Interpreting Market Trends for BMW Dealership in Sydney, Australia
Specializing in the sale of automobiles in Sydney’s BMW dealer has been a top premium brand choice. However, with an ever-changing environment and new trend factors, the General Manager, Helga Schmit would seek to re-think the dealership’s marketing strategies in order to assist it produce batter sales results. Thus, there will be a need for collecting data on various market factors that are specific to the Sidney’s BMW market. In that view, the collection of data will be focused on the capital city of Sydney, Australia. The data factors are summarized as follows:
- Disposable income: Employment rate
Disposable income is the level of income that households can spend for their consumer purposes. It is the income after taxation whose level determines the income that consumers have at their disposal. One of its determiners is the level of employment in a society.
- Purchasing power: Price index/inflation
Purchasing power refers to the ability that the income held has in buying goods and services. The change in purchasing power determines the quantity of goods that a given amount can afford. Inflation and price index is a crucial determiner of consumers’ purchasing power. (Sengupta, 2005)
- Income distribution
Income distribution refers to the share of the economy’s total disposable income. The data is useful in classifying income groups that define customer segments by their income.
- Market reach: Digital media coverage
The level of market reach by various channels is an indication of the share of the market that the dealership region can reach the channel. The data on media coverage on Sydney’s population would be useful to determine the ability to reach the right market segments.
- Customer satisfaction
Refers to the perceived attractiveness that customers place to a certain brand and its services and determines customer loyalty and repeat purchase patterns. (Sengupta, 2005)
- Past marketing activities’ success
The success of past strategies is an indication of what can effectively work in the market and what needs to be enhanced for effective marketing.
- Competitors’ and their strategies
Justifying choice of each set of data in Task 1
- Disposable income: Employment rate
Understanding the level of the disposable income within the market is crucial in determining the level of demand and if consumers are likely to afford the product. In consideration, a high level of disposable income that is reflected by a high employment or low unemployment rate among other factors could be an indication of potential high demand and vice versa. The data is collected from secondary sources including government bureau databases.
- Purchasing power: Price index:
An understanding of the market’s purchasing power trend over time would be suitable for marketers to determine the trend for demand. That is because the increase in purchasing power represented by decreasing inflation would have an effect of increasing demand. On the other hand, a reduction in the purchasing power represented by an increase in inflation would reflect a possible reduction in the ability to buy the cars. The data is collected from secondary sources including government bureau databases.
- Income distribution:
The data is crucial to identify the proportion of the segment of the population that the BMW’s premium brands targets. In consideration, identification of the segment’s share of income and its trend is crucial in marketing planning. (Porter, 1980) The data is collected from secondary sources including government bureau databases.
- Customer satisfaction
The level of customer satisfaction is crucial in determining g how well the brands meet customer expectations as well as how the company’s services are perceived by the market. The data will be collected through interview with customers as well as through surveys.
- Past marketing activities’ success
Will be crucial in identifying the potential of future strategies success and the most suitable marketing actions the business should apply. The data is collected through interviews with marketing executives in the market.
- Competitors and their marketing strategies
Understanding the level of competition and strategies applied by direct competitors is crucial in devising suitable competitive strategies that attract and retain customers hence a need for that information. (Porter, 1980) The data is collected through market survey in terms if interview and questionnaires.
Executive Summary
With a purpose to enhance marketing decision making, correct market information and interpretation is essential to marketers. Therefore, marketing research focusing on relevant market aspects is crucial. The need for BMW Sydney’s dealership to enhance its marketing of its brands should be met through a comprehensive market research, involving identification of the relationship between various market factors and the sales of vehicles in the market. In addition, identification of those factor trends is crucial for marketing decision-making that involves product positioning, pricing, distribution, and promotion. (Porter, 1980)
A market research is proposed to analyse the effects of unemployment, inflation, income distribution, media coverage, customer satisfaction as well as success of past and competitor’s strategies and population distribution could have on vehicle sales and the possible future effects. The case study has the objectives of identifying the factors relationship with vehicle sales hence the ability to forecast sales given the factor trends. Consequently, a quantitative analysis will involve the use of both primary and secondary data for collection of variables. Secondary data collection for inflation, unemployment and income as well as income distribution while media coverage and customer satisfaction data will be collected through primary methods comprising of a questionnaire.
Furthermore, the market research began on January 2014 with activities involving recruitment of research personnel, training, data collection, data analysis, results review, and implementation. Finally, recommendations are made for enhancing the dealership marketing.
Aims and objectives
In line with the dealership’s goal of ensuring that its customers receive the best and ongoing service during the purchase and throughout the ownership of every vehicle sold, the research has a number of objectives.
- Identify the factors that affect the BMW brand sales in Sydney market.
- Establish the dealership’s customers’ satisfaction in the market.
- Identify the effectiveness of the past strategic activities in the market.
- Identify the most effective way to market BMW brand in the Sydney market.
Analysis
Demand for goods and services is usually determined by a number of factors ranging from economical to social as well as competition. In that view, establishing the impact that the relevant factors have on demand of cars in the Sydney market is crucial in enhancing marketing activities and boost BMW sales in the market. In that respect, the analysis uses the factors as independent variables whose effect on dependent variable {sales} is tested. With the identification of the nature of the relationship as well as its strength, marketers can use the information to establish and apply strategies that enhance sales given the specific factors in the market. (Sengupta, 2005)
Data collection
The study applies two different data collection methods. That will include primary and secondary data collection. In that respect, the primary method will entail reliance on published information on the markets and relevant variables including the Australian Bureau of Statistics database. On the other hand, primary sources will involve methods like questionnaires to the market seeking to identify customers’ aspects such as level of disposable income and digital media coverage. (Moore, 2007)
Methodology
Data analysis
In data analysis, the study applies regression analysis of the market data as well as basic arithmetic that will be suitable in identifying the relationship between market variables and sales performance as well as identifying the market trend. The data and analysis results are presented in graphical form for the purpose of easier identification of the trends and relationships. That is useful for marketing planning as trends helps the planners in forecasting future market demand and variables change. (Makridakis & Wheelwright, 2008)
Data relevance
The research focuses on the listed data sets that narrow down the market factors to the most relevant variables. In addition, the use of credible sources as well as representative samples. (Moore, 2007)
Analysis efficiency
Qualified personnel collected data for the purpose of collecting the right information. Also, the use of qualified personnel is useful for enhancing data analysis and results presentation. (Makridakis & Wheelwright, 2008)
Schedule of activity
The research followed a schedule that is outlined as follows including activities and time taken for each.
The research schedule began in January 2015 and in meant to be completed in December 2015 with a presentation of the final report to the marketing manager.
Budget
The plan’s estimated budget is presented as follows.
Research Budget:
In view of the estimated budget, the research cost is $260,720 that is in line with the market rates for research analysts and assistants’ rates. (Paterson Research Group, 2014)
In view of research ethics, the research has been done on the basis of confidentiality of respondents’ personal information. In addition, the research involved seeking consent for use of data from the legal sources. That involved seeking authorization for access of key data such as companies’ information and performance. Finally, the research process sought to protect the involved data as a means of guarding the research integrity. (Salkind, 2006)
Research limitations
In the process, the research was subject to a number of limitations including failure to cover all factors, high cost related to research staff’s pay as well as bias in responses from the participants. (Salkind, 2006)
Presentation of three sets of data
Three of the chosen data are presented as follows using three different techniques.
Australian Quarterly Inflation Rate
Australian Quarterly Inflation Rate chart
Source: Trading Economics, 2014b
Presentation of the data using a bar chart is suitable for clear identification of the inflation change over time and identification of the trend over time. (McCabe & Moore, 2006)
Australian Monthly Unemployment Rate
Source: Trading Economics, 2014a
Use of the line chart to present the rate of unemployment is suitable as it clearly sets out the trend in the rate change over time. (McCabe & Moore, 2006)
Use of the line chart to present the rate of unemployment is suitable as it clearly sets out the trend in the rate change over time. (McCabe & Moore, 2006)
Average share of income received by each person chart
Source: Australian Bureau, 2014.
Use of comparative bar chart for the income distribution is suitable as it enhances comparison of the income between the different groups, as well as comparison of the group’s income share change over time. (McCabe & Moore, 2006)
The following monthly sales of passenger vehicles in Australia from May, 2013 to July 2014. Also included is the Reserve Bank of Australia’s Target Cash Interest Rate for the corresponding months.
Source: (RBA, 2014)
- Calculating the correlation coefficient between passenger car sales and the RBA’s target cash interest rate using manual or Excel program as well as interpreting the correlation coefficient.
Correlation coefficients usually range from -1 to +1 with -1 being an indication of a perfectly negative correlation. That defines the relationship of variables that moves equally to the opposite direction. On the other hand, the correlation of +1 is a perfect correlation with the variables moving equally in the same direction. Finally, the correlation of zero means that there is no relationship between the variables under study. By using the monthly sales of vehicles in Australia and the Reserve Bank of Australia’s Target Cash Interest Rates for the corresponding month, 2013 to July 2014
Interpreting the correlation co-efficient
With a correlation coefficient of -0.75, there is an indication of a negative correlation between the two variables. Therefore, an increase in the rate results in reduced sales. In addition, the size of the correlation of 0.75 shows a strong relationship between the variables. It can be said that a change in the rate has a significant effect on the sales in the opposite direction.
- Manually or using spreadsheet/statistical program
- Calculating least square/regression line to the sales figures time series.
Regression equations are used for estimating the variables given the variables. Slope represents the amount of change in the variable with a unit change in the independent variable. On the other hand, the intercept provides the amount of the variable that does not depend on the independent variable. In this case, the slope shows the change in sales with a unit change in the rate while the intercept shows the sales that do not depend on the rate. (Montgomery et al., 2001)
Regression Equation(y) = a + b x
Intercept [a] = [ΣY – b*(ΣX)] / N
Slope[b] = [N*ΣXY – (ΣX)*(ΣY)] / [N*ΣX2 - (ΣX)2]Where: x and y are time and sales respectively. b is the slope of the regression line a is the intercept point of the regression line and the sales axis. N is the number of values or elements X is the RBA rate Score Y is the sales Score ΣXY is the sum of the product of RBA rate and sales scores ΣX is the sum of RBA rates scores ΣY is the sum of Sales scores ΣX2 is the sum of square RBA rates Scores (Montgomery et al., 2001)Estimating the regression for car sales and the time series1: Number of values N = 152: Substituting the calculated values in the slope formula. Slope(b) = (NΣXY - (ΣX)(ΣY)) / (NΣX2 - (ΣX)2) = ((15)*(6293772)) – ((120)*( 789964)) / ((15)*( 1240) - ( 120)2) = (94406580 - 94795680)/(18600 - 14400) = -389100/4200 = -92.643: Substituting calculated values n the intercept formula. Intercept (a) = (ΣY – b (ΣX)) / N = (789964 – (-92.64*(120))/15 = (789964 – 11,116.80) /15 = 53405.41
4: Substituting the values in the regression equation Regression Equation(y) = a + b x = 53405.41– 92.64 x. (Montgomery et al, 2001)
- Using the trend line to forecast industry sales of passenger vehicles for each of the next three months.
Using the estimated regression equation, 53405.41– 92.64 x, projection for the next three months sales are forecasted as follows
16th month = [53405.41– 92.64 *(16)] = 51,992.76
17th month = [53405.41– 92.64 *(17)] = 51,830.12
18th month = [53405.41– 92.64* (18)] = 51,737.48
In view of the estimated regression line, 53405.41 of cars sales is independent of time during each year results to a decrease in sales by 94 cars. That is indicated by the intercept and the slope respectively. In addition, the further forecast of the sales for next three months confirms that trend.
- Report for Helga on the interpretation of the data and how it can be used to make marketing strategy decisions.
Executive summary
In view of the analysis, it is clear that a number of factors have an effect of sales of passenger cars. Those factors range from those related to the economy to those that concerns consumer behavior as well as competitors. In that view, the research has identified the negative relationship between RBA rate and the sales have been declining over the years. The trends have also been replicated in the forecast of the next three months hence the need to address market factors in marketing planning as a way of enhancing sales.
In that view, a number of factors have been found to be crucial to marketers consideration include those that have an impact on purchasing power such as inflation, unemployment, and income distribution. Other relate to customers such as customer satisfaction with the brands they purchase and the dealers services. Further, the media coverage have been found to be crucial in reaching the right segment. Finally, past marketing strategies success as well as the competitors strategies have been found to be crucial factors to be considered as they identify the potential of the business succeeding in attracting and retaining customers.
Introduction
Market research is crucial for those involved in planning and implementing marketing strategies. The identification of market trends and variable relationships help to formulate strategies suitable for the market situation and the forecasted future. In addition, marketing decisions made on the basis of the correct market analysis have a near chance of success than strategies based on incorrect or no market research. The report contains the explanation of the link between the data analysis and marketing decisions as well as the schedule that is provided given the timeframe and estimating possible costs of a market study.
Body
Considering the data sets and their information’s relevance to make the following marketing decisions based on the use that marketers can put the analysis to enhance the dealership’s sale performance. Owing the ability to position the brand through suitable marketing mix strategies comprising of product, pricing, distribution and promotion guided by the market nature and trends.
- Cash Rate and time series
Cash rate determines the cost of borrowing in the market; its effects on sales could be through the effect on funds availability to consumers. The nature of the relationship between the cash rate and the vehicle sales is useful in establishing the expected sales trend with the rate change. This can be demonstrated by the negative correlation between sales and the rate. On the other hand, the regression analysis was done on the time series and the sale for the year 2013 and 2014. The analysis has provided a regression equation; Sales = 53405.41– 92.64 x. The equation’s interpretation is that other factors explain 53405.41of the vehicles sales in independent of the cash rate and. In addition, the slope value of –92.64 indicates that each year results to a sales decrease by 92.64 cars. Marketers can use the information to adjust pricing efficiently to feature the forecasted change in the rate that could improve prices when the rate is high in order to cater for the increased cost of borrowing (Montgomery, Vining & Peck, 2001)
- Inflation
Analysis of inflation rate trends in the market will help to identify a trend in consumers’ purchasing power. This will be useful to markets for pricing purposes, to address different levels of purchasing power over different periods. This can be addressed through price-based promotion programs like discounts.
- Employment
Employment level analysis will be suitable to identify the level and trend of disposable income in the market as it affects the demand. Establishing the trend will help marketers forecast a future sales trend that will be useful in managing the vehicles distribution in a bid to ensure that the right distribution quantity is made to cater for market demand without unnecessary oversupply or under- stocking of BMW vehicles at Sydney’s dealerships.
- Media Coverage
An analysis of the media channels is reaching the market and is suitable as it provides information on the suitability of a channels ability to reach the right target segment. Identifying the number of market reach is useful in establishing suitable promotion strategies with more efficient marketing communication strategies.
- Population distribution
The analysis on population distribution will be useful to identify the geographical location that marketing activities like advertising should target. The highly populated area forms a better target segment than less populated regions out of Sydney. The population distribution will determine the places where the dealership business should focus its distribution channels.
- Income distribution
Income distribution identification and related trends will be useful for the business in the recognition from the level of income that the high-income segment Sydney earners have and the trend in that income share. The singling out will help establish whether the regions market has a significant high-income class that can sustain BMW brands premium prices.
- Customer satisfaction
Understanding customer satisfaction and its drivers in the market will help in establishing suitable strategies such as pricing and distribution that suits target market.
- Past strategies success
The success of past strategies will be a guide to the marketers in terms of what is suitable for a specific market. That helps in determining the right approach in terms of promotion as well as pricing as means of attracting and retaining customers.
- Competitors and their strategies
Several competitors provide more competition depending on their strategies. In that respect, the dealership benefits from understanding the strategies that direct competitors apply. That is because it can apply differentiation approach to offer value in a unique way that enhances its competitiveness.
Conclusions and recommendations
In view of the research results, marketers should make decisions that seek to address those factors in a manner that increases potential for buying the company’s premium brands. That needs suitable mix of pricing, product positioning, promotion, and distribution. (Sengupta, 2005) In that respect, the identification of interest rate having a negative correlation with sale of the vehicles, the dealer should seek to offer incentives such as discounts and added services during times of high-interest rate. That would help counter the reduced demand. In addition, the strategy should apply for cases involving high inflation and unemployment rates during which demand for the cars is expected to be low. On the other hand, suitable marketing strategies should be applied to address customer issues as a means of enhancing their satisfaction in line with research findings on the effect that the satisfaction and competitors’s strategies has on the dealership sales. Finally, the markets should focus on utilizing advertising channels that have a wider marker reach of the right target segments.
- Talking points necessary to convey the points.
Talking notes
The report presents a proposal of market research on key aspects that are relevant to BMW’s Sydney’s dealership marketing.
- The research involves the analysis of the relationship between vehicle sales and factors including inflation, unemployment, income distribution, customer satisfaction, past marketing strategies success as well as competitors and their strategies in addition to media coverage. These factors have been identified as crucial data to determine the marketing mix strategies that a business should apply to retain customers.
- Through the identification of those factors that will have the greatest effect on sales as well as their trends that will act as a guide for demand forecasting. With a trend analysis, the marketing teams can make decisions on the marketing that suits the market factors and trends to enhance sales.
- In that perspective, the market research applies a quantitative analysis including regression and a correlation analysis that is used to identify the relationship between factors and the strength of the relationship. In addition, there will be the use of different data and results presentation methods for precise identification of relationships and trends.
- Respecting the study schedule, the market research is proposed to begin in January 2015 extending to September 2015. From then on the research findings will have been reviewed, and suitable marketing mixes will be established to put in place for implementation.
- The visual aids applied in presenting the information include graphs and charts to presents market trend in sales as well as factors change in the specified Sydney market. (Boyce, 2004)
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