Marketing Management Report of a Hybrid Car
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HYBRID CAR MARKETING MANEGEMENT REPORT
Executive summary
The world is at the verge of transition to the use of hybrid power vehicles, these vehicles have been manufactured to use high proficient electric motors to enhance their fuel consumption efficiency, which are powered by internal combustion engines. This game-changing new technological progress in the motor vehicle industry is poised to increase energy effectiveness considerably and make a wide range of fuels available for powering motor vehicles, and significantly shrink demand for oil from the transportation quarter (Kishi & Satoh, 2005).
Enhancement in vehicle fuel consumption efficiency; Owing to the hybrid-powered trains, this will equalize in the long-term persistent growth in the world hoard of vehicles, regardless of the swelling motor vehicle possession in the up-and-coming world. From research, indications are that: estimates of superior fuel efficiency and swift espousal of hybrid vehicles leaves us to conclude that overall oil demand from cars and other light-duty vehicles will first rise gradually to 21.5 million barrels per day as from 2010, and the plummet to 16.1 million by 2030. If plug-in hybrid cars, which can be re-energized by plugging into a common electrical outlet, are rapidly commercialized and adopted, then the gain in fuel competence would be even larger (Demirdoven & Deutch, 2004).
Hybrid technology is already available. Toyota motors are leading the way, but with a few years to come in the near future, most automakers will offer hybridization as an option. There will be a variety of vehicles designed to make the most of hybrids’ strengths, with makers of cars likely to adjust much of the present capacity to make hybrid cars with restricted supplementary expense (Demirdoven & Deutch, 2004).
Massive consumer adaption of hybrid cars will take place due to the superiority of these cars fairly than a plain effort to lessen oil consumption. In addition to fuel economy by an average of 60% over equivalent usual cars, hybrid cars present low emissions, faster acceleration and are flexible in the adoption of a host of luxury and safety systems particularly electronic ones. Escalating fuel prices, tax reprieves as well as fear of oil shortage will speed acceptance rates of hybrid cars, but this will not be the only way that will drive victory in this sector.
We anticipate the number of hybrid vehicles to grow swiftly over the next few years, since hybrid cars proffer a more striking advantage than other alternatives. As compared to other normal cars, hybrid cars advance both fuel effectiveness, and recital hence will not soon face challenges from clean air policy in any region in the world (Kishi & Satoh, 2005).
The fuel-efficiency gains from plug-ins would be massive for those people who classically drive only short distances each day- and could have dramatic implications for overall oil demand. Some 40% of people travel daily on foot for over 20 miles a day; if these people could buy plug-in hybrid cars which they can go 20-30 miles before re-energizing, they will never have to use oil for day to day driving but still have an internal combustion engine for long trips.
Gasoline plus electric hybrids have just two weaknesses: initial cost and load capacity. The amount of load that can be carried is a concern for pick-ups and heavy trucks; over time but a diesel hybrid can be made for this division. Over time, we expect the cost of this new technology to fall like in many other sectors as economies of scale are put in place.
Shift to transportation powered by electricity will be the next phase in the broad transition away from the current mechanical systems that are not efficient. The major limitation on electric-powered transportation up to this time is the weight and size of batteries required to store electrical power for the vehicles plus the semi-conductor technology requisite to manage the flow of voltage (Struben & Sterman, 2006). With new technology in this sector, the outlook and flexibility of hybrid vehicles will be enhanced.
The venture implications of the swop to hybrid vehicles are clear-cut. The industry that will be affected most will be that of automakers and their customary suppliers, semiconductor and electronics companies, oil and gas producers not forgetting electric utilities (Struben & Sterman, 2006).
Plug-in hybrid electric vehicles are probable to enter as an extension of the hybrid existing today. Like in the later plug-ins are powered by both batteries and liquid gasoline. Moreover, other than being charged by the gasoline engines and regenerative braking, plug-in hybrids may be re-energized by plugging into typical electric outlets (Struben & Sterman, 2006).
Hybrid car market dynamics
The diverse extent of diffusion of the hybrid technology makes it had to arrive at one common global picture on the hybrid cars market. If this is anything to go by then we have to take a close look on the documented data regarding the market of the cars. Sales have been there in Japan and the US. In the US, sales have gone up consistently since the 1990s (Teske, 2006).
Sales of HEV vehicles in the USA
Source: Teske (2006)
From existing records, a breakdown in 2005, new hybrid car registration was on the rise in some states especially in California, which outpaced all of them with registrations of up to half a million, followed by Florida and the Texas at number three with ten thousand. For the US market, Los Angles remains at the top of metropolis with the highest number of hybrid vehicles with around 22,922 new hybrid models being registered.
For the Japanese market, there are no official figures regarding hybrid car sales. The following data published by JAMA, is the only existing for the sale of hybrid cars in this market
Hybrid car in use in Japan
Source: Jama
It is hard to look into the future and clearly foresee market share of the hybrid car market in the developed countries since these technologies is still in its knee and it has to compete with well-established and dominant designs, which have a strong backing from the lobbies. Regarding the US market, there are quite a number of forecasts for the market split that have been documented by professional experts as well as institutions of high learning. The market has show very varying treads: from around 11% to 30% in the year 2015. These variations are expected to change significantly over time due to adjustments and change of assumptions within various variables (Teske 2006).
From the research by Green, Duleep & McManus (2004) it clearly shows from there survey in the US what the perceptions about hybrid versus gasoline powered engines that are used in the light duty vehicles market and they give a detailed synthesis of which is the only market literature available. They elaborated cases for 2008, 2012 and into the future showing that the market share the hybrid cars will limited and below expectations.
Variables influencing the HEV market
From the Teske’s research on the hybrid car in the United States (2006) shows that a number of variables overall drives the future integration of the hybrid car technology. The variables can be broken down into three sub-groups.
- Market demand, which includes the discernment that hybrid cars technology among customers, maintenance, constrains cost of ownership, and sociological reasons to choose hybrid cars.
- Supply side of the market, which encompasses the various hybrid car models available, characteristics of powering, production cost and fuel consumption efficiency and exhausts emissions.
- Finally, macro economic reasons, which have an impact on the market at large. This may include availability, fuel prices, and relevancy of other technologies like cleaner diesel plus natural gas cars, taxations and regulation (Kishi & Satoh, 2005).
Of these factors, the following are the most relevant:
Increasing environmental concerns: Environmental worries have become the major driving force in the choice of consumers when it comes making a decision to buy. The wider public domain discussion on global warming due to carbon monoxide emission, by existing cars is also affecting the buying decision by consumers. In the United States this leveraged by the energy dependence argument, which augurs well with the general public (De Banville & Chanaron, 2005). A new course towards the environment should be espoused to shun remorse, while the feature of modernization gains importance over the conventional elucidation of merely low fuel burning up notion (Kishi & Satoh, 2005).
Escalating fuel prices: This major driver in the cost of possession determination, fuel costs is painstaking central in the future of the market of these cars. However a high sale of hybrid cars witnessed during the times of high oil prices in 2006 vindicate a psychological orientation as far as this variable is concerned. Nonetheless, the high fuel prices did not make the buying of the hybrid cars a worthwhile financial expense (Teske, 2006).
Emissions and fuel efficiency: carbon monoxide emissions are unswervingly related to fuel amount burned in the process of combustion. But this being the case, modern combustion technologies like the precision gasoline injection engine allow for minimal fuel burn and low dangerous emissions like: HC, NO and CO.. Hybrid technology is aimed at reducing harmful emissions in various ways i.e. reducing a vehicles’ fuel consumption via regenerative braking in a stop-and- go in case of a traffic jam or via running the engine at optimal efficiency conditions (De Banville & Chanaron 2005).
Improvement of energy storage: electric energy in hybrid cars needs to be stored and released quickly because of the nature of functions performed, in the present day, the hybrid cars use NiNH battery technology, which is very heavy, but research is focusing on Li-Io technology that is light and provides more powered (De Banville & Chanaron 2005). This technology is yet to be transferred to the motor vehicle industry. Capacitors as seen in the BMW X3 efficient dynamics, have proven to cope with this need but have limited capacity.
Taxes and regulatory regime: in most countries in the world, regulation favors hybrid cars above conventional ones, this is mostly the case in the US where the Zero-Emission-Vehicle (ZEV) program is directed towards shrinking emissions related to air quality. Besides that, several other states are offering tax credits in support of hybrid car sales, which became effective upon purchase of these cars. Also new policy framework is in the pipeline in support of future emission benchmarks to enhance up take of hybrid cars. In Europe however, legislation is more diverse unlike the US, which clearly favors Hybrid cars (Hekkert &Van Den Hoed 2004). Presently 11 EU members states have elements in their laws about fuel taxations system that totally or partly is based on the car’s CO emission and fuel consumption hence this tax regime does not send a clear signal to the market.
Hybrid car market segmentation
There are ways in which the hybrid car market can be segmented depending on the strategy that is best for sale of the new vehicles. In this case, the best option will be a multi-pronged approach, which seeks to answer questions such as who, how, where and how? For the case of hybrid car three market segmentations will work best (Hekkert &Van Den Hoed 2004):
- Geographical segmentation
- Psycho-demographic segmentation
- Behavioral segmentation
Geographical segmentation
In this marketing strategy, the market will be segmented according to where customers are situated. This will involve dividing the hybrid car market into geographical units e.g. countries, counties, continents and neighborhoods. Under this category, the Hybrid car market can be cut down into the following units: North American market, south East Asian market, African market, European market and South American market. With sales date in these regions, the marketing departments will get a quick glance of how customers are taking up the new car within these delimited areas (Hekkert &Van Den Hoed 2004).
Geographical segments will be a useful strategy in the assimilation of the hybrid car because of the following:
- Will be easy to make advertisement in different languages according to the geographical units
- It will avail a quick overview similarities and differences between consumers as per geographical segments
- Easy to consider climatic differences in each geographical unit and make cars that suits each region
as much this is a good marketing approach, it fails to consider other paramount variables like age, personality and consumer lifestyles hence this might hinder the potential of success for the hybrid car.
Psycho-demographic segmentation:
These marketing segmentation strategies will seek to answer the question “why?” Regarding consumer is purchasing behavior. Here the market will be alienated into groupings based on lifestyle, personality and values variables.
Segmentation of consumers based on lifestyle is anchored on the notion that, an individual’ personality has a more direct impact on the services and products they will purchase. For instance, environmental enthusiasts will be easy to convince to buy these cars and at the same time, they will encourage their friends to do so (Hekkert &Van Den Hoed 2004). Since personality characters have correlation with product categories customers classify with as well as swaying appeals they responds to, the markets for hybrid cars marketers can employ this in segmenting the market.
This segmentation is very important because of the following reasons:
- It will help in developing consumer profiles that will be useful in guiding promotional efforts hence strengthen the hybrid car brad.
- This usually enables the marketer to comprehend the reasons at the back of consumers’ buying behavior
- It will offer the marketing department an effective way of matching a mixture of promotional messaging tools to march the psycho-demographic traits.
- It will avail figures pertaining to the mental make-up of consumers.
Although this is a good segmentation approach, it does not give marketers a thorough indulgent of how frequently and how clients use services and products. Sometimes product use is situational and has little to do with psycho-demographic information, this segmentation approach does not entirely capture the purchase of merchandise and services in a daily basis (Hekkert &Van Den Hoed 2004).
Behavioral segmentation
This marketing approach seeks to answer the question “how?” This segmentation strategy has become so important in the design of products. Additionally it became a powerful tool in venturing into new markets and expanding existing ones (Klein 2007).
Behavioral segmentation approach divides the market into customer groupings based on their: responses, uses, attitudes and knowledge towards products. In this strategy, the hybrid car marketing can be segmented into the following.
- Benefits sought; the hybrid car market here should be segmented according to the benefits consumers will get from the adoption of the hybrid cars, which provide a unique opportunity the hybrid cars’ key attributes and point out its superiority over its competitors.
- Occasions; the hybrid car marketing here will be segmented as per the occasions when it is appropriate to use which will offer an insight to expand the market for the hybrid car as the best to use for short distances where it can be used minus requiring recharging of it batteries.
- Usage rate: this segmentation will focus on consumers as being heavy, light or medium users. For the hybrid cars, the focus of marketing for now should be light, medium users since the heavy users represent a minute percentage of buying, and again the available technology is yet to be used in heavy vehicles.
- Attitude towards the hybrid car: In this segmentation, the hybrid car consumers can be grouped in accordance to their attitudes to the product. For example, there are those customers who are very enthusiastic and positive about the hybrid cars and there are those who of cause are hostile or negative about the new technology (Klein 2007).
Consumer behavior for the hybrid car segmentations
There is a close relationship between how consumers behave and the how marketers do the market segmentation to reflect the interaction that exists between a marketing program and the psychology of the consumer. For successful marketing, marketer ought to do an identification of a large population called a market segment, and then devolve into understanding consumer behavior in each segment in order to come up with concrete marketing campaign (Klein 2007). For the hybrid car market segmentation strategy, the following are some of the consumer behaviors exhibited for the identified segments.
- Attitude-to-behavior: the marketer of the hybrid car should aim at leading the customer to carry out a specific behavior, “to make a purchase. However, the products are produced before the behavior; hence, the market is tasked to predict the behavior of the consumer. These behavior can best suited in the psycho-demographic and behavioral segmentations
- The dominance consumer behavior: here the consumer usually seeks to best model on each brand of product they are interested in purchasing. There a marketer should do his best in bring out the best attributes of the hybrid car in the adverts so that they can give it the car a competitive edge when consumers are making a decision to make a purchase. The will do well in all the three market segmentations identified in the hybrid car sector such as psycho-demographic, geographical and behavioral segmentations.
- Self –concept: normally a consumer has three prejudiced self-images: ideal self-image, real self-image and looking-glass self-image. A consumer uses any of the three mentioned self-concepts when looking for appropriate brands to purchase. This consumer behavior will find useful application in the development of a marketing strategy in the behavioral segmentations.
Marketing mix that will work best in the hybrid car market segments
In the hybrid car market segments, variables chosen for segmenting the market must have a relationship with some particular responses. One such segment should be based on age (youth, old) because it is common knowledge, the two groups will have a different response to a particular market mix. The succession should be as follows: do segmentation to the market, then select desired target markets and then develop a marketing mix for that targeted market for example hybrid sports cars for youth vs. old. Then the expected response should be buy vs. not buy this will be the dependent variable its nature is dependent on the independent variable such as age.
Recommendations for improvement to the organization’s marketing efforts
To make marketing of hybrid cars more successful, top carmakers should promote hybrid cars as the best solutions to increasing vehicle efficiency. Press publications and literature from automakers should be aimed at making the general public look at hybrid carmakers with optimism. Whenever opponents to hybrid cars make scathing attacks to the technology using strong arguments against the technology and its technical complexity, the promoters should come out with guns blazing with counter arguments to make sure the public does not sympathize with them and become lukewarm to the hybrid cars (Sanchez & Poxon 2006).
Marketing should also ensure that political pressure is involved in the campaign strategy by urging governments to come up with laws that politically and financially support a worldwide drive for the adoption of hybrid cars. The marketing teams for hybrid cars should strive to ensure that customers buying decisions should not only be inclined at financial factors only because these factors are self-motivated in nature because there is intense public debate on changes in the climate and other related factors such as taxation (Sanchez & Poxon 2006). Anticipating these changes will be central to successful marketing these cars in the future.
A more positive driving force should be in place and aimed at overcoming difficulties so for pinpointed. This can be achieved through founding applied research and developing units for the hybrid cars in collaboration with component suppliers as well as involving public labs in advancing technologies used in hybrid cars such as batteries and fuel cells for a complete electric drive.