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Golf Market Analysis of FAW-Volkswagen

Author: XiaoXiaoYong
Tutor: YuHongYan
School: Jilin University
Course: Business Administration
Keywords: Golf Macro environment Market segmentation Competitors Target market Consumer Behavior Market positioning
CLC: F279.26
Type: Master's thesis
Year: 2004
Downloads: 471
Quote: 1
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Abstract

According to the statistics by CAIA, the production and sales of cars in China were grown by 16.35% and 18.25% respectively in 2001 compared with the same period a year ago. In 2002 the figures show an increase of 55% and 56% respectively. In 2003, from January to June, domestic car production reached 895,500 units and the sales grew to 842,800 units respectively. Facing a rapidly growing car market, FAW-VW introduced Golf, a classic hatchback cars, that was developed and popular in Europe for 30 years. The car was formally launched to the market on July 15 after production localization.However, the Golf fell far short of the sales target in a year, which is a boom year for China’s car industry and became the worst performer in the car making history by the joint venture companies in China.What caused such a performance in China for a car which was popular and top performer in Europe and America?The essay attempts to employ a quantitative and qualitative analysis and marketing management theories to explore and analyze the macro and micro environment, the market segmentation, the target market, consumer behavior and Golf’s competitors in which the Golf is positioned. It attempts to offer some descriptions of the main features of the target market for a grasp of the market acceptance value and demand, identify the sales points which affect the Golf’s sales and find an effective way to increase the sales of the Golf.The marketing environment analysis:Population, economic state, political and legislative system, technology, social and culture background and the development sustainability are the six environmental elements that are externally given which can provide opportunities and challenges to the automotive industries. Among the six elements, population growth and economic development tend to favor the hatchback cars while the Chinese traditional culture and perception of the hatchback cars are biased against the hatchback cars.1. The Chinese traditional perception of a sedan is: a car must have a front and a rear. A car without a rear is not a sedan. This perception is strongly biased against the hatchback cars.2. In the current market, hatchback cars are at the lower end in terms of prices. They are perceived as cheap, narrow, obsolete and not safe. In the A Class market, the Chinese consumers generally tend to buy a notchback car for a similar price, not a hatchback car. The cold reception encountered by the Golf in China is therefore not unexpected.The market segmentation analysis:Based on the criteria employed by the Chinese car industry, the Golf is an A class, standard hatchback cars. 1. The development of the market segment where the Golf is located The growth area comes mainly from the notchback cars which have a price tag from Y 90,000 to Y 230,000, then comes from the A00 class hatchback cars and small SUVs. In the Chinese hatchback market segment where the Golf is located, the quantity of demand is very limited. The most sold hatchback cars areAOO and AO classes that take up units sold up to 75%. In the high price end Golf, Polo and Xsara are all sandwiched by the lower priced hatchback cars and the similar priced notchback cars. It offers the consumers no distinct advantages. 2. The main features of the buyers of Golf: The consumers of the buyers of Golf are rather unique: They age from 20 to 40 with a family monthly income of ?,000.00 to ?8,000.00. They are white collars among whom 84% have tertiary or higher education. 37% of them are overseas returnees or have some overseas work experiences. The consumer group seems potentially large but not large enough in reality to support the absorption of the units produced. The introduction of the Golf into the Chinese market is somewhat too early. This is another reason for its poor performance.The consumers behavior analysis:1. The consumers motive analysis:Most of the Chinese consumers purchase a car with two motives: the obvious one is to use it for transport and the hidden one is to show their social identity. In the consumer expectation, the Golf

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