Hybrid Cars the Marketing Strategy Term Paper

  • Length: 8 pages
  • Sources: 6
  • Subject: Transportation
  • Type: Term Paper
  • Paper: #22251890

Excerpt from Term Paper :

16) Broader estimates, including all companies are more conservative, yet it is clear that the target market potential is exponential, and marketing will likely broaden its scope to other target markets in the near future.

Possible risks to the industry are limited by quality and potential market saturation, when demand levels off with supply, as it will likely in the near future. As has been stated previously, it seems the shakier the economy seems the more likely people are to invest in hybrid technology to offset other costs. Though it is clear that like all other durable goods, when people are satisfied, except for the exclusion of those who out of hand buy a new car every 3 years, they will likely retain their vehicle longer and therefore not seek another purchase once their immediate needs have been met. The overall industry has answered this call by marketing quality and efficiency as well as targeting expendable income and offering financing with better and better terms for those who do not buy large items with cash, which is the case with most consumers. If the current hybrid cars prove unreliable, difficult to maintain or in any way express of poor quality the market may see a downturn, but technology seems to be outpacing any initial problems or drawbacks seen by first consumers, such as those who purchased hybrid vehicles that required charging from outside sources.

Competitors/Substitutes:

If by chance the all electric vehicle makes a significant comeback, which is unlikely, given the political climate and marked limitations of lack of independence from the electric grid there could be some market drop, but again this is unlikely as all electric vehicles are still limited in size and scope as compared to inclusive hybrids. Secondary to this is the diversity of hybrid technology itself which will be tested by consumers and in research. This includes differing hybrid fuel types, including gasoline, natural gas, diesel and hydrogen as well as alternative non-hybrid fuel cars, which are also in research currently. Bio-diesel has a strong hold in some regions of the market, but bio-diesel as well as natural gas are still frequently difficult to find and the extreme differences between these technologies and combustion engines (still a part of the hybrid) often leave consumers scratching their heads. Future utilization of hydrogen technology is likely but will again challenge the consumer as there is still a clear sense that waste will be produced by such vehicles and will in the long run do as much damage as good. Each competitor will have to sell their option independent of the major auto producers as most have not embraced such technology at this time, which will be a significant challenge and secondarily if these technologies are adopted by any major producer in a significant way the competition for niche sales in substitutes to hybrid cars will likely be even greater.

Price:

Price is clearly an issue for consumers as well as the market, as prices for hybrid cars are currently higher than for traditional combustion models in the market between 3,000 and 6,000 more than a traditional engine car depending on model. The current assumption is that even in the long run current hybrid buyers may expect to break even, not save a bundle on the purchase, meaning in the short-term the cost could be prohibitive but in the long-term its about the same with the environmental issue being the deal breaker most frequently. (Bartell, 2007, Carseek.com) This has been offset in some locals with discounts and tax incentives that can be as high as $2,000 in tax rebates (both federal and state/local) for the purchase of a hybrid vehicle. Though it must also be clear that entities are losing tax revenue, by both reducing the direct tax and by smaller tax bases at the pumps, so it is likely that many of these incentives may disappear in the future as hybrid and alternative fuel cars become more in number. (Krol & Orrick, 2006, p. 15) Unexpected costs such as maintenance is also a serious consideration, as well as yet inconclusive insurance premiums.

Maintenance costs are another decision-making factor, but hybrid maintenance, as long as it is not battery-related, is not that different than maintaining a "regular" car. Most normal mechanics can handle the usual wear and tear issues, and owners of smaller hybrids say that oil changes are less frequent, recommended every 5,000 miles, instead of every 3,000. However, it should be noted that if the manufacturer's warranty becomes voided, a replacement battery pack can cost as much as $4,000. (Bartell, 2007, Carseek.com)

Though it is unclear how many consumers are aware that normal, non-battery wear and tear can be dealt with by almost any good mechanic, this is valuable information for marketing.

Channels of Distribution:

Traditional channels of distribution, being the auto dealership model, an independent system of distribution, unlike almost any other do to financing issues as well as forecast information, has been the means by which hybrid vehicles are reaching the market. Hybrid vehicles are not the only vehicles that have ever hit a waiting list demand, and regional differences in demand also dictate availability. Other alternative vehicles have stand alone systems that are much smaller and more niche in nature.

Advertising, Sales Promotions, PR Plans:

Advertising the greatest number of available hybrid vehicles has been a significant historical booste for individual retailers and brands. Additioanlly, when supply equals demands individuals will be more likely to be able to walk onto a lot, test drive and purchase a hybrid car and this will likely be the greatest PR / Sales promotion plan in the long run. Individual dealers are taking their cues, as is standard from automakers and seeking out target market sales to those who are willing and able to pay the initial 3,000 to 6,000 increase in purchase price. There will likely be additional sales tactics in the future, but as of yet demand is still dictating price, and sales (price breaks) on hybrid vehicles are scarce, if they exist at all. This avenue, again will likely increase in the future as competitive market and supply meet the consumer at the retail end.

Marketing Budget:

two year marketing budget will likely take all these factors into consideration, and may be significantly lower than other traditional market entrance products, as the cars in a sense are selling themselves, currently. Marketing initial awareness of hybrid offerings will likely be the trend in the next two years as more vehicles become available to consumers, in different sizes and brands. After this initial awareness campaign, usually conducted by the automakers limitations in the need to market heavily anything but significant change in technology will be limited. Forecast revenue for hybrid vehicles will be somewhere between 400,000 and 450,000 with a conservative estimate of 100-125 billion dollars in sales. The cost to produce such vehicles has also reduced significantly since 1999 making it comparable to other vehicles as technology in manufacturing increases. The outcome of actual profit will likely be a conservative 10, billion in annual profit from sales of hybrid vehicles.

References

Bartell, M.A. (2007) "Hybrid vs. Gas: Comparison of Costs and Benefits" Carseek.com Retrieved September 13, 2007 at http://www.carseek.com/articles/hybrid-vs.-gas.html

Carr-Ruffino, N., & Acheson, J. (2007, July/August). The Hybrid Phenomenon: High Gas Prices and Shifting Consumer Sentiment Point to Bright Prospects for Hybrid Cars. The Futurist, 41, 16.

Automobile. (2004). In the Columbia Encyclopedia (6th ed.). New York: Columbia University Press.

Dooley, E.E. (2005). The 2005 North American International Auto Show in Detroit Saw the Introduction of a Number of Highly Efficient Cars, Including Several New Gas-Electric Hybrid Models. Environmental Health Perspectives, 113(4), 233.

Hybridcars.com (2007) "Hybrid Market Forecasts," Retrieved September 13, 2007 at http://www.hybridcars.com/hybrid-drivers/hybrid-market-forecasts.html

Krol, E.,…

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