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Pricing Strategies: Ford And Perodua

Paper Type: Free Essay Subject: Marketing
Wordcount: 2975 words Published: 28th Apr 2017

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Generally, culture is ‘how people life’, which means the way things are done by people (Bartlett and etc 2008). There are many different cultures in different groups of people. In an organization, culture is a traditional way of thinking and of doing things, which is shared to a greater or lesser degree by all its members and which new members must learn or at least partially accept, in order to be accepted into service in the firm (Palmer, 2007). Culture in this sense covers a wide range of behavior such as the methods of production, job skills and technical knowledge, attitudes towards discipline and many more ( Groseschi and Doherty, 2000)

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2.0 Company Background

2.1 Perodua

The Perusahaan Automobil Kedua Sendirian Berhad which is also known as Perodua is Malaysia’s 2nd largest automobile manufacturer after Proton ( Perodua, 2005). The shareholders of Perodua are UMW Corporation Sdn Bhd with 38% stake, Daihatsu Motor Co. Ltd. (20%), MBM Resources Bhd (20%), PNB Equity Resources Corporation Sdn Bhd (10%), Mitsui & Co. Ltd (7%) and Daihatsu (Malaysia) Sdn Bhd (5%). Perodua was established in 1993 and in 1994 they lanched their first car which is Perodua kancil. Perodua mainly only produces mini cars. Perodua is quite successful in its business ventures and its cars are very popular among Malaysians (Kamaruddin, 2009)

2.2 Ford

Ford Motor Company is a multinational automotive corporation which is based in Dearborn, Michigan. Based on worldwide vehicle sales, Ford is the world’s 4th largest automaker (Bloss, 2005). It is also is also accounted as the largest company being controlled and managed continuously by a family for more than a hundred years. Ford was found by Henry Ford in 1903 (Wilson, 1995). Ford Company represents a $164 billion multinational business empire. Examples of cars that are produced by ford are Ford mustang, Fiesta, Escape, Fusion and many more. Ford Motor Company expanded worldwide with its assembly plants in France, England, Denmark, Germany, Austria, and many more. The amazing cars and technology produced and inspired by Ford since the late 1920’s has pushed the world’s pace all the way into the 20th century (Wilson, 1995). Ford continues to be on the forefront of American automakers and is quickly gaining ground in its attempt to reclaim the small car market from foreign manufacturers. Ford has recorded giving the best car’s and service satisfaction that created loyal customers. It has encouraged customers from all over the country to use Ford vehicle because of their strong brand image compared with other vehicle (Bloss, 2005).

3.0 Management style

In an organization, a manager has to perform many roles and also handle various types of situation. How they perform and handle depends on their management style. A management style is an overall method of leadership used by a manager (Kotler, 2003). There are few management styles such as autocratic, democratic, participative and laissez faire ( Kotler, 2000)

The management style that is adopted by Ford is Participative (Wellens, 1980). Henry Ford the founder of Ford once said that ”coming together is a beginning. Keeping together is progress. Working together is success.” (Bloss, 2005). This shows that he strongly believes that excellence will only be thoroughly achieved through dedication and teamwork (Bloss, 2005). The reason Ford use Participative management style is because they believe that it is very important to make the team feels that they are needed by the management because success is a two way street where one person can never achieve excellence and success without the help of tour team (Kervin, 1992). The management is work such as even the people lower down the organization are involved in decision making (Bloss, 2005). Ford as also strongly emphasized that everyone related needs to know the plan therefore everyday there is a meeting called Business plan review whereby the top management and the ford’s executive review the plan of work (Kervin, 1992). This is a ritual carried by ford in order to build an effective team.

The management style that is adopted by Perodua is Autocratic (Husband, 1975). This is because more then 50% shares of Perodua are owned by the government (Kamaruddin, 2009). Therefore all the final and main decision is made by government. Other share holders of Perodua are not allowed to make any decision without the approval of the government. Basiclly all the activeties of Perodua is fully controlled by the government (Chacko, 2006). No one else in the company has any power to make a decision or even have a lead in any activities or process in the company.

4.0 Product

Even tough Ford and Perodua are in the same industry, there is a reason why some people prefer Ford cars then Perodua cars and some prefers Perodua cars than Ford cars. This is due to the ways the company’s product are made, their selling price, the promotion they does for their products and also the place where the cars are sold. Product is whereby a company produces products that people wants to buy. The product can be tangible and also intangible (Smith, 1976). Before producing a product, the company has to decide on which market segment they would like to focus on as the product produced will be on the segment they have chosen (Thore, 1971)

4.1 Product market

Product market is on how a company promotes their product to attract customer to purchase their product (Roskin, 1989). There are various ways that can be used in order to attract customers for example using media, sponsorship’s and many more

( Prentice, 2000).

Ford mostly promotes their product to the market using media device such as advertisement’s using television and also newspapers (Sheldon, 1984). Other than that, Ford also does exhibition throughout the year and also has showrooms provided in most of the country. Other than that, Ford also carries out many roads off trip event whereby they bring out their new product and uses in the road trip to attract more customers (Likert, 1967). While doing the product market, Ford has to make sure there is no mistake made as it will effect on customers opinion on the product.

Perodua also mostly promotes their product using media device such as advertising I television (Meredith, 2003). Other than that perodua does also distribute brochure house to house very often to attract customers. Moreover Perodua also sponsor free cars as gift in big events whereby many people will take part to win a car (Othman, and Ghani, 2008). This are few ways that perodua uses to promote their product. Another way that Perodua uses is that, the company has a contact with Eon bank whereby the bank provides loan for those who would like to purchase Perodua product (Meredith, 2003). In my opinion this is one of the best ways to promote the product to market.

4.2 Product development

Product development is whereby a company decides on how to develop their product better in future to avoid failure (Beimans, 1995)

Many years back, Ford was doing bad in product development which lead them to bad lost. However, Ford overcomes this situation by making better decision (Kervin, 1992). One of the reason ford face loss was because the car design that was produce by Ford was not meeting the markets expectation. Therefore to avoid this, Ford started to hire young designer that world give better design according to current generation of that year. Other than that, in order to develop their product Ford also came by the decision of transforming the business into a more lucrative one that meets the 21st century demand for fuel efficient vehicles ( Bloss, 2005).

Perodua have also adopted few ways to develop their product better to avoid failure. One of it is the design of the cars ( Perodua, 2005). Many years back, the design of perodua cars are not attracting then other cars. Their car design such as kancil, kelisa, and kenari was very simple and did not attract many customers to purchase their product. In order to overcome this Perodua came out with better design cars that meet today’s generation’s expectation which is Myvi ( Perodua, 2005). Other than that, perodua also develop their product by coming out with bigger cars such as Alza which is more comfortable is appropriate for family’s as before this Perodua have always been known as a company that manufacture small cars such as kancil that was much preferred by ladies ( Perodua, 2005).

4.3 Product Differentiation

Product differentiation can reduce treat of buyers (Reid, 1997). When a company sells a differentiated product than other company’s they gain the market leader of that particular product (Bennett, 1997). Buyers interested in purchasing this particular product must buy it from a particular firm. Any potential buyer is reduced by the ability of a from withhold highly valued product or service from a buyer ( Hesterly, 2008). Even when companies offer the same product, buyers will see a difference based on the company or brand image.

Ford is more into comfort and they are different in terms of quality. This is because Ford produces their product on the term of quality oriented (Wilson, 2005). Most customers prefer to purchase Ford cars because the safely level of Ford cars are higher than perodua cars. There are also high social cars that are target for high income customers. This is how Ford differentiates them with perodua.

The factor that differentiates Perodua than other cars is the price of the cars. Perodua cars are much cheaper and affordable for many people (Kamaruddin, 2007). Other than that, perodua cars are also low petrol assumption cars which are preferred by customers due to the high petrol price nowadays. Another factor that differentiates Perodua uses is that, the company has a contact with Eon bank whereby the bank provides loan for those who would like to purchase Perodua product (Kamaruddin, 2007.

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5.0 Price

In general, price is defined as the amount of money charged for a product or service (Senior, 2006). Price is whereby the marketers have to determine price for their product. They have to make sure that they sell the product at a price whereby they can make profit and also cover cost and also not being to high that can turn away their customers ( Kotler, 2000).

5.1 Price elasticity of demand

Price elasticity of demand is measure of the sensitivity of demand to change in price (Kotller, 2006,). Marketers needs to know about the price elasticity as it will explain or in result shows on how responsive demand will bring change in the price of the product ( Senior, 1997). When the demand of the product goes up, the price of the product will also go up and when the demand goes down the price goes down (Kinicki and Williams, 1998)

Therefore, when the demand of Ford and Perodua cars goes up, the price will also goes up. This is because when there is a high demand on product there will be many customers that want to purchase the product (Gates, 1999). This is because as the demand goes up, the supply will go down and there will be limited cars that are available. Therefore, customers are willing to pay high price on the product and this will bring profit to the company.

5.2 Price fixing

A product price is not set easily (Bateman and Snel, 2002). Before setting the price of a product or service, the company has to look at other factors that cover different items in its line (Gurtinon, 1997). These factors can be internal factors and external factors. The main factor that the companies have to look in is the costs. Cost’s set the floor for the price that the company can charge for its product (Draft, 2000). A company would want to charge a price that would cover all its producing, distributing, and selling the product and also them input and output material in order to gain profit (Gurtinon, 1997). A company’s cost may be an important element in its pricing strategy. Many companies work to become ‘low cost producers’ in their industry (Kotler, 2003). Companies with lower costs may set lower prices, which result in greater sales and profit. There are many types of cost that has to been consider before setting a price such as fixed cost, variable cost and also total cost ( Bennett, 1997).

For example, the quality of product produced by Ford is high which means Ford uses high technology in order to produce their product (Noel and Charan, 1997). Other than that, the material used by ford is much better and higher quality then Perodua. The labors used by Ford are also those with higher qualification and those with better education background. From this it can be conclude that the cost used by Ford in order to produce their cars is high, therefore the price of their product is higher but with better quality ( Sheldon, 1984).

On their hand, Perodua cars are budget oriented whereby the cost used in order to produce their cars in not high (Othman and Ghani, 2008). This is because; perodua cars are not as high quality as Ford cars are. Even the security level of Perodua cars is low (Meredith, 2003). This is because the material used to build their cars is not as solid and better quality as Ford. Therefore Perodua cars are cheaper than ford cars due to the cost.

5.3 Price Quality

A company might decide it wants to have the highest quality product on the market ( Prentice, 2000) . This normally entails charging a high price to cover the high product and high cost of R&D (Roskin, 1989). For example, Ford produced high quality cars with higher technology use and higher safety level than perodua. Perodua cars quality is not very high therefore the Ford has set the price of their car higher then Perodua in order to cover the their R&D cost while because perodua does not use high cost on R&D they are able to come out with lower price cars.

5.4 Competitors Price

Another factor that affects the company’s pricing decision is the competitor’s price and their possible reactions to the company’s own pricing strategy (Bateman and Snell, 2002). For example, one of Ford competitors is Toyota. Therefore it is important for ford to have track on the pricing of Toyota cars. If Ford followers a high price, high margin strategy, and then the customers might consider other company’s to purchase their cars that follows lower price and this will cause Ford to face lost. Same goes to perodua whereby their main competitor is proton. Therefore these companies needs to learn the price and quality that each competitors offer before setting their price.

6.0 Comparison

6.1 Similarity

Ford is more towards product quality oriented where else Perodua is more towards budget oriented. However, both this company has the same goal and mission which is to capture and dominate the market. Other than that, the marketing method used by both these company is the same which is both these company uses media to promote their product and also does road shows.

Other than that, both Ford and Perodua use the same hierarchy type of management that consists of lower level and higher level. Since Ford is quality oriented, most of the workers are skilled and highly educated. While for perodua, there are both lower level and highly educated of worker. In other words, both the company’s has given opportunity to many locals and foreigner workers the opportunity to work with them.

6.2 Differentiation

Perodua are basically small cars that are built in simple design and not build for style personality. These cars are affordable for those with low income and also moderate income. Perodua cars are mostly aim on the ladies drivers. While on their hand, Ford cars are build with better design and are mostly big cars and more comfortable then Perodua. Ford cars are design for high income and medium income customers. Customers do not mind paying more to buy ford cars due to the design and quality of the cars.

Other than that, Ford has branches all over the country and also offices in most of the countries whereby customers are able to inquire and buy cars easily. This is because, Ford is a multinational company and it’s well known. Ford has experience in the vehicle industry for many years compare to Perodua which has recently come in the industry. Other than that, Perodua products are mostly recognized in Asian companies only.

Another different between Ford and Perodua is that Ford is a private company while for Perodua more than 50% of their shares are owned by the government. There is a huge involvement of the government in almost all the decision making in Perodua and all the final decision is made by the government. Perodua is not allowed to make any move without the acknowledgement and the approval of the government while for Ford, there is no government involvement in the decision making. All the decision in Ford is made by their CEO and their share holders.

There is also a huge different between Ford and Perodua products. Ford products are all quality oriented whereby Perodua products are budget oriented. This is the reason why there is a huge price different between Ford cars and Perodua cars. The cars that are produced by Ford are cars with better technology use, high quality and high safety level. While for Perodua, their cars are not as strong as Ford and the safety and quality level of the cars is low.

7.0 Recommendation


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