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Developing a New Plug-In Hybrid Vehicle –PHEVs (Marketing Plan) Report (Assessment)


Mission

Universal Motors specializes in producing heavy duty and rugged vehicles suited for the difficult terrain in Latin America, Africa, and Asia (internally known as the LAAA zone). There is ongoing research for viable electric vehicles for this region by many automakers. Some manufacturers have successfully developed commercial models. The models developed so far have the challenge of miles covered on a single charge.

On this count, they compete rather poorly with conventional gasoline based vehicles. The commercialized solution to this problem is the hybrid technology. Universal Motors research and development division has produced a new model that it believes will meet the demands of the consumers and further narrow the distance to full electric vehicles.

The model is available in three releases; the Camel Bantam for urban driving, the Camel Ranger for off road uses, and the Camel Jumbo for light commercial use. The goal of their design is to provide “long range benefits” to consumers (Maromonte, 1998, p.7).

Organizational Mission Statement

A mission statement provides an organization with a “coherent sense of direction” (Wall, 2004, p.4). The mission statement of Universal Motors is, “we are committed to providing solutions for all mobility needs of humanity, especially in challenging areas with tough terrain and difficult environmental conditions”.

Marketing Mission Statement

The marketing mission statement is:

“We reach every possible car owner with information relating to motoring solutions applicable to their terrain and make available the solutions”.

Purpose of the Plan

The purpose of this plan is to explore and settle on appropriate strategies for introducing the Camel Series into the LAAA zone by executing a winning marketing strategy. The Harvard Business School (2005) states, “Strategy is about doing the right things” (p. xi).

Situational Analysis

The development of a marketing strategy requires a comprehensive situational analysis Mark, (2004) states, “One of the greatest benefits of a comprehensive approach to strategy is the surfacing and exploitation of multiple sources of attractive growth”(p.11).

Situational analysis requires an indepth look at the current products on offer in the market, the market segments these products target, and the distribution network in use.

It is also crucial to evaluate the competition and financial condition of the company, and summarizing the information in a SWOT analysis table. Howard (2004), states that to become profitable, “you must first wake up to the internal rules you are currently playing by and expand you field of possibilities” (p.xvii).

Current products

The models in distribution in the LAAA zone range from personal cars to heavy utility vehicles. The personal cars cater for city driving on well-maintained roads.

They target urban dwellers that need mobility to and from work. A number of off-road vehicles are available in these markets too for the more demanding driving conditions outside of the cities. The third class of vehicles developed by Universal Motors is commercial vehicles used for transporting passengers and business supplies.

Target market

Universal Motors aims at providing ideal vehicles for city dwellers whose basic need is personal transport to and from work, and occasional recreational uses involving out of town travel. The more regular intercity travelers such as tour companies and government officials use the off-road options. Business people on the other hand find the commercial range of vehicles useful to them for cargo haulage.

Distribution Network

In every country under the LAAA zone, Universal Motors has a main distributor who is also the company’s franchise holder in the region. They provide sales and support services to the customers. Each of them runs service workshops for Universal Motors in their territories. The number of workshops depends on geography and the number of Universal Motors products in a given locale.

Competition

The most formidable competitor to Universal Motors is Mahindra. They have a strong reputation for reliability and their cars are easy to service. In addition, their cars have some of the highest resale values in the market. Other competitors working to gain market share include TATA Motors, and a number of Chinese manufacturers that have adopted a very aggressive marketing stance in the LAAA zone.

They Include BYD Auto. Montgomery and Porter (1991) declare, “Increasingly, both business units and corporations must compete globally” (p. xv). Dalic (2007) refers to this phenomenon as “the convergence of cultures” (p. 4). Hyundai and Ssang Yong present a latent threat. However, they have not entered these markets sufficiently to warrant consideration as an immediate threat.

Financial Conditions

Universal Motors suffered from the effects of the credit crunch just like many vehicle manufacturers. However, because of long-term relationships with financiers and robust growth potential in the company’s primary markets, getting financing does not present a serious challenge.

Universal Motors currently deemphasizes margin because it is implementing a long-term strategy aimed at establishing a brand reputation based on quality and affordability. This necessitates margin forfeiting in the short-term for the benefit of a long-term relationship with clients in these markets.

External Forces

Many of the governments in the LAAA zone are ineffective because of dictatorial rule and abuse of democratic processes. In addition, the region is home to most of the third world countries with a high instance of poverty. Selling cars is challenging yet the demand for corporate social participation is high.

While powerful, it is important to appreciate that, “external forces are outside the control of anyone in the organization” (Robinson & Robinson, 2005, p.14).

Summary of Situational Analysis (SWOT)

The following SWOT table shows “critical success and its limiting factors” (2007, Morden, p.6)

Strengths
1 Strong presence in LAAA
2 Experience in several sectors of the motor vehicle market in LAAA
3 Well established distribution network of Universal Motors franchises
4. Good relations with financiers who can avail credit for expansion
5. Consistent pricing strategy providing value for the customer
Weaknesses
1 Lack of presence in Hybrid market
2. Undeveloped capacity to service PHEVs
Opportunity
1 Improving buying power of young executives and middle level managers because of economic booms is target markets
2 Increasing demand for personal transport for city dwellers in LAAA
3 Demand for robust easy maintenance utility cargo trucks and transport units
Threats
1 Aggressive market entry tactics by TATA, Chinese car manufacturers
2 Latent threat by Asian automakers Hyundai and SSang Yong
3 Unbalanced playing field in India and China- which are lucrative emerging markets
4 Economic hardships eroding buying power and making borrowing to finance car loans stringent
5 Large demands on company for Corporate social responsibility related needs

Segmentation, Targeting and Positioning

Within the LAAA zone, Brazil is the most significant market in the South American region. It has pushed demand for new cars to an all time high as the people who can afford them have increased. In Asia, China and India represent the most significant markets. In Africa, South Africa and most of the North African states represent the most significant markets.

Within these continents, Universal Motors targets urban dwellers, travel companies, and commercial transport users. Urban dwellers that desire personal transport to work include mid level managers and young executives. They crave the freedom that a personal car provides. Transport providers who use our vehicles mainly appreciate them for their minimum service requirements.

The market position that Universal Motors currently occupy is in the medium cost and satisfactory quality segment. This is because Universal Motors provides all its vehicles at a lower cost than the industry average. Most low cost brands cannot compete effectively with Universal Motors products because it provides better value for money to car owners.

Marketing Strategy

Henderson (1991) advocates for the formal planning of all strategy including marketing strategy. A marketing strategist asks, “What are we trying to achieve?” (Robert, 2005, p.xi).

Objectives

There are three classes of objectives identified for the Camel Series of Plug in Hybrid electric vehicle (PHEV’s) developed by Universal Motors

Marketing Objectives

Overall Objective: The key marketing objective is to provide the LAAA market with a good quality, reliable affordable car to meet their needs.

Financial Objectives

The reason why it is important to set financial objectives is that for poor businesses, “cost discipline is an incidental reaction to events” (Institute of Management and Administration, 2006, p. 3). A winning business is deliberate in its actions.

Overall objective: To meet the cost of producing affordable PHEV by providing the vehicles en-mass

Societal Objectives

Overall objective: To ensure sustainable operations with due regard for the environment and for the society

Programs

Target Market

The Camel Series has three sets of primary markets. They include the urban middle class, tour companies, government departments, and commercial transport needs providers.

Product

The Camel Series of PHEV’s utilize the state of the art technology in the development of Hybrid cars. The cars in the series have a smaller gasoline engine and a more powerful electric motor compared to existing hybrid models. This difference provides for a more robust performance when using electricity.

The Camel Bantam resembles the existing hybrid vehicles in the market, with the difference being a smaller gasoline engine and more powerful motor driving the power train. This car has the capacity to travel for one hundred kilometers on a single charge making it ideal for the city dweller that on average travels for a maximum of fifty kilometers per day.

The Camel Ranger is a sports utility off-road vehicle. In addition to a smaller motor and a prioritized electric motor, its battery capacity delivers one-week autonomy, equivalent to two hundred and fifty kilometers per charge.

The Camel Jumbo is a two-ton truck with adaptable cargo space. It provides a means of transport for commercial users with a need to move medium sized cargo. Its battery capacity promises one hundred kilometers on a single charge. This is ideal for business based in cities with clients within the cities. It compares well with the distance most cargo trucks of their class travel on any given day.

Promotion

The promotion of the Camel Series includes strategies taking advantage of environmental consciousness events that have become a common feature in many LAAA zone countries. TV advertisements have worked well in the LAAA region since many of the people who fall within the target market watch TV. There are plans to conduct test drives for potential clients including regulators and government officials.

Existing Hybrid cars in the LAAA region also serve as status symbols for the owner. It is ‘cool’ to have a hybrid. This means that the new PHEVs will attract attention from many potential clients who will acquire them, not just as vehicles but also as status symbols. In addition, the company will utilize social networking such as facebook to attract and retain interest in the new models targeting the younger generation.

Distribution

The distribution network consists of franchise holders who have territorial rights in their geographical regions. Typically, each franchise holder is responsible for a whole city. Universal Motors believes that, “Location is also important in marketing” (Levinson & Levinson, 2007, p.12).

They operate showrooms and conduct test drives. The distribution chain starts from the manufacturing and assembly plants, then to shipping companies, and finally to Universal Motors warehouses then to franchise holders.

Pricing

Pricing of the PHEV is tricky. Indeed, Retske (2002) observes that, “Pricing products and services is one of the most important things” (p.172). Two major issues will influence the prices offered for the vehicles. The long-term profitability of the Camel Series is the most volatile issue currently.

The company has operated on a low margin strategy for the last few years as a strategy for entry into new markets and for the development of brand reputation.

Suzue (2002) states, “companies that achieve superior business results are those that continually implement various programs to lower cost, improve quality and/or shorten lead time-all in an ongoing effort to improve competitiveness” (p.1) From there, the company hopes to improve the margin by efficient operations, reducing risks and in the process improving the margins.

Additional Considerations

Other important considerations to the process include internal financing mechanisms for the marketing process and the feedback loop required to receive feedback from agents in the field. The feedback forms the basis for the evaluation of success of the marketing effort.

Financial Plan

The Marketing Budget

The need for good budgeting practices while undertaking marketing needs no emphasis. “Many projects exceed their budget yet still fail to deliver the promised outcome” (Stratton, 2006, p.9). Mercer (2001) adds his voice of caution when he states, “marketing has to work with those resources that area available” (p.19).

Projected costs, revenues and sales forecasts 2011

Projected Costs
Trade fairs participation
Seminar participation
Media budget (TV slots)
Adverts on industry magazines
Revenues
Internal budget 20,000
Sales forecast
10000 units Camel Bantam @10,000 100,000,000
5000 Units Camel [email protected] 15,000 75,000,000
3000 units camel jumbo @ 20000 60,000,000
TOTAL (sales forecast) 235,000,000
Anticipated profits
Cost of production for Camel Bantam
10,000 [email protected] 9,000
90,000,000
Cost of production for Camel Ranger
5000 Units @ 7,500
37,500,000
Cost of production for camel Jumbo 3000units @12,000 36,000,000
TOTAL (production cost) 163,500,000
PROFITS 71,500,000

Implementation Process

Measures for Measuring Performance

The process of marketing, “requires an evaluation stage, in which we analyze what went right and what went wrong” (Venkataraman & Pinto, 2008, p.14). The performance measurement of the marketing effort will utilize the following tools:

  1. Calls and Email Inquiries
  2. Test Drives Conducted
  3. Actual Sales in the Succeeding Periods

Implementation procedure

The implementation procedure for this marketing plan will include a four-step program. The four steps will be market penetration, market development, service program development, and diversification. Daughtry and Casselman (2009) warn that a business strategy is “virtually useless without consistent execution” (p.5).

Market Penetration

The plan is to reach this market quicker than our competitors do and to convince the market that it has a value product that will meet its needs. There is a moment when, “marketing skills and marketing mentality becomes essential to continued success” (Shanklin & Ryans, 1987, p.66).

Market Development

This will involve consolidating gains made in the marketing effort. The activities requiring emphasis at this stage will include brand-building activities to ensure that the existing clientele remain favorably disposed to the Universal Motors brand. That is why Butje (2005) says, “Nothing is more killing for a product than a flashy introduction and a failure to deliver” (p.16).

Service Program Development

Universal Motors plans to train their mechanics on some of the troubleshooting techniques that will assist in diagnosis and general service of vehicles. It will include strengthening the existing franchise network by building their capacity to service the new Camel Series PHEVs.

Diversification

With the above sections well implemented, time to release a new series of Hybrids will come. These models will provide further relief from gasoline as a step closer to full electric vehicles. This stage is dependent on improvements in battery technology and increase in the efficiency of electric motors used in cars. In a sense, diversification is the process of reconciling, “intended, realized and emergent strategies” (Robert, 2005, p.14).

Reference List

Butje, M., 2005. Product Marketing for Technology Companies. Oxford: Elsevier Butterworth-Heinemann.

Dalic, T., 2007. Globalization of Marketing Strategies in Light of Segmentation and Cultural Diversity. Norderstedt: GRIN Verlag.

Daughtry, T.C. & Casselman, G.L., 2009. Executing Strategy: From Boardroom to Frontline. Herndon, VI: Capital Books.

Harvard Business School, 2005. Strategy: Create and Implement the Best Strategy for Your Business. Boston, MA: Harvard Business Press.

Henderson, B.D., 1991. Developing Strategy. In C.A. Montgomery & M.E. Porter, eds. Strategy: Seeking and Securing Competitive Advantage. Boston, MA: Harvard Business School Publishing Division.

Howard, C., 2004. Turning Passions into Profits: Three Steps to Wealth and Power. New Jersey: John Wiley and Sons.

Institute of Management and Administration, 2006.Cost Reduction and Control Best Practices: The Best Ways for a Financial Manager to save Money. New Jersey: John Wiley and Sons.

Levinson, J.C. & Levinson, J., 2007. Guerella Marketing: Easy and Inexpensive Strategies for Making Big Profits. New York, NY: Houghton Mifflin Company.

Mark, D., 2004. Strategy: A Step by Step Approach to the Developement and Presentation of World Class Business Strategy. New York, NY: Palgrave Macmillan.

Maromonte, K.R., 1998. Corporate Strategiv Business Sourcing. Westport, CT. Greenwood publishing Group, Inc.

Mercer, D., Marketing. Oxford: Blackwell Publishers Inc.

Montgomery, C.A. & Porter, M.E., eds., 1991. Strategy: Seeking and Securing Competitive Advantage. Boston, MA: Harvard Business School Publishing Division.

Morden, T., 2007. Principles of Strategic Management. Hampshire: Ashgate Publishing Company.

Retske, G., 2002. A Guide to Competitive International Telecommunications. New York, NY: CMP Books.

Robert, M.G., 2005. Contemporary Strategy Analysis. Malden, MA: Wiley-Blackwell.

Robinson, D.G. & Robinson, J.C., 2005. Strategic Business Partner: A Critical Role for Human Resource Professionals. San Fransisco, CA: Berret-Koehler publishers Inc.

Shanklin, W.L. & Ryans, J.K., 1987. Essentials of Marketing High Technology. USA: DC Heath and Company.

Stratton, R.W., 2006. The Earned Value Management Maturity Model. Vienna: Management Concepts.

Suzue, T., 2002. Cost Half: The Method for Radical Cost Reduction. New York, NY: Productivity Press.

Venkataraman, R.R. & Pinto, J.K., 2008. Cost and Value Management in Projects. New Jersey: John Wiley and Sons

Wall, S.J., 2004. On the Fly: Executing Strategy in a Changing World. Hoboken, NJ: John Wiley and Sons.

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IvyPanda. (2019, May 24). Developing a New Plug-In Hybrid Vehicle –PHEVs (Marketing Plan). Retrieved from https://ivypanda.com/essays/developing-a-new-plug-in-hybrid-vehicle-phevs-marketing-plan-assessment/

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"Developing a New Plug-In Hybrid Vehicle –PHEVs (Marketing Plan)." IvyPanda, 24 May 2019, ivypanda.com/essays/developing-a-new-plug-in-hybrid-vehicle-phevs-marketing-plan-assessment/.

1. IvyPanda. "Developing a New Plug-In Hybrid Vehicle –PHEVs (Marketing Plan)." May 24, 2019. https://ivypanda.com/essays/developing-a-new-plug-in-hybrid-vehicle-phevs-marketing-plan-assessment/.


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IvyPanda. "Developing a New Plug-In Hybrid Vehicle –PHEVs (Marketing Plan)." May 24, 2019. https://ivypanda.com/essays/developing-a-new-plug-in-hybrid-vehicle-phevs-marketing-plan-assessment/.

References

IvyPanda. 2019. "Developing a New Plug-In Hybrid Vehicle –PHEVs (Marketing Plan)." May 24, 2019. https://ivypanda.com/essays/developing-a-new-plug-in-hybrid-vehicle-phevs-marketing-plan-assessment/.

References

IvyPanda. (2019) 'Developing a New Plug-In Hybrid Vehicle –PHEVs (Marketing Plan)'. 24 May.

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