All industries are characterized by trends and new developments that gradually or speedily produce changes important enough to require a strategic response from participating firms. Industry and competitive conditions change because forces are enticing or pressuring certain industry participants to alter their actions. These driving forces are those that have the biggest influence on the changes underway in the industry's structure and competitive environment. Shifts in industry growth are a driving source for industry change, affecting the balance between industry supply and buyer demand, entry and exit, and the character and the strength of the competition.
An upsurge in buyer demand triggers a race among established firms and newcomers to capture the new sales opportunities. Such is the case in the Chinese auto market. "The urge to splurge" on luxury represents a new phase for China's car industry, the world's second largest auto market. As overall sales in China are swelling, it is a particular concentration of prestigious brands that care causing the high end of the market to expand twice as fast as the industry average.
The market demand for cars in China relates to a wide variety of variables: the health of the broader economy, personal income, the price of autos, and the availability of financing. As China's economy continues to grow at a rapid rate, so do the income levels of the population. This income increase has left buyers wealthy and ready to spend big for prestige, quality and excellence. Shifts in buyer demographics alter the state of competition by opening the way to market an industry's product through a different mix of dealers and outlets, prompting producers to broaden or narrow their product lines, bringing different sales and promotion approaches to play, and forcing adjustments in customer service offerings. Global automakers have been quick to expand their presence in the emerging markets of China in order...
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