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Market Analysis

The introduction of an Australian brand in the market is poised to bring opportunities and challenges. The German government has a new plan called Energiewende, which seeks to replace, reduce the use of coal and nuclear products (Dvd, 2017). Its annual release of 906 million tonnes of Co2 keeps increasing and vehicle emissions produce the highest carbon release. The international markets have opportunities and challenges for businesses today because of globalization.  The development of technology within the global market is a major stimulant for organizational development. As brands search for opportunities in new regions, market entry strategies for new products and services emerge. The change in the business models redefines business undertakings. Most global markets have a major challenge of dealing with environmental issues (Konrad, 2012). Although German technology has found a place in global markets as vehicle manufacturers in luxury vehicles namely BMW, Volkswagen and Mercedes, there is a gap in bus companies. In fact, one of Germany’s brand, BMW is penetrating the Asian markets successfully through the electric car model. Germany is a leading exporter of luxury vehicles but its production of electric cars is still lagging behind. Taking advantage of this gap, AVASS an Australian brand steps in with its electric car model set for the Germany market.

The business opportunity in the bus industry has benefits as well as challenges. Among these are the customer perception of the brand and brand identity. It also has challenges with its brand equity. A reduction of 50% on tax gives AVASS a cost reduction incentive for business (Bohnsack, Pinkse, & Kolt, 2014). Although the company is strong in Australia, venturing into a market where there are giants in the industry has its challenge. In order to gain popularity and acceptance in Germany AVASS may need partnerships for the whole production process or vehicle parts. It takes multiple strategies to analyze its capability for this new venture. In international business, there are different modes of market entry including partnership with manufacturers in the region.

Industry statistics reveal the promising market potential in the market. The decision to enter the European market starts with success at home (Vorrath, 2016). Recent moves by Germany to import buses from Solaris Bus & Coach for parts of Germany is an indication of demand (Eurotransport, 2017). AVASS plans to manufacture all electric vehicles in segments of busses, cars, vans motorcycles and trucks. The brand has its battery-manufacturing unit, which makes its production of parts more affordable. In Europe, the brand already has a production plant in Turkey. Like its competitors BMW and Mercedes, AVASS has plants in China where the emerging market shows huge demand for sustainable brands. The brand targets government orders for large-scale supplies.  

Size of the Market and Growth Rates

Although the global market seems ready for the electric vehicle, consumer trends in Germany speak a different language (Petzinger, 2016). Germans have a connection with environment friendly brands. Although keen on recycling, most of its consumers in the vehicle industry prefer the high performing cars. These are fuel guzzlers whose maintenance is high. Electricity in the country is cheap compared to coal products. In contrast to China’s public charging systems, Germany has home charging units therefore; it gives AVASS confidence of infrastructural development. AVASS has a reputation of producing quality unlike its competitor Volkswagen that has had to deal with ethical issues about accountability in greenhouse emission (Ewing, 2016).

The fact that AVASS has six years’ experience in lithium-ion battery gives it an edge. Environment Friendly Products is one of the reasons for this adoption (Perkowski, 2017). Since the brand is new in the market, partnership with reputable brands is appropriate. BMW chose to collaborate with Samsung as an entry plan into China (BMW., 2016). . This is also the reason for other brands like Apple having production plants in regions outside their home. AVASS needs to look at advantages such as the low cost of operations because electrically charged vehicles do not need fuel services. Technology on overage costs less and electric vehicles provide a sustainable resource. Learning from successful experiences in regions like China, AVASS is able to make estimates of its production process (Shrouzu, 2017). Industry stakeholders in the automobile sector also agree to the green vehicles idea.

Market intelligence point towards partnerships with local brands in order to succeed in the quest to create solutions (DeMorro, 2014). The BMW/Samsung deal is a perfect example of how AVASS can reduce on the supply chain costs. Market share statistics also bring out Mercedes as a successful global brand that AVASS needs to watch (Winton, 2017). The target market is medium income earners. Carmakers rush to take advantage of this growing demand proves the potential of this strategic move (Harvey, 2011). Consumer interests often translate to sales but when it comes to disruptive technology, the innovator takes risks. Consumers drive technological changes in the global markets. The demand for energy efficient products in the region has support from government, NGO and the business community.

AVASS is not a brand within the luxury car market. Instead, it falls in the same category as Toyota and Ford and it is popular for bus models. Located at the heart of Europe, Germany is the best access point for all of Europe. Besides the strategic geographic location, it is also economically strategic because it is the largest in automotive market production and sales (McCarthy, 2013). The country manufactures more than 15 million cars, which account for 19% of global production. Its suppliers are globally recognized and its 20% contribution to GDP makes it the biggest industry in the industry. Vehicles that come from Germany have a global reputation of quality. The country also invests hugely in Research and Development (RD) for innovative products.

Population

It is hard to overlook the influence of technology because it improves efficiency, and provides alternative modes of production. Technology production also enhances connectivity between the automobile industry and technology. The electric vehicle provides a solution with hybrid vehicles that is light in weight, and high in safety and fuel consumption (Bullis, 2013). In Germany, investment in automotive is higher than the electronics and telecommunication industries. This is a stable economy with a high rate of investment. Its legal system is friendly with lower tax rates and it has quality infrastructural development. AVASS has access to business partners for business financing and public grants. The German market is highly competitive and organizations embrace best practice in a population with a highly skilled workforce. The main hindrance to the electric vehicles business in the EU is the battery-charging infrastructure and vehicle supply range (Winton, 2017). AVASS is a renowned battery manufacturer with years of experience.

Germany plans to have more than 1 million electric cars by 2020 and government institutions are the leading customers in the EV segment. . This is an opportunity for AVASS since the EU population is largely unaware of the benefits of EV. This means AVASS needs to invest in target marketing and PR communication (Shahan, 2017). It needs to target buyers who need:

  • Affordable vehicles
  • Great interior and exterior design
  • Quality battery mechanism
  • Variety in style

AVASS is the premium Electric Vehicle (EV) manufacturer situated in Melbourne Australia. This privately owned brand is popular in AU because of its innovation and quality. It combines safety, high quality and environment friendly attributes. The region has 81 million consumers forming 16% of the EU population (GTAI, 2017). Over 60% of this population comprises of a productive population between 25-69 years. Consumers in the transport segment is the public industry (Morris, 2017). 

German laws favor the introduction of EV brands (GTAI, 2017). Compliance is important for the development of the brand image and it protects the brand from exploitation and legal suits. A complete market analysis captures the consumer trends and its influencing factors such as environmental sustainability (Ruoff, 2016). These become the basis for present and future strategies. AVASS marketing mix strategies must cater for cultural barrier and environmental concerns. These are common hindrances to market entry strategies (Moran, Abrason, & Moran, 2014). Learning ways to overcome such barriers is part of the strategic management processes. Language barrier is also an issue because AVASS’s origin is in English speaking Australia, which is different from German.  Germans are loyal to local brands and convincing them otherwise possess a major challenges.

Market Barriers and Market Drivers

AVASS more than 100 years in the automotive industry. Its business focus is on innovation and advanced technology.  Its agenda is to use breakthrough technology for improved transformation and capabilities. Its business model is collaboration in product delivery, business processes and management style. Its head office is in Australia’s Melbourne, Victoria. It has manufacturing units across the globe including China, India, South America and South Africa. It has plans to have a manufacturing plant in Europe by 2018 (AVASS, 2017).

Expertise: Popular for its electric bus, AVASS intends to use the EV technology for improved manufacturing of other vehicles. The brand is the Guinness World record holder for high capacity and density, which surpasses the competitor four times. Its low cost battery also lasts longer and it comes with 8 years warranty. The brand seeks to capitalize on these advantages. The e-vehicle also has certifications in safety and reduced emissions. Its definition of innovation features, new methods, advanced, new ideas, creative and unique ideas (Nzta, 2017). 

Management: Leadership is also a significant factor because it influences the direction taken by the brand. The inspiration to introduce the electric car was because of a number of global factors including the need for alternative, convenient operations and low cost energy efficient vehicles (Garage, 2017) multitier products. The brand hires the best skills in the region and it has more than 500 employees in the EV department (Lannen, 2016). Headed by Allen Saylav its CEO, the brand has employees across Europe, Asia and South America. It has employees in the manufacturing unit, engineering, supply chain and management. The brand has top engineers and designers with credentials in the automotive industry.

Current strategies: The brands management strategy has a focus on innovation and sustainability for buses and coaches. This conservative brand accommodates for the development of the electric car vehicles using advanced technology. The brand plans to take advantage of the global market in different regions. The electric bus segment is a unique specialty that is still unexplored (Ruoff, 2016). However, it needs to upgrade with additional features in order to meet the high consumer tastes in Germany and Europe. The market is highly volatile yet it presents opportunities. A closer look at some of the reasons why consumers would resist the electric vehicle reveals concerns about the battery run in while in traffic and consumer loyalty to specific car designs (Dowling, 2017). AVASS has a responsibility of transforming this consumer perception. This is possible through integrated advertising strategies. The brand needs to take advantage of the government support in Australia and Germany.

AVASS has a vision to enrich its customers, stakeholders, employees and distributors. The electric vehicle offers solutions in the transport sector is for both private and public means. Oil is a scarce resource globally and there are concerns about global warming and pollution through gas emissions (Wee, Molin, & Liao, 2016). The table below summarizes some of its customer reviews about electric vehicles.

Segment

Customer perception

Electric bus

Reduced emissions, less vibrations, excellent performance, easy mobility, single charge per day

Electric cars

Cost effective, reduced vibration, battery durability, excellent performance, safety standards, zero emissions, advanced technology, clean energy

Fuel vehicles

Sleek design, high performance, variety, horse power, value for money

Table 1: Customer perception of electric vehicles verses fuel combustion

Focusing on the electric bus consumer modern consumer, AVASS group needs strategies in sales, service, spare parts, survey and sustainability to define its integration of suppliers in the business agenda (Bohnsack, Pinkse, & Kolt, 2014).

 The 4Ps strategy for electric vehicles products is dynamic (Song, Hofman, Li, Han, & Ouyag, 2015). The price, place, product, and promotion plan changes by location and market trends. 

  • Pricing factors consider the cost of production in terms of the availability of automobile parts, human capital and raw materials required to make a bus or coach. A closer look at the electric version shows cheaper products and maintenance.
  • Product: A new entry of the electric bus brand into the German markets has to devise ways in which to produce according to the consumer needs. The brand also has customized productions for niche classification with style, comfort, safety and status details(Dobson, 2017). Finding the right market in Germany is crucial for target marketing.
  • Promotions are important in shaping the brand name. Unknown products at discount offers may sell or fail to sell depending on the customer review, brand marketing and PR strategies. AVASS needs a CSR plan that makes it part of German culture and consumer needs.
  • Place: Stable brands like Toyota survive because of the availability of spares parts in their areas of business(Derek, 2015). AVASS has a challenge of making battery recharge infrastructure accessible because it is the role of the government to develop the infrastructure.

The bus industry is unique because most EV producers focus on cars and motorbikes (Yang, 2016).  Germany is a developed country hence AVASS may need competitive plans for market entry and penetration (Debord, 2016). Unlike the electric car, which needs style and performance, public transport vehicles are keen on safety, comfort and functions (Team, 2015). Bus manufacturers in Europe are:

  • Solaris
  • Volvo
  • Irizar and
  • VDL

AVASS needs to work on its brand elements for higher equity, a good reputation and recognition. This applies to both local and global branding strategies. Research proves that quality and self-identity are critical elements in global branding and marketing (Strizhakova, Coulter, & Price, 2011).

As future projections point toward the adoption of electric cars, Europe and Asia seem promising (Campbell, 2017). The electric bus and coaches segment continues to experience constant growth over the years. Avass has been in the business for over 6 years (AVASS, 2017). Its 100 years’ experience in Australia’s automotive is an advantage. The brand also has a reputation for quality battery production. The brand stands a high chance with larger multinational partnerships from Germany (Lasserre, 2012).

Avass target marketing plan starts with the segmentation of its products to align it with the local sustainability agenda. This breaks down its positioning in accordance to the specific customers. Designed for the low-income customer segment, Avass customers are often middle level earners. Its customers are within the middle class. The consumer perception on a scale of 1-5 varies depending on the car brand. This is shown below

Brand Benefits

Solaris

Volvo

AVASS

Irizar

VDL

Safety

2

1

2

1

4

Comfort

1

1

3

2

3

Battery pack

1

2

1

2

3

New energy

2

3

2

1

4

Design

1

3

3

3

2

Cost

3

2

2

2

3

Table 2: Customer perception of the AVASS

The following is the brand positioning data for 2015/2016 revenues in the region. 

Brands

Comfort

Safety

Market Share

Solaris

1

4

10.4

AVASS

3

1

0.9

Volvo

4

2

17.6

VDL

3

4

3.2

Irizar

1

1

24.1

Table 3 Market share for brand position in Europe (Abb, 2016) 

Germany is a mature economy in which bus and coach manufacturers have a higher bargaining power because of the market demand and less competition (Ljungqvist, Sargent, & J, 2012). This gives suppliers a higher advantage because there are fewer electric bus suppliers. Australia is also a strong economy and AVASS has an advantage of providing low cost but quality products. The customers bargaining power in Germany is the public transport sector. Avass needs high quality, advanced technology, design and safety busses.  Through partnerships, the brand is able to establish its image within the EU. AVASS needs strategies that favor its lower cost attributes without compromising its quality. The threat of substitutes is high in the luxury car segment but not in affordable electric vehicles. These are efficient and reliable in the recession. Besides the bus and coaches, AVASS also has motorbikes and coaches. This makes the threat of new entrants in the market low because of segmentation. The electric car also has low threats because the market is slow to accept the energy saving mode.

Rivalry in electric bus

Threat of new entrants

Bargaining power of buyers

Bargaining power of suppliers

Threat of substitutes

AVASS

low

medium

high

low

Solaris

low

high

high

High

Volvo

low

high

high

high

VDL

low

medium

high

High

Irizar

low

high

high

low

Table 4: Porter’s analysis of luxury brands in competition with BMW

In order to understand the competition and its environment, the Porter’s five forces identifies the industry’s challenges (Porter, 2011).

Reports indicate that the overall production of electric vehicles has grown considerably (Marklines, 2016). The fact that AVAS has a production unit in Asia is a plus because of reduced costs of production. The primary activities that the production unit engages in are in form of logistics, operational management, marketing and service. Changes in value chain affects the support activities featuring technology, procurement, and firm infrastructure. Its main competitor Ilrizar and Solaris continues to depict exponential growth in the market.

Although most of the brand’s Europe production is planned for Germany, its home country Australia and Asia have a considerable share. This caters for the automobile, motorcycles and parts. The complexities of this value chain determines the changes in distribution networks. It sells products to customers, businesses and distributors. The introduction of an electronic vehicle implies changes in these system as well as marketing plans (handwerger, 2014).

In the BCG Matrix analysis the product with the most market share has higher returns. More productions lead to higher efficiency hence the economies of scale lead to more profits. This is what the reputable brands invest when there is high demand (Debord, 2016). However, the bus market slower growth rate shows lower revenue and limited growth. From the BCG chart, the electric car is in the dog’s market share showing an average of fewer returns on investment. The AVASS electric bus has potential for future profits.  A SWOT analysis shows that the electric buses and coaches have highest profits within the corporates (Musk, 2017). Avass gains an advantage because of its low cost within the electric bus and coaches segment. If the brand gains an innovative design in its electric bus product development, it stands an even higher chance. In the region, other car brands are within the stars depicting high growth products with a higher market share. These generate revenue and invest too. AVASS needs to capitalize on market penetration, and integration for innovative brands.

The question mark brands (trucks) are at risk because it invests a lot yet goes through loses. These are struggling brands leading to the dogs attributes. It needs market penetration strategies and diversification. 

During the global economic recession, economic challenges affect most brands. AVASS becomes an ideal brand for low-income seasons (Piketty & Saez, 2013). As a public service brand, it needs advanced technology and safety installations. The brand has a chance for growth within an environment of high competition. It is impossible to ignore culture and language barriers during the marketing activities.

Strength

·         Acceptance in Australia and New Zealand markets

·         Government and corporate demand for EV coaches and buses

·         Focus on green products

·         Quality brand

·         Instability in fuel costs and economic recessions

·         Low costs

Weaknesses

·         Consumer preference for German origin brands

·         Employee management challenges

·         Limited variety in choices

·         High cost of labour

Opportunities

·         Partnership with giants in the region

·         Advanced technology applications

·         EU and global public systems

·         Regional and national laws favoring sustainable products for government institutions

Threats

·         Competitive environment of a developed economy

·         Preference for local brands

·         Culture and language barriers

·         Global economic recession

Conclusion

AVASS has a strong background in Australia and New Zealand. It is a quality brand with a reputation in automobile battery manufacturing and electric vehicle products. Its entry into Germany presents opportunities and challenges in the public service sector. Different theories of international business explain its transition from national to regional and a global brand.  As a brand seeking to introduce a new product in an established market, it needs to look at its strengths and weaknesses. A comparative analysis of its internal abilities against the external market factors provides evidence based data to support its penetration. Entry strategies have to analyze the new industry of Germany without ignoring the demand for EV buses and coaches. The brand also has motorbikes, which are also in demand within the EU. Technology is also a crucial influencer, which defines the target customer and brand positioning strategies. In modern economies sustainability and fuel, efficiency gives the electric public transport products an edge. AVASS needs to invest heavily in marketing strategies for success in Germanys and Europe.  Its competitors are old in the market and have decades of experience.

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[Accessed 05 March 2024].

My Assignment Help. 'AVASS Electric Vehicles: Market Entry Strategy Essay For Germany.' (My Assignment Help, 2022) <https://myassignmenthelp.com/free-samples/mktg7035-global-marketing/environment-friendly-products-file-A93295.html> accessed 05 March 2024.

My Assignment Help. AVASS Electric Vehicles: Market Entry Strategy Essay For Germany. [Internet]. My Assignment Help. 2022 [cited 05 March 2024]. Available from: https://myassignmenthelp.com/free-samples/mktg7035-global-marketing/environment-friendly-products-file-A93295.html.

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