INTRODUCTION
The recent storm or wave of environmental preservation has not only touched on the importance of planting trees but also has dictated that we cut our fuel-based emissions by more than half. This has led man to review all manners of machinery in factories and the automobile industries. With this in mind improvements and replacements of certain car, models have been necessary to be able to achieve our planet’s aim of renewable energy and conserving the ozone layer. In this aspect, it is important to this particular company to maintain their image as well as make profits. Below is what I think will give a balance between SUVs and fuel-efficient cars.
PROS
- Large market share: people are switching from fuel guzzlers to fuel- efficient vehicles because of the $4 increase in gasoline price all over the country. Many who are changing their vehicles are the middle-income earners who are the largest target market and have a huge spending capability. They range from ages 26 to 45, are also educated, and are wise on ‘value for your money’ phrase. For example, David King who traded in his Chevrolet Tahoe for a Chevrolet Volt which he charges as it’s a plug-in hybrid and hardly buys any gas for it when he drive 25miles to and fro every day. The cash for clunkers scheme have reported that six of the top trade-ins were SUVs, which make up 83% of 316,189 vehicles that have been traded in.
- Grants for companies developing hybrid technology: the goal set by President Obama of a million hybrids on the roads by 2015 was no joke. In 2009, he pumped in $2.4 billion in federal grants to those companies developing hybrid technology. This grants from the government help to cut up to 50% of what could be pumped into the hybrid projects. As well as a surety, that the U.S. department of transportation will purchase public service buses that run on clean-fuels thus reducing any risk of dead stock.
- Competitive advantage: people trust a company that has a longer record for manufacture of cars than a new entrant does in the market that has no roots. The record of other vehicles manufactured by this company will boost moral for the new entry of the fuel-efficient cars.
CONS
- Unreliable infrastructure: there is not yet enough electricity charging stations that can support models of cars that otherwise use electricity as their main source of power. This can thus slow down sales of models such as these.
- Cannibalization of existing market: existing quality products and car models would be thrown out of the market if too much emphasis is put on the newer models thus reducing sales of other viable models that would also help increase the profit margin
- Few would be sold so few economies of scale: because of the faulty mechanisms in place in most hybrid models people are a little bit skeptic of these new models. Despite their efficiency in miles per gallon, most people still buy SUVs for recreational purposes. For example, Mr. Frank, 28 a manager at a bank bought a Ford Explorer just because it fits their needs and is also more versatile. It also fits his two large dogs, carries their mountain bikes, and pulls their boat when they have weekend trips.
RECOMMENDATIONS
Wiping out a whole line of SUVs is not the answer to the company’s problems. The existing models can be improved on efficiency and consumption that will still give better performance but with the close attention to preserving the environment. Hybrids are not our only solution as the nickel hydride used for their batteries are harmful to the earth. The solution here is to supplement the miles per gallon (MPG) with gallons per mile (GPM). This is because it better explains the fuel savings and consumption of fuel when comparing two cars to each other. This is what I think is an effective marketing strategy.
Reference
http://w303.com/354/hybrid-auto-market-analysis/
http://www.ehow.com/about_5603217_government-grants-hybrid-cars.html
http://www.guardian.co.uk/environment/2009/aug/12/cash-for-clunkers-suv
