MINI PROJECT INTERNATIONAL MARKETING MARKETING STRATEGIES IN AUTOMOBILE INDUSTRY

SUBMITTED BY R. PREM KUMARM.B.A. B-SECTION3511210091

CONTENTS:

1. MARKET ANALYSIS

2. ORGANISATION AND MANAGEMENT

3. MARKETING AND SALES STRATEGIES

4.PRODUCT LINE

5. FINANCIAL FORECAST

6. APPENDIX

1. MARKET ANALYSIS

1.1 Industry Description

According to latest Land Transport Authority (LTA) statistics, the number of cars in Singapore grew by a record 7.5 per cent last year, to 456,482 units. The Government through its Certificate of Entitlement (COE) policy has sought to cap the annual increase in the car population to around 3 per cents.

But this is not an exact science. Based on the recent trend of high deregistration, especially between 2001 and 2005, the annual issue of COEs has been quite generous. Even so, the balance tipped towards deregistration for a couple of years, when more cars were taken off the road than new cars were added although there was a 5.1 per cent growth in 2005. Last year, 117,062 new cars were registered.

In contrast, 82,811 cars were deregistrated 6 per cent fewer than in 2005. This is the first drop in the number of cars taken off the roads since 1996 just before the trend of early deregistration emerged. During this period till 2005, many people were deregistering, that is scrapping or exporting cars as new as three years old. This is because of a generous rebate policy on the cars before the fifth year. These rebates on residual taxes were worth more than what the car would fetch on the second-hand market, which in turn was battered by sliding new car prices.

However, the rebate formula was revised and made less generous in 2002 to stem the early deregistration trend which was deemed to wasteful by many. Its desired impact kicked in last year. The bulk of cars bought with relatively high COEs, anything above $30,000 have mostly been scrapped. By last year, there were fewer cars eligible for high rebates left on the road. Another reason for the reversal in the registration trend was that many buyers had borrowed too much and would be out of pocket if they deregistered their vehicles prematurely. Many car buyers had been tempted by the availability of 10 year loans and zero downpayment.

Observers said that more COEs may be released because certificates which should have been released in previous years were held back because the replacement demand was underestimated.

1.2 Industry Outlook

With more COEs to be released, the industry outlook of the car population will increase due to the following reasons:

- Increase in COE Quotas which will eventually causes the COE price to plunge due to the supply and demand factor.

- Longer repayment period and bank zero downpayments will make it more affordable for the middle and lower income earner.

1.3 Market Size

Currently, based on the figure from Land and Transport Authority (LTA), the total cars in Singapore are 456,482 units. The market size we are looking at is about 5 per cents which round the figure of 22,824 units.

As the Government has capped the growth to an annual of 3 per cents, we are looking at the forecast of 3000 units per year for the next 5 years.

1.4 Growth Potential

As we have done a detail market survey on the consumer behaviors, the following points lead to the potential for the product.

a. Consumer has better buying power.b. Useful for new driver or foreigner driving in Singapore or Malaysia where they can get to their destination easy as compared to the conventional street directory.c. Help driver to save time and lower fuel consumption.d. Also as a Gadget.

1.5 Target Market Segmentation

The main focus for the target market:

Demographic Segmentation- Age between 25 to 60 years old.- Male and Female.- Income from $1500 onward.- Middle and high education level.

Psychographic Segmentation- Middle and high social class.- Gadget and technology personality.

1.6 SWOT Analysis

Strengths- Technopreneurial spirit.- Software and hardware knowledge.- Localized original content.- Wide network in the automotive industry.- Understanding the nature of the industry.- Strong positioning and relationship with the industry association.- Proven IT expertise and capability.- Low cost research and development.- Capable to launch in short period of time.

Weaknesses- New start-up.- Insufficient capital base.- Additional manpower required.

Opportunities- Create awareness in the product.- Create future potential collate ration with company in the South East Asia regions.- Expansion opportunities through franchising / strategic partners.- Opportunity to market through online.- Lead to opportunity to further development to enhance the product.

Threats- Create other player to move in.- Stringent government policy.- Market acceptance level.

1.7 Competitive Advantages

The company feels that it has an edge over potential competition due to the management previously has all the relevant contacts and experiences in the industry. Furthermore, the Research and Development engineers are very competent in their field. Also, coupled with copyrights which will further create our competitiveness stronger.

2. ORGANISATION AND MANAGEMENT

2.1 Organisation Structure

The organizational structure will consist of four departments.

Administration Department

Head by the Executive Director. His job role will involve in sourcing, procurement, shipping and financial of the company. He has over 10 years of experience in this field with multi-national company and in the government sector as well.

Sales and Marketing Department

Head by the Sales and Marketing Director. His role is to analysis the market, plan, strategies marketing strategies and implementation. Also, oversee the sales department. He has over 12 years of experience in the automotive industry and has rich industrial knowledge in this field. He has very good contacts with major car distributors and importers in Singapore.

Research and Development Department

Head by the R & D Chief Engineer. His job is to further enhance the product with more added features and functions so to keep up the competitive edge. Graduated from Nanyang Technological University in 1990 with a Master Degree in Computing Architectural, was employed by National Computers Systems Pte Ltd for 7 years as the post of Architectural Engineer.

Operation Department

Head by the Operation Manager. His scope of work is to ensure smooth flow of production and meet the schedule of delivery. He also has to keep track closely the inventory of the company and ensure the inventory able to meet the production needs. He has a vast experience in company operation for more than 8 years with Multi-National Company in China.

2.2 Hiring

For the recruitments, we will be engaging a reputable recruitment agency to hunt for talents as they have the expertise to shortlist our requirements.

2.3 Training

All new hired staffs will undergo intense formal training. Training will be in term of hand-on and theory training. Once they are confident in their area, the respective head of department will assess their level of competency. If below satisfactory, they will undergo the whole process again.

2.4 Salary

Salary will base on the guideline set by the National Wages Council. On the case to case basis, if the applicant has the right type of experiences we required, the company might offer him above the market rate.

2.5 Benefits

As a way to retent capable, hardworking staff, the company has lay down the following benefits to boost the morale of the staff.

- Bonus plan.- Recreational program.- Additional external training or course.- Commission scheme.- Year end company tour- Health insurance / health care plan- Disability insurance

3. MARKETING AND SALES STRATEGIES

3.1 Marketing Strategies

Following are the marketing strategies which we will be applying for this business.

Advertisement Advertising in major auto magazines and newspapers which unable us to reach a vast of the target audience especially auto magazines where those car enthusiasts buy and subscribed monthly.

Shows Participate in motor shows and road shows.

Rental For those whom do not want to spend too much on the product, they can rental the unit where they only pay by daily rate especially useful when they are traveling to Malaysia.

Credit Card Tie up with credit card companies for zero per cent interest free scheme when the buyer signs up using credit card.

3.2 Channel of Distributions

Car Distributor / Parallel Imports These are the channel where they are the frontline to the car buyer. They will be interested to market the product as it enhances them to sell their car easy if package with it car price and as well as they will make some commission from the product.

Car Accessories Shop This also another area where its able to reach the target audience especially car enthusiasts.

4. PRODUCT LINE

The Portable Car Navigation Device has its unique functions and features.

4.1 Functions

- Navigation Function- MP3- MP4- Personal Organizer

4.2 Features

- Light weight, compact.- Touchscreen.- User friendly.- Portable, easily transferable from car to car.- Includes map of Singapore and West Malaysia Peninsular.- Available in English, Mandarin and Malay Berhasa.- Enable to route to your destination using street name or postal code.- Enable to select shortest or fastest routing.- Enable to input your favourite destinations in the device. Eg. home, office.- More than 60,000 places of interests stored in the system for Singapore and West Malaysia Peninsular. Eg. restaurants, food centres, entertainments and etc.4.3 Unique Selling Point

The unique selling point is that the entire hardware is build and design by our R & D team which they are capable to upgrade the feature and function. Also, we have our proprietary licenced map which also enables us to have competitive edge over the competitors.

5. FINANCIAL FORECAST

5.1 Funding Requirements

The initial funding requirements are SGD 4.2 million. This figure is provided for the funding for the first year expenses. Our expectation is to generate revenues in the first year and profit in the second year.

5.2 Utilisation of Funds

The amount of SGD 1.5 million will be utilized as follows :

Stock Inventory 3,500,000Personnel 300,000Sales and Marketing 300,000Contingencies 100,0004,200,000

5.3 Expansion Plan

With our good contacts and industry knowledge, our direction is to expand the business to the South East Asia Region. In our expansion, we will be looking for qualified company to represent us as the country distributor and as joint venture.

5.4 Financial Return

Financial projections, based on conservative assumptions indicate net revenues of SGD 1.5 million in first year, SGD 3.0 million in second year and SGD 4.5 million in the third year.

Based on our assumptions, the cash flow projections indicate the breakeven point in the later part of third year. It is important to note that our assumptions would be significantly increased when our regional plan roll-out.

5.5 Exit Strategy

To be listed in the SGX stock exchange in 3 to 4 years.

6. APPENDIX

- Car population have grows by record of 7.5%. 2007. The Straits Times. Pg. 1. Jan 17.

- www.bplan.com. 1996 - 2007

- Philip Kotler Marketing Management. 1997. 9th Edition.