Perry Cars Limited (PCL)
Perry Cars Limited (PCL) plans to undertake a market research to determine whether a new venture will be profitable and to guide company strategy for the new business. The company intends to buy Wonder Car Hire (WCH) from its proprietor. WCH is a car hire business which has been operating profitably. David, the owner of PCL is considering an expansion into the car hire market. By conducting proper market research, David will be able to make an informed decision on whether to invest in WCH or not.
Market research is an instrument available to businesses especially potential investors. It provides information on existing market opportunities. It could also provide data on market performance in terms of revenues and competition. Market research has to be conducted in a systematic and objective color. This is because the results of the study determine the business success of the companies that will utilize the findings (Anand, & Shachar, 2007). The issues under study have to be clearly defined. The design of the study should allow for proper data collection, analysis and presentation of the findings.
PCL could use both qualitative and quantitative approaches to market research (Anand, & Shachar, 2007; Cresweell, 2003). A qualitative approach to research is used where the results can be obtained through careful study of the issues under study. An expert researcher explains the findings and infers conclusions from the facts of the study (Anand, & Shachar, 2007). Quantitative research requires the use of questionnaires and data collection sheets. The final research findings are made from statistical calculations which are then used to test the hypothesis set out at the beginning of the study. The company to determine the interpersonal aspects of the business (Cresweell, 2003) could use qualitative market research. David could interview the employees of WCH to establish their job satisfaction and attitude towards the company and the possible acquisition. He could also visit WCH premises and observe the employees at work and their interaction with clients. This will give him insights into the human relation aspects of the company which are hard to accurately measure numerically.
Qualitative research is the most reliable approach to market research. This is because it can be designed to meet specific marketing concerns of a company. The questionnaires such as customer surveys could have all the questions and issues for which the company requires answers (Anand, & Shachar, 2007). The data collected is then analyzed using established statistical methods which are then used to support research findings. PCL can use qualitative research to determine the competitiveness of car hire market including information on market competition. The research can also reveal profitability data such as past, present and future performance. It could also reveal consumer tastes and preferences and government regulations.
PCL could also employ secondary research methods to gather information on the new company. This is the process of gathering information from primary sources, which have conducted studies on the business under study (Cresweell, 2003). Secondary research can be used at the initial stage of an actual research to identify the available information. Secondary research can also be used as the only research technique. The materials used for this approach to research have to be authoritative, credible and reliable (Anand, & Shachar, 2007). Some of the materials used are previous research findings, journals, government and other organizational statistics.
Marketing Objectives for Diversification Plans
The first marketing objective for PCL would be to create a new but strong brand image for the two companies. This is because both PCL and WCH have created an independent image among their customers. PCL must decide whether it will retain the name of WCH in its vehicles or not. Another strategic approach would be to develop a new brand with an accompanying name. This will enable the company to create its own image and build the brand along the desired qualities (Armstrong, 2006). Another approach would be to retain the name of the PCL which is the umbrella company. The best brand name will be the one that gives the company a good image and a strong presence in the market.
The next Marketing strategy will be to gain a given percentage of the market share within a specified period of time (Armstrong, 2006). PCL could decide to gain 20% of the car rental market and 30% of the used cars resale and repairs by 2013. This objective is specific and measurable. The marketing goal will be to gain 30 percent of car hire market and 40% of the resale and repairs market from the total market revenue or customer base. This objective is time specific because the company will be able to gauge its success in 2013.
PCL will have to increase the awareness of the target consumers of the products and services provided by the company in order to increase sales by a given percentage. Depending on the state of the economy, an increase in sales of up to 40% is realistic. It is important for the PCL to increase its sale in order to cover the costs of acquiring a new business. Additional sale will provide the much needed revenues to support the new business model as secures its market share.
The marketing objectives should not contradict each other or create conflict of goals. They should agree with the overall marketing plan which will ensure a successful marketing exercise. The marketing objectives should be supported by the overall marketing strategy, action plans, and budgetary allocation and control measures. A smart marketing objective should be supported by an enabling marketing strategy. A marketing strategy provides the outline for achieving the objectives (Armstrong, 2006). It is an important tool for the achievement of any predetermined objectives.
Using the Marketing Mix to Build Market Share
Product
PCL is a garage that provides a range of car related products and services. The company achieved success in selling both expensive and affordable used cars. The garage also conducts car servicing and vehicle diagnostics. It also carries out accident vehicle repairs for cars involved in accidents.
Price
The company employs different pricing techniques to determine product and service prices (Pitta, and Pitta, 2012). David considers competitor prices before determining his price. The company uses a combination of mark up percentages and discounts to set competitive prices for their customers. A premium is placed on services provided to corporate customers since they can afford to pay higher prices.
Place
The company operates a successful garage, which includes a car resale business and accident repair services. The employees are able to deliver the required products and services in the best quality and within the right time. The garage is safe both as a working environment and as business premise (Pitta, and Pitta, 2012). The location of the business has enabled it to enjoy business success since its inception 30 years ago.
Promotion
Promotion is the exercise of ensuring the target market is aware of the products and services provided by a business. The Company has built a reputation of quality services over the period of time it has been in operation. Satisfied customers help a business to grow through positive referrals and word of mouth. The proprietor is constantly upgrading the company’s website. David feels that the website should have a provision for booking services and making online orders. The company has been using local radio stations for promotional purposes. It is currently considering adding television advertising to its promotional campaign.
A proper marketing mix is made of product, price, place, and promotion (Armstrong, 2006). For a product to succeed in any given market, it has to master the dynamics of the marketing mix. A quality product that priced too expensively will not sell properly. A good product that is fairly priced will equally fail if it is not available to the target market. A good promotional campaign is important to any product because it creates awareness of the desirable qualities of the product and informs the public of its availability. PCL has mastered the marketing mix of its products within its market. That is why the company has been successful since its inception in 1982. The company has been able to balance product and services together with price and place. The company also undertakes promotional activities through its website and radio advertisements. Company employees also play an important promotional function through personal selling.
Using the Acquisition to Increase Market Share
The acquisition of WCH will add a new product to PCL’s product portfolio. In addition to the traditional company products, the company will be able to provide car hire services to their clients. Since WCH has developed a tried and tested business model, PCL will be able to make profit from the new venture. This is one of the advantages of an acquisition compared to ground breaking. PCL will acquire the assets of WCH including employees and loyal customers who will follow the company to its new home. PCL can therefore increase its market share by promoting its new product portfolio to its current clients while targeting new clients (Pitta, and Pitta, 2012).
PCL should take advantage of the expertise of WCH employees in the business of car hire. The management of PCL should learn as much as possible from these employees. Trade secrets will help PCL to manage the new business efficiently and effectively. Information about aspects of the business such as competitive pricing, customer relations, financial and control will be readily available. PCL can convert this information into a business advantage by combining expertise with experience. The biggest challenge would be to create an accommodating environment for the new employees to fit into the organizational culture of the new company with ease. PCL should therefore develop an all encompassing working environment for all employees.
PCL could take advantage of the economies of scale created by acquisitions to increase production leading to vigorous marketing to increase market share (Pitta, and Pitta, 2012). The two companies will now be able to increase production efficiency by taking advantage of trade discounts and economies of scale. The production price per unit will reduce leading to lower prices to the customers. Customers are attracted to quality products sold at relatively lower prices attracts because people are constantly looking for value. The economical advantages of this acquisition could result in a larger market share.
Reference List
Anand, B. N., & Shachar, R. 2007. Communication. Quantitative Marketing and Economics,
5(3): pp. 211-237.
Armstrong. M. 2006. A handbook of Human Resource Management Practice (10th
edition) Kogan Page, London
Cresweell, J. W., 2003, Research Design: Qualitative, Quantitative, and Mixed Method
Approaches,
Thousand Oaks, CA: Sage Publishers
Pitta, D. and Pitta, E. 2012. "Transforming the nature and scope of new product development,”
Journal of Product & Brand Management, 21 (1): pp.35 – 46
