Market Share
Source : Snapshots UK Cars 2010
Market share is really important when conducting market reaserch, because it shows which companies are controling the market. The pie chart clearly shows that in 2009 the largest UK car company by volume was ford, with 15.9% share of the market. The two main players in the market were Ford and General motors. They accounted for 27.8% of the market by volume. Further more the top 5 car companies account for 47.1% of the market share in the uk which is a massive share, especially when considering that the 53.9% representing ‘others’ consists of over 100 other car companies.This is proof to show that this market is highly competitive and even large firms such General motors do struggle, this is shown by the decline in market share of -2.1% between 2008 and 2009. This could mean that if Ducati were to enter this highly competitive market there is a chance that they could be knocked out by competitiors who are much more experienced in the sector than Ducati. Because of the high risks involved in the car market I would suggest that Ducati should not enter the car market.
Market Forecasts
Source : Snapshots UK Cars 2010
Market forecast is extremely important because it shows whether the market will grow or contract. In this case the UK car market has been forecasted to not to grow in 2010 since 2009. However from then on the sales are predicted to start to rising dramatically from 1,955,000 in 2010 to 2,058,000 in 2014, and the car market is forcasted to pick up. However after 2011 the growth of the market will slow down .
This could mean that if Ducati was to enter the car market then it sales could rise in future because the growth would of market would mean that more people are buying new cars and this would be the time for Ducati to enter to try and get the brand going. For those reasons I think Ducati migth enter the car market as the future of the market looks secure and strong, and the best time to enter would be the time when the market is growing. However the forecast is only an esitmate and the market can change significantly and in the current financial climate there is always a chance of a double-dip recession.
External Influences
Fuel prices
Fuel prices can be an external factor which will affect the sales of new registered cars sold. This is because people are worried about the soaring Fuel prices and think they may not be able to afford to run a car. Petrol prices increased from 88pence per litre in 2007 to 117ppl in 2010, and diesel prices increased from 92ppl to a staggering 122ppl in the same time. This is because the demand for oil is far greater than the supply and also because the three middle eastern countries Iran, Saudi Arabia and UAE (also part of the OPEC) control the supply of oil causing the price to increase by supplying less.
A recent survey taken by Motor Trend showed that ‘Nearly 40% of car buyers say fuel prices have affected vehicle purchase decision; Additional new car buyers say 29-pence increase in petrol prices will affect their purchase decision’.
This means that if Ducati were to enter the car market then they could struggle to make sales as people are now deciding not to buy new cars because of the running cost (fuel) for the car. This could cause Ducati to fail in the new market as the complementary product is highly priced.
The Recession
During the recession the UK car market took the biggest hit and the sales fell by 45% in a research done by ‘car’. Furthermore the UK car market shrank by 37% which is huge. This happened because the banks around the world were going into administration causing British companies to face problems as people stopped spending as much as they did to try and save money in case the UK banks collapsed, which lead to sales of cars to decrease dramatically. The market showed no signs of recovering soon and car manufactures such as Honda had to close their plant for 6 months.
This could mean that if Ducati entered the car market in a recession then they would really struggle to survive as sales decreased dramatically and the market shrank very quickly by a large proportion.
Conclusion
In conclusion I think the main reasons to why Ducati should enter the car market are that it is growing and the economy is now out of the recession and recovering pretty well. This is shown by the rise in the number of cars sold in the second quarter of 2010 as sales increased by 17.3%. Furthermore the forecast shows that the market will grow and sales will increase dramatically between 2010 and 2011. Also fuel prices have been forecasted to drop from $89 per barrel to $70 per barrel, meaning that fuel prices over all could drop.
All this suggest a good future for Ducati in the car market. However there are many reasons for why the motor bike giant should not enter the market. Firstly because the market is highly competitive with over 150 car manufactures battling it out for a larger market share, which is controlled by five of the most successful car companies in the world who have built this reputation and power over long period of time. This would mean that if Ducati entered this market then they could easily be knocked out by the competitors who have far more experience in the market. Secondly the forecast for the market to grow is only an estimate and the market can actually dip back into recession causing the car market to shrink once again.
Overall I think the car market may not be the market for Ducati to enter as they may struggle to make sales and to hold their position in the market.
Evaluation of Research Methodology
I used to secondary research to gather the information i needed for this report, however secondary data has many advantages and disadvantages.
Advantages:
Ease of Access - the Internet has changed how secondary research is accessed by offering convenience e.g. online access from many locations and generally standardised usage methods for all data sources. It was easy to obtain the snapshots report very quickly through the internet.
Low Cost to obtain- Researchers are often attracted to secondary data because getting this information is much less expensive than if the researchers had to carry out the research themselves. It didn’t cost anything to obtain the snapshots report because the research on the website is mostly free.
May Help Clarify Research Question – Secondary research is often used prior to larger scale primary research to help clarify what is to be learned. My snapshots report helped me to gather all the information I needed.
Disadvantages:
Not Specific to Researcher’s Needs- In many cases, secondary data is not presented in a form that exactly meets the researcher’s needs. Therefore, the researcher needs to rely on secondary data that is presented and classified in a way that is similar to their needs. There was a lot of information in the snapshots report which i didn’t need e.g. market segmentation by volume.
Incomplete Information- The researcher may not get the full version of the research to gain the full value of the study. This is because many research suppliers offer free portions of their research and then charge expensive fees for their full reports. For example from my snapshots report market size by value was missing which was an important part of the report.
Quality of Research- he researcher needs to take sufficient steps to critically evaluate the validity and reliability of the information provided. In my case the data may not be reliable as it has not been done by me and it could also be out of date.