The European business environment Free essay! Download now
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The European business environment
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| Words: 3300 | Submitted: 31-Oct-2009
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DescriptionIn my essay will begin with building an insight of the industry and illustrate the difficulties it faces at the current economic recession and define the chosen segment for my research, followed by a breakdown of consumer behavior analysis, which will help demonstrate consumer motives and psychology when it comes to purchasing goods and services.
Automotive Consumer segment chosen: Upper Rung City
High Propensity Vehicles: European / Japanese Vehicles, Luxury, SUV, Sports
Defining Characteristics: Mostly single without kids, this wealthy segment favors, cities and surrounds for their home ownership. Ethnically and racially diverse, their ages range from 30 – 65. They are primarily concentrated where they make – or made – their money:. Since they can buy what they want they usually choose quality and the trappings of their lifestyles, including luxury homes and condominiums, foreign travel, investment portfolios and costly leisure activities. Upper Rung City consumers have a high propensity for European and Japanese vehicles, particularly luxury cars plus SUVs and sports cars.
Hefty blow. Sales are plunging, tens of thousands of jobs hang in the balance and most companies are making a loss. About the best that can be said is that the industry is in nowhere near as bad a shape as that of the US.
"Even the weakest European players, Fiat, Renault and Peugeot Citroen, are not technically insolvent like most of their Detroit equivalents," said Toby Procter, director of UK research firm Trendtracker.
Beetling along at a profit
the strongest, European market leader Volkswagen, even made a pre-tax profit for 2008, 1% higher at €661 million, albeit with a 20% plunge in the fourth quarter, figures released this week show. According to the company's chief executive Martin Winterkorn, 2009 is set to be "one of the most difficult years in our history".
When it comes to survival, financial strength makes all the difference. Detroit's GM and Chrysler are close to running out of cash and are surviving on multi-billion dollar lifelines from the US government.
"The situation is very different in Europe. You have companies used to competing in a multi-firm market and their operations are fundamentally viable," said Professor Garel Rhys of Cardiff Business School.
Acres of unsold vehicles
Yet that is what most governments are doing. Britain has offered £2.3 billion of loan guarantees, France has offered €6 billion (£5.4 billion) to Peugeot/Citroen and Renault on condition they don't close French plants and there have been smaller guarantee and loan schemes from Sweden and Portugal.
Germany, Italy and Spain have also extended billions of Euros in aid, though these measures have included proposals to spur demand by getting people to scrap their existing cars and buy new ones.
According to Efraim Levy, a senior automobile equity analyst at Standard & Poor’s, in April 2008 consumers purchased more cars than trucks, stating it was “an eye-opening event that led many automakers to shift to producing smaller, more fuel-efficient cars.”
The following consumer behaviors work in favor of the electric car and can provide the foundation for a PR campaign to promote it. Pitches and story angles about the electric car that highlight these trends will be relevant to journalists and the public.
• Green consumers. Today, consumers and organizations are more eco-friendly than ever. Green initiatives are formed to help demonstrate how businesses are environmentally friendly, while other organizations focus on making green-friendly products for consumption. The automotive industry has a great opportunity to leverage consumer environmental concern to promote the electric car.
• The recession. Given the current state of the economy, consumers are looking for ways to cut costs and avoid high payouts at the gas pump. The electric car not only provides a more fuel-efficient mode of transportation, but it also ties to our need to be green and helps consumers feel good about their purchase.
• Consumer adoption of hybrid cars. Hybrid cars provide consumers with a gas-electric option. According to the American International Automobile Dealers Association, hybrid cars are increasingly popular because consumers can now have an affordable car that is fuel efficient and practical enough for everyday use.
Attention for the electric car is likely to increase as new models are unveiled and the debate over the best car battery continues. From a PR perspective, auto manufacturers will want to pay close attention to these trends to drive public interest in new, innovative and profitable electric cars.
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