunately, the Lebanese war left the Chiah facilities in complete ruin and forced RYMCO to move from the location to Deir Koubel at first and then to Choueifat, where a showroom and a service facility were set up to cater to customers’ needs.
In 1985, after the Israeli invasion, RYMCO was once again forced to move. This time the move saw them relocate from Choueifat to Hamra Street and then to Jal El Baher, which was to later become an official RYMCO branch.
After 1991's ceasefire, RYMCO re-launched its operations from Chiah where the showrooms, the after-sales facility and company offices saw a complete restoration. By 1992, RYMCO proudly participated with Nissan and GMC in the nation's first every Motor Show.
After 41 years of being a privately owned institution, RYMCO went public in 1998 to become the first and the only automotive dealer to be listed on Beirut Stock Exchange list.
The Chiyah showrooms were given full restoration in 2003; where the re-opening took place in the presence of Nissan CEO, Carlos Ghosn and then in 2004, RYMCO went on to launch its Infinitiboutique in the heart of downtown Beirut becoming the first to open a separate facility for Infiniti outside Northern America.
The following year, Abdo Sweidan, the newly appointed managing director of RYMCO, received the 2005 President Award from Carlos Ghosn, CEO of Nissan. 2006 was a record year for RYMCO, as it maintained the No.1 position and achieved growth across the board for the 7th year in a row.
In 2007, RYMCO achieved a 74% growth over 2006 controlling 21.3% of the Lebanese market, maintaining its number 1 position.
2008 was another record year. RYMCO became the fastest growing automotive dealer in Lebanon growing its business by 85.7% from 4273 units in 2007 to 7932 units in 2008, historically no other dealer was able to achieve those sales figure in Lebanon.
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Awards and recognition
1995 RYMCO received the MARKET-LEADER Award from Nissan Motor Co. LTD, for its outstanding contribution to the expansion of Nissan sales in the Lebanese market.
2003 RYMCO was appointed as the Gold Winner for the 8th Nissan International Service Technical Contest (Middle East Area Contest).
2004 A special Award was presented by Nissan to RYMCO for achieving the No. 1 market share among Japanese Brands. President Award for the NSC (NSC) 2004: "In reference to its continued sales effort and outstanding performance" "No.1 market share total cars. Target achievement"
2005 RYMCO received the NISSAN Global NSSW Award, for outstanding performance in Customer Satisfaction Special recognition award in Achieving No.1 market share among Japanese brands Mr. Abdo Sweidan, the newly appointed managing director of RYMCO received the "President Award" for 2005 from Carlos Ghosn CEO of Nissan.
2006 Infiniti Special Recognition Award: "Special recognition award for Infiniti for the Best Brand Status in the region". GMC Milestone Award for 25.76% growth in GMC brand sales over 2005.
2007 GMC golden Bar Award was presented to RYMCO in recognition of its dedication to achieve the highest CSI scores in the region for the After Sales. Best global practice award: for Infiniti outstanding brand performance and positioning.
2007 Nissan special recognition award: - "No.1 market share over 3 years in a row: 2005, 2006, 2007"- 2007 General Motors "Chairman Challenge award":- "In recognition of your success in achieving No.1 market share among Japanese brands"-
2007 Best product launch: - The Infiniti G35 launch in Beirut Downtown Background.
2007Best Marketing project for 2007: - Nissan end of year campaign (knock-out punch project)

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Achievements
- Number 1 Position for Rasamny Younis Motor Company with 7932 car sold or 22.5% market share and a good 85.7% growth over last year.
- Number 1 Position for Nissan Brand with 6991 car sold controlling 20% market share along with a good YOY growth of 63.6% over 2008.
- Number 1 Position for NISSAN passenger Vehicles with 5646 units sold controlling 21.3% from the total sedan market share.
- Number 1 Position for NISSAN SUV with 1086 SUV sold or 17.5% from the total SUV market share.
- Number 1 Position for Infiniti in the Cross over Luxury SUV segment with 63% Growth over last year.
- 92% growth in GMC sales over the past year, achieving a good 579 units sold, crowning it the nbr 1 brand in the American SUV segment.

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Awards
Best Marketing project for 2008: RYMCO Motor Gallery & End of year Campaign
Source: Rymco Cars, Wikipedia

LEBANESE CAR MARKET
Looking at top brand performance:
Kia dominated the market, selling 9.825 vehicles in 2012, about 3.000 units more than 2010, with a share of 27.8%, up 2.2 points of share from the previous year and 6.4 from 2010.
Hyundai was 2nd, selling 6.314 units in 2012, about 2.000 vehicles more than 2010, with a share of 17.9%, up 1.4 points of share from the previous year and 5.5 points from 2010.
Nissan in 3rd posted a negative year, selling 5.340 units, about 300 units less than 2010, with a share of 15.1%, down 2.7 points of share from the previous year and 1.8 from 2010.
Toyota was 4th selling 1.932 units, about 1000 less than 2010, with a share of 5.5%, up 1.1 points of share from the previous year and down 3.8 points from 2010.
Chevrolet was 5th selling 1.611 vehicles with a share of 4.6%, up 0.2 points of share from the previous year and 0.6 from 2010.
In the table below, the Top 25 Brands: Rank 2012 | Brand | 2010 | 2011 | 2012 | 2010 | 2011 | 2012 | 1 | Kia | 6.494 | 8.305 | 9.825 | 19,4% | 25,6% | 27,8% | 2 | Hyundai | 4.152 | 5.341 | 6.315 | 12,4% | 16,5% | 17,9% | 3 | Nissan | 5.663 | 5.840 | 5.340 | 16,9% | 18,0% | 15,1% | 4 | Toyota | 3.103 | 1.425 | 1.932 | 9,3% | 4,4% | 5,5% | 5 | Chevrolet | 1.338 | 1.440 | 1.611 | 4,0% | 4,4% | 4,6% | 6 | Renault | 1.145 | 1.192 | 1.308 | 3,4% | 3,7% | 3,7% | 7 | Volkswagen | 691 | 615 | 738 | 2,1% | 1,9% | 2,1% | 8 | Peugeot | 970 | 877 | 678 | 2,9% | 2,7% | 1,9% | 9 | BMW | 816 | 472 | 651 | 2,4% | 1,5% | 1,8% | 10 | Audi | 521 | 547 | 549 | 1,6% | 1,7% | 1,6% | 11 | Mercedes | 742 | 737 | 492 | 2,2% | 2,3% | 1,4% | 12 | Mazda | 946 | 470 | 489 | 2,8% | 1,4% | 1,4% | 13 | Dacia | 332 | 351 | 420 | 1,0% | 1,1% | 1,2% | 14 | Honda | 757 | 457 | 402 | 2,3% | 1,4% | 1,1% | 15 | Seat | 472 | 447 | 399 | 1,4% | 1,4% | 1,1% | 16 | Suzuki | 438 | 383 | 369 | 1,3% | 1,2% | 1,0% | 17 | Mitsubishi | 1.287 | 641 | 366 | 3,9% | 2,0% | 1,0% | 18 | Jeep | 118 | 176 | 297 | 0,4% | 0,5% | 0,8% | 19 | Porsche | 335 | 311 | 291 | 1,0% | 1,0% | 0,8% | 20 | Geely | 32 | 10 | 249 | 0,1% | 0,0% | 0,7% | 21 | Land Rover | 271 | 231 | 249 | 0,8% | 0,7% | 0,7% | 22 | Citroen | 357 | 258 | 225 | 1,1% | 0,8% | 0,6% | 23 | Skoda | 166 | 189 | 216 | 0,5% | 0,6% | 0,6% | 24 | Mini | 80 | 127 | 183 | 0,2% | 0,4% | 0,5% | 25 | Ford | 146 | 159 | 162 | 0,4% | 0,5% | 0,5% |

Source: info@focus2move.com
STATEMENT OF THE PROBLEM
What advertising framework that RYMCO will use to sustain and grow their market leadership in the Lebanese car market? 1. How will RYMCO maximize the Blue Ocean Strategy by enhancing their advertising management? 2. What advertising framework is applicable in conveying their value innovation?

OBJECTIVES * To identify the advertising framework to be used by RYMCO in sustaining and growing their market share. * To maximize the Blue Ocean Strategy in creating value innovation. * To successfully manage their advertising campaigns. * To address RYMCO’s threats and weaknesses that may hinder the company from sustaining and growing their market share. * To determine RYMCO’s strengths and opportunities that may be used in their market domination.

AREAS OF CONSIDERATION/MAJOR ASSUMPTIONS * Point of View: This study will take the point of view of RYMCO to maximize the Blue Ocean Strategy and managing their advertising activities to uphold their market leadership in the Lebanese Automotive market. * RYMCO is the market leader in the Lebanese Automotive market. * The Blue Ocean Strategy has created an uncontested market space by reconstructing market boundaries, focusing on the big picture, reaching beyond existing demand and getting the strategic sequence right. * Value innovation has the simultaneous pursuit of differentiation and low cost – and key analytical tools and frameworks such as the strategy canvas, the four actions framework and the eliminate-reduce-raise-create grid. * RYMCO has addressed the four key hurdles comprise the cognitive, resource, motivational and political hurdles that prevent people involved in strategy execution from understanding the need to break from status quo, finding the resources to implement the new strategic shift, keeping your people committed to implementing the new strategy, and from overcoming the powerful vested interests that may block the change. * RYMCO’s outdoor advertising, TV commercials, radio spots, print ads and SMS messages are very successful IMC used to earn them market leadership. * RYMCO’s success is attributed in their ability to understand customer buying behaviour and respond to their needs. * B2C and/or personal selling are important for selling motor vehicles.
THEORETICAL FRAMEWORK
SWOT ANALYSIS
STRENGHT
* The company operates a chain of independent showrooms and has an automotive dealership arrangement with auto manufacturers in the United States, Japan, Europe, and China such as Nissan Motors, GM, Renault, Nissan Diesel (UD), FAW, and Kawasaki. * By 1992, RYMCO proudly participated with Nissan and GMC in the nation's first every Motor Show. * After 41 years of private owner ship, RYMCO went public in 1998, becoming the first and only automotive dealer to be listed on the Beirut Stock Exchange. * In 2004, RYMCO went on to launch its Infiniti boutique in the heart of downtown Beirut, becoming the first to open a separate facility for Infiniti outside of North America. * In 2005, Abdo Sweidan, the newly appointed managing director of RYMCO, received the President's Award from Nissan's Carlos Ghosn * RYMCO experienced 74 percent growth from 2005 to 2006 * It controlled 21.3 percent of the Lebanese market, maintaining its number one position. * In 2008, RYMCO became the fastest-growing automotive dealer in Lebanon, increasing sales by 85.7 percent, moving 4,273 units in 2007 to 7,932 units in 2008. * In 2009, RYMCO expanded into overseas markets, gaining the right to distribute the Infiniti brand of cars in London. It also began stocking Nissan and Infiniti vehicles in free zone areas in Syria. * Number 1 Position for Nissan Brand with 6991 car sold controlling 20% market share along with a good YOY growth of 63.6% over 2008. * Number 1 Position for NISSAN SUV with 1086 SUV sold or 17.5% from the total SUV market share. * Number 1 Position for Infiniti in the Cross over Luxury SUV segment with 63% Growth over last year. * 92% growth in GMC sales over the past year, achieving a good 579 units sold, crowning it the number 1 brand in the American SUV segment. * one-stop-shop

WEAKNESSES * Has not manufactory at Lebanese * Under estimating the economic realities of inflation, high price of gasoline and lower purchasing power * Unforeseen the arise of Korean cars suchs as Kia (NATCO).
OPPORTUNITIES
* New consumer behavior * Good customer service experience is the key factor that sets the dealer apart from competition * Acquiring “Cherry” (Chinese) and Hyundai (Korean) brand to be included in their dealership. * “Compact Vehicles” arising sales in the Lebanese Market.

THREATS * Existing competitor * New entrants from China and India * Services be imitated by other competitors * Economic realities of inflation, higher fuel costs and lower purchasing power * Entrants of Korean Car models such as Kia and Hyundai

THREE HIERARCHY OF EFFECT MODEL

It is an early model that depicted consumer response to advertising as a series of stages including awareness, knowledge, liking, preference, conviction and purchase.
Terminologies:
Affect: a basic mode of psychological response that involves a general positive/negative feeling and varying levels of activation or arousal of the psychological system that consumers experience in their bodies such as emotions, specific feelings, moods and evaluation.
Behaviour: specific overt actions directed at some target object; overt actions are observable and measurable responses or actions of consumers.
Belief: the perceived association between two concepts. May be represented cognitively as a proposition belief about products often concern their attributes or functional consequences. Beliefs are synonymous with knowledge and meaning in that each term refers to consumers cognitive representations of important concepts.

Source: Consumer Behavior and Marketing Strategy by Peter and Olson 9th Edition
A hierarchical representation of how advertising influences a consumer's decision to purchase or not purchase a product or service over time. The hierarchy-of-effects theory is used to set up a structured series of advertising message objectives for a particular product, with the goal of building upon each successive objective until a sale is ultimately made.

The objectives of a campaign are (in order of delivery): awareness, knowledge, liking, preference, conviction and purchase.
The hierarchy-of-effects theory is an advanced advertising strategy in that it approaches the sale of a good through well-developed, persuasive advertising messages designed to build brand awareness over time. While an immediate purchase would be preferred, companies using this strategy expect consumers to need a longer decision-making process.

Source: Investopedia; Hierarchy of Effects Model

ALTERNATIVE COURSES OF ACTION
ACA 1: Use Conative Approach to improve and maitain their market share.
PROs It can stimulate the purchase power through different activities such as coupon, Internet “hits” and orders and buy one-get-one-free to and increase the customers’ value.
CONs This will increase the company’s marketing budget and is easily to be imitated by the other company
ACA 2: Enhance RYMCO’s advertising framework by incorporating Consumer Behaviour and Effects Model.
PROs This will increase the repeation of the brand in the customers’ mind. When people think about purchase a car, this brand will first come into the mind.
CONs The company should still spend a lot on the marketing compaign. And it should always come with new ideas for the advertising. So the people will not get tied for it.

ACA 3: Use Multi-Attribute approach in maintaining their market leadership (Consumer Behaviour). PROs Through enhance the different attributes of the cars not only the quality but also the bundled services, it will increase the total evalution of this brand and also gives the customers a lot of convenience comparing to other brand. CONs The company should find long time relationship partners to work together and need more people and time to control the quality and deal with the other companies
RECOMMENDATION
The group recommends ACA 2.
Using B2C and understanding its consumers decision making will allow RYMCO align all of its advertising campaigns suited to the affect and beliefs that will give customer satisfaction and positive word-of-mouth endorsement.
The hierarchy-of-effects theory is an advanced advertising strategy in that it approaches the sale of a good through well-developed, persuasive advertising messages designed to build brand awareness over time. While an immediate purchase would be preferred, companies using this strategy expect consumers to need a longer decision-making process.

ACTION PLAN 1. Align Marketing Mix 2. Assess Environmental Factors 3. Create an advertising program 4. Establish customer satisfaction. 5. Highlight Value Innovation.

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