The major objective of the report is to analyse the current performance of the premium car brand, Jaguar. The company’s performance over the previous years has been successful with their profitability ratios and sales constantly increasing. In the FY2018, Jaguar retailed 174,560 vehicles which accounted for 28.4% of total unit sales [1]. Likewise, Jaguar Land Rover has increased its revenue from £24.3bn to £25.8bn and total investment spending from £3.4bn to £4.2bn in FY2016/17 and FY2017/18 respectively [12]. It must be considered however, that these statistics include those of Land Rover, therefore, there is no doubt that the combined performances of the two would result in higher profits. The prediction was that the company’s performance in these recent months would decline due to external political and economic threats. Moreover, its limited range would not aide the manufacturer during this difficult time. However, conducting the analysis found this to be wrong to a small extent and is of particular importance for the future performance of the company.
Table of Contents
Summary 1
Introduction 1
Jaguar’s Marketing Mix 1
Jaguar’s Order Winning Criteria 3
External and Internal Analysis 3
Threats 3
Opportunities 3
Future Performance Analysis 4
Cost leadership 4
Differentiation 4
Focus 4
Conclusion 4
References 5
Glossary 6
Introduction
Jaguar is one of the leading manufacturers of premium luxury cars in the automotive industry owned by the Indian automobile manufacturer Tata Motors Ltd. The company is well known for its luxury sedans, its sports cars [2] and lately for its decisions in cutting down on its workforce. Despite threats of low demand and other threats from competitors, Jaguar has yearly shown strong focus on research and development ready for future competition and is still known for being one of the strongest automotive manufactures in the UK.
Jaguar’s Marketing Mix
The Jaguar brand offers luxurious premium all-wheel-drive vehicles which are categorised under: Sports, Premium and Lifestyle [1]. The prices of the products range from £28,930 (E-PACE car) to £64,495 (I-PACE model) [3]. In addition, nine out of ten of their vehicles are petrol or diesel powered as its plans to implement all-electric engines will begin to take place in 2020.
Under its sports category, the company offers the petrol or diesel-powered F-TYPE as shown in Fig. 1. Similarly, the XE, XEL, XF (see Fig. 2), XF Sportbrake and XJ vehicle types under the premium category are powered by the same engines. Under the lifestyle category, the F-PACE car (Fig. 3) is recorded as the fastest selling Jaguar ever as its first SUV [4] whilst the I-PACE (Fig.4) was introduced as Jaguars first electric hybrid model in the second half of 2018.
In terms of place and its promotion of its models, Jaguar chooses to target higher classes as well as have a selective distribution across the globe. Rather than depending on the distribution, Jaguar’s power lies in its promotions and product quality. It also makes use of its ambassadors, such as tennis player Kyle Edmund who served as the marketing face for Jaguars cars last year.
Jaguar’s Main Competitors
There are only a few companies across the UK which can compete with the Jaguars as the brand is relatively differentiated with high quality and cost. Consequently, the barriers to entry are very high making the threat from new entrants low as it would be difficult for groups to compete in this type of market. Additionally, the demand for these luxury models can be described as price elastic making the bargaining power of its buyers slightly weak. It is therefore evident that Jaguars market structure is best described as oligopolistic where the majority of shares is dominated by a few companies as shown in Fig. 5 where Tata dominates the car manufacturing industry share by 37%.
Against Jaguar in this oligopolistic competition are manufactures: Audi AG, Bayerische Motoren Co Ltd (BMW), Nissan Motor Co Ltd and many more [6]. Whilst there is also Tesla Inc, who sell more luxury cars, these groups are the most competitive against the Jaguar brand. Not only do Nissan and BMW produce sports, premium and lifestyle ranges like the Jaguars, both have electric cars such as the BMW i3 which came out in 2017 and the Nissan Leaf is announced to come out soon. These electric cars pose a
threat of substitute products towards Jaguar who only have one electric hybrid. However, despite this competition, these firms compete on non-price wars and have tacit collusion which result in sensible parallel actions.
Jaguar performs well when looking at the profitability ratios between its competition as shown in Fig. 6. Both its profit margin (6.51%) and ROTA (5.77%) are relatively high [11].
Jaguar’s Order Winning Criteria
Jaguar’s main order winners and qualifiers are its heritage and reliability. The company’s reputation for quality and its historical touch are boosted by the fact that it has strong links with the royal family. This can be seen in events such as Prince Harry and Megan Markle’s wedding where the E-type Jaguar was used to drive the two out of Windsor Castle as shown in Fig. 7. This robust publicity gives another reason for customers to choose the Jaguars over its competitors. Along with this, Jaguar markets its cars through other celebrities. In 2014 its British Villain storyline with Tom Hiddleston, Sir Ben Kingsley and Mark Strong [13] gave its followers an incentive to buy the same car as their idols. Furthermore, Jaguar offer some unique selling points such as its 10-day guarantee of promising to produce customers customised cars within 10 days. This is something other luxury car manufacturers do not offer and is compelling enough to attract new customers.
External and Internal Analysis
Threats
China’s performance should be Jaguar’s biggest concern. The fall in demand there is not helped by the fact that import tariffs for cars and parts for most vehicles were cut from 25% to 15% in July 2018 [14] to try and reduce trade tensions with the US. Apart from this move, it’s slow economic growth and depreciating currency have also contributed to the delay of consumer purchases. Moreover, the government demands for every manufacturer based in China to produce low-emission vehicles which adds to the unprecedent pressure on the automotive industry to deal with the shift to electric cars. For Jaguar who primarily produces diesel engines – this is a major challenge.
Likewise, the unpopularity of diesel poses a threat to the demands for Jaguars. It’s current electric hybrid the I-PACE is the only Jaguar not powered by a diesel or petrol engine making this a serious weakness. This corresponds to the fall of sales in China where customers who want to purchase electric models are limited to only one Jaguar.
Lastly, the Brexit uncertainty serves as an economic threat towards Jaguar. It leads the automotive industry in a position vulnerable to trade tariffs, trade wars, and disruptions to supply chains. In fact, Brexit would bring the end to Jaguar’s just-in-time delivery for its parts. Consequently, Jaguar would need major investment in warehousing to stock all the goods that might arrive over a longer time period.
Opportunities
Emission policies across the globe and in the UK such as the ‘T-Charge’ in London and the ‘Birmingham clean air charge’ serve as opportunities for Jaguar to become more environmentally friendly when developing its electric cars. Its agreement with Blackberry Ltd on March 2018 [16] to develop technology for next generation vehicles and similarly the opening of the manufacturing plant in Slovakia on October 2018, and technical engineering office in Hungary 2019, [17] act as good starting points to innovate and invest in this opportunity. Doing this will counteract the threats of currency fluctuations from Brexit and the unpopularity of diesel worldwide whilst maintain healthy relationships with its suppliers in central and Eastern Europe.
Future Performance Analysis
Jaguar’s existing strategy consists of tackling its main threats by generating enough investments for the launch of its electric cars as its £2.5bn turnaround programme shows [18]. It is also preparing for the upcoming Brexit deal. Its recent action of cutting 4,500 jobs across the UK [18] is a reasonable strategy as it allows the company to create a budget ready for future changes and face its tough competition.
Jaguar’s main goal should be to try and turn its new products to ‘Stars’ on a BCG matrix where it has the potential to provide a high percentage of the future profits of the business and secure them. To do this, the company could use Porter’s Generic Strategies as a foundation to face this competition.
Cost leadership
Achieving cost leadership may be difficult for Jaguar as it is simply facing too many threats. Two ways in which Jaguar can achieve cost leadership are: by reducing costs by charging industry-average prices or to increase market share by charging lower prices [15]. These strategies may not be ideal for the upcoming electric models as Jaguar cannot afford to charge lower prices for the expensive to manufacture electric cars. However, for the ‘Dogs’ on a BCG Matrix such as the XJ -Range and other F-types, reducing their costs may change the market share and increase profits. This is assuming that there are still customers who choose to buy luxury diesel powered cars.
Differentiation
On the other hand, it would be ideal for Jaguar to focus on differentiating its electric cars. This is because these electric cars can be produced at average industry costs but be sold at premium prices. The best way for the company to differentiate is to create a unique selling point. As mentioned previously, Jaguar should take advantage of the Blackberry Agreement (March 2018) to create unique selling points and implement new technologies into its cars in a way that no other competitor has.
Focus
Lastly, Porter’s focus strategy states that a business should concentrate on a niche market. In order to do this Jaguar must strengthen its research and development capabilities to identify the: needs, wants and requirements of its customers that are being addressed poorly or not at all by other firms [19]. This may include adding extra features on its new products to give customers a product that no other company in the market can offer. Or by improving its delivery systems and services to satisfy them. Jaguar could focus on delivering more environmentally features as society is becoming more litigious to these topics.
Conclusion
The analysis conducted has proven that Jaguar’s limited range has put them in an unfavourable position. Whilst this is not their only weakness, it definitely makes it harder for the company to tackle some of its main threats despite having high profitability ratios and turnovers compared to its competitors. However, if Jaguar faces these challenges well, over the next few years the company will be able to become more robust in the automotive industry, and potentially dominate the luxury premium car market.
References
[1] Jaguar Land Rover Automotive Plc Company Profile. (2018). [online] p.4. Available at: https://0-advantage-marketline-com.pugwash.lib.warwick.ac.uk/Product?ptype=Companies&pid=198C98DA-6827-4299-9020-33FF61B54E58 [Accessed 25 Jan. 2019].
[2] Web.archive.org. (2012). Wayback Machine. [online] Available at: https://web.archive.org/web/20130202202350/http://www.jaguarlandrover.com/pdf/Investor_Presentation_FY2012_Overview.pdf
[Accessed 27 Jan. 2019].
[3] Jaguar.co.uk. (2019). Luxury Sports Cars, Executive Saloons and SUVs | Jaguar UK. [online] Available at: https://www.jaguar.co.uk/index.html [Accessed 27 Jan. 2019].
[4] Media.jaguar.com. (2019). [online] Available at: https://media.jaguar.com/en-gb/2016/jaguar-f-pace-fastest-selling-jaguar-ever [Accessed 28 Jan. 2019].
[5] Prince Harry and Meghan Markle leave Windsor Castle for the evening reception in the Jaguar Concept Zero. (2018). [image] Available at: https://edition.cnn.com/style/article/royal-wedding-electric-jaguar-intl/index.html [Accessed 1 Feb. 2019].
[6] Jaguar Land Rover Plc Company Profile. (2018). [pdf] pp.20. Available at: http://www.marketline.com [Accessed 26 Jan. 2019].
[7] Jaguar’s F-PACE model. (2019). [image] Available at: https://www.jaguar.co.uk/jaguar-range/f-pace/index.html [Accessed 27 Jan. 2019].
[8] Jaguar’s I-PACE Model. (2019). [image] Available at: https://www.jaguar.co.uk/jaguar-range/i-pace/index.html [Accessed 29 Jan. 2019].
[9] Jaguar’s XF Model. (2018). [image] Available at: https://www.jaguar.com.au/jaguar-range/xf/index.html [Accessed 28 Jan. 2019].
[10] Jaguar’s F-Type Model. (2019). [image] Available at: https://www.jaguar.co.uk/jaguar-range/f-type/fleet-and-business/index.html [Accessed 29 Jan. 2019].
[11] Amadeus.bvdinfo.com. (2017). Amadeus – Report. [online] Available at: https://amadeus.bvdinfo.com/version-2019121/Report.serv?_CID=91&context=1YKZG74IR9OTMSD&SeqNr=0 [Accessed 26 Jan. 2019].
[12] Jaguar Land Rover Automotive PLC Annual Report 2017/18. (2018). [online] p.3. Available at: http://annualreport2018.jaguarlandrover.com [Accessed 05 Feb. 2019].
[13] Media.jaguar.com. (2014). [online] Available at: https://media.jaguar.com/fr-fr/news/2014/01/jaguar-announces-three-renowned-actors-appear-its-first-super-bowl-commercial [Accessed 30 Jan. 2019].
[14] BBC News. (2018). China to ‘cut US car tariff to 15%’. [online] Available at: https://www.bbc.co.uk/news/business-46531803 [Accessed 30 Jan. 2019].
[15] Mindtools.com. (2019). Porter’s Generic StrategiesChoosing Your Route to Success. [online] Available at: https://www.mindtools.com/pages/article/newSTR_82.htm [Accessed 7 Feb. 2019].
[16] Jaguar Land Rover Automotive Plc Company Profile. (2018). [online] p.6. Available at: https://0-advantage-marketline-com.pugwash.lib.warwick.ac.uk/Product?ptype=Companies&pid=198C98DA-6827-4299-9020-33FF61B54E58 [Accessed 25 Jan. 2019].
[17] Jaguar Land Rover Automotive Plc Company Profile. (2018). [online] p.18. Available at: https://0-advantage-marketline-com.pugwash.lib.warwick.ac.uk/Product?ptype=Companies&pid=198C98DA-6827-4299-9020-33FF61B54E58 [Accessed 25 Jan. 2019].
[18] Ft.com. (2019). Jaguar Land Rover to cut 4,500 jobs | Financial Times. [online] Available at: https://www.ft.com/content/03c886c8-14d6-11e9-a581-4ff78404524e [Accessed 3 Feb. 2019].
[19] BusinessDictionary.com. (2019). Which of your friends needs to learn this term?. [online] Available at: http://www.businessdictionary.com/definition/niche-marketing.html [Accessed 4 Feb. 2019].
[20] Car Manufacturing in the United Kingdom. (2018). [pdf] p.12. Available at: http://www.marketline.com [Accessed 4 Feb. 2019].
Glossary
Term Definition
Bargaining power of buyers
One of Porter’s five forces which describes the amount of influence consumers can exert on businesses to get them to provide higher quality products, better customer service and lower prices.
Barriers to entry
Factors that obstruct or restrict the entry of new firms into an industry or market.
BCG Matrix
A framework consisting of four categories to classify where a product may lay in regards to the growth rate of the industry and relative market share created by Boston Consulting Group.
Cost leadership
A strategy that companies use to have a competitive advantage by creating a low-cost position among its competitors.
Dog’s on BCG Matrix
Products on the BCG Matrix that have low market share and low growth rate.
Differentiation
The process of distinguishing a product or service from others to make it more attractive to a business’s target market.
Focus Strategy
A strategy that companies use by concentrating on the unique needs of customers within a particular market to develop low-cost or well-specified products for the market.
Just-in-time
A system based which produces the specific amounts of goods needed at a particular time.
Marketing Mix
A mix of factors that a company controls to influence consumers to purchase its products: product, place, packaging, price and promotion.
Niche Market
A small specific market for a particular product or service.
Non-price wars
A market situation where competitors do not lower prices for the fear of a price war.
Oligopolistic/ Oligopolistic competition
A type of competition where a small number of large firms account for a relatively large market share.
Order Qualifiers
A characteristic of a product or service that a customer requires.
Order Winners
A characteristic of a product that persuade customers to choose its products or services over others.
Place
One of the 5P’s in the Marketing Mix which describes how the product or service of a company reaches the customer.
Porter’s generic strategies
Different strategies in order for a business to achieve a sustainable competitive advantage over other competing products and firms in a market.
Price elastic
A measure of the quantity demanded of a product or service when nothing but the price changes.
Product
An object or substance that is manufactured for sale.
Profit margin
A profitability ratio that represents how much percentage of sales has turned into profits.
Promotion
One of the 5P’s in the Marketing Mix which describes how a product is publicised to increase sales or public awareness.
Return on Total Assets (ROTA)
A profitability ratio calculated by dividing the net income by the average total assets of a company.
Stars on BCG Matrix
Products in the BCG Matrix that have high growth markets with high market share.
Tacit collusion
A situation where other firms accept the price changes established by a dominant firm to avoid price wars.
Threat of new entrants
One of Porter’s five forces which refers to the threat of new competitors to existing competitors in an industry.
Threat of substitute of products
One of Porter’s five forces which refers to a substitute product that may offer the same or similar benefits to a company as a product form another industry.
Unique Selling Point
A factor that differentiates a product from its competitors.