Factors Affecting Corporate Motor Vehicle Sales

Part 1: Introduction

Introduction

In the vehicle dealership business, two kinds of clients exist. There are individual clients and commercial clients. Each of the two clients is driven towards purchasing a given vehicle by a specific factor that precedes any other factor. For individual clients, the aspect of price, power, comfort, safety, and the number of seats among many other factors can be driving a client towards buying a given type of car (Shende, 2014). On the other hand, commercial buyers mainly seek to address the aspect of the vehicle’s load carrying capacity, customization, price, the safety of employees, and serviceability among other factors. Focusing on commercial clients can be more appropriate since the majority of business buyers have a more or less similar line of needs.

Identifying the topmost consideration of clients can be a significant score for management of vehicle dealership companies since it will be a step towards meeting the client’s moment of need. According to Bennett (2013), meeting clients’ moment of need is known as a unique sales proposition. Achieving a successful unique sales proposition is often driven or directed by what the customer considers important to them. Businesses, especially commercial vehicle dealers need to review their unique sales proposition often to remain relevant to clients. This research paper, therefore, seeks to understand the factors that can create a unique sales proposition for a commercial vehicle client which will enable any dealership business to bring in vehicles that have the desired qualities/characteristics of our clients. Second, the research will enable the said business to understand the extent to which corporate buyers are willing to go in sacrificing price for specifications. As such, the business shall be in a position to price the vehicles in such a way that it shall be meeting the clients’ moment of value to retain them and make them repeat buyers.

Research Question

“How do corporate buyers rank their considerations before making a vehicle purchasing decision?” 

Hypothesis

65% of the corporate buyers are driven by vehicle specifications rather than price when making the buy decision. 

Holgu (2002), assessed the commercial vehicle choice process on the part of the manufacturer. The study considered the size of the vehicle shipments and attempted to determine the factors that drove vehicle manufacturers into deciding the shipment sizes. Horowitz and Russo (1989) attempted to come up with a system that would identify the kind of vehicle a client wanted to purchase. To execute the task, Horowitz and Russo (1989) attempted to understand how salespeople talked to clients and made an interactive system through which clients could ask questions. This way, they were able to determine the order in which customers wanted information concerning vehicles arranged and determine a client’s list of preferences. The model discovered that clients were interested in characteristics first, and then price. The model used was the same for both individual and commercial clients. 

Ethical Concerns

For research to be accepted as having passed the integrity test, ethical concerns must be addressed. According to Sojka and Spangenberg (1994) and Williams (2012), there are three main areas of interest as it concerns market and online research, which are, confidentiality, consent, and deception. Confidentiality becomes an issue when the respondents (who also happened to be real or potential customers in this case) have their identities tied to their responses in the public arena. My study assured respondents that their confidentiality remained and remains a significant and priority issue throughout the study stages. Consent, to some extent, touches on the concept of confidentiality. To ensure that the study was credible, the study involved only those participants who consented to be party to it. As a result, the study followed a standard approach in obtaining the consent of participants. Lastly, the issue of deception was covered. The researcher informed the respondents of the purposes of the study as the absolute truth. The study confirmed that the respondents were capable of making vehicle purchase decisions in their companies. The clients’ selected way of using the vehicles were not and will not be disclosed in a bid to safeguard their business.

Research Design

The study assumed the case study design and was both qualitative and quantitative in its measurements. Yin (2013) and Zainal (2017) explain that a case study is an inquiry that aims at evaluating and examining a scenario or phenomenon that is real life. 

Sampling

The study assumed the concept of stratified random sampling. According to Rea and Parker (2014), stratified random sampling involves division of sampling population into lesser groups called strata. Sampling data was approached from the aspect of our customer database. On this, there were three strata. Those who purchase vehicles for human transport, those who use vehicles for movement of general merchandise, and those who use vehicles for specialized transport. Respondents were picked randomly and called over the phone to confirm their willingness to participate. The study aimed to have 60 respondents. The researcher used the company’s database to establish clients contacts (telephone number and email address). The telephone numbers such obtained were used to call the potential participants to inform them of the intent of the study, assured them of confidentiality, obtained their consent, and confirmed their email address. 

Part 2: Literature review

Makgopa (2016) looked at how micro-environmental factors are put into consideration when planning of marketing communication strategies and campaigns of car dealerships. The study hypothesized that micro-environmental factors such as budgetary considerations, marketing objectives, and available products play a significant role when planning for marketing and communication strategies. The study was an exploratory qualitative study. To perform the research, the researcher targeted car dealerships in Gauteng province of South Africa. The study found out that the primary internal factor that influenced communication and marketing strategy in the motor dealership was budgetary considerations allocated to the function of communication and marketing. Allocation of the budget was in such a way that it allowed proper marketing, especially during high seasons as generated by previous data. Marketing objectives came in second while available products trailed in the last position. Makgopa (2016), answered the research question by conducting a study that went deeper and uncovered the underlying factors in each of the considerations as well as ranked all the three elements by importance. 

Ridout and Dunning (2013) evaluated the efficiency of marketing of business (corporate) vehicles around the aspect of fuel economy. The study was inspired by the federal regulations which aimed at reducing fuel consumption in light transport vehicles. The study notes that physical characteristics of vehicles are not the only aspects that determine the pricing of vehicles. Buyers of vehicles, as Ridout and Dunning (2013), found out, are concerned about how such vehicles are represented physically due to the self-image as well as how good the vehicles are when it comes to fuel efficiency. The study found out that dealers of such vehicles can market the fuel economy of the vehicles to generate interest and consequently influence the buy decision. 

Vehicle dealers should be aware of the changing business dynamics; technology is speeding up the delivery of electric vehicles, be they small passenger vehicles, light trucks or heavy trucks. Krupa et al. (2014) conducted a study involving 2,302 drivers spread out in 21 cities in the US. The study found out that there is great interest in electric vehicles and are mostly worried about the environment and reliance on foreign fuels especially oil. The respondents were worried about recharging time, the initial cost of the vehicles as well as driving range. With the concept of electric vehicles having attracted highly innovative inventors and entrepreneurs like Elon Musk, there has been great emphasis on the technology, and recently, Elon, Tesla’s brain child developed a truck with impeccable capabilities. 

From the literature review, it is apparent that buyers of vehicles look at numerous aspects of a car before making a buy decision. Many of the aspects are different from what one can easily conclude to be the main driver; prices. The emergence of electric vehicles with more than imagined capabilities is an entire game changer. Researchers need to look at how consumers are likely to behave with the new technology and make recommendations to that effect for marketers to take it up and make sales. 

Part 3: Data

Types of Secondary Data

Secondary data cannot be assumed when conducting a study. Concerning designing primary research, secondary data is necessary as explained by Burns and Bush (2006). Babib and Zikmund (2015) assert that with secondary data, a comparison of primary data collection results is found. On the light of designing primary research and finding comparable but verified research data, this study, which aimed at unearthing whether corporate car buyers were interested more in prices or vehicle specifications, discovered that secondary research was appropriate and insightful. 

Secondary data comes in different types. For purposes of this study, an emphasis was placed on case studies and archival data. Case studies on marketing in motor vehicle dealerships were explored to provide a trend from which a deviation was compared. Archival data was necessary for the collection of verified information regarding consumer behavior when purchasing a corporate vehicle. 

Measurement and Measurement Scales

Measurement of the intensity of emotions attached to a particular decision, for instance, the liking of a vehicle design, can be difficult to measure using conventional means. To achieve the goal of measuring the factors under investigation in quantifiable terms, a Likert scale was a useful means of measurement. Likert Scale is simple and normally don’t force people into expressing their doubts or opinions. The analysis allows respondents to be neutral and objective as they provide quantitative data. 

The study used nominal, ordinal and interval scales of measurement. Nominal scales were used to separate individual buyers and corporate buyers as explained by Churchill and Iacobucci (2006). Ordinal scales of measurement took over to rank the various categories of corporate buyers the study identified, for instance, human transport. With this sequential arrangement of measurement scales, the study was able to come up with conclusive findings. The scales were used to separate consumers into groups which will be later tested to answer the research question in a way that makes the study relevant even to other would be consumers of such findings.

Data Collection

For the purposes of data collection, this study used the interviews technique. The participants were either be interviewed using the phone or one on one. One on one happened on two occasions. First, buyers who showed up into the business to make a purchase or to survey our products and those with whom the researcher paid a visit. As explained by Gill at al. (2008), interviews provide a means of gathering in-depth information about a specific issue. To properly conduct the interview, the study assumed a structured interview format. Gill at al. (2008) explains that structured interviews are particularly fruitful since they provide a means through which a researcher can have predetermined questions. Gill et al. (2008), agree that interviews provide a means to collect data on topics that people would not want to talk about in public or in public setting. In this study, there was a likelihood that company executives were not likely to discuss the decision-making processes in their companies in public places. 

Data Collection and Presentation 

The collected data was analyzed using descriptive statistics which mainly included percentages. This is because data that was collected was both qualitative and quantitative. The data were sorted according to the sections of the questionnaire, scored using numeric scores and entered in a codebook to determine individual responses and represent it in tables and figures to summarize it to help draw conclusions that provided answers to research questions. Data processing was done using statistical analysis software MS Excel. 

The quantitative data in the study was presented using visual techniques which included graphs, pie charts, and tables. This was useful in providing some sense of order and establishing a trend which helped in understanding the subject under study.

Part 4: Results

The response rate was fair considering that only 5 of the randomly picked respondents did not respond. 

The main types of business activities were found to be as follows 

Human Transport	HorticultureTransport	Meat Transport	Equipment mobility	Store Merchandise	Heavy Duty Transport
16	7	8	14	6	4

The study found out the businesses bought vehicles mostly for use in their core business activities. 

The businesses were found to have vehicle purchase budget allocation on an annual basis. The respondents however mentioned that the number of vehicles to be purchased was determined by the previous economic performance of their company in the previous year, the prevailing economic conditions as well as the forecasted business performance of the company. 

All the respondents mentioned that the procurement department was concerned with the prices of such vehicles and were very concerned with exceeding the budgets. Only the companies in the human transport business were allowed to overshoot the budget but by a small margin. This can be attributed to the fact that the business is very competitive and the need for classy and unique equipment is a huge selling point. 

The buy decision was often determined by the following four factors that were mentioned more prevalently.  

1. Price
2. Fuel economy
3. Conformity of the vehicles to required specifications
4. Safety 
5. Serviceability 

It was found out that the product conformity to specifications was key. It was ranked as the first by 47 out of the 55 (85%) respondents. Price came in second, followed by fuel economy, safety and lastly serviceability. 

Discussion 

Human transport seems to be the most prevalence. This can be attributed to the fact that many businesses are in corporate human transport as well as transport for staff. Such businesses have an affinity for nice looking vehicles as compared to other businesses which need specialized features like refrigeration. Businesses interviewed are seen as going concerns by their owners and employees hence the kind of heightened prudence when it comes to purchasing of vehicles while paying special attention to the previous, current and future economic trends. The hypothesis of this study that more than 65% of the corporate buyers focus on vehicle specifications rather than price therefore holds. Businesses have proved that the need for functionality surpasses the price consideration by ranking conformity of the vehicle to be purchased to their pre-determined specifications higher than all other considerations which included price. 

Part 5: Conclusion

This study has found out that businesses have great tendencies to like what makes conducting their core businesses easier to execute and are willing to sacrifice money for this convenience. Dealers in corporate vehicles need to understand that buyers need products that fit their jobs. As such, it becomes paramount that dealers should get their acts together and come up with comprehensive market study programs to establish the kind of buyers they have in their proximity and as such, bring in merchandise that is similarly reminiscent of what in admired in the market. The concept of electric vehicles is coming in strongly, and vehicle dealerships need to be cognizant of this fact and make way for it. Research gap exists concerning electric cars and their marketability. It would be unfair to assume that such vehicles will adopt the same marketing dynamics as traditional cars. 

Part 6: References

Babin, B. J., & Zikmund, W. G. (2015). Exploring marketing research. Cengage Learning.

Bennett, V. M. (2013). Organization and bargaining: Sales process choice at auto dealerships. Management Science, 59(9), 2003-2018.

Burns, A. C., & Bush, R. F. (2006). Marketing research. Globalization, 1(7).

Churchill, G. A., & Iacobucci, D. (2006). Marketing research: methodological foundations. New York: Dryden Press. 

Gill, P., Stewart, K., Treasure, E., & Chadwick, B. (2008). Methods of data collection in qualitative research: interviews and focus groups. British dental journal, 204(6), 291-295.

Holgu ı´ n-Veras, J. (2002). Revealed preference analysis of commercial vehicle choice process. Journal of transportation engineering, 128(4), 336-346.

Horowitz, A. D., & Russo, J. E. (1989). Modeling new car customer-salesperson interaction for a knowledge-based system. ACR North American Advances. 

Krupa, J. S., Rizzo, D. M., Eppstein, M. J., Lanute, D. B., Gaalema, D. E., Lakkaraju, K., & Warrender, C. E. (2014). Analysis of a consumer survey on plug-in hybrid electric vehicles. Transportation Research Part A: Policy and Practice, 64, 14-31. 

Makgopa S. Sipho (2016). Planning of marketing communication strategies by car dealerships. Problems and Perspectives in Management 14(4), 212-220. https://businessperspectives.org/journals?task=callelement&format=raw&item_id=8144&element=e46cdb75-ca7e-4c69-97ee-741acaab6046&method=download&args[0]=0

Rea, L. M., & Parker, R. A. (2014). Designing and conducting survey research: A comprehensive guide. John Wiley & Sons. 

Ridout, J. S., & Dunning, A. E. (2013). Marketing Around Fuel Economy Regulation of Passenger Vehicles and Light-Duty Trucks. In Transportation Research Board 92nd Annual Meeting (No. 13-3252).

Shende, V. (2014). Analysis of research in consumer behavior of automobile passenger car customer. International Journal of Scientific and Research Publications, 4(2), 1.

Sojka, J., & Spangenberg, E. R. (1994). Ethical concerns in marketing research. ACR North American Advances.

Williams, S. G. (2012). The ethics of internet research. Online Journal of Nursing Informatics, 16(2).

Yin, R. K. (2013). Case study research: Design and methods. Sage publications.

Zainal, Z. (2017). Case study as a research method. Jurnal Kemanusiaan, 5(1).

                                                        Part 7: Appendix 

Guiding Questions during Interviews

1. What is the main business activity in your company?
2. What do you mostly buy vehicles for?
3. How often do you have a vehicle budget in your organization?
4. Do you consider the prevailing market prices when allocating such budgets?
5. Are the vehicle purchase budgets static or flexible?
6. By approximation, to what extent are you allowed to overshoot the budget?
7. What factors determine the kind of car you buy?
8. How important are other factors in the buy decision in comparison to price?
9. What are the first four factors that influence the buy decision? Arrange them in order of importance.