Marketing strategy shift from SUVs to fuel-efficient vehicles

SUVS

You a marketing manager interviewing a job a large automotive company. You prepared interview a chance offered job, decide study company company's future marketing ideas. One company's ideas phase large, profitable SUV line automobiles focus smaller, fuel-efficient cars.

Marketing manager: Interview

Despite the current popularity in the media for demonizing gas-guzzling SUVs and the praise for cars such as the Prius and the Chevy Volt, consumer buying trends have yielded inconsistent results. When gas prices spike, consumers typically flock to more fuel-efficient cars. However, as gas prices have experienced moderate attrition, the desire for larger vehicles has increased once again. "Retail prices for 5-year-old full-size SUVs are 23% higher than a year ago...That is more than double the average price increase of 11% for all 5-year-old vehicles. Prices for 3-year-old SUVs are up 6%, triple the 2% average increase for all vehicles that age" (Used full-size SUVs are in demand again, 2012, The New York Times). Many consumers acted "irrationally" to a spike in gas prices in 2008, downsizing in favor of vehicles that proved to be too small for lifestyles that featured multiple children, sports which required the need to transport heavy equipment, and off-road use (Used full-size SUVs are in demand again, 2012, The New York Times).

Furthermore, SUVs have become more fuel-efficient in recent years. A "2013 Ford Explorer with a 4-cylinder EcoBoost engine gets 28 miles per gallon in highway driving, compared with 18 mpg for a 2003 Explorer" (Used full-size SUVs are in demand again, 2012, The New York Times). Greater diversity and product segmentation will also enable American consumers to balance the need for affordability with their desire for larger vehicles. "Next-generation vehicles will likely be tailored more narrowly to specific uses. Not every SUV model will be able to tow a 4- or 5-ton trailer" not will they need to, for the average consumer who simply needs a roomier vehicle (Cox 2012). And hybrid technology is now incorporated into many SUVs, allowing for greater fuel economy, and an answer to environmental critics' condemnations of the vehicles.

Americans, in contrast to Europeans, have historically preferred large cars. In contrast to Europe, where public transportation is common, parking is scarce, and driving distances are comparatively short for consumers, Americans live in a car-dependent nation. Carrying large amounts of groceries and equipment by car is seen as a necessity. Political pressures are unlikely to result in a higher gas tax and sustained higher fuel prices. And it is important to have the company's eye on the international market overall. Abroad, demand for SUVs has increased in the developing world, rather than decreased. SUVs "are the fastest-growing segment" in China, where they are a status symbol amongst the Chinese middle class, and are very popular with 'Tiger Moms,' or the Chinese equivalent of 'soccer moms' (Tiger moms craving SUVs drive next wave of Chinese demand, 2012, Bloomberg News). In China, SUV demand is triple that of traditional vehicles, increasing more than 20% last year. Women who wish to transport their entire families are driving that growth. More women are driving in general in China, and SUVs are their vehicle of choice.