Market Analysis:

Within the car industry, the total cars produced in 2010 for Western Europe totalled 13,392,000.46, were as in Eastern Europe it totalled to 3,035,000. Due to our company focusing upon the luxury hybrid and large diesel car market our potential market size is smaller. (Mintel, 2011)
For the Honda Civic hybrid sales totalled 34,757 in 2009 within Europe, while the Toyota Prius had sales of 42,600 in 2009. (Green Car Congress, 2010) This provides a good indication that we obtain a satisfactory level of sales for our hybrid model.
Industry status (growing/maturing/ in decline)
The general market is in decline due to the global recession, however within Western Europe sales grew on average in 2010 by 13.82%, and within Eastern Europe sales grew by an average of 10.96%. (Mintel, 2011) This evidence suggests that despite a general fall in sales Europe wide a correctly placed product can still efficiently enter the market. We feel we have developed the models to achieve this.

Within the Hybrid market companies such as Toyota have seen a steady increase in sales for the Toyota Prius 8,100 in 2004 to 42,600 in 2009. This demonstrates a clear market for our product within the industry.
Market Segments
For the large diesel we have decided to target the age group of 25 to 40. We are predominantly targeting this market as we are aiming for a family market. The family market needs a large car due to the size of modern families, and large boot space is essential. We believe the 25 to 40 is best as we need a market that can afford the car, and are concerned for the environment.
As for the luxury hybrid we have decided to target the age group of 55 and above market. This is due to people above 55, being more likely to have larger disposable income, as they have been in work for longer. They also make up one the largest groups of buyers in the luxury car sector purchasing a total of 224,750 cars, giving us the potential to gain a larger market share. For a more detailed analysis of the market and our customers see appendix 2.
Appendix 2
Target Market
Primary Market (Appendix 2)
Within the European car market we have decided to target our products accordingly:
The hybrid luxury car will be targeted primarily at the over 55 market as this is the group most likely to afford our vehicle. We will include options in accordance with similar luxury vehicles e.g. Lexus and Jaguar. This will increase the perceived value of our product.
The large diesel vehicle will be targeted at the 25-40 age group. This is due to the large proportion of people with families in this age bracket, who are our target customer. The options provided will focus on safety and ease of use in line with our competitors e.g. Toyota and Ford.

Secondary Market
The secondary market for our models is as follows:
For the luxury hybrid our secondary market is the 25-40 age group who represent the second largest market for luxury vehicles. Our model options also include the styling package which will be appealing to young professionals within this age bracket.
The large diesel will be appealing the secondary market of the 41-55 age group. This large market may still need a large car for older children, but would want a more affordable but stylish model of car.
Demographics of Target Markets (age, sex, and socio-economic groups)
On demographics, our marketing strategy will target both sexes. Males and females will be attracted to different features of both of our cars and can chose options accordingly. This is particularly relevant for our large diesel as many different packages are offered. This gives us a greater demographic coverage.
Within the European Union, 67.23% of the population is aged 15-64, and is representative of our target market. (CIA Fact book, 2011) There are six socio-economic groups within Europe which includes A, B, C1, C2, D, and E. Our marketing team will target group A (higher managerial, administrative professional like CEO’s, senior civil service and doctors) for the luxury car, and group B (intermediate managerial, administrative, professionals like banks and teachers) for the large diesel car. (DJS Research LTD, 2011),
These two socio-economic groups that have the largest disposable income are needed to ensure the level of sales we have forecasted.
Customer Key perception factors
There are many key perception factors that will affect the consumer decision when buying our large cars. Do to our target market we aim to meet customer expectations by offering large space, reasonable prices, adjustable features, comfort, and a greener efficient car. With our company looking at adjustable features, this may please customers looking for social status, as they can add the luxury features desired.
Customer Needs Analysis
Customers in the target market bracket have different needs, so it will affect their purchasing decision. They will be looking for a car that will meet their needs. The most obvious need they look for is a mode of transport. They will consider buying a car that is reliable, to take them to any destination they desire.
For those aged 25 to 40, we believe predominantly our customers will have large families so will consider buying a car with large space that can carry their families. They may have budgeted constraints, so therefore likely to consider the price of the car.
On the other hand with those above 55 may be more likely to have the disposable income needed, so are likely to consider comfort over price (White, 2011). They may want to appear in the same social class as their colleagues/friends so may look towards the large hybrid market.
Established Major Competitors

Direct Competitors
There are different competitors we are likely to face within the European market. Direct competitors include Toyota, Honda and Porsche (Wood, 2009). Toyota and Honda will be in direct competition especially towards our hybrid market.
The strength of these companies lies within innovation, where it is able to produce the highest quality hybrid cars. In addition as well is its financial backing and large market share, giving them competitive advantage.
A major weakness of a company like Toyota is its large scale operation which makes it difficult to concentrate on particular market needs. Also recent recalling of cars has raised large doubts upon quality.
Porsche on the other hand has an advantage in that it has experiences operating within the European market.
Companies like Toyota and Ford spend less than 1% of profit on advertising, so we have decided to follow a similar strategy in year 1, and increase to 2% in year 2 (Tutor 2 you, 2011)
Indirect Competitors
Indirect competitors includes rising companies like Nissan, Tata, and other Chinese companies which are making inroads in European market (Madslien, 2008) .
PESTLE Analysis (Appendix 1)
The economic problems affecting the European car market currently means that our products will have to be priced appropriately and directed towards the right customer to be successful. This decision is influenced by the social trend of environmentally friendly attitudes in recent years towards purchases.

The introduction of new technologies which improve the efficiency and emission levels of cars will only enhance our products in working towards our vision. New taxes and legislation focussed on high emission vehicles has resulted in a greater need for greener vehicles which we will be producing. The above information directed us towards the production of a hybrid car and a more affordable diesel car with investment into further ‘green’ technologies within the next seven years.

Appendix 1
PESTEL analysis
Economic
1. The global recession has caused consumers to adapt their spending, which affects large markets such as the car industry, as sales in 2009 dropped by 17.2% within Europe. (Guardian, 2009)
2. Within the first 3 months of 2009 the general European market fell from 4.15m vehicles a year to 3.43m. (Guardian, 2009)
3. This has resulted in credit services used to finance the purchase of a new car is now given out less and less which could result in many consumers struggling to fund a new car.
4. Despite economic troubles the number of registered hybrids within the UK alone was 13,661. (Hybrid cars, 2010)
5. Also the Toyota Prius has seen large increases in hybrid sales, who are the market leaders for the hybrid market. (Green car congress, 2010)
Political
1. The majority of Europe tries to increase the sales of hybrid cars by offering tax or VAT rebates. (power circle, 2010)
2. Business secretary Lord Mandelson revealed plans to unlock loans up to £1.3bn from European Investment banks to fund investment into greener vehicles. (BBC news, 2009)
3. Within the UK the Government dedicates special programmes such as the Automotive Assistance Programme to help UK automotive industries. (BIS,2009)
4. Through the Automotive Assistance Programme, £2.3 billion was invested into the sector to help produce the right cars. £400 million was invested in research and development into low carbon transport. (BIS, 2009)
5. The European automobile manufactures agrees with the EU’s mission to reduce average car emissions to 120g carbon dioxide per kilometre by 2012. (ACEA,2011)
Social
1. Globally we are becoming more environmentally conscious, due to the harm we can cause to the planet. Therefore more people are looking at environmental alternatives.
2. With the recession many consumers may buy a car which is a necessity rather than a want. This could lead to high costing cars being purchased less.
3. With a C02 based taxation system, it may influence consumer purchases
Technological
1. Many competitors have invested heavily in research and development in greener technology such as Toyota who look at lowering C02 emissions and still offering advanced driving performance within Hybrids (Toyota, 2010)
2. New technology seen within cars includes stability control, anti-lock braking, and emergency brake assist. (OICA, 2011)
3. When the EU signed to the Kyoto protocol objectives in 1998, C02 emissions from cars have been reduced by an average 13% through enhanced vehicle technology (EU monitoring report, 2004)
4. The category of “automobiles and parts” and “commercial vehicles and trucks” invested €32.8 billion into research and development in 2008. This made the automotive industry the largest investor in research and development throughout the EU. (ACEA, 2010)
5. Automakers within Europe have launched many C02-efficient technologies, and continue to do so. Other areas include plug-in electric hybrids, alternate low emission fuels, reducing pollutant emissions and eco-innovative technologies. (ACEA, 2011)

Environmental
1. 15.9% of all global man made C02 emissions are from road transportation. (OICA,2010)
2. The EU average of C02 emissions within a new passenger car has fallen from 171 g/km in 2000 to 154 g/km in 2008. (OICA, 2010)
3. Competitors such as Toyota are aiming to globally “establish a low-carbon society,” (Toyota, 2011)
4. Within Europe energy consumption per vehicle decreased by 6.5%, waste per vehicle decreased 4.8%, and emissions were reduced by 14.3% between 2005 and 2007. (ACEA, 2011)
5. With emerging global impacts, green vehicles use low carbon energy sources, low air pollutant, low noise emissions and can be recycled easier.
Legal
1. Environmental protection and safety legislations set a strong influence on the type of vehicles manufactured. Therefore European automotive companies focus on securing the environmental changes and benefits. (BIS, 2011)
2. Manufacturers face new regulations by 2015 on emissions and safety, such as smaller emission limits, and new C02 rules. (ACEA, 2011)
3. Motor vehicles cannot be sold within the EU if it does not meet the terms of the “Framework Director for Whole Vehicle Type-Approval. This contains over 45 procedures about technical, environmental, and safety requirements. (ACEA, 2011)
4. The competitive automotive regulatory system for the 21st century (CARS 21) makes suggestions on regulatory framework for the European automotive industry. This framework outlines global competitiveness, employment issues, safety, and environmental performance. (European Commission, 2011)

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