Received 24 February 1999Revised 29 October 1999Accepted 5 November 1999
INTRODUCTION
Today the world’s automobile popula-tion is growing at a much faster ratethan the human population. In 1950,
there were about 50 million vehicles on Earth.By 1994 the vehicle population had grown toalmost 600 million, and if the present trendcontinue there will be over 3 billion vehicleson Earth by the year 2050 (Sperling, 1995).Besides granting vehicle users freedom, pri-vacy and convenience, usage of the auto-mobile also threatens our environment.Particularly, by dumping increasing amountsof carbon dioxide and other climate-alteringgreenhouse emissions into the atmosphere,internal combustion engine vehicles (ICVs)cause severe harm to both environment andhumans.
To reduce the harms of automobile usage,cleaner fuels have been developed and fuelcatalysts have been implemented. However,these measures do not affect the emission ofcarbon dioxide, the major contributor to thegreenhouse effect. Dealing with the problemsassociated with the increasing number of ve-hicles worldwide without curtailing peoples’freedom of movement and choice – a basicvalue of a democratic society – is one of thegreatest challenges of our time. Substitutingcurrent automobiles with an environmentallysounder fleet seems to be an unavoidableelement in a realistic solution. This couldeither be done by increasing the efficiencyand reducing the emissions of ICVs, switching
* Correspondence to: Dr. John Thøgersen, Associate Professor,Department of Marketing, Aarhus School of Business, Hasle-gaardsvej 10, DK-8210 Aarhus V, Denmark.
to less noxious fuels or by finding less pollut-ing propulsion systems (e.g., Sperling, 1995).The first two alternatives seem most obviousand closest at hand, but in practice disap-pointingly little has happened in terms ofachieving environmental benefits along theseroutes. This is one of the reasons why increas-ing interest gathers around developing vehi-cles with a less polluting propulsion system,which could reduce local pollution as well asgreenhouse emissions from the transportationsystem. However, compared to ICVs, currentelectric vehicles (EVs) still have disadvantagesthat make them less attractive. Current bat-tery technology, not allowing unlimited driv-ing ranges, relatively long recharging timesand high initial purchase prices are some ofthe EVs’ major disadvantages. On the otherhand, fuel for EVs is inexpensive, electric mo-tors last significantly longer than internalcombustion engines and motor maintenanceis minimal. If the full costs of current environ-mental pollution were taken into account, EVswould compare more favourably to ICVs.Hence, an important challenge for marketersand policy-makers wanting to create a globalmarket for EVs is to assure that the market isadequately informed, not only about the dis-advantages, but also about the advantages ofthis new technology.
Seen with the eyes of a potential customer,the EV technology is a new (and unknown)propulsion system, which mainly removesone of the many non-market disadvantages oftraditional ICVs (local emissions) and reducessignificantly a second (greenhouse gas emis-sions)1. However, these societal benefits comeat high costs to the individual owner/user ofthe EV: higher price, limited driving range,shorter availability on a daily basis (due tore-charge time), less loading capacity (becauseof the batteries) and lower speed and acceler-ation. In addition, the usability of an EV ishampered by the lack of an infrastructure forrefueling (recharging). On top of this, the EVdoes not solve other social ills connected withprivate transportation: congestion, traffic acci-dents and the need for a dense lattice ofpaved roads.
A product like this hardly sells itself topotential customers. Hence, in addition toregulation backing the EV, skillful marketingis needed in order for it to be accepted anddiffused throughout society. A number of re-searchers have published thorough studies ofnational EV policies in Europe and NorthAmerica in recent years (Schot et al., 1994;Kemp et al., 1998; Weber and Hoogma, 1998;Truffer et al., in press). Studies facilitating thedevelopment of appropriate national and in-ternational policy for this area fulfill an obvi-ous and urgent need. However, even ifappropriate policy suggestions aiming at sup-porting the market acceptance of EVs are de-veloped and implemented, the effort is in vainif a skilled and committed marketing effort byEV producers is lacking. Still, studies aimingto stimulate and support policy developmentby companies in this area are largely absent.Designing a marketing plan that can makethe market accept the new product and ‘take-off’ (Tigert and Farivar, 1981; Link, 1997)requires knowledge and understanding ofboth the characteristics of the earliest poten-tial adopters, and of the new product itself(Goldsmith and Hofacker, 1991; Hawkins etal., 1998). In this paper, an outline of a two-phase strategy for the targeted marketing ofEVs is developed, based, first, on a discussionof the current and expected future characteris-tics of EVs and, second, on a review of re-search on the characteristics of early adoptersof new products. In this endeavour, wefocus solely on general issues that we judgeto be indiscriminately relevant for the market-ing of EVs in (at least) all developed coun-tries. EV producers, of course, have to adjusttheir marketing strategies to the special char-acteristics of the national markets where theyoperate.
THE ELECTRIC VEHICLE
The world’s first EV was built as early as 1842in Scotland. In this vehicle a rechargeable leadbattery served as energy source. In the yearsaround the turn of the century, EVs were intheir heyday. Of some 4000 automobiles1 Depending on how the electricity is produced.
produced in the United States in 1900, about40% were steam powered, 38% electric andthe rest were ICVs. After that, however, bat-tery technology stalled, while oil was inex-pensive and abundant. The ICV then came torule the automotive world.
However, the invention of semiconductorsin the 1950s and the continuing improvementsin motors and controllers spurred some inter-est in EVs in the 1960s (Sperling, 1995). Atabout the same time the first regulation (theAir Quality Act of 1967) toward vehicle emis-sions was adopted, first in the state of Califor-nia, USA, and then in the whole USA.Commercial interests in EVs then initiatedsome, modest, research and a converted ICVrunning on silver-zinc batteries was displayedat the 1966 auto shows. However, the imple-mentation of the Air Quality Act of 1967 wasnot very successful.
In the US Clean Air Act Amendment of1970 a technology forcing strategy was imple-mented to achieve desired reduction of vehi-cle emissions. In this act, in contrast to formeracts, it was stated that the protection of healthof man and nature was the issue, not techno-logical feasibility. Technical solutions simplyhad to be enforced in order to meet thisposition. Spurred by the oil crises in the 1970sand the 1980s the investment in EVs tookanother step forward. However, the majorinvestments in EVs started as a direct re-sponse to California’s Zero Emission Mandatein the 1990s. In this mandate, the CaliforniaAir Resources Board required that a growingpercentage of each major automaker’s sales inCalifornia had to be zero emission vehicles.The mandate covered automaker’s sellingover 35000 vehicles a year in California. In2003, the threshold will drop to 3000 vehiclesper year, which will affect most auto compa-nies except specialized companies such asRolls Royce and Ferrari. The required percent-age of zero emission vehicles was set at 2%for 1998, increasing to 5% in 2001 and 10% in2003. Later, the requirements regarding themake years of 1998 to 2002 were droppedwhile the 10% requirement for 2003 was kept.
It is obvious from this that the currentregulatory motivation for interest in EVs isdue strictly to one concern – air quality. If
EVs were used instead of ICVs, this wouldreduce urban air pollution, even if coal-firedplants were to generate much of the electricity(Wang et al., 1990). The EVs do, however,offer other benefits that are often ignored.One is the reduction in oil consumption andthereby the dependence on oil exportingcountries. There is also a potential for loweredgreenhouse gas emissions, particularly if elec-tricity from natural-gas plants, fuel cells or –more importantly – renewable sources is used(DeLuchi, 1993).
The future
The EV is, however, still burdened with amajor drawback working against an immedi-ate full-scale implementation. The expensiveand not fully optimized battery technologydoes not allow longer driving distances (Sper-ling, 1995). Current lead–acid batteries, al-though low in cost, are not satisfactorybecause they last less than two years and20000 miles and do not store enough energyto power a full-size vehicle very far or fast.Batteries such as nickel cadmium, nickel ironand sodium sulphur are today not among themost promising due to high cost, high operat-ing temperature and high risk of corrosiveproblems. Nickel–metal hydride and lithium-based batteries, however, appear to be theleading contenders for the 21st century, sincethey have long life and are nontoxic.
Another promising option is fuel cell tech-nology. A fuel cell is a device that transformshydrogen and oxygen into electricity and wa-ter. No pollutants or greenhouse gases areemitted during the transformation, the elec-tricity is produced continuously onboard, thedriving range is almost the same as that of anICV and the technology is almost mainte-nance free. However, fuel cells are still veryexpensive and the reformer technology needsmore elaboration (DaimlerChrysler, 1999).
The future strategies are, however, some-what worrisome. The goal today seems to beto develop technologies able to compete head-on with ICVs, but the question remains as towhether individuals really are willing to payfor this, or whether they would rather preferan EV with a shorter driving distance and acheaper price than an ICV.
Obtaining a good match between productcharacteristics and potential customers’ needsand wants is crucial for gaining market ac-ceptance of a new product. Rarely do allpotential customers readily embrace a newproduct at once. Typically, market penetra-tion starts with a small segment (Hawkins etal., 1998) or niche (Schot et al., 1994; Kemp etal., 1998; Weber and Hoogma, 1998; Truffer etal., in press) consisting of customers withparticular characteristics, needs or wants.When a foothold has been established in themarket, learning processes related to the coreproduct itself and to supporting technologiesand institutions accelerate, and supportivesocial, political and institutional networkscrystallize, which may radically improve thecompetitive position of the new product(Schot et al., 1994; Kemp et al., 1998; Weberand Hoogma, 1998). Hence, it is of tremen-dous strategic importance for producers ofnew products to correctly identify the cus-tomer segment(s) that contain(s) the mostlikely early adopters and to target their mar-keting effort as effectively as possible to-wards this (these) segment(s) from the outset(Goldsmith and Hofacker, 1991; Hawkins etal., 1998).
In his path-breaking contribution to re-search on the adoption of innovations,Rogers (1995, first edition in 1962) suggestedthat innovations can be classified along fivedimensions and that the likelihood and rateof adoption is determined by the potentialadopter’s perception of the innovation onthese dimensions. The five dimensions arerelative advantage (over the entity it su-persedes), value compatibility (with theadopter’s values, needs and experiences),complexity (how difficult it is to understandand use), trialability (can it be tested withoutor with limited costs) and observability (in-fluences the likelihood that others will adopt).A number of studies have found that poten-tial adopters’ perceptions of the innovationon these dimensions are better predictors ofadoption than personality and demographic
characteristics (e.g., Ostlund, 1974; Labay andKinnear, 1981). Still, personality and demo-graphic characteristics may offer valuablesupplementary segmentation criteria.
A number of studies have striven to un-cover personality traits associated with howearly an individual adopts an innovation (‘in-nate innovativeness’). For instance, innova-tiveness has been conceptualized as ‘a latentunderlying preference for new and differentexperiences’ motivating a search for newstimulation of the mind and/or the senses(Venkatesan, 1973; Carlson and Grossbart,1985; Venkatraman and Price, 1990). How-ever, Gatignon and Robertson (1985) havequestioned that innate innovativeness existsacross the board. These authors found that anindividual’s degree of innovativeness is al-ways dependent on product category andtheir conclusion is ‘that there is not a general-ized innovator across product category or in-terest domains’. Accordingly, Goldsmith andHofacker (1991) defined ‘domain’ or ‘productspecific innovativeness’ as a tendency tolearn about and to adopt innovations withina specific domain of interest. They also sug-gest that even if it is possible to construct ameasure of a global innovativeness, at leastthe measure of willingness to pay for adop-tion should be concretized with respect to aspecific product concept.
Whether it is referred to as innate or do-main specific, innovativeness is conceptual-ized as a personality trait measurable in, forinstance, individual favourable attitude, per-ceived benefits, willingness to sacrifice andlatent need before, or even without, actualadoption. In line with this conceptualization,individuals’ can be grouped depending ontheir degree of innovativeness, i.e., on howearly in the diffusion process they are likelyto adopt an innovation. A third concept, ‘ac-tualized innovativeness’, is a measure of howearly in the diffusion process an innovation isactually adopted, i.e., it focuses on actualadoption behaviour. Rogers (1995) define (ac-tualized) innovativeness as ‘the degree towhich an individual or other unit of adoptionis relatively earlier in adopting new productsthan other members of the system’. He pro-poses a segmentation of the market into in-novators, early adopters, early majority, late
majority and laggards, with typical2 percent-ages of 2.5, 13.5, 34.0, 34.0 and 16.0, respec-tively (Rogers, 1995). This relative-time-of-adoption definition focuses more on the dy-namics of the diffusion process than on (morestatic) individual predispositions.
Most earlier research has characterized theearliest adopters, or the most innovative indi-viduals, as less price sensitive, primarily be-cause they are relatively high in social status(high income, standard of living, wealth)(Rogers, 1995). However, other studies havequestioned this. Link and Malm (1994) foundthat individuals most willing to pay were notthe most prepared to adopt a new productfirst and Goldsmith and Flynn (1992) as wellas Flynn and Goldsmith (1993) found no rela-tionship between innovativeness and income.Thus, if some highly innovative individualsactually pay a high price for adoption, thereseem to be factors other than socioeconomiccharacteristics behind their decision to adopt.Other plausible factors might be a genuineinterest in trying new products, blindness toprices or a snob effect (Link, 1997).
The hypothesized lower price sensitivity ofthe earliest adopters also seems at odds withtheir often found greater knowledge and com-petence in product comprehension and evalu-ation (Hirschman, 1980). The earliest adoptersare often found to be heavy users of otherproducts within the area of the target productcategory (Gatignon and Robertson, 1985).Therefore, it cannot be discarded that they ingeneral are competent enough to evaluateeven very new products (Link, 1997). Compe-tence is an important determinant in priceperception (Rao and Monroe, 1988). There-fore, the earliest adopters also should havewell developed internal reference prices basedon their knowledge and competence, whichmight make them more, not less, price sensi-tive (Link, 1997).
In general, products are evaluated in rela-tion to other known products. A new prod-uct’s price and benefits are compared to the
prices and benefits of other products withinthe individual’s evoked set, i.e. the alternativeproducts considered by the individual in theadoption decision (Howard and Sheth, 1969).Known alternatives thus serve as referencepoints in the individual’s perception of a newproduct (Monroe, 1990). The price a potentialadopter is willing to pay for a new productis determined by the difference in per-ceived quality between the focal productand the adopter’s reference points (salientalternatives).
ADOPTION OF ELECTRIC VEHICLES
Under the conditions outlined earlier, whowould be willing to purchase an EV? Vehiclecustomers basically fall into two types: privateindividuals and (public or private) organiza-tions (or – as they are often referred to in thisconnection – fleet operators). The latter are byfar the largest individual customers, but theformer make up the large majority of thevehicle market in most countries. As we willreturn to later, fleet operators form a marketsegment with many desirable characteristicsfrom the point of view of EV marketing. Invarious countries, postal companies, electricutilities, public transportation companies, carrental companies and even the military havebeen among the first to test EVs (Knie et al.,1997; Anonymous, 1998a; O’Donnell andOxfeld, 1998; Schulz, 1998; Morrison, 1999a,b).
Private individuals have approached EVsmore reluctantly. In 1990 the prediction wasthat about 1% of the American populationwould consider purchasing an EV (Buist,1993). Three years later, Power and Associates(1993) found that 6% of American house-holds could consider purchasing an EV.Kurani et al. (1994) found that 16% of asample of California households wouldchoose an EV over of an ICV. Garling etal. (1998a) found that the percentage ofinterested households depends on the rela-tive performance and price of the EV com-pared to ICVs. With the most favourable –but in no way unrealistic – characteristicsincluded in the study, almost 30% of a sample
2 These percentages should not be taken to literally. It may bereasonable to operate with more or fewer categories ofadopters, depending on the innovation, and the adopter cate-gories may make up different proportions of the market, notforming a nice bell-shaped curve (Hoyer and MacInnis, 1997).
of households from a large Swedish city couldconsider purchasing an EV over an ICV.
Although these percentages are highly un-certain and difficult to compare, the condi-tions seem to change in favour of EVs.However, the question is how EVs should bemarketed in order to attract potential cus-tomers. Kurani et al. (1994) suggest that thereare many similarities between the introduc-tion of the microwave oven and the EV. Be-fore individuals were made aware (e.g.through special cooking courses) that mi-crowave ovens were complements of, not sub-stitutes for, conventional ovens, acceptancewas very low, while it increased dramaticallyafterwards. A product such as the microwaveoven is a ‘high learning product’, meaningthat to utilize its qualities individuals have tomake behavioural adjustments. Althoughthere also are obvious and important differ-ences between the two products, the mi-crowave oven and the EV have a lot incommon in this respect (Schot et al., 1994;Truffer et al., in press).
We believe that the classification by Rogers,(1995) of innovations along five dimensionsoffers the most promising starting point forsegmenting the potential EV market and par-ticularly for identifying early adopters. Hence,we suggest that the most likely early adoptersare among those that perceive the balancebetween advantages and disadvantages ofEVs as compared with ICVs most favourably,perceive the EV as compatible with importantvalues and do not perceive it as difficult tounderstand and use (i.e., not high in complex-ity). A plan for marketing of EVs should bothtarget potential adopters holding favourableperceptions and influence the perceptions ofthese and other potential adopters in a morefavourable direction. Further, according toRogers classification, trialability and observ-ability are two important characteristics ofEVs that should be used actively in the mar-keting campaign.
Regarding demographic and personalitycharacteristics, some of the general traits ofthe earliest adopters, unveiled by previousresearch, may apply in this domain also (suchas being more educated, higher in experimen-tation, knowledge and competence, being
heavy users of similar products and havingthe ability to understand the advantages of anew product compared to old ones). Yet, dueto its unique combination of high costs andvisibility, which makes EVs (like other cars) ahigh involvement product, we believe that theearliest adopters of this particular newproduct are best understood in terms of do-main or product specific innovativeness(Goldsmith and Hofacker, 1991). It seems rea-sonable to assume that the most importantsource of domain specific innovativeness is afavourable perception of the EV along thedimensions suggested by Rogers (1995).
MARKETING STRATEGIES FORELECTRIC VEHICLES
The unique selling proposition for an EV isthat it has less negative impacts on the wel-fare of other people and nature than an ICV.However, the prospective buyer is required topay a high price for his or her good deed.And since there are currently next to no pri-vately owned EVs on the streets there is noteven a social norm backing the selling propo-sition. The marketing of such a deal is anuphill battle indeed. Given the current condi-tions, there is not much hope that enough EVscan be sold in the short term to cover themanufacturer’s costs (Thornton, 1999) or tomake noticeable environmental or societal dif-ference. Hence, it should be realized that amarketing campaign for an EV is only com-mercially defensible if a crucial assumptionholds true: that conditions will change radi-cally in favour of EVs in the longer run. Webelieve that this assumption is not too farfetched, but that it cannot be taken forgranted either.
In order for such a change to happen it isprobably necessary that the learning curve forEVs is considerably steeper than that for com-bustion engine (including catalytic cleaning)technology, leading to a rapid narrowing ofthe present price/performance relationshipgap between the two technologies. It is alsonecessary that no superior ‘third’ technologyfor individual mobility is developed within a
1–2% increaseBetter diesel 1% increase Particle and NOx reduction Now (if requiredby law)Now (if required1–2% increaseHC, CO and NOx reduction1% increaseReformulated petrolby law)
HC, CO, NOx and particle More than 103–5 times ordi-Bio-fuels 10–50% reductionnary fuels yearsreduction
Reduction 10–20% increase 5 yearsHybrid cars 10–15% reductionCatolytic retrofit HC, CO and NOx reduction DKK 2–5000 1–2 years0
increase
Source: Transportradet (1997).
foreseeable future. Table 1 shows a recentassessment of the most important of the com-peting technologies, including EV technology.According to this assessment, EV technologyoffers the greatest promises for environmentalimprovement, but also the longest time-lag tocost competitiveness. Governmental support,including subsidies or tax relief for EVs orrestrictions on the use of ICVs (Bernard, 1981;Kemp et al., 1998; Weber and Hoogma, 1998),can facilitate the process; it is probably even aprerequisite for a successful marketing of EVs,but it is hardly sufficient (or will hardly bestrong enough to suffice).
If faith can be had in a technological fore-cast3 predicting a rapid narrowing of theprice/performance relationship gap, it makessense to plan a long-run marketing strategywhere the losses that are inevitably incurredin the initial phase are recovered in the longerrun. Economies of scale and learning curveeffects depend on the volume of production4.Getting many EVs on the market has theadded advantages of demonstrating the vi-
ability of the technology to more reluctantpotential customers, creating positive word ofmouth (provided that the initial customers aresatisfied with what they get), and creating apush for the establishment of the necessaryinfrastructure. A successful market penetra-tion strategy probably should include a fairlylow introduction price5 based on introductionrebates or ‘learning curve pricing’ (Kotler,1991), focusing first on achieving market ac-ceptance by a few carefully selected segments(Hawkins et al., 1998).
That hardly anyone buys a new car withouta test drive demonstrates the importance oftrialability for consumer choice in this market.When the car is based on a new technologywhose most important limitations only showup in relatively extreme situations, the inter-ested first-time customer is bound to have adesire to try the EV for an extended periodbefore final commitment. Hence, a generousreturn policy or possibilities for leasing6 anEV for a period before a final decision topurchase it would help in bringing interested
3 Which a responsible management would need to performmuch more rigorously.4 For instance, nickel–metal hydride battery producer Pana-sonic EV Energy Co. estimates that if it could increase produc-tion fivefold it could slash its prices in half (Thornton, 1999).
5 This opinion seems to be shared by the large car companiesthat have made the first serious attempt to build a market forelectric (and hybrid) cars (Thornton, 1999).6 In the USA, GM has decided to only lease out their first EV,the EV1 (Murphy, 1997; Dipert, 1999).
Figure 1. Distribution of car stock on major owner groups in Denmark and Sweden: percentages
potential customers the last step from interestto actually buying an EV.
The primary advantage of the EV is itsenvironment-friendliness compared to theICV. Hence, an EV is bound to appeal more topotential adopters the more they value envi-ronment-friendliness (see Truffer et al., inpress). However, it is also evident that theprivate car is perceived as an importantlifestyle item in many other respects (Jensen,1997), as reflected in the wide variation inprice, style, size and many other characteris-tics of cars. Current EVs share most character-istics with small, relatively fuel-economicalcars. Hence, car drivers who – for variouslifestyle reasons – prefer prestigious, sportyor off-road cars are less likely to perceive anEV as a satisfactory substitute.
Technology policy researchers have sug-gested that the early phase of innovation dif-fusion depends primarily on niche-specificfactors, while systemic factors are more influ-ential in later phases (Weber and Hoogma,1998). Consistent with this view, but from amarketing perspective, we suggest a two-phase strategy for the marketing of an EV. Wesuggest that the following organizations andprivate consumers (with some qualificationswhich we will return to shortly) representparticularly promising segments to be
targeted in phase 1 of the marketing plan7: (i)public sector organizations, (ii) ‘green’ compa-nies and (iii) multi-car households whosetransportation need regarding the second caris within the present generation of EVs’ tech-nical capabilities and whose values andlifestyle are compatible with owning an EV.Evidently these segments all represent smallfractions of the (huge) total car market, butwe are confident that together they offer apotential market well above the 2.5% of thepotential adopters that are typically assumedto be ‘innovators’ (Rogers, 1995). As an illus-tration, Figure 1 presents a rough estimate ofthe relative size of various car customer seg-ments in Denmark and Sweden (based onBilindustriforeningen, Bilstatistik, Gamlin andZeipel Kommunikation, 1998, and Trans-portradet 1997). Clearly, not all cars in any ofthe three segments can be substituted withcurrent generation EVs. For instance, publicsector cars include police cars and companycars include executive luxury cars. The reasonmulti-car families are considered a promis-ing segment is that some of the most im-portant disadvantages of current EVs are re-duced if the owner also has an ICV. Hence,the number of cars owned by multi-car7 On this issue we are in broad agreement with at least some ofthe front-runners in the EV industry (Anonymous, 1998b).
families strongly overestimates the potentialmarket for EVs in this segment. The propor-tion of households owning more than one car(12% in both Sweden and Denmark) tellsmore about the potential size of this market(but still is an overestimation due to thevalue-compatibility problem). Single-carhouseholds are of course the most attractivesegment in the car-market. A larger propor-tion of these households than usually as-sumed can cover their transportation needswith current generation EVs (Garling et al.,1998b; Truffer et al., in press). Still, exceptmaybe for a few people that perceive environ-ment-friendliness as the most important self-defining concept, these households are likelyto perceive relying on an EV as too riskyunder current conditions. Hence, the overallmarketing strategy for EVs should include amarketing campaign targeted at the mostpromising single-car households in phase 2,when the technology has improved more anddemonstration effects from the successfuladoption by the segments targeted in phase 1can be reaped.
The public sector
The public sector is a large fleet operator andvehicle customer in most countries, both con-cerning freight and person transportation. Forinstance, the public sector owns about 3% ofthe family-sized cars in Denmark and 2% inSweden (see Figure 1). A number of countriesalso have official ‘green purchase’ policies forpublic sector purchases (value compatibility).The green purchase policies are now extend-ing also to vehicles (CARB Mobile SourceDivision, 1995), and if specific acquisitionpolicies for ZEVs (zero emission vehicles) aredecided, not only in California, but world-wide, a large market for EVs will emerge.Most vehicles owned by public sector organi-zations are used for short trips and duringnormal working hours, which makes thismarket less sensitive to the technical limita-tions of current EVs (relative advantage)(Schot et al., 1994; Nesbitt and Sperling, 1998).Many public sector organizations, though,live within a tight budget constraint, whichmakes it unlikely that they will voluntarily
pay a substantially higher price for an EVthan for a similar ICV. Hence, success in thismarket segment depends heavily on it eitherbecoming mandatory for such organizationsto buy a certain percentage of ZEVs or thatEVs become price competitive (due to promo-tional pricing or subsidies).
Green companies
This segment consists of private companieswith (a desire for) a high environmental pro-file (value compatibility). There are no goodestimates of the share of companies that per-ceive themselves as ‘green’. However, there ismuch documentation that an increasing num-ber of firms use ‘green’ arguments in theirmarketing and even larger numbers are keento build a ‘green’ corporate image (Peattie,1995). For companies wanting to bolster a‘green’ corporate image, a non-polluting EVhas – at least potentially – a substantiallyhigher value than it has for the average per-son (or company) (relative advantage) (Schotet al., 1994). Like cars owned by public sectororganizations, many corporate cars are usedonly for fairly short trips and only withinnormal working hours. Hence, this segment islikely to be less sensitive than private house-holds to the functional deficits of EVs (relativeadvantage) are. Of course, not all ‘green’ com-panies perceive the promotional value of anEV to be high enough to compensate for theirfunctional deficits and premium price. Theproportion of such companies finding the dealattractive (and the share of their vehicle fleetthat they find it attractive for) depends on theEV manufacturers’ price policies as well asgovernmental support in the form of subsi-dies and/or tax relief. As with the other seg-ments, the proportion will increase withfurther improvements in EV technology.
Multi-car households
The main reason why multi-car householdsare considered a particularly promising mar-ket segment is that EVs’ functional disadvan-tages are assumed to be much less important ifthe household has an additional ICV at itsdisposal (relative advantage). Consistent with
this assumption, most studies of EV use byprivate households in various countries havefound that a majority of these early adoptersown an ICV as well (Kurani et al., 1996; Knieet al., 1997; Harms and Truffer, 1998; Truffer etal., in press). However, the fact that the func-tional disadvantages of an EV are less prob-lematic for a multi-car household does notchange the fact that an EV is currently afunctionally inferior product at a higher price.Hence, some sort of promotional pricingis particularly important regarding thissegment8.
The multi-car segment has the disadvantagethat it is likely to contain some of the mostenthusiastic car-owners; people who are likelyto react strongly and defensively against ar-guments meant to convince them about theenvironmental menace of car-driving. Such‘car-lovers’ are not likely to go for an EV,even as the second car (value incompatibility).However, this segment also contains house-holds who own more than one car out ofneed, because current work and living condi-tions demand it. Some of these people mayeven feel bad about having more than one car,because they are concerned about the envi-ronmental hazards of car-driving, and theymay welcome ways of relieving their badconsciousness (value compatibility). However,many in this segment are also bound to expe-rience their transport expenses as a heavyburden. Such families are likely to dismissfurther considerations about buying an EV ifit is more expensive than a similar ICV.
FROM PHASE 1 TO PHASE 2
The initial marketing campaign for an EVcould sensibly target these three market seg-ments; the public sector, green companies andmulti-car households. Promotional pricing isobviously a necessary part of the strategy inmost segments and, as already mentioned, itis important that EV manufacturers realizethat it will take a while before they can expectto earn a profit on EVs. As has been amply
demonstrated by many bankruptcies, withoutrich and patient investors small companiesstand few chances of making it in this busi-ness, in spite of high levels of creativity andenthusiasm. Political support in the form ofsubsidies or preferential tax treatment can re-duce the loss and may even be perceived asnecessary for being able to reduce prices to acompetitive level, even with regard to thementioned target segments. Governmental orother support for research and development,infrastructure and market development mayalso greatly influence the speed of maturationof the EV market, particularly at the nationallevel (Mackenzie, 1997; Weber and Hoogma,1998). Hence, a sensible long run marketingplan for an EV should include tight coopera-tion with governmental bodies, perhaps evenlobbying.
Successful marketing towards the targetsegments of phase 1 is the key to successfulmarketing of EVs to the wider public, particu-larly the single-car households. Drivers ofEVs, at work or in private, will promote EVsin their social networks (Darley, 1977/78;Bernard, 1981; Darley and Beniger, 1981; Mur-phy, 1997), provided they are satisfied withthe product. Also, by just being in the streetsthe EV technology is demonstrated for poten-tial customers outside the social networks ofinitial drivers. This may raise curiosity andinterest. In addition, people who feel badabout the negative environmental impact oftheir car use are more likely to perceive thatthere exists a social norm about changing toan EV the more EVs they encounter.
Given the importance of word of mouthand demonstration effects for long-run suc-cess, it is crucial that EVs are not ‘over-mar-keted’, particularly if this result in selling EVsto people who are bound to get trouble withthem or in other ways become dissatisfied.This has, at least, two important implications(Murphy, 1997). (i) The selling of an EV in theearly phase should be based on thoroughscrutiny of the interested customer’s needsand on information about both the pros andcons of the EV. An interested customer whoseneeds cannot be properly solved by an EVshould explicitly be advised not to buy one.(ii) The EV offer should include measures to
8 This was confirmed by the Swiss Mendrisio experiment(Harms and Truffer, 1998).
reduce feelings of uncertainty about whetherthe driving range of the bought EV actuallycovers desired driving range. Such measurescould be a generous return policy and/or aservice package including, for instance, freeleasing of an ICV once every second month orso during the first years after purchase. Alter-natively, EVs could be leased rather than sold,which is currently GM’s preferred solution inthe USA (Murphy, 1997; Dipert, 1999). Simu-lation of own vehicle use pattern by means ofa computer program could be cheap way ofreducing initial scepticism and might be suffi-cient to convince the most interested con-sumers that an EV is a possible solution totheir transport needs (Hoyer and MacInnis,1997).
CONCLUDING REMARKS
The first two segments suggested in phase 1,the public sector and ‘green’ companies, arealready targeted to some extent in some Eu-ropean countries, but much more intensiveand systematic marketing targeted at thesesegments is needed. An example of whatcould have been (part of) a marketing cam-paign targeted at government organizations(but is rather a customer initiative) is demon-stration projects including personal vehicles,light duty vehicles and buses that are cur-rently running in the three major cities inSweden. Similar projects have been run inmany other countries in Europe (Knie et al.,1997) and North America (Morrison, 1999a).
In most cases based on their own and NGO– rather than on producers’ – initiative, gov-ernments of many countries also support EVsin different ways, such as subsidies and/or taxrelief, preferential treatment of EVs in cities,demonstration projects, research projects fo-cusing on private use of EVs and batteryexchange programmes (in which changing in-stead of recharging empty batteries is tested)(Knie et al., 1997; Mackenzie, 1997). Many ofthese programmes have the added advantagethat the EV at least to some extent is madevisible to the general public. Furthermore, ini-tiatives such as these mean that the new tech-
nology is tested in real-life situations and thatthe further improvement of still immatureparts is stimulated. Hence, they should beconsidered an important element of the mar-keting programme for an EV, even thoughthey are difficult to plan and control.
From a societal point of view, targeting themulti-car household segment is somewhatprecarious. The promotion of the EV as asecond car could, at least in countries wherethe large majority of households still are sin-gle-car households, result in an increasingpercentage of two-car-households with a re-sulting increase in congestion and other trafficrelated problems. If they are perceived aspromoting a multi-car lifestyle, the credibilityof companies marketing EVs as an environ-ment-friendly alternative to the ICV will alsosuffer. Hence, EV producers should not ex-plicitly advertise the EV as ‘the second car’.Instead they should attempt to position theEV based on its differential advantages (docu-mented environment-friendliness9 as well asother advantages10) and rely on those value-compatible consumers perceiving the relativeadvantages most favourably (which we be-lieve will disproportionally be multi-carhouseholds) to be most receptive to this typeof advertising.
The next challenge for EV marketers, whenthe phase 1 segments have been successfullyserved, is the huge single-car-household mar-ket. The marketing campaign directed to-wards this segment will not be much differentfrom the one targeting multi-car households,but the conditions will be more favourable.Successful marketing depends, also in thisphase, on identifying the most likely firstadopters (in this segment), and again valuecompatibility is crucial. No doubt, promo-tional pricing and tax relief will still be impor-tant in this phase, albeit to a decreasingdegree, and so is the opportunity of actuallytrying an EV for a longer period than just atest drive.
9 For ethical, legal and efficiency reasons claims about environ-ment-friendliness should be specific and well documented(Davis, 1992, 1993).10 For instance, GM has chosen to position its EV1 as the car ofthe future (Kelly, 1999), perhaps in an attempt to appeal to theinnovative personality.
The most serious barriers to ‘take-off’ forthe EV market are the current uncertaintyregarding the development of the EV technol-ogy, car manufacturers’ and oil companies’pushing of technologies to reduce the envi-ronmental impacts of the ICV and insufficientgovernmental support. Lack of consensusabout which EV technology to enhance mayextend the uncertainty and the same mayattempts by car manufacturers and oil compa-nies do to defend ICVs’ market dominance.More certainty about governments’ commit-ment to support implementation of EVs on alarger scale would surely help, as would morerestrictions for using ICVs in cities.
ACKNOWLEDGEMENTS
The research was financially supported by a grant fromthe Swedish Communications and Transport ResearchBoard (No. 93-315-22). An earlier version of this paperwas presented at the 5th Workshop of the Nordic Busi-ness Environmental Management Network: The Role ofTheory, Gothenburg Research Institute, Goteborg, 14–16January 1999. We are grateful for helpful suggestionsfrom Sylvia Harms, Daniel Sperling and two anony-mous reviewers.
REFERENCES
Anonymous. 1998a. Delivering cleaner transportationoptions. Research and Development 13: 9.
Anonymous. 1998b. Norway: electric car market: anoverview. International Market Insight Trade InquiresSeptember: 30.
Bernard MJ. 1981. Problems in predicting market re-sponse to new transportation technology. In NewHorizons in Travel-Behavior Research, Stopher PR, Mey-burg AH, Brog W (eds). Lexington: Toronto; 465–487.
Bilindustriforeningen AB Bilstatistik and Gamlin andZeipel Kommunikation. 1998. Bilismen i Sverige 1998.Wallin and Dalholm: Stockholm.
Buist DR. 1993. An Automotive Manufacturer’s AlternativeFuel Perspective. Proceedings from the First AnnualWorld Car 2001 Conference, 51–55.
CARB Mobile Source Division. 1995. Proposed amend-ment to the low-emission vehicle regulations to addan equivalent zero-emission vehicle (EZEV) standardand allow zero-emission vehicle credit for hybrid-elec-tric vehicles.
Carlson L, Grossbart SL. 1985. Towards a better under-standing of inherent innovativeness. In AMA Educa-tors Proceedings, Belk R (ed.). American MarketingAssociation: Chicago, IL; 88–91.
DaimlerChrysler. 1999. Driving the first viable fuel cellcar. Advanced Vehicle Review 51: 20–23.
Darley JM. 1977/78. Energy conservation techniques asinnovations and their diffusion. Energy and Buildings1: 339–343.
Darley JM, Beniger JR. 1981. Diffusion of energy-con-serving innovations. Journal of Social Issues 37: 150–171.
Davis JJ. 1992. Ethics and environmental marketing.Journal of Business Ethics 11: 81–87.
Davis JJ. 1993. Strategies for environmental advertising.Journal of Consumer Marketing 10: 223–225.
DeLuchi M. 1993. Greenhouse-gas emissions from theuse of new fuels for transportation and electricity.Transportation Research A 27: 187–191.
Dipert B. 1999. Green challenger takes on gas guzzlers.EDN 3: 36–38.
Flynn LR, Goldsmith RE. 1993. A validation of theGoldsmith and Hofacker innovativeness scale. Educa-tional and Psychological Measurement 53: 1105–1116.
Garling A, Johansson A, Garling T. 1998a. Determinantsof attitudes toward and choice of EVs. Unpublishedmanuscript. Chalmers University of Technology:Gothenburg.
Garling A, Johansson A, Garling T. 1998b. A visibilityand field study of households’ choices of EV. Unpub-lished manuscript. Chalmers University of Technol-ogy: Gothenburg.
Gatignon H, Robertson TS. 1985. A propositional inven-tory for new diffusion research. Journal of ConsumerResearch 11: 849–867.
Goldsmith RE, Flynn LR. 1992. Identifying innovators inconsumer product markets. European Journal of Mar-keting 26: 42–55.
Goldsmith RE, Hofacker CF. 1991. Measuring consumerinnovativeness. Journal of the Academy of MarketingScience 19: 209–221.
Harms S, Truffer B. 1998. Stimulating the Market forLightweight Electric Vehicles. The Experience of the SwissMendriso Project. EAWAG: Switzerland.
Hawkins DI, Best RJ, Coney KA. 1998. Consumer Behav-ior. Building Marketing Strategy (7th edn). McGraw-Hill: Boston.
vehicles (FS II 97-105). Papers. WissenschaftszentrumBerlin fur Sozialforschung.
Kotler P. 1991. Marketing Management. Analysis, Planning,Implementation, and Control (7th edn). Prentice-Hall:Englewood Cliffs, NJ.
Kurani K, Turrentine T, Sperling D. 1994. The ZeroEmissions Vehicle Market: a Diary-Based Survey of NewCar Buyers in California. Institute of TransportationStudies, University of California.
Kurani K, Turrentine T, Sperling D. 1996. Testing elec-tric vehicle demand in ‘hybrid households’ using areflexive survey. Transportation Research D 1: 131–149.
Labay DG, Kinnear TC. 1981. Exploring the consumerdecision process in the adoption of solar energy sys-tems. Journal of Consumer Research 8: 271–278.
Link F. 1997. Diffusion dynamics and the pricing of innova-tions. Unpublished Doctoral Thesis, Lund Studies inEconomics and Management, The Institute of Eco-nomic Research, Lund University.
Link F, Malm. 1994. Future User Groups of Mobile Tele-phony – Innovativeness and Product Preferences, paperpresented at the COST 248 Workshop: The EuropeanTelecom User, Lund.
Mackenzie JJ. 1997. Driving the road to sustainableground transportation. In Frontiers of Sustainability,Dower R, Ditz D, Faeth P, Johnson N, Kozloff K,Mackenzie JJ (eds). Island: Washington, DC; 121–190.
Monroe KB. 1990. Pricing: Making Profitable Decisions.McGraw-Hill: New York.
Morrison G. 1999a. Electricity takes the high road. Me-chanical Engineering 3: 112.
Morrison G. 1999b. Marines to get hybrid electric hum-mvee. Mechanical Engineering 3: 16.
Murphy IP. 1997. Charged up. Electric cars get jolt ofmarketing. Marketing News 31: 7, 1, 7, 13.
Nesbitt K, Sperling D. 1998. Myths regarding alternativefuel vehicle demand by light-duty vehicle fleets.Transportation Research D 3: 259–269.
O‘Donnell P, Oxfeld J. 1998. How to get a green ma-chine. Newsweek 25: 6.
Ostlund L. 1974. Perceived innovation attributes as pre-dictors of innovativeness. Journal of Consumer Research1: 23–29.
Peattie K. 1995. Environmental Marketing Management:Meeting the Green Challenge. Pitman: London.
Power JD. 1993. Automotive Consumer Profile Study. ThePower Report.
Rao AR, Monroe KB. 1988. The moderating effect ofprior knowledge on cue utilization in product evalua-tions. Journal of Consumer Research 15: 253–264.
Rogers EM. 1995. Diffusion of Innovations (4th edn). FreePress: New York.
Schot JW, Hoogma R, Elzen B. 1994. Strategies for shift-ing technological systems. The case of the automobilesystem. Futures 26: 1060–1076.
Schulz JD. 1998. Doing double duty. Traffic World 4:25–27.
Sperling D. 1995. Future Drive: EVs and Sustainable Trans-portation. Island: Covelo, CA.
Thornton E. 1999. Enviro-cars: the race is on. BusinessWeek 3615: 74.
Tigert D, Farivar B. 1981. The Bass new product growthmodel: a sensitivity analysis for a high technologyproduct. Journal of Marketing 45: 81–90.
Transportradet. 1997. Mere Miljøvenlige Biler – TekniskeMuligheder og Politiske Tiltag, Rapport 97-04. Trans-portradet: København.
Truffer B, Harms S, Wachter M. In press. Regionalexperiments and changing consumer behaviour: theemergence of integrated mobility forms. In IfOnly. . . .Prospects of the Electric Vehicle. Hulten S,Cowan R (eds).
Venkatesan M. 1973. Cognitive consistency and noveltyseeking. In Consumer Behavior: Theoretical Sources,Ward S, Robertson TS (eds). Prentice-Hall: EnglewoodCliffs, NJ.
Venkatraman MP, Price LP. 1990. Differentiating be-tween cognitive and sensory innovativeness: concepts,measurement and their implications. Journal of Busi-ness Research 20: 293–315.
Wang Q, DeLuchi M, Sperling D. 1990. Emission im-pacts of EVs. Journal of the Air and Waste ManagementAssociation 40: 1275–1284.
Weber M, Hoogma R. 1998. Beyond national and tech-nological styles of innovation diffusion: a dynamicperspective on cases from the energy and transportsectors. Technology Analysis and Strategic Management10: 545–566.
BIOGRAPHY
Dr. Anita Garling, Associate Professor, De-partment of Water, Environment and Trans-port, Chalmers University of Technology,SE-412 96 Gothenburg, Sweden.Tel +46 31 772 2397.Fax +46 31 189 705.E-mail: [email protected]. John Thøgersen, Associate Professor, De-partment of Marketing, Aarhus School ofBusiness, Haslegaardsvej 10, DK-8210 AarhusV, Denmark.Tel +45 8948 6440.Fax +45 8615 3988.E-mail: [email protected]
![Bse ppt[2]](https://static.documents.pub/doc/80x56/54c526734a7959c83a8b4619/bse-ppt2.jpg)
