MCOM4040 Marketing and Communications: Addison Lee Company

The Marketing Director has announced a new objective for the company:

To grow the Addison Lee car service business by 3% by targeting a younger demographic of 16 – 25-year olds by June 2018.

1. Explainthe concept of market segmentation and its importance in planning a marketing strategy for Addison Lee
2. Discusstwo (2) segmentation approaches that Addison Lee could adopt when segmenting the market for 16 – 25-year olds

Task 4: Marketing mix

1. Using the 7ps, Identifyand describe Addison Lee’s current marketing mix using appropriate examples for each of the 7P’s
2. Recommendchanges to the Product, Price and Promotion element of Addison Lee’s marketing mix (7ps) which will enable the business to achieve its desired objective, of 3% growth in their car service business by targeting 16-25-year olds

Answer:

Introduction 

Addison Lee is a UK based organization that is founded in the year 1975 and provides private hire services. The company is operating its business operations from more than 40 years and offering a variety of international, same day, mobile and client-focused delivery services via coaches, minicabs, taxi bikes and private jets. In 1975, company was founded by John Griffin as pace Croft Limited. It operates more than 4000 vehicles and earns more than £900m annual revenues (Addison Lee, 2017). This report includes different marketing aspects about Addison Lee on the basis of given case study. It describes the evolution of marketing, marketing environment of Addison Lee, marketing strategies and marketing mix for the company. At the end, it includes some recommendations to make changes in the 7Ps strategies of Addison Lee.

Task 1: Evolution of Marketing 

Production 

In marketing, production is the process for developing the products and services with the objective of selling them to generate profits. In the case of Addison lee, production will involve the inclusion of new GPS system that is installed to track the vehicles of the company. Moreover, the company is introducing a mobile app that was introduced with the objective of shifting its business model to business to consumer (Armstrong, et al, 2015). These both are the major part of its production as both of them have brought up the sales of Addison Lee.

Product

Product of the Addison Lee includes the hiring services, which are provided to the travellers in UK through taxi bikes, minicabs, coaches, jets etc.

Selling 

When the products and services are introduced, it is vital to sell it to the targeted customers. Addison Lee offers its services through its website and mobile application, so it generates 25% of its sales from its website and 50% from mobile app. It is increasing its customer base from both the application and website. In addition to this, the number of downloads on Google Play Store has been increased since its launch that is the obvious evidence that the business of Addison Lee is growing and its sales strategy is effective (Baker, and Saren, 2016).

Marketing Orientation

Marketing orientation is the philosophy of company that is emphasized on finding and satisfying the needs of customers via its products.  It has introduced a mobile application, ETA model, driver tipping service and sending personal mails to the customers about their offers and discounts. Moreover, it is offering discounted deals and altered its company logo to give a superior look.

Orientation adopted by Addison Lee

The orientation that is implemented by Addison Lee is targeted to overhauling the branding and marketing strategy of the company. The mission of Addison Lee is to gather the traffic from new target market. It has changed the brand logo that has different look. The company has done this to grab the attention of market (Andrews, and Shimp, 2017). It is making investment for enhancing the customer experience. To attain that, it is working on the information system and providing GPS service and ETA. Addison Lee is giving value deals and customized offers to its customers by sending them personal e-mails. It has emphasized on weekend fares and tipping the drivers. It is increasing number of vehicles to handle the increasing demand for private hiring services.

Task 2: Marketing Environments

Marketing Environment and its importance to Business 

Marketing environment can be defined as the internal and external factors, which affect the ability of the company to maintain the growth and develop relationships with customers. These factors affect the performance of organization and its position in the market. It is very important for the Addison Lee to conduct SWOT and PESTLE analysis for analyzing its market. When it is about developing marketing strategy, they should consider both micro and macro environmental factors. It is important because lack of awareness about environment can increase the chances of failure of business strategy (Dawson, 2014). It is very important to analyze the external factors, like; political, economic, technological, social and legal factors, which may impact the growth of company in a specific market. Furthermore, SWOT analysis assists in understanding the strengths, weaknesses, threats and opportunities of the organization. So, the managers and leaders focus on environmental analysis before creating a new marketing strategy.

Macro Environment Analysis: Economic Factors 

Under environmental analysis, economic factors include such as; inflation rate, GDP and buying power of customers. These factors have large impact on marketing decisions of company. Addison Lee operates its business in London and it is one of the richest cities in United Kingdom the efficiency to adopt modern technologies (Keller, 2009).  80% of population in UK is from the urban area that shows that there is the good market for taxi hiring firms. Currently, rate of inflation has increased in the year 2017 as compared to year 2016 that is affecting the purchasing power of people. Due to this, people prefer to travel in public transportation than private taxies. It will have an adverse impact on the business and growth of Addison Lee in UK. Thus, it is a threat for the company.  

Socio-cultural Factors 

These factors focus on the society, family, media and other social factors. These may affect the opinions, buyer behavior and attitudes of the customers. The country has urban population and customers are using advanced technologies. It forces the customers towards taxi hiring services in London. In addition, the people are getting the benefits of carpooling services through digital marketing. There is a perfect market for Addison Lee’s services (Luttrell, 2016).

From both the above mentioned factors, social factors are creating market opportunities for Addison Lee. 

Micro Environmental Analysis 

In London, there are two major competitors for Addison Lee, i.e. Uber and Hail. Both of these organizations have been offering the app and web based services and operating the business very well.

Hail is one of the biggest competitors of Addison Lee, which is owing to free rides and significant discounts that it provides to customers. It can force Addison Lee to offer the free coupons and discounts (Percy, 2014).

Uber was the biggest player in the London taxi hiring industry, but currently, the Uber’s license has been cancelled, which is a good sign for the growth of Addison Lee in UK. Before this, Uber was the biggest threat for the case company.

Internal Environmental Factors 

Strengths 

One of the major strengths of the company is that it has diversified its service range and attracted various customers. By this, it has become one of the well-established brands in London. Other strength of Addison Lee is its mobile applications. When the people are going mobile and they have access to the smart phone, it was imperative that it introduces it application. In 2009, it launched its mobile app for booking the rides (Yuan, 2013).

Weaknesses 

Addison lee has established its business in taxi hiring services, but still it is behind its competitors in the area of carpooling services. It is one of the major weaknesses of company as there is the increase in business of carpooling services. Apart from this, the organization has maintained its brand image in providing the better services. But, the organization is not taking the feedback from customers (Thorson, and Moore, 2013).

Task 3: Marketing Strategies 

Market Segmentation and its importance 

Market segmentation is the approach of categorizing the whole market in different segments on the basis of different characteristics, like; income, race, demography, age group, purchasing power etc. This process is used by the organization to target the rights customers as per the products. Under this, the company divides the customers according to the similar demands, choices and preferences. For strategic planning of Addison Lee, it is very important to segment the market. By market segmentation, the company will be able to target the right customers and implement the strategies accordingly. It will assist the organization in approaching the right set of audiences (Shimp, 2008).

Segmentation Approaches 250

Demographic:

It is the most important and common segmentation approach that is used by an organization. Demographic characteristics include sex, age, occupation, income, education level, religion, social class and ethnic status. At Addison Lee, this approach can be used as they have targeted the market on the basis of age group, i.e. 16-25 years old. People are in this group will come under an income level, thus giving a segmentation group to the organization. At the same time, the company can consider some other factors, like; family size, income, sex etc., which will assist the organization in targeting the right people for its taxi hiring services (Young, 2014).

Behavioral Approach:

This approach of market segmentation is very innovative in the nature because it only emphasizes on why the customers purchase the products. This approach shows the behaviors of people towards products, which may include the loyalty, usage and benefits of services. By considering this approach Addison Lee needs to take the feedback and response of customers and modify the services accordingly. The company can consider the benefit responses on the basis of brand image, economy and resale value of services (Oh, and Oh, 2017). The usage response categorizes the users based on medium, heavy and light users and then targets them. Thus, for the given objective, i.e. “to grow the Addison Lee car service business by 3% by targeting a younger demographic of 16 – 25-year olds by June 2018”, above segmentation approaches are beneficial and will assist the company is attaining the objective.

Task 4: Marketing Mix :  7 Ps of Addison Lee 

Product

Product strategy of the company includes the design, value, quality, technology and packaging of the products, which are offered by it. Addison Lee is offering the private hiring services in London, United Kingdom (Skok, and Baird, 2005). Product of the Addison Lee includes the hiring services, which are provided to the travellers in UK through taxi bikes, minicabs, coaches, jets etc.

Price

Pricing of a company may include different strategies, like; penetration, skimming, value based and cost based, which are adopted by the organization to sell its products and services to the customers. Addison Lee is implementing price skimming strategy, under which it is penetrating the marketplace by keeping the prices lower and in this way it is skimming the market. There are some premium options, which are available to Addison Lee (Bitsch, et al, 2017).

Place

The company is operating its business operations in 350 cities since its establishment in the year 1975 (Addison Lee, 2017).

Promotion

For promoting the services, company is providing various discounts and offers by customized deals and giving free and loyalty rides to its regular customers. The company is providing free coupons for the first time users and giving referral benefits (European Commission, 2016).

People

At Addison Lee, the management is well-experienced and drivers are well-trained about the values and ethics of company and it also made familiarized with the technology, which are getting used in the cabs and taxies. Human resources are the major aspects at Addison Lee.

Processes

Addison Lee utilizes its mobile application and website for its business operations. The customers can book their ride using the app on their smart phones and drivers track their location. After taking the ride, they can pay their bills using debit card, credit card, cash, Apple Pay, PayPal or Addison Lee’s wallet.

Physical Evidence 

Currently, Addison Lee has changed its logo to give it a premium look. It has different vehicles, like; jets, Toyota Cars, taxi bikes etc. for its target audiences that enhance the brand image among people (Young, 2014).

Changes in the 7 Ps of Addison Lee 

Product:

Addison Lee should make focus on the pushing its mobile app to each smart phone user in the state, it is running in. The company should completely operate its business on the basis of app model and stop investing money on company’s website maintenance. It should diversify its service range and make the carpooling services stronger, which will assist the organization in increasing in customer base. With its hiring services, the company should offer free rides and quality services to retain the customers (Wallsten, 2015). It should fix built-in screens in its taxies and cars, which will make it easy for the drivers to follow the navigation map and route. In addition to this, it should install the computer gaming system in the vehicles, so that children can enjoy the ride. It will assist the organization in attracting the customers towards its services.

Price:

It is the major important part of the marketing mix strategies. Addison Lee should make focus on the pricing strategy and it should implement the cost based pricing, that will be instilled with the occasional coupons and discounts to its first users and rewards to the regular customers.

 Promotion: 

The company should promote its services on the social media, like; Facebook, Twitter, Instagram etc.  The organization need to make focus on its promotion among its targeted audiences. It should target the young people, i.e. age group of 20 to 29 years, as they are using social media and networking sites more than others (Rose McGrory Social Media Ltd, 2017). It can be evidenced by looking at below graph:

Figure 1: Social Media Users in UK

(Source: Rose McGrory Social Media Ltd, 2017)

It should allow the customers to post their reviews and feedback about the rides and give ratings on social media sites. It will assist the organization in enhancing its brand image and its hiring services (Addison Lee, 2017).

Thus, Addison Lee is offering the hiring services by using new and innovative ideas. The report shows that marketing environment and its strategies are beneficial for the growth and success of organization.

References 

Addison Lee, 2017, London’s premier car service, Accessed From: https://www.addisonlee.com/

Andrews, J.C. and Shimp, T.A., 2017. Advertising, promotion, and other aspects of integrated marketing communications. Nelson Education.

Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.

Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.

Bitsch, J., Brochstedt, S., Holm, A.H. and Knudsen, A., 2017. The role of stakeholders in relation to the business model in the taxi industry. Proceedings of Pragmatic Constructivism, 5(1), pp.3-1

Dawson, J.A., 2014. The Marketing Environment (RLE Marketing)(Vol. 1). Routledge.

European Commission, 2016, Promotion channels and tools, Accessed from: https://ec.europa.eu/ipg/go_live/promotion/channels_tools/index_en.htm

Keller, K.L, 2009, Building strong brands in a modern marketing communications environment. Journal of Marketing Communications.

Luttrell, R., 2016, Social Media: How to Engage, Share, and Connect, Rowman & Littlefield

Oh, Y. and Oh, J., 2017. A critical incident approach to consumer response in the smartphone market: product, service and contents. Information Systems and e-Business Management, 15(3), pp.577-597.

Percy, L, 2014, Strategic Integrated Marketing Communications. Routledge Publications.

Shimp, T.A, 2008, Advertising Promotion and Other Aspects of Integrated Marketing Communications. Cengage Learning.

Skok, W. and Baird, S., 2005. Strategic use of emerging technology: the London taxi cab industry. Strategic Change, 14(6), pp.295-306.

Rose McGrory Social Media Ltd, 2017, UK Social Media Statistics for 2017, retrieved from https://www.rosemcgrory.co.uk/2017/01/03/uk-social-media-statistics-for-2017/. 

Thorson, E. and Moore, J. eds., 2013. Integrated communication: Synergy of persuasive voices. Psychology Press.

 Wallsten, S., 2015. The competitive effects of the sharing economy: how is Uber changing taxis?. Technology Policy Institute, 22.

Young, A., 2014. Brand media strategy: integrated communications planning in the digital era. Springer.

Yuan, H., 2013. A SWOT analysis of successful construction waste management. Journal of Cleaner Production, 39, pp.1-8.