The market environment refers to all of the forces that affect marketing management’s ability to build and maintain successful relationships with target customers. It consists of both a macro-environment and a micro-environment. Some of the forces can be controlled by the company and some of the forces cannot. The micro-environment at Chevrolet includes such things as departments within the company, suppliers, dealerships, customers, competitors, and publics.
The macro-environment at Chevrolet includes forces that are part of the larger society and includes the concepts of demography, economy, natural forces, technology, politics, and culture. The macro-environment forces can and often do affect the micro-environment (Wikipedia, 2009). The following sections will expand on the micro-environmental factors within Chevrolet to describe the marketing environment for the Chevy Volt. Each department in the company can have an impact on marketing decisions.
Based on research about the target market and features of competitors’ cars, the marketing department plays a very important roll in recommending what features are desirable to appeal to larger segment of customers and attempt to neutralize the competition as a threat to sales. After analyzing what customers want, it’s up to the research and development department to determine what is possible based on technology with an eye to drive costs down when they can.
It is up to the leaders of the company to determine the level of effort on introducing new technology into the new cars, and the accounting department provides guidance if the manufacturing and marketing cost goals are attainable. In 1980, the market share for GM was 45 percent, but that number has dropped steadily at 0. 7 percent per year to about 22 percent in 2008 (Wall Street Journal, 2009). With the company facing bankruptcy, the leaders of the company knew they had to do something to get back some of the automobile market share, so in 2007 they put the wheels in motion to roll out the Chevy Volt that GM claims will leapfrog the
competition (Welch, 2008). The environment at GM is currently one of survival for the whole company after the bankruptcy and government bailout. According to a poll by JD Power, the percentage of consumers who considered a hybrid-electric vehicle is up from 50 percent in 2007 to 62 percent in 2008, and 39 percent of the respondents in their survey believe manufacturers should focus on developing emerging technologies not currently available in the market, such as fuel-cell and electric vehicles (JD Powers, 2008). There are numerous competitors in the hybrid segment all trying to capture their share of the market.
Some competitors to the Volt are the Toyota Prius, Ford Fusion, Honda Insight, Volkswagen Jetta, and the Nissan Leaf. The main rival for the Chevy Volt is currently the third generation Toyota Prius (GM-Volt. com, 2009). The Prius has been around for a while and has sold over 250K vehicles world-wide in 2008 (Murphy, 2009). Current estimates for the new Prius are 48 miles per gallon city and 45 miles per gallon highway (GM-Volt. com, 2009). The new Prius will sell for about $22K. The Prius currently has the best positioning in the hybrid market because they have an established reputation.
The Fusion has an EPA rating of 41 city and 36 highway miles per gallon and is classified as a mid-sized sedan and sells for approximately $27K. The Honda Insight does not have any official EPA ratings yet, but they expect it to be in the low 40 miles per gallon. The Insight is a little smaller than the Fusion and is expected to be priced around $19K. The Volkswagen Jetta is a diesel brand that is advertised to get 30 miles per gallon city and 41 miles per gallon highway at a cost of about $22K. The Chevy Volt claims 230 miles per gallon for city driving and up to 50 miles per gallon using generator assisted operation.
From a technology and energy efficiency standpoint, the Chevy Volt has some good marketing possibilities. The main detractor for the Volt is the price which is estimated to be around $40K. Another important topic in the microenvironment is publics, which is any group that has an interest in or impact on the organization’s ability to meet its goals. Examples of publics include financial data about the company, media reports that can influence customers’ opinions, and citizen actions groups in support or against the product.
Chevrolet is currently under the public microscope as they have recently accepted government bailout money which gives 60 percent ownership to the US taxpayer. Most media reports have good things to say about the Chevy Volt, but also include a small level of skepticism about Chevrolet being able to deliver the Volt on time and capture enough of the market share to succeed. The market share of Chevrolet is estimated to be 22 percent in 2009 with a continued drop to 19. 7 percent by 2014 (General Motors Corporation, 2008).
Marketing managers must also look at the macro-environment to come up with a coherent marketing strategy. Demography is important for the marketer to try and determine the population size, location, race, and occupation of the customers. Understanding the demography will help to divide the population into target markets. The Chevy Volt market segment is the mid-sized sedan, and the target market according to Chevrolet’s website is 75 percent of the daily commuters who according to the US Department of Transportation Bureau of Statistics travel less then 40 miles.
One of the main design features of the Chevy Volt is being able to drive electric only for 40 miles with an extended range up to 400 miles. According to Scarborough Research, hybrid owners are wealthy, active, educated, and overwhelmingly democratic. The research shows that 42 percent of households that own one hybrid vehicle have an annual income of $100K or more, 27 percent have post graduate degree, and are 23 percent more likely to be aged over 50. Hybrid owners prefer to be engaged in outdoor activities and are health conscious (Scarborough Research, 2007).
The economy and technology also play a major role in the marketing environment. The demand for energy efficient cars increases when the price of gas is high, and people are more likely to buy vehicles of they can secure low interest financing options. Technology is important for the marketer because there is a certain appeal for a certain segment of the population to have the newest that is available. The hybrid market is like the arms race of the past for the US. It is a race to surpass the competitors in technology and price.
One down side of technology is that it is usually more expensive. With a price near $40K, the Volt is facing an uphill marketing battle. The increased cost is mainly due to the electrical package for the car using cutting edge of technology lithium batteries (GM-Volt. com, 2009). Marketing Strategy Some of the major points to consider for the marketing strategy for the Chevy Volt can be determined by a thorough PEST (Political, Economic, Sociocultural, Technological) and SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis.
Each area needs to be analyzed and the information should be used to maximize the 4 P’s (Price, Product, Place, Promotion). The marketing strategy should include the advantages of the Chevy Volt and highlight some deficiencies of the competition. It is not the intent of this paper to provide a detailed PEST or SWOT analysis, but recommend a jumping off point for the marketing strategy based on the information presented earlier. According to the GMC Restructuring Plan, the top reasons to buy a GMC automobile in 2008 was exterior styling, fuel economy, value for the money, pricing, and dependability in that order.
Of the hybrids purchased through 2006, 27 percent were classified as “early adopters” which is defined as willing to pay a premium to help the environment or be among the first to own a hybrid (Klein, 2007). Chevrolet’s plan is to build 10K units the first year with the potential for 60K in the following years. There are currently over 49,000 people signed up on GM-Volt. com want list for a Chevy Volt which shows consumer interest is high. The marketing strategy needs to include points about having the latest and greatest in electric car technology aimed at the early adopters.
Another important part of the marketing strategy should talk about the Chevy Volt as an “American Made” leap in technology over the competition in providing energy efficiency and environmental benefits. A major feature of the Chevy Volt is that its propulsion is provided by an all electric motor and that the gasoline portion of the Volt is only a generator to charge the leading edge technology batteries. The all electric drive train needs to be highlighted as a difference with the competition as most of the competitors still have a gasoline power train with an electronic assist.
A very good marketing aid would be a side by side comparison of environmental emissions. This way, the customers would get to see the vehicles side by side and see one of the major differences. Other differences between the Volt and its competitors should be highlighted in the marketing strategy. For example, although the Fusion and the Prius are somewhat fuel efficient, they still depend on their gasoline engine and they do not have any plug in capability. The Nissan Leaf, a plug in model, only has a range of 100 miles, and the Volkswagen Jetta is just an advanced diesel motor.
The Volt marketing strategy should stress that it is a better choice for both the commuter that drives under 40 miles a day and the baby boomer that is soon to retire and take long trips. Due to the cutting edge technology for the Volt, dependability must be mentioned and a long term warranty needs to be advertised. Ease of use and the fact that no additional charging equipment will be needed should also be in the marketing message. Customers need to understand that they only need to plug the car into a normal household outlet.
A portion of the Volt marketing message should target the baby boomer generation whose demographics show that they are more likely to be active and go on trips. Bike racks, car-top carriers, air pumps, tailgate seating, and ease of using the trunk space could be important features for the retired and active person. To help mitigate some of the sticker shock for the Volt, GMC should continue to work with the US Government to try and secure a tax credit toward the Chevy Volt. If successful, the tax credit would be a good marketing tool.
In addition, GMC should actively seek partnership deals with environmental groups such as the Sierra Club or other environmental groups to offer special discounts. The marketing message should also stress the American heritage and production lines of Chevrolet. Another way to offset some of the competition would be to stress a “buy American” theme. The marketing slogan that GMC has been using for quite some time is GMC – An American Revolution. They could adapt this same slogan to their hybrid line of cars, GMC – An American Revolution in Energy Independence.
Join the Revolution! References General Motors Corporation (2008, December 31). GMC 2009-2014 Restructuring Plan. Retrieved August 23, 2009, from: http://media. gm. com/us/gm/en/ news/govt/docs/plan. pdf JD Powers (2008). 2008 Automotive Environmental Index. Retrieved August 24, 2009, from: http://www. jdpower. com/autos/articles/2008-Automotive-Environmental-Index Klein, J. (2007). Topline Strategy Group: Why People Really Buy Hybrids. Retrieved August 24, 2009, from: http://www. toplinestrategy. com/Topline_Strategy_Report_ Why_People_Really_Buy_Hybrids.
pdf Scarborough Research (2007, December 4). Hybrid Vehicle Owners are Wealthy, Active, Educated and Overwhelmingly Democratic. Retrieved August 24, 2009, from: http://www. scarborough. com/press_releases/Hybrid%20FINAL%2012. 4. 07. pdf Wall Street Journal (2009, March 30). GM February 17 Plan, Viability Determination. Retrieved August 23, 2009, from: http://online. wsj. com/public/resources/documents/GM-Viability-Assessment-20090330. pdf Wikipedia (2009, August 22). Marketing Environment. Retrieved August 22, 2009, from: http://en. wikipedia. org/wiki/Market_environment