Capcar

Capsule Incorporated

Presented By:

Alysia Houston

LaDeyah Forte’

Baraa Sairafi

Lenna’ Myles

Thanh Le

Yang Hu

Due Date: February 18, 2016

Professor: Dr. Cooley

Industry Analysis

The automotive industry is one of the most important economic sectors by revenue

worldwide. The main characteristic of this industry, using Porter’s 5 forces, can be summarized with:

- High entry barriers. The needs of plants, machines, materials, advertising and human labor

require high capitals and investments for new companies to step into the market. Also the

knowledge and the technologies represent a main obstacle, since new innovations and

technologies are the key to success in this market.

- Low power of suppliers. Since there is high competition among automobile supply

businesses due to the high number of firms, automaker companies hold most of the

bargaining power.

- Relatively low power of consumers. Although globalization has made competition fiercer,

providing buyers with more alternatives and choices, they still have little market power,

because of their small individual purchasing power.

- Relevant presence of substitutes. The increasing issue of environmental pollution and the

high cost of owning a car have made public transportation services a valid substitute.

- High competition. The high competition is caused by the big number of firms operating in

this market and by the increasing globalization. However, because of its oligopolistic nature,

the effects of a price-based competition are minimized, keeping the profitability quite

consistent. Yet, in recent years this price-based competition has become more intense. In fact,

companies are trying to adopt indirect price strategies, such as promotions, financing plans

and long-term warranties, to gain more market share.

Based on the genre of products, we can define 3 main submarkets: passenger vehicles, commercial

vehicles and motorcycles. CapCar is focusing mainly on the passenger vehicles market.

This market is characterized by an uneven distribution in the world. While it has reached the

maturity in most of the developed countries, such as in America and Europe, it is still at the growing

stage in the developing countries, BRIC nations above all. These countries represent the major

markets of the car industry and they will be our company’s primary target.

Here is a SWOT analysis of our company:

Strengths Weaknesses

Disruptive and new technology

Safety and convenience

Money saving in long-term

Customer’s skepticism

Weak brand image, since we are a new company

High price

Opportunities Threats

Maturity of the industry

Financial power of customers

Our price can be decreased once we gain the

return of the investments

High competition

Substitute products and services

Entrance of new companies with similar products

Our current customers are located in two main wards called Shibuya and Minato, in the

center of Tokyo, Japan. Shibuya is a very popular area for photography, producers, and actors. As for

Minato, this city serves as a strategic hub for regional and international trade activities. They live and

work in the luxurious and upscale wards of Shibuya and Minato. Our customers are between the

ages of 35-45, wealthy, single, or married with families. Their annual household incomes range

between $200,000 and $400,000. Currently, our consumers are business leaders, managers, artists,

and celebrities. They are very price conscious and are often times willing to pay a premium for our

product, because it will be beneficial to them and their families. Celebrities and business leaders need

security and convenience and that is what CapCar provides to our customers. Our customers have

the ability to store their vehicle in the capsule to avoid issues of theft or car damage. CapCar also

provides the customer with convenience which will save them from the hassles of finding a place to

park in an overpopulated area where parking is already extremely difficult. Our consumers have

strict schedules, that mean there is no time to waste, especially riding around searching for parking.

Future customers will be those of the same demographics in the wealthy and populated countries of

Europe, America, and Asia. Future customers will also include those that are extremely concerned

with the protection and safety of their vehicles. These customers feel it is necessary to make such an

investment on a CapCar to ensure that their vehicle and the belongings inside the vehicle are safe.

After we regain the costs of the investments made and once we start to produce on a large scale, we

can lower the prices. Therefore we can expand the range of our customers to those who have a lower

financial power.

The main competitors in the industry have already established a huge presence in the Tokyo

market. The major threat will come from Toyota because Toyota sold around 500,000 units in Japan

in Q2 2014.Even though this number was reduced by 7% to 469,000 units for the same quarter in

2015, they still remained the strongest vehicle manufacturer (Forbes). Our biggest competitors we

need to pay the most attention to is Toyota, Honda and Suzuki. Toyota and Honda remained Japan’s

bestselling car brands during the first nine months of 2015 (Bestsellingcars). Most of the Japanese

drive Japanese cars because they are proud of their automobile industry and it is expensive to drive

and maintain foreign cars. Even though Toyota is a major factor in Japan, there is enough market for

CapCar to exist!

There is no resemblance at this time to our product, which will give us a competitive

advantage over competitors. Capcar is the first innovation that will allow cars to be kept in pockets

and bags. This technology will revolutionize the life of the whole planet. Toyota is a Japan based

company that deals in automobiles and has its headquarters in Aichi, Japan. Unfortunately this

company has the product that is best positioned in the market and has had the best year on year

growth. They do not launch never ending programs, rather than they rely on common sense. Their

strategy is to randomly start from the small scale and progress toward large scale if the public accepts

it. Toyota trusts their instincts and does things when they feel like it. They waste less money, time

and space on marketing. Our other competitor Honda generates high profit margins, innovates and is

strategically creative in all aspects of productivity.

Toyota is leading the competitor pack largely to the success of them creating an innovative

culture, a brand reputation valued at 30 billion and an industry leader in production and sales. Their

weaknesses include large recalls and weak presence in emerging markets. Honda is known for their

diversified product portfolio and strong brand image! Their weaknesses also include large product

recalls and decreasing sales. Suzuki is relying on the success of being able to modify its strategies to

manufacture markets and sell products to consumers in other countries.

This automobile market industry is constantly growing, making it an attractive industry for us

to be in, with our new technology, it means CapCar will be able to compete in the niche that’s

developing for customers seeking solutions and not just off the shelf products. Parking in Japan is

actually quite complicated. There is not much street parking and it is basically illegal to park on the

side of the road in Japan. The roads only have one or two lanes and strictly enforced speed limits. In

Japan if you do not have your own car park, you could be fined heavily for using a restaurants car

park. Capcar provides the value of safety and convenience to customers by being able to store their

car in contractible and portable capsules. Besides there will be no need for parking lots, nor will there

be concern about looting. While there is no product in resemblance to our own, we do realize that as

the technology becomes popular we have to find ways to keep our product relevant. Also, we will

face a fierce competition from luxury car companies such as BMW, Mercedes-Benz, Audi, Porsche

and Lexus.

Other than those car companies, we have three main indirect competitors. First are the

commercial parking lots in business centers, shopping malls, and sport arenas. Second are residential

parking lots for upscale condominiums and subdivisions. Third are the airport parking lots for both

domestic and international passengers. Each competitor has its unique positioning, marketing

strategy, and competitive advantages.

Commercial parking lots position as “default” parking choices in business centers, shopping

malls, and sport arenas. These lots are very close to or even attached to these venues. Therefore, car

owners are accustomed to buying monthly or even annual pass to these parking lots for the

convenience. In reality, this competitor mainly forms partnerships with businesses operating within

these buildings. Their parking lots consequently become the “mandatory” choices of parking for

these businesses. The main competitive advantage of commercial parking lot is relatively low cost,

in comparison to Capcar product. In some cases, employees of certain businesses receive discount

voucher or even stipends from employers for the parking fees. For some shopping malls, parking is

sometimes provided for free for the first two hours of parking. Looking forward, these commercial

parking lots can even enhance their competitive advantages by adding more security features such as

security guards, security cameras, security booths, and etc. These features can bring even more peace

of mind to the car drivers.

Residential parking lots for upscale subdivisions and condominiums position also as the

“default” parking choices for residents. In some cases, residents are required to pay monthly fees to

use these parking lots, as indicated in lease agreements. Noticeably, residents are also required by

law to provide proof of residential parking space in order to obtain car registration and ownership.

These lots usually belong to the subdivision developers and in most cases, “marketing strategy”

simply comes from lease agreement. Furthermore, competitive advantage come from enhance

security features such as security guards, cameras, and chip-enable swipe access. Looking forwards,

these subdivision management teams may provide free parking for certain residents who purchased

high-end house models. This fact may discourage car driver from buying expensive Capcar products.

Airport parking lots also position themselves as the “default” parking choices for passengers.

Their main marketing strategy is partnership with popular airlines. In specific, as passengers spend

money for parking fees, they also can earn airline mileage for frequent flyer programs. The

attractiveness/ competitive advantages also come from great services. Parking lots are mostly

covered parking; passengers can use shuttle bus to travel from parking lots to the departure terminals.

Upon arrival, cars will be driven directly to the arrival terminals. For some parking lots, beverages

and newspapers are also provided “free” for passengers. Looking into the future, these airport

parking lots can enhance their competitive advantage by lowering their prices and providing more

loyalty programs to frequently passengers.

Among these three types of competitors, Capsule Inc. would like to “attack” more into the

residential parking lots where most revenue can be potentially generated. Capsule would like to

position our Capcar product as a complimentary parking tool for residents. In other words, our

marketing strategy is to seek partnership with management teams and owners of upscale

subdivisions. 20% revenue from selling Capcar product to subdivision resident will be granted to

subdivision managements. In return, Capcar will be granted the exclusive choice of parking for

residents. This is a win-win situation for both Capcar and subdivision managements. Capcar can

generate sales; while managements can also receive revenue without investing anything at all for

parking lot services, such as maintenance or security. Noticeably, profit margin for Capcar will

decrease, due to shared revenue with managements. Therefore, profit measurement will be monitored

closely. In order to maintain or increase profit margin, we need to establish partnership with at least

two-third of all upscale subdivisions and condominiums. This is a challenging task; therefore,

negotiation and relationship building with subdivision management and owners are very crucial.

Work Cited

DeepJapan. “Parking in Japan” DeepJapan.com July, 7, 2013. http://www.deepjapan.org/a/976

SWOT analysis of Toyota. (n.d.). Retrieved March 24, 2016, from

https://www.strategicmanagementinsight.com/swot-analyses/toyota-swot-analysis.html

Trefis Team. “How does a 7% decline in the Japanese auto market reflect on Toyota Motors”

Forbes. October 5, 2015 http://www.forbes.com/sites/greatspeculations/2015/10/05/how-does-a-

7-decline-in-the-japanese-auto-market-reflect-on-toyota-motors/#4612b5f72e4c

Parking | Haneda Airport International Terminal. (n.d.). Retrieved March 24, 2016, from

http://www.haneda-airport.jp/inter/en/access/parking.html

2015 Auto Industry Trends. (n.d.). Retrieved March 24, 2016, from

http://www.strategyand.pwc.com/perspectives/2015-auto-trends