Retailer Profile of Land Rover

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Fall 2012
MARK 360 Final Retailer Profile
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Retailer Profile of Land Rover

  1. 1. Jacob Hostetler MARK 360-20W Stacy NeierFinal Retailer Profile Land Rover December 4, 2012 1
  2. 2. DB 1. An Introduction to Land Rover Land Rover is one of the most iconic automotive companies, with a tremendous historyand instantly recognizable branding. Ever since the original Land Rover debuted in 1948,customers have sought their products for their off-roading prestige. These days, the company isrepresented by several models, most notably the Range Rover. The Range Rover is the pinnacleof luxury off-roading and is world renown for its agility and status. Leading the company intothe future is the 2013 Range Rover. In contrast to many retailers that use the "classic model" when it comes to distribution,automotive companies such as Land Rover get rid of the middlemen. Auto manufacturersgenerally use forward integration, overtaking some of the retailing responsibilities themselves.New car dealerships are almost always franchises, so the vehicles travel through companiesretailers to the final consumer. In the diagram below, Land Rover and its competitors arerepresented by the second row of Consumer Goods. The third and fourth rows aremore representative of industries such as grocery and clothing. Land Rover is strictly a first-tier retailer, catering to consumers with higher incomes. Itsentry-level model - the LR2 - starts at over $35,000, while the Range Rover goes from $80,000to nearly $200,000. This is a rather narrow target market. In a case study by AdMob for theautomaker, Land Rover identified its target audience as an "active male, high net worthdemographic between the ages of 35-54." This is represented in many of their commercials, suchas the video below featuring the Range Rover Evoque Convertible concept. While the company is best known for its Range Rover SUV, Land Rover has beendiversifying its portfolio. The automaker makes a lone variety of car - sport utility vehicle - but isincreasing its assortment. Recently, in collaboration with Victoria Beckham, Land Rover 2
  3. 3. designed and released the Range Rover Evoque, a significant departure from the companyshistory. A coupé version is available, and the above convertible concept has been so wellreceived by the companys customer base its likely to be produced. Development of new modelsis helping Land Rover to maintain and increase its competitive advantage over Mercedes-Benz,Porsche, and BMW. The following article details how this diversification has helped thecompanys sales immensely. There is no electronic channel available that allows consumers to purchase Land Rovers.In fact, no automaker features this option, though almost all allow potential customers to "Build& Price" their various models. However, this can be used to entice customers to buy. In theRetail Communities text the author writes, “What goes on inside the store is often theculmination of a host of other external forms of marketing, communication and societalinfluences, which come together at the point of sale.” In addition, the fact that the dealers arefranchises of the manufacturer means that both ends of the distribution channel benefit from oneanother. Retailers "have direct access and control over the final transaction with the ultimateconsumer," whereas "manufacturers...often have the advantage of product knowledge and,sometimes, larger marketing budgets."DB 2. Once Upon A Time In a Land (Rover) Far AwayA Brief HistoryBorn of the aluminum left over from World War II aircraft, the first Land Rover vehicle emergedfrom the skunkworks of the Rover Car Company in 1948. Modestly entitled "Series I," it was"ingeniously designed and engineered for extreme capability and strength." However, Land 3
  4. 4. Rover did not become its own entity until the late 1970s. These days the company carries on withpartner Jaguar under the ownership of Tata Motors.Recent EventsThe automotive industry as a whole has been tumultuous over the past decade, the landscapemarred by most notably the worldwide economic downturn. Land Rovers history has beenheavily affected by the resulting industry changes. In 2000, BMW Group sold the off-roadingautomaker to one of the most iconic companies in the world: The Ford Motor Company.However, in 2007 Ford put its high-end subsidiaries Jaguar and Land Rover up for sale. Thecompany was losing money, investing much less than its German rivals in the brands, and in2008 it sold Jaguar and Land Rover to Tata Motors, an Indian automotive group.On thesale/acquisition of Land Rover and Jaguar, Alan Mulally, president and CEO of the Ford MotorCompany, said, "Jaguar and Land Rover are terrific brands. We are confident that they areleaving our fold with the products, plans and team to continue to thrive under Tatas stewardship.Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implementour plan to create a strong Ford Motor Company that delivers profitable growth for all."Mission StatementsWhile Land Rovers and other large, powerful SUVs have been seen by many as wasteful,inefficient, and harmful to the environment, the automaker has made strides in conservationefforts and keeps environmental sustainability at the forefront of decisions. This philosophy isevident in the companys video environmental mission statement, which speaks volumes abouthow dedicated the automaker is to providing the vehicles its customers know and love while 4
  5. 5. creating some of the "greenest" SUVs.Parent company Tata Motors mission statement is "To beworld-class automotive innovators, and to help Tata Motors to develop world-class vehiclesthrough the advancement of its technical knowledge and its product engineering processes." Thismission statement is carried through to the Land Rover brand, with more innovation,diversification, and competitive products that better meet the needs of consumers.What Changes Might We See In the Retail Format and Target Market?Land Rover already has an ideal consumer (active male, high net worth demographic betweenthe ages of 35-54) but might be able to use some of the data in Retailing Communities to itsadvantage. While targeting "singles [who] are less likely to live in a rural area" would be a greatstart, a key selling point to "families [who] make slightly more trips and spend more money pertrip" would be the efficiency, luxury, and driving experience of the Land Rover lineup. Thesecustomers spend a great deal of time in their cars, and might appreciate what the automaker hasto offer.Sales figures for Land Rover are increasing rapidly and significantly, though the new carmarket has been shrinking. There are no plans to change the retail setting, described by theautomaker as: "The Land Rover Retailer setting is unique in the realm of retail automotiveexperiences, with an ambiance reflecting warmth, adventure and world exploration. Our relaxed,respectful sales process is one where a friendly and knowledgeable sales representative attends toyou the entire length of your visit." Because of the uptake in sales, mainly attributable to thepopular Evoque and the Asian market, Land Rover only plans on further expanding its retaillocations.Will the Automaker Remain Relevant? 5
  6. 6. Land Rover has made it out of a dark period in time during Fords ownership and is on the cuspof the "hyper-SUV" trend. After the big SUV/crossover boom in the early 2000s, a new trend ofexpensive, high-performance SUVs is starting to emerge. In 2002, Porsche defied all when itlaunched an SUV called the Cayenne, which has since become widely popular. Withnew/upcoming SUV offerings from Maserati, Lamborghini, and Bentley, consumers are willingto pay much more for "trendy" sport utility vehicles. Though many Land Rovers start at a muchlower price point, the new flagship supercharged Range Rover will easily compete at the low endof the market and with similar vehicles from BMW. Not to mention the upcomingAutobiography Range Rover, which starts at a mere $230,000+.The automaker is also beginningto diversify its portfolio, most notably with the Range Rover Evoque. One generally doesntassociate a Spice Girl with an off-roader, but the vehicle was in fact designed in team withVictoria Beckham. This diversification is slated to continue in order for the automaker to remainand become even more relevant.DB 3. Why Get a Car When You Can Own a Land Rover?Target MarketFrom Jeremy Clarkson of BBCs Top Gear to daddys little 20-something, Land Rovers arebought and driven by a very diverse group of consumers. There are consumers who purchase thehighly capable Range Rover with the intention of actually driving off roads, and then there arethose who think [and can afford to think] Cadillac Escalades and BMW X5s are cliché.However, the automaker has a fairly narrow idea of its target consumer. A recent case study byAdMob describes their clients target customer as "an active male, high net worth demographicbetween the ages of 34-54." The brand is successfully targeting these individuals according to a 6
  7. 7. 2008 article from Cars.com: "As the flagship of the Land Rover brand, and with its high pricetags, the Range Rovers demographics are impressive. The typical buyer is a professional orexecutive male, college graduate, with an annual household income of about $375,000."Trade AreasAccording to Chapter 8 of Retailing Management,many retailers use geographic informationsystems such as Claritas to define trade areas. In Claritass PRIZM segmentation, "Movers andShakers" are described as well educated, without kids, wealthy, and business-oriented. Thissegment is also said to drive a Land Rover Range Rover. Another (potentially untapped) group isthe "Winners Circle" who are similar but have children.The retailer should locate itself so theprimary trading area is in regions inhabited by these young, wealthy, adventurous demographics.The size of the primary trade area is quite large; Land Rover retailers are few and far betweenrelative to those of large department stores and even higher volume automakers such as Ford. Asthe map from SimplyMap in the Storify post shows, new cars purchased in places such asChicago, Arizona, the northeastern seaboard, and southern California are much more expensive.These are areas Land Rover could consider primary trading areas, whereas the middle of thecountry would be a tertiary area if at an area all. Secondary trade areas would consist of regionswhere its a far drive to purchase a Land Rover vehicle, but not unreasonable.Future and Emerging MarketsWhile the target market is overall not slated to change, Land Rover is beginning to target newconsumers with new, unique products to cater to a different audience. The best example by far isthe Range Rover Evoque, which is much smaller, lighter, less powerful, and inexpensive in 7
  8. 8. relation to the traditional Range Rover while retaining its siblings off-road prowess. DesignDirector Gerry McGovern talks about the Range Rover Evoques ideal consumer as younger,image aware, well connected, interested in social media, and wanting an emotional connectionwith vehicles. Chapter 7 of Retail Communities talks about how Twitter, Facebook, and othersocial media sites are playing a role in purchases. This group of "yuppies" who are engaged withsocial media is certainly an emerging market Land Rover is capitalizing on.In the future, LandRover will also be releasing and updating cheaper vehicles to appeal to a broader range ofconsumers. In an Inside Line article, Global Brand Director John Edwards talks about how thecompany will be going after more of the leisure segment, creating vehicles that are "functional,durable and affordable." This will help better cater towards the emerging segment of GenerationX buyers who are looking for larger luxury vehicles capable of family trips and moving largeamounts of equipment or luggage. The chart below reveals that over 40% of Land Rovercustomers were ages 28-45.DB 4. Land Rovers and Range Rovers and Evoques, Oh My!Merchandise AssortmentThe merchandise assortment of automakers relative to other retailers is quite unique. Land Roveris a part of a much larger organization, but the retailer technically only carries one brand – LandRover – though the argument can be made that the Range Rover is itself a subbrand. At theretailers locations, its unlikely to find a new vehicle bearing a different name unless the locationsupports other automakers. Often Land Rover retailers are found with BMWand/or corporate partner Jaguar dealerships. 8
  9. 9. Stages in the Product LifecycleWhen it comes to the product lifecycle, one might think such an old, well-established companywould be in at least the third stage, maturity. For several models in the mix this may very well bethe case, but because of strongly increasing sales and new models in the portfolio, Land Rover isexperiencing tremendous growth. For the past several decades, the retailer was stable, simplyselling exactly what its customers expected with little change after the initial creation of thecompany. Land Rover had a specific brand identity, and eventually Range Rover developed itsown as well. At this point the retailers merchandise was comfortable in the maturity stage.However, with the development of new models such as the Range Rover Evoque and themassive new Chinese market, Land Rover is without doubt back in the growth stage. Accordingto an article from the DailyMail, "In 2003, JLR sold just 431 cars in China. In the last financialyear it sold an astonishing 51,000 there, up 76 per cent on the year before, and by the end of thisyear China is likely to overtake the United States as the firm’s biggest market." Sales recordsarent just being broken in China either.Youre Special, and So Is Your CarSpecialty goods are products that have certain features, qualities, or identities that consumers arewilling to seek out, pay more for, and often sacrifice convenience for. As a specialized, luxuryautomaker Land Rover is most definitely a purveyor of specialty goods. Even the cheapestmodel, the LR2, starts at a fairly high price for its size and features. As noted in last weeksStorify post, the primary and secondary trade areas of the retailer are very large. Dealerships canbe scarce in certain areas, meaning consumers may need to travel a long distance to purchase aLand Rover. Luxury brands special goods can have high consumer loyalty, so special "loyalty 9
  10. 10. programs" mentioned in Chapter 8 of Retail Communities would not apply. These consumers aregoing out of their way to get exactly what they want, a Land Rover.Potential GapsAs a company with a very narrow merchandise assortment, there are many very large if notmassive gaps in the Land Rover portfolio. Small and mid-size luxury SUVs able to cope withrough terrain are all Land Rover makes. No minivans, sedans, coupés, convertibles, trucks, verylarge SUVs, sports cars, etc. are available from Land Rover. These are all potential gaps, butfrom the automakers point of view these gaps are necessary. As a specialty goods retailer, LandRover needs to retain its exclusivity and its precious brand identity. By creating a sedan or othernon-SUV, the identity of Land Rover is cheapened, so these gaps need to exist. In the past,though, there have been gaps that have been filled; and in the future, the automaker may attemptto manufacture a truck, taking care of a once-closed gap.DB 5. Location, Location, LocationIn What Areas Are the Retailers Located?Land Rover dealerships are typically located in larger metropolitan areas. In the map below, it isnoted that there are concentrations of retail locations in Los Angeles, San Francisco, Atlanta,Chicago, New York City, and Boston. To drill down further, though, the automakers locationsare frequently paired with sister company Jaguars or former sister company BMWs as wasmentioned in a previous post. One often finds several dealerships owned by the same individualin an "auto mall" of sorts, so Land Rover retailers can be found in an area with a plethora ofcompetitors. For example, the Troy Motor Mall in Troy, Michigan features automakers such as 10
  11. 11. Bentley, Lamborghini, Cadillac, Hyundai, Jeep, and Mazda in a very small area; all dealershipsshare the same owner.But Why?The reason behind the large number of Land Rover retail locations in major cities and lackthereof in many states is the target market: the populations in these metro areas are large, somany dealerships are needed to cater to the demands of many consumers; and many of thesecities and suburbs contain Land Rovers target market. Generally young to middle-aged, wealthy,educated male professionals live in cities and suburbs. When combined with SimplyMap data onnew car purchase prices from a previous Storify post, it is evident the dealer locations coincidewith high purchase prices and vice versa. Land Rover and other automotive dealerships arefranchised due to laws prohibiting automakers selling cars directly to consumers, so the retailerhas no direct say on where a dealer is located and/or the conditions of the lease agreement. Forthe majority of consumers who would be interested in a Land Rover vehicle, there is anaccessible dealership, though it may be nearly 100 miles away in areas marked in light bluebelow.Integration of Multi-Channel RetailingConsumers make new automotive purchases almost exclusively through brick-and-mortardealerships franchised from the automaker. However, with the rise of mobile technology and e-commerce, there is room for Land Rover to innovate how it sells its luxury SUVs. The Wiredarticle in the Storifypost describes how fellow automaker Tesla uses "boutique" stores in high-end malls to educate customers. All purchases are done through an online system available at the 11
  12. 12. stores or at home. While this could potentially help Land Rover reach customers in the tertiarytrade area, it might not be cost effective, and Tesla is currently in a lot of hot water for its retaillocations and online system.DB 6. Land Rover’s Pricing As a premium automotive retailer, Land Rovers vehicles are almost always at the highend of the price range. Even the entry-level LR2 starts at over $35,000; add a few popularoptions and its $40,000. In order to remain a high-end automaker and keep the value of the LandRover and Range Rover brands, Land Rover must bring to market only products that are highquality with an MSRP to match. Other manufacturers have been going down-market, cheapeningthe brand in the process; this is something Land Rover has successfully avoided. Due to lawspreventing automakers from selling vehicles directly to consumers, the exact prices consumerspay for vehicles can vary greatly, especially with luxury automobiles. The MSRP, ormanufacturers suggested retail price is what Land Rover recommends its dealerships sell thevehicles for, but many consumers are able to negotiate a lower price still within the dealersprofit margin.Pricing PolicyThe specific pricing is set by each dealership, so almost all discounts and other specials are donethrough each according to the supply/demand in the area, current inventory, and overhead costs.Often deals are given on outgoing model years and older designs. Currently the 2013 model yearvehicles are arriving, so some dealerships are discounting 2012 models in order to move theinventory. Current offers and specials are often shown on dealers websites, in local newspapers, 12
  13. 13. or on local television. While almost all specials are done through dealerships, Land Rover doesoffer similar specials that are available at all participating dealerships. Some consumers also takeadvantage of Costcos Auto Program, which gives members a discounted price based on averagesale price and what the dealer pays the manufacturer. The program is designed to satisfy theconsumer need to negotiate and bargain with dealerships. As the website notes, the MSRP of a2012 Land Rover Range Rover Supercharged with a few options is $98,970. By purchasingthrough a Costco partner dealership, a consumer would save nearly $9,000. In a recentEuromonitor article entitled I Don’t Need to Have It All – Thrift and the Under 35s Worldwide,the author notes that many consumers in foreign countries are going without a car. Stateside, thisisn’t as much a case, but it’s noted that in a Consumer Reports survey “75% of hagglers weresuccessful in getting a lower price.” “37% of those under 35 said they always or often asked fordiscounts,’” which could be a problem for the luxury retailer. However, the retailer could simplydirect cost-conscious consumers to the Costco program, showing how much money can besaved.Loyalty ProgramsWhile the retailer does not have a loyalty program, Land Rover and LR dealerships do offerloyalty incentives from time to time. For example, Land Rover Canada is offering $5,000 off anew Range Rover for current Land Rover owners and lessees. In an article from Luxury Daily,industry expert Al Ries states, "Many automobile customers are very loyal to their currentvehicles. When a Range Rover customer needs a new car, he or she tends to trade in an oldRange Rover for a new one.” This shows that whether or not the specials themselves areeffective, consumers are very loyal to the company and the automobiles. 13
  14. 14. DB 7. Land Rover’s Communication MixPaid CommunicationConsumers are continuously bombarded with specials and deals on automobiles through avariety of media. There are advertisements for countless local dealerships in the dailynewspapers, on the radio, and on television. Some dealerships even use direct mail and email. Anautomobile purchase is a highly involved process, so many retail locations try to move theirexpensive inventory as quickly as possible. By making their name, location, and currentpurchase/lease offers known, dealerships can attract more potential customers who may have notknown of or forgotten the businesss existence. Land Rover is no exception to this concept. Openany Sunday newspaper and youre likely to find an advertisement for Land Rovers.In a National Retail Foundation article entitled “Goosebumps, Giggles, and Gadgets,” the authorremarks how retailers use Super Bowl commercials to create a connection with the brand and theviewer. Land Rover definitely has a big opportunity to increase their TV presence and create aviral video such as VW’s “Star Wars Kid” commercial. However, promotions arent the solemethod of Land Rovers paid communication mix. In addition to the companys simple, wellorganized website, the retail locations are highly similar in appearance inside and out. Theoutside always consists of two main colors: beige or brown and the traditional "Land RoverGreen." Some even have stone fasciae or look like a large log cabin, making the essence of thebrand evident. Another main feature of the retail locations is a Land Rover vehicle propped upon rocks or logs or something else to show off the automobiles off-road skills. According to theretailers website, most dealerships feature a Rock Course Test Drive where associates driveconsumers through a "Demonstration Course, which vividly demonstrates the strength and 14
  15. 15. capabilities that have made Land Rover vehicles legendary on all seven continents." Of coursethere are also demo models dealers are required to have on hand if customers request a testdrive.The identity of the adventure-driven automaker carries forth inside the dealerships. Withwood details, fireplaces, and kayaks propped up against the wall, the companys brand identity isobvious. The rustic chic interiors help foster what the automaker calls The Land RoverWay: "The Land Rover Retailer setting is unique in the realm of retail automotive experiences,with an ambiance reflecting warmth, adventure and world exploration. Our relaxed, respectfulsales process is one where a friendly and knowledgeable sales representative attends to you theentire length of your visit." The store atmosphere instills inside many customers a sense ofadventure while the salespeople satisfy their clients needs using a no-pressure approach.Personalselling is a major concept in the automotive industry, especially with luxury vehicles. The mainbenefit of personal selling in this industry is its flexibility. By paying attention to individualconsumer needs, sales associates are able to direct consumers to the exact model, suggestoptional extras, and answer any questions customers might have. Land Rover customers are alsoable to go online to "Build and Price" the Land Rover of their choosing. Afterwards, they canprint off the information, bring it to a dealership of their choosing, and have someone guide themthrough a hands-on vehicle experience. Another way Land Rover spends money to market itsautomobiles is through launch events and attendance at auto shows around the world. Theseevents may be mostly for the glitterati, but they certainly make a splash in the automotiveindustry. Subject matter experts, celebrities, and the media were all recently invited to one of themany recent events celebrating the all-new 2013 Land Rover Range Rover. Perhaps the mostrecent example of indirect paid communication is Jaguar Land Rover’s presence in the film 15
  16. 16. Skyfall. Range Rovers, Range Rover Sports, and even a Range Rover Evoque were all featured,not to mention the European-spec Defender in the opening scene.Unpaid CommunicationLand Rover and many of its competitors benefit greatly from such publicity. There are a plethoraof companies such as Motor Trend magazine,Automobilemagazine, and the British televisionshow Top Gear that review new cars, alert readers of recalls, provide commentary on theautomobile industry as a whole, and compare offerings from various manufacturers. A greatnumber of consumers turn to these sources of information when purchasing a new vehicle.According to MRI+ Automobilemagazine has a circulation of 571, 321 consumers who are likelyto be influenced by the articles and industry commentary. Good publicity from theseorganizations helps retailers such as Land Rover increase their visibility and their sales. Forexample, Motor Trend annually gives away the highly coveted "Car/SUV/Truck of the Year"award. The recipient of the 2013 SUV award was the Mercedes-Benz GL. It is likely thatMercedes will have a direct benefit, and its possible Land Rover sales will be negativelyaffected. Word of Mouth may not be as influential in the automotive industry as it is elsewhere,but consumers do share great and terrible experiences with others. A July 2012 Mintel report –Car Retailing UK – shows that 33% of consumers used the opinions of friends and family inresearching a car. This is mainly because of the highly involved nature of automobile purchases.Its not as simple as returning the vehicle. Satisfied Land Rover customers may recommend theirfriends purchase a Land Rover or purchase from a specific dealership. This goes both ways,though; if a consumer has a bad experience, he may not return, not even for regular maintenance.This can be a major disadvantage to any retailer. 16
  17. 17. Cooperative AdvertisingLand Rover and its dealerships do take advantage of cooperative advertising. Dealerships havea liaison that coordinates with the main company - Land Rover North America - on advertising,new product launches, and press fleets. This beneficial relationship not only allows dealers to usemore advertisements without a large ad budget but also makes it possible for Land Rover toprevent advertising that harms the brand image. After decades of building brand equity, it isimperative the automobile manufacturer keep the retail experiences and ad campaigns the sameacross the board. Dealer-specific ads inform consumers about regional deals and direct them totheir local Land Rover dealership; many of these are aired on basic network channels and onlocal radio stations. In contrast, advertisements developed and paid for by Land Rover arentregion-specific and feature nation-wide promotions.Another concept worth noting here is thehalo effect. While the retailer and the dealerships partner on some advertising costs, Land Roverpays for the national ad campaigns. These are normally on cable and satellite networks, but theystill inform consumers. In this fashion, dealerships can directly benefit from these advertisementswithout having spent money. The halo effect carries through to the dealer experience as well.Consumers have an idea of a Land Rover dealership experience, and this is applied to all thedealerships. This can be negative, though. For example, if a customer has a bad experience at anunder-performing dealership, he may project this experience onto other retail locations and thecompany as a whole.DB 8. Land Rover LayoutDealership Layout & Design 17
  18. 18. As is the case with many automakers today, Land Rover dealerships tend to look and feel verysimilar not only on the exterior, but also the interior. Inside Land Rover dealerships, theatmosphere is very relaxed with a sense of adventure emanating from the use of natural woodand stone. Due to size restrictions, many locations use a free-form layout; 4-6 popular modelsand trim levels are placed here and there as freestanding displays inside so potential customerscan experience a Land Rover in comfort. Located around the perimeter of the showroom aredesks and offices of managers and sales agents. Most retailers also feature a small lounge withliterature, chairs, a television, and a fireplace, and all have an "Adventure Center," wherecustomers can learn more about the adventuring aspects of their vehicles. Embedded in theStorify post is a video of a Land Rover dealership someone designed using Google SketchUP.Many of the traditional Land Rover design elements are seen in the mock-up.Outside in theparking lots, however, the automobiles are arranged in a grid layout, parked in neat rows(normally) according to model and trim level. This makes it easy for a consumer to look at twoof the exact same vehicle in a different color or try out a feature they arent sure they want. Bothof these layouts are effective in promoting customer flow. Consumers are able to look at LandRover literature in addition to looking at and climbing into a few select models. They are able togo in any order they wish and explore the vehicles to their desire in a very nice environment. Onthe retailers website Land Rover states: "Our relaxed, respectful sales process is one where afriendly and knowledgeable sales representative attends to you the entire length of yourvisit... Genuinely pleased to assist, these Land Rover enthusiasts employ an educated, no-pressure approach to describing vehicle features and capabilities."Dealership Atmospherics 18
  19. 19. According to the retail radar, there’s a 98% chance of adventure in Land Rover dealerships witha slight possibility of sales. The most notable and arguably most important fixtures in the LandRover retailers are the vehicles inside. If its cold, raining, or hot outside, consumers can escapeto the showroom to play around with the cars or have a sales associate take them through thefeatures and capabilities. Other fixtures such as seating and literature bookshelves are alsoimportant; in the retailers locations these are tasteful and blend into the overall décor. In theimage below, one can see all the decorative fixtures that enhance the feeling of adventure.Though many Land Rover consumers dont take their vehicles off road, its important to maintainthe companys brand identity. Compared to competitors retail locations, Land Rover certainlystands alone in this aspect.The lighting in each location is primarily used to highlight eachvehicle. Looking at the Storify photos, one notices a profound use of track lighting; this is doneso that cars in the showroom can be arranged in a variety of different ways. Because windowsare such a prominent feature in each dealership, there is little need for additional lighting in theshowroom during the day. However, one will note the use of traditional fluorescent lights in theoffice area in the above photo. The large amounts of natural light help consumers to feel as ifthey are in a more natural setting, unlike in a grocery store where they are bombarded withfluorescent lights. The colors also help to create a natural, calm mood inside the dealerships.Warm, neutral colors are almost exclusively used, in addition to the standard Land Rover green.Many of the tones and natural stone/wood effects help soothe consumers by creating a relaxingatmosphere.Music may or may not be used in Land Rover dealerships, depending on thedealership owner/managers request. Dealerships can often be empty and rather quiet, so playingmusic in the background would certainly make a positive impact. Almost all Land Rover (andother) retail locations have a television in the lounge area, allowing consumers to sit and enjoy a 19
  20. 20. kids program, the local news channel, or a Land Rover video. Music might be too much in thatcase. The scent of a Land Rover dealership, however, is very important. Many consumerslove the "new car smell," and as an automaker that uses natural woods, wool, alcantara, andsome of the finest cow hides in the world, Land Rovers lineup certainly has a scent. This scentmakes a dealership visit pleasurable, but according to some new information, the scent itself maybe very dangerous. However, Land Rover and its competitors typically use higher-end materials,so the smells are more often fresh leather than flame retardant chemicals. These smells coupledwith the overall décor cater to Land Rovers target demographic of middle aged, wealthy,adventurous males.DB 9. Land Rover Customer ServiceMaintenanceLand Rovers many retail locations offer much more than new and preowned vehicles. Whileselling automobiles is a major purpose of dealerships, providing service for the customers ishighly important. Land Rover dealerships are able to perform the routine maintenance on LandRovers and Range Rovers, and some have the capability to repair major bodywork. When itcomes to automobiles, customers are very concerned about service. Howard Orloff Land Roverstates the following about its service: "We are proud to provide the Land Rover service Chicagocounts on. Our factory-trained and ASE-certified technicians undergo regular training sessions tolearn the latest techniques in automotive repair and to master the latest innovative diagnosticequipment. With the expert assistance of our auto parts specialists, our service team is able todiagnose and repair your Land Rover or Range Rover swiftly and efficiently. Our promise to youis this: we’ll always strive to fix it quickly and correctly, and fix it right the first time." In the 20
  21. 21. Journal of Retailing article “Technical complexity and consumer knowledge as moderators ofservice quality evaluation in the automobile service industry” it was found that “perceivedfairness of the facility and its personnel was more important than empathy, responsiveness,reliability, and convenience. For Land Rover, this means more focus should be put onmaintaining fair practices and getting the maintenance done properly than on convenience.Adventure ServicesAs a lifestyle brand, Land Rover doesnt stop at producing cars and servicing them. The companyis very involved in events and actively engages with its consumers. Land Rover offers"Experiences" consisting of driving schools and annual exotic treks. One such school is locatedon the Biltmore Estate in North Carolina. On the 8,000 acre property there are vehicle trails usedby the Land Rover Driving Experience to test every facet of the manufacturersautomobiles.These special events are not exclusive to the international retailer, however. Manydealerships have their own local activities for their respective clients. While many consumerswould never dream of actually taking their off-roading SUVs off the roads, there is a largedemographic who occasionally feel differently. Howard Orloff Land Rover in Chicago, IL is onedealership that brings these unique experiences closer to its consumers. Multiple times per year,this retail location hosts off-road events that consumers and Land Rover enthusiasts can attend.In addition to simply driving on a special course, participants can attend family-orientedactivities that align with the automakers adventuring image such as the fishing contest. As thevideo in the Storify shows, many consumers outside the target demographic (families, youngwomen, etc.) are involved in the events. 21
  22. 22. ComplaintsAll Land Rover dealerships are held to a certain standard by the company. That being said mostof the customer service is done through the individual dealerships because consumers purchasevehicles from the dealers not the automaker. Hardly ever will a dealership accept a return on avehicle, especially one at such a high price point. To prevent complaints and Buyers Remorse,Land Rover sales associates use a very personalized approach, finding exactly what a consumerwants/needs and satisfying them. More often there are complaints about the dealers servicedepartment. If a customer has complaints, the service department can try to remedy the issue bynot charging for the service, redoing what had been done, or what is applicable in the situation.However, many consumers remain unsatisfied and choose to switch dealerships, take the vehicleelsewhere for service, or even sell the vehicle as the customer in the review shown in the Storifydid. Consumers are also able to contact Land Rovers Customer Relationship Center if necessary;the automaker will intervene if it is evident there is a service gap that isnt in line with thecompanys policies.Employee EmpowermentDealership sales associates are the direct negotiators with consumers, so they are able to reducethe selling price of a vehicle and negotiate other terms of the sale within reason. Mostdealerships have a certain limit above the break-even point where an associate cannot sell theautomobile without managerial permission, however. By empowering the sales team, consumersget an independent, customized sales experience; the managerial oversight makes certain that thedealership is able to profit on each vehicle sold. When it comes to service, things are different. Ifa customer has a complaint, the service manager normally deals with the situation and is 22
  23. 23. generally the only individual with the power to discount a service. However, the services are notnegotiable.Mystery ShoppingIn contrast to most other retailers, mystery shopping in the automotive industry is not veryprevalent. The price point of Land Rover vehicles is much higher than that of products at Chaneland Saks Fifth Avenue let alone at Wal-Mart and Macys, but with that comes a highly involvedpurchase process; consumers put much time and effort into the purchase, so automakers anddealers need to make sure the process is exceptional. Therefore, automakers and outsideorganizations such as Pied Piper do engage in the use of mystery shoppers to evaluate the salesprocess, dealer quality, and service department. The group Pied Piper annually publishes anautomotive industry satisfaction index. Its worth noting that in the past year Land Rover hasfallen by one point to below average customer service.Market research is very important tomystery shopping; Land Rover needs to appeal to a certain unique demographic. A mysteryshopper who is 38, male, wealthy, travels a lot, and active outdoors will feel much differentlytowards a Land Rover dealership and the sales process than a shopper who is 22, female, high-strung, hipster, and eco-conscious. Turning the situation around, however, Land Rover could usemystery shoppers who align with another demographic that is purchasing their vehicles toevaluate why these customers enjoy the vehicles and how the sales process can be customized tobetter service them.What Consumers Are Actually Saying! 23
  24. 24. Janie is an older woman who doesnt travel or spend time outdoors. She is very wealthyand purchases luxury SUVs because of their practicality. Very recently she sold her LandRover Range Rover because it spent over 2 months out of the year at the dealership forservice. Janie was very satisfied with the sales process, but highly unsatisfied with theservice cost and quality. "Overall it was just an unreliable car, and they couldnt fix it"she said.Jake is a "yuppy" (young professional) who is wealthy, adventurous, travels frequently,and is highly brand-conscious. On his purchase he commented, "Range Rovers arentreliable, but its not that important to me." So far he has been very satisfied with theautomobile; Jake saved money by purchasing a used vehicle and hasnt had any majorservice issues yet. His dealership gave customers a free first service as part of apromotion.Stephen is a successful doctor with several children and a wife who heads a law firm. Thefamily frequently travels and occasionally spends time outdoors. He is a car collectorwith several notable vintage pieces, and the cars they drive are all high-end. He and hiswife recently traded in her BMW for a Range Rover Evoque Coupé. "The salesman wasgreat - very helpful. Much better than last time I was there looking to purchase a car."Stephen continued to go into great detail about how his local Land Rover dealership hasdone well under new ownership since BMW sold Land Rover.With these consumers, it appears there is more of an issue with reliability than dealershipservice. Land Rover hasnt been known for making reliable automobiles, but recentmodels have improved. However, they also show than there is room to improve when itcomes to retail locations. 24
  25. 25. DB 10. Land Rover v. Mercedes-BenzLand Rovers Brand ImageLand Rovers primary advantage is that it is a definitive lifestyle brand. The very essence of aLand Rover vehicle channels adventure, capability, luxury, and status, especially the flagshipRange Rover, which many consider a subbrand in of itself. In an interview Paul Melhuish,Marketing Manager of Land Rover South Africa, states, "The Land Rover brand epitomizesauthenticity and supremacy, the heritage earned gives the brand these characteristics/qualities asbeing proven and the real thing. The other important brand personality is that of individualism.One of the strongest aspects that the brand symbolizes is that of adventure – consumers perceivethe brand as a symbol of adventure and exploration. This together with the traits of individualismand authenticity present the Land Rover brand image as one of the strongest and mostestablished in the world."When it comes to other automobile manufacturers, there is no other thatcan compete with such a unique and strong identity. Many competitors have a strong heritage aswell, but have since diversified their lines so much to serve more than just a niche group ofconsumers. Take, for example, BMWs motorsport heritage - perhaps one of the most recognizedin the world. One can still purchase a race-tuned BMW M3, but there are 70+ other models,many of which do not carry forth the motorsport prowess the automaker was once known for.While Land Rover is currently expanding its lineup, looking to double annual sales by 2020, thecoming models will hold true to the Land Rover identity.Land Rovers Off-Road ProwessThe main component of the automakers brand image is off-road capability. This key aspect is 25
  26. 26. carried forth through all current models from the entry-level, sub-$40k LR2 to the Range RoverAutobiography Ultimate Edition. And even though the Range Rover Evoque was designed inpart by Spice Girl Victoria Beckham, it can hold its own off-road. While many Land Roverconsumers wouldnt dream of taking their precious luxury SUV off the highway and out of themetropolitan, it is important to other customers that Land Rover is certainly a class leader whenit comes to driving on very rough terrain.In fact, no other automaker can attest to makingexclusively vehicles that are not only some of the most luxurious available but also share the off-road capabilities that Land Rovers have. However, in the world of rough terrain, go-anywhere4x4s, two competitors stand out: the Mercedes-Benz G-Class and the Toyota Land Cruiser. Bothare currently still on sale, are currently used throughout the world as serious off-road vehicles,and have a high price tag that brings refinement to the world of off-roading. The key differencebetween Toyota and Mercedes-Benz and Land Rover is that only Land Rovers off-road pedigreeis applied to all models in the lineup.Mercedes-Benzs AdvantagesMercedes is one of Land Rover’s close rivals. They offer many luxury automobiles, includingtwo SUVs that consumers generally use to trek off the highways, the GL-Class and the G-Class,the latter of which is much more specialty and capable. Interestingly enough, many consumerswho aren’t looking for capability but for status also purchase the G-Class.The difference incapability between the Land Rover Range Rover and Mercedes-Benz G-Glass is negligible. Bothare incredibly suitable over rough terrain, and each has a luxurious interior, though manyconsumers prefer the Range Rover. The G-Class is a much lower-volume seller than any of LandRovers products. The GL-Class is a direct competitor with the Range Rover, though its larger. It 26
  27. 27. doesnt share the capability off the road, but many consumers look to this SUV when searchingfor a Range Rover alternative. It’s also worth noting the GL was Motor Trend’s SUV Of theYear, a highly commendable feat; it’s likely Land Rover consumers will purchase a Mercedes-Benz GL because of this. Where Mercedes comes into its own, though, is with diversity. Aconsumer who wants something other than an SUV is tragically disappointed by Land Rover, butnot Mercedes. The German automaker has small cars, large cars, convertibles, SUVs, andeverything in between; it even has coupés with 4 doors! Land Rover sells exclusively SUVs. InNovember 2012, data from BIGInsight’s Auto Insight Center shows that over 50% of vehiclespurchased in the last 6 months by consumers in the survey selected a car, not an SUV, minivan,or other alternative.However, Mercedes is looking to go into the off-roading market even furtherwith the new Ener-G-Force concept [possibly] aimed at Land Rovers European Defender andDC110 concept. If the MB model comes to the market and is very successful, it could meanproblems for LR.How to Maintain the Advantage, You Ask?This shouldnt be hard for Land Rover. Land Rover is a lifestyle brand whereas Mercedes-Benzis not (or is at least less of one). The British, once-German, once-American, now-Indianautomaker is known for its luxury, off-road capable sport utility vehicles and nothing else. LandRover has been expanding its lineup very recently and is planning to continue to do so; however,this will be done without harming the brand image. By diversifying in this fashion, the retailerwill be able to reach more consumers without alienating the die-hard Land Rover fans.Mercedes-Benz has simply chased profits and really hasnt looked to maintain much more than a 27
  28. 28. brand image of "luxury." Land Rover, in contrast, is going after profits but without its Germancompetitors wild abandon. 28

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