Case Study: GM: Downsizing the Hummer
Course Title: Marketing Strategy
When you think power or tough, think hummer; when you see yourself as a giant or a knight, ride a Hummer. These two sentences can be summarized the essence of what AM general and General Motors Corporation worked for.
Am general’s was created Humvee in 1979 which is an acronym for the formal designation “High Mobility Multipurpose Wheeled Vehicle (HMMWV).
General Motors Corporation and its subsidiaries engage in the development, production, and marketing of cars, trucks, and parts worldwide. It offers small, midsize, sports, and luxury cars; and pickup, van, utilities, and medium duty trucks in Canada, Europe, Latin America, and Asia Pacific. In addition, the company offers after sale services, such as maintenance, light repairs, collision repairs, and vehicle accessories. General Motors markets its products through distributors and dealers, as well as through retail dealers.
The contract between the two companies gives GM use of the Hummer brand name and responsibility for design, sourcing of components and tooling, production engineering, and marketing and distribution. AM General’s is responsible for manufacturing engineering, assembly and brand management. It also retains the right to market and distribute military vehicles such as the H1, known to the army as the "HUMVEE."
From a demographic standpoint, Hummer's target market segment cannot be very large because of the high price of the vehicle, which can be in excess of $200,000. AM General’s targeted for elite road warriors and for the average age of 50 years.
The problem of H1 is the size that is really disturbed its owners because it takes a lot of parking space.
Based on the research of GM, it made an agreement with AM General giving its right to produce H2 which is SUV for GM. It is narrower and lighter than Hummer. As a result, the brand-new H2 is smaller than past models and based on GM's full-size pickup/sport utility vehicle design. Instead of seating four occupants like the current Hummer H1 does, the H2 holds five. In addition to a more civilized ride, the H2 promises what Hummer calls “more creature comforts.” It also costs about two-thirds as much as the big H1 model.
The H2 is a conventional SUV — if any Hummer can truly be called conventional, that is. H2 is designed for a younger; more mainstream group of buyers. It is designed for everyday use, as well as for the most demanding off-road conditions. Hummer's market segment consists of males between the ages of 25 and 44 who earn over $100,000 a year. This demographic group consists of Generation X'ers and some of the Baby Boom generation.
From a psychographic standpoint, its target customers include rugged individualists, successful achievers, the realist, the discerner, the conqueror and the adventurer.
The problem existed when the company saw that H2 was heavier than other SUV as well as more fuel consumption. Later on, the company was extended the line of H2 by producing sport utility truck and pick up tuck style cargo
GM owns the “big freakin’ SUV” position in most consumers’ minds which makes their latest effort, the H3. This model from Hummer is not only significantly smaller than its predecessors; it is being marketed to attract women, but the problem is still the same: fuel consumption and pollution.
Finally, Hummers are today sold with a large number of accessories and can be customized according to the individual customers need. For example on such customizations are bullet proof hummers. Moreover, there is adventure off-road academy; when you attend this academy, you will gain more than just driving skill. You will take with you a greater understanding of what it truly means to be an off-roader. Also, Hummer is a sponsor of the 2007 NFL draft.
Threats: Hummers produce greenhouse gas (GHG) emissions from its facilities. They damage the...
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