International Marketing
The Future Automotive Market Analysis in Europe and North America
Driving in Europe and in the United States has a lot of different things. For the different shape of geographical condition, available funding and different approaches in policies, there would be differences in the type of vehicle people choose, or the type of public transportation the government would provide for the whole community.
There is no doubt for the cultural factors that may give an impact to what people choose. Car manufacturers also take studies for the two different communities. As more tendencies to people in Europe and the U.S. develop their own preferences in automobile types and accessories, they would also need to target the market to suit the needs of the different communities.
The Europeans and The Small Cars
Chandler said that road infrastructures apparently become one of the challenging factors for car manufacturers to decide what to produce net and where to sell it. It is not that different in every country to pick a car to drive. The major differences in North American structures and Asian seem has made this fact. Asians buy small cars, and mostly, many of the Asian manufacturers also see it and made it fit, just to make it suitable with the crowded major streets where they have to pass through everyday. Many car manufacturers then think to make some adjustments to produce their car meeting the need (and preference) of most people living in the continent. For example, Honda made an expanded design to sell to American markets, while it present in smaller size series in Asia.
Europeans also seem to adjust to this trend. Although in the real condition there are not much crowds compared to what happens in many Asian countries, the European customers also develop preferences to drive small, and compact cars.
For Europeans, small cars enable them to drive in an efficient concept in saving spaces, energy, simplicity, as personal reasons. There is also another advantage that with smaller sizes of the vehicle, there will be a lot of space saved for parking area, less pollution, and even less traffic jams.
One of the main reasons many Europeans take when buying a car in the energy factor. Chandler mentioned that while Americans are enthusiastic to compare velocities and accessories, Europeans want more information about how energy saving the car is. Fuel price is rising in the area that it would be a wise decision to buy an economic one.
The travel volume of people in both regions is quite different that made the efficiency difference too. The article “Saving Energy for U.S. Transportation” gave the information, that Europeans travel about half as much (in miles per capita per year) as Americans.”
There are a lot of other contributing factors like tight land use policies, travel cost (due to facilities and fuel price), cultural histories, the willingness to travel, different urban system, culture and lifestyle also take place in this data.
With quite similar economic status, the data also showed that Europeans do not follow the trend to buy cars as much as the U.S. communities. This is possible as there are more options of facilities that utilized most for Europeans travelers like buses and subways. There are the same facilities as available in the U.S., but the frequent of use in Europe is much higher.
European communities have been long known as the bicycle lovers. People travel in reasonable distances using this one-person vehicle while the city roads have the facilities for this. The city transport systems in European regions like Netherlands, Belgium and Germany, house a lot of bicycle transport systems which allow bike-riders to ride safely without having to compete with big trucks and other types of large vehicles, as well as not to inhale too much poisonous exhaust waste from them.
He said that Europeans are more sensitive to air pollution problems as well as the traffic noise, besides the high tax of fuel price, twice as much than those of the U.S. They are some factors that the researchers of car manufacturers would address when trying to design a new type of automobile.
Mitropolitski made a review on the recent type of vehicle invented called the Human Transporter. This vehicle was designed to transfer people in the short travel distance about less than 10 km. He said that a type of vehicle like this would find a good market in Europe, but need to wait for a certain time to sell in the U.S. The “Segway” type of vehicle that he reviewed would give another option that the Europeans would love: quite small size, cheaper and faster.
US Markets Open for Big Cars
Madslien (2002) said, in the year of 2001, the American market still showed great respect and increased in a reasonable percentage despite the economic condition that was said to be worsening. General Motors, For and Chrysler made a little advancement of 1%, 6% and 10% sales increase than the previous year.
The most sales were made after the companies introduced “light truck,” previously famous for American buyers. This type of vehicle seemed have stolen public’s heart as they recognized it for the luxurious performance and facilities upon the larger, roomy size. The fuel consumption did not really matter for American customers.
In the other region, Madslien said, the force down from the high-fuel price and tightening policies for car industry, the manufacturers decide to build smaller machines, especially with the energy-saving and environment-friendly orientation.
The AA motoring organization, as cited by BBC News has made a view that in the UK, there was a lot of inconvenience in the transportation as the British spent a lot of time commuting for work, while there was enough air pollution on the road, and not to mention the fuel price hiked up for 15%. That was the highest price to pay among the other European countries. The AA’s Great British Motorist study confirmed that from across the Europe, Britons pay worst for the car, referring to the fuel price and quality of air. This seems to be one important factor to reveal the European most valued number when they choose for cars.
In the “Saving Energy for U.S. Transportation” document, European transportation system is said to be different from the U.S. system from the “different levels of travel.” Europe has faster growth of travel, although this is not commonly associated with the energy consumption. There is a matter of efficiency here, and this is what is seen differently between both regions. It is said that:
European levels of per capita travel and energy consumption should continue significantly below those of the United States because of a combination of different geography and urban histories; European gasoline prices that are three to four times higher than prices in the United States; different policies regarding land use controls, parking availability, automobile restrictions, and other factors that affect travel; Europe’s reasonably robust mass transit systems; and cultural and socioeconomic differences.”
The whole performance showed that European system would be less energy consuming than the U.S. system. This was the result of optimizing the public transportation facilities, rather than pursuing automobile possessions. In fact, although there was no significant difference for the income, but buying a car is not an utmost choice if public transportation considered providing enough access for the working place and daily activities.
There is no direct evidence that the Americans are more affected to the availability of exact transportation structure system that encourages them to buy big and luxurious cars. There could be a closer assumption driven by the changing lifestyle of the Americans and the greater need to the availability of suitable cars that meet the lifestyle requirements.
There is a fast growing of urban population that is related to the new habit throughout the cities, where people’s demands of secure jobs and independent living have inhabited the modern community. Many people have to survive their daily lives at work and sometimes there is merely not enough time to satisfy the multiple needs between the work stretch and the private travels.
A vehicle, where some parts of the communities sometimes think as the second home, and spend most of their time during their commute, is probably chosen for its reliability to suit people’s needs to be a means of transportation, as well as a matter of taste. A car does not only satisfy the owner for the function, but also becomes a second place for the owner to find personal space where they can do what they want, as well as being at home.
The “home” function of the car can be identified both for professional as well as family-related activities. Somebody could buy a car for the main function to deliver him or her to the workplace, while in fact many Americans get trapped in uncomfortable driving lanes – due to traffic jams, crowd, and more traffic lights present. In this case people would choose that the car provide more facilities (entertainment centers), room to breath and to rest the legs, as well as extra features where people can express their need.
Scott (2002) said, “Americans also seem to want the car that can do it all – a station wagon, sports sedan, minivan, pickup, even convertible all rolled into one.” This is what they price they pay for, and in fact it is a very practical, and good choice. This means that manufacturers required their designers to make the most with the available space to fit all new accessories and equipments, shaping up that even new and complicated gears and electronic devices do not twist each other but put in easy reach and simple instructions.
Designers have created a series of function in a simple panel, adjustable dimming roofs, or movable gates. General Motors even introduced the concept of autonomous car that gives a big score for the “luxury” factor. Scott (2002) wrote that this company had created computer- controlled car that presents easy operation for multiple functions like entertainment centers (DVD player, sound system, monitor), mobile office (computer panel, video conference facilities, internet access), which enable people to simply conduct their business activities from the car, even when they are trapped in the traffic jam.
Independent professionals have more desires to their cars than just mobility function. Cars are also considered as the symbols or representatives of the owners. As a part of career supporter for example, people rely on their cars to add the accent to the whole performance. Big and luxurious cars are often in demand to express the great need. It may show the person’s security and self-assurance. Cars also become part to show the professional performance associated to companies’ image, if there are any associated business activities that are represented from the car.
Big cars would give a pleasant style at the first place. Besides the transporting function, the second most important rate for cars is the recreation function. It is not limited to the recreational facilities the manufacturers provide in each unit, but also the color of adventures that the cars are related into. It becomes a very important factor too. Big cars look great and powerful on the street, and it is a fact. There is a great feeling when people drive on a high-speed lane on the highways and they expect to get greatest adventures from their cars, or at least the adventure look. To make it complete, they are also designed with proper velocity options, capabilities to suit the different driving conditions, and also proper safety equipment for accident and severe weather conditions. Car manufacturers seem to notice this signals that they also offer this factor in the advertisement, and it really works.
The possible connection for this factor and the transportation infrastructure is that they offer good option for personal need. The road structures are good enough for this type of vehicle, although it is not specially designed for it. There is also a practical factor that every person needs to own a car to suit the personal need. It is very common in the country that there would be more than just one car in the family.
However, there is another important factor, still with the family-related functions. It is also very common that people follow the tight workforce schedule that they may need to suit best with family-supporting activities.
A choice of a car could also be made after the requirement of the available room to load the whole family members and their stuffs. This means that a working parent or working couples will consider buying a car that is big enough to take the whole family members, especially the kids, for example to school and other practice schedules, without worrying about space and still have enough room to breath and feel comfortable with the big load.
Madliesn (2002) said, “consumer taste” matters when giving the decision a go. There are a lot of alternative function of the car mentioned here that the vehicle may also develop second function to load outdoor equipments like surfboards, bikes, and of course, people. The facts showed that during 2001 for the first time, light trucks sales exceed the classic passenger vehicles.
This also means that the cars would be suitable both for the performance at the office, taking families to holiday spots, and do not require too much time for the regular maintenance. Unlike the European community, Americans do not put fuel price (fuel consumption) as something that really, really matters.
American people also give good value for speed and reliability of the whole condition, safety, and the operation of the engines. Test drives and information centers would mostly offer a lot of information to satisfy the customers who want to know about their future cars.
This is why millions of dollars were spent annually to accessorize the vehicle. An ON TRAC review shows interesting facts about this tendency to accessorize cars. There was a report from the Special Equipment Marketing Association that about $24.86 billion had been spent for car accessories in the year of 2000. This number shows a 7% increase from the previous year, which shows that people pay more attention to their cars’ look. From this number, about 75% of the accessories sold in the market were designed for big cars like trucks, vans, and SUVs. There was an indication that the size was simply not enough. People still want to give their big vehicles a better look, more than just what the manufacturers have offered.
The important accessories that they use include “appearance accessories” like sunroofs and wood dash kits (at about 55.6% of the market share or $13.8 billion), wheels, tires, and suspension products ($6 billion) and racing and performance parts ($5 billion), ON TRAC reported. This fact made it clearer that Americans put a big part of their lifestyles value on their cars, and the cars become the more important symbol than just a means of transportation, but also a means of lifestyle, love and expression.
The Future Trend of The Sales
Chandler however predicts that as economic integration and globalization issue is raised and developed better, the car markets would soon adjust. The better the economic integration will be, the more chances that infrastructure development in different regions like Europe, North America and Asia will correspond to each other, creating a smaller gap among the present differences and inducing new marketplace for previously absent models. However, it is important to remember that those changes may take years to happen.
It is little to say that this will affect everything, but it is not that European consumers do not follow the buying sense as strong as the U.S. do, but they just find the different value in relation with the culture and geographical shapes.
The condition within the country or region will be the first factor that affects customers to buy the cars. As fuel and pollution are quite critical and people are very sensitive to these factors. Therefore, there would be good idea for the manufacturers to continue developing types of vehicle that suit the need, like energy-saving cars.
The manufacturers could continue research which incorporates alternative fuel use, but within the range that would not sacrifice the vehicle performance. They still have good alternatives on public transportation and effective use of them that without a certain reason to buy a car, the products may not be able to sell well.
The space-saving idea has already been well accepted in Europe that this would be a good continuation for the market research process. Besides in Europe, manufacturers could also take a look at Asian market, which seems to develop similar sensitivity, but another different reasons of course to buy small cars. As many Asian countries contain such population with high workforce, poor infrastructure, but quite low income, they would probably look at the offer as long as it is sold within the reasonable price.
Manufacturers do not need to have problems with this as they can use the standard platform to develop different types of cars suitable to each region’s demand. This means that the manufacturer does not need to create a different platform for every approach they work on a country or region, but only shape up the similar design platform they already have and make suitable adjustment on the color, function, exterior and interior performance and another little additions as well. For example, Volkswagen has used the similar platform for luxury golf cars in Europe and shape it up for cabs in Mexico. This approach would really save time and money while the company concentrates to the marketing procedures.
It is a wise choice that a research also conducted by taking cultural factors into account. In the U.S., the trend to drive big cars is also driven by cultural content and the community lifestyle. The growing urban system and intercultural change may also affect the automobile preference. However, if the company wants to give a try on a new design, this also worth to try. As it was said before, the strong marketing force in the U.S. had helped manufacturers to sell trucks and it even outsold than the classic passenger vehicles. This is a very successful action, although maybe not very good in the expense. However, passenger cars have been introduced previously, and it is possible that it would get another greater demand as the trend rolls. In the future the company may offer customers good reason why they need to buy small cars, of course, if it is safe and comfortable enough compared to the existing ones.
Bibliography
BBC News. Nov 1999. UK Motorists ‘Worst Off in Europe’. Retrieved November 10, 2002, from BBC News Online. http://news.bbc.co.uk/hi/english/uk/newsid_536000/536787.stm
Chandler, C. Globalization: The Automotive Industry’s Quest for a “World Car” Strategy. Retrieved November 10, 2002 from Global Edge, Michigan State University. Web site: http://globaledge.msu.edu/KnowledgeRoom/FeaturedInsights/0018.pdf
How Much Is That Doggy in the (Rear) Window. 2002. ON TRAC Vol. 02 No. 01. Retrieved November 10, 2002 from Travel Relocation Automobiles Compensation. Web site: http://www.runzheimer.com/corpc/ontrac/scripts/ontracprint.asp
Madslien, J. Jan 2002. U.S. drivers keep on truckin’. Retrieved November 10, 2002, from BBC News Online. Web site: http://news.bbc.co.uk/2/hi/business/1741531.stm
Mitropolitski, S. Dec 2001. Europe Better Prepared To Accept The Segway. Retrieved November 10, 2002 from International Real Estate Digest. Web site: http://www.ired.com/news/mkt/segway.htm
Scott, C. Jan 2002.
Future Cars Go High-tech, Add Entertainment Features. Retrieved November 10, 2002 from CSMonitor. Web site: http://www.csmonitor.com/2002/0111/p3s1-usgn.html
Woodrow Wilson School of Public and International Affairs. 1994. Saving Energy in U.S. Transportation. Retrieved November 13, 2002 from Woodrow Wilson School of Public and International Affairs. Princeton University. Web site: http://www.wws.princeton.edu/cgi-bin/byteserv.prl/~ota/disk1/1994/9432/943203.PDF.
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