Perodua – Csr
Periods – Advertising with social dimension Executive Summary Periods was set up as a national car project in the year 1993. In the initial years of its inception the company operated in a protected environment marked by both tariff and non-tariff barriers. By the year 1998 leveraging on its high local sourcing strategy the company, along with Proton, managed to capture up to 90% market share. In 2001 the company set up a Joint venture with Dadaists Motor Co. And Mitosis & Co. , the Japanese partners being responsible for manufacturing and engineering operations.
Operating in an open economy post AFT in year 2006, Periods has found its niche in the small car segment and completely dominates the sub-1000 c motor vehicle segment. Periods has been extensively using “cause related marketing approach” treating Government, suppliers and dealers, employees and customers as stakeholders in its business. It also has 2 different kinds of ad programs, product ads promote individual brands, whereas corporate ads carry social message and promote the company. 2 different departments handle the designing and positioning of these different ad types.
There are obvious benefits to using corporate ads with emotional appeal; studies eave established that companies tend to realize enhanced relationship with their agencies. However on the flipped designing these ad campaigns is very complicated as sensibilities of all sections of the society have to be taken into consideration. A major downside to Persona’s corporate ad campaign is that no evaluation model has been adopted to measure the effect of such advertising on company’s short term goal I. E sales or long term goal of being a responsible corporate citizen.
The company should immediately adopt both qualitative and quantitative measures to understand the benefit of its campaign. Depending on results obtained Periods can decide on how to continue with its corporate ad campaign. Industry Overview The ass and the ass were the decades of “Industrial Nationalism” in Malaysia and the Government set up the national automotive programmer. Prior to 1985 Malaysia was an importer of automobiles and the aim of the programmer was to build a nationally owned and controlled automotive industry. Proton was the first of the 2 national cars and was established in 1985.
It was a Joint Perusal Automobile Asked Sad Bad (Periods) was established in 1993 and was the 2nd National car project. The Government also established a heavy vehicle company “Malaysian Bus and Truck (MAT) in 1994, a motorcycle manufacturer “MODERNS” in 1995 and a light commercial vehicle manufacturer “MIGNON” in 1997. In order to protect the domestic industry the Malaysian Government imposed substantial import duty on all completely built-up imported cars or completely knocked down vehicles. Apart from the import duties, non-tariff barriers such as licensing and import quotas were also enforced.
The 1980 “Mandatory Deletion Programmer” (MAD) made local sourcing of components, between 45-60%, compulsory pending on the cubic capacity of the car. In 2005-06 under the Common Effective Preferential Tariff (KEPT) scheme Malaysia was required to dismantle both tariff and non-tariff barriers. The applicable KEPT rate depending on the country of origination is shown below: The most obvious consequence of implementing the KEPT for Malaysia’s car producer is the minimization of protective automotive policy and disappearance of price advantage.
This will open up the market for greater competition from companies from other SEAN countries like Japan and South Korea which are major automobile producers in the region. See Exhibit 1 for breakup of vehicles produced and assembled in Malaysia) Periods – A background Perusal Automobile Asked Sad Bad (Periods) was established in 1993, this was the second national car project of Malaysia after Proton was set up in 1985. Periods was a Joint venture between Dadaists, Missus, and other Government controlled companies with Malaysian equity amounting to 68%. See exhibit 2 for Persona’s shareholding structure in 1993). Operating in a protected environment Periods was able to leverage on the MAD programmer and made use of up to 75-90% local content in its cars. This gave the company a significant price advantage over its competitors. Both national cars exploited the pricing advantage and accounted for 90% of vehicles sold in 1998. In 2001, Periods set up a Joint venture, with Dadaists Motor Co Ltd. And Mitosis & Co. Ltd. , called the Periods Auto Corporation Sad Bad (BPCS).
As per the Joint venture agreement, the Japanese partners would control the manufacturing and engineering operations whereas the Malaysian partner would have the largest stake. Persona’s strength is in the small car segment and the company aims to serve the coal and overseas market’s demand for compact, affordable and reliable vehicles with excellent standards and quality. As of June 2009, the company employed about In order to enhance efficiency and cost competitiveness the company has introduced Toyota Production System (TIPS).
TIPS is driven by the concept of “Good Thinking Meaner Good Product” and comprises of 2 main systems “Just in Time” and “Kodak”. The TIPS aimed to eliminate excessive lead-time, lower inventory levels and reduce costs. Persona’s Joint venture with Dadaists gave Periods an opportunity to get in shape or liberalizing of auto industry post-AFT. In 2006 the company overtook Proton to become the biggest car seller in the Malaysia. The liberalizing campaign has presented Periods with a mixed big. Persona’s expertise in manufacturing small cars has opened up new export markets for the company.
At the same time big players with sophisticated technology and competitive production techniques now have access to Malaysian car market, thereby increasing competition for Periods in its own backyard. Marketing communication and advertising process Cause related marketing approach A marketing communication program can be successful only when all the departments of the company are actively involved in the marketing plan. All company departments and personnel should communicate the same message to the target audience.
Periods places Corporate Social Responsibility (CARS) at the heart of all its business activities. So naturally the company’s CARS activities form the central theme of its “cause related marketing”. As part of the strategy, Periods follows a 4 pronged approach where the Government, suppliers and dealers, employees and consumers re all treated as stakeholders in the business. (see exhibit 3 for Persona’s stakeholder structure). Some of the activities undertaken by the company to engage stakeholders are: * Government Periods engages with the Government by contributing to local man power training.
In-spite of having the option of importing foreign workers, the company spends substantial amounts on training locals and employing them at its plants. The company also helped develop the local auto component and parts industry. * Suppliers and dealers Periods has developed a quality audit system to optimism local vendor’s performance ND to assure the quality of components’ supplied to the company. During the Asian financial crisis the company allowed vendors to increase prices to ensure they had sufficient working capital. Credit terms were reduced from 30 to 60 days. Employees Periods believes in an inclusive work environment and allows employees to grow invests in its work force through training, counseling and providing healthy and conducive work environment as well as employment benefits. * Consumer & public Persona’s strength lies in the small car segment. It intends to provide more affordable vehicles’ for lower income level and rural people. In addition to providing quality products at affordable prices, the company through its corporate ads also works to increase social awareness about safe driving practices and other positive social values.
The company has also designed and implemented a training programmer for youth living in the locations that Periods operates in. It also supports various causes, financially as well as in kind, responding to the needs of less audits to ensure Advertising process privileged. The company conducts stringent environmental environmentally safe practices have been adopted. Periods has 2 kinds of ads: * Product ads – These are designed with the objective of communicating the product range, features of the product etc. To the end user.
Such ads are handled by the marketing section of the company. * Corporate ads – With the express desire of becoming a socially responsible corporate citizen these ads with social dimension have been launched. The public affairs section is responsible for these ads. Marketing, sales and manufacturing department departments are involved in the design of these ads. See exhibit 4 for advertising matrix) Periods operates in a multi-cultural society and the main objective of the corporate ad is to transcend the racial boundary and get close to the target buyer.
The company understands its consumers are realists who do not relate to superficial messages; they consider things in real terms and are practical in life. In order to connect to these “real people”, the ads always portray Periods as part of the society and the ad message always reflects existing social phenomenon. The main objective of these corporate ads is to create awareness amongst the general public about oral values the company believes in. Some of the social messages or issues that the company has worked with, is based on elements like driving etiquette, nationalism, inter-racial harmony and family reunion.
One unique aspect about Persona’s ads has been its use of the individual as focus to bring out the social message; both negative and positive emotional appeals are used in the ads. The company has used both television and print media to carry its corporate ads. Newspapers are used as supplementary coverage medium to reach specific ethnic groups. Strengths of Persona’s advertising campaign: The company has been associating itself with elements like driving etiquette, family harmony, nationalism, racial harmony etc.
These are emotions that middle class and rural people of Malaysia immediately connect with. Constant exposure to such ads will lead consumers to perceive the company as being “good”. * Medium of advertising The company uses television as the primary medium of advertisement. Images work quicker and convey meaning at once. Weakness of Persona’s advertising campaign: * Sensibilities in multi-cultural society The company operates in a multi-cultural society; perceptions and attitudes of people from different ethnic back ground towards all aspects of life might be very different.
For example black in Chinese culture has neutral meaning, whereas Hindus usually consider black as a negative color. So when designing ads the company will have to be careful to ensure sensibilities of particular ethnic groups are not offended. * Enforcing/reinforcing racial stereotypes Racial stereotyping is a bane of multicultural societies. Any ad that might inadvertently reinforce such stereotype will definitely create backlash and lead to active publicity, which Periods can do without. Uncertain impact No actual evaluation has been conducted to measure the effect of the company’s corporate advertising program. Effect of such ad on company sales or perception of general public about Periods is unknown. Exhibit 1: Breakup of vehicles produced and assembled in Malaysia Exhibit 2: Persona’s shareholding structure in 1993 Exhibit 3: Persona’s marketing communications stakeholders Exhibit 4: Advertising matrix of Periods [ 1 ]. Periods corporate website – http://www. Periods. Com. My/corporate/company