Mazda SKYACTIV Technology

Mazda SKYACTIV Technology

Mazda Motor Company is a major automobile manufacturer today and is currently #5 car manufacturer in Japan1. Jugiro Matsuda founded Toyo Cork Kogyo Company, Ltd. in Hiroshima, Southern Japan, creating the original Mazda facility1. Toyo Kogyo took a dramatic plunge on August 9th 1945 due to the fact that the United States dropped an atomic bomb on Hiroshima, which killed 400 workers, and damaged the facility beyond working order1. There was much speculation about whether Toyo Kogyo Company could be reconstructed and if so, how the company and its operations would be funded. Toyo Cork Kogyo was officially re-named to Mazda Motor Corporation in 1987 1. Mazda has been seen as a producer for average costing automobiles ranging around $15,000 – $55,000 in Canada2. Mazda has a broad variety of models which appeal to many different markets including family vehicles for larger capacity, sports convertibles for summer traveling and cruising in style, and the average well-priced vehicles for the old and young. Mazda’s target market is based on demographics where they target single adults in the working class, 20 – 30 year olds and young students who mainly belong to higher income families4. Geographically, Mazda is currently being sold and marketed all over the world, with a focus on Europe more than other continents4. More specifically, Mazda is being sold in Europe, the Middle East, Africa, North America, South America, and Asia Pacific2.

Mazda’s extremely well-known slogan “Zoom-Zoom” has been slightly changed to promote the new SKYACTIV brand, they now use “Sustainable Zoom-Zoom” to market the more environmentally friendly aspects of the Mazda SKYACTIV 2. Most car manufactures are trying to improve performance by focusing on various hybrid models, and innovated turbochargers. This is where Mazda differs from the majority of automobile companies; SKYACTIV technology is Mazda’s way of “re-inventing” the current internal combustion powered vehicles that consumers already love to drive. Presently Mazda is dedicating their research & development to improve internal combustion engines, transmissions, drive shafts, and the chassis2.

The SKYACTIV name is a marketing strategy, a new brand of vehicle modules. The SKYACTIV engine is the result of this is improving the internal combustion engine by reaching a new compression of 13:1 air to fuel ratio, compared to most automobiles on the market which usually have a ratio of less than 11:1 at a maximum1. This increases the percentage of the fuel that is being utilized towards energy. However, the larger the compression ratio in an internal combustion engine causes more heat and more pollution from greater emissions, which can lead to a larger environmental impact. The goal of SKYACTIV is to manage the amount of increased heat and emissions down to normal while maintaining a higher performance. SKYACTIV is more than just a better engine; Mazda has completely re-designed the whole transmission to decrease the loss of energy from their new SKYACTIV engines to the wheels of the car3. Mazda has used the development on the internal combustion engine to enhance the market that they are targeting by increasing engine efficiency and effectiveness3. Politically and socially more pollution is seen as more harmful to the environment which is why Mazda is keeping the amount of emissions produced from their vehicles the same while increasing the power, and durability of the automobile as a whole3. In the year 2016 federal economy standards in North America are going to be rising. Specifically in the United States and Canada fuel economy is going to be a mandatory 38 miles per gallon for passenger cars, 28.3 miles per gallon for light trucks, and 34.1 miles per gallon for crossover vehicles5. Engineers at Mazda have been tasked with improving power while at least keeping fuel economy above these restrictions, if not being able to reduce the fuel economy in every vehicle, in preparations of these fuel economy increases2. On top of being pushed politically, Mazda has been able to keep their economical standard of supplying a lower than average price automobile. The SKYACTIV engine has become Mazda’s primary focus, and with that comes new factories for producing the new engine, which in turn produces many jobs for local economies6. People have been extremely willing to accept the new SKYACTIV brand that there are a variety of social groups and websites formed around the promotion of the new, cleaner, more powerful cars 7. Some people say that Mazda has allowed for driving a hybrid-type vehicle that is still fun to drive8. This is giving consumers the viable alternative to the array of hybrid technologies now being offered by competitors, thus creating more of a blue ocean market for Mazda.

In 1979 Mazda and Ford entered a partnership in which Mazda’s hopes going into the partnership were that Ford would be able to help transform the small niche Japanese automaker into a major global automobile producer. Ford only wanted to increase research and development success by adding a different cultures look at each other’s products9. Furthermore, improving technology in the engineering sector is having a huge effect on vehicles from every producer10.(seems randomly thrown in) Improving technology has allowed for more disabled individuals to access the vehicles when they before could not, and elderly people the ability to access the vehicles for longer10. The technology behind Mazda CX-5 crossover SUV which features the full suite of Mazda SKYACTIV technology is what has named it the 2012 Crossover of the year, with the highest fuel economy in its class11.(seems randomly thrown in) Over the years, Mazda has done a very effective job of building up a customer base that trusts the brand and will continue buying from Mazda for the rest of their lives. They have done this by producing affordable, desirable vehicles with the improvements people want to see in their cars just as the technology is becoming available. Implementing this new SKYACTIV technology into their vehicle, offers their customers with the latest and most efficient technology without having to break their Mazda bond and shop at competitor stores12. Mazda has also strengthened their company with this new technology as people are constantly striving for quieter vehicles. With new increased efficiency in the transmission, driveshaft and engine, Mazda customers are now provided with a quieter vehicle which removes the need to yell over the engine to talk to their passengers12.

Like any other company, Mazda is not perfect. This new technology that is supposed to create happier and an increased amount of customers will eventually cost more for the customer to repair13 As well, as with any new piece of technology, there has not been enough time to “beta” test or assess the technology over an extended period of time. This could lead to customers purchasing the vehicle, only to find out after a few months that a defect appears while they are driving14. These two issues could cause Mazda to lose out on future customers as no one wants to go back to the company who provided them with a bad experience. Losing customers is one thing Mazda can’t afford to do right now, as the research and production of this product were both quite expensive leaving Mazda needing a solid, long lasting, piece of machinery in order to make up for costs related to building SKYACTIV technology15.

Although the cost of repairs may be seen as expensive to some consumer’s, leaving the technology in place and allowing the market to soak up all it has to offer, will allow room in the future to lower the cost of the SKYACTIV product16. This is due to the research and production costs being covered by initial sales. During the process of producing the SKYACTIV technology Mazda left room for innovation. SKYACTIV technology in future cars is planned to improve the efficiency of the internal combustion process by 100% of their current technology12. Although there are improvements in many areas of the SKYACTIV brand that could further develop the driving abilities of the vehicle, this new technology has already reduced the weight of the vehicle12. For example, the use of different welding along with different materials in the creation of the new chassis removes a lot of weight from the vehicle as well as contributing to the strength and overall vehicle safety for passengers16. This opens doors for the Mazda Company to run with the idea of creating lighter vehicles and seeing where that path could lead them. The thought that a company is continuing to further its overall vehicle safety with materials other than air bags, might be alluring to other company’s customers allowing Mazda to pick up new customers from competing companies with their new safety features. Combined with the SKYACTIV technology is the i-stop engine which turns off the engine after a set period of idling17. The i-stop feature allows for improved fuel efficiency, which will create further opportunities for Mazda to steal new customers with their newer and improved fuel-efficient technology17.

The biggest worry that Mazda is experiencing right now is that Ford is also pursuing the idea of more fuel-efficient vehicles through similar strategies to Mazda18. Ford is downsizing their engine, as well as including eco-boost, and turbo charged engines18. When these products become available to Ford customers, Mazda’s technology might seem outdated causing them to lose customers to Ford. Most other companies are also looking into similar technology, which impedes on Mazda’s new fuel efficient, and safer territory18.

By improving fuel- efficiency and safety features in their vehicle, Mazda is attempting to improve their brand positioning. Through taking their old vehicles and implementing these new features at no extra cost appeals to the customers sense of money management allowing them to feel like this is a company who really cares about their customers and their financial situations18. Keeping the car looking simple, and clean both inside and out, allows the customers the luxury of high-end technology without the ‘in your face’ appearance of an overly flashy car12. This appeals to the customer’s yearning a safe, sturdy vehicle just for regular everyday life.

The SKYACTIV technology is currently in the process of being integrated into every vehicle being produced by Mazda19. The technology will be put into vehicles over the next couple of years allowing for some improvements between models of vehicles without having an entire fleet of Mazda products breaking down with the same defect all at the same time19. With more and more vehicles using this new technology, Mazda wants to incorporate it into their different country dealers as well19. Japan, North America, Europe, China, Asia/Oceania, Central and South America, the Middle East and Africa are all receiving this steady improvement into the vehicles they are selling19.

Sticking with what Mazda knows has worked for them in the past; they have integrated their new SKYACTIV technology into their usual, everyday “Zoom Zoom” commercials. This allows the customers to easily relate the new technology to the old reliable Mazda brand and logo that they know and appreciate. The changes that they have made to the old slogan is to include the word “sustainable” with their “zoom zoom” allowing customers to recognize the importance of this improvement. Along with the “Zoom Zoom” commercials, Mazda is promoting their new products to new vehicle owners by adopting a graduate program12. This program allows new university and college graduates to receive $500 off any new Mazda they wish to purchase12.

Along with this $500 incentive, Mazda also offers a first time owners encouragement12. This gives another $500 to drivers with no prior automotive financing or lease history to finance their vehicle through Scotiabank12. Both of these financial offers are for the younger generation of driving, but Mazda also promotes to all drivers through their “0% financing for 84 months on select vehicles”12.

As previously mentioned, the cost of this new technology makes no difference in price for the customer since the vehicle would cost the same with or without SKYACTIV. The price range for Mazda vehicles starts at about $13 000 and closes off at the $55 000 mark, allowing for both affordable and lavish vehicle owners to be satisfied12. Mazda uses a unique market segmenting process which is essentially a mixture of two different combined target market approaches2. Mazda itself usually uses a combined target market approach by combining people who like speed and performance (one of the main features that Mazda keeps its focus on when advertising) with the average low to middle income families who are looking for a more inexpensive quality vehicle4. Mazda markets to both of these target markets in the same way, while emphasizing both of those features with the same promotions2. Mazda SKYACTIV however, has a completely different marketing approach and has specific advertising tailored towards the SKYACTIV innovation itself. SKYACTIV still uses the combined target market approach but they are not targeting the same groups as the majority of basic Mazda vehicles do. Mazda SKYACTIV introduces a different target market into the company by promotions that highlight positive impacts to the environment and the economy (lower gas costs,) as well as increased performance with lower environmental impact, which all targets an entirely different segment of people than the original Mazda vehicles4. These market segments seem to be working well for Mazda and they also follow the criteria used for segmenting a broad product-market: homogeneous within itself (such as the younger age bracket with low to middle income sizes where people would generally respond the same to marketing variables), heterogeneous between market segments (such as the difference between inexpensive low quality Mazda vehicles and environmentally friendly SKYACTIV Mazda sports vehicles), substantial (each of these segments contributes largely to Mazda’s overall profit), and operational (such as the specifically identified age brackets of customers and certain characteristics that these customers possess)20.

Originally Mazda’s main demographic market segment was older citizens within the middle income level in the working class21. More recently Mazda has made a successful attempt at targeting a younger demographic looking for affordable, stylish, and quality performance vehicles. Mazda has done this through innovating the design and style of their recent vehicles, as well as altering the way that they market Mazda vehicles. More advertising was placed in college/university campuses in order to appeal to a more youthful target market21. The advertising placed within campuses involved pictures of the more sporty looking, affordable Mazda’s and the ads were even made to make the students feel important by having titles such as, “ For you high life forms21.” As mentioned above, Mazda also provides incentives for graduating post-secondary students to enlarge their newer and younger target market12. The general consumer market demographics for any current Mazda vehicle is commonly between the ages of 20 – 35 4. Within these demographics, single adults in the working class as well as younger students who typically belong to higher level income families are both specific sub-sections of the target market4. Mr. Khan, an assistant manager from Galadari Automobiles states that the newer Mazda 6 model is particularly targeted at people who are young, outgoing and stylish22. Geographically, Mazda markets and sells their automobiles all over the world primarily in Europe4. Only certain vehicles are sold in North America which helps to narrow down an extremely broad geographic product market2. Perhaps Mazda realized that it was only profitable to sell certain vehicles in North America since the consumer market does not appeal to certain varieties of vehicles due to their particular demographics and geographic location4. Mazda incorporates many determining dimensions into their SKYACTIV vehicles in order to give the customer more motivation to buy the vehicle, as well as providing the customer with a variety of determining dimensions that are commonly associated with buying a new vehicle12. For example, the Mazda SKYACTIV provides a variety of features as determining dimensions to accommodate consumer needs and wants such as; increased fuel economy, increased performance, speed, sleek look, rich interior, safety, smooth driving, and an improved internal combustion engine and vehicle architecture12.

Mazda uses its more unique determining dimensions that are attributed with the SKYACTIV technology (such as the improved fuel economy, decreased emissions, increased performance and speed, all of which while maintaining overall safety within the SKYACTIV vehicles) in order to better position themselves in the market, as well as to allow more opportunity for expanding or even creating a new target market12. Since the new SKYACTIV vehicles are actually cheaper to manufacture than Mazda’s previous generation of vehicles this allows Mazda to have an advantage with their new technology in the sense that they have lower prices, which lead to higher sales, which leads to increased profits12. Since Mazda SKYACTIV has lower prices for higher quality vehicles, this allows them to expand their current target market by drawing in consumers with less income (which also makes the SKYACTIV more available to younger consumers with low income) but who also want a classy vehicle that has basically the same features and fuel-efficiency as vehicles almost double the SKYACTIV’s price. Positioning is the process marketers take to create an identity that will in turn be the company image. (Where did this come from?)Once positioning has taken place the company should have a clear statement of why the target market should purchase from them23.Mazda established its World Wide Brand Positioning (WWBP) in 1998, which sets Mazda’s brand globally as well as communicating the current and future direction of Mazda 2. Since the launch in 1998, World Wide Brand Positioning has been implemented into all Mazda’s markets around the world. Mazda’s brand statement is “Zoom-Zoom -To offer creative and innovative “exhilarating driving” to those people who still hold dear the love of motion experienced as a child”2. The two characteristics of the statement are personality and product2. The characteristic of personality includes things like being stylish, insightful, and spirited while product uses distinctive design, exceptional functionality, responsive handling and driving performance to help customers better understand the craftsmanship of their vehicles2.Now bringing in “Sustainable Zoom-Zoom” with their vision for innovative technologies on their old systems, calling it SKYACTIV. This technology is intended to provide driving pleasure, along with environmental and safety performance in its vehicles2. (This all seems repeated) The new SKYACTIV technology is aiding Mazda’s efforts in improving efficiency, while doing so they are able to keep “power-producing expansion stroke3.”The personality of the cars with SKYACTIV remains the same style, insightful and spirited because nothing has been changed on the outside.

Almost everything in the vehicle is the same; however, with a SKYACTIV featured vehicle the original engine is enhanced, transmission and drive-train are more efficient, and the chassis is upgraded. Furthermore, SKYACTIV products are fine-tuned; the design of the cars’ chassis has been developed to make it eight percent lighter and thirty percent more rigid2. Functionality, handling and performance has been unfazed because they have increased fuel efficiency however, the horsepower remains the same. Mazda’s current consumers will not be affected with the new SKYACTIV technology because nothing has been altered that would make them change their mind about buying a new Mazda. Consumers who are looking at buying a new car, who want to be environmentally friendly, now have a reason to go into their Mazda dealership and look into SKYACTIV technology4.(This paragraph sort of seems like it has been previously said as well) The idea of differentiation is to design differences to distinguish Mazda from other car companies offering the same kind of product. Things like quality, performance, reliability, style, design and the list can go on help in differentiating a certain product from another23. There are a number of different brands for the same product, including vehicles so If two vehicles from two different companies are virtually the same, how do you get a consumer to pick your car first? People decide on a brand they can identify with what that company believes in, there tends to be a certain emotional link for the consumer2. Mazda can differentiate from other competitors by keeping their vehicles fun to drive, and keeping the same fuel economy. Most other car companies are making cutbacks on horsepower for fuel economy24. With new federal fuel rules coming into effect in 2016, automotive companies are trying to improve fuel efficiency in their vehicles24. Even though other manufactures are designing their own efficient engines, like Ford with their EcoBoost engines. Mazda is still set apart from its rivals in their commitment to not sacrifice power, or “zoominess” as they say, power train overhaul and new designs and structures of their vehicles24. Mazda has new ideas for their marketing strategy with SKYACTIV models, these include, advertising, inside out, pricing, grade and equipment strategy2. Through advertising Mazda is going to promote communication of new information through digital and social media more than they have in the past, so they are able to reach a more diverse market2. The inside-out strategy is to help distributors and car dealers to gain confidence in the products they are selling. To do this Mazda is putting them through a program where they get to drive the SKYACTIV vehicle and go to training sessions that allow them to get to know the vehicles inside and out2. Some of the responses from dealers are gaining great confidence and high expectation for sales to increase. Dealers are also saying that there is a drastic improvement of brand loyalty through differentiation from other makers2. Through pricing Mazda is reducing the gap between the list price of the car and the transaction price2. Grade and equipment strategy is a simple system that emphasizes brand and differentiation equipment2.

After Mazda launched its new SKYACTIV technology, they have opened many doors to new customers. Even more so because SKYACTIV is the same car, only improved, Mazda retains old customers and gains new ones. Mazda’s target market with SKYACTIV technologies are individuals who are staying young at heart, who have a strong sense of expressing their selves and are self-confident in their choices4. Also, Mazda’s SKYACTIV technology targets a market that has never been targeted before. Other car companies have introduced fuel efficient cars and are targeting environmentally friendly people, whereas SKYACTIV technology is still powerful enough to target the people who want vehicles that are fuel efficient as well as fun and fast to drive4.(Maybe this paragraph should be up with the target marketing section on pg. 7 or 8?) The new SKYACTIV technology appeals to customers looking to keep power, but improve on fuel efficiency4. Fuel efficiency is one of the most demanded qualities in vehicles today, and Mazda targets those customers. These are the results of a recent survey conducted on American car consumers and their thoughts on fuel efficiency; ”Nearly 80 percent of survey respondents said they would ‘strongly support’ or ‘somewhat support’ a national goal of reducing oil consumption26. And more than 70 percent said they would support increased government funding for measures aimed at achieving that goal. Still, 94 percent named a high purchase price as a deterrent to choosing an ‘environmentally friendly or green’ vehicle25.” Mazda did exactly what Americans were looking for.

Americans wanted to have better fuel efficiency without sacrificing horsepower, nor having to pay more for the vehicle. Mazda introduced four models with SKYACTIV technology to North America with 35Mpg (Miles per Gallon,) 155 horsepower, all of this for a base price of $15,200 26. The automotive industry is one of the most competitive in business today. Both manufacturers and dealers alike rely on the success of marketing initiatives to hit sales objectives, month in and month out. But to build the brand and motivate customers to remain loyal requires a great deal of effort26. In 2008 there were roughly 54 million cars produced in the world26. Marketing plays a huge role in the automotive industry because there are so many different car companies to choose from. Normally once a car company has a customer the customer will become loyal to that car company and continue to buy their brand. The automotive industry is definitely a red ocean, where all of the car companies (the sharks) are fighting for one prey (consumers.) SKYACTIV Technology is where Mazda differentiates itself from competitors in the industry and escapes from the red ocean.

When the conversation turns to so-called “green” cars, Mazda arguably is the most honest and transparent car company on planet Earth. Bar none. No question 27. A big competitor of SKYACTIV technology vehicles is the Ford Focus. The focus also offers improved fuel economy and markets to people who are strictly looking for great fuel economy. Overall the automotive industry is very competitive and Mazda aims to use its SKYACTIV marketing techniques to make its product a successful one over its competitor. In conclusion, Mazda could also improve overall in their SKYACTIV brand if they pursued other options. Firstly, if Mazda had television programs, similar to BMW’s and Audi’s, outlining new technologies featured in their new vehicles, it would raise customer awareness. Secondly, Mazda could give customers the ability to directly purchase a vehicle from their website, so you can just go into the dealer and pick it up, instead of referencing locations to purchase from; this would raise total sales. Next, like Ford, Mazda should feature nitrite tires on all of their SKYACTIV vehicles and advertise an even higher fuel economy because of this. Finally, Mazda should come out with SKYACTIV engines for their pickup trucks, this would increase size of the market that the Mazda SKYACTIV technology is segmented towards.

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