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Analyzing the Used-Car Industry: CarMax's Market Share and Marketing Strategies

   

Added on  2019-09-22

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Running head: Individual Analysis1Individual AnalysisOnUsed Car Market(CarMax)Goutham JalakamTexas A&M University-CommerceDr. Chris MyersApril 7, 2017
Analyzing the Used-Car Industry: CarMax's Market Share and Marketing Strategies_1

Individual Analysis2Table of ContentsExecutive Summary.........................................................................................................................3Situation Analysis............................................................................................................................3Industry Overview & Sector Description....................................................................................3Segment information.......................................................................................................................5Demographic characteristics of Market:......................................................................................5Psychographic characteristics:.....................................................................................................5Behavioral characteristics:...........................................................................................................6Marketing Mix.................................................................................................................................6Product strategy...........................................................................................................................6
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Individual Analysis3Executive SummaryCarMax, Inc. (NYSE: KMX), is a public traded company with $14 billion revenue andUnited states largest used cars retailer. Company founded in 1993 and its headquarters located inGoochland County, Virginia. CarMax registered one million used vehicle sales both from retailand wholesale stores in a fiscal year and sold over 6 million cars overall. The company operates173 stores and differentiates itself from competitors in the used car space by providing a wideselection of high-quality vehicles, low prices, friendly sales consultants, and buyers can sell a carwithout buying a car (CarMax).Overall U.S auto industry growth is very strong since few years and grown significantlypost 2009 recession. Based on Edmunds report (Used-Car report, Edmunds), Used car salesincreased over the past 6 years and in 2016 slightly performed (0.6%) better compared to 2015 inoverall sales. Because of low gas prices, larger vehicle segments are performing better comparedto compact cars(Edmunds, 2016). Because of used-car demand, CarMax outperformed manycompetitors with its net income rose 8.2 percent with net earnings of $152.6 million on a solidrise in used-vehicle sales. Market segments for used cars are students, families, baby boomers and singles.Millennials, who are of age 18 to 34, mostly students, singles and low-income households arepotential target segments for used car market. 78% of the used cars are purchased by Millenniallast year and whereas adults over 35 purchase percentage are 68% new and old carstogether(Edmunds,2015). Students and Singles look for vehicles which are fuel efficient, lessprice, style and works for long trips. Families and baby boomers look cars based on their lifestyle and mostly cars which are safe and comfort. Also, with the technology advancements, mostof the customers looks for advanced technology features in cars. 80% of the car shoppers (4 outof 5) say it is important to integrate their smartphone features. So, providing used cars with theseoptions will helps to increase market share (Shopping behaviors, Edmunds, 2015). Product strategy looks for the trends or direction of the used car industry and strategizedbased on the potential growth of the market. Some of the key used car products(vehicles) ofCompact vehicle segment are Toyota Corolla, Mazda 3 and Honda Civic. These products targetmarket segments like Students and Singles looks for major features like good fuel efficiency,Adaptive Cruise Control, Dual-Zone Automatic Climate Control, Forward-Collision Alert withAutomatic Braking, Infotainment System, Lane-Departure Warning(Compact car features).Market segments like Families and Baby boomers look for Jeep compass and Honda HRV whichcomes under Compact Crossover SUVs and this segment looks for features which provide safetyand comfort like room space, blind spot monitoring, anti-lock brakes. Situation AnalysisIndustry Overview & Sector DescriptionFor the past 6 years, U.S. auto industry has strong growth in both new and used carmarkets. After 2009 global financial crisis, the auto industry has grown by massive 68%. With
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