CASE STUDY ON SPORT UTILITY VECHICILES (SUV);

CHANGE IN MARKETING DEFINITION, MACRO ENVIRONMENT,

INDUSTRY ANALYSIS, AND VALUE CREATION FOR CUSTOMERS

Assessment Report

Marketing Management (BHO6505)

Submitted by:

Sandhya Aryal Regmi

Student id: s4633174

Victoria University, Sydney,

Submitted to:

Dr. Lova Andrimora

Unit coordinator and Lecturer

Victoria University, Sydney

Sydney, Australia

April 2020
 Table of contents

1. Introduction
1.1 Background of the study
1.2 Statement of purpose
2. Marketing Definition
2.1 Change in Australian Population
2.2 Impact on Marketing definition
3. Important Aspects of Macro environment
4. Industry Analysis
4.1 Analysis of porters five forces
4.2 Value creation
5. Conclusion
References
 1. Introduction

1.1 Background of the study

The changing pattern of population and demographics in Australia has created many challenges
for the marketers in any respect level of business, especially for the car marketers. Nowadays,
marketers need to keep close track of demographics change and development in their markets.
They have to analyses different variables of demographics like changing age and family
structure, population diversity, geographic population shifts, gender, and ethnicity to operate any
business successfully. According to the latest figure released by Australian Bureau of Statistics
(2019), the proportion of population is increasing. The study found that within the year ending
30 September 2019, the population of Australia grew by 371,100 (1.5percent) whereas it had
been 24.07 million in 2017, and 3.77 million in 1901, respectively.

1.2 Statement of purpose

The purposes of the study are:

i. To seek out some of the recent changes within the Australian population and know
whether it changes the way we define marketing.
ii. To know the important aspects of macro environment that affects the car industry most.
iii. To assess the attractiveness of auto industry and value creation while selling cars.

2. Marketing Definition
2.1 Change in the Australian Population

The population of Australia has changed a lot over a few decades. The migrants, millennial have
plays a significant role on changing the Australian population. The Australian population was
24.07 million in 2017, which grew by 1.5 percent during the year ending 30, September 2019.
The Australian Institute of family studies (2017) found that in 1901, 35 percent of the
populations were less than 15 years of age, while the proportion declined to 19percent in 2015.
Similarly, in 1901 only 4percent of the population was 65 years older, that had grown to fifteen
(15percent) in 2015. The percentage of family households is decreasing since few years and if
we talk about the data, the study found that families formed 71 percent and 77 percent of
Australian households in 2016 and 1986 respectively. Over the same period, the number of
single persons household increased from around 19 percent to 24percent.

Although, two-family parties still make up a very large part of Australian families, this pattern is
changing. The study shows that families are getting smaller and the average number per
household was 4.5 in 1911 but it declined to 2.6 in 2016. From 1976 to 2016, the number of
families with children at home has been declining. The couple with children made up nearly half
of families 48percent in 1976, while it decline slightly and became 37percent in 2016. At the
same time, the proportion of couples without children has increased from 28percent in 1976 to
38percent in 2016.

Despite the facts of demographics changing, most of the SUVs advertisement follows the
identical typical family style advertisement where families are show with their dependent
children inside their car. We can conclude from the above data that person without children and
number of single-persons has increased in the recent few years but they are still showing the
advertisement with kids and parents. As an example in these ads of ford
https://www.youtube.com/watch?v=CF94WmrvQwA we are able to see the family's members
with kids driving to some of the adventurous places and having fun activities. However,
nowadays SUVs have broadened their scope and making the advertisement that specializes in
other too. As within the new ad of SUVs Range rover https://www.youtube.com/watch?
v=J2GHn_mvI2w we can see how the youngsters are enjoying driving with their friends and
driving alone rather than family members with kids. This shows that SUVs companies are
attempting to create their advertisement in keeping with change in demographics (age).
Marketers must increasingly consider the needs of non-traditional households because their
numbers are growing rapidly compared to traditional households.

2.2 Impact on Marketing Definition

Kotler defined marketing as exchange between firm and its customers but now marketing is not
only related to exchange between firm and its customers but marketing is the activity, set of
institutions, and process for creating, communicating, delivering and exchanging offerings that
have value for customers, clients, partners and society at large (American marketing
Association). Marketing should also include customer's needs and wants as the needs of
customers are changing and dynamic. Similarly, Marketing also includes doing research and
through research, they should target and segment the main customers. The target customers of
SUVs are mainly family members with children but because of change in demographics and its
benefits like good gas mileage, off-road, seating capacities other than targeted customers are
buying it.

3. Important Aspects of Macro-Environment

The external environment of these days is very much dynamic characterized by quick changes,
particularly technological changes. In performing external environmental analysis, the managers
of organizations should analyze the market and macro-environment within which the
organizations operate. This suggests that car marketers need to conduct an environmental
analysis to grasp the position on its market and its competitors. The macro-environment
consists of variables that are beyond the control of the organizations management (Van Schie,
2012). Varadarajan(2011) depicts that the macro-environment consists of the PESTEL analysis.
According to Blokdyk (2018), PESTL Analysis is an analysis of external environmental factors
covering Political, Economic, Social and technological fields together with legal fields. It
determines how external factors affect the performance and business process of the organization.
Here is the detailed of PESTL components:

 Political factors: Political factors include a variety of government policies, law and a
formal and informal rules of the environment that affect the core business of
organization. The political factors play an important role and have direct impact on the
profitability of the automotive industry.
 Economic factors: The economic factors include external variables such as interest rates,
inflation rates, level of economic growth, currency exchange rates and fiscal and
monetary policies (Bosdriez,Witvliet,Visscher and Kunst,2012).. Changes in major
economic variable such as income, cost of living, interest rate have a large impact on
marketplace.
 Socio-cultural factors: Social factors in general include culture, demography, family size
and structure, education levels. Social and cultural factors have a direct impact on
 people's attitudes, consumers and buying behavior. The automotive market is affected
deeply by the changing socio-cultural trends and people's preference.
 Technological Factors: A technological factor refers to technology that affects raw
materials, operations, products, and services organization. Technology changes provide
exciting opportunities and threats for marketers.
 Legal and Environmental factors: The legal factors include how local, national and
global legislation affects the project and the environmental factors include local, national
and global environmental issues. The general environment problem such as global
warming and pollution are the factors that car marketers should consider before
producing any vehicles and operation any business.

The car marketers of Australia should consider all above-mentioned PESTEL analysis, as all the
four factors are equally important to success in business. However, among them the marketers
should understand the most on socio-cultural factors and demographic changes. The Australian
population is dynamic because of various factors like migrants, millennial, fertility rate etc.
Cultural difference is a major factor that influences business practices of a country. With the
population of over 25 million, Australia has diverse culture and traditions that significantly differ
from what is obtained in the western world. The market is influence deeply by the changing
socio-cultural forces and peoples preferences. The most important demographic trends the car
marketers should understand in Australia are the changing age structure of the population. Like
most developed countries, because of low fertility and longer life expectancy the Australian
population is rapidly growing older. This aging of the population create the significant impact on
the car marketers. The different age groups have distinctive buying habits and needs. The
automobile industry has to keep in mind the age factors while targeting any consumers.
Similarly, the Australian household's pattern is changing day by day. Today approximately 38%
of all family households have two parents living at home that are expecting to fall slightly in near
future. The car marketers should consider these changes and have to release vehicles based on
the preferences of their target population. Apart from it from culture to culture people's style and
preferences also differ as a result the particular model sell in some market, might not be as
popular in the other.
 4. INDUSTRY ANALYSIS
4.1 Analysis of porters five forces model

Porter's five forces is a model that identifies and analyzes five competitive forces that shape
every industry and helps to determine an industry weakness and strength. Five forces analysis is
frequently use to identify an industries structure to determine corporate strategy. Here is a five-
force analysis of the automobile industry that discusses the forces, which affect its
competitiveness and attractiveness in Australian market.

i. Threat of new entrants: It is difficult for new brands to enter in the new market because
of the brand strength, reputation and huge financial outlay required. Due to the high fixed
cost involved in car designed and manufacture, that entail high exit barriers as well as the
economics of scale gained from the mass production, new start-up companies are rare.
The Australian automobile market has been declining which may discourage new
entrants. Overall, the threat of new entrants is assesses as weak.
ii. Bargaining power of suppliers: The number of suppliers in Australian automobile
industry is a lot as compared to the number of buyers. This means that the suppliers have
less control over prices, which makes the bargaining power of suppliers a weak force.
Similarly, the product provided by these suppliers are fairly standardized, less
differentiated and have low switching costs, which makes easier to switch around
suppliers. In this way, bargaining power of suppliers is considerably low.
iii. Bargaining power of buyer: In the auto industry, buyers are competitive forces as they are
well inform about the dealer cost and the majority will do extensive research that will
force the dealer to low the cost. They can do this by negotiating between dealers going
with the one that provides better service, higher quality and most importantly a lower
price than the rest.
i. Threat of Substitutes: The main threats of substitute for new cars market are used cars,
public transport and alternative vehicles such as motorbikes and bicycles. The wide
availability of different means of transport means that people do not have to buy cars.
They can choose public transport and cycle to reach their destination. These are often
 cheaper alternatives and offer environmentally friendly option which are rewarded by the
government too by low tax. Overall, the threat from substitutes is moderate.
ii. Competitive rivalry: The automobile industry is extremely competitive and in a highly
competitive industry, return is low because of the cost of competitors. The car industry is
oligopolistic, meaning that the different companies are going to be highly sensitive to
each other's pricing and marketing strategies. Similarly, the product differentiation is low
in car market, which increases the rivalry. Overall, the rivalry in new car market is
strong.
4.2 Creating value while selling SUVs cars

The main goal of marketing is to create value for the customers. The marketers must create value
by understanding the customer's needs, wants and demands of their target market. Similarly, they
can create value by advertising their products and by targeting their potential customers. The
detailed of the ways that car marketers can create value are:

i. Advertising the product: Considering the car industry, advertising can be classified as an
essential opportunity for car companies to reach the targeted customers. It can also seen
as a tool for companies to inform and educate customers about their brands and products
(Bendixen, 1993). Therefore, the car marketers should focus on explaining what features
the SUVs have and how it will be beneficial for the customers. They can advertise about
their product, which include safety, off-road driving capabilities etc.
ii. Targeting their potential customers: The car marketers must understand and know the
customers beforehand, which helps them to target their customers. The factors that must
be consider when reaching the market include their age range, income level, locations,
education levels, gender, family size and others. The SUVs companies of Australia
should also focus on the Asians family, as they are the major customers.
 5. Conclusions
The concept of marketing has changed over a few decades. It not only includes buying, selling of
goods and services but also includes doing proper research, creating value for customers, market
segmentation and targeting the potential market. A proper research includes analyzing of
PESTEL and assessing the attractiveness of market.
Australian demographic is changing rapidly and there seems declining in the number of families
with children. SUVs companies are attempting to create their advertisement according to the
change in demographics. We can see the different types of SUVs ads in which the young person
is driving with their friend enjoying the natural scene and even the female driving too. However,
being a country with lots of migrants and dynamic culture these ads should focused on showing
different ethnicity. The SUVs still make profit without focusing on ethnicity but it may hamper
their long run business if they do not make any research on the changing population and
especially the families of Asian countries.
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