Essay/Term paper: Marketing of an adjustable headlight

Essay, term paper, research paper:  Literature Essays

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 | 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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