Thanks for everyone's input. Here is what I came up with for our 2 hour class discussion.
SWOT Analysis –
Strengths – Able to produce many more H2’s than H1 resulting in higher profits
Brand Equity (where Hummer is building their entire marketing strategy)
Weaknesses – Living up to the standard of Hummer toughness
Keeping the customer’s happy with a well-priced, versatile vehicle
Brand Dilution
Opportunities – New model + great advertising = beating the competition
H3 coming out will draw buyers for smaller SUV’s
$5 Billion potential sales
Threats – Anti-SUV Websites drawing more and more buyers away
Gas Guzzler Tax kills SUV sales
Cannibalization
Alternative Options – Since Jeep is now more or less left in the dust due to their attempt to ‘one-up’ Hummer by mocking an ad produced by Hummer. Jeep is now forced to get back to the basics and analyze what made their Grand Cherokee sell in the first place, then compare it to the market today. Their ad’s showing “Trail-Rated� is boring at best. Today, many viewers and buyers want to see what the vehicle can do at it’s limits. Speed and versatility come to mind when catching one’s interest through and automobile ad. On top of that, uniqueness wins as well. A “Trail Rating� is only through Jeep so how could other SUV’s be trail rated?
Follow-up Questions
1) The market the Hummer entered was not just someone who wanted a versatile vehicle, but one who wanted luxury as well. This has become common for an SUV these days as to have amenities like luxury cars, but in SUV’s bodies. The way that Hummer segmented their buyers is by price and wants. Hummer H2’s start around $50,000 leaving them out of most buyer’s ranges, so therefore they targeted them towards the more wealthy. Next, even though most buyers of these vehicles don’t do much or any off-road driving, they still want a vehicle that is capable of it. Hummer then marketed their H2 as one that could perform on and off the road by showing one of their commercials having it speeding through a desert-y road. It shows the vehicle from a side-profile how it exerts great speed over bumpy roads while showing the suspension movement. The advertisements really caught the attention of any viewer, but mostly towards the current owners of Luxo-SUV’s. After these ads came out, you began to see H2’s multiply by the day and become the most popular SUV’s on the road, just how Grand Cherokee’s were when they came out. Although about $20,000 more in price than the Jeep, you get a much beefier vehicle with bigger tires, engine, and interior room. While this price is an increase by a lot, it gives a new sense to the word “cool� in the owner’s eyes.
2) With Hummer planning on filling out its model line to include smaller, lower-priced SUV’s, this tells us that Hummer is looking to “replace� Jeep. Jeep has been around for a long time and when one used to look for a true off-road vehicle, they’d look to jeep. However, with the introduction of the Hummer H1 in 1983? by the US Military, Hummer was the new standard in off-road ability. H1’s, although extremely pricey at about $100,000 a pop, still sold and continue to sell. They now have a waiting list of 3 years for one. With the recent introduction of the H2, a $50,000 suburbanite SUV, Hummer’s sales have sky-rocketed. They are able to mass produce these vehicles and they attract more attention with their leather trimmed, comfortable interior with stoutly good looks and a powerful, rugged image. The H2 has proven to have stole profits from Jeep by advertising how rugged this SUV is even though the average user doesn’t get more off-road than a gravel driveway. A loaded Jeep Grand Cherokee OverLander Edition will run you $42,175 (MSRP) while a loaded Hummer H2 will run you $65, 395. That’s over a $20,000 difference in pricing. Now, either people don’t mind spending the money on a Hummer or Jeep is crying over nothing. In my opinion, I think Hummer’s have become a huge overnight hit that have drowned out the all-to-well-known look of the Jeep Grand Cherokee. People need a change and rather than go to another SUV that doesn’t do well off-road, they’d rather trust a true off-road brand, Hummer.
• The H2 is a tax loophole. Under Bush's new tax plan, business owners can deduct the entire cost of their $55,000 H2. If you are in the highest tax bracket, that's a tax savings of nearly $20,000! The government rewards you more savings for buying an H2 than you'd get for buying an electric car.
- H1 -> H2 -> H3 = Brand Extension
- Cannibalization – if the H3 sales takes sales away from the H2
Brand Personality
- Confident
- Military
- Elite
- Rugged
- Status/Weekend Warrior
- Individualist
- COOL
Segmentation (Based) Variables
Consumer
- Income
- SES
- Gender
- Personality
- Benefits (Off-Road)
- Lifestyle
- Geography -> Religion -> East, West, Mid-West
- Families/ Household Size
.
