Fueling The Hybrid Craze

The overall category of gas-electric vehicles in the United States is hotter than ever. Although hybrids accounted for only about 3 percent of total U.S. car sales in 2007, their share is growing rapidly. For the first quarter of 2008, hybrid sales were up 25 percent over the previous year. In April of that year, sales jumped a whopping 58 percent. The Prius alone commands more than 50 percent of the market and is largely responsible for category growth.

While various hybrid models have hit the market in recent years, it appears that consumers like their green cars very green. Sales of the Prius and Civic have grown significantly each year since their introductions. But less efficient (and more expensive) hybrid models such as the Honda Accord (now discontinued), the Ford Escape, and the Mercury Mariner have not fared nearly as well. Some analysts believe it is because consumers are doing the math and realizing that even with better fuel efficiency, they may not save money with a hybrid. In fact, a widely publicized 2006 report by Consumer Reports revealed that of six hybrid models studied, the Prius and the Civic were the only two to recover the price premium and save consumers money after five years and 120,700 kilometers. But as the price of gas rises, the break-even period for the price of a hybrid gets shorter and shorter. That may just mean greater demand for all hybrid models as consumers perceive that even the less efficient hybrids make financial sense.

Almost every automotive nameplate now wants a piece of the growing pie. In 2008, there were 15 hybrid models available in the United States from 9 different brand nameplates. General Motors offers both the only full-sized SUV hybrid in the Tahoe and the lowest priced hybrid option at $2,000 for the Saturn Vue and Aura. GM plans to extend the Saturn hybrid line to almost every vehicle in the lineup while continuing to introduce hybrids in other divisions. Ford plans to produce 250,000 hybrids a year by 2012. And while Subaru, Hyundai, and Honda are all promoting upcoming hybrid models, Audi, BMW, and numerous others are busy developing hybrid vehicles of their own.

Even with all the activity from these automotive brands, Toyota is currently the clear leader in hybrid sales and likely will be for some time to come. It makes 6 of the current 15 U.S. hybrid models (including 3 Lexus models). And with market conditions changing, Toyota is also showing its ability to adapt. In addition to the increased level of competition, the Prius faces more internal competition from new Toyota models like the Camry. Toyota faces a greater challenge in ramping up production to meet demand than from external competition.

All indications show that Toyota plans to maintain its hybrid momentum, doubling its line to 12 models and increasing its worldwide hybrid sales to 1 million vehicles per year by the early 2010s. At that time, it plans to unleash an entirely new lineup of hybrids based on next-generation lithium-ion batteries, which pack more power than the current nickel-metal-hydride batteries. If the past is any indication, Toyota's future looks very green.

Questions for Discussion

1. What microenvironmental factors affected both the first generation and second generation models of the Toyota Prius? How well has Toyota dealt with these factors?

2. Outline the major macroenvironmental factors—demographic, economic, natural, technological, political and cultural—that have affected Prius sales. How well has Toyota dealt with each of these factors?

3. Evaluate Toyota's marketing strategy so far. What has Toyota done well? How might it improve its strategy?

4. GM's marketing director for new ventures. Ken Stewart, says "If you want to get a lot of hybrids on the road, you put them in vehicles that people are buying now." This seems to summarize the U.S. auto makers' approach to hybrids. Would you agree with Mr. Stewart? Why or why not?

Sources: Martin Zimmerman, "Hybrid Car Sales Are Zoomin," Los Angeles Times, May 23, 2008, p. A1; David Welch, "Prius: Over 1 Million Sold," BusinessWeek, May 15, 2008, accessed at www.businessweek.com; Peter Valdes-Dapena, "Prius Still King as Hybrid Auto Sales Rise," CNNMoney.com, August 2, 2007; Peter Valdes-Dapena, "Mad Market for Used Fuel-Sippers," CNNMoney.com, May 18, 2006; David Kiley and David Welch, "Invasion of the Hybrids," BusinessWeek, January 10, 2006; and Brian Twomey, "The Prius Is the World's Best Selling Hybrid," Mirror, May 23, 2008, p. 44.

Chapter 4

Port 1 Defining Marketing and the Marketing Process {Chapters 1,2)

Part 2 Understanding the Marketplace and Consumers (Chapters 3, 4, S: 6)

Part 3 Designing « Customer-Driven Strategy and Mix (Chapter* 7,8,9,10,11,12,13,14,15,

Port 4 Extending MarkaNfsg (Chapters 18, 19,20}

Managing Marketing Information to Gain Customer Insights

Chapter PREVIEW

In the previous chapter, you learned about the complex and changing marketing environment. In this chapter, we continue our exploration of how marketers gain insights into consumers and the marketplace. We look at how companies develop and manage information about important marketplace elements—customers, competitors, products, and marketing programs. To succeed in today's marketplace, companies must know how to turn mountains of marketing information into fresh customer insights that will help them deliver greater value to customers.

We'll start this chapter with a story about ZIBA, a brand and product design consultancy that helps its clients to create new products that connect strongly with customers. ZIBA's designs don't start in a research lab. ZIBA's first step is to research consumers and get to know them—really get to know them. Then, based on the deep insights garnered from consumer research, ZIBA designs products that turn consumers' heads and open their wallets.

ZIBA is a brand and new-product design consultancy. In its own words, it "helps companies to create meaningful ideas, designs, and experiences that consumers crave." ZIBA knows that good product design begins with good marketing research. But it does much, much more than just gather facts about market demographics and consumer buying patterns. It digs in and really gets to know consumers. More than just gathering facts and figures, it develops deep customer and market insights. Driven by' a self-described "almost unnatural obsession for understanding consumers," ZIBA innovates with soul. "ZIBA's process is about more than design," says a design analyst. "It's about creating something that will evoke emotion—even love."

The company's long odyssey into the hearts and hungers of consumers began in 1989 with—of all things—a squeegee. An entrepreneur hired the consultancy to craft a hip-looking tool for cleaning gunky shower stalls. Rather than pouring through market data or conducting the usual consumer surveys, ZIBA dispatched a small team of designers to plumb the mysteries of the American bathroom. It spent 10 days shadowing people as they bent to their noxious task, photographing the ballet-like movements of window washers, and even studying silk screeners to glean the ergonomics of handling a squeegee-like device.

Such surveillance eventually led to a sculptured, cylindrical handle, about the size of a shampoo bottle, which held two removable, wave-shaped plastic blades. Dubbed the Cleret, the freestanding cleaning tool looked like no other squeegee that had come before. Elegantly simple in its design and effective in its performance, it landed in the Smithsonian Museum's permanent design collection. It also claimed the Industrial Designers Society of America's best-designed new consumer product award (check it out at www.cleret.com/aboutus.html). Best of all, since the Cleret's launch, the start-up has sold $40 million worth of the thing. From that point on, every ZIBA design would grow out of its unique research approach of first decoding the consumer's mind in order to forge key customer insights.

At the heart of ZIBA's success is its Consumer Insights and Trends Group, an interesting mix of social anthropologists, cultural ethnographers, user-experience wizards, trend trackers, brand translators, and cool hunters, headed by creative director Steve McCallion. McCallion argues that it's not enough to study the average user and ask them what they want. "We're going for something deeper—to understand why people want what they want," he says. "Our ability to invent is solely dependent on our ability to capture that dynamic relationship between the brand and the culture that finds it relevant."

So when Sirius Satellite Radio enlisted ZIBA to fashion a handheld receiver (what would later become the Sirius S50 and the new Stiletto), McCallion and his consumer insights squad went in for a deep dive, spreading out across Portland, Boston, and Nashville to spend some quality time with 44 Sirius subscribers. They toured people's CD collections, hung out with them at Saturday afternoon sports-watching parties, studied how they accessorized their cars, and got them to rift on why music matters to them.

Before designing the Sirius satellite radio, ZIBA's consumer insight squad went in for a "deep dive" with customers, resulting in a "discovery, portability, personalization" positioning statement that drove the entire design process.

Ideas Design Experiences Eéiísatíea Insplt&il&n.

Kscouer neuj ways to think about your customers your market, your technology and your business:

Then, back at ZIBA's studios, the team spent weeks harvesting raw data, photographs, and field notes, seeking deeper customer insights. McCallion edited the material down to a design target—the "iPod fatigued"—and assembled more-focused profiles of Sirius users, such as the "intelligent fan" (dials into a wide range of sports and listens to the radio while attending games) and the "business charismatic" (drives a BMW 5 Series and holds a platinum frequent-flier card).

Working from the profiles, McCallion and the insights team crafted a perceptive positioning statement—"discovery, portability, personalization"—that drove the entire design process as ZIBA tested and refined scores of prototypes. They knew the business charismatic was looking for a device that wouldn't detract from a car's interior, so they urged designers to give the S50 and the Stiletto a simple, accessible interface. The intelligent fan was keen on portability, and by story-boarding scenarios for the S50, the team discovered that many people wanted to use it to record programming and play it back later. They also pushed for a prominent media dial and a lustrous black finish, based on the conviction that both were powerfully reminiscent of "radio."

"We all have memories of listening to the radio when we were kids," says McCallion. "We wanted to tap into those memories; they help you emotionally connect with the product." Apparently, McCallion and ZIBA scored a hit—the S50 became one of the holiday season's top sellers and took yet another Gold Idea Award, presented by the Industrial Designers Society of America.

ZIBA has come a long way from contemplating shower stalls. Thanks to its innovative research approach, ZIBA is now a hot design consultancy. It has fashioned

Ideas Design Experiences Eéiísatíea Insplt&il&n.

Kscouer neuj ways to think about your customers your market, your technology and your business:

ZIBA's product designs don't start in the research lab. The design consultancy's first step is to research consumers and get to know them—really get to know them.

everything from waffle makers for the appli- Based on deep ance maker KitchenAid to winches for the customer insights, U.S. state of Oregon's Warn Industries to a ZIBA designs new community development for Portland, products that turn Oregon's South Waterfront. Today, ZIBA's consumers' heads clients include a who's who list of Fortune 100 and open their heavyweights such as P&G, Microsoft, FedEx, wallets, and Whirlpool as well as an assortment of small technology start-ups and service organizations. ZIBA's doing something right: Over the past several years, it's walked off with a shelf full of Industrial Design Excellence Awards.

ZIBA teaches its clients that successful new products don't begin in their R&D labs. They begin with a deep understanding of customers and their emotional connections to the products they buy and use. "They're terrific designers but it's their ability to capture what your customers are about and then connect with them that's truly fascinating," says one client. Whether it's a squeegee or a high-tech consumer communications device, at ZIBA, innovative new products start with innovative consumer research that provides fresh customer and market insights.1

As the ZIBA story highlights, good products and marketing programs begin with good customer information. Companies also need an abundance of information on competitors, resellers, and other actors and marketplace forces. But more than just gathering information, marketers must use the information to gain powerful customer and market insights.

Author I Marketing information by Comment | ¡tse|f has |¡tt|e va|ue The value is in the customer insights gained from the information and how these insights are used to make better marketing decisions.

-H- Marketing Information and Customer

Insights (pp 123-126)

To create value for customers and to build meaningful relationships with them, marketers must first gain fresh, deep insights into what customers need and want. Companies use such customer insights to develop competitive advantage. "In today's hypercompetitive

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Responses

  • Jali
    What microenvironmental factors affected the introduction and marketing of the toyota prius?
    8 years ago
  • ortensio
    What microenvironmental factors affected both the first generation and second generation?
    7 years ago

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