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A RESEARCH PROPOSAL

Table of Contents Page

1. COMPANY PROFILE ……………………………………………………………………………………………….2. RESEARCH RATIONALE ………………………………………………………………………………………….3. RESEARCH OBJECTIVES …………………………………………………………………………………………4. SECONDARY RESEARCH………………………………………………………………………………………… 4.1. Objectives 4.2. Internal research……………………………………………………………………………………………. 4.3. External research……………………………………………………………………………………………. 5. PRIMARY RESEARCH ……………………………………………………………………………………………… 5.1. Objectives 5.2. Qualitative research ……………………………………………………………………………………….. 5.3. Quantitative research……………………………………………………………………………………… 6. ADMINISTRATION ………………………………………………………………………………………………….. 6.0 Reporting………………………………………………………………………………………………………….. 6.1. Timing ……………………………………………………………………………………………………………… 6.2. Fees……………………………………………………………………………………………………………………7. REFERENCES…………………………………………………………………………………………………………… 8. APPENDIX ……………………………………………………………………………………………………………… 8.0. Credentials……………………………………………………………………………………………………….. 8.1. Terms & conditions ………………………………………………………………………………………….

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1. COMPANY PROFILE

Skoda Auto is a one hundred year old Czechoslovakian car manufacturing company which was privatized in 1989 after the fall of communism. The company was formed in 1895 to manufacture bicycles and started the production of automobiles in 1899. In the war years, the company had a reputation for making quality products; however, fifty years of communist rule in Czechoslovakia meant that the organization was a state run body with little or no investment or innovation [Skoda, 2010].

The company's reputation suffered as a result, however in the early nineties, 70% of Skoda was purchased by the Volkswagen Group [VAG] with the remaining 30% in government control, thereafter its corporate image improved and sales increased worldwide. The Volkswagen Group is the largest car manufacturer in Europe selling an average of five million cars a year, representing a twelve percent share of the world car market [VAG, 2010].

Volkswagen is the parent company of successful brands comprising; SEAT, Volkswagen Commercial Vehicles, Audi, Lamborghini, Bentley and Bugatti. Each business unit has individual character and is positioned for effectiveness within the VAG brand portfolio with Skoda positioned as a conservative value proposition. [Skoda, 2010]

Figure 1: Skoda positioning within the Volkswagen Group

Source: Skoda, 2011

Skoda’s mission is “to provide quality sales, service and transportation needs for our customers” [Skoda, 2010]. The three basic values of Skoda are: Intelligence through innovation and service, attractiveness in design and technology and dedication to continuous improvement while delivering value and environmentally sound products. Skoda places great importance in giving back to the community through the sponsorship of education programs, arts and culture and work experience programs.

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Skoda offers a wide range of vehicles including the compact Fabia, a mini MPV, and the economy brand Octavia and a luxury model, the Superb. As part of its “Strategy 2018”, the company plans to launch one new model every year by upgrading existing models, introducing successor models and by developing completely new models in high-growth segments.

The largest market for Skoda is Germany followed by; China, Czech Republic, Russia, UK, Poland, Ukraine, Romania, Italy, Spain, France, Slovakia, Austria, India and Belgium. Skoda is available in Europe, Russia, The Middle East, Australia, North Africa, Central and South America and the Far East. There are no dealerships to- date in North America or Canada.

2. RESEARCH RATIONALE

Skoda Auto has witnessed significant sales growth in Europe and in the Asian markets; however, growth in the Middle East remains sluggish.

Figure 2: Skoda sales volume growth Sales volume growth 2010

Middle East 2.0%Europe 9.4%India 10.5%China 15.0%Source: Skoda Auto, 2011

With the global recession easing, the strategic goal of Skoda is to reinforce positions in Western Europe, consolidate leadership in Central Europe and penetrate markets, in particular, the Middle East. This is part of their “Go East” strategy that aims to improve brand awareness, familiarity and favorability in that part of the world. Despite its success across the globe, the current strategy of Skoda has not been successful in the UAE market.

The Skoda brand has not managed to capture the imagination of the target audience groups in the region and as a result, sales and profits have been below market averages. Skoda’s brand perception in the UAE is an automobile manufacturer that is neither the cheapest nor the best in their class. In the UAE markets, Skoda’s main competitors are the Japanese manufacturers, European manufacturers and American manufacturers. Recent competition from these Korean and Chinese providers has further eroded Skoda’s presence in the UAE.

The UAE economy has contracted as a result of the global economic crisis and economic growth decreased from 7.4% in 2008 to -3.5% in 2010, Inflation stood at 3.1% in 2010, compared with 0.8% in 2009, joblessness has continued to increase from a low of 2% in 2008 to a high of 4.5 % in 2010 [World Fact Book, 2011]

Given the turbulent economic environment in the UAE, it is essential that Skoda carefully crafts its direction, building on past success by mapping out a strategy to reflect its position in the market as a value adding automobile provider in the region. To do this, requires research on customers and potential customers’ considerations of value, competitors ‘pricing and the importance of payment methods in the competitive car market.

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3. RESEARCH OBJECTIVES The overall purpose of this research is to determine the influences on value in the UAE car market and how they relate to Skoda’s ability to change the prices of its range of cars. The main research objectives that Skoda wishes to address are as follows:

OBJECTIVE:To determine customers and potential customers perceptions of value in relation to the organization’s products or services

PURPOSE:This objective will reveal and establish the target audience’s perceptions, attitudes and opinions of value in relation to Skoda’s product range and after sales service. This information will indicate where Skoda is seen to add value and areas in need of improvement.

SUB OBJECTIVES:

To identify and profile Skoda customers and potential customers in terms of: age, gender, income, social class, ethnicity, religion, attitudes, interests and opinions and loyalty.

Determine the level of awareness and knowledge of the Skoda as an organization and prioritize the tangible and emotional attributes of the product range that appeal to each user group.

To reveal the nature, extent and effect of sociological, economic and personal influences on the different user groups on value perception in relation to Skoda as an organization and its products.

To discover the effectiveness of Skoda’s communication of value to customers and potential customers in terms of: advertising, personal selling, public relation, direct marketing and corporate communication.

To elicit and prioritize customers and potential customers’ opinions and suggestions to improve Skoda’s value proposition in real and emotional terms for its existing and upcoming product range.

OBJECTIVE:To compare perceptions of the organization’s pricing relative to the activities of other organizations in the same sector

PURPOSE:This objective will identify and rank the Skoda product range and services in terms of value perceived against competitors in the same segments. This information will indicate product/service elements in need of improvement in relation to competitors and assist in developing an effective marketing strategy.

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SUB OBJECTIVES:

To identify and determine the importance of competitors pricing activities in terms of acquiring new customers, maintaining existing current customers in relation to the overall value proposition.

To determine customers and potential customers’ level of knowledge and awareness of competitor organizations, products, prices, promotions and service in comparison to Skoda and its products.

To reveal customers and potential customers perceptions of pricing of Skoda’s products in relation to competitors as drivers of value and establish activities of competitors that improve perceptions of value.

Discover marketing communications activities that Skoda could use to change attitudes to the brand value

To collect and prioritize customer and potential customers’ suggestions to improve pricing activities for current and new products that would improve customer value and Skoda’s competitive advantage.

OBJECTIVE:To examine the likelihood of customers and potential customers willing to pay more for these products or services

PURPOSE:This objective will establish what the market considers as value and how much customers and potential customers would be willing to pay for improved products and services from Skoda. This information will reveal trends in market tastes and factors influencing those trends measured in willingness and ability to pay.

SUB OBJECTIVES:

To determine the rational and emotional attributes of Skoda and its products that could be leveraged as the basis for customers and non customer’s willingness to pay more.

To calculate and analyze price and income elasticities of demand as indicators of willingness and ability to pay more for the organizations products and services

To identify and measure willingness to pay more for competitors products through cross elasticity of demand as benchmark measure for ability to pay more for Skoda products.

To determine and rank the economic and social factors that influence and encourage customers and potential customers to pay for Skoda’s current products and services.

To elicit opinions and suggestions from customers and potential customers as regards willingness to pay for a new range of Skoda products and services.

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OBJECTIVE:To explore customers and potential customers preferred payment methods

PURPOSE:

This objective will investigate the way in which customers pay for Skoda products and services along with suggestions for improvements in this area. This information will help Skoda consolidate valued payment facilities and develop innovative solutions.

SUB OBJECTIVES: To identify customers and potential customers’ knowledge, awareness of Skoda’s current payment

methods and the importance of these methods as drivers of value

To discover and rank preferred methods of payments by customers and potential customers in terms of their demographic, psychographic, geographic and buyergraphic profiles.

To identify and rank customers and potential customers’ attitudes and opinions of the importance of payment methods as a service attribute in comparison to other services attributes.

To reveal attitudes and opinions to new terms and conditions for payments that could be offered by Skoda such as improved terms and conditions in financing, installment schemes cash and trade discounts.

To collect and rank customers and potential customers’ suggestions for new payment methods such as online payment facilities, mobile phone payment facilities and payment via other digital devices.

4. SECONDARY RESEARCH

Secondary research is the collection of second hand information i.e. information that has already been collected by the firm, other firms, agencies, the government or other bodies. The purpose of collecting secondary data is to access existing information relevant to the research objectives that will provide insight into the research objectives and lay the foundation for further research.

Advantages Disadvantages

Lower cost than primary research Information might be out-of -date

Information might be readily available Information might not be specifically relevant

Provides a broad overview of the market Can be time consuming to find actionable data

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4.1. Objectives

Identify demographic and lifestyle information of current and non customers Determine the level of awareness and knowledge of the Skoda range Reveal the nature, extent and effect of influences on perceptions of value Investigate the level of awareness and knowledge of competitor products and services Establish price and income elasticity of demand in the local car market Ascertain the importance of payment methods in customer value Establish the most common payment methods currently used

4.2. Internal researchInternal research involves an examination of Skoda’s accumulated data and information to date. An examination will be carried out of the Skoda marketing database and company records in each department; sales, operations, accounts and service. Sources of internal research will include:

Skoda sales reports Client account information Past marketing reports Customer complaints Customer feedback Past media reports

By analyzing internal information, insights can be gained into Skoda product and service attributes that are valued by the target audience that can be further researched by external secondary research.

4.3. External research External research involves an examination of existing published material relating to Skoda, the UAE economy, demographics, social trends, competition and changes in technology that impact on conceptions of value in the car market. Sources of external research will include:

Government reports on car sales Magazine articles on car preferences Newspaper commentaries Competitors marketing collateral and web sites Relevant motoring blogs Private reports on the local car market

By analyzing external information, insights can be gained into Skoda product and service attributes that are valued by the target audience that can be further researched by primary research.

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5. PRIMARY RESEARCH

Primary research is the collection of first hand information i.e. new information collected in response to the research brief and objectives. Primary research can be qualitative or qualitative in nature. Qualitative research investigates how people understand their experiences whereas quantitative research deals with numerical measurements of these experiences.

Qualitative research explores attitudes, behaviour and experiences through such methods as interviews or focus groups. It attempts to get an in-depth opinion from participants. As it is attitudes, behaviour and experiences which are important, fewer people take part in the research, but the contact with these people tends to last a lot longer.

Quantitative research generates statistics through the use of large-scale survey research, using methods such as questionnaires or structured interviews. This type of research reaches many more people, but the contact with those people is much quicker than it is in qualitative research. The purpose of collecting primary data is to access up-to-date, actionable new information that will add insight to the secondary research activities and findings.

Advantages Disadvantages

Allows expression of extended opinions Can be expensive and time consuming

Helps to validate secondary research Risk of bias throughout the process

Provides deep insights into behaviour Need qualified and trained researchers

5.1. Objectives

Identify and rank the drivers of value in the different car market segments Reveal new sources of value for current customers and potential customers Establish key activities of competitors that improve perceptions of value Discover activities that Skoda could use to change attitudes to the brand value To reveal individual product and service elements that could be priced higher Judge the likelihood of competitors changing their prices Appraise willingness to pay more for a new high end brand Reveal current payment methods made by customer segment Discover the level of interest in new payment methods Evaluate the likely success of offering new payment methods Determine and prioritize perceptions of value among the main competitors Reveal the importance of price V non price drivers of value among competitors To evaluate the influences on ability and willingness to pay more

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5.2. Qualitative research

Qualitative research can be done in the form of depth interviews, focus group sessions and ethnographic observations. The most suitable qualitative research method for the Skoda brief is focus group sessions as depth interviews are time and resource intensive while ethnographic observations involve too few participants. A focus group is a collection of five to ten individuals brought together to discuss a topic and this allows in depth discussion and interaction. The purpose of the focus group is to gain deep insights from the target audience into their feelings, attitudes and opinions of the Skoda brand along with suggestions for improvements.

Before any research takes place, a pilot test will be carried out. A small sample of the target audience will be selected and a mock focus group session will be carried out. This will provide an opportunity to test procedures, the venue and for the moderators to fine tune the questions for the actual interviews. Once the pilot test has been carried out the research team will meet to discuss any problems and make final adjustments for the actual research.

5.2.1 RecruitmentCandidates will be sent an invitation to be replied to within five days; two weeks before research commences. The agency will contact each candidate by telephone to confirm attendance or non-attendance. A stratified random sample of target audience will be taken. In this method the population is divided into subgroups e.g. by marital status, family life cycle, income, location, gender, ethnicity and age and a simple random sample is then taken from each sub-group.

A variety of sources will be used to select the participants including the Skoda customer database and purchased demographic reports. The aim is to ensure that the focus groups have members from all the key subgroups in the population. Research will involve four focus groups; two for consumer segments and two for corporate segments:

Consumer Group Location Segment Age Group Gender Sample size 1 Dubai A,B 35-55 Male /female 102 Abu Dhabi C,D 25-35 Male/female 10

Corporate Group Location Segment Role Gender Sample size 3 Dubai Senior Management Male /female 10 4 Abu Dhabi Junior Staff Male/female 10

Respondents will be chosen from consumer and corporate segments that best represent the characteristics of the target audience. Candidates will be invited to participate on a volunteer basis as long as they fulfill the application requirements, previously mentioned.

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5.2.2 ProcedureTwo professional moderators will be issued with discussion guidelines to carry out the group discussions of one hour duration. This will to ensure consistency in the process. To ensure objectivity and avoid bias, prospective participants will be screened and those with any connection to Skoda or direct competitors will not be allowed to participate in discussions. The selected participants will be offered a cash incentive which will be awarded after the successful completion of the group sessions.

Focus group discussions will be held at the Skoda head office so that participants can view the range of Skoda models and make notes for group discussions. A room will be booked and equipped with audio/ video equipment so that sessions can be viewed remotely and recorded. Each focus group session will begin by the by moderator introducing himself, indicating facilities and outlining the procedures for discussions. Participants will introduce each other and a series of introductory questions will then follow, discussion will progress to more detailed topics with candidates giving further opinions.

Moderators will make use of a range of materials to engage participants including photos, sound bites, video clips, brochures, newspapers, web sites and magazine articles. To encourage discussion, moderators will use direct discussion and projective tests designed to reveal inner thoughts and feelings. These tests have a basis in psychology and are used to tap into inner feelings that people find difficult to describe directly in revealing emotional links between the consumer and the brand. Focus group discussions will be structured around the research brief and objectives to discover levels of awareness, knowledge and attitudes to brand Skoda and suggestions to improve value in the UAE market.

Data AnalysisRecordings of the focus group sessions will be collected and analyzed by moderators in relation to the research brief and objectives using specialized applications such as Nvivo data analysis software. Information will be summarized in spreadsheet form so that it can be easily accessed and interpreted by the client.

5.3. Quantitative research Quantitative Research is a research methodology that reveals absolute and measurable data in contrast to qualitative research as it uses a structured approach to produce quantifiable insights into motivations, attitudes and behaviour. This research method can access large numbers and can make statistical assumptions about the behavior of the general population. It is less flexible than qualitative research but tends to be more reliable and valid as it is an objective in nature.

The most suitable quantitive research method for the Skoda brief is computer aided web interviewing as face to face interviews are time and resource intensive while postal interviews would attract too few participants. Web aided interviewing will reduce data recording errors and improve efficiency by increasing the speed of survey execution, processing and analysis.

Computer Assisted Web Interviewing is a form of interviewing where respondents answer the questionnaire online through a web link or website. Online questionnaires can contain photographs, video clips, audio recordings and are therefore multimedia rich and attractive and this encourages the respondents to proceed with the questionnaire. The purpose of the web interviewing is to gain insights from a large number of participants from the target audience and reveal their feelings, attitudes and opinions of the Skoda brand along with suggestions for improvements.

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Before any research is carried out, a pilot test will be carried out to flag up any problems with processes, procedures and participants. Question sequencing will be tested; candidates understanding of terminology will also be tested. Testing will also provide some feedback on any potential issues that may arise in terms of analyzing the data. Once the pilot test has been carried out, any necessary adjustments will be made for the upcoming research.

5.3.1. Recruitment

Potential participants will be selected for interviews from a database of existing customers and from purchased reports on local demographics. Candidates will be sent an invitation to be replied to within five days, two weeks before research commences .The agency will contact each candidate by telephone to confirm attendance or non-attendance. Questions will be based on a variety of formats including; closed end, dichotomous, multiple choice and ranking type questions.

A combination of cluster and stratified random sampling of the target audience will be carried out. The population will be divided into subgroups by location and attributes such as gender, marital status, socio-economic group, age and family life cycle. The aim is to ensure that the focus groups have members from all the key subgroups in the population. Research will involve a computer-aided survey of two hundred participants.

Socio economic group Male Female Age Location Ethnic group

A 50 50 25-55 All UAE emirates

UAE nationals and Westerners

B 25 25 25-55 All UAE emirates

UAE nationals Westerners & Asian

C 15 15 45-55 All UAE emirates

Asian, Gulf Arab & African

D 10 10 45-55 All UAE emirates

Asian, Gulf Arab & Far Eastern

5.3.2. Procedure In computer aided web interviewing an interviewer will survey the respondents with the help of a computer generated questionnaire by calling a sample of two hundred candidates using voice over internet protocol or VOIP. To begin with the survey, a questionnaire will be generated. Thereafter, the interviewer will execute the survey application so that it is up and running on the display terminal. Calls will be made to the interviewees that will last approximately ten minutes.

On establishment of successful connection, interviewer will begin interviewing the respondents according to the sequence of questions in the questionnaire. The entire process of generating a survey to making a call to the interviewee, recording, storing and analysis of survey answers is automated.

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Data AnalysisThe answers from the online questionnaire will be saved directly in the database, the entire process is automated. Research information will be collected and analyzed by using computer software such as Sphinx Survey Analysis {Sphinx, 2010} to generate statistical results from the respondent answers, collate segments, identify trends and discover patterns of behaviour in the target segments. This software is specifically designed to provide data management services in an easy to use interface. Results can be generated in a short time span as the package does not require extensive and time consuming training program.

6. ADMINISTRATION

6.0 ReportingThe reports on findings and observations from secondary research, quantitative research and qualitative research will be submitted by the end of week 4, 9 and 13 respectively. The final presentation and reports saved on flash drive and will be given to the client. The report will be evaluated based on the ability of the research answering the objectives noted in the proposal.

Research will be carried out in accordance with the rules and regulations set by MRS Codes of Conduct. [MRS, 2007] In order to ensure the standard quality of interviews, interviewers will be trained for necessary interview skills. Consultants will inspect the quality of interviews and focus groups by random selection.

6.1. Timing Week Activity1-4 Desk Research4-6 Qualitative Pilot Testing & Fieldwork

6-9 Qualitative Deskwork9-11 Quantitative Pilot Testing & Fieldwork 12 Quantitative Deskwork13 Data Analysis & Presentation14 Final Report

6.2. FeesSecondary Research Sum Total Junior Staff 4,000 Senior Staff 8,000Purchased Reports 2,000 Sub Total 14,000

Qualitative Research Focus Groups 3,000 Equipment and materials 1,000Miscellaneous expenses 500 Sub Total 6,500

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Quantitative Research CAW Interviews 3,500 Equipment and materials 1,000Miscellaneous expenses 1,000Sub Total 6,500

Total 27,000All costs are subject to variation according to circumstances and are expressed in US Dollars

7. REFERENCES

8. APPENDIX

8.0. CredentialsMartins Marketing Research Agency was established in 1985, in Dubai, UAE. The agency has a successful track record in producing research data and reports across a wide variety of industries, since its inception. The Skoda Auto research brief will be the responsibility of Mr. Martin, Director of consumer research division. Mr. Martin has worked in the research industry for over 15 years and has knowledge and experience of the most up-to-date research technologies and methods. Mr. Kevin Stacy, research operations manager, will be responsible for the day-to-day research activities of the project. Mr. Stacey has worked in Dubai for over 10 years in the area of business and consumer research and has experience of researching the automotive sector. Martins Marketing Research Agency has access to a wide database of junior research staff as it offers internship programs. The Skoda Auto brief will be given high priority in the agency and senior staff will be involved in the project as a demonstration of commitment to the project.

8.1. Terms & conditions

Payment schedule 20% Project Acceptance 20% Qualitative Fieldwork Report 20% Quantitative Fieldwork Report 40% Final Report

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8.2 Skoda Product range

Skoda offers a wide range of vehicles including the compact Fabia, a mini MPV, the economy brand Octavia and a luxury model, the Superb. As part of its “Strategy 2018”, the company plans to launch one new model every year by upgrading existing models, introducing successor models and by developing completely new models in high-growth segments.

Skoda Fabia

The Skoda Fabia is a hatchback model from the Skoda collection competing in the compact segment of sedan cars in the world market. The Skoda Fabia is available in different engine specifications both diesel and petrol in 1.4 and 2.0 liter engines.

Skoda Roomster

The Skoda Roomster is a small hatchback MPV model from the Skoda collection competing in the people carrier segment in the world market. The Skoda Roomster is available in different engine specifications both diesel and petrol in 1.2, 1.4 and 1.6 liter engines

Skoda Octavia

The Skoda Octavia is a saloon model from the Skoda collection competing in the lower-mid-range standard segment of sedan cars in the world market. The Octavia offers petrol and diesel variants with engine sizes of; 1.8, 1.8 turbo and the sports VS version 2.0 liter turbo.

Skoda Yeti

The Skoda Roomster is a small SUV model from the Skoda collection competing in the compact SUV segment in the world market. The Skoda Yeti is available in different engine specifications both diesel and petrol in 1.2, 1.8 and 2.0 liter engines.

Skoda Superb

Skoda Superb is the flagship model of Skoda with its petrol and diesel engine variants, 2.0, 2.8, 3.8 liters, targeting the upper middle class consumer. The Superb is offered as a lift-back saloon targeting the executive user and larger families by offering luxury and performance. This model is available with a wide variety of trim levels and accessories such as a sunroof.

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