Entry into the Dutch Car Market, Taking into Account Car Thefts - Research Paper Example

Secondary Market Research Introduction Over the past five years, the number of cars sold in Netherlands has increased tremendously. The young generations that has a disposable income forms the largest market segment. With the increasing level of globalization resulting from liberalization of markets, efficient flow of information, and integration of economies, the level of competition in the local and global market has increased tremendously. This results from the entry of multinational companies in the market. These are firms such as Toyota, General Motors, and Honda which have diversified their products in order to reduce the risks and uncertainties associated with concentrating in a single product (Roth 2010). Therefore, Netherlands population has enjoyed an increase in the number of cars being purchased in the market. This creates an opportunity for Luminescent Alarms to penetrate the market. However, there are already existing firms that fits the cars with securit alarms. These are firms that have been able to segment the market, attract the loyalty of the customers towards their products, and positioned their products strategically in the market (Siegel, Bunt & Zaitch 2003). In order for Luminescent Alarms to penetrate the market, there is need to conduct intensive research and come up with a detailed report before determining whether the idea is viable or not. Secondary Market Research Car Sales The number of cars sold in Netherlands last year provides a clear indication of a market that is dynamic and ready to purchase quality cars in the market. January being the month that recorded the highest number of cars purchased in the market, this is the month that Luminescent Alarms should focus on in order to make the highest number of sales. The statistics indicate that many people prefer to purchase their cars of choice during this month. With only few cares having been fitted with alarms by the manufacturing firm, this month can offer a great opportunity for the company to penetrate the market. The average car sales in Netherlands are 39292 per month. This is a high number of cars especially putting into perspective that there are only few players in the market that has specialized in fitting car alarms. Last year, the total number of 390, 412 cars were sold in the market with the lowest number of cars being sold in the month of July and August. This is the month when the firm should intensify its marketing campaign before the setting in of the high season. Cars Registered in Netherlands Subjects Passenger car Class of vehicle age Periods number Total age 2014 7 932 290 Less than 1 year 2014 405 807 1 or 2 years 2014 1 065 954 3 or 4 years 2014 830 319 5 or 6 years 2014 874 899 7 or 8 years 2014 920 572 9 to 12 years 2014 1 302 540 12 to 15 years 2014 1 215 222 15 to 20 years 2014 849 002 20 to 25 years 2014 156 337 25 years or older 2014 311 638 © Statistics Netherlands, Den Haag/Heerlen 22-4-2015 The total number of cars registered in the country are 7.9 million. 405, 807 cars are less than one years old. This indicates that people continue to purchase new cars. In addition, the statistics indicate majority of the people are likely to dispose their cars after the age of five years and replace them with new cars. This is an indication that the alarm life in the country can be approximately 5 years. However, of great importance to note is that over one million of these cars are over 15 years. This is a long waiting period for a customer to purchase a new alarm for the car. However, majority of these people maintains their old car but have a new car. This is an indication that the customers are willing to spend their money on new models which are able to meet their tastes and preferences. Statistics indicate that majority of the customers who are purhasing new cars in the market in Netherlands already have an old car. Therefore, they are likely to have become loyal to the previous alarms that were fitted in their cars. However, there has been an outcry that some of the alarms do not last for a very long time (International Association of Auto Theft Investigators 2002). This can be a great opportunity for the Luminescent Alarms to penetrate the market and close this gap. Nevertheless, it is critical to ensure that the firm considers customer relationship management in order to maintain the loyalty of the customers towards its services. Cars stolen These statistics indicate that the number of cars being stolen in the country has decreased tremedously. This can be attriuted to improved security measures by the government, eg installation of CCTV cameras in prone areas. In addition, the reduction can be attributed to effectiveness of the competitors alarms in the market. These statistics is an indication that Netherands market does not look prospective especially putting into perspective that there are other players in the market that has already set in place a barrier of entry for other interested investors (Fijnaut & Paoli 2004). Private cars are the most targeted cars. However, the number of private cars has reduced from 26.438 to 10.712. This is a very large margin that cannot be ignored when making a decision especially for a long-term investment. The number of motocycles has increased over the years. As people look for convinient mode of transport, this is a sector that need to be exploited especially after the growing interest from the youth who forms the largest market segment. Private Vehicles Stolen 2014 The highest cases of car theft were reported in Rotterdam with 1654, followed by East Netherlands (1547), and Amsterdam (1288). These statistics are significant in identifying the ideal place to set up the business. In addition, they indicate the regions where the demand for alarms is high. Age of Stolen Cars The highest number of stolen cars is between the ages of 0-3 years. This is because they have a high resale value. Over 30% of all stolen cars were 0-3 years old. This is a clear indication that this is the most ideal target market. According to the statistics, this group of cars has a 17% theft risk. This indicates that the owners of cars that are less than 3 years are likely to look for alarms for their cars. Recovered Cars Approximately 40% of all cars that are stolen in the country are recovered. However, statistics indicate that 60% of these cars are never recovered. This is an indication that the current alarms in the market has done very little to help the client recover their stolen vehicles. This can be used as an opportunity to market the firm’s alarms. 30% of 0-3 yrs old cars and 4-7 years old cars were recovered. However, 70% of the rest were not covered. The clients spend a lot of money to purchase these cars. As a result, the statistics are providing detailed information that many of the firms in the market have not been able to solve the problem. Top 10 Stolen Vehicles, Aging from 0-3 years old, in 2014 The top 10 cars brands represent 79.1 percent of all stolen private vehicles. These include Volkswagen, Audi, BMW, Seat, and Peugeot. Statistics indicate that the theft cases of Audi, Land Rover, and Citroën rose by 30%. This is an indication that car thieves are targeting highly priced vehicles in the market. In addition, cases related to Peugot, Seat, Opel and Renault increased trenedously. Therefore, as an investor one should target the owners of these cars who are likely to be bothered by these statistics thereby, look for alarms. Of importance to note is the fact that cases related to Volkswagen, BMW and Toyota have decreased. Therefore, these clients which were the major target by the previous alarm companies are no longer a major target. SWOT Analysis Strengths The products are unique and patented. Majority of the products in the market have not been patented. In addition, the companies offering the alarms are not well known. They try to hide their identity because of the legal aspect that might face them in case the alarm fails to help the customers to track their vehicles. Therefore, patented products will be hard to be stolen and manipulated by rogue investors in the market. The uniqueness of product feauture and function will set the product apart. Many of the product in the market has been differentiated through branding. However, Luminescent Alarms will offer something new to the customers. This aspect is likely to attract the attention of the target market towards the products. Weaknesses The product is not well established in the market. The dominant brands in the market will compete intensively with these new products. Customer unfamiliarity with the product will make it hard for the product to establish itself in the market. This is because the customers have been used to dominant brands in the market for a very long period of time. Product price is likely to put off the customers. Cheap imported products are very many in the market. Therefore, customers are likely to purchase the substitutes because they are cheap and readily available in the market. Opportunities Although theft cases has reduced tremedously over the years, the growth of the vehicle security system market offers the product with a lifeline to penetrate and dominate the market. Many car manufactures are looking for ideal partners that deal with car alarms. This creates an opportunity for the alarm to penetrate and position itself strategically in the market. Threats Strong competiton especially from multinational companies is likely to threaten the company’s position in the narket, Decreasing rates of car theft cases is threatening the existence of the company in the market. This is because customers are seeing no need to fit their cars with alarms. Recomedations Recommedation one It is not ideal to enter the Netherlands market. Over the years, theft cases has reduced tremeodusly. Due to the work that the Foundation for Tackling Vehicle Crime is doing to decrease and prevent car thefts, the figures are likely to reduce over the years. Every business likes to invest in a market that has a prospecting future (Dijk 2008). However, the current statistics is an indication that things are going to get worse for the alarm company. Only 9 out of 122 people surveyed stated that their cars were stolen. This is a very small number especially putting into perspective that alarms are mainly fitted once in a long period of time. Therefore, they cannot sustain the business in the market. In addition, investing in this market will make the company to operate at a loss because of high operational costs with low sales. Netherlands population has a low perception towards car theft. Their perception is likely to even become lower with the increased security of their cars. Therefore, it will be very hard to convince them to fit their cars with alarm systems. Recommendation two If the company decides to venture into the market, it should target customers with less than three years old cars. These are clients who are at a higher risk of losing their cars through theft. As a result, they will be willing to purchase alarm systems that will enable their cars to be tracked in case such an incident occurs (Kushner 2012). According to Statistics Netherlands 2014, there are approximately 1,471,761 million cars between the ages of 0 to 2. This is a large number which can sustain the operations of the company in the market. Furthermore, it’s only 30% of all cars stolen in 2014 that were recovered. Therefore, the customers lack confidence with the existing alarm companies in the market. Therefore, the entry of the company will offer them with a new alternative. Cars that are 0-3 years old are at a 17% risk of being stolen. With the high number of vehicles being purchased, this numbers will make many of car buyers to fit their cars with alarm systems. This will offer the company with an ideal market. The company should focus on the regions with the most car thefts which are Rotterdam, East Netherlands and Amsterdam. 41% of all private cars are stolen in these regions. Therefore, the firm should establish its base in this area because many clients are desperate to fit their cars with alarms. However, the firm should not ignore the 59% remaining. However, it should operate from this area which has the highest demand for its products. The company should establish a collaboration with Foundation for Tackling Vehicle Crime and car insures and dealerships. This will enable the clients to be directed towards the company’s products, an aspect that will increase its overall sales, Moreover, the firm should collaborate with car manufacturers in order for the firms to fit the cars with the alarms before they are released to the market (Body-Gendrot, Hough, Kerezsi, Lévy & Snacken 2013). This will have a major impact on the overall performance of the business in the market. References Body-Gendrot, S., Hough, M., Kerezsi, K., Lévy, R., & Snacken, S. 2013. The Routledge Handbook of European Criminology. Hoboken: Taylor and Francis. Dijk, J. J. 2008. The world of crime: Breaking the silence on problems of security, justice, and development across the world. Los Angeles: Sage Publications. Fijnaut, C., & Paoli, L. 2004. Organised crime in Europe: Concepts, patterns, and control policies in the European Union and beyond. The Netherlands: Springer. Foundation for Tackling Vehicle Crime in the Netherlands 2014“Annual Report Vehicle Crime”. International Association of Auto Theft Investigators. 2002. International Association of Auto Theft Investigators: 1952-2002. Paducah, KY: Turner Pub. Co. Kushner, D. 2012. Jacked: The outlaw story of Grand theft auto. Hoboken, NJ: John Wiley & Sons. Roth, M. P. 2010. Global organized crime: A reference handbook. Santa Barbara, CA: ABC-CLIO. Siegel, D., Bunt, H. G., & Zaitch, D. 2003. Global organized crime: Trends and developments. Dordrecht: Kluwer Academic Publishers. Statistics Netherlands 2014 http://statline.cbs.nl/StatWeb/publication/?VW=T&DM=SLEN&PA=82044ENG&LA=EN The European Automobile Manufacturers Association. http://www.tradingeconomics.com/netherlands/car-registrations Read More