hummerhummer_mm

HUMMER

EeshaKhwahish

SimantVasudha

About

• Hummer was a brand of trucks and SUVs, first marketed in 1992 when AM General began selling a civilian version of the Humvee.

• In 1998, General Motors (GM) purchased the brand name and marketed three vehicles: the original Hummer H1, based on the Humvee; and the H2 and H3.

• Political• Laws and regulations had affected the automobile industry

since its outburst. These laws generally revolved around the environmental norms that were to be fulfilled by any car industry. Thus the car manufacturers had to take care of the environmental issues during manufacturing of cars.

• Taxes and government foreign policies are critical for the automobile industry. The foreign policies help to us decide the probability of success in the global market.

• Introduction of new schemes in the US automobile industry wherein regulations led to produce high mileage cars along with increase in automobile sales and production.

• Economical• There was excess capacity of cars produced thus

giving rise to high amount of revenue in marketing and new product designs. Thus there was lot of revenue withheld even though demand was less than supply.

• Surplus capital and buying power in the developed economies like US.

• Economic downturn in the US market(recession)

• Sociocultural• From developed countries such as UK and USA to developing

nations such as India and China, one common thread running through the consumer market of the automatic industry is that all societies assess a vehicle user based on the vehicle he owns.

• Social status of a person is very much based on whether he drives an expensive car.

• Changes in the customer predilection from car being a status symbol to fuel efficiency and low emission cars.

• Changes in buying pattern of the consumers due to recession in mature markets.

• Environmental issues and awareness of the harmful emissions through automobiles

• Technology• Increase in use of technology to gain a clear

competitive ad vantage• Use of new and sophisticated design to

overcome the decreased margins in the industry.

• Modifications or restriction on technology causing environmental pollution.

• Legal• Restrictions and strict pollution norms set up

in European and US markets

SWOT

Strength1. Strong brand image 2. Iconic design which is

synonymous with its name3. Very strong physical and

technical specifications4. Serves a niche market5. Positive publicity due to

performance of Humvee in Gulf war.

Weakness1. High Price2. Very poor mileage3. Environmentally

unfriendly.4. The franchise segment has

to invest extra money and time.

Opportunity1. Development of hybrid

version.2. Very strong and popular

brand name which they can leverage in other sectors for diversification.

Threat1. High fuel consumption2. Global financial crisis has

made consumers more conscious of fuel costs and the hike.

Competitors

• Direct, competition DaimlerChrysler’s Jeep Wrangler, Lincoln Navigator, Land Rover’s Range Rover, and the Lexus LX 470

• Indirect competition, The yacht, vacation house, diamonds and other status symbols

Porter’s Five Forces

• Threats of new entrantsThe threat of new entrants in case of automobile industry is less as large capital cost is required to set up a manufacturing plant and distribution channel.

• Threats of substitutesThe yacht, vacation house, and other status symbols are the potential substitute for Hummer, which can thereby reduce profits for the company.

• Bargaining power of buyersLuxury cars are positioned as in exclusive product range and Hummer being a niche product the bargaining power of the buyers is low.

• Bargaining power of suppliersThe bargaining power of suppliers is high in this industry as the suppliers can decide the price tag for the raw materials.

• Competitive rivalryHummer has cut throat completion for its products, with brands with similar offering.

Consumer• Hummer customers, wanted the off-road capabilities the vehicle had to offer but were

more interested in the image it created. They were as likely to drive their Hummers to an upscale mall as up a mountain.

• Typically, Hummer buyers have not been on a tight budget. Practicality and value, after all, have never been part of Hummer's appeal.

Annual per capita income of the consumer is $125,000-$200,000

Hummer is considered as a status symbol and used by rugged individual.

For luxury cars, design and appeal are the deciding factor rather than fuel efficiency and price tags.

Hummer with its design and appeal caters the masculinity attribute of the consumer which he looks for.

The consumer varies from industrialists to businessmen.

Hummer knew that its consumers value the psychological feeling of being tough.

The brand awareness is 44% but out of which only 5% consider buying it.

Segmentation

Demographic• Men due to masculinity of the vehicle, with

age of 25 – 50 years and income of $200,000-$300,000. since it’s a niche segment product the target was mostly entrepreneurs and not the corporate conformists and top executives.

Psychographic• Sports oriented lifestyle, people who like off

road performance. The ruggedness and looks of the vehicle gave a boost to their personality.

Behavioral• Tangible benefits, ruggedness, true off road

capabilities, high ground clearance, control systems.

• Intangible benefits, status symbol and sense of pride of ownership and style.

Target Audience

• H1• Income of $200,000 dollars and age group of 40-50 years.

The lifestyle of the consumer thrill seekers also adding to their current stock of luxury cars and mostly men.

• H2• Income of $125,000 dollars and average age of 40 . They

targeted both men and women. The lifestyle here was looking for ruggedness and after H1 this version was more manageable.

Positioning

• Hummer was positioned as “like nothing else” and for “rugged individualists”

Marketing Strategy

• The Hummer marketing strategy (unique product, high price, psychological promotion) is targeted towards the luxury off road SUV Market. It can be described as being a ‘Challenger’ in that market based on dominance, with the lead being Jeeps’ Wrangler. It can also be described as following a product differentiation approach by proposing it as an effective off roader.

GM took the brand name of Hummer

• Hummer as brand has a positive perception due to its participation in US Military and also because of endorsement with Arnold Schwarzengger.

• Also, GM when tested their SUV in focus group the reaction was so-so. When same was listed under the brand name of Hummer the reaction was very positive and exciting.

Q2

GM downplayed Hummer’s military heritage