I am writing to you in regards to the Hummer’s target market. According to AM General’s market research , Hummer’s market is divided into four categories: the realist, the discerner, the conqueror, and the adventurer. The realist considers Hummer for its practical purposes, and will therefore make use of the vehicle’s off-road prowess. The discerner is a connoisseur for the finer things in life, who appreciates Hummer’s status, but is unlikely to go off-roading. The conqueror is a successful person who wants people to know it, who appreciates Hummer for its exclusivity and attention grabbing looks. The fourth type of buyer is the adventurer, who wants to take the Hummer off-road. By analyzing the percentage of the population that has these qualities, I think that Hummer’s U.S. target market segment is males between the ages of 25 and 64 who earn over $100,000 per year.
Hummer’s target market segment cannot be very large because of the high price of the vehicle, which can be in excess of $90,000. Hummer must gear its marketing strategies towards this small group of individuals. 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. These males are looking for specific vehicles that are geared towards luxury and status. According to 1999 census data , in the approximation of 40,698,000 males between the ages of 25 and 44, only 2,011,000 of them earn enough money to purchase a Hummer. This would give Hummer a market base of over 2 million consumers.
This market segment is growing because of the change in this base from 1998 to 1999. The number of males within this age group who earned over $100,000 was 1,730,000 in 1998. That reveals a growth rate of 16% in one year. Also, you can infer that the number of people in general who can afford a Hummer is increasing due to the low unemployment rate, and the steadily growing U.S. economy. I would think that Hummer’s sales would continue to grow due to the increase of its market segment coupled with the fact that the company is preparing to release new models that may cater to a whole other marketing segment.
Cultural Trends, Attitudes, Values of Target Market
The outlook on the buying attitudes of Hummer’s target market remains robust in the future. The demand for luxury items has been steadily growing for the past couple of years. With the existence of a bull market, and a steady increase in national prosperity, today’s high-income individuals have a healthy demand for luxurious goods and services. The SUV market in general has been steadily increasing over the past five years. According to American Demographics , forecasters estimate that 49% of the new vehicle market will be that of light trucks in 2001, and light truck sales will be greater than that of car sales in 2002. Today’s consumers stress safety over other attributes when buying vehicles, which show the increase in demand for SUV’s, which are proven to be safer than most cars in crashes. Also, American Demographics’ study revealed that empty nest baby boomers are not moving towards sedans, but towards SUV’s. Another value of today’s consumers is in styling. Today’s SUV’s have been appealing to consumers because of their current styling blend of ruggedness and beauty. The image factor is also big in analyzing consumer trends. Consumers have a liking for SUV’s because of the image that it projects. If one drives an SUV, they feel confident that they are seen as a person “who is strong” or “who knows what he wants”.
These consumer values are crucial in analyzing Hummer’s fit within the SUV market. GM must market the Hummer as a vehicle that will make the driver appear to be a person of high stature and class. These trends of high image and luxury appreciation are the main values that Hummer’s market segment possesses. Hummer must tailor its marketing plan towards the idea of a luxurious alternative to a sedan that will make you look like “the man!” Hummer must make its vehicle appeal to the high income individuals by making it a status symbol.
Hummer’s most important competitors are other luxury SUV’s, such as Range Rover, Lincoln, and Lexus. These manufacturers all have SUV’s that are all in the upper echelon of the industry. They are all considered a status symbol in the SUV market. Hummer’s disadvantages to this group of manufacturers are mostly in performance and ride quality. These other SUV’s all have a more car-like ride, a faster 0-60mph time, and are comparable in luxury offerings such as TV’s, navigation systems etc., and also has more passenger capacity (see exhibit A). Also, they are all slightly cheaper than the Hummer. The way in which Hummer differentiates itself is in off-road performance, in which there is no substitute. Hummer is the leader in off-road capability because of the vehicle’s military background.
You might want to regularly monitor certain newsgroups on the web that will give you insight into consumer needs and wants. Two newsgroups that you may monitor are the
“alt.jeep-1” and the “alt.autos.studebaker” strings on www.dejanews.com. Two things that I read within these groups that may help you in the marketing process are the fact that consumers are expecting something new from Hummer in the near future, and that consumers have financial concerns about a large vehicle such as Hummer. GM can use the consumers’ wants to tailor their marketing plan towards them.
SPORT UTILITY VEHICLE COMAPRITIVE TABLE
CLASS: FULL SIZE LUXURY SUV
HUMMERLINCOLN NAVIGATORRANGE ROVERLEXUS LX470
HORSEPOWER:195 bhp300 bhp222 bhp230 bhp
TORQUE:430 lb-ft355 lb-ft300 lb-ft320 lb-ft
FUEL ECONOMY:10-11 mpg12-27 mpg12-15 mpg13-16mpg
O-60MPH TIME:18 sec.10.3 sec.12.2 sec.10.1 sec.