Downsizing Hummer

Maslow’s needs make us realize that each of us is motivated by needs in our daily life. We strive to meet our basic needs which deal with the most obvious needs for survival. Therefore, when the lower order needs of physical and emotional well-being are satisfied than only will one be concerned with higher order needs of influence and personal development. Since, without meeting lower order needs, we are no longer concerned about the maintenance of our higher order needs.

Similarly, in the case of GM: Downsizing the Hummer, it is very obvious that esteem and self actualization are the only needs that will motivate a purchase of a Hummer H2. Esteem needs can be categorized as external or internal motivators. Internally motivating esteem needs are those such as self-esteem, accomplishment etc. External esteem needs are those such as reputation and recognition. For a person to own H2, they have to feels the sense of “belonging”, and then the desire to attain a degree of importance emerges to hold the strong feeling of meeting its esteem needs which will motivate that individual to purchase H2.

The fact that GM target buyers with an average age of 42 and annual household incomes above US $125,000 for its sale of H2 are a conclusion that one has to surpass its basic needs in order to meet its high order needs. Therefore, we can say that esteem need is one of the motivator to increase sale of H2 because individual in this category are highly ambitious in maintaining its status and would feel the importance to purchase H2. Self actualization needs are needs that do not involve balance because once he/she is engaged to it, they continue to be felt.

They involve the continuous desire to fulfill potentials and become the most complete, the fullest, “you”, which in terms called self-actualization. GM’s target market would be those individual who falls under this category of Maslow’s needs because according to its research, studies showed that only 10 percent of owners would ever spend so much on off-the-road vehicles. The fact that, only a small percentage of the population reaches the level of self-actualization needs is also the reality that it is a good motivator for GM to reach its projected sale of H2.

To conclude, the fact that GM believed that the H2, would appeal to rugged individualists and wealthy baby boomers etc, we can say that the firm is talking about individual that has the quest of reaching one’s full potential as a person and is able to continue to grow as a person to be able to purchase H2. 1. One of the common dilemmas faced by developers of car industry is to find out ways of finding potential early adopters of its services during its market research. Since, we are fully aware that the product characteristics of any new product affect its rate of adoption.

Therefore, for the purpose of this discussion we will consider Hummer as an innovation and evaluate how the five products characteristics can influence the innovation’s rate of adoption. The first product characteristic deal with relative advantage where by the innovation appears superior to its existing products. For example, Hummer is designed to take people off the beaten path and could plow through water to a depth of 76 cm and climb almost vertical, rocky surfaces etc.

The comparative product characteristic presented by Hummer can be perceived as an advantage toward the innovators group who are willing to try out new product with some risks. To conclude, we can say that Hummer product is unique in comparison to existing product available and due its promising features it is able to attract the innovators group. The second product characteristics deal with compatibility where by the innovation fits the values and experiences of potential consumers.

As GM believed that it could introduce the H2 in the luxury SUV market and compete successfully with brands such as the Lincoln etc should be perceived as a competitive advantage for the early adopters because these are people who adopt new idea early but with caution. For example, H2 has to surpass the benefits of other luxury brand in terms of performance, safety, design and utility of the car in comparison with H2. To conclude, we can say that if H2 can outperform other brand with its relative product features than it can be proved to be a competitive advantage for the early adopters to seek the new product.

The third product characteristics deal with complexity where by the innovation is hard to understand or use. Hummer is a high mobility wheeled vehicle and it is not very difficult to handle once proper training is provided. For example, early majority group who adopt new ideas before the average person can take the opportunity of the training available offered by AM General. Therefore, we can say that once the early majority group learned to control the Hummer in extreme off-road situation than it will take less time to penetrate the market to adopt the new innovation.

The fourth product characteristics deal with Divisibility where by the innovation may be tried on a limited basis. The fact that Hummer is very expensive to own and the late majority group are usually reluctant to adopt new innovation makes it difficult for Hummer to attract them. Therefore, Hummer is available for rent through the rental companies for a weekend getaway. To conclude, we can say that through the adoption of trying out the product for the weekend can change the rate of adoption from the user perspective of owning the Hummer.

Lastly, Communicability deals with the results of using the innovation that are observed or illustrated to others. For Hummer to communicate its innovation to laggards group it require good marketing campaign because at this stage they are trying to convince its innovation to group of people who are not willing to change and will adopt changes only when the idea reaches its selling point. Therefore, we can say that the product characteristics can influence the rate of adoption if the product is not demonstrated properly with its usage, safety, performance and utility.

According to my evaluation, I think GM sale prediction was weak because it did not present any inevitable facts that by projecting 40 000 units per year will realize the anticipated profit year after. Based, on my evaluation it confirm that it is a dilemmas to find early adopters to buy new products because today’s buyers are diligent in going through the product characteristics before making any final decisions. Also, the fact that GM did not include any back up plan to overcome increase gas price that has decreased sales is a major lack of sale prediction.

Lastly, the projected demand for Hummer by GM was higher than expected and GM failed to take immediate action to slow down production when sale was declining and come up with remedial solution to prevent current downturn, instead GM was pursuing its long term plan to sell 100 000 more Hummer branded vehicle in a year. 2. GM used many variables while segmenting the SUV market. The major focus for segmenting the SUV market was through demographic variables, specifically; age, life cycle stage, income, occupation, and gender.

GM also used psychographic variables which are based on social class, lifestyle, or personality characteristics. Consumer needs and wants change with age and marketers must design package or promote products differently to meet the wants of different age groups. For example, when GM introduced the 2003 H2 it targeted buyers with an average age of 42 so that it can compete in the luxury SUV market. Therefore, we can say that age is one of the Critical demographic variables that GM has to work with in segmenting its market.

From the psychographic standpoint, variable that can reflect sale of H2 are strongly influenced by social class of having to own the luxury H2. The second demographic variable that GM uses to segment the SUV market for it Hummer H2 is life-cycle stage which is an important variable particularly in markets where other luxury SUV brand is already available. For example, contrast the product and promotion approach of other SUV brand in comparison to H2 off-the-road vehicle where studies showed only 10 percent of owners would ever take off the road.

Therefore, GM must carefully study its market segment to compete with its product and age group life-cycle stage. From the psychographic standpoint, People usually like to express their lifestyle by consuming something that stand out and buying H2 is a way to express their life style and is one of the crucial variables that GM uses to segment its H2. Income is another demographic variable that GM uses to segment its market. The fact that GM targeted buyers who has annual household incomes of above US $125,000 is of its focus on marketing directly to consumers who have relatively high income.

In terms of psychographic variable we can say that personality characteristic can play a major role in how GM can promote its H2 to get buyers attention. For example, GM used TV ads that featured well-dressed woman driving the H2 and by doing this the ad is playing a major role in trying to sell its products to woman and assuring that anyone can get on the wheel for a smooth drive. Occupation is another vital demographic variable that GM uses to segment its market. For example, based on GM’s market research it believed that the H2 would appeal to rugged individual and wealthy baby boomers that has jobs in investment banking and the like.

The fact that GM targeted buyers who has good occupation is the vital decision from marketing perspective in order to evaluate affordability of the H2 market. From psychographic standpoint, social class plays a major variable for affordability where by only middle and upper class families can afford the H2. Gender segmentation is widely used in marketing to appeal to the interested group. However, GM wants to segment its luxury H2 market to appeal to women to enjoy the smooth drive as opposed to only men.

For example, GM attempted to do this by not focusing on the H2’s off-road ability, but to show their customers in a different light by promoting H2 with ad concluding with the line, “Threaten Men in a New Way. ” In terms of psychographic standpoint, we can say that personality characteristic variable is crucial in helping GM to drive the sale to appeal to interested groups by presenting ads differently to target the market. 3. The original Hummer, H1 is one-of-a-kind vehicle, the world’s premier off-road vehicle positioned as a terrific performance with high ticketed price.

The name Hummer evokes an image of great proportions, a vehicle that can withstand almost anything by keeping in mind its major function: H1 was created to take people off the beaten path where other cars and truck cannot take on to experience the world with full freedom of a joy ride. However, to achieve maximum mobility in comparison to other SUVs, Hummer was not designed for its speed but it is equipped with a central Tire Inflation system, which enables the driver to increase or decrease the tire air pressure at will due to off road driving capabilities.

Lastly, AM targeted H1 towards small segment of well-off individual who can pay more than US $100 000. By contrast, H2 is positioned as a more luxury and reasonably priced luxury SUV. GM introduced H2 by expanding its product offerings to larger segment and making the brand accessible to more buyers with a slightly scaled down, more civilized version of the H1. H2 has customization accessories and an option to upgrade to luxury packages which is one of the major perk that will satisfy the strong desire for those individual who wish to personalize their vehicle.

Apart from this, H2 has a balance with interior comfort, off-road and on-road capabilities where by rugged individualist will be more likely to take it off-road and successful achiever is more likely to drive it on-road as a symbol of success. Lastly , GM used TV ads that featured a well-dressed woman driving the H2 through an urban business district is a way for GM to positioned its H2 to target woman to experience the ride and purchase H2 with all its promising features that it has to offers to buyers.

For any company to succeed in introducing its new brand it is crucial for the firm with the help of the marketing team to figure out its core competitive advantage in differentiating the company’s marketing offer so that it can provide consumers with superior value. One of the competitive advantages used by GM is product differentiation which is the process of distinguishing a product or offering from other.

For example, GM introduced H2 in the luxury SUV market to compete with its competitor and the company did not make small changes in H2 to distinguished itself, but it offered overwhelming benefit like off-road and on-road capabilities which is the unique aspects of a firm’s offering that created a sense of value to the potential buyers. Brand Image differentiation is another competitive advantage used by GM to position its H2 because image is one of the way the public perceives the company or its products.

As we know that image is affected by many factors which are beyond the company’s control but building effective image establishes the product’s character and value proposition. For example, in order for image differentiation to work, it must be conveyed through every available communication vehicle and GM used media to promote its H2 through TV ads and targeted woman and presented the brand image that every buyers can take the Hummer H2 off the beaten path that no other SUV brand can provide.

For any new product positioning, it is imperative to select its overall position strategy to ensure value proposition. For example, GM positioned H2 so that more buyers can afford to own the luxury SUV and it can compete successfully with brands such as the Lincoln Navigator or GM’s own Cadillac. However, GM lacks the marketing mix efforts to support the positioning strategy by effectively delivering its position by communicating its brand to create its market niche.

They did not develop any advertising messages that broadcast its superior service on why buyers should choose Hummer H2 versus other SUV brand that are offered in the market. The other downside of its positioning is by only communicating its off-road and on-road capabilities through TV ads. They failed to deliver other benefits that Hummer H2 has to offer to the users and by over emphasizing its off-road capability have decrease its value proposition because in reality only about 10 percent of the consumer are interested in buying a car for off-road driving.

Although, they have some form of communication to target women but that was only created to develop new market niche to increase its sales but it is not delivering its SUV position in the market where more and more competitors are entering the market. To conclude, establishing the position is a challenging tasks but maintaining its position is also very crucial which GM failed to do with Hummer H2 when sales was declining and the company did not adapt to change in consumer demand and instead increase its production level without any tactical plan to overcome its long-term goal in dealing with current market position.