Prius: Leading a Wave of Hybrids

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Case for Chapter 3
PRIUS: Leading a Wave of Hybrids
Americans love their cars. In a country where SUVs sell briskly and the biggest sport is stockcar racing, you wouldn’t expect a small, hybrid, sluggish vehicle to sell well. Despite such expectations, Toyota successfully introduced the Prius in 2000, and Honda introduced the Insight. The Prius, whose name means “ to go before,” literally flew out of dealer showrooms, even if consumers weren’t quite sure how to pronounce it ( it’s PREE-us, not PRY-US). Given Toyota’s success with the Prius and Honda’s with the Insight, other automotive companies have plans to introduce hybrids of some sort. Hybrid vehicles have both a gas engine and an electric motor. When starting up or at very low speeds (under 15 mph), the auto runs on the electric motor. At roughly 15 mph, the gas engine kicks in. This means that the auto gets power from only the battery at low speeds, and from bothe the gas engine and electric motor during heavy acceleration. Once up to speed, the gas engine sends power directly to the wheels and, through the generator, to the electric motor or battery. When braking, energy from the slowing wheels—energy that is wasted in a conventional car—is sent back through the electric motor to charge the battery. At a stop, the gas engine shuts off, saving fuel. When the driver presses the accelerator, the electric motor kicks in. When starting up and operating at low speed speeds, the auto does not make noise, which seems eerie to some drivers and to pedestrians who don’t hear it coming! The original Prius was a small, cramped compact with a dull design. It had a four-cylinder gas engine and a 33-kilowatt electric motor. It went from 0 to 60 in a woeful 14.5 seconds. But it got 42 miles per gallon. The 2004 Prius is a much spiffier-looking car that can hit 60 mph in 10.5 seconds and get 55 mpg. Its top speed is 105 mph and it goes from 30 to 60 in 4.5 seconds. Although that sounds like a big improvement, in actual driving it isn’t so exciting. One test driver referred to the Prius as laboring its ways to 60 in 10.5 seconds; then taking another 10.5 seconds to get to 80, and then he didn’t have enough time in the day to get to 100 mph. The car ran a quarter-mile track in 18 seconds at a 77 mph; so the test driver concluded that you could drag race any school bus, confident of victory. But you better watch out for SUVs—they can blow you off the road! A muscle car, the Prius isn’t. In a country where everyone was ecstatic when governments raisd speed limits above 55 mph, why would the Prius be so successful? For the first model, the answer lies in Toyota’s clever marketing campaign. To begin with, it wasn’t aimed at the mass market. Instead, Toyota thought that the first hybrid buyers would be “techies” and early adopters (people who are highly likely to buy something just because it’s new). The company was right. Once Toyota identified the target market, it was able to educate the right consumers 2 years before introduction. The company established a Web site to distribute information and set e-brochures to 40,000 likely buyers just before the introduction. The press was also excited about the technology. Auto magazines, and even general interest media, ran articles describing, enthusing, or belittling the hybrids. All of this coverage helped Toyota sell 1,800 cars immediately. In all, Toyota spent $15 million in 2002 touting the Prius. There were print ads in magazines such as Newsweek and Vantity Far, but the bulk of the campaign was in television advertising on channels such as Discovery, the History Channel, the learning Channel, and MSNBC. Ads running before the actual introduction used the tagline, “ A car that sometimes runs on gas power and sometimes runs on electric power, from a company that always runs on brain power.” These ads helped to position Toyota as an “environmentally concerned” company and more subtly stressed the technology aspect of the car. After all,...
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