Downsizing The Hummer Case Study Questions Answers
There are a variety of consumers in the market that are distinguished by various factors, one of the primary ones being their income levels. Prominent, well-known marketers conduct a detailed analysis of the market segmentation to understand the consumers in the market to estimate the economic viability of their product. There are four major market segmentation variables which are:
- Behavioural (Thomas, 2020)
Once the marketer well understands the market segmentation, they come up with suitable marketing mix strategies for their target segment, and every marketing mix they come up with is exclusive to a particular market segment. This method is used to achieve the highest possible response from the market by giving special attention to the unique differences of the consumers. (Hanlon, 2020)
General Motors, or better known as GM, used the significant segmentation variables by attempting to understand their target consumers. Their target consumers were mainly SUV drivers who had the capacity and willingness to buy the vehicle. Their next step was to exclusively tailor their marketing mix targeted at these consumers to provide the best offers and services to them to attract their attention while taking in consideration their age, gender, and income level.
The target market segment is the set of people that share common demand and characteristics for certain products, and in the case of Hummer H2, GM followed “Differentiated Marketing”. It is important to select the most appropriate target market as this is the first and foremost target market decision and the other decisions depend on it (Aghdaie & Alimardani, 2015). The following were the target market decisions taken by GM for Hummer H2:
- This unique vehicle is mainly targeted towards consumers who have a challenging personality, like undertaking challenging adventures and are independent.
- It targets wealthy consumers in their early 40s on an average as they look for the prestige and reputation in buying the vehicle rather than its speed or other technical factors. The H2 buyers should, on an average basis, have an annual income of over $125,000.
- It also targets celebrities who have been researched on and fall within the target age category.
In case of GM, they targeted the Hummer H2 towards “successful achievers” with the advertising tagline “Hummer, Like Nothing Else”. In contrast, in the case of AM, they looked forward to fulfilling military purposes with the vehicle and had the advertising tagline “The world’s most serious 4x4”. There was also a stark contrast in the pricing of the two cars where the original Hummer was priced at $200000 while the H2 was priced at $125000. Lastly, while the H2 preferred their target consumers to be in their early 40s, the Hummer looked for consumers of age 50.
Product positioning is one extremely crucial strategy for any business to be successful. In order to have a wider outreach in the market, a business needs to conduct proper studies over their rivals and come up with proper positioning strategies (Gabriel, 2015). GM attempted to position the Hummer H2 in the series “large luxury SUV”. The H2 was described to be different as a high-quality product that was worth its high price. GM made claims that H2 was supposed to be used as a passenger vehicle on all sorts of terrains and it would be a great competition to the other luxury SUV brands such as Mercedes Benz, Lincoln Navigator, Land Rover and even their own Cadillac Escalade. Keeping this in mind, GM followed the following positioning steps to get Hummer H2 a good stand in the market:
- They focused on all the advantages they had over their direct competitors so they could build a stable position in the market.
- They had to consider all the benefits and thoroughly analyse them to choose for the most relative competitive advantages that would help them compete against other brands that offered SUVs as well. (Amadeo, 2020)
- Lastly, they came up with an overall positioning strategy that considered other competing brands and along with all the market aspects in a nutshell.
When competing in an extensive market with other strong brands, it is tough to build a distinct image that would attract consumers. For this purpose, GM hired a marketing firm called “Modernista” for their $3 million campaign where they first came up with their advertising tagline “Hummer. Like nothing else.”
As GM analysed the market segmentation, we got to know different target consumers had other motives of buying the vehicle. While the car was specifically designed for off-road adventures and rough terrains, it has been branded as one of the most excellent luxury SUVs which brings along with it two types of consumers who will be purchasing it. The first category consists of the consumers who would buy it for its practicality and power of driving it through places with steep hills, obstacles, and even going through shallow water. The second category consists of buyers who would purchase this vehicle as a symbol of high status and luxury.
Next comes the detailed analysis of the target buyers to understand why they would pay such a hefty amount for this off-road vehicle that they won’t even use to fulfil their purpose. If we look back at the case study, the Hummer has been produced specifically for people in their early 40s on an average, regardless of their age. Such people would be married in most cases, and they would already have children. In such a case, Hummer is a significant and safe car that most wealthy families would consider to buy even if they don’t go off-routing. Similarly, people with exciting and fun-loving personalities would be willing to pay such a large amount for the vehicle to go on off-road trips. In general, Hummer was considered to be a “social distinction” who liked to flaunt their status and be noticed (Luedicke & Giesler, 2007)
The STP model or the segmentation, targeting and positioning model is used to identify the homogenous group of consumers in the market and analyse their consumer behaviour. Once those target market segments are identified, they come up with various strategies to appeal to their target consumers and satisfy their desires (Lynn, 2011). The STP model consists of the following steps:
- Market segmentation where the segmentation variables are considered
- Targeting the consumers in the market
- Positioning the product in the market
- Forming an appropriate marketing mix based on observations
Let’s form a list first to list out our recommendations for the segmentation and targeting of Hummer:
|Majorly males, but no restrictions on females as such
|Adventurous, Lavish, Luxurious
|Benefits the consumer is seeking
|Taking the Hummer on off-road tours, Status symbol
For the proper positioning of the Hummer, it is essential to consider its opponents because it needs to develop certain aspects to it that will make it unique and appeal to the customers to buy it (Karadeniz, 2009). Some their opponents were Mercedes Benz, Lincoln Navigator, Land Rover and GM’s own Cadillac Escalade. To position the vehicle properly in the market, we need to analyse what makes it unique. It is of high value, distinct and meant for undertaking adventures which are promoted by their tagline “Hummer. Like nothing else.” The most critical positioning strategy that HM should adopt is to advertise the exclusive characteristic traits of their Hummer drivers. It will build the image for GM that people who have a lavish and adventurous lifestyle choose to drive Hummer, and thus similar people will be attracted to buy the same. (Alscher, 2019)