Analysis of Perodua Casd

ABSTRACT

This case analysis focuses has two key objectives (1) evaluating the effectiveness of Perodua's company advertising with a social dimension (CASD) and (2) providing recommendations to improve the company's CASDs strategy. An in depth analysis is done Malaysia's automobile industry taking into account government role and competitive threats. The company's competitive positioning and advertising history will also be reviewed.

In order to create a more meaningful analysis of the case, relevant literature is presented and key points are highlighted. The non-economic metric evaluation of the CASD strategy will come from related literature.

After the analysis, recommendations are made in further improving the CASD strategy. Key managerial implications as presented literature will be used to create high impact and quality recommendations. Also, there will be much focus on addressing the following key issues: First, will CASDs be more effective in sustaining the company's profitability in the midst of global and regional liberalisation of trade? Second, will CASDs built on a good citizenship orientation give Perodua a unique position on the world stage? And lastly, does the company have the moral authority to get viewers to re-examine their values through the company's ads.

REVIEW OF RELATED LITERATURE

The studies reviewed provide (1) a theoretical foundation on the review of marketing with social dimension and its subset, company advertising with social dimension (CASD) and (2) a model for explaining success factors of CASD.

The Role of Marketing Actions with a Social Dimension: Appeals to the Institutional Environment

The study provides for two main objectives:

1. Provide empirical evidence of the main effects of marketing actions with a social dimension and the interaction effect between these actions can be understood an examined.

2. Introduce institutional theory as one theoretical lens through which the integration of non-economic and economic oriented marketing actions can be understood and examined.

The results of the second objective and key strategic implications will be used extensively for this case.

Overview on Institutional Theory

Institutional Theory provides a non-economic explanation of organizational behaviours and strategies in business markets (DiMaggio & Powell, 1991; Scott, 2008). It is essential for managers to follow rules, norms, and belief systems related to the institutional environment and mobilize their social, economic, and political resources to adapt and change institutional environments. The inclusion of the institutional theory leads to the view of the organization as an organic, indivisible part of a complex environment system that includes both "hard wired economics" and "socio cultural norms". Organizational action that conforms to the norms of a given constituency provides a show of cultural allegiance, for which an organization is rewarded with support.

Legitimacy

Legitimation represents a perception of how well the organization enacts and upholds environmental norms (institutional). There are two types of legitimacy; the first is called "pragmatic legitimacy" where an organization satisfies the egotistical need of a consumer. For example, an organization that is able to satisfy the needs of a consumer for a specific product at a specific price will achieve pragmatic legitimacy with that consumer.

However, organizations cannot rely of pragmatic legitimacy alone since it makes it vulnerable to consumer tastes, competitors' threats and other self - interested manipulations. It needs to reach the second phase of legitimacy which is "social or moral legitimacy". With social legitimacy, the evaluation of the organization is based on whether the organization's actions are consistent with the welfare of society. Social legitimacy provides a better justification for the company's existence, and in therefore rewarded with more support from the public.

Key Strategic Implications

The study took into consideration the impact of performative actions, organizational strategies aimed at specific tasks (e.g., making shopping easier and cheaper) and institutional actions, strategies aimed at the institutional environment (e.g. socio cultural norms).

The results reveal four strategic implications:

1. An institutional orientation. The study strongly supports institutional actions strategic centrepiece rather than just a mere trade-off and side by side with economic oriented strategy. Taking for example retailers, they must take into account product mix (assortment issues, competitive positioning) consistent with the adoption of a institutional orientation (e.g. labor does not come from third world sweat shops).

2. The interaction of performative actions vs institutional actions. Simply put, a company that finds itself unable to compete on performative grounds because of smaller economies of scale, may find that is advantaged to outperform its competitors in the institutional environment. The institutional orientation benefits the company in two ways: (1) it gains the main effect on the institutional actions (gains social legitimacy) and (2) raises the minimum level of institutional actions.

3. Legitimation as measure of business performance. Menon and Menon (1997) call for an appropriate measure that captures both non-economic and economic criteria. The results of the study suggest that legitimation as a mediating variable between strategic actions and support maybe the measure.

4. Support as a key dependent variable. Support replaces more specific product and brand choice variable if an institutional orientation is to be developed.

Company Advertising with a Social Dimension

The study examines company advertising with social dimensions and compares them to matched standard, or non - social campaigns. Furthermore, the author of the study investigates the managers' objectives for the campaigns, processes creating them, and develops a model for explaining success factors. For this case only the model for success factors will be used extensively.

Degrees of Freedom

Because of tougher obstacles and higher hurdles, social campaigns need more latitude than standard campaigns; they need