1. Marketing
research
(1.1) Market
* Size of the
market
The size of the market is large - the whole
car industry (world-wide) with multi-billion pound worth of value. Below are
some of the car manufacturers today:
Acura | Alfa Romeo | American Motors | Audi a|
British Marques | BMW | Bricklin | Bugatti | Buick | Cadillac | Chevrolet |
Chrysler | Citroen | Daewoo | DeLorean | DeTomaso | Dodge | Eagle | Ferrari |
Fiat | Ford | General Motors | Holden | Honda | Hyundai | Infiniti | Isuzu |
Jaguar | Jensen | Kia | Lada | Lamborghini | Lancia | Lexus | Lincoln |
Lotus | MG | Maserati | Mazda | Mercedes
Benz | Mercury | Mitsubishi | Nissan |
Oldsmobile | Opel | Peugeot | Plymouth | Pontiac | Porsche | Renault | Rover |
Saab | Saturn | Skoda | Studebaker | Subaru | Sunbeam | Suzuki | TVR | Toyota |
Trabant | Triumph | Tucker | Vauxhall | Vector | Volkswagen | Volvo
* Market
structure
The type of marketing in which we are
concerned with can be categorised as industrial marketing. This means that we
are making specialised products that are sold to car companies and
manufacturers rather than the general public. The obvious reason for this is
that the product is assumed to be fitted onto cars by engineers only.
* Industry output
Below is the statistics
on car production. This information is required as we need to identify growth
potential which is the key to find a new opportunity. A growing market is where
prices and margins are higher and therefore more desirable.
* Mode of
transport
This research
covered travel patterns among London passengers. Travelling by car comes first
with a share of 49% and bus usage follows with 19%. This is shown below.
Source : London
Transport Household Survey
(1.2)
Product
* Factors that
may affect demand for the product
Demand for this type of product may be
affected by several factors:
1. The rate of
national income which depends on the Gross National Product (GNP) and the
capital consumption. As the national income increases, so does the production
of goods and services which include cars. The quarterly national accounts is
shown below.
Personal sector
Industrial and
commercial
Gross domestic
Gross domestic
Gross national
saving ratio
companies financial
product at current
product at constant
disposable income
at
surplus or deficit
market prices
factor cost
constant market prices
per cent
œbn
1990=100
seasonally
adjusted
1996 Q1
11.7
1
131.1
107.6
108.3
Q2
11.9
2.6
132.7
108.2
109.4
Q3
11.7
1.3
134.4
108.9
109.8
Source: ONS
2. Demand is also affected by a change in
price of the product. A survey was conducted to find the general response to
price changes. 30 samples of potential customers were taken and the result of
the survey is shown below.
* Competitors
Pricing
The chart below
shows how car manufacturers (up-market) charge for their electrical optional
equipment.
(1.3) Competitors
* Competitive
analysis
The company is a
leader in terms of the product it's developed but in such a large market, many
other new technologies have been introduced. These products are designed to
help improve vehicle - owner safety and security. They offer significant
potential for automotive manufacturers. A study called APEAL by J.D. Power has
shown that consumer's best interests are technologies that lessen the chance of
an accident. This could mean that the product has some chances of success. This
could be further proved by certain tests. Some of the emerging technologies of
greatest interests to consumers are:
* Run-flat Tyres
: drive up to 100 miles on a flat tyre
* Automatic 911
dialling : in an accident, vehicle would automatically contact 911
* Vision
Enhancement : computer screen display to aid driving when visibility is poor
* Automatic
Stability Control : Sensor which keeps driver from losing control
* Remote start-up
: A button on the key which would start the vehicle from a distance
2. Marketing of
the product
(2.1) Product and
Planning
* Product lines
and ranges
The company, so far, will manufacture a
single product (one line) at a single price (one range). Therefore we need not
worry about the product mix at the moment, though preparations should be done
prior to further product development such as variations in models, quality
offered at different price levels, responses to consumer needs or manufacturing
process.
(2.2) Packaging
* Package design
The package
should provide protection, offer convenience, reduce transportation costs,
provide opportunity for reuse, create a favourable product image, establish
product differences, establish corporate identity and gain display at retail
level. It is recommended to use foam molded into the shape of the product. The
mold will form a box shape where a paper cover can be put onto. The cover can
carry company logo, trademarks, photo of the product, description and features
of the product, etc.
(2.3) Pricing
By referring to
the product life cycle, the product is in the introductory stage where costs of
production and marketing will be high, but it is clear that there is a genuine
product differential (a completely new product, not yet seen in the market).
This enables the company to benefit in various ways, such as high initial pricing
or rapid market penetration.
As the survey
suggests, the consumer price for the product should be set around œ250 - œ350
where demand is the most appropriate and stable. The lower the price the more
likely consumers are to pay for the product.
(2.4) Advertising
and Sales Promotion
There is an
advantage here as advertising is a much smaller constituent of marketing costs
in industrial than in consumer marketing. The use of mass media is not
recommended here as industrial markets are highly segmented and it would be
wasteful to do so, although the company should advertise in the national press
as for the following reasons:
* To build up a
corporate image
* To attract the
attention of executives who may influence the buying decision, but who rarely have
the opportunity or inclination to read specialised journals.
* To stimulate
consumer demand for the product which will reflect on industrial demand.
Specialised media
Most advertising
for the product should, instead, be done through the following specialised media.
* Direct mail.
This will be very effective because the company can identify prospective
customers i.e. car manufacturers. Use of this medium can keep companies
constantly informed of developments between sales visits.
* Trade press and
business journals. The range of journals are extremely wide with some aiming at
specialised readers. Members of these journals will most certainly include
targeted customers. Some specific car journals include AutoWeek, AutoWorld,
Automotive Engineering, Popular Mechanics, etc.
* Exhibitions. By
participating in many national exhibitions, the company can create an awareness
and establish itself as an innovator which will attract potential customers who
will develop favourable attitudes to the product.
(2.5) Branding
Although this is
a new product, it is important to give the product a brand name or trade mark
to differentiate it with the emerging competitors' products. This will enable
the company to advertise the characteristics and qualities of the product and
build brand loyalty. Consumer loyalty makes brands less susceptible to falling
sales following a price increase.
(2.6)
Distribution
Direct selling
will be used to distribute the product to car manufacturers. The reasons for
this are:
* The need to
demonstrate the product, to supervise tests, to undertake complicated and
perhaps lengthy negotiations and to provide after-sales service. The company's
sales personnel will be expected to be more effective than those of
intermediaries who may handle a wide range of products.
* High
intermediary profit margins which might give rise to cost and price advantages
under a direct marketing system.
* Car industry
market structure with few potential buyers - geographically concentrated. The
potential size of orders is large. Thus fewer sales-persons are necessary to
establish direct contact, and the cost in relation to potential manufacturers
is normally lower than in the case of direct personal selling to domestic
customers.
* The product may
be bought to individual specifications and involve direct negotiation between
the buyer and the company on technical level.
* Items are of
high unit value and may require special credit arrangements which are more
easily negotiated on a direct basis.
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