Demand models for automobiles and their marketing implications in Korea

• Main Author: Choi, Woo-Chan
• Format: text
• Published: Animo Repository 1987
• Subjects: Automobile industry and trade > Marketing.; Demand (Economic theory); Automobiles > Design and construction.; Automobile industry and trade > Korea
• Online Access: https://animorepository.dlsu.edu.ph/etd_doctoral/1277
• Institution: De La Salle University

The principal objective of this study is to determine reliable demand models for automobiles and consequently to use the demand projection as a necessary instrument for further developing marketing mix strategies of Korean automobile manufacturers. The study is divided into two parts. The first phase developed demand models for automobiles and the second stage advanced marketing mix strategies for the automobile makers. A conceptual demand model was developed based not only on the traditional regression model but also on the stock adjustment model and the state adjustment model with ARIMA methodology using secondary data. The logistic curve was used for the long-term forecasting of car ownership. The primary analytical technique, (multiple) regression analysis with an ARIMA factor(s), was used to estimate demand models for automobiles and to predict the future levels of demand. The results from estimates and forcasts indicate that: a) more meaningful aggregate estimates of demand level of automobiles might be obtained by incorporating the ARIMA factor into the traditional regression analysis b) income level is the single more important (and significant) factor in determining the demand rates c) forecast values of this study showed more realistic levels than industry estimates and government's projections d) 1 out of 5 Korean households, on the average, will own an automobile by the end of the year 1990 e) income elasticity of demand for new automobiles indicate that new car sales is highly sensitive to changes in income.However, sales of new cars are relatively, but not highly price elastic and f) automobile stock had, except for a few earlier years, risen above the desired levels of the automobile stock. Suggestions for further improvement in the domestic market marketing strategy are: a) strategic market segmentation and product differentiation to increase market share of local makers and to hold local market from inroads of foreign products b) upgrade and upscale passenger cars to capture an increasing high-end market c) achieve economies of scale by increasing the productivity and develop more fuel-efficient mini cars (and diesel cars) d) improve the competitiveness in non-price marketing mix aspects e) improve competitive cost performance and f) develop quality auto parts and components.