Advanced Search

Can you give me some information about a recent marketing campaign?

In order to put LTI's strategic objectives into effect, their chief executive, Ian Pickering, has made visits in 2004 to the company's target growth markets in Mexico, North America and China. He sees large cities such as San Francisco, Mexico City, Chicago, Tokyo, Rio de Janeiro, Beijing and Shanghai as being key to the company's development. His sales technique makes the most of LTI's product's unique selling points:

• Capacity - five people can sit in the back, instead of the usual three
• Security - a high specification sreen between the passengers and the driver
• Passenger comfort - leading to greater customer satisfaction
• Heritage - associations with London's image as a great world city

Image: Taxis in Times Square, New York. Will the London 'black cab' ever replace them? Copyright: Jessica Poli, available from stock.xchng.

Key to this strategy may be the licensing authorities in large cities. Just as in London, most major urban centres' transport systems are controlled by local officials. If LTI can persuade enough of them of the benefits to be gained from using London-style 'black' cabs, then the company's fortunes could rapidly be transformed. With more than one hundred world cities that have populations in excess of three million, the potential market is huge.

Marketing activity in North America

LTI has agreed to distribute taxis to an independent company called LTNA, who sell the vehicles in the United States and Canada. This business was founded by an American businessman, Larry Smith.

A key problem that LTI face in this market is the impact of currency movements. North American buyers of LTI black cabs have to pay for the taxis in pound sterling, which means converting their dollars into UK currency. Have a look at the following table to see how exchange rate movements can affect price in this market:

This table illustrates the impact of exchange rate changes on LTI's ability to sell its vehicles to customers in the US. To establish itself as the supplier of choice in this and other markets, LTI may have to absorb some of the additional costs that customers would otherwise have to pay. The rate of exchange for £ sterling to US dollars has moved within the range shown in the table within the past twelve months (May 2003 - May 2004), as can be seen in the chart that follows:

Source of data: BBC Market Data

LTI's ability to expand into the North American market is clearly hampered by the weakness of the dollar in recent months. This shows how factors outside the control of business organisations can impinge on a firm's strategy.

Even with the emphasis on LTI's core values of style, tradition, durability and comfort, as well as the ability to conform to stringent environmental regulations, such as those that are in place in the state of California, the company's ability to generate profits through its North American and other export market operations may be badly affected by sterling's strength against the US dollar.

| Index | Previous Question | Next Question |