Moving to Hybrid Cars

1.0 Introduction

Australia has the largest per capita level of green house gas emissions in the developed world, mainly due to a heavy reliance on coal to generate electricity. Every person contributes 27.2 tonnes of carbon dioxide each year, which is 27 percent higher than that of an average American citizen. (Peatling, 2004) This, included with the constantly rising fuel prices creates an ever increasing demand for more energy efficient and lower pollution level cars. Hybrid cars are a well known solution to the issue however consumer confidence in these cars is extremely low.

A hybrid car is a car that can run off two or more sources of fuel, such as petrol, electricity or gas. Hybrid cars have been around for a very long time with the first one being built over one hundred years ago by Porsche. (A Hybrid Car, 2006) The following report is a marketing plan for the introduction of the Nissan Nuvu into the Australian market. The report will give a detailed situation analysis on the current Australian car industry with specific targeting of the environmentally friendly cars market segment, stating our marketing objectives for the introduction of the Nissan Nuvu and develop a detailed marketing strategy for this product.

The Nissan Nuvu is shown in the picture below.

Picture: (Hybrid and Electric Cars Shine in Paris, 2008)

3.0 Product Evaluation

In order to maximise the marketing of the Nissan Nuvu, the product must be evaluated and analysed on a number of levels. Looking at the elements of a product, its brand name, strengths and weaknesses, aspects of competition products and a number of other factors enables us to price, place and promote the product accordingly in order to achieve optimum success.

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3.1 Elements of the Product

The Nissan Nuvu can be broken down into three levels; the core, actual and augmented products it offers.

3.1.1 Core

The core product is the benefit that consumers obtain when purchasing the product. In this case the core product would be a low-running costs and environmentally-friendly means of transport for city driving.

3.1.2 Actual

The actual product is the attributes of the product that combine to convey the core product. The Nissan Nuvu is a short, compact, three seater city car powered by an electric motor. Solar panels are situated on the roof which provides power to the motor and the car is built using an extensive amount of natural, organic and recycled materials. (Lavrinc 2008)

3.1.3 Augmented

The augmented product is the package of the actual product and the additional features and services that come with it. For the Nissan Nuvu it is the actual product listed above along with services that would be decided by the actual distributers of the product at the point of sale. Such services are only prospective but would include things like car warranty, car maintenance and servicing for the first 1000kms, home delivery and opportunity of choosing additional features on the car.

3.2 Product Classification

The Nissan Nuvu is classified as a consumer good as it is used for personal use and consumption. Under this heading the Nissan Nuvu is categorised as a Specialty product as it is an exclusive product that consumers would make a special effort to obtain, it is very unique at the current time and distribution will almost certainly be exclusive.

However in the near future (five to ten years) it is anticipated that there will be a big move to this particular style of car (electric-powered) due to rising oil prices and environmental concerns. In this case the scope of the competition will grow and the Nissan Nuvu will hopefully become a Shopping product that is widely-distributed and also very common and popular.

3.2.1 Product Lifecycle

The Nissan Nuvu is still in the product development stage of the product lifecycle as no actual sales have been made and it is still only a concept as commercial production has not yet commenced.

3.2.2 Branding

Nissan has an established and well reputed brand name. Many customers value and trust the brand and would be willing to consider the Nissan Nuvu as a new product. The Nissan brand has a number of attributes such as durable and reliable. Nissan claims on its website that it is “renowned for excellent engineering and searing handling and dynamics technology” (Heritage n.d.).

Customers relate benefits to the Nissan brand such as trusting the vehicle to reach the destination without any concerns or problems, not having to buy a new car for an extensive time, having a comfortable and safe way of transport.

Values attached to the Nissan brand include durability, comfortableness and reliability. Nissan’s brand personality would be that it is straight, trustworthy and responsible but also innovative and adaptable.

Nissan has reasonable brand equity through almost full awareness in Australia, high perceived quality and an extent of brand loyalty.

The label or name of the product Nissan Nuvu, meaning “new view” gives the product an innovative appeal and implies that it is addressing the needs of tomorrow and providing a credible solution to this.

3.2.3 Comparing to Competition

At the current time the only real competitors in the market for a low-running cost city car are hybrid models Toyota Prius and Honda Civic Hybrid which run on both a petrol motor and an electric motor (Hybrid Cars 2008). Australia is yet to release a commercially available all-electric car (Start your (electric) engines n.d.). Obviously all other cars and means of transport around a city can be considered as competition but it is rational to look closer at products that aim at a similar market segment and offer similar benefits and attributes. The most prominent competitor is the Toyota Prius which has been commercially available in Australia since 2001 (Sustainability Report 2007). In this time over 5000 units have been sold, 1974 of them in 2006 and 195 in January 2007, a 96% increase on sales in January 2006 (Sustainability Report 2007) showing an increased demand for this particular model. The Toyota Prius is starting to appeal to a growing market but there is certainly room for another product in this market.

The Nissan Nuvu has an advantage over such competitors with the extensive use of organic, natural and recyclable materials but also it is even cheaper to run and more environmentally-friendly than the hybrid cars as it has zero emissions. The Nissan Nuvu is currently very unique as it will be the only all-electric car commercially available in Australia.

It is anticipated that in the near future the prospect of owning such an eco-friendly car will become more plausible for Australian drivers who at the moment car more for performance and looks in a car and not so much in how economical and environmentally-friendly it is. It is also anticipated that as this becomes the case the number of competitor products will also increase and the product will need to be regularly reviewed and improved to keep an edge on such competitors.

3.3 Strengths and Weaknesses

3.3.1 Strengths

* Only all-electric car commercially available in Australia – unique

* Zero emissions therefore extremely environmentally-friendly

* Compact, agile, easy to drive and very easy to park

* Roomy interior – 3m long, 1.7m tall and 1.55m wide (Lavrinc 2008)

* Extremely low running costs

* Strong brand name and reputation

3.3.2 Weaknesses

* Small market segment – opposes Australian culture (generally Australian’s value performance and/or looks in a car

* Customer uncertainty – will be first all-electric car

4.0 Consumer Evaluation

4.1 Introduction

The hybrid and environmentally friendly car industry is targeting the entire population that purchase cars. However, consumer attitudes in the past towards such cars have been poor, regardless of how high fuel prices go it appears that the uncertainty levels towards these cars will remain high. Hybrid cars as a general rule across western countries account for a very small share of the car market as a result of this lack of confidence. In America, hybrid cars account for only 3 percent of the total car market, although this is increasing with a twenty five percent increase in sales in the last four months. (Zimmerman, 2008) This is somewhat strange because in a recent study hybrid cars have been shown to save the consumer anywhere between $500 to $4500 dollars over a five year period compared to a car running on gasoline, savings are much higher over normal petrol models. (Consumer reports, 2008) This group of consumers can be broken into several, more defined market segments base upon demographic, geographic, psychographic and behavioural characteristics. Each market segment may be marketed to in a slightly different way to maximize efficiency.

4.2 Market Segmentation

Market segmentation is the process of dividing a market such as the Australian car market up into segments or groups based on a number of variables. These variables are:

1. Demographic Variables – This is to divide a market up into groups based on age, sex, family size, family life cycle, income, occupation, education, religion and nationality.

2. Geographic Variables – This is to divide a market up into groups based on region, city size, density and climate.

3. Psychographic Variables – This is to divide a market up into groups based on socioeconomic status, values, attitudes, lifestyle groups and personality.

4. Behavioural Variables – This is to divide a market up into groups based on frequency of purchase, usage rate, loyalty to product or brand, attitude towards product and what their user status is.

All of the above ways can be used to segment a market however, not all possibilities are seen as effective ways to manage market segmentation. There are four key characteristics that market segments must have to be successful. The first is measurability and this refers to the extent of which the size of the market segment and the purchasing power of its consumers can be effectively measured. (Market segmentation, n.d.) The second characteristic is accessibility and this measures the extent to which the segment can be targeted effectively with advertising and the product distributed effectively. The third characteristic is substantiality and this simply measures if the segment is large enough to be profitable. The final characteristic is actionability and this measure the extent to which programs can be constructed and carried out to attract and serve the segment as a whole. (Kotler et al, 2006. 217 – 229)

4.2.1 Segmentation of Australian car market

The Australian car industry can be segmented in many ways. On a broad scale you have segments such as large family cars, four wheel drives, small cars and hybrid cars. Within the large segment of hybrid cars comes another group of market segments. These segments can be determined depending on which characteristics are use to classify them. The four types of characteristics are above.

4.2.2 Demographic segmentation

Demographic segmentation divides a market up into segments based on age, sex, family size, family life cycle, income, occupation, education, religion and nationality. Demographic segmentation is generally the most common form of segmentation. In general,

* Younger people have less disposable income and are fewer worries about safety features and energy efficiency.

* Large families require bigger cars so they can transport everyone in the same vehicle and store more luggage.

* People with higher disposable income will look at luxury features in cars such and be fewer worries about efficiency.

* Occupation can have a direct impact on the sort of car people drive. For example a consultant who drives a large amount of kilometres would want a bigger car which is better on the open road and more comfortable to drive large distances.

* Education, religion and nationality are characteristics which are, in general not related to the car industry.

4.2.3 Geographic segmentation

Cars can be segmented according to geographic segmentation; this includes variables such as region, city size, density and climate. The main type of geographic segmentation is the difference between country and city living styles. People living in the country generally have larger cars such as sedans and four wheel drives. This is because they are driving larger distances than people living closer to the cbd. In the current economic and environmental climate the general population who live in and around major cities are targeted with smaller, more fuel efficient cars. A great example of the swing to smaller, more fuel efficient cars is evident in the current US market with all major car companies’ sales decreasing with companies like General Motors, Toyota, Chrysler and Honda. On the other hand the Volkswagen mini increased in sales by 24 percent, which clearly proves a move in consumer demand. (Kiley, 2008)

4.2.4 Psychographic segmentation

Cars are in general not segmented using psychographic variables which include socioeconomic status, values, attitudes, lifestyle groups and personality. However variables such as personality may influence a buyer’s decision process when buying a car. For example a female with a feminine and out there personality may choose a convertible as there car because it suits there personality.

4.2.5 Behavioural Segmentation

The Australian car industry is not an industry in which behavioural variables would be considered a primary source of segmentation. Behavioural variables include frequency of purchase, usage rate, loyalty to product or brand, attitude towards product and what their user status is. However loyalty to a specific company can once again play a significant role in the buyer’s decision process in terms of which company he ultimately goes with.

4.2.6 Consumer segment profiles for hybrid/ electric car market

Within the hybrid and electric car market exists a few different market segments. The first market segment is very broad and includes most females between the ages of twenty five and sixty. This market segment contains a large proportion of the total market because females in this age group are the ones who would buy these cars. Young to middle age males are not included at all as a market segment because, in general these people are not at all interested in buying these cars and marketing to them is a waste of resources. However in the future if more attractive cars are made then the male segments of the traditional cars market may be attracted towards more energy efficient cars.

4.3 Analysis of customer behaviour

4.3.1 Types of buying decision behaviour

Consumer decision making can vary with the type of buyer decision. More complex decisions are more than likely going to involve more buying participants and more buyer consideration. There are four types of buyer behaviour, they are:

* Complex buyer behaviour – The buyer is highly involved in the purchasing process and there are significant differences between competing brands. Consumers can be highly involved when the product is expensive, complex or a risky purchase.

* Dissonance reducing buyer behaviour – Occurs when consumers are highly involved in the purchase because it is risky or expensive and there is very little difference between competing brands.

* Habitual buyer behaviour – When there is low consumer involvement and there is very little difference between competing brands.

* Variety seeking buyer behaviour – When there is low consumer involvement but there is a large amount of difference between brands.

The hybrid and electric car market would be classified under complex buyer behaviour. This is because there is a high amount of buyer involvement in the decision process because the product is both expensive and can be considered risky. The hybrid and electric cars market because it is relatively new; there are a lot of different products on the market because each company is trying to get a feel for what consumers want. (Kotler et al, 2006. 168)

4.3.2 The buyer decision process

The buyer decision process is an analysis of the stages buyers go through to reach a buyer decision. A diagram of the five stages is shown on the right hand side of the document, sourced from (Hurren, 2008). The need recognition stage, put simply, is the buyer recognising a problem or need. Information search is the buyer making the conscious decision to investigate and find more information on a specific product or market. After the consumer has gathered information and reached a conclusion of several final brand choices, the buyer would compare and contrast each to find the most attractive and suitable product for them. After this the purchase decision is made based on a analysis of the brand alternatives. Following the purchase, comes the evaluation of whether the buyer is satisfied or dissatisfied with their purchase decision. The consumer is satisfied when their expectations meet the performance of the product. (Kotler et al, 2006. 169 – 171)

4.3.3 Types of Purchase decision

There are two factors that can influence the purchase decision when buying a car. The first is the attitudes of significant others towards a particular consumers product choice. For example if your girlfriend disapproves of a certain brand then you would be less likely to purchase that particular brand. The second factor is influencing purchase decisions is unexpected situational influences. For instance if you base a purchase decision on expected income, expected cost and expected useful life of product and then you lose your job, this is more than likely going to influence the purchase decision.

4.3.4 Consumption information

Consumption information is hard to come by for the Australian market, due to the fact that there is still no electric car on the market. However hybrid cars which are cars using more than one source of fuel, have shown strong increases in demand since coming onto the market. This is evidenced by the Toyota Prius which is a petrol electric hybrid, this year reaching one million in sales, breaking records as the first hybrid to reach this mark.(Kageyama, 2008) There are a number of social influences that have dramatically affected consumption of these cars. The first is the public perception that they do not perform as well as conventional petrol and diesel competitors. However with the ever rising cost of crude oil, consumers are being forced to revaluate the cost of performance. In a recent study in the US, of the population sample surveyed, only 0.65 percent of people had ever owned or currently owns a hybrid vehicle. (Miller, 2005) In America, hybrid cars account for only 3 percent of the total car market, although this is increasing with a twenty five percent increase in sales in the last four months. (Zimmerman, 2008)

4.3.5 Attitudes towards hybrid and electric cars

Attitudes towards hybrid and electric cars in the past have been poor. They have been on the market since 1999, with the Honda Insight. This was closely followed by the Toyota Prius and the Honda Civic. Attitudes have changed in the past few years with Toyota making the prius more powerful and bigger. (Blake, 2006) However for a long time there has been a perception that they are over priced, ugly and are bot up to scratch with the average vehicle available on the market today. Apart from the Toyota Prius Hybrid and electrical cars are still quite new to the Australian market and their reputation needs to be fixed with well structured marketing plans.

4.3.6 Consumer Benefits of hybrid and electrical cars

Hybrid cars, although seen as expensive in comparison to other cars are relatively competitive on price because in a recent study hybrid cars have been shown to save the consumer anywhere between $500 to $4500 dollars over a five year period compared to a car running on gasoline, savings are much higher over normal petrol models. (Consumer reports, 2008) The key benefit of owning a hybrid car should still be the benefit to the environment. The car can do basically everything that a regular petrol car can do and has the above benefits. The key issue in today’s market is getting people disregard the general public perception and realise the benefits such a car can offer.

4.3.7 Customer Loyalty

Customer loyalty plays a big part in the purchasing process for consumers in today’s car market. However in the hybrid and electrical car segment, companies don’t have large enough established market shares to enable them target loyal customers in their advertising. Current advertising for this segment is minimal and is mainly used to get more market exposure. In America, hybrid cars account for only 3 percent of the total car market; this is a very small share of the market. (Zimmerman, 2008)

4.3.8 Best consumer prospects

The best prospects for hybrid and electrical cars until they become more wide spread are environmentally conscious people and females between the ages of 25 – 60. This is because these are the people you can target with marketing appealing to their feeling of social responsibility, especially in consideration of the environment.

5.0 Competitor Analysis

5.1 Direct and Indirect Competition

A direct competition is where two or more products with the same functions compete against each other. On the other hand, an indirect competition is where products which are close substitutes for one another compete. For example, butter competing with margarine. (BusinessDictionary.com n.d.)

The Nissan Nuvu is no different from any other automobiles and has a large amount of both direct and indirect competitors. Its direct competitors include hybrid and electrical cars that are produced by other companies. On the other hand, there is also a large number of indirect competitors which include cars of the same size and shape such as the Smart Fortwo and other forms of transport such as motorcycles.

One example of its direct competitor is the Toyota Prius developed and manufactured by the Toyota Motor Corporation. The Toyota Prius is a hybrid car which is also capable on running with electricity which is the same as the Nissan Nuvu. The Toyota Prius has been out in the market since 1997 and have already launched three models since its first launch (Toyota Motor Sales n.d.). This has allowed the Toyota Prius to have a stable influence on consumers who would want to purchase an environmental friendly and economical car.

5.2 Strength and Weaknesses

One of the strengths of the direct competitors is the capacity as they are mainly 3+1 seaters or more while the Nissan Nuvu would be based as a 2+1 seater instead (Autocar September 8, 2008). The influence of its direct competitors on the market is also much greater as other companies have already released popular hybrid cars long ago such as the Toyota Prius. This would make the consumers to feel safer and more confident to purchase a Toyota Prius over a Nissan Nuvu it is the first car of its concept and not many people are that of risk takers. Not only those, the direct competitors also have a larger distribution area within Australia compared to that of Nissan. They are also putting a lot of effort into the promotion of their respective hybrid models to increase sales. This would definitely give them a larger overall advantage.

5.3 Weaknesses of direct competitors

Despite the disadvantages that the Nissan Nuvu has on its direct competitors, it also has advantages over them. One main advantage is the design of the Nissan Nuvu which is futuristic especially in terms of design and price as the Nissan Nuvu has a futuristic design with an all-glass roof covered with solar panels placed in the pattern of leaves on a tree. (Autocar, Sep 9 2008). The Nissan Nuvu is also powered by a single battery pack and does not use hydrogen nor petrol while other hybrid cars still require petrol or hydrogen to allow them to function. This means that the Nissan Nuvu would not emit any CO2 thus making it very environmentally friendly (Alina S. February 2, 2008).

Not only that, families nowadays are also very small and usually only have one child and so, this would make the smaller families think that they would not need such a big car with a 3+1 seater. Therefore, the Nissan Nuvu’s 2+1 seater would be just right for them since it already has enough space for everyday shopping built at the back of the car. (Autocar September 8, 2008).

5.4 Likely major competitors in the future

The Nissan Nuvu would be having a large number of major competitors in the future which would include all motor corporations as the world is moving towards the environmentally friendly age. Due to the shift to the environmentally friendly age, all motor corporations are also investing to the research of such hybrid cars. Hence, cheaper environmentally friendly cars would definitely threaten the future of the Nissan Nuvu.

7.0 Marketing Objectives

The key marketing objective of this report is to gain the maximum amount of market exposure possible in the first twelve months following the release of the Nissan Nuvu onto the Australian market.

8.0 Marketing Strategies

8.1 Target Markets

8.2 Marketing mix

8.2.1 Product Strategies

Product strategies are an essential part of the marketing mix in determining how to market your product. Product strategies take into consideration elements such as branding, packaging and labelling.

Branding is the first key element of product strategies. A brand is a name, term sign symbol or design used to identify a certain service or group of products and differentiate them from competitors. The Nissan brand name carries traits such as quality, performance and reliability and has a long history of providing for its customers. The Nuvu is a new and attractive sounding brand name and is easy to say and remember. However this does not guarantee product success. A combination of all four elements of the marketing mix is the best way to achieve success in marketing a product. Packaging includes designing and producing the container or wrapper for a product. However in terms of the car market, packaging is not overly applicable. The only area which comes into packaging is generally the colour options of the car. The Nissan Nuvu will be released in a wide range of colours which will be modern and eye catching in design as well as more tradition colours. Labelling of a product serves a very simple purpose, which is to help identify the Nissan Nuvu from other cars and further promote the vehicle.

8.2.2 Pricing Strategies

8.2.2.1 Market-share Leadership

With the anticipation of an increasing demand for low-running cost and environmentally-friendly cars in the near future it would be in best interests to take a market-share leadership approach to pricing in an attempt to dominate the market now while the market is small in the hope of maintaining a large market share in the future.

Influencing factors such as costs of research and development cost of production, competitor’s pricing, the anticipated demand for such a product and market objectives must be considered when deciding a price for the product. As gaining as much market share as possible is a significant objective, keeping prices at a competitive price is essential in order to penetrate the market as effectively as possible. However at the current time an all-electric car will be unique so there is no actual price to compete against apart from the similar hybrid cars such as the Toyota Prius and the Honda Civic Hybrid which are priced at $36,500 and $29,990 respectively (Hybrid Cars 2008).

Due to the Nissan Nuvu being a unique product a relatively high price would be acceptable, however with the anticipation of a number of competitors entering the market in the near future the price would need to be lowered in order to be more competitive and maintain a strong market share.

8.2.3 Distribution Strategies

The Nissan Nuvu, like any other cars undergo Exclusive Distribution as it is a high-priced and upscale merchandise. Exclusive distribution is a retail selling strategy typically used by manufacturers of high-priced, generally upscale merchandise, such as cars (Answers.com n.d.).

By using this type of distribution, the Nissan Motors Corporation can ensure that:

– Only certain dealers have exclusive territorial rights to sell the product.

– They can control over the way the Nissan Nuvu would be merchandised.

– They can provide the extensive installation or repair services that are necessary at first hand.

– They would be able to use their own sales force to sell directly to the consumers.

– They can maintain the uniqueness of their product.

However, the market for hybrid cars is already very intense due to the large amount of car dealer companies within Australia and the large amount of competition with the different brands. Therefore, the Nissan Nuvu would have to be set away from this competition as one of the first zero CO2 emission cars that would only run on a single battery pack powered by either electricity or solar energy. The Nissan Nuvu should also be in a position where it would be known as an ideal economical and environmentally friendly car.

As the Nissan Nuvu would be one of the first Electric-Solar Powered cars that do not require hydrogen or petrol to run to hit the market, it would most likely be more popular with environmentally aware consumers who live within the country. This would definitely give the Nissan Nuvu an edge over its competitors. Not only that, the car would also appeal to others especially Generation Y consumers with its unique features and futuristic design. Generation Y consumers are more concerned about the environment and this car would definitely be popular with them as well. Not only that, the future type of families can also be foreseen as a family with a single child which is exactly right for the Nissan Nuvu’s 2+1 seater.

Due to the novelty of the product, we should not follow the past strategies in the distribution of cars to the dealer networks. Instead, we should develop a centralized inventory where the dealer would take orders from the customers and then have the Nissan Nuvu shipped and delivered to the dealership. This centralized distribution network would no doubt result in higher transportation costs, but it would also increase the efficiency of the distribution.

Besides that, as one of our main target segment would be the Generation Y, we should also sell the car online where a vehicle would be shipped to the respective dealer when the order is placed online. This would not only increase efficiency in sales and distribution, it would also increase the convenience of the consumers who would want to purchase the car. Customers should also be allowed to customize the car online as different consumers would have different types of budget and taste on how their car should look. As we are currently in the technology age, this way of distributing and selling the car would be effective.

By selling the car online, it would not only be effective in the present time, but it would also be effective in the future towards the newer generations as they would all be more technology and internet savvy. This would not only increase the efficiency of sales, it would also be able to penetrate the markets in the future, not only for the Nissan Nuvu, but also for all the other Nissan car models.