- Executive Summary
The Mission of RACKMN(Working Title) is to successfully supply businesses selling cars with information to maximize their sales growth in areas that are usually ignored. We are trying to resolve the issue of selling cars to first-time car buyers and who are dissuaded by restrictions put on them in decision-making prior to the purchase. The ideal first-time buyer is in college at the age of 17-24 who is looking to influence their popularity.
What makes us different is that we are catering to a client base that is otherwise ignored due to age, financial limitations, and liabilities associated with finances? The best way to market to our age group is through social media or e-commerce outlets. Due to the age and the way, our core customer interacts day-to-day; it is the most suitable way to create customer engagement and retention. Our customers are motivated by design and cool factors, rather than simply price. This is where lending and borrowing comes into play. Our price strategy needs to include affordability in the realms of keeping up with appearances. However, according to the National Automobile Dealers Association’s annual sales forecast in 2018 for the first time since the recession, peaking at 17.6 million vehicles sold in 2019. They have been falling ever since, and they are expected to continue that trend next year. Higher interest rates and a bevy of new cars coming off lease stand to push more customers into the used market in 2019, said Patrick Manzi, senior economist for the trade group.
The best way to achieve this goal would be by making lending more accessible with fewer restrictions. Additionally, maintain affordability and customer retention by offering upgrades as a cell-phone industry does.
- Problem Discovery and Definition – A. Exploratory Research 1. Secondary Data Research
- Role: aimed at getting to understand the role that a certain group of known factors has over the behavior of our system or part of it (responses) that is also already known.
What is the role that finance, location, and age has to do with the ability
to purchase a vehicle and influence buying decisions as a first-time buyer?
Young adults have the responsibility of paying off their college tuition, loans or paying off credit card bills. Depending on where the person resides, they might be more inclined to buy a vehicle because they may prefer taking a car versus taking public transportation and dealing with delays and other negatives that come with taking public transportation. They may even get to their locations quicker if they have their own vehicle.
- Characterization: aimed at getting to know and understand better the set of factors that better characterize our experimental groups.
What are the key potential factors characterizing the respondents of my study by gender, age, income, living situation, and distance of travel?
Our target group consists of Male or Female young adults who will be first-time car buyers. They are a market that is ignored in the automobile industry because of their financial limitations. Due to their financial limitations, they are a market that does not get much attention and is ultimately ignored.
- Prediction: aimed at unveiling what factors will help us to model certain responses of our system.
How does design, and brand play into factoring purchase price versus the cost of operation?
The Majority of young adults want their first vehicle purchase to be a current model year, but are unable to make that purchase because of other financial responsibilities such as college tuition or monthly rent payments or other expenses that use up the majority of their discretionary income.
- Differentiation: aimed at identifying what responses are the most different according to a certain already known factor.
Will the average buyer forgo purchase for public transportation? If the offered purchase price is equatable, will they buy over taking public transportation?
Average buyers will purchase a vehicle overtaking public transportation if the purchase price is equatable. Many people who take public transportation today would choose to have a vehicle of their own because they would avoid delays in trains and buses as well as have more privacy for themselves.
III. Problem Discovery and Definition – B. Problem Definition – 1. Problem Statement
Most first-time car buyers are dissuaded from purchasing a vehicle due to restrictions and limitations put on them by financial institutions. Additionally, there is no information available to showcase what motivates a person not to purchase a car within the New York City Metro Area. It is a problem because millennials are one of the biggest markets to capture with constant shopping power. If we are able to research their wants, needs, and motivation, we would be able to capture the market with a positive impact and constant growth. Ambiguity surrounds the old idea that people within the metro area purchased a car and owned a car as a social statement rather than usability. Additionally, presumptions that shoppers are not so concerned about transparency or viability but rather moving up the ladder socially. However, when viewed deeper into current trends, it would appear that millennials are very focused on the ramifications of their choices, influences, and decisions. More importantly, how will these affect the broader spectrum of society and people who surround them. We hope to discover how most millennials are forgoing purchasing because of all the easily available options that logically is cheaper. And when it is purchased, it is not so much because of a brand name or social position but because of how it fits into their lifestyles of exploration and transparency.
III.B.2. Problem Discovery and Definition – B. Problem Definition – 2. Research Objectives
- Millennial Spending Habits and Why They Buy:
According to Forbes, Millennials consider social responsibility and environmental friendliness when considering their purchases, so brands face Millennials’ significant expectations in terms of shopping and investment dollars. They typically choose to either follow their own instincts or go along with their peers but have become rather weary of financial advice given by parents and professionals in the field. They also prefer personal connections with those who manage their money, who reflect their highly held values of trust, authenticity, and choice. When shopping, Millennials focus on discounts. Millennials value price over recommendations, the brand’s reputation, and even product quality.
- Who are Millennial Shoppers and What do They Really Want?
Millennials—born between 1980 and 2000—are both the 20th century’s last generation and its first truly digital one. This old century/new technology dichotomy gives pause to marketers attempting to understand and connect with this key demographic. To get the appropriate understanding, Accenture, a proprietary global market research study on the shopping behaviors of 6,000 consumers, of which 1,707 were Millennials, across eight countries: While Millennials are already a potent force, they will truly come into their own by 2020, when we project their spending in the United States will grow to $1.4 trillion annually and represent 30 percent of total retail sales. Millennials will have a major economic impact in other markets our research covered as well. Although Millennials have earned a reputation for viewing the world through a uniquely digital lens, our results found some remarkable similarities between them and their predecessors: the Baby Boomers (born from 1946 to 1964) and Generation X (1965 to 1979).
- More than half (55 percent) of the survey respondents, in all three demographics, said that they seek out “the cheapest return option.”
- Forty-one percent of all three groups said they practice “showrooming”—examining merchandise at a nearby retail store and then shopping for it online to find the lowest price—more often than they did a year ago. This shift is due, in part, to the current high penetration levels of smartphones, which can enable customers to search for an item easily, even while in a store.
- Thirty-six percent of those surveyed from all three generations said they will go online to buy from a retailer’s website if they want a product when the company’s stores are closed.
- On average, 89 percent said having access to real-time product availability information would influence their shopping choices in terms of which stores they would frequent.
- Are Millennials Buying Cars Differently?
One reason they could be buying more cars is because of where they are living. As housing costs rise in big cities, more people (Millennials included) are opting to move to the suburbs where prices are lower. This means owning a car is a necessity for getting around, so it’s no surprise that they’re buying more cars. However, they may be buying more cars but that doesn’t mean they see it the same way as other generations. How Millennials look at car ownership has shifted since the generation of their parents and grandparents. Owning a car is no longer the status symbol it once was. Millennials seem to be buying cars more out of necessity rather than desire. In fact, 43% of them see owning a car as a hassle. Owning a car for this generation seems to be more about getting them from one point to another, rather than being a status symbol. Previous generations may have wanted to buy a car to enjoy the luxury of it, while Millennials may be buying them just because they have to. With companies like Uber and Lyft growing in popularity, lots of people are wondering if Millennials will ditch buying cars altogether. These easy to use services make it seem like needing a car is not necessary.
III.B.3. Problem Discovery and Definition – B. Problem Definition – 3. Research Questions
- By owning a vehicle within the city limits, a buyer is forced to hedge the cost of parking, tickets, and occasional service associated with use. Additionally, a buyer is faced with a very high cost of insurance and very limited use, given the amount of time spent at work or at school: What motivates a first-time buyer to purchase a vehicle within New York City Metro Area where there are so many public transportations available?
- A decision to own a car has been made. A buyer is able to hedge and speculate the restrictions and limitations s/he will be faced with based on owning and using a car on a daily basis. However, if this purchase will be toward a new or used vehicle; and what are influences motivating one choice versus another?
- The purchaser of this vehicle is not dissuaded by the discomfort of owning a car and operating a car. Also, the buyer is not restricted by financial obligations or/and limitations. What influences the buyer to go toward one brand of car versus another; and how much design or/and social acceptance plays a role in car ownership?
III.B.4. Problem Discovery and Definition – B. Problem Definition – 4. Hypothesis
- Young people are motivated by design and what people think of them:
People who fall in the Millenial age group, it would appear that great design is a priority. According to ReliablePlant(research conducted by AutoDesk), Millennials place greater importance on design in workplace satisfaction, in purchasing products and in making significant decisions such as choosing which city to live in and where to work. Survey results also show that design has a considerable influence on many Americans’ daily choices. Almost seven in 10 respondents said that the last time they saw a product in a store that they “just had to have,” it was because of its design. If we were to provide products in relation to Design Thinking, we would be able to convince young people to purchase more, even outside of their means.
- A young first-time buyer would buy a new vehicle if there is a rolling service and cost of lending was affordable and provided with transparency:
According to WinSight, “Millennials are looking for good prices and quality, convenient items that fit into their busy lifestyles.” Millennial consumers, which are expected to spend $200 billion annually. Millennial shoppers have the option to choose to purchase food from a grocery store to be prepared at home, in addition, to decide to order a meal kit from Blue Apron, or pick up prepared meals from the supermarket service deli or simply go out to a restaurant. They are fully motivated by options that consider roles without limitations. The Power of Produce 2016 echoes this sentiment. According to the report, Millennials emphasize price as the top-influencing factor when purchasing. Additionally, they are two-to-seven times more likely to use some form of digital or mobile communication vehicles than Baby Boomers when researching produce prices. Though the price is the main decision influencer for this age group, retailers can still drive sales by creating an easy-to-use, value-added loyalty program, Shafer says. “For Millennial consumers, transparency within the program is key,” Shafer adds. “The program must be mobile-friendly, accessible from anywhere, and easy.” While retailers can win Millennial shoppers over with transparency about the loyalty programs they offer, but this age group also seek transparency.
- Conclusions and Recommendations
Many teenagers to college-aged individuals do not have a great means of obtaining their own vehicle. With that being said, it is essential to give these young people a fair chance to become drivers. The ability to have full control over purchases regarding automobiles is something that these specific people do not have, as made apparent through our research.
Our research team here at RACKMN has determined that the process of purchasing cars for first-time buyers should be made easier, with fewer restrictions placed on these individuals.
