R&D CASE STUDY

Market research on automotive products: How a market leader can maintain the dynamics of growth

NICHE

Automotive & Car
Wheels

SERVICES

Market analysis
Qualitative research
Quantitative research
Positioning
Branding
Media strategy

TOOLS

PowerBI
SimilarWeb
Google Analytics
Google Trends
Euromonitor
Statista

Customer

Infosina is an online store selling car tires and rims for vehicles with the option of store collection and fitting service or national delivery within Ukraine. Direct importer of Continental, Gislaved, Barum, Michelin, Goodyear, Kelly, and other tire brands.

Challenge

  • Finding new opportunities to grow the business in sales by N% year-on-year in the context that the brand is already using all available performance tools.

    Initial data

    The research presented in this case study was conducted by our team in 2020 and was subject to an NDA until 2021.

    Since 2013 Infoshina has grown from a regional business to a leader of the online market of tires and rims with its own warehouses and stores in the five largest cities of Ukraine.

    Promodo and Infoshina have been working together since 2014. During these eight years we have become a full-fledged marketing department for the client and together we have developed large-scale growth strategies, launch TV advertising and we are responsible for the results of performance campaigns.

    Solution

    To answer the question of what level of business growth is possible in the market of automotive products in Ukraine, and to determine the vector of development for 3-4 years, we offered the client to develop a comprehensive marketing strategy. The purpose of this strategy was to help identify points of growth at the expense of new business opportunities and at the expense of the consumer.

    Stages of developing a comprehensive brand strategy

    In this case study we will look at the first fundamental stage of work in a comprehensive marketing strategy ー Market and competitor analysis.

    Stages of market analysis

    Methodology: what was studied

    Structure of market research
    in the automotive sector

    Market research

    1. Study of macro- and micro-indicators of the auto market

    Auto market: Worldwide & Ukraine

    The tire market is directly dependent on the automotive industry: the decline or growth of car production, sales dynamics, changing demand and consumer preferences in this area have a significant impact on the development of the tire industry.In our study, we found that the global automotive industry is outpacing sales: the number of cars produced in the last 10 years has exceeded the number of cars sold in a year.

    Production and sales of new cars in the world over the past 10 years, millions pcs.Source: Auto.vercit

    Conclusion

    Majority of cars are sold a year after production. These global dynamics, as well as global traffic congestion, indicate an oversaturation of the market with new cars. At the same time, these factors contribute to the growing demand for alternative means of transportation ー motorcycles and bicycles.

    It can be assumed that these market trends in Europe and the U.S. will largely influence the situation on the Ukrainian market in the coming years. This means that the client has one of the possible points of growth:
    to increase the range of tires for two-wheeled vehicles/mode of transport.

    Following global trends, the Ukrainian market also grew. According to data for the same period in the country, there has been an increase in the number of registered cars: as of 2019 〜1,100,000 Ukrainians have purchased or changed their car.

    Dynamics of passenger car market by new cars / imports of used cars / resale cars in Ukraine.
    Source: auto-consulting.com

    It‘s important to note that the growth of the Ukrainian car market is mainly due to the sale and resale of used cars imported from other countries.

    Structure of the car market in Ukraine, 2019. Source: Federation of Automotive Industry of Ukraine

    According to our research, the main flow of used cars come to Ukraine from Poland. This is why we recommended the client pay special attention to the structure of the car market of this country.

    Number of vehicles imported into Ukraine with foreign registration Source: OpenDataBot

    In addition to global market trends, the study also took into account the growing impact of the pandemic.

    At the beginning of 2020 in the global market of cars sales CUV type occupied 40%, while in Europe prevailed sales of SUV type cars, reaching 38% ー these trends are also visible in Ukraine.

    CUV (crossover utility vehicle) ー high-clearance all-terrain vehicles in the station wagon version (for example, the Toyota RAV4 and Honda CR-V).
    SUV (sport utility vehicle) ー practical sports car, the main difference from SUVs - the lack of increased cross-country ability (for example, Volkswagen Touareg and Audi Q5).

    At the same time, there is a growing trend for electric cars, which are replacing diesel and gasoline vehicles. Over the past 10 years, this market has grown by 60% annually. In 2020, the share of electric cars in the sales of all cars in the world will already be more than 3%.

    The growth dynamics of electric car sales in the world over 10 years. Source: Iea.org

    For example, in Europe, hybrid and electric cars already account for more than 17% of all car registrations by 2020.

    For example, in Europe, hybrid and electric cars already account for more thGiven this trend of substitution in the global auto market, we conducted a BI-analysis using data about vehicle registrations in Ukraine from 2013 to 2020 and found that this segment of cars from the U.S. and Europe is actively "flowing" into our country.an 17% of all car registrations by 2020.

    Dynamics of registration of electric cars in Ukraine. Source: BI Promodo

    Despite the fact that the Ukrainian market of electric cars is also developing, we drew the customer's attention to the fact that the trend of substitution in our country is not yet evident. It is too early to switch globally to the range of tires for these type of cars.

    2. Analysis of global trends in the tire category

    To be in trend: what trends dictate the global tire market

    Recognize current market trends ー create a stable basis for business development, and anticipate them ー be one step ahead of your competitors.

    As part of the study, we identified the main trends in the global tire market.

    According to Smithers Rapra, the percentage of tires purchased online is expected to be 13% by 2023.

    3. Study of the structure and capacity of the tire market in Ukraine

    We were able to study the current structure of the tire market and identify trends in the coming years, by examining the price preferences of Ukrainian consumers and determine the most popular types of wheels for new and used cars. The car tire market is mainly divided into three main price segments: economy, medium and premium.

    According to our research, it is the economy segment that dominates the Ukrainian market: Ukrainians are not yet ready to buy premium tires. Moreover, according to liga.net experts, 30-40% of tires for passenger cars are purchased in the shadow market, which significantly distorts the real picture of domestic consumption.

    Structure of the passenger car tire market by price segment in Ukraine, number of units. For the period 2007-2019

    To determine the most popular type of wheels, we used data on Ukrainians' preferences regarding the choice of new and used cars. For example, the trend in 2020 shows that Ukrainian consumers prefer new cars with a larger tire size ー R17, R19.

    Leader models of new car sales in Ukraine, 2020

    Source: autoconsulting.com.ua, auto.ria

    While among used cars, the most popular wheel size on the Ukrainian market is R16, and the most resold car model is the Volkswagen Passat.

    Top used car models in Ukraine, 2020

    Source: autoconsulting.com.ua, auto.ria

    To determine which car brands will be in demand for tires in the coming years, we built a BI model to analyze data on the registration and import of cars in Ukraine.

    Implementation of dashboard on registration and import of cars to Ukraine, 2020

    According to the research, we can conclude that consumer preference for larger-diameter tires will motivate eCommerce to increase the assortment. This is due to the fact that an increase in the range of wheels with a larger diameter will create additional load on the showroom and warehouse space.

    4. Analysis of online sales channels

    The global growth of marketplace influence: what are the risks for niche businesses?

    As marketplaces grow in demand, they have an impact on the performance of niche companies.

    Analysis of the experience of foreign countries has shown that in the United States and Europe (in particular Poland) the globalization of the market is already taking place: marketplaces have taken 90% of the market. At the same time, there are still niche players on the market, among which there are clear leaders.

    In the current model of the tire market in Ukraine, the influence of the marketplace is increasing, but the niche retail does not lose its position yet.

    This shows that customers still care about service and assortment
    ー something that niche players can offer to a greater extent, but marketplaces can offer to a lesser extent

    Assortment ratio of niche players and marketplaces

    Given the fact that China has become a leading player in the global tire market, it was important for the client to understand: is it worth expanding the range with tires from Chinese brands?

    A detailed analysis of the assortment line showed that Chinese-made tires predominate in the assortment structure of marketplaces. At the same time, niche stores specialize in tires in the medium and premium segments.

    5. Identification of competitors and study of their services

    As in any market, Infoshina has competitors whose products cover the same needs as our customer's products.

    To stand out from the crowd with similar offerings, it is important to find a solution that helps Infoshina to become the best choice among other alternatives. It is for this purpose that the competitor's service was investigated.

    We analyzed the top companies of the Ukrainian tire market according to such criteria:

    To identify unique and trending services, we researched competitors from countries with a similar tire market model.

    As a result of the analysis, we determined the vectors of development of the service and assortment component of the tire and related niches for the client:

    It was these vectors that helped identify the consumer "pains" that competitors don't close and become the value proposition of the business.

    6. Analysis of the customer's business

    The results of the client's business analysis ー are the key to solving business problems. We analyzed sales from the website and by call inquiries, studied in detail conversions from different types of devices and order structure by brands, tire types and sizes, and sales geography.

    Based on internal sales data and Google Analytics data, we built a BI system that allowed us to:

    An example of a BI dashboard in customer business analysis
    An example of a BI dashboard in customer business analysis

    Results

    Any marketing solution should go in synergy with the business, support the key vector and the vision of owners, shareholders and management. The Promodo team always relies on facts, data and figures in its work. Implementation of effective ideas is not only about creating a concept and developing creatives, but also about deep analysis of indicators and finding ways to achieve results with their help.

    Market analysis was a fundamental step in this process. The data obtained helped identify new growth points for the Infoshina brand.

    All this became the starting point for us in further research and derivation of positions. We gained insights using what we had researched of the consumer to develop a comprehensive brand strategy.

    What's next?

    Assortment ratio of niche players and marketplaces

    project team

    Infoshina

      Eugene Matlay

      Head of the project infoshina.ua

      Promodo

      Julia Yatsenko

      Head of RnD

      Irina Pikalova

      Strategist

      Yaroslav Skorodenko

      Strategist

      Bogdan Kolomiets

      Strategist

      Anastasiya Kravchenko

      Project Manager Strategy

      Alexey Vasutkin

      Executive Director

      Yulia Beresneva

      Deputy Head / Teamlead PPC

      Nikolay Hanko

      Marketing Manager

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