Electric Cars - Research Paper Example

? Electric Cars  of the Executive summary In the current age individuals are becoming conscious about eco-friendly products. The amount of pollution is soaring with the improving transport and communication facilities. Almost 50% individuals around the world are owners of cars. At this juncture it has becomes crucial to protect the environment from the rising air pollution. The electric cars are modern cars that run on batteries. Thus, using such cars would help to reduce the extent of air pollution and thereby shield environmental degradation. The research paper is based on a Canadian electric car producing company. The company has completed designing the car but wants to increase its output. A rise in output can only be afforded, if the company makes a commercial plan that would help to market the product and make it a leading vehicle in the current competitive industry. The context of this research paper would capture the various details about the product, industry, potential market applications, challengers, risks and path of commercialization that would be useful for the company to make its product acceptable in the market. Contents Product 5 Product Description 5 Prototype Status 5 Intellectual Property Status 5 Industry Analysis 5 Definition of your industry 5 Working and Prospects of the Industry 6 Size, Life Cycle Status, Characteristics and Drivers 6 Trends 6 Barriers to Entry 7 Typical Sales Pattern and Profit Margin 7 Potential Market Applications 7 Primary and Secondary Target Markets 7 Key Market Factors 8 Market Segmentation 8 Primary Research Results 8 Potential Challenges and Risks 8 Technology risks  8 Business model risks 9 Market risks  9 Execution risks  9 Path to commercialization 9 Market entry strategy 9 Timelines & Milestones 9 References 12 Product Product Description An electric car is an eco friendly car that runs with the help of an electric motor or battery stored electrical energy. The electric motors in such cars help to generate torque, thereby giving smooth and strong acceleration to such modern vehicles. Such cars emit less air impurities because they do not discharge tailpipe pollutants. Some electric cars are also powered by solar energy or gasoline, these cars are known as solar and hybrid cars respectively (Westbrook, 2001). Prototype Status The research paper concentrates on a four seating electric car. The car is produced by a Canadian automobile company and its manufacturing division is in Ontario. The car fully runs with electricity and comprises of all the features that a modern car should contain. However, the car is required to be charged every time its cell energy diminishes. The company manufactures only 75 cars per month at present but the figure is expected to augment up to 200 cars per month by 2014. Intellectual Property Status The intellectual property rights are legal rights that are catered to the automobile firms for discovering a new design of a vehicle. Such rights ensure that the state of technology or blueprint newly invented by a company is not copied by any other firm in the industry. A trademark can only be used by a Canadian company according to the norms of Canada. Thus, it is obvious that the Canadian electric car manufacturing firm will possess a trademark that would protect its product from forgery (WIPO, 2013). Industry Analysis Definition of your industry The automobile industry is an industry that comprises a large pool of organizations and companies. Such companies are engaged in designing, selling, manufacturing, marketing and developing motor cycles, mopeds, towed vehicles and motor vehicles. It is a long established business segment since 1890’s. Working and Prospects of the Industry Automobile industry is considered as one of the most important industry in the current global economic system in terms of revenue. The biggest strength of the industry is its diversity; there are infinite companies that participate in automobile manufacturing. The industry stands 3rd in the Fortune 500 list and Global 500 list. The products manufactured from this industry enjoy a wide customer base and the manufacturers have the benefits of economies of scale in production. These companies produce unique products and exhibit the class of popular brands (Marchionne, 2009). Size, Life Cycle Status, Characteristics and Drivers The automobile industry was established in the latter half of the 18th century. Over the years the number of firms participating in this industry increased rapidly. The sedan market is still young in its life cycle, where new modifications and standards are the basal features. Automobile industry has been the segment that facilitates both invention and economic progress. After 125 years, the industry now attempts to introduce ‘self driving’ cars (KPMG, n.d). Automobile industry involves knowledge-intense commerce and manufacturing. There are a chain of suppliers in this industry, this includes the first, second and third ties suppliers. Each type comprises of suppliers manufacturing separate parts of the vehicles. There are primarily four drivers of this industry. One of them is the improving economic status of the world, second is the taste and preferences of the consumers being favorable towards this industry, third factor is the easing government policies for this segment and lastly the technological advances enjoyed by the firms in this business segment (Gerbeau, 2002). Trends The designs and facilities available in the modern manufactured cars are improving over time. Software programming based cars are in the current market trends. Cars are treated as objects of luxury and expenditure on it exhibit the characteristics of conspicuous consumption. Considering the recessionary trails in the market, high end producing car companies are manufacturing lower priced cars like the Mercedes A class. The automobile manufacturers are now targeting the growing middle class consumers in the emerging economies (OECD, n.d.). Barriers to Entry There are many barriers a firm faces while entering in the automobile industry. The finance required to start up a car manufacturing company is very high. The suppliers of the raw inputs exhibit the problem of limited capacity. Many firms downsize their operations because they do not have excess capacity. The industry exhibits high competition between giant firms. There are a lot of legal restrictions in the form of patents. Marketing a fresh variety becomes very costly in this industry. Typical Sales Pattern and Profit Margin Automobile industry is significantly affected by the current global recession. The sales of cars have fallen in United States and Canada since 2008 due to lack of credit facility among the households. Car manufacturers are now concentrating in the emerging economies like India, China and Russia. The profit margins of most of the companies have fallen due to fall in the aggregate sales. It is expected that with the growth of the economy, the industry would be able to expand its economic surplus (Mom, 2004). Potential Market Applications Primary and Secondary Target Markets Electric cars are extremely expensive cars, so the target primary market for such cars in Canada may be Ontario itself. The automobile company considered in this research has its manufacturing segment in Ontario. Thus, it would be most convenient for the company to distribute its product to the customers living in Ontario. The population size of Ontario 13505.9 as recorded in 2012 may be the size of the primary target market. The secondary market of the company may be Manitoba, which is located just beside Ontario, the size of population of this region is 1267 as recorded in 2012 (STATCAN, 2012). Key Market Factors The company while targeting its primary and secondary markets should consider the demographic, economic, social and legal factors. The percentage of young consumers in Ontario and Manitoba are high. Approximately 41.4% of the people living in these regions are between age groups of 25 to 54 years. Thus, the company must try to focus on this age group while marketing its product. The employment and empowerment of men and women is almost same in Canada, thus the company should target both male and female customers. Canada has a total literacy rate of 99%, so the electric eco-friendly car would be attractive to almost all the literate customers. There has been a rise in the per capita income level for all individuals in Canada. Since electric cars are expensive, the company must target the rich customers of Ontario and Manitoba. The legal restrictions on business in these markets are less in Canada (CIA, 2013). Market Segmentation The company must target to consider a demographic mode of market segmentation. Considering the demographics, the company must try to target the rich customers in Ontario and Manitoba. Electric cars are extremely expensive and consumers need to have the right purchasing power to get such products. Moreover, the company must target to sell the product to the young consumers. Young people are more interested to use newly invented products (GOV, 2010). Primary Research Results The researcher had surveyed a random sample of about 1000 car owners in Ontario and Manitoba. It was found in the primary survey that the consumers who are highly educated in the sample are interested to purchase electric cars as it helps to reduce air pollution. Almost 70 % of the sample customers were ready to demand for electric car. Potential Challenges and Risks Technology risks  It is found by the scientists that Carbon Dioxide emissions from electric cars are much more than the general petrol cars. Electric cars are winning popularity in the markets because they are environment friendly, but such emissions would make customers suspicious about the goodness of such cars (The Risk Monger, 2012). Business model risks Electric cars manufacturing require high cost and is also time consuming. At present the automobile industry is highly competitive, in such situation it might be a challenging task for the electric car manufacturers to compete successfully with the traditional car makers (PricewaterhouseCoopers, 2002). Market risks  The Global market has gone under recession since 2008. Though the per capita income thresholds are rising but the real income levels are decrementing with the rise in prices. Thus the electric car producer might find it difficult to augment sales in this crisis. Execution risks  Electric car producing companies are now trying to reduce the cost of producing such vehicles. However, from the latter half of 20th century, consumers desire to purchase cars what run with low priced gasoline and combustion engine technology (Akkaya, n.d.). Path to commercialization Market entry strategy The company should try to increase its sales among the rich customers at first with the catchphrase of environment friendliness. Then the company should try to win over the customer loyalty and value for electric cars. It is true that only awareness about the environment can make the consumers purchase such expensive cars (Forbes, 2013). Timelines & Milestones Over the time the company must try to increase its output and thereby enjoy the benefits of economies of scale in production. If the quantum of output produced increases then only the firm would be able to cut down its cost and prices for such expensive cars. If the prices of such cars are reduced, then it would help the firms augment their sales in the current depressed market. Timeline for the Commercial Plan (Source: Authors Creation) The above table explains the possible timeline for the commercial plan of the Canadian car manufacturing company. References Akkaya, M. F. (n.d.). Global marketing strategies Retrieved from http://www.ekonomi.gov.tr/upload/bf09ae98-d8d3-8566-4520b0d124e5614d/fatih_akkaya.pdf . CIA. (2013). World fact book. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ca.html. Forbes. (2013). Hackers reveal nasty new car attacks--With me behind the wheel (video). Retrieved from http://www.forbes.com/sites/andygreenberg/2013/07/24/hackers-reveal-nasty-new-car-attacks-with-me-behind-the-wheel-video/. Gerbeau, P. (2002). Lifecycle of the car industry. Retrieved from http://www.open.edu/openlearn/money-management/management/business-studies/lifecycle-the-car-industry. GOV. (2010). Demographics. Retrieved from http://www.fin.gov.on.ca/en/economy/demographics/. KPMG. (n.d). Self-driving cars: The next revolution. Retrieved from https://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/self-driving-cars-next-revolution.pdf. Marchionne, S. (2009). Prospects for the auto industry: From chapter 11 to chapter 1. Retrieved from http://www.iie.com/publications/papers/marchionne1209.pdf. Mom, G. (2004). The electric vehicle: Technology and expectations in the automobile age. Maryland: JHU Press. OECD. (n.d.). The automobile industry in and beyond the crisis. Retrieved from http://www.oecd.org/eco/outlook/44089863.pdf. PricewaterhouseCoopers. (2002). Business risk model. Retrieved from http://www.aiiaweb.it/files/aiia/risk_short_definitions_gbp.pdf . STATCAN. (2012). Statistics Canada. Retrieved from http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/demo02a-eng.htm. The Risk Monger. (2012). Electric cars: Ignore the facts so we can feel good about ourselves. Retrieved from http://risk-monger.blogactiv.eu/2012/10/08/electric-cars-ignore-the-facts-so-we-can-feel-good-about-ourselves/#.UjBcCH84_Dc. Westbrook, M. H. (2001). The electric car: Development and future of battery, hybrid and fuel-cell cars. London: IET. WIPO. (2013). Intellectual property issues in advertising. Retrieved from http://www.wipo.int/sme/en/documents/ip_advertising.htm. Read More