Conscious Families Of Today's Market example essay topic

Automotive Industry And Target Market Essay, Research Automotive Industry And Target Market Automobile Industry And Target Market Analysis Prepared By: Susan Cleary 4179390 Hafiz Ga foor 3957128 Renee Mortier 4350316 Shushan Aryan 4053745 Constantin os Labor 4115414 Table of Contents Industry 3 Demographic 3 Economic 3 Environmental 3 Technological 4 Political 4 Cultural 4 Target Market 5 Demographic 5 Psycho graphic 5 Evolution 6 Interests, Attitudes & Opinions 6 Purchasing Power 6 Purchasing Habits 6 Bibliography 7 Internet Sites 7 Books 7 Appendices 8 Appendix A (Statistics Canada) Appendix B (World Book) Appendix C (Industry Revenues) IndustryDemographicThirty years ago, the average Canadian family size was 4.0, the general population had less formal education and most lived in urban areas. In today's society, families reside mainly in suburban areas have attained a higher level of education and have fewer children. Decrease in family size is due to economic shifts, (More expensive to raise children) and, more women entering college and the work force during their prime child bearing years. (25-34) Higher education is needed to succeed financially and suburban migration was to attain a better lifestyle. The increased population density in the suburbs has led to severe traffic congestion and increased travel time to work. Transportation wastes valuable time, and trends indicate that people who had migrated to more suburban areas are now returning to the urban centers and, as people migrate to the cities their need for vehicles decreases and they lean towards other alternatives such as public transit.

Also to be considered is the aging of the Canadian population there is an increase in the number of "empty nesters' who, soon to be retiring will lose a lot of their buying power. These trends foreshadow consumers purchasing smaller more efficient cars that are conducive to city driving, parking and without all the extra room for children that they do not have anymore, or do not intend to have at all in the future. Economic During the last decade sales in the automotive industry have slowed due in part to the changing economy. Inflation and interest rates have offset the increase in average income.

(See appendix A) We see how as incomes relatively decrease, spending patters have shifted to more basic products and away from luxuries such as cars. Consumers are turning to other form of transportation, such as public transit. Due to the "paradox of economy', longer workweeks are needed to maintain living standards. Some consumers find their incomes deteriorating and, unable to increase their workweek, find themselves cutting back on their spending and shifting their spending habits. Engel's law demonstrates how changing incomes are reflected in changing buying patterns.

This shift in consumers's pending patterns through the course of the last decade is demonstrated by an overall decrease in sales in the automotive industry. (See appendix D) Without indications of future economic improvements the future of sales in the automotive industry looks as if it will continue it's downward trend. Environmental Automobiles contributed about 15.3 percent of Canada's total emissions in 1980 and 14.4 per cent of the total in 1995. (See appendix B) In consequence, air quality occurs in cities like Montreal, and has become a serious environmental issue. The government spends exorbitant amounts of funds each year on research and development designed to control air pollution caused by automobiles. The Environmental Protection Act of Canada enforces emission standards that limit the amount of pollution new automobiles may produce.

Since 1975, most North American made cars have been equipped with emission control systems that have reduced emissions of hydrocarbons and carbon dioxide by 96 per cent and nitrogen oxides (Nox) 76 per cent. Vehicles built after 1990 pollute one twentieth of those produced in 1975. Today, car owners are paying an additional $2400 in emission-control equipment to promote a cleaner and greener living environment. (web) One of the most important goals of all industries today should be to never allow the depletion of our exhaustible natural resources such as fossil fuelsTechnologicalIn the last 10 years the automotive industry has dedicated its efforts to increase the efficiency and quality of new vehicles. The industry has developed an array of electronic components, which improve fuel consumption, safety, reliability, performance, and maneuvering to facilitate the diagnosis and repairs of problems when they occur. The industry has also developed new materials to replace steel in vehicles such as fiberglass. (Standard & Poor's Industry Survey, The McGraw-Hill Companies, December 1998) "The Big 3" (General Motors, Ford & Chrysler) continue to implement variations on a technique called "simultaneous engineering'.

The general idea is that designers and engineers from various specialties work together in the design phase. With this new approach which is referred to as "platform engineering', companies that have implemented this technique have reduced the time required to design and produce the industries latest generation of vehicles to 36 months or less. Furthermore, the industry is able to develop prototype vehicles up to 98 weeks prior to the commencement of production, versus 28 weeks previously. (Standard & Poor's Industry Survey, The McGraw-Hill Companies, April 1996.) Political With the increase of legislation over the past decade, and of social awareness, which is fueled by pressure groups such as Environment Canada, car companies are forced to devote more money into research and development for better, cleaner and safer technologies. Auto manufacturers' costs of new model development and older model improvement have increased dramatically. ("Cars today have approximately 2400.00 dollars of emission control equipment' -Canadian Automobile Association) At present automobile manufacturers have a wide range of factors to consider such as passenger capacity, seatbelt, air bags maximum weight per axle all these have to pass government regulated safety standards. (vehicle safety act) The future of automobile legislation can only hold tighter restrictions on safety features and the environmental friendliness of the industries products.

Cultural Most Canadians have been following certain cultural values since their ancestors migrated here. The most common value that has been instilled in Canadian families from generation to generation is marriage, children and an honest lifestyle. Primary values such as these are used by marketers to develop and eventually sell their products and therefore better facilitate these persisting cultural values. The automotive industry is a prime example.

The minivan industry stems from the 1960's with the invention of the station wagon. During this era, large families of 7 and 8 were very common and normal sedan automobiles were found to be inconvenient for these families. As a result a larger, more spacious, family oriented automobile was invented known as the station wagon. The station wagon was then the automobile of choice for families for many years, until around 9 years ago. Station wagons throughout its years of popularity with families developed a label of being boring and dull. This was partly due to its appearance not evolving with society's changing tastes.

The minivan (targeting the same market as station wagons), for the first time presented a more modern, better looking, more spacious, alternative to the station wagon to satisfy the changing outlook of society. Although station wagons still exist today, the minivan with a greater appeal to our culture, is by far the number one choice of couples with more than one child Target Market Demographic The minivan today falls roughly within the $30000 – $40000 price range. As a result, not everyone who could benefit from this automobile can afford it. Minivans target young families (parents between the ages of 25-34) with 2-3 children or more residing in rural and suburban areas in which transportation needs are involved.

Despite the minivan's convenience, studies from Stats Canada show its target group has been decreasing (See appendix A) and has been forecasted to continue decreasing in the years to come. Many factors contribute to this decreasing target group. First and foremost, the decreasing number of children per family. Also, the price, limiting its buyers to those who attain a certain income (studies show income earned by members of society is directly proportionate to their level of education).

An income level predominantly earned by members of the middle to upper middle class (see appendix A). It has also been noted that people have been and are continuing to migrate from the more rural areas to the cities due to higher incomes and a faster pace of life, decreasing the amount of transportation needed to commute. More importantly, according to Stats Canada, the family structure in Canada is changing, and due to the increase in cost of living, more women (between the ages of 25-34) are joining the workforce. This happens to be the age bracket where most women have their children.

Married couples with no children are the fastest growing demographic group (as stated in text). Families, with children, are a shrinking market for this product. PsychographicMore Canadians from 5 to 32 years of age die as a result of traffic accidents than any other cause (See appendix B). This leads parents to prefer the use of a vehicle that provides a reliable, safe and secure driving experience.

Families spend most of their time and money to find a vehicle that is designed to prevent car accidents and protect passengers and drivers. A family's primary concern is the well being and safety of their children on the road (See appendix B). Therefore, consumers prefer to choose vehicles with family friendly features. In order to satisfy the consumer's safety needs automotive companies build vehicles, with their tastes and want in mind.

Manufactures install government-specified (See Vehicle Safety Act) lights, reflectors, brakes, tires, windows, windshield wipers, defrosters and dash board controls to prevent accidents and install seatbelts, air bags, head restraints and bumper system to protect car occupants. These features not only satisfy government regulations, but also please the safety conscious families of today's market. Evolution The Canadian family has gone through drastic changes through the course of the last few decades. From a single breadwinner, supporting a household of four or more children, the family unit has graduated to double incomes with only one or two children and a higher level of education for both the man and the women and even to same sex couples. Due to inflation and women increasingly entering the work force this change was self-evident. With this continuing trend families are becoming fewer and fewer.

(See Appendix A), and will continue to do so in the future Interests, Attitudes & Opinions In the 1990's Canadians have been taking mini-vacations in minivans more often than before. One third of them (37%) would rather take several shorter vacation trips of 3-4 days during the year, compared with 21% who prefer take only one vacation. The other 37% prefer a couple of trips of middling length. The preference for mini-trips varies little by demographic characteristics such as age, education and income. This may be due to the difficulty of coordinating vacation schedules in the double income families that dominate these groups.

However Canadians appreciate the ease of planning and taking shorter trips. More than half (55%) have taken a 3 to 5 day "long weekend' vacation in the past year. Where most of these are road trips with the use of minivans. (The Public Pulse, March 1998) In addition to family vacations a vehicle with versatility allow parents to transport their children and their equipment to extra curricular activities such as sports. Consumers are ready to pay more to remain style conscious. Bigger, more luxurious appeal to this market and conform to their opinion of a worthwhile vehicle.

Purchasing Power As for the purchasing power of families, the median income has gradually increased over the course of the last 10 years. Rising along with incomes are inflation rates... (See Appendix A) and single parent households. This demonstrates the buying power of today's young families with double or single incomes, has dropped dramatically. Even with the greater availability of credit which increases buying power. Over the last decade and in today's unstable economy an increase in purchasing revenues seems unlikely with the lowered buying power of today's young families.

(See Appendix A) Purchasing Habits This decrease in buying power demonstrates a shift in buying patterns towards more value for each dollar spent illustrating "Engel's Law'. Young families are now leaning towards smaller more cost efficient cars with longer warranties (forcing the automotive industry to assume longer warranty liabilities) This trend is confirmed by the decrease in revenues of the automobile industry over the last decade (See appendix C)

Bibliography

Internet Sites web / press 0111788. html. web (motor vehicle safety act) web daniel / hyper writing / arguments / incalacaterra / edu. html / Books Sens, Allen, and Peter Stott. Global Politics: Origins, Currents, Directions. Scarborough: International Thompson Publishing Nelson, 1998.
The Public Pulse, March 1998 Standard & Poor's Industry Survey, The McGraw-Hill Companies, December 1998.