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New Car Alarm Market Research - Essay Example

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This report will identify how well Luminescent Alarms would be received by the general public. Luminescent Alarms Ltd is a UK vehicle security company established in 2010 that has developed a new innovative car alarm system that is intended to solve the problem of car theft…
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New Car Alarm Market Research
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Luminescent Alarms Contents Introduction 2 Background Information 3 Company Products 3 Objectives 7 Statistical Data (secondary data) 7 Porter’s Forces (External Environmental Factors) 10 New Entrants 10 Brokering Power of Buyers 11 Threat of Substitutes 11 Market Competitors 12 SWOT Analysis 12 Strengths 12 Weakness 14 Opportunities 14 Threats 15 Recommendations 15 References 17 Executive Summary This report has been produced with the aim of the project objectives, to identify how well Luminescent Alarms would be received by the general public (car owners) in the Netherlands. Luminescent Alarms Ltd is a UK vehicle security company established in 2010 that has developed a new innovative car alarm system that is intended to solve the problem of car theft. The Porter´s five forces analysis has been developed, in order to identify the active external forces that influence the Netherland’s vehicle security market. They effectively show the plusses that the firm has over its competitors. The SWOT Analysis of the company´s product and the marker research, has found the fortes of the Luminescent Alarm system and market of choice. The main weakness of the process is the unfamiliarity of the product within the market which will later on be tasking in the globalization process and the competition. Various openings and threats have been found within the automobile market research and the advantages that the company has over its competition by virtue of its location and production line. The research results are intended to outline how well Luminescent Alarms would be received by the general public (car owners). The research is also aimed at finding out if there is a demand for its proposed product and to see if its potential customers would buy the new product with regard to its practicality. Introduction Car crime has been an ostensibleglobal problem for decades, in practically every country in the world. As reports show that more than 2700 cars are reported stolen in Europe on a daily basis and 50% of them are hardly ever retrieved. Luminescent Alarms offers the solution. Luminescent Alarms is the World’s first silent and visual car alarm. A unique British patent that uses cutting-edge optical tools. It responds to a signal provided by a standard mobile phone SIM and makes an illuminated flashing message 'Stolen' appear visibly on a number plate when required, this feature however, is subject to manipulation by the car owner. Background Information Luminescent Alarms was created by David Richardson and Dr Ashley Knowles to develop and exploit the idea of an anti-theft technology for identifying stolen cars.The ideology is to raise the profile of a stolen vehicle thereby drawing the attention of the public who can then respond by alerting the police. The Alarm ensures that the owners stay in complete control of the security of their vehiclesand the police can launch a recovery mission as nippily. When activated, the owner and the relevant authorities concurrently receive text messages alerting them of the theft. That helps raise the profile and ensure the vehicle is apprehended with haste. The system is tamper proof and can be tracked on a number of devices (including computers, laptops and smartphones). Company Products The design of a short message service enabled security system is an innovation in the car security structure. This security apparatus can be incorporated in any motor vehicle of choice. The concept behind this idea revolves around the use of a Sony Ericson GSM modem and a micro-controller. The connection is set-up by use of a wireless GSM communication platform and this gives it the feature of accessibility over a wide geographical region. From January of 2015 there is a reported 47946 registered cars while as of February of the same year, the number fell to33944 Cars and this is attributed to the rise in cases of car theft. The car alarm technology has its flaws evidently since all vehicles are fitted with this feature. Some of the flaws are false alarms and the distance of exposure. Car alarms are limited to the range of the car owner and with the frequent false alarm experiences there is a likelihood of assumption once a car alarm is heard. The car alarm system that was designed by Jiwa Abdullah, makes use of motion sensors to detect incursion. Over time, various modifications have been made to the original model in a bid to make it more effective with incorporations of lock mechanisms be it to the steering apparatus, the car doors or the wheel system and in some cases an assimilation of all possible locks. The major blemish with this system is that it is susceptible to interference. Car thieves have mastered the skill of tampering with and even removing car alarms in a matter of seconds. With this occurrence, car owners have sought the service of Global Positioning Systems (GPS) to aid in recovery of stolen vehicles. This service however, has its limitations for instance in indoor or underground parking areas, the vehicles cannot be traced (Abdullah J. 2011). The alarm systems come in many variations, while there are those that are overly sensitive there are those that can withstand land tremors without being triggered. Another failure is that they lack a recovery mechanism for stolen vehicles but merely depend on secondary GPS contrivance. The structure developed by Luminescent works as follows: the user dials a premeditated number to the device in the vehicle and the authentication process is triggered when the GSM module detects the incoming call. Through AT tension commands, the authentication is performed. A cell phone that definitely interconnects with peripherals is the best make. Since AT commands are a means through which modems interconnect with cell phones, the different makes of mobile phones interpret the commands differently- others are prompt and some are indirect. It is from this information that the conclusion that Ericsson handsets are the most feasible option. Below is a flowchart of the operation of the system. NO YES NO YES Luminescent Alarms LTD wishes to grow and become an international company by first venturing into the European market from Netherlands. The syndicate wants to examine the market in the Netherlands to determine whether its prospects are viable by carrying out a market analysis. Objectives Over the past few months we have been busy researching and investigating the potential for 'Luminescent Alarms' product in the Netherlands. We have conducted in-depth primary and secondary research to gain an understanding of the existing market. Over the next 20 minutes we will be aiming to summarize our findings and recommend what we believe is the correct future strategy to be taken for your company. Statistical Data (secondary data) Car Security Systems Market Report Passenger car security systems, such as Alarms, Immobilizers, Remote Keyless Entry (RKE), and Central Locking systems market is estimated to grow at a steady rate, as the need for effective and reliable security systems is increasing. The passenger car security systems market in terms of value is projected to grow $11.5 Billion by 2019. Increase in vehicle thefts and increase in consumer awareness towards vehicle security are acting as a driving factor for the market. Asia-Oceania region is estimated to be biggest market in terms of value for passenger car security systems. This is mainly driven by the drastic increase in vehicle thefts in the emerging countries. In the European region, Germany is estimated to be the largest market for passenger car security systems owing to large number of vehicle sales. However, France is estimated to grow at the highest growth rate in the region. Source: Markets and Markets Analysis 2014. Netherlands Car Registrations Car Registrations in Netherlands averaged 39292.44 cars from 1967 until 2015. Car Registrations in Netherlands decreased to 33944 Cars in February of 2015 from 47946 Cars in January of 2015. Top 10 Stolen Vehicles, Aging from 0-3 years old, in 2014 The top 10 car brands represents 79.1% of all stolen private vehicles aging from 0-3 years old in 2014. Audi, Land Rover and Citroën show a increase to above 30% compared to 2013. Aditionally, Peugot, Seat, Opel and Renault have displayed a significant increase as well. The percentages for Volkswagen, BMW and Toyota have decreased. Car thieves are increasingly targeting newer vehicles because they are more profitable. Percentage of recovered private vehicles 2013-2014 From the information above it is evident that the target clients for Luminescent Company are the car owners who are prey to car thieves. With better security frameworks in place that are outcomes of technological innovations, it is alarming that the rate of car theft is exponentially rising. Porter’s Forces (External Environmental Factors) New Entrants The strongest competitive force is the determinant factor of the success rate of an industry in a given market. There are various technical and economic factors that determine the forte of each competitive force. The threat of new entrants as seen in the case of Luminescent Company that recently joined the market brings a new perspective on the market strategies employed by competing firms. This is the case because the new entrants shake up the competition (Manktlew J. & Carlson A.). Luminescent Alarms specializes in the manufacture of alarms and with their technological innovations in the car manufacturing industry, they pose a threat to existing firms since the car market is ever growing. However, they are not immune to the same threat. This being a new company, the prospect of having their profit margins capped is quite the challenge. A firm like Scorpion Automotive Ltd. that has been in the market for a longer period than Luminescent has the capability to withstand the blow of a new entrant unlike Luminescent which faces the possibility of being phased out (Michael, E. 2008). Brokering Power of Buyers The bargaining power of buyers in Netherlands has increased with the economic trends recorded in the past years. Especially with the data showing that 79.1% of all private vehicles stolen range from 0-3 years old and with the more luxurious models like Audi and Land rover showing a 30% increase in probability of being stolen, the buyer’s profile has been modified. This modification shows an increased interest to purchase and install car security systems. Such a development would be beneficial to Luminescent if they can sign a contract with a car dealership and with the exclusive nature of such deals, this would mean a long-term partnership has been established and with it an increased profit margin. The dispensability of the product plays a major role in lowering the bargaining power of the buyers (Vernon, 1966). The more accessible that Luminescent products are, the greater profits they are likely to reflect. Threat of Substitutes The threat of substitutes is projected in the form of cheaper substitutes for Luminescent products. Commodities that serve the same purpose tend to come in varieties and it is not in all situations that the alternatives are of comparable quality. Lower quality products that seem to get the job done infiltrate the market and marginalize profits, new entrants that have not entirely conquered the large-scale or global market are then at a threat of annihilation. The use of alternative means of transport also poses a threat to the sale of car alarms especially with the increased automobile theft cases, not all people are willing to take the risk of purchasing a private means of transport (Deloitte 2009). Therefore as much as the increase in car theft cases appears to be a lucrative business opportunity for the sales of alarm systems, in a different perspective it is also detrimental. Market Competitors Market competitors bring about high fixed costs and exit barriers. The high fixed costs are a consequence of the presence of many competitors in the market. Such a high presence regulates the prices at which services and products can be retailed at. With factors like product promotion coming into play, it is tough to gain a competitive advantage without the use of technological novelties (Buckley & Casson, 1976). Luminescent is at an advantage in this case because innovation is their strong suit. Exit barriers arise when the cost of leaving a market is far too high. For start-up companies like Luminescent the possibility of disinvestment is formidable(Datamonitor 2011). SWOT Analysis Strengths With the development of modern security systems, car thieves are also devising means to beat these systems. Security system manufacturers are therefore in a race with car thieves. This happening has birthed the necessity for mobility and multimedia amenities. To overcome this hurdle the use of a mobile GSM expedient with intelligence calling is the way to go. The assumption that every car owner possesses a mobile communication device is a safe one. The apparatus installed in the vehicle is linked to the device of the owner leaving only one challenge- that of the network provider. The mechanism is therefore as effective as the availability of a strong network connection. So long as the car owner uses a network provider that covers a wide geographical region, the viability of the service is assured. The advantage that Luminescent has over similar firms at a multinational level is that European based equipment is based on eminence, safety and energy adeptness. This is in line with the requirements stipulated by the European Commission. The policies are aimed at the modernization of the European Union industrial base. The policies centre on: monitoring novelty enactment and uptake, the development of guidelines to fuel the expansive commercialization of innovation by the EU industry(Botrić & Škuflić, 2006). The execution of actions of the Innovation Union are under management of the Directorate General for Enterprise & Industry. What this means for Luminescent is that they have a strong backing of the commission on their undertakings to curb car theft (www.ec.europa.eu). The ICT Innovation for Manufacturing SMEs (I4MS) is an ingenuity that was launched be the European Commission in 2013. The focus that they put on the economic nature of novelties and the superiority in the market stems from the fact that they originate from steps made in ICT that are assimilated in the products (EU, February 2013). In a bid to make the manufacturing process more proficient, ICT centred solutions are applied across the entire course. This gives the result that European produced material is mass produced and more diversified to fit the clientele needs. This in turn ensures suppleness to the ever changing global market (www.i4ms.eu). Weakness The challenges that the firm has to overcome are based on the fact that the largest automobile industry is based in a competing market- Japan. A partnership with Toyota would be very lucrative since they have the highest sales in automobiles every year. Their models are consumer based in the sense that they are economical to operate and therefore attract the largest portion of private car buyers. Tapping into such a market would be a major leap towards globalization of the Luminescent. Another problem is the issue of unfamiliarity of the product to the customers. This stems from the fact that Luminescent is not an established brand. Opportunities Luminescent has diverse opportunities to expand its horizons in the near future with the study that revealed that SMEs provide an aggregate 45% of manufacturing value and contribute to the hiring of 59% of the job creations in the manufacturing segment. These figures have attracted funding from the European Commission that has set a 77 million Euros budget to fund the manufacturing division. The high-tech companies like Luminescent are on the fore-front since they are ICT induced and play a major role in re-industrialization of Europe (www.i4ms.eu). Profitable opportunities linger in the Chinese market for Luminescent being a component firm. With the fast increase in competition, China is seeking EU component firms with bases in their locality to supply them with high-tech components for their car models. According to Professor Manfred Broy, today the cost of electronics and software in automobiles is 35% of the total cost of the vehicle. These electronic systems are incorporated in the manufacture of alarm systems. The foremost Original Equipment Manufacturers (OEMs) have put their focus on traditional product areas such as security which is proven by the consumer report on High-tech Automotive Headaches (December 2013, www.consumerreports.org) that shows a survey conducted that identified infotainment paraphernalia as the most wearisome feature in 2014 vehicles. Deductively, a company that can contrive superior structures (security in this case) has high prospects (Auto Industry Trends, 2015). Threats The threats to global expansion of Luminescent include unregulated and unprecedented protectionism by import countries. When faced with an economic crisis or the prospect of one, countries impose tariffs on imported equipment which deters exporters. The absence of a free trade deal brings about the possibility of a looming tariff imposition. Take for instance the case of Brazil that raised tariffs on 100 sectors in October 2014 in an attempt salvage its deteriorating industrial base. The Inovar- Auto Programme was set in motion and it targets the automobile industry. The major problem with such impositions is that they are executed without a pre-warning to the traders. This occurrence renders products blocked in customs entry points. Such measures that are damaging to the car industry also injure component manufacturers like Luminescent (Pritchard, E. September 2013). Recommendations Luminescent Alarms should develop operating systems that are attuned with Android software. This is ascribed to the fact that Android OS is the most popular software all over the world (www.developer.com) The firm should ensure that there is incessant research for new cutting edge software. This is ascribed to the fact that its products are based on existing technologies in the market. Since there is an already standing tracking system in the market, Luminescent Alarms should lay emphasis on a more advanced tracking system on mobile devices in order to capture a wider market. A system that is unsusceptible to network interference. Luminescent Alarms should lay emphasis on tracking devices and vehicle security systems in order to face the stiff competition from its rival companies. Luminescent Alarms should also target car rental services since they are higher risk targets. References Abdullah J. Design of Mobile Control Car Security System. Int. J. Engineering and Technology, 3(3) (2011) 1–2. Android Developers. Android the World’s most Popular Mobile Platform. [Accessed April 24th 2015]. Available from, http://www.developer.android.com/about/index.html Baker P. et al. December 2012. Annex to the Main Report on Business Services.European Commission, DG Enterprise and Industry, pp. 79-93. Botrić & Škuflić. 2006. Main Determinants of Foreign Direct Investment in the South East European Countries, Transition Studies Review, Vol. 13, No, 2, pp. 359-377. Buckley & Casson. 1976. The Future of Multinational Enterprise, London: Macmillan Datamonitor 2011. Automotive Manufacturing. [Accessed April 24th 2015]. Available from, http://360.datamonitor.com.www.baser.dk/Product?pid=10C672D5-7559-4A0A-90B3-5EFBDF97D73C December 2013. High-tech Automotive Headaches. [Accessed April 24th 2015]. Available from, http://www.consumerreports.org/cro/magazine/2014/02/high-tech-automotive-headaches/index.htm Deloitte. 2009.Accelerating toward 2020 -An Automotive Industry Transformed. Pp. 1-32 Doh, J. P., 2000. Entrepreneurial Privatization Strategies: Order of Entry and Local Partner Collaboration as Sources of Competitive Advantage. Academy of Management Review, 25(3), pp. 551-571. February 2013. EU, Industry to Invest 22 Billion Euros in Research and Innovation. [Accessed April 24th 2015]. Available from http://www.euractiv.com/specialreport-innovation-digital;/eu-industry-invest-22-research-i-news-529214 I4MS: Fostering Digital Industrial Innovation in Europe. [Accessed April 24th]. Available from, http://www.i4ms.eu/events/berlin-event-detail.php Innovation Policy. Industrial Innovation Enterprise and Industry. [Accessed April 23rd 2015]. Available from http://www.ec.europa.eu/enterprise/policies/innovation/policy/index-en.htm Manktlew J. & Carlson A. Porter’s Five Forces.[Accessed April 24th 2015]. Available from, http://www.mindtools.com/pages/article/newTMC-08.htm Noble P.Protectionism on the Rise in Europe. [Accessed April 24th 2015]. Available from, http://content.time.com/time/world/article/0,8599,1876944,00.html Porter’s Five Forces Model. [Accessed April 23rd 2015]. Available from, http://www.businessballs.com/portersfiveforcesofcompetition.htm Pritchard, E. September 2013. Europe Fears Uncontrolled Protectionism as Emerging Markets turn against Free Trade. [Accessed April 24th 2015]. Available from, http://www.telegraph.co.uk/finance/economics/10282016/Europe-fears-uncontrolled-protectionism-as-emerging-markets-turn-against-free-trade.html Sikander, M. et al. SMS Based Wireless Home Appliance Control System (HACS) for Automating Appliances and Security. Tech. 6(2009) 887–894. Sony Ericsson Mobile Communications International .2003. [Accessed April 23rd 2015]. Available from http://www.sonyericsson.com. Strategy & 2015 Auto Industry Trends. Turbulence & Technology. [Accessed April 24th 2015]. Available from http://www.strategyand.pwc.com/perspectives/2015-auto-trends Vernon 1966. International Investment and International Trade in the Product Cycle. Quarterly Journal of Economics, Vol. 80, pp. 190-207. Read More
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