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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.

Activities

Preceding Activities

Duration (days)

A. Outline a questionnaire None 2 Days
B. Print the questionnaire A 1 Day
C. Make the people fill the questionnaire B 5 Days
D. Collect the primary data C 2 Days
E. Analyze primary data D 1 Day
F. Collect Secondary data Can be started with A 2 Days
G. Analyze Secondary data F 3 Days
H. Prepare Report G and E 1 Day
I. Use PD & SD for suggestion making H 1 Day

PD = Primary Data, SD = Secondary Data

Diagram 1: Network Diagram

1.3.1 Questionnaire for Primary Research

What type of cars do you like?

Name-___________________________________________________________________

Tick mark the options

Gender-    Male { }  Female{ }

Do you enjoy driving a car?

Yes { } No { }

How many cars do you own?

1 { } 2 { } 3 { } 4 { } 5 { } 6 { } 7 { } 8 { }

Age Group: Specify in Number & Tick the option accordingly:_____ Years

20-30 { } 30-40 { } 40-50 { } 50-60 { }

What type of car do you prefer?

Sedan { } SUV { } Sports Car { }

What is the price range of the car would u prefer to buy (00,000 Rupees)? Specify particular amount in Rs. and tick the option accordingly: ­­­_____ Rs.

20-40 { } 40-60 { } 60-80 { }     80-100 { }

** All the Information given by you will be used in a research. Your identity will never be disclosed. Thank you for your time and for being a part of this survey.

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

Type of Car

Age Group

Sedan

SUV

Sports Car

Class Interval

20-30 15 5 10
30-40 20 15 6
40-50 5 10 3
50-60 5 5 1
45 35 20

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

Class Interval (Age)   Frequency    Cumulative Frequency
20-30 15 15
30-40 20 35
40-50 5 40
50-60 5 45
Total 45

Quartiles

Nth Value = = 45

Q1 =

Q2 =

Q3 =

Quartile Range

QR = Q3 – Q1 = 39 – 18 = 21 years

Quartile Deviation

QD = = 10.5 years

b. SUV

Class Interval (Age)   Frequency    Cumulative Frequency
20-30 5 5
30-40 15 20
40-50 10 30
50-60 5 35
Total 35

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

Class Interval (Age)   Frequency    Cumulative Frequency
20-30 10 10
30-40 6 6
40-50 3 3
50-60 1 1
Total 20

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

Class Interval

x

f

fx

(x – xÌ…)

(x – xÌ…)²

f(x – xÌ…)²

20 – 30 25 15 375 -10 100 1500
30 – 40 35 20 700 0 0 0
40 – 50 45 5 225 10 100 500
50 – 60 55 5 275 20 200 1000
45 1575 3000

Mean = xÌ… = = = 35

Variance = = = 66.67

Standard Deviation = δ = = = 8.16

Coefficient of Variation = = = 0.23

b. SUV

Class Interval

x

f

fx

(x – xÌ…)

(x – xÌ…)²

f(x – xÌ…)²

20 – 30 25 5 125 -14 196 980
30 – 40 35 15 525 -4 16 240
40 – 50 45 10 450 6 36 360
50 – 60 55 5 275 16 256 1280
35 1375 2860

Mean = xÌ… = = = 39.28 = 39 (approx.)

Variance = = = 81.71

Standard Deviation = δ = = = 9.04

Coefficient of Variation = = = 0.23

c. Sports Car

Class Interval

x

f

fx

(x – xÌ…)

(x – xÌ…)²

f(x – xÌ…)²

20 – 30 25 10 250 -7.5 56.25 562.5
30 – 40 35 6 210 2.5 6.25 37.5
40 – 50 45 3 135 12.5 156.25 468.75
50 – 60 55 1 55 22.5 506.25 506.25
20 650 1575

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

No. of People

Age Group (X)

Pricing Range (Y)

XY

1 21 25 525 441 625
2 22 30 660 484 900
3 22 30 660 484 900
4 23 35 805 529 1225
5 24 40 960 576 1600
6 24 40 960 576 1600
7 24 100 2400 576 10000
8 25 80 2000 625 6400
9 25 95 2375 625 9025
10 27 45 1215 729 2025
11 28 35 980 784 1225
12 28 95 2660 784 9025
13 29 50 1450 841 2500
14 29 50 1450 841 2500
15 29 35 1015 841 1225
16 30 40 1200 900 1600
17 31 55 1705 961 3025
18 32 65 2080 1024 4225
19 32 75 2400 1024 5625
20 32 55 1760 1024 3025
21 32 40 1280 1024 1600
22 33 45 1485 1089 2025
23 34 70 2380 1156 4900
24 34 80 2720 1156 6400
25 35 100 3500 1225 10000
26 35 75 2625 1225 5625
27 36 35 1260 1296 1225
28 36 25 900 1296 625
29 36 65 2340 1296 4225
30 37 60 2220 1369 3600
31 37 70 2590 1369 4900
32 37 85 3145 1369 7225
33 38 95 3610 1444 9025
34 38 55 2090 1444 3025
35 39 70 2730 1521 4900
36 40 65 2600 1600 4225
37 40 25 1000 1600 625
38 41 30 1230 1681 900
39 44 40 1760 1936 1600
40 48 50 2400 2304 2500
41 52 55 2860 2704 3025
42 55 85 4675 3025 7225
43 56 95 5320 3136 9025
44 58 60 3480 3364 3600
45 59 40 2360 3481 1600

Total

1567

2590

91820

58779

171900

Correlation Coefficient = r =

r =

r =

r = = = 0.16625701 = 0.17 (approx.)

SUV

No. of People

Age Group (X)

Pricing Range (Y)

XY

1 21 35 735 441 1225
2 23 45 1035 529 2025
3 27 45 1215 729 2025
4 27 55 1485 729 3025
5 29 65 1885 841 4225
6 31 75 2325 961 5625
7 31 70 2170 961 4900
8 32 80 2560 1024 6400
9 32 85 2720 1024 7225
10 35 35 1225 1225 1225
11 35 45 1575 1225 2025
12 36 50 1800 1296 2500
13 36 60 2160 1296 3600
14 37 45 1665 1369 2025
15 37 55 2035 1369 3025
16 38 60 2280 1444 3600
17 38 60 2280 1444 3600
18 38 65 2470 1444 4225
19 39 40

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