Expansion Analysis for BMW

1. Prepare and implement a plan for the collection of primary and secondary data for assessing an area of business of your choice.

a. Develop and use a questionnaire and justify its design for a particular purpose.

1.1 Research Topic

General Area of interest: – Expansion & Diversification of Business.

Specific sub area of interest: -BMW’s expansion in car segment in Mumbai, India.

More specific topic of interest: – Which type of car segment should BMW expand their business in Mumbai, India.

Research Topic – BMW’s expansion in particular car market segment.

1.1.1 Background

BMW entered the Indian market in the year 2006 after their arch rival Mercedes-Benz. Both the German luxury car makers have the maximum market share in the luxury car market segment. Recently Audi has entered their market and is giving both the automobile companies a tough competition. BMW is able to overtake Mercedes-Benz in terms of sales and has been at the top of the luxury car market segment in India since the last four years. Audi is capturing the market segment rapidly with its new cars. So in order to remain at the top of the luxury car segment BMW as to react according to the change in trend and bring out new models to beat its competitors and block the entry of new competitors like Nissan, Porsche, Volkswagen, etc in their market segment.

BMW has its sales subsidiary in Gurgaon, Delhi to develop its dealer network in India. BMW has established 14 dealers all over India. Mumbai is one of the largest cities of luxury car market segment in India. The SIAM (Society of Indian Automobile Manufactures) has reported that BMW’s sales have grown by 12.76% to 1,020 units in July, 2009. The report also says that BMW has increased its sales by 43% to 3,000 units in 2010. BMW has future plans on increasing their dealership in eight more cities of India. BMW’s management team can understand the taste of the Indian consumers based on the research conducted in Mumbai, India. Mumbai being the economic capital of India had the largest number of buyers of luxury cars in India. BMW had opened its first assembly center in Chennai in 2007 by seeing the potential growth in Indian market. BMW is really caution about its product launch in Indian markets because they just don’t want to sell cars based on their brand value, but they wish to create better brand value by serving their customers with luxury cars with top of the line features, amazing performance and competing prices. BMW had surprised all its rivals by launching Rolls Royce cars in Indian market after studying the economic growth in India. But they still haven’t launched the cars of brand Mini because Indian customers are not ready for expensive small cars. BMW has always tried to make their cars on the basis of an idea of being practical and contemporary which has helped them succeed in luxury car segment in India. The firm has also made cars which are fuel efficient and eco-friendly (working on hybrid technology) has boosted their brand value and has helped them find many new customers.

http://automobiles.mapsofindia.com/cars/bmw/

1.1.2 Aim for the Research Project

The aim for the research topic is to find out in which market segment should BMW make expansions (produce new models) in Mumbai.

1.1.3 Objectives

The objectives for my research are to gather primary information for the research through Descriptive or Survey Research Design with the help of a questionnaire, secondary information via the staffs of the car companies and through companies sites, and conclude by research analysis and present it as a report to the BMW’s management team.

1.2Research

Leedy (1985) defines research as the manner in which we attempt to solve problems in a systematic effort to push back the frontiers of human ignorance or to confirm the validity of the solution to problems others have presumably resolved.

1.2.1 Research Design

Research Design is defined as a framework or blueprint for conducting a marketing research project. It specifies the details of the procedure necessary for attaining the information needed to structure and/or solve marketing research problems.

http://destinydawnmarie.blogspot.com/2007/05/research-design.html

1.2.2 Type of Research Design Chosen

Descriptive or Survey Research Design is used for the research as it attempts to describe and explain conditions of the present by using many subjects and questionnaires to fully describe a phenomenon. Survey research design /survey methodology is one of the most popular for dissertation research.

http://www.dissertation-statistics.com/research-designs.html

1.2.3 Primary & Secondary Research

The methods used for primary research is Descriptive or Survey Research Design method by which qualitative data is collected through questionnaires. The questionnaire is filled by 100 people visiting the showrooms of BMW, Audi & Mercedes-Benz and the data collected is analyzed and a conclusion is made. The questionnaire is designed to know the preference of the type of car segment people prefer to buy. Secondary data is collected from the showroom managers, balance sheet of companies and from the company’s site. Using both primary and secondary research a conclusion is drawn and presented in form of a report to the BMW management.

1.2.4 Network Diagram

The network diagram is used to show how the market research is carried out and data is analyzed and generated into a report for the management of BMW.

PD = Primary Data, SD = Secondary Data

Diagram 1: Network Diagram

1.3.1 Questionnaire for Primary Research

1.3.2 Analysis of the Questionnaire

The first question was asked to determine the ratio of gender of 100 people who had been a part of this survey. The result showed that out of the population of 100 the ratio of Men: Women were 7:3. The number of female who came to the showroom was 30 and the number of male was 70.

Gender: Male = 70 People Female = 30 People

Diagram 2: Gender

The second question is a general question asked to check how much the Indian people prefer to drive their car. The data collected showed that 95% of the people prefer driving their cars and 5% of the people do not drive their cars.

People who like driving their car (Yes) = 95   People who don’t drive their car (No) = 5

Diagram 3: People Who Prefer Driving Their Car

The third was based on how many cars each one owned who was surveyed. The data collected showed that 1 car was owned by 15 % people, 2 cars were owned by 10% people, 3 cars are owned by 25% people, 4 cars are owned by 10% people, 5 cars owned by 15% people, 6 cars owned by 15% people, 7 cars owned by 5% people, and 8 cars owned by 5% people.

Number of cars owned:

1=15 people  2=10 people  3=25people  4=10 people  5=15 people  6=15 people  7=5 people  8= 5 people

Diagram 4: Number of Cars Owned

The fourth and fifth questions were asked to gather the information for the company to check the preference of what type of car the people who were surveyed preferred. The data collected was tabulated according to the age group.

Age Group of People Surveyed and their Preference for the Type of Car

Diagram 5: Preference of Type of Car of People of Different Age Group

The sixth question was asked to see what price range the Indian customers prefer when they plan to buy a car.

Price range of cars (00,000 Rupees) 20-40 = 25 people 40-60 = 40 people 60-80 = 25 people 80-100 = 10 people             

Diagram 6: Price Range of cars (00,000 Rs)

The data collected showed the price range preferred by the Indian customers. The data showed that 25% people preferred car in the range 20-40 (00,000 Rs.), 40% people preferred car in the range 40-60 (00,000 Rs.), 25% people preferred car in the range 60-80 (00,000 Rs.), and 10% people preferred car in the range 80-100 (00,000 Rs. This data is also essential as this will help the company to make cars according to the taste of their customers.

2. Create information for decision making by summarising data using representative values, and use the results to draw valid and useful conclusions in a business context.

a. Analyse the data collected in Task 1 using measures of dispersion, and use to assess an area of business of your choice.

b. Use quartiles, percentiles and correlation coefficient, and use these to draw useful conclusions in a business context.

2.1 Quartile, Quartile Range and Quartile Deviation

a. Sedan

Quartiles

Nth Value = = 45

Q1 =

Q2 = 

Q3 =

Quartile Range

QR = Q3 – Q1 = 39 – 18 = 21 years

Quartile Deviation

QD = = 10.5 years

b. SUV

Quartiles

Nth Value = = 35

Q1 = 

Q2 =

Q3 =

Quartile Range

QR = Q3 – Q1 = 47 – 32 = 15 years

Quartile Deviation

QD = = 7.5 years

c. Sports Car

Quartiles

Nth Value = = 20

Q1 =

Q2 =

Q3 =

Quartile Range

QR = Q3 – Q1 = 38 – 18 = 20 years

Quartile Deviation

QD = = 10 years

2.2 Mean, Variance, Standard Deviation & Coefficient of Correlation

a. Sedan

Mean = xÌ… = = = 35

Variance = = = 66.67

Standard Deviation = δ = = = 8.16

Coefficient of Variation = = = 0.23

b. SUV

Mean = xÌ… = = = 39.28 = 39 (approx.)

Variance = = = 81.71

Standard Deviation = δ = = = 9.04

Coefficient of Variation = = = 0.23

c. Sports Car

Mean = xÌ… = = = 32.5

Variance = = = 78.75

Standard Deviation = δ = = = 8.87

Coefficient of Variation = = = 0.27

2.3 Coefficient of Correlation of Pricing and Age Group

Sedan Car

Correlation Coefficient = r =

r =

r =

r = = = 0.16625701 = 0.17 (approx.)

SUV