Green marketing in the automotive sector: a comparative study in national and international research

Type de publication:

Journal Article

Source:

Gerpisa colloquium, Paris (2018)

Résumé:

Purpose: Among the new frontiers of the automotive sector is the tendency to incorporate Green Marketing strategies, not only in terms of advertising positioning but also in terms of products. This article presents the results of a research on new technologies and fields of innovation involving the theme of sustainability, specifically the Green Marketing strategies of companies in the automotive sector based on secondary data from ANFAVEA, FENABRAVE, OICA and the World Bank, from the which were extracted data on sales volume, purchasing power and taxation of national and international companies. In fact, in Brazil the issues addressed were more related to the management of innovation of pollution mitigation products (TEIXEIRA AND CALIA, 2013), issues related to sustainability influencing the decision of consumers in the municipality of São Paulo (CARVALHO AND HOURNEAUX JR., 2012), and the degree of importance of eco-design attributes of the product and the use of eco-efficient production technology in the decision-making process for the purchase of premium automobiles (CARVALHO, 2006), and finally, pollution control policies atmospheric (MENDES, 2004). International publications, in turn, are numerous and quite diverse; this can be explained by the fact that both in the United States and Europe, concrete actions regarding the automobile have been discussed for a long time. To name a few, Griskevicius, Tybur, and Van Der Bergh (2010) conducted a study of the reasons why people bought cars, household cleaners and dishwashers with ecological appeals. With regard to cars, the authors verified that the ecological appeal was the least valued. Choy and Prizzia (2010) concluded that regardless of gender and age, Hawaiians would buy hybrid cars to support the environmental cause as long as the cost of purchasing was the same as that of the conventional car. Mitchell and Harrison (2012) have shown the recent increase in green vehicle buying interest in the US market from the results of a study of a Ford sport utility vehicle, which is the market preference. Bhunnoo, Oogarah-Hanuman and Ramsaran-Fowdar (2011) illustrated how tenants saw the automotive market in Mauritius and what the attitudes would be for the introduction of hybrid vehicles on the market. Oliver and Lee (2010) compare the intentions of buying hybrid cars between South Koreans and Americans by checking for similarities and differences. Sangkapichai and Saphores (2009) investigated the reasons why Californians are interested in hybrid cars.

Methodology (Design): The article methodology was a wide range bibliographical survey of national and international academic articles, journals, books, dissertations, thesis, television documentaries, specialized portals and news in general, aiming to raise the greatest amount of information about the article’s subject and consisted in the search at several databases and electronic data of articles, periodicals, dissertations and theses. The bases were Scielo, Spell, Portal CAPES, PROQUEST, EBSCO and ENANPAD. For Malhotra (2012) the goal of an exploratory research is to search for a problem or situation to provide information and to gain greater understanding. In this step, the research was supported by secondary data sources, which, according to Malhotra (2012) help to identify and define the problem better, in order to provide a better conception of research. Still, for Hair et. al. (2005) exploratory research is discovery oriented, since it is indicated when there is little information about a study problem. The second phase of the Exploratory Study consisted of the screening and reading of the bibliographic material, establishing the basis that formed the whole theoretical reference and the secondary data presented and analysed.
The Main Results (Findings): What is observed is that Brazil has a tendency that follows the global trends regarding the green car, but the practice of Green Marketing is still incipient, because there are local governmental and structural factors that limit the development of the practice of the Green Marketing in Brazil, comparing with European and American countries. As if so, the hybrid car in the Brazilian market, besides being incipient, is expensive and depends exclusively on government incentives for its large-scale production, since it is not yet produced in Brazil, being imported in low volume. This fact is still somewhat distant, since it is perceived that the concept of the hybrid car remains in the utopia, and that for the big market, it can be seen only as one of many.

Practical Implications: The results contribute to raise questions that stimulate the reflection and in a second moment, stimulate and provide a basis for future studies related to national and regional clusters, since as the hybrid car in the Brazilian market it still depends exclusively on governmental incentives for its large-scale production, the study can subsidize Public Policies to eliminate industry dependence and encourage structural changes in the Automotive Sector, specifically in the direction of green marketing strategies to be promotional, or in terms of producing green or hybrid cars.

Texte complet:

GREEN MARKETING IN THE AUTOMOTIVE SECTOR: A COMPARATIVE STUDY IN NATIONAL AND INTERNATIONAL RESEARCH.

ABSTRACT

Purpose: Among the new frontiers of the automotive sector is the tendency to incorporate Green Marketing strategies, not only in terms of advertising positioning but also in terms of products. This article presents the results of a research on new technologies and fields of innovation involving the theme of sustainability, specifically the Green Marketing strategies of companies in the automotive sector based on secondary data from ANFAVEA, FENABRAVE, OICA and the World Bank, from the which were extracted data on sales volume, purchasing power and taxation of national and international companies. In fact, in Brazil the issues addressed were more related to the management of innovation of pollution mitigation products (TEIXEIRA AND CALIA, 2013), issues related to sustainability influencing the decision of consumers in the municipality of São Paulo (CARVALHO AND HOURNEAUX JR., 2012), and the degree of importance of eco-design attributes of the product and the use of eco-efficient production technology in the decision-making process for the purchase of premium automobiles (CARVALHO, 2006), and finally, pollution control policies atmospheric (MENDES, 2004). International publications, in turn, are numerous and quite diverse; this can be explained by the fact that both in the United States and Europe, concrete actions regarding the automobile have been discussed for a long time. To name a few, Griskevicius, Tybur, and Van Der Bergh (2010) conducted a study of the reasons why people bought cars, household cleaners and dishwashers with ecological appeals. With regard to cars, the authors verified that the ecological appeal was the least valued. Choy and Prizzia (2010) concluded that regardless of gender and age, Hawaiians would buy hybrid cars to support the environmental cause as long as the cost of purchasing was the same as that of the conventional car. Mitchell and Harrison (2012) have shown the recent increase in green vehicle buying interest in the US market from the results of a study of a Ford sport utility vehicle, which is the market preference. Bhunnoo, Oogarah-Hanuman and Ramsaran-Fowdar (2011) illustrated how tenants saw the automotive market in Mauritius and what the attitudes would be for the introduction of hybrid vehicles on the market. Oliver and Lee (2010) compare the intentions of buying hybrid cars between South Koreans and Americans by checking for similarities and differences. Sangkapichai and Saphores (2009) investigated the reasons why Californians are interested in hybrid cars.

Methodology (Design): The article methodology was a wide range bibliographical survey of national and international academic articles, journals, books, dissertations, thesis, television documentaries, specialized portals and news in general, aiming to raise the greatest amount of information about the article’s subject and consisted in the search at several databases and electronic data of articles, periodicals, dissertations and theses. The bases were Scielo, Spell, Portal CAPES, PROQUEST, EBSCO and ENANPAD. For Malhotra (2012) the goal of an exploratory research is to search for a problem or situation to provide information and to gain greater understanding. In this step, the research was supported by secondary data sources, which, according to Malhotra (2012) help to identify and define the problem better, in order to provide a better conception of research. Still, for Hair et. al. (2005) exploratory research is discovery oriented, since it is indicated when there is little information about a study problem. The second phase of the Exploratory Study consisted of the screening and reading of the bibliographic material, establishing the basis that formed the whole theoretical reference and the secondary data presented and analyzed.

The Main Results (Findings): What is observed is that Brazil has a tendency that follows the global trends regarding the green car, but the practice of Green Marketing is still incipient, because there are local governmental and structural factors that limit the development of the practice of the Green Marketing in Brazil, comparing with European and American countries. As if so, the hybrid car in the Brazilian market, besides being incipient, is expensive and depends exclusively on government incentives for its large-scale production, since it is not yet produced in Brazil, being imported in low volume. This fact is still somewhat distant, since it is perceived that the concept of the hybrid car remains in the utopia, and that for the big market, it can be seen only as one of many.

Practical Implications: The results contribute to raise questions that stimulate the reflection and in a second moment, stimulate and provide a basis for future studies related to national and regional clusters, since as the hybrid car in the Brazilian market it still depends exclusively on governmental incentives for its large-scale production, the study can subsidize Public Policies to eliminate industry dependence and encourage structural changes in the Automotive Sector, specifically in the direction of green marketing strategies to be promotional, or in terms of producing green or hybrid cars.

Key Words: Green Marketing Strategies, Brazilian Automotive Sector, Sceneries, Green Car, Sustainability

1 - Introduction

The idea and need of using the planet resources without any permanent degradation, so that the concepts of sustainability, environmental conservation, ecologically sound, among others, have never been so much in evidence.

The concept of sustainability is not new, as well as "the discovery of the XXI century", once Thomas Malthus had already mentioned this issue in the eighteenth century, in regard to the controlled use of resources, due to the possibility of misery and hunger become a global plague that would destroy the entire human race (Gennari & Oliveira, 2009).

Analysing the history of mankind, Moraes (2009) states that: aboriginal’s tradition and wisdom set out the benefits of nature conservation to modern urban population.

In the study of marketing, more specifically deriving from “The Activist School” approach, it is observed that, since the 1950s, Ralph Nader’s work (1957) drew attention to the pollution generated by vehicles.
Lustosa (2010) says that besides the intensive use of natural resources, waste production processes launched in the environment resulted in the accumulation of pollutants above the absorptive capacity, generating pollution, therefore degrading the environment. All of these concerns and trends lead to emergence of a new approach on marketing management, called “Green marketing”, defined by Dahlstrom (2011) as a process of planning and executing the marketing mix for ease consumption, production, distribution, promotion, packaging and product retrieval in a way that is susceptible to environmental concerns.

Thus, there is a lot of discussion about what can be done, yet we may ask: what really have the automotive sector organizations done in Brazil in relation to sustainability, concerning about Green Marketing Strategies? This is the question raised by this study, accomplished by secondary data from sources such as ANFAVEA, FENABRAVE, OICA and World Bank. It presents the reality of the sector in Brazil, framed in an oligopoly market structure, analysing it in comparison to worldwide organizations scenario, and concluding with the Green Marketing Strategies adopted by national and international organizations, presenting grounded explanations for incipient Green Marketing Strategies used in Brazilian automotive sector.

2. Brazilian Automotive Sector: A Brief Scenario

Brazilian automotive market is considered the 4th worldwide in production and sales, nevertheless this position demands attention and analysis. This is related to the fact that Brazil’s number is only lower than China, USA and Japan, in this order; and because there is a gap regarding the first positions, as shows Chart 1:

Chart 1 – Annual Production of Cars and Light Vehicles per Country

Position Country Units Evolution
1 China 16,366,255 7.41%
2 USA 14,492,600 13.41%
3 Japan 5,320,391 27.58%
4 Brazil 3,634,639 6.11%
Source: FENABRAVE, 2012.

In that situation, Brazil assumes an important role as the 4th place worldwide in the automotive market, and also for being the 6th economy (7th in Purchasing Power). The scenario and peculiarities of our market challenge professionals and managers of different areas (such as finance, administration, economy and mainly marketing) that participate in the planning in the automotive sector, enhancing the green marketing approach in the kind of vehicles offered in the market respecting sustainability concepts and environmental protection.

To fulfill the purpose of this paper, a research about trends on the “green car” was carried out, and Brazilian automobile manufacturers’ strategies as a result of a Marketing Management focused on Green Marketing.

The investigation started from two issues: the first one regarding the product – automobile, and the second one related to the manufacturing process. Regarding the product, the impacts of the use and after-use of the vehicle have been examined. In the process, the studies focus on which resources (water, energy) are used in manufacturing automobiles and the waste treatment during this process.

The research mentioned in this article, was based on the analysis of the following automobile manufacturers in Brazil: Volkswagen, General Motors/Chevrolet, Ford, Fiat, Toyota, Honda, Nissan e Mitsubishi. These companies were chosen considering their local importance and for being responsible for 82% of market share in 2012, as shown in Chart 2:

Chart 2 – Market Share – Selected Automobile Manufacturers

Position Automaker Market Share
1 Fiat 23.06%
2 Volkswagen 21.14%
3 GM – Chevrolet 17.68%
4 Ford 8.9%
5 Honda 3.71%
6 Toyota 3.13%
7 Nissan 2.88%
8 Mitsubishi 1.67%
Source: Elaborated by the Authors
Compiled information from ANFAVEA – Associação Nacional dos Fabricantes de Veículos Automotores, 2013.

The remaining 18% are between 39 brands, some of which are automobile manufacturers and other small importers companies. Automobile manufacturers mentioned above are ANFAVEA affiliates (Brazil - National Association of Motor Vehicle Manufacturers), and in the market share rates are included vehicles imported by them, while the affiliated importers to ABEIVA (Associação Brasileira das Empresas Importadoras de Veículos Automotores - Brazilian Association of Importers of Automotive Vehicles) that are not automobile manufacturers in Brazil, represent approximately 6% of sales volume in the domestic market.

Automobile manufacturers selected are entirely of foreign capital, consequently Brazilian market is merely one more activity from the overall operation of the company, but this does not mean that the products offered here have the same technology, equipment and models from the headquarters’ ones. This characteristic makes Brazilian market a distinctive regional arena, and this paper will address the strategies of selected organizations in the automotive sector, with regard to the ones from marketing planning, starting with an analysis of local scenario, which resulted in the offer of products with respect to the environment and sustainability, denominated "green cars".

3 – Green Market Strategies in Oligopolistic Markets

The market structure in oligopoly, affects business performance, so it is important to highlight that this is the current structure in the automotive sector. The various forms or market structures depend primarily upon three characteristics that are: the number of companies in the market, the type of product offered (same or different) and whether there are barriers for new entrants to entry in this market (Vasconcellos & Garcia, 2012). The strategies adopted by companies concerning product offering, pricing, being proactive or reactive, focusing on cost or differentiation, reflect in the performance because planning should take into consideration the amount of competitors, and in oligopoly there are few big competitors owing the entire product offer.

The automotive sector is classified as an oligopoly, which is characterized by a small number of companies dominate the market supply, as automobile manufacturers , or else explain Vasconcellos & Garcia (2012 ) as one in which there are large numbers of companies, but few dominating the market . A summary of different opinions on oligopoly market structure can be seen in Chart 3.

Chart 3 –Positioning on the Oligopoly Market Structure

Authors Positioning on Oligopoly
Stiglitz & Walsh (2003) In oligopolies there are few companies that are concerned about the reaction of rivals to do anything. That goes for airlines, cigar industry, aluminum, automotive industries and many others.
McGuigan, Moyer & Harris (2004) Oligopoly is characterized by a relatively small number of companies offering a product or service, and differentiating characteristic lies in the fact that the number of firms is small enough that actions of an individual company (involving price, quantity produced, style or quality of the product, release of new models and sale conditions) have perceptible impact on other companies’ sales.
Nellis & Parker (2003) In oligopoly markets there are a relatively small number of market suppliers and companies tend to be interdependent. Therefore, competitive strategy is based on some belief about competitors’ reaction, in terms of price competitiveness or not.
Pinho & Vasconcellos (Org), (2004) Oligopoly is a market structure that is characterized by the existence of few producers and sellers manufacturing goods that are close substitutes among themselves.

McConnel & Brue (2001) Oligopoly is a market dominated by few big producers and homogeneous or differentiated products, and the profit of each company depends not only on its own price and its sales strategies, but also their rivals’ ones.
Mansfield & Yohe (2006) Oligopoly is composed of few companies and each one creates its own policies and strategies watching its effects on corresponding rivals.
Ferguson (1987) The oligopoly exists when there is more than a seller in market, but when the number is not so big to neglect the contribution of each one.
Source: Elaborated by the Authors
Research - Bibliographic references quoted.

The environment of automotive industry shows that despite the interdependence among competitors, it is necessary that each company uses specific strategies to obtain results and position in the market.

The definition of strategy is not unique, it varies according to the world of who will define and study it, and therefore there is no consensus on this subject and its definition. Mintzberg et al (2006) defines it as a pattern or plan that integrates key goals, policies and sequence of action of the organization. Andrews apud Serra et al (2004) defines as the pattern of objectives and key goals to achieve defining what business and type the company is or should be. Katz (1970) defines it as the relationship between the company and its surrounding environment: present relationship (strategic situation) and future relationship (strategic plan, which is set of objectives and actions to take in order to accomplish these goals). For Dias (2006) is the set of actions performed by an organization in order to adjust it to its competitive environment in order to achieve its major objectives. The strategic decisions include relationship between the company and its ecosystem; for Porter (2004), they are offensive or defensive actions to create a defendable position in an industry to successfully face the competitive forces, and thus get a higher return on investment; for Thietart (1984) is the set of decisions and actions related to choice of means and conjunction of resources to achieve a goal. All definitions have in common the concepts of Social Marketing, that bounds the brand to a major cause and Societal Marketing, which is to offer products that promote community welfare.

The strategy to accomplish Green Marketing and Eco-friendly product is based on Societal Marketing. The denomination of “Green Marketing” began in the '70s, when it began the concern about environment. It was during this period that emerged various environmental NGOs and environmentalist movements. According to Kotler and Armstrong (1998), in 1970 on “Earth Day”, for the first time environmentalists attempted to educate American public on environmental issues not very successfully, for at that time the population was not focused on such concerns.

Nowadays, sustainability concerns have never been so evident, companies and consumers are in some ways attached and engaged in environmental cause, either by values, trendiness, imposition, financial reasons or necessity: they just wish that people and businesses are more careful with the environment.

The damage caused to the ecosystem by predatory mining, devastation of forests, toxic waste, acid rain, air and water pollution are the foundations of concerns of environmentalism - created by conscious citizens and government agencies, aimed at protecting and improving the environmental life of the population.

For Dias (2009), the “Green Marketing” is based on a process of integrated management, responsible for identifying, anticipating consumer’s expectations and satisfaction. It is expected that as a result of Green Marketing approach, products’ production is profitable for the company, satisfying the customer, sustainable and responsible for the environment.

Vilela Junior and Demajorovic (2006) reported that Green Marketing is an adjustment of the companies’ marketing strategies to requirements of a new era in which consumers want more than products.

Ottman (1994) states that the Green Marketing has two purposes: the first one is to develop products that balance consumer needs, feasible price reasonable and compatibility to environmental issues, resulting in minimum impact on the environment. The second one is to develop a high quality image, which includes environmental sensibility considering as attributes of a product, and its manufacturer historical record regarding environmental compliance.

Therefore, companies’ marketing strategies in Green Marketing should show this concern not only in speech or in ideas, but in their managers’ attitudes and behaviors when carrying out the implementation. Even though being the 4th market, Brazil does not perform as well as Germany, in the 5th place in the automotive industry, with regard to investments and technologies that seek energy efficiency of vehicles and consequently resulting in an offer almost nonexistent of green vehicles. The poor performance also reflects the quality of the offered equipment, road safety, quality manufacturing, incentives, and also taxes that affect directly the car final price.

4 – Brazilian automotive sector scenario in the global context

In this section, we present brief overview of the automotive global scenario, followed by analysis of the reality of this sector in Brazil and, finally, the analysis of green marketing practiced globally and nationally.

4.1 Global automotive scenario

The forces that rule competition in oligopoly (5 forces) by Porter (2004), Hitt, Ireland and Hoskisson (2003) illustrates the external environment in Figure 1.

Figure 1 – External Environment

Source: Hitt, Ireland e Hoskisson, 2003.

The influence of each micro-environment is critical to the performance of the sector, but each market - specifically the automotive one - has peculiarities: while U.S. national preference is for sport utility vehicles (SUVs), representing almost 60% of the market; in Brazil, the predominant option is for passenger vehicles. Thus, the subjects presented create a scenario with the following characteristics:
- Consumers want compact, quiet and efficient vehicles.
- Electric and hybrid vehicles are alternative to combustion ones.
- New sources of energy are offered.
- Green Products.
- Increased demand for electricity.
- Global and local increase on population and consumption.
- More severe environmental laws.
- Technology focused on energy efficiency and traffic management.
- Increased pollution.
- Problems of infrastructure to accommodate the growing fleet of vehicles in cities.

This scenario is not specific for Brazil; nevertheless, the way these problems are managed makes the situation of Brazilian market unique. For comparison, Charts 4 and 5 show some statistics comparing Brazil to Argentina, Chile, China and Mexico, classified as emerging economies.

Chart 4 –Per capita Income– Competitors Price x Purchase Power

Country US$ - Per Capita Income
Actual Prices US$ - Per Capita Income
Purchase Power
Argentina 9,740.00 17,130.00
Brazil 10,720.00 11,420.00
Chile 12,280.00 16,330.00
China 4,940.00 8,390.00
Mexico 9,420.00 15,390.00
Source: World Bank, 2011.

In Latin countries, Brazil is the second in per capita income and the worst in purchasing power: this shows loss of competitiveness, highlighting that among analysed countries, Brazil has the highest costs.

Chart 5 – Production Volume x Sales Volume

Country Global Position Production Volume Sales Amount
Argentina 17º 828,771 818,861
Brazil 4º 3,432,616 3,633,248
Chile 28º 0 352,637
China 1º 18, 418,876 14, 234,740
Mexico 15º 2,680,037 903,098
Source: Elaborated by the Authors
Data Compiled from ANFAVEA, ANAC (National Association for Automotive Industry -Chile),
World Bank, Autoinforme (website about Automotive Market), FENABRAVE and OICA, 2011.

China, the first undisputed position, demonstrates expansion of its external and internal economy as well, as 4 million vehicles are exported, more than the whole Brazilian market, considering that China is the largest country in population with over 1 billion people.

Mexico is an exporting platform, but despite the fact that its production is prepared to answer an increasing demand, it is too vulnerable to global recession or to economies that are based on exportation (mainly North America and Europe) affecting its revenues, and consequently the levels of investment and employment.

Brazil, on the other hand, has an undeveloped market, exporting an average of 400 thousand vehicles, with production mainly to domestic market. However this is extremely variable, depending on government subsidies to stimulate growth and maintain production level. To accomplish that, in less than a decade, four reductions in IPI (Tax on Industrialized Products) were issued in order to maintain the level of activity and stimulate sales - the last one happened in 2011 together with other financial incentives - such as reduction in rates and increase on financing time.

4.2 – Brazilian automotive market sector reality

Domestic market today offers (production) and sells (production and imports) passenger vehicles, light commercial vehicles, lorries and buses, and the distribution by type of fuel can be illustrated as Chart 6.

Chart 6 –Vehicle type x Fuel Type

Vehicle Type Fuel
Passenger Vehicles Gasoline and Biofuel (Ethanol and Gasoline)
Light Commercial Vehicles Biofuel (Ethanol and Gasoline)
Gasoline and Diesel
Lorries and Buses Diesel
Source: Elaborated by the Authors
Compiled from ANFAVEA, 2012.

In Brazil, passenger vehicles are manufactured locally, and, without exception, they all are biofuel - accepting any mixture of ethanol and gasoline in their tank and the consumer has the opportunity to choose whichever is more convenient. Vehicles imported from other countries like Mexico are powered by gasoline and biofuel; from Argentina, vehicles are biofuels; and gasoline for almost all other countries. Lorries and buses are diesel powered. Brazil was a pioneer in developing the technology of ethanol as fuel in the late 1970s (Proalcool program), and also the use of two fuels in the same tank (called flex-fuel or flex-fuel vehicles). Despite the pioneering, other technologies have emerged abroad and are not used due to costs involved, or, in many cases, once Brazil does not produce, only imports this resource, tax barriers regarding production and access to technology. Chart 7 illustrates the participation of taxes in vehicles’ prices.

Chart 7 – Taxes on vehicles production

Automobiles - 2011
Taxes 1.0 From 1.0 to 2.0 Above 2.0
Ethanol / Flex Gasoline Ethanol / Flex Gasoline Ethanol / Flex
IPI (Tax Production) 7% 13% 11% 25% 18%
ICMS ( Tax of Circulation) 12% 12% 12% 12% 12%
PIS / COFINS (Employees’ taxes) 11.60% 11.60% 11.60% 11.60% 11.60%
Part (%) Final Price 27.10% 30.40% 29.20% 36.40% 33.10%
Source: ANFAVEA, 2011.

As shown on the chart, higher taxation occurs on vehicles with engine capacities above 2,000 cylinders, or 2.0. This procedure is extended to imports; besides the mentioned taxes, includes import tax and other taxes that increase the cost of the coming product, thereby causing a technology and price gap between the vehicles manufactured here and the ones from abroad. Thus, in Brazilian market, little has been done on environmental aspects of the offered products. This little done is a reflection of guidelines from headquarters of international companies that carries in the definition of a product and corresponding components, the requirements for adaptation of local suppliers , nevertheless the suppliers frequently are foreigners.

4.3 - Worldwide green marketing reality in the automotive sector

Europe and U.S. have a market and a wider offering of hybrid and electric vehicles. For example, in U.S. in the 1990s, General Motors introduced the EV1 type, but it was a failure, very controversial. Even though U.S. is not signatory to Kyoto Protocol, and also one of the biggest polluters of the atmosphere, consumers willing to buy the vehicle even some vehicles presenting certain problems.

The case is well illustrated in the documentary "Who Killed the Electric Car ", which shows that at the time, there was no governmental, neither from the industry, interest in investing heavily in a technology that would replace oil as the main source of energy, and could affect the current employment industry, and tax revenue could be weakened, resulting severe impacts on American economy. Therefore, some batteries brands were purchased by Exxon Mobil, eliminating the force "Products Substitutes” in Porter’s model (2004).

Chart 8 illustrates models offered in European and American markets and their respective release dates.

Chart 8 – Vehicles and Alternative Technology used

Brand
Model Technology Market Release Year
Toyota Prius Hybrid Europe / USA / Japan 1997
Honda Insight Hybrid Europe / USA / Japan 2000
Volvo XC 60 Electric (Plug-in) Sweden /
Europe 2012
Nissan Leaf Electric (Plug-in) Europe / USA / Japan 2010
Peugeot iOn Electric (Plug-in) France /
Europe 2010
Ford Fusion Hybrid USA /
Canada 2009
Chevrolet Volt Hybrid USA /
Canada 2010
Opel / Holden Ampera Hybrid Europe /
Australia 2010
Source: Elaborated by the Authors.

As shown, technology, products and the incentive for the viability of new electric models have existed for some time in European and American markets, yet incipient in Brazil.

4.4 - The Ecologically Correct, Green Car and the Future: Relevant issues of Green Marketing Strategies in Brazil

Even before the greatest American flop, Brazil had its pioneer launched and produced by General Motors, Chevrolet, the EV1 or Electric Vehicle 1 – named Gurgel Itaipu, in 1974. Electric vehicles are dated from the 19th century, the same period of the combustion engine vehicles. Due to the resounding success of Ford T, automakers have focused on this concept, leaving the electric vehicles aside.

For example, Ford released Fusion Hybrid vehicle in 2010 as an ecological alternative, a unit of the car was given to Presidency. Toyota announced in 2011 the coming of its first hybrid vehicle, Prius, launched in 1997; many Hollywood stars such as Cameron Diaz and Ewan McGregor got one, making the product gain visibility. Since January 2013, it is officially being sold in dealerships of the brand in Brazil.

Nissan had offered a pioneering project in São Paulo, “Zero Emission " providing two electric Leaf models , that, do not use combustion engine in conjunction with an electric motor as Prius and Fusion .

Honda announcing its most popular model, Civic, highlights its technology regarding Econ mechanism that switches the vehicle parameters assuring a more economical drive.

Mitsubishi in return, has imported a unit of electric vehicle i-MIEV which has being used by the company's president in Brazil.

Volkswagen had introduced a Blue Motion line in Polo model, company’s global car, inserting the idea of the economy, frugality and environmental consciousness. The Gol model, the biggest selling brand, had also launched an Ecomotion version. Both were a complete failure.

Chevrolet has launched a line of vehicles with Eco Tec and Econoflex engines, which promise of lower fuel consumption was only a promise.

Finally, Fiat, for over a decade has been working on a pilot project in partnership with the binational Itaipu Dam, for now the electric vehicles developed there are used only for its indoor employees. Still, Fiat was the first company in Latin America to treat the waste from the production process, having a water treatment station at the plant in the city of Betim in Minas Gerais.

Even occupying a prominent position, Brazilian market is still not moving forward on developing technology and offering products in line with other markets like U.S. and Europe. Part of this problem can be based on the country’s economic situation; distribution of uneven income causing demand on cars of lower value, resulting that automobile manufacturers import certain models, justified by weak demand or need of more investment, thus creating barriers to investment, development and production of vehicles.

Chart 9 illustrates the models of greater value produced in Brazil compared with the same respective price ranges of imported ones

Chart 9 – Types produced x Imported x Prices – Selected brands

Brand Type Price average (BRL) Production from
Volkswagen Golf 50,000.00 Brazil
Volkswagen Jetta 62,000.00 Mexico
Ford Ecosport 53,000.00 Brazil
Ford Fusion From 80,000 to 120,000,00 Mexico
Source: Elaborated by the Authors
Compiled from ANFAVEA and automotive companies.

Information above is not a pattern, even though other automobile manufacturers can add more value to their products internally, such as Chevrolet, which offers models ranging from R$ 25,000.00 - Classic model, up to R$ 170,000.00 - Trailblazer model. The reason why some brands can produce vehicles with higher added value instead of importing them is related to the segment in which they operate as well as the strategic planning, goals and objectives of their companies. Besides economic factors, taxation in cars price composition is the highest in the world, also affecting production and importation decisions, as shown in Figure 2.

Figure 2 - Comparative Composition Taxes on Vehicle Final Price

Source: ANFAVEA, 2012.

Brazilian policies regarding the marketing of vehicles have immediate effect on planning of the companies located here or in companies that want to settle. The last event related to IPI (tax for industrialized products) was connected to the entry of Chinese vehicles in Brazilian market, with competitive prices if compared with national equivalent type, and higher quality in comparison to corresponding Brazilian ones. For that, the association of automobile manufacturers - ANFAVEA met the federal government to discuss a policy to encourage domestic market (meaning “protection”) to compete with Chinese cars. As a result, there was an increase of IPI for imported cars called New Automotive Regime (except for Mercosur and Mexico), establishing import quotas for vehicles and promoting incentives to initiate local production of what is imported, replacing importations.

The five forces of Porter (2004), do not mention government as a competitive force, but only as the 6th entry barrier as “Government Policy ", by which the government can limit or even prevent an industry entry by controls, operation licenses and limits to access raw materials. In that way, the government is considered an indirect force. Bailey (1999) states that companies should pursue an integrated strategy, including both the private and public sectors, and strategic planning should include an awareness of public policies fully understood in all steps of the value chain and throughout the organization; also the government should be considered in the strategic planning, once taxation has direct impact on performance and investment/disinvestment decisions. Moreover, incentives for new energy sources lead to reflection on the following issues:

- (A) governmental interest at the time: The Federal Government is the controller of Petrobras (leader in Brazilian oil industry), strategic market for tax revenue and also controlling inflation. Any activity that replaces oil as a source endangers the entire research investment and exploitation, such as Pre-Salt.

- (B) energy generation: Brazilian energy matrix is based mostly on hydropower and the remaining in power. It is a strategic market to control inflation, and short term increase on demand may result in higher costs, since the answer to demand does not happen at the same speed.

- (C) ANP - National Petroleum Agency: Agency Supervisory Government for the fuel market, with monitoring of the entire production and distribution chain.

- (D) Petrobras Distributor (BR): distributes only fuel, there is still compatible technology for charging an electric vehicle as easy as conventional combustion vehicle - it requires investment in infrastructure.

- (E) ANEEL - Brazilian Electricity Regulatory Agency: Government supervisor for the development of electricity market. It requires investment and studies for proper home and service stations for correct and risk-free use.

- (F) bi-fuel technology: innovative, so far obsolete. Launched in scale in 2003, still failed to eliminate the issue of energy efficiency in the use of fuel, the structure was only prepared to supply this technology.

- (G) fleet: vehicles need to be withdrawn from circulation and the purchase of new ones less polluting ones has to be encouraged, and in Brazilian market there is nothing done about the recycling of obsolete and waste vehicles

4.4.1 - The Govern Policy for Automotive Sector Development

5 - Conclusion

Statistical data shows that Brazilian market is in a respectable position in relation to the world, even when compared with bigger and more developed economies. Despite the position on local purchasing power and taxation added to the final price of a vehicle, what compromises a lower performance in higher added value segments compared to the lower value-added ones, resulting in products with different technology standards from America, and two European economic powers (Germany and England), as these markets develop and offer the same products, with no difference in equipment, accessories and technology. Moreover, even with high government interests on the development of the sector, new technologies are still low or almost inexistent, since they are directly related to strategic sectors of Brazilian economy, contributing for the governmental policies not considered as a direct force at Porter's (2004) model, are accepted on the strategic business planning of the companies.

Another important point noticed is that even with current and innovative technology that was bi-fuel vehicle, it had become obsolete, and the investment that once was applied in R & D - Research & Development, it is now needed in RD & I - Research, Development & Improvement. Therefore, to solve questions concerning alternative energy and existent technology, science is the solution.

The issues gathered in this article contribute to managers of small, medium or large businesses, to analyze relevant orientation towards the environment in which they are settled, while it is taken into consideration legal aspects of the industry or market that influence in competition and level of investment in resources. It also allows leverage information search level, prepare the strategic planning of the company, and from the analysis of environmental scenario define and implement green marketing among other strategies of the organization.

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Concéption Tommaso Pardi
Administration Géry Deffontaines

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