The German market is large and full of potential.
THE MARKET
The German market is large and full of potential. Economy figures put it at the top amongst European nations. It has about 43.6 million of the population, an employment rate of 90% (as of September 2009), in the labor force. The GDP of the economy is at high of € 2.5 trillion.
Its consumer market is growing at fast rate. This is due to the empowerment of the German population through acquisition of knowledge and skills in form of education which leads to employment hence many people have a relatively higher purchasing power estimated at € 1.49 trillion.
The German population has a saving culture. Majority of those new in the labor force have chosen to adopt this means of securing their future (after retirement) as opposed to government-run pension schemes. This means that they are frugal consumers.
The standard of living is on the rise. This is attributed due to the increase in prices of basic needs that is housing, food and clothing. The prices of utilities such as electricity, fuel and water have also been augmenting. This has called for prudence in household budgeting despite relatively higher income levels in comparison to other countries.
The different regions of Germany have a varying purchasing power. Unemployment rates are more in the western regions of the country hence they have a lower purchasing power. Another aspect of regional differences is population in urban and rural areas. Most Germans live in urban areas implying that most consumer markets are to be found here. Also, the medium-sized cities have potential as statistics indicate that the rural folk shop in these cities especially during the weekends.
The population of Germany is ageing. This has been brought about by the increase in life expectancy of the population and the rise in single households. This calls for adaptation of consumer products in line with the changing population.
The target market has a population of 82 million with potential consumer population of 43.6 million (2008 estimation). The segmentation variables of the consumer market include:
Benefits of the product. These include: They improve the health of the users due to the exercise involved during its usage; they are economical as the user save on fuel expenses and maintenance related costs as compared to motor-driven vehicles; they are eco-friendly as they do not contribute to environmental pollution.
Characteristics of consumers. As describe above the German consumers have a saving culture and due to the high costs of living they are frugal in their spending. This affects their decisions while purchasing items. Therefore an economical item such as this product would be popular.
Product usage. As majority of the population lives in the urban areas where space is scarce, this product would be popular in the market as its folding feature means minimal occupation of space.
Competition.
The product faces competition mainly from the new eco-friendly motor vehicles. For instance, the scooters and hybrid-vehicles which are fuel effective. These mean of transport, also poses a competition because the folding bike is limited to short distance usage. They are time consuming due to their low speed in comparison to these means of transport. They are limited to usage in favorable weather while the other means of transport are flexible and can be used in all weather.
Summary on potential problems and opportunities.
The consumers have a high purchasing power due to their relatively high employment rates hence they can afford the product. They are selective buyers and thus an economical and environmental friendly product would lead to a higher percentage in the consumption. Since the population is ageing the product might be limited to the young and physically able. Also to be taken into consideration is the regional differences in terms of purchasing power and population density.
MARKETING STRATEGY
The product is in the introductory stage in its life cycle. The product should thus be very affordable to the majority of the consumers so as to make a way into the market and to counter effect the competition faced. The product should be of high quality and of good branding to attract and maintain a large consumer base. It should at first be distributed selectively amongst consumers. The product should be promoted so as to create awareness of its presence in the market.
The advantages of the product are many and they include:
It is more economical due to low purchase and maintenance costs. It is also pollution free as it does not use fuel. It compatible since majority of the population falls between 30 and 50 years (http://www.census.gov/ipc/www/idbpyr.html] as source). This range contains physically able persons. Also due the scarcity of space in the urban areas where majority of the population is found, the folding bike is relatively smaller than other vehicles. It is a simple product to use as it requires minimal training to operate. The transport infrastructure is well developed and thus usage of the product would be easier.
The product should come in different sizes and colors to suit the varying needs and preferences of the consumers. It should also have a warranty to attract and give assurance to the consumers on its reliability. Due the advanced technology and slow change on the preferences the product meets the challenges in its acceptance. The ageing population is reluctant to the acceptance of due to their bodily limitations. The slow speed of the folding bike might make it less acceptable as compared to other products in the market.
The product meets many needs of the target market since it is economical (the high standards of living call for less expensive products), eco-friendly (the Germans are selective buyers) and requires minimal storage space (majority of the population lives in the urban regions leading to scarcity in space).
REFERENCES
CIA World Fact book (2009).
http://www.consumer-products-germany.com/
http://www.census.gov/ipc/www/idbpyr.html