A Study On The Competitive Strategy Of The Underprivileged Latecomer In China's Auto Market

From the perspective of underprivileged latecomers, this thesis tries to find out the competitive strategy to seek survival and development of Chinese native automobile enterprises, which are clearly known as new entrants. Specifically, it includes their entry modes into the automobile industry, the strategy to overcome the disadvantages in corporate resource, and the strategy to make use of the latecomer advantages. Furthermore, the paper deeply explores their detailed measurements when they put their competitive strategy into practice, such as product strategy, sub-brand publicity strategy, and price strategy. Case study is the main method used in this thesis. This paper takes five Chinese native automobile enterprises as its main cases of study, which are Chery, Geely, BYD, Brilliance, and Hafei. While at the same time, another five foreign automobile enterprises in China are involved as contrast samples, which are Toyota from Japan, Volkswagen from Germany, Ford from America, Hyundai from Korea, and Citroen from France. The innovative theoretical contributions of this thesis can be summarized into four aspects as below.Firstly, this paper, based on previous relative researches, constructed a theoretical framework of the competition strategy especially for underprivileged latecomers, which constituted three key factors - entry mode into the industry, the process to overcome the resource disadvantages, and the approach to utilize the advantage of backwardness. According to this new method, we deduce the competition behavior from the five case enterprises, and it shows that as the underprivileged latecomers, Chinese native automobile enterprises:1) are more likely to select the segmentations which the early entrants abandoned or had little willingness to explore, and more likely to adopt the cost-effective strategy with combination of good quality and lower cost; 2) intend to get over their resource disadvantages by the means of integrating their internal resources and external resources; 3) are more like to learn lessons from the early entrants by following and imitating, and more than that, by creative imitation and innovation, such as non-product innovation and integrated operation mode innovation in the early survival stage, as well as product innovation, customer value innovation, and brand innovation in the development stage.Secondly, this paper, with the combination of competition strategy and marketing mix, introduces a model to analyze the competitive strategy and the implementation policy in the automobile industry, thus successfully solving the problem of the combination of competition strategy and functional policy, and providing a new guidance for enterprise operation in the industry. The model defines the competition market for automobile enterprises as auto class-capacity mix strategy and sub-brand mix strategy. The competition edge can be defined in six aspects:auto grade mix policy, product performance and configuration mix policy, auto updating policy, sub-brand publicity policy, price mix policy, and performance-price ratio policy.Thirdly, base on Barbara's brand information model, the thesis proposes a model to analyze the sub-brand publicity strategy of automobiles. The new model incorporates basic brand communication theories into practical automobile products and market, providing theoretical base and practical references for auto sub-brand propagandizing strategy. It especially sums up eight methods which the automobile enterprises may use to promote their products, including (1) associating with international brand; (2) associating with products of higher level; (3) comparing with similar rivals; (4) comparing with the previous versions of the same style; (5) demonstrating objective facts or data; (6) exhibiting unique design, rich configuration, and design concept; (7) keeping pace with international fashion; (8) paying attention to the market demand. These propaganda ways provide theoretical guidelines for auto firms to promote their sub-brands.Fourthly, this thesis comprehensively uses the "Initial Quality Study" (IQS) - an index reflecting product quality and customer satisfaction degree- and automobile price, to reveal the performance-price ratio evolution of Chinese native automobiles. How did native automobiles survive the fierce competition with foreign rivals? The research results indicates that an integration of product strategy and price strategy is the right answer. More specifically, sales price is the competitive edge in the early survival stage, while in the late survival stage and development stage, Chinese native automobiles mainly win the competition by using the high performance-price ratio strategy, that is, they enhance the quality and maintain the low price as well.