QUESTIONS

1. Using celebrities to advertise or market a product appears to have increased markedly in the past few years in many industries. Explain TWO (2) benefits of using celebrities in Morgan's communication strategy.

2. Identify TWO (2) Morgan's key competitive advantages in the international market.

3. Describe TWO (2) reasons that Morgan's international communication strategy is different from mainstream mass-produced car.

4. Localizing market strategy is the process of adapting content, products, and services to specific local markets. Identify TWO (2) advantages of localization for Morgan Company's global market.

5. If Morgan wants to expand its products, briefly explain ONE (1) advantage and ONE (1) disadvantage of using "Market Expansion Strategies' matrix.

There are FIVE (5) questions in this question paper. Questions are based on the case study below. Answer all questions. (30 MARKS) Morgan Motor Company: can the British retro sports car brand still be successful after 100 years? The once proud British car industry has all but vanished. However, there is one famous producer left in the UK: the Morgan Motor Company. It is the oldest privately held car company in the world and today the company is still 100 per cent family owned. The company was founded in 1909 by H.F.S. Morgan and was run by him until 1959. Peter Morgan, the son of H.F.S., ran the company until a few years before his death in 2003. The company is currently run by Charles Morgan, Peter's son. Morgan is based in Malvern Link, in Worcestershire, and employs 163 people. All the cars are assembled by hand and the waiting list is one to two years, although it has been as high as 10 years in the past. Business is strong, despite the economic slowdown. In 1997 Morgan made 480 cars; 14 years later, in 2011, the figure was 700. Morgan Says that one day it may make as many as 900-1,000 cars a year, but only if that can be done the Morgan way and what a totally unique and utterly inimitable way to make sports cars that is! In 2011 the estimated revenue was around 25 million. The operating profits were 320,000 in 2011, compared with 665,000 in 2009. The company employs 160 people, of whom 130 are production floor employees. Morgan history The first Morgan design was, of course, the famous Three-wheeler. H.F.S. Morgan designed a fun car, the Morgan runabout, for people with little money but with a sense of adventure. The car was a great success and in the 1920s the Morgan factory in Malvern was making 2,500-3,000 cars a year, with a smaller number being built under licensee in France under the Darmont Morgan brand. Nevertheless, each year production always sold out in advance, as customers were desperate for small cars at this time. Morgan Three-wheeler sales declined and by 1935 there were only 300 new orders. The reason for this was the arrival of mass-produced popular cars from Ford, Morris and Austin at a similar price but offering more features for the money. H.F.S. Morgan had to come up with a new design. He did this in 1936 and announced the Morgan Four, a light sports car with four wheels and a four-cylinder Coventry Climax engine. From the start, the Morgan Four made its name in competition and finished well at Le Mans in 1938 and 1939. In 1962 Morgan won the two-liter class at Le Mans. A production Morgan beat the specially modified Porsche and Lotus racing cars and then drove home: the car averaged 98 mph for the 24-hour race. Following the race, the Morgan plus Four Super sports was launched as a factory model so that customers could buy a Le Mans class winner. Morgan's cars became regular winners in production sports car races across the US. At this time the Morgan Motor Company was one of the first companies to benefit from celebrity endorsement-Ralph Lauren, Brigitte Bardot and David Bailey all drove Morgans in the 1960s. In 1989 a visit was made by businessman Sir John Harvey Jones and makers of the BBC program Troubleshooter. Sir John criticized the company's strategy of having a long waiting list and making everything by hand in such a labor-intensive way. Morgan is probably the only car company that still makes cars the way they were made in the early 1900s-building them on a wooden frame and crafting them mainly by hand. Sir John did not really understand Morgan's market. Coachbuilding (by wood) and a waiting list are strengths, not weaknesses, of the business. Coach- building the cockpit area produces a light, strong cabin that is durable and the waiting list maintains second-hand prices. There was much humor over the 'Sir John Hardly Knows T-shirts that subsequently appeared at Morgan Sports Car Club meetings. There were some very beneficial commercial effects of Sir John's visit. Morgan experienced a big increase in orders and the long waiting list encouraged a price increase, which led to the company making significant profits that could be reinvested. In April 2009, princess Anne officially opened the brand-new Morgan Visitor Centre, a modern museum bedecked with memorabilia, photos, films, and the inevitable gift shop, housing a remarkable range of merchandise for "Moggie' enthusiasts, young and old. The Morgan philosophy and product range The company's whole business model is based on longevity and brand reinforcement. This is not a get rich quick business. Among the many other distinctions Morgan enjoys is that of being one of just a few family dynasties left in the car industry. The traditional family influence has engendered a long-time dedication to craft, as well as a determination not to grow the company too large for fear of increasing costs and jeopardizing quality. The sense of family ties isn't lost on customers, either. Eager buyers often visit their unbom vehicles in the company's factory as the cars are being built. It is a kind of Build.a.Bear transferred to the car industry. All Morgan cars have a customer's name on them before they begin pro-duction. Customers can choose from myriad variants of body, engine size, paint color, dashboard, and leather trim. However, component supply and storage have been complicated by the Morgan customization model, but this have been simplified where possible to make it easier for the business to deliver product. Morgan's speedy roadsters are entirely hand-crafted, which is perhaps fitting for the oldest privately held sports car manufacturer in the world. As a result, each car takes 130 hours to build, and the waiting list is at least 12 months. By comparison, the average US- made-Nissan takes just over 28 hours to build and can be had pretty much when you want it. Unlike commonplace vehicles, Morgans feature ash wood frames, hand molded body panels and hand-stitched leather. Such craftsmanship doesn't come cheap. For the US market, a basic two seat roadster starts at nearly US$50,000 and the top-of-the-line Aero 8 two seat road rocket starts at around US$140,000-before adding custom cosmetic, luxury, or performance upgrades. Aero 8 (launched in 2000) was the first completely new Morgan for 30 years and customers wanting to buy one must wait nine months. The two-door Morgan roadsters may look old-fashioned, but they perform as well as the best of today's techno-logically advanced sports cars. The Aero 8 is Europe's first AIV (aluminum intensive vehicle) and is 20 per cent lighter than comparable vehicles. It is equipped with a BMW-sourced 4.4-litre V8 engine that gets the car from 0 to 60 in just 4.5 seconds. As part of the centenary celebrations (100 years in 2009), Morgan announced a truly special model. The brand-new Aero Super Sports was launched at the Geneva Motor Show in 2009 and the first customer models were finished at the factory in January 2010. The two Aero models, intended for a production run of 100 units, were launched from rendered drawings, with up-front deposits of 25,000 per car required 12 months before build. They quickly sold 100 on plan. Designed and engineered in-house, the Morgan Aero Super Sports is a lightweight aluminum sports car with a luxurious specification. The interior features a comfortable combination of polished hardwoods, hand-stitched leather and electronic technology to create a driving environment that is efficient and ergonomic. Despite all this opulence, the overall weight of the car is still relatively low, so the car is responsive to driver inputs and economical to run. Morgan can achieve this because of their unique use of aircraft style super formed aluminum outer panels and the skills of their craftsmen in hand finishing the assembly of each car. The technology debuted in the 100 AeroMax coupes built by the factory in 2008 and 2009. Such was the demand for the Aero Super Sports model that Morgan took the decision to produce the new model in greater numbers. Customer target grun Morgan is not a company that deliberately targets the recession proof super-rich, but the cars' name and cach have made the marque resilient. Morgan's business model has been robust. First, the cars have great residual value - an AeroMax that sells for 110,000 new can go on sale in Germany for 160,000 within a year. Today, 98 per cent of all the Morgans ever made are still in existence. Of growing importance is the number of women who are wealthy in their own right who are potential customers. In north America where the number of Morgan distributors has doubled in recent years, women represent nearly 40 per cent of the top wealth holders, with gross assets of more than US$625,000, and in the UK there are now as many woman millionaires as men in the age group 18-44. However, Morgan buyers are not necessarily terribly wealthy, especially not owners of the 1.6 base model, costing around 30,000 in the UK. The BMW-engined Aero 8 costs nearly eight times this amount. Over the years a lot of celebrities have joined the Morgan spirit: Mick Jagger has joined Catherine Deneuve and Jean-paul Belmondo. Even Miss piggy has been among the elite alumni of Morgan owners. Morgan cars have appeared in a host of films and TV programs, including Moonraker, Monty Python's Flying Circus, My Girl and The Trip. Several books have been published about Morgan cars. The Morgan community A Morgan community is in place for the firm's huge network of enthusiasts: . Cars can be ordered online or through the global dealer network (26 in the UK, 28 in Europe, eight in the US and six in the rest of the world). The Morgan Sports Car Club: this owners' club, which represents owners in many countries, pro-vides a sense of identity and community for many of the buyers. It has strong links and influences with the factory, and the Morgan community is often consulted on product and brand development. The club is a powerful, though informal, symbol and promoter of the Morgan core brand proposition. There is an active agenda of meetings and social gatherings. For example, during the 100th anniversary celebrations in 2009, many Morgan owners met with the Morgan family at the factory in Malvern Link. The Worcester based Morgan Works racing team. The racing events also create a strong relational bond between owners and the factory. All these activities represent classic examples of customer relationship marketing. International marketing Morgan builds about 700 cars per year, around 30 per cent of which are sold in the UK. Besides the UK and the US, Morgan cars are sold through out most of western Europe, as well as in Australia, Japan, New Zealand and South Africa. For part of the 1950s and 1960s, the US provided the company with its largest market worldwide, taking up to 85 per cent of all production. This ended with the first wave of US safety and emission regulations in 1971. For many years (1974 to 1992), all Morgans imported into the US were converted to run on propane, to meet the requirements of the US emissions regulations. However, this conversion, along with bringing the cars into compliance with US vehicle safety legislation, was carried out by the dealership and not by the factory, making the cars grey market vehicles. Comeback in the US In 2003, Morgan sold 100 cars in the US, and it has already pre-sold the same number of the Aero 8 which replaces its plus 8 model. Sales were then expected to rise to 200-250 per year. The Aero 8 was the first Morgan model sold in the US since the 1950s and 1960s. There are FIVE (5) questions in this question paper. Questions are based on the case study below. Answer all questions. (30 MARKS) Morgan Motor Company: can the British retro sports car brand still be successful after 100 years? The once proud British car industry has all but vanished. However, there is one famous producer left in the UK: the Morgan Motor Company. It is the oldest privately held car company in the world and today the company is still 100 per cent family owned. The company was founded in 1909 by H.F.S. Morgan and was run by him until 1959. Peter Morgan, the son of H.F.S., ran the company until a few years before his death in 2003. The company is currently run by Charles Morgan, Peter's son. Morgan is based in Malvern Link, in Worcestershire, and employs 163 people. All the cars are assembled by hand and the waiting list is one to two years, although it has been as high as 10 years in the past. Business is strong, despite the economic slowdown. In 1997 Morgan made 480 cars; 14 years later, in 2011, the figure was 700. Morgan Says that one day it may make as many as 900-1,000 cars a year, but only if that can be done the Morgan way and what a totally unique and utterly inimitable way to make sports cars that is! In 2011 the estimated revenue was around 25 million. The operating profits were 320,000 in 2011, compared with 665,000 in 2009. The company employs 160 people, of whom 130 are production floor employees. Morgan history The first Morgan design was, of course, the famous Three-wheeler. H.F.S. Morgan designed a fun car, the Morgan runabout, for people with little money but with a sense of adventure. The car was a great success and in the 1920s the Morgan factory in Malvern was making 2,500-3,000 cars a year, with a smaller number being built under licensee in France under the Darmont Morgan brand. Nevertheless, each year production always sold out in advance, as customers were desperate for small cars at this time. Morgan Three-wheeler sales declined and by 1935 there were only 300 new orders. The reason for this was the arrival of mass-produced popular cars from Ford, Morris and Austin at a similar price but offering more features for the money. H.F.S. Morgan had to come up with a new design. He did this in 1936 and announced the Morgan Four, a light sports car with four wheels and a four-cylinder Coventry Climax engine. From the start, the Morgan Four made its name in competition and finished well at Le Mans in 1938 and 1939. In 1962 Morgan won the two-liter class at Le Mans. A production Morgan beat the specially modified Porsche and Lotus racing cars and then drove home: the car averaged 98 mph for the 24-hour race. Following the race, the Morgan plus Four Super sports was launched as a factory model so that customers could buy a Le Mans class winner. Morgan's cars became regular winners in production sports car races across the US. At this time the Morgan Motor Company was one of the first companies to benefit from celebrity endorsement-Ralph Lauren, Brigitte Bardot and David Bailey all drove Morgans in the 1960s. In 1989 a visit was made by businessman Sir John Harvey Jones and makers of the BBC program Troubleshooter. Sir John criticized the company's strategy of having a long waiting list and making everything by hand in such a labor-intensive way. Morgan is probably the only car company that still makes cars the way they were made in the early 1900s-building them on a wooden frame and crafting them mainly by hand. Sir John did not really understand Morgan's market. Coachbuilding (by wood) and a waiting list are strengths, not weaknesses, of the business. Coach- building the cockpit area produces a light, strong cabin that is durable and the waiting list maintains second-hand prices. There was much humor over the 'Sir John Hardly Knows T-shirts that subsequently appeared at Morgan Sports Car Club meetings. There were some very beneficial commercial effects of Sir John's visit. Morgan experienced a big increase in orders and the long waiting list encouraged a price increase, which led to the company making significant profits that could be reinvested. In April 2009, princess Anne officially opened the brand-new Morgan Visitor Centre, a modern museum bedecked with memorabilia, photos, films, and the inevitable gift shop, housing a remarkable range of merchandise for "Moggie' enthusiasts, young and old. The Morgan philosophy and product range The company's whole business model is based on longevity and brand reinforcement. This is not a get rich quick business. Among the many other distinctions Morgan enjoys is that of being one of just a few family dynasties left in the car industry. The traditional family influence has engendered a long-time dedication to craft, as well as a determination not to grow the company too large for fear of increasing costs and jeopardizing quality. The sense of family ties isn't lost on customers, either. Eager buyers often visit their unbom vehicles in the company's factory as the cars are being built. It is a kind of Build.a.Bear transferred to the car industry. All Morgan cars have a customer's name on them before they begin pro-duction. Customers can choose from myriad variants of body, engine size, paint color, dashboard, and leather trim. However, component supply and storage have been complicated by the Morgan customization model, but this have been simplified where possible to make it easier for the business to deliver product. Morgan's speedy roadsters are entirely hand-crafted, which is perhaps fitting for the oldest privately held sports car manufacturer in the world. As a result, each car takes 130 hours to build, and the waiting list is at least 12 months. By comparison, the average US- made-Nissan takes just over 28 hours to build and can be had pretty much when you want it. Unlike commonplace vehicles, Morgans feature ash wood frames, hand molded body panels and hand-stitched leather. Such craftsmanship doesn't come cheap. For the US market, a basic two seat roadster starts at nearly US$50,000 and the top-of-the-line Aero 8 two seat road rocket starts at around US$140,000-before adding custom cosmetic, luxury, or performance upgrades. Aero 8 (launched in 2000) was the first completely new Morgan for 30 years and customers wanting to buy one must wait nine months. The two-door Morgan roadsters may look old-fashioned, but they perform as well as the best of today's techno-logically advanced sports cars. The Aero 8 is Europe's first AIV (aluminum intensive vehicle) and is 20 per cent lighter than comparable vehicles. It is equipped with a BMW-sourced 4.4-litre V8 engine that gets the car from 0 to 60 in just 4.5 seconds. As part of the centenary celebrations (100 years in 2009), Morgan announced a truly special model. The brand-new Aero Super Sports was launched at the Geneva Motor Show in 2009 and the first customer models were finished at the factory in January 2010. The two Aero models, intended for a production run of 100 units, were launched from rendered drawings, with up-front deposits of 25,000 per car required 12 months before build. They quickly sold 100 on plan. Designed and engineered in-house, the Morgan Aero Super Sports is a lightweight aluminum sports car with a luxurious specification. The interior features a comfortable combination of polished hardwoods, hand-stitched leather and electronic technology to create a driving environment that is efficient and ergonomic. Despite all this opulence, the overall weight of the car is still relatively low, so the car is responsive to driver inputs and economical to run. Morgan can achieve this because of their unique use of aircraft style super formed aluminum outer panels and the skills of their craftsmen in hand finishing the assembly of each car. The technology debuted in the 100 AeroMax coupes built by the factory in 2008 and 2009. Such was the demand for the Aero Super Sports model that Morgan took the decision to produce the new model in greater numbers. Customer target grun Morgan is not a company that deliberately targets the recession proof super-rich, but the cars' name and cach have made the marque resilient. Morgan's business model has been robust. First, the cars have great residual value - an AeroMax that sells for 110,000 new can go on sale in Germany for 160,000 within a year. Today, 98 per cent of all the Morgans ever made are still in existence. Of growing importance is the number of women who are wealthy in their own right who are potential customers. In north America where the number of Morgan distributors has doubled in recent years, women represent nearly 40 per cent of the top wealth holders, with gross assets of more than US$625,000, and in the UK there are now as many woman millionaires as men in the age group 18-44. However, Morgan buyers are not necessarily terribly wealthy, especially not owners of the 1.6 base model, costing around 30,000 in the UK. The BMW-engined Aero 8 costs nearly eight times this amount. Over the years a lot of celebrities have joined the Morgan spirit: Mick Jagger has joined Catherine Deneuve and Jean-paul Belmondo. Even Miss piggy has been among the elite alumni of Morgan owners. Morgan cars have appeared in a host of films and TV programs, including Moonraker, Monty Python's Flying Circus, My Girl and The Trip. Several books have been published about Morgan cars. The Morgan community A Morgan community is in place for the firm's huge network of enthusiasts: . Cars can be ordered online or through the global dealer network (26 in the UK, 28 in Europe, eight in the US and six in the rest of the world). The Morgan Sports Car Club: this owners' club, which represents owners in many countries, pro-vides a sense of identity and community for many of the buyers. It has strong links and influences with the factory, and the Morgan community is often consulted on product and brand development. The club is a powerful, though informal, symbol and promoter of the Morgan core brand proposition. There is an active agenda of meetings and social gatherings. For example, during the 100th anniversary celebrations in 2009, many Morgan owners met with the Morgan family at the factory in Malvern Link. The Worcester based Morgan Works racing team. The racing events also create a strong relational bond between owners and the factory. All these activities represent classic examples of customer relationship marketing. International marketing Morgan builds about 700 cars per year, around 30 per cent of which are sold in the UK. Besides the UK and the US, Morgan cars are sold through out most of western Europe, as well as in Australia, Japan, New Zealand and South Africa. For part of the 1950s and 1960s, the US provided the company with its largest market worldwide, taking up to 85 per cent of all production. This ended with the first wave of US safety and emission regulations in 1971. For many years (1974 to 1992), all Morgans imported into the US were converted to run on propane, to meet the requirements of the US emissions regulations. However, this conversion, along with bringing the cars into compliance with US vehicle safety legislation, was carried out by the dealership and not by the factory, making the cars grey market vehicles. Comeback in the US In 2003, Morgan sold 100 cars in the US, and it has already pre-sold the same number of the Aero 8 which replaces its plus 8 model. Sales were then expected to rise to 200-250 per year. The Aero 8 was the first Morgan model sold in the US since the 1950s and 1960s