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Chevrolet Volt

“Plug-in to the Future”

Marketing Strategy withProfessor Dr. Robert Harmon

Summer 2008Benjamin Long, Nicole Mallos, Emily Rabin, Lana Sappa & Cameron

Woelfer



Chevrolet Volt Marketing Plan Summer 2008

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Table of Contents

EXECUTIVE SUMMARY 7

MARKET OPPORTUNITY 7 COMPETITIVE ADVANTAGE 7 COMPETITIVE ASSESSMENT 7 NET ASSESSMENT 7 MARKETING OBJECTIVES 8 MARKETING STRATEGY 8 MARKETING BUDGET REQUIREMENTS 8 CAPITAL REQUIREMENTS 9

BUSINESS OVERVIEW 10

COMPANY OVERVIEW 10

PRODUCTS AND SERVICES 11 PRODUCT DESCRIPTION 11 VALUE PROPOSITION 13 BRAND IDENTITY 14 STRENGTHS /WEAKNESSES 14

CONCLUSIONS 15

TECHNOLOGY ASSESSMENT 16

VOLT OVERVIEW 16 PRODUCT TECHNOLOGY AND PLATFORM 16

E-FLEX DRIVE TRAIN 16 LITHIUM-ION BATTERY 17

COMPETING TECHNOLOGIES 18 COMPARATIVE ASSESSMENT 18 FAB ANALYSIS 19 COST DRIVERS 20 TECHNOLOGY LIFE CYCLES 20 PRODUCT LIFE CYCLES 21

DISRUPTIVE TECHNOLOGIES 21 CONCLUSIONS 21

MARKET ANALYSIS 22

POTENTIAL MARKET SEGMENTS 22 ECO-ELITE CONCERNED AND STYLE-WEARY MAINSTREAM GREEN 23 LOCAL GOVERNMENT OFFICES 23 GAS MILEAGE- WEARY AND ECONOMICALLY DRIVEN 23

SEGMENTATION METHOD 23 SEGMENT FORECASTS 23 BUYING CENTER 25




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DEMOGRAPHICS 26 PSYCHOGRAPHICS 26 BEHAVIORAL INSIGHTS 27 PROFILE OF SEGMENT CUSTOMERS 28 CUSTOMER VALUE DRIVERS 29 FAB REQUIREMENTS 30

PRICE SENSITIVITY 30 GEOGRAPHIC SEGMENTS 31

ESTABLISHING THE TARGET MARKET 33 DOCUMENT THE MAXIMUM OPPORTUNITY 35 POTENTIAL NEW MARKETS 35 MARKET ANALYSIS CONCLUSION 36

COMPETITOR ANALYSIS 38

INDUSTRY DYNAMICS 38 PORTER MODEL 38

SOURCES OF COMPETITIVE ADVANTAGE 41 COMPETITIVE BARRIERS 43 PARTNERSHIP /ALLIANCES 43

COMPETITIVE FACTORS MAPPING 43 KEY COMPETITIVE FACTORS 43 CONTRAST MATRIX 44 ANALYZING COMPETITIVE FACTORS 45

PROFILES OF COMPETITORS 46 COMPETITIVE BENCHMARKS 50 CONCLUSIONS 51

NET ASSESSMENT 52

SWOT ANALYSIS 52 STRENGTHS 53 WEAKNESSES 53 OPPORTUNITIES 53 THREATS 53

CRITICAL FACTORS 54 RISK FACTORS 54 SUCCESS FACTORS 56

CONCLUSIONS 56

MARKETING STRATEGY 59

STRATEGY PLATFORM 59 MARKETING OBJECTIVES DASHBOARD 59 GROWTH STRATEGY 60 MARKET LEADERSHIP STRATEGIES 64 POSITIONING STRATEGY 67 BRAND STRATEGY 67




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TRANSITION TO 4 PS 68 PRODUCT PLAN 68

PRODUCT OBJECTIVES 68 PRODUCT LIFE CYCLES 69 PRODUCT STRATEGY 71 PRODUCT COST MODEL 73

PRODUCT LAUNCH ISSUES 73 PRODUCT LAUNCH TIMELINE 73

SALES AND DISTRIBUTION PLAN 73 SALES STRATEGY 74 CHANNEL STRATEGY 74 SALES AND DISTRIBUTION OBJECTIVES 74 SALES STRATEGY 75 CHANNEL STRATEGY 77

PROMOTION PLAN 78 PROMOTION OBJECTIVES 78 PROMOTION THEME 78 PROMOTION STRATEGY 80

CAMPAIGN PLAN 84 PRICING PLAN 85

PRICING OBJECTIVES 85 VALUE BASED PRICING 85 PRICING STRATEGIES 86 CUSTOMER REACTIONS 86 COMPETITOR REACTIONS 86

IMPLEMENTATION 87

FINANCIALS 87

PRO-FORMA PROFIT AND LOSS STATEMENT 87 MARKETING BUDGET 91 MARKETING COMMUNICATIONS /PROMOTIONS BUDGET 93 CAPITAL BUDGET 95

CONTROLLING THE MARKETING PLAN 95 TIMELINE 95 TRACKING AND MONITORING 96

ORGANIZATIONAL REQUIREMENTS 97 OBJECTIVES 98 ORGANIZATIONAL PLAN 98

PLAN CONCLUSION 101

BIBLIOGRAPHY 105

APPENDICES 113

ASSIGNMENT 1 : TEAM ROSTER 113 ASSIGNMENT 2 : MARKETING PLAN PROPOSAL 113




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ASSIGNMENT 3 : CVD ASSESSMENT 119 ASSIGNMENT 4 : MARKET RESEARCH PLAN 129 ASSIGNMENT 5 : SEGMENT ATTRACTIVENESS ANALYSIS 131 ASSIGNMENT 6 : CUSTOMER PROFILES 134 ASSIGNMENT 7 : COMPETITIVE FACTORS MAPPING 135 ASSIGNMENT 8 : MARKET SIZING 136

ASSIGNMENT 9 : SWOT CHART 137 ASSIGNMENT 10 : CRITICAL RISK FACTORS AND SUCCESS FACTORS 138 ASSIGNMENT 11 : MOA CONCLUSIONS 139 ASSIGNMENT 12 : PLAN OBJECTIVES 141 ASSIGNMENT 13 : ANSOFF’S MATRIX 142 ASSIGNMENT 14 : VALUE DISCIPLINES 143 ASSIGNMENT 15 : BRAND STORIES 144 ASSIGNMENT 16 : VALUE DISCIPLINE / TRANSITION MATRIX 149 ASSIGNMENT 17 : PRODUCT PLATFORM STRATEGY 150 ASSIGNMENT 18 : SALES AND DISTRIBUTION STRATEGY 151 ASSIGNMENT 19 : COMMUNICATIONS MIX, SCHEDULE, TIMELINE, BUDGET 152 ASSIGNMENT 20 : PRICING STRATEGY SPREADSHEET PROJECTIONS 153

ASSIGNMENT 21 : LEVEL-5 MARKETING PLAN OUTLINE 153 ASSIGNMENT 22 : MARKETING BUDGET AND PLAN TIMELINE 154 ASSIGNMENT 23 : PRO-FORMA P&L AND CAPITAL BUDGET 155 ASSIGNMENT 24 : POWER POINT PRESENTATION 156

Table of Figures and Tables

FIGURE 1. E-FLEX DRIVE TRAIN CONFIGURED FOR THE VOLT 17 FIGURE 2. COMPARISON OF DRIVE TRAIN MECHANICS 18 FIGURE 3. SALES POTENTIAL 24 FIGURE 4. FEATURES, ATTRIBUTES, AND BENEFITS FOR POTENTIAL SEGMENTS 30 FIGURE 5. MOST HYBRIDS PURCHASED BY METROPOLITAN AREA 32 FIGURE 6. PER CAPITA PURCHASES OF TOP 10 METROPOLITAN AREAS 32 FIGURE 7. MARKET SEGMENT VALUE CURVES 34 FIGURE 8. PORTER’S FIVE FORCE’S OVERVIEW FOR THE VOLT 38 FIGURE 9. COMPETITIVE FACTOR ANALYSIS 45 FIGURE 10. ANSOFF’S MATRIX 61 FIGURE 11. BLUE OCEAN STRATEGY 63 FIGURE 12. VALUE DISCIPLINES 66 FIGURE 13. VALUE DISCIPLINE – MARKETING STRATEGY TRANSITION MAP 68 FIGURE 14. CHEVROLET HYBRID PLATFORM 71 FIGURE 15. CUSTOMER PATH TO PURCHASE 76 FIGURE 16. MARKETING COMMUNICATIONS MEDIA MIX 80 FIGURE 17. BREAK-EVEN ANALYSIS 91 FIGURE 18. VOLT ORGANIZATIONAL STRUCTURE 99

TABLE 1. CHEVROLET STRENGTHS AND WEAKNESSES 10




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TABLE 2. FAB CHART FOR CHEVROLET VOLT 13 TABLE 3. CHEVROLET VOLT STRENGTHS AND WEAKNESSES 14 TABLE 4. COMPARATIVE CHART FOR BATTERY TECHNOLOGY 19 TABLE 5. FAB CHART FOR VOLT AND PRIUS TECHNOLOGY 20 TABLE 6. POTENTIAL MARKET SEGMENTS 23 TABLE 7. 2008 SALES PROJECTIONS FOR EACH SEGMENT 25

TABLE 8. MARKET SEGMENT PROFILES 28 TABLE 9. SEGMENT CONTRAST MATRIX 33 TABLE 10. REITERATION OF 2008 SALES PROJECTIONS FOR EACH SEGMENT 34 TABLE 11. PORTER’S FIVE FORCES: THREAT OF NEW ENTRANTS 39 TABLE 12. PORTER’S FIVE FORCES: POWER OF BUYERS 40 TABLE 13. PORTER’S FIVE FORCES: POWER OF SUPPLIERS 40 TABLE 14. PORTER’S FIVE FORCES: SUBSTITUTES 41 TABLE 15. PORTER’S FIVE FORCES: RIVALRY OF COMPETITORS 41 TABLE 16. CONTRAST MATRIX 44 TABLE 17. PROFILE OF TOYOTA 46 TABLE 18. PROFILE OF HONDA 48 TABLE 19. SWOT ANALYSIS 52

TABLE 20. CRITICAL RISK FACTORS 55 TABLE 21. CRITICAL SUCCESS FACTORS 56 TABLE 22. OBJECTIVES DASHBOARD PLAN TABLE (2010-2012) 59 TABLE 23. TAXONOMY 72 TABLE 24. OBJECTIVES, SALES STRATEGY, AND CHANNEL STRATEGY 74 TABLE 25. PRO-FORMA P&L 89 TABLE 26. MARKETING BUDGET AND TIMELINE 92 TABLE 27. MARKETING PROMOTIONS BUDGET AND TIMELINE 94




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Executive Summary

Market Opportunity

The market opportunity for the Chevrolet Volt is relatively attractive considering thetrends and circumstances that are occurring in the United States society.

The target market for the product is a segment called the Eco-Elites. They havebeen identified as the segment to be most likely to buy the Volt considering theirlifestyle and purchasing power.

For 2007, TAM was $7,500,000 for the total passenger car market (BTS 2008).As for the SAM for 2008 it was estimated at about $6.3 billion for the Eco-Elitetarget market (Hybrid 2008).

Competitive Advantage

The Chevrolet Volt‘s competitive advantages are based on it being an eco-performancevehicle that is electric with the potential of energy flexibility. It will compete on its eco-friendly image of zero emissions produced with 40 or less mile trips while still being ahigh performance vehicle. Also, the vehicle will have no fuel costs when traveling 40miles or less which is another competitive advantage. The Volt is unique because theconsumer is able to charge the vehicle in a regular household plug, which othercompeting products do not have. An advantage for the Volt that will be capitalized on isthe style of the vehicle. Unlike other hybrids and one of its main competitors, the Prius(which lack a certain aesthetic appeal), consumers will be excited about the Volt, an eco-friendly, highly stylish vehicle. Competitors have not released anything like it.

Competitive Assessment

As for the competitive assessment, threats of new entrants seem low while rivalry of competitors is high. The power of buyers is low while the power of suppliers is moderateto high. This represents the volatile industry in which Chevrolet competes. The Volt‘smain competitors are Toyota and Honda. Toyota produces the Prius which has the mostmarket share for hybrid vehicles. Honda produces the Honda Civic Hybrid which is verydesirable considering the success of the Honda Civic so far. Both of these competitorshave recognized the consumer‘s desire for fuel efficient and eco-friendly vehicles early.Toyota has been a pioneer of hybrid technology and was the first to be massivelysuccessful with the Prius, a hybrid vehicle. The advantages for Toyota and Honda include

strong brand reputations exhibiting perceptions of fuel-efficiency, reliability andtrustworthiness which consumers do not recognize in Chevrolet.

Net Assessment

The net assessment identifies internal strengths and weaknesses for the Volt and alsoexternal opportunities and threats. Chevrolet‘s oper ation is somewhat large and is astrong brand; the company should be able to leverage their product in order to gain




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significant market share. Taking into account the company‘s power in the market,Chevrolet will be able to obtain innovative technology and research for the product.Weaknesses for the Volt include a declining market and financial performance due to aneconomy in trouble and the company‘s highly successful competitors, Toyota and Honda.Another weakness for the Volt is associated with a high price tag considering that the

technology being used for the vehicle is relatively expensive to develop. Opportunitiesfor the vehicle reside in a shifting fuel market which has resulted in many consumersbecoming eco-conscious and the onset of the ―green‖ social trend. Possible threats for theproduct reside in an economic downturn and the increasing prices of raw materials whichhave made consumers more price sensitive.

Marketing Objectives

The marketing objectives for the Chevrolet Volt are as follows.

Revenue for the Chevrolet Volt is projected at $960,000,000 for 2010. Thisnumber will increase in the following years, achieving $4.2 billion in 2011 and $4

billion in 2012.The Volt‘s market share for the passenger car market in 2010 is estimated at.27%, and remains steady for 2011 and 2012 at 1.33%.

As for the market share projected in the hybrid sector, it will achieve 2.96% in2010 followed by 12.04% in 2011 and 9.79% for 2012.

Considering the high costs of producing the product, ROI is projected as -8.81%for 2010. However ROI will increase in the following years achieving 31.82% in2011 and 39.45% in 2012.

In 2010 ROMI will be relatively low at -286.37% however it will increase in thefollowing years at 1196.72% 2011 and jumping to 2297.74% for 2012.

Marketing Strategy

The marketing strategy for the Chevrolet Volt consists of using a blue ocean strategyconsidering the Volt‘s superior performance in establishing a frame of reference,leveraging points of parity, and using compelling differences. As a result, the Voltachieves a longer lasting ROI.

The Chevrolet Volt will be positioned emphasizing buyers‘ motives and goals, economicvalue, style, independence and eco-friendliness considering low emissions. Both thebranding and the value proposition speak to these consumer value drivers. The brandingfor the Volt accentuates the brand‘s assets while lessening the impact of the brand‘s

liabilities. The empowerment of a new generation of people and vehicles through the re-invention of Americana are essential to the branding statement.

Marketing Budget Requirements

The marketing budget total for the Chevrolet Volt has been projected at $68,075,000 forthree years. This incorporates marketing communications for promoting the product, themarketing team, sales and customer support and product management. A 10%




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contingency is also included into the marketing budget. An upfront capital investment of $16,443,000 is needed considering the pre-launch advertising and promotions.

Chevrolet will monitor the marketing budget by maintaining a market share of 10% in thealternative vehicle market, a 70% share of mind for customer satisfaction, 12% brand

preference for the U.S. market and 19% ROI over three years.

Capital Requirements

The capital requirement for the Chevrolet Volt has been estimated to about $2 billion.Most of the expenses have come from the Research and Development departmentconsidering the new and innovative technology. R&D requires about 95% of the capitalrequirement. The costs for R&D will be amortized over the three year period. At the endof the three year period net income will amount to about $290 million with a ROI of 17.89%.




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Business Overview

Company Overview

General Motors Corp. was founded in 1908 by William C. Durant and boasts itself as

being the largest automaker in the world. They‘ve been the annual global sales leader inthe car industry for 76 years. The company‘s headquarters is located in Detroit,Michigan. General Motors manufactures vehicles in 33 different countries and employs266,000 people throughout the world. General Motors manufactures a wide variety of cars and trucks, including hybrids and vehicles that use bio-fuels. It currently holds22.1% market share for cars and trucks in the United States. Market share is down .7%from 2007. Throughout the years, GM has developed many different vehicle brands, suchas: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac,Saab, Saturn and Vauxhall. The General Motors Corp. also includes the subsidiary of OnStar, which has been declared the industry‘s leader in safety, security, and informationservices (GM Company Profile 2008).

GM‘s business opportunity is to enter the car industry with the first American electricvehicle. They are capitalizing on the rise of gas prices and the ―green‖ social trend of eco-conscious consumers. GM is dedicated to producing vehicles that are cleaner andmore efficient through the development of new technology (GM Company Profile 2008).GM finally recognizes that demand in the industry is shifting to vehicles with good fueleconomy and eco-friendly cars. The company is embracing this by producing morehybrids and developing new technology for electric, alternative fuel and fuel cellvehicles.

Chevrolet is a subsidiary brand of General Motors and is its best known brand

worldwide. It was founded in 1911 by Louis Chevrolet and William C. Durant. Chevroletoffers over 20 vehicles to the market ranging from subcompact cars to medium dutycommercial trucks. It‘s most popular products have consisted of the Malibu and Impalasedans. Considering Chevrolet‘s longevity, the company contains various competitiveadvantages and disadvantages. The following is a table describing the variouscompetitive strengths and weaknesses for Chevrolet.

Table 1. Chevrolet Strengths and Weaknesses

Strengths WeaknessesInnovative Technology Tarnished Brand Reputation

American High R&D Costs

Opportunity to Repair BrandReputation

Third Party TechnologyDevelopment

Marketing Power Declining Market Share

Strategic FlexibilityDeclining FinancialPerformance

Positioned in a Niche MarketConducts Large ScaleOperations

Strong Brand Portfolio




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The company has various competitive strengths which has helped it sustain its position inthe market for as long as it has and gives the Volt a good platform. These strengthsconsist of the company‘s innovative technology, that it is an American brand, their opportunity to repair its image/positioning, its marketing power, strategic flexibility, that

it is positioned in a niche market, conducts large scale operations, and has a very strong brand portfolio. All of these aspects have been conducive to the brand‘s success in themarket.

There are various weaknesses of General Motors that may harm the success of the Volt.They include: a decreased strength in brand identity and reputation due to product recalls,the unknown kinks and long term affects of the product that can cause hesitation of purchase or harm the brand, the new technology being used is expensive to research anddevelop, third party technology development, declining market share, and decliningfinancial performance of the firm.

GM and Chevrolet will be successful with the launch of the Volt considering the future of the vehicle industry. Consumers are no longer willing to purchase gas guzzling vehiclesthat are harmful to their wallets and the environment. Rather they prefer vehicles thathelp them become more fuel independent, considering its high costs and destructiveaffects on the environment. Taking into account the common perceptions of societycurrently, wanting to advocate for foreign independency and an eco-conscious socialtrend to empower individuals to live and think ―green‖. Consumers want and are readyfor a vehicle that is associative with these values.

Products and Services

Product Description

The Chevrolet Volt is a new vehicle that will be launched in 2010. It is classified as anelectric vehicle. This is due to the fact that the vehicle contains an electric motor, is builton the E-Flex Propulsion System and uses a lithium-ion battery. It is built on the E-FlexPropulsion System which means that it is a standard platform drive train that is energyflexible. Energy flexibility means that the drive train can be powered by various energysources ranging from gasoline to electricity, including hydrogen fuel-cells or bio-fuel(GreenCarCongress 2008). The Chevrolet Volt‘s combustion engine is not mechanicallylinked to the drive train but is solely used to generate energy for the lithium-ion battery.

The various components of the Volt include a gasoline engine, generator, electric motor,charge ports, battery pack, and fuel tanks. The gasoline engine consists of a three-cylinder, 1.0 liter turbo charged internal combustion engine that only turns on as neededin order to generate energy for the battery. The 53-kw generator is powered by the engineand is able to recharge the battery in about 30 minutes. The electric motor contains 120-kw and produces 160 hp. The Volt‘s top speed is 120 mph. Charge ports are located onboth sides of the vehicle, and allows the driver to charge the battery from a 110-volt




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household socket in approximately 6.5 hours. A 16-kwh lithium-ion battery is included inthe battery pack and when fully charged it has enough power for up to 40 miles of drivingbefore the generator is needed. Two fuels tanks are included in the vehicles which canhold a maximum total of 12 gallons of gasoline or E85 (GM‘s Chevy Volt 2007).

The lithium-ion battery is a very important component in the Volt considering that it iswhat mostly enables the vehicle to be electric. Considering the battery‘s high energydensity and its light weight, the Volt is able to run solely on electricity for up to 40 mileswhen fully charged. After that point, the vehicle will need to resort to extra energy torecharge the battery therefore using fuel to generate energy for the lithium-ion battery.This means that the Volt is able to run up to 40 miles with virtually zero emissions andzero fuel. The Volt will receive about 400 miles per tank and an estimated 50 miles pergallon. This contributes to a rather eco-friendly and fuel efficient vehicle.

Exterior

The Chevrolet Volt will be comparable to the size of the Chevrolet Cobalt. Thedimensions for the Volt will be estimated as approximately 170 inches lengthwise, 52.6inches high and 70.5 inches wide. The vehicle has been designed for an urban lifestyle,therefore its dimensions need to be small enough to sustain an urban way of life. TheVolt‘s small proportions joined by large wheels, wide front and rear tracks, and a tightwheel-to-body relationship imply a sporty style for the Volt. The roof, side glass andbeltline are constructed by GE plastics. It consists of a transparent, glazed polycarbonatematerial that will be scratch resistant while also providing the gloss surface that looks likeglass. The exterior panels of the vehicle are also built using a GE Plastics composite(Chevrolet Volt Concept, 2007).

Interior

The interior components of the Chevrolet Volt are made from lightweight, recyclablematerials that imply responsibility and eco-consciousness. It is designed for daily use toappeal to smart consumers with an urban lifestyle. The Volt‘s interior is equipped withtechnologies that enable a consumer with an eco-conscious and urban lifestyle to live asimpler life. Some examples of this include the instrument panel topper and steeringwheel that are both made out of GE Plastics. Some of the interior features include superimaging, composite panels, and the use of ambient light (Chevrolet Volt Concept, 2007).

Super imaging uses florescent inks and is an innovative, dual-mode technology displaythat provides two visual levels of information to the driver from the information cluster.The composite panels are made by GE Plastics and can be placed on upper instrumentpanels, seat backs, center console sides and door inserts. They provide structural interiorsurfaces that can be cantilevered in space. Ambient light is used heavily in the vehicleconsidering its transparent upper roof, thinner pillars and rail sections. In addition, allstorage areas are lighted internally, further contributing to an ambient effect (ChevroletVolt Concept, 2007).




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The following table describes the Features, Advantages, and Benefits of the ChevroletVolt.

Table 2. FAB Chart for Chevrolet Volt

Features

Fuel-Powered BatteryPlug-In

Runs 40 miles without using gasoline

Lithium - ion battery charges in 6.5 hours

E-Flex drive train

Runs up to 400 miles with fuel-powered battery

Aesthetic Style

AdvantagesDoes not use gasoline to power the drive train

Allows for easy charging using a household plug-in

Lithium-ion battery is lighter and more efficient

Provides a standard that can be used for other vehicles

Allows use of various energy sourcesZero emissions when run on battery

Zero fuel use when run on battery

Estimated 50 MPG fuel economy when run on fuel

Better style than other hybrid vehicles

BenefitsVirtually Zero Emissions

Virtually Zero Fuel Costs

Eco-Friendly

American Brand

Low Fuel Costs

Low Emissions

Value proposition

―Empowering a new generation by reinventing the spirit of the American automobile.‖

This value proposition is based on the different customer value drivers that have beenassociated with the Chevrolet Volt. These value drivers would include style andinnovation while also incorporating the aspects of being eco-friendly and less dependentupon gasoline. It also considers the relevant circumstances occurring within today‘ssociety including the concern of raising oil prices and also the concern of protecting theenvironment. The customer value drivers that were most important consisted of buyers‘motivations and goals including the economic values of the product.

As described in the value proposition, the Volt is creating the perception of empowerment though its use of both a new vehicle generation and a new generation of consumers. It represents the reinvention of the classic American automobiles into anupdated technological and highly innovative American vehicle that has the future inmind.




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Brand identity

Chevrolet has been a brand that has been patronized for many years. The brand pridesitself on offering products that are high quality, perform well and stylish. It has producedmany vehicles throughout many years of servicing its customers. Taking into account the

brand‘s tagline, ―An American Revolution‖, it‘s apparent that Chevrolet‘s brand identityconsists of being American, independent and industrial. Once known for the classicAmerican vehicles that were boasted in the years past, Chevrolet‘s image has changed inrecent years. Considering product defects and consumers‘ consistent complaints, thecompany‘s image has been negatively affected. Chevrolet is not perceived as providingsuperior quality for consumers, and its vehicles have been known to be relativelyunreliable. It has also been criticized for producing gas guzzling vehicles that are bothharmful for the wallet and the environment. However the company is viewed positivelyby many considering the circumstances of war and a desire to avoid foreign dependenceby consumers through being an American brand.

The Volt is an attempt to improve the company‘s image through providing a vehicle thatis fuel efficient, eco-friendly, innovative and of superior quality and performance. Itsbrand identity will also incorporate being American and independent but will alsoincorporate updated technologies, innovativeness, style, sustainability and empowerment.This differs to the previously stated brand identity of Chevrolet because in a way it isreinventing itself for the new generation. The Volt is the vehicle of the future consideringits E-Flex drive train that GM intends on using for other alternative energy vehicles. It isintroducing a new idea of transportation and reinventing the car industry. The Voltrepresents new and innovative technology, style and sustainability. It is a concept that canempower consumers to think about the future and be a part of an eco-consciousmovement in society.

Strengths/Weaknesses

Table 3. Chevrolet Volt Strengths and Weaknesses

THE VOLT

Strengths WeaknessesAesthetic Appeal Unproven Technology

Eco-Friendly High Price

Low Fuel Costs Tarnished Brand Reputation

Lithium-ion Battery

American Brand

Innovative Technology

As depicted in table 3 above, the following strengths and weaknesses are apparent for theopportunity of the Chevrolet Volt.

Strengths of the Volt include its aesthetic appeal, eco-friendliness and ability to appeal tothe social trend, and low fuel costs. These strengths will help to boost consumers‘perception of the vehicle and provoke interest into the product. The Volt is unlike any




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other alternative vehicle due to these qualities. Superior style compared to the Prius andother hybrid vehicles is going to help position the Volt against competition. The Volt isalso more eco-friendly than the Prius and other hybrid vehicles which also contributes toits low fuel costs. Also considering the Volt‘s lithium-ion battery which is betterconsidering its high energy density and light weight when compared to the Nickel-Metal

Hydride Battery used in the Prius. Chevrolet is an American brand which is advantageousfor the Volt considering consumers want to avoid foreign dependency. The Volt‘sinnovative technology sets it ahead of the competition as a pioneer in the energy flexiblevehicle industry.

Weaknesses of the vehicle would include the unproven technology, considering that theVolt is the first vehicle to be put on the market using lithium-ion batteries as an energysource. There are many bugs and defects that may occur which can harm the reputation of the brand and the vehicle, therefore causing consumers to become less interested in theproduct due to fear. Another weakness of the product is its price tag. At $48,000 for thefirst year, it seems relatively expensive considering the prices of similar vehicles.

Consumers may not be willing to spend this much on a vehicle considering an economicdownturn. Chevrolet‘s brand reputation is a challenge to overcome due to negativeperceptions of the brand.

The Volt will be positioned against competitors based on the fact that it is an eco-friendly, high performance vehicle with a better appearance. When considering theCorvette and Camaro, Chevrolet is known for building performance vehicles. The Voltwill be the first eco-performance vehicle on the market, meaning that although it is eco-friendly it is also a high performance vehicle. The Toyota Prius and the Honda Civic arenot associated with the level of performance that the Chevrolet Volt will be.

Conclusions

While General Motors is venturing into a new territory considering the production of theVolt, there are many factors to take into account. The company faces an opportunity toreplenish its brand image through the new technology of the Volt. Positioned on thequalities of being an eco-performance vehicle, there is a lot of potential to help GeneralMotors and Chevrolet improve its brand image and regain share for increased financialperformance. However considering the new technology associated with the vehicle, if theproduct fails General Motors will be hit hard. Defects that may occur in the new vehiclewill further deteriorate the brand‘s image, not to mention all the capital that would havebeen lost from venturing into the project.

Considering the vehicle‘s features and competitive advantages, the vehicle has highpotential for being successful in the market. An eco-performance vehicle is desired in themarket considering the lack of such a product being offered by competitors. An eco-friendly, stylish, performance vehicle includes qualities that are currently heavily desiredin the market considering the onset of rising fuel prices and threats of global warming.Competitors such as Toyota and Honda have continued to produce vehicles that have notsimultaneously addressed all three of these factors.




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Technology Assessment

Volt Overview

The Volt is marketed by GM as an electric car. The reasoning behind this classification

is that the combustion engine is not mechanically connected to the drive train; the engineis only used to recharge the lithium-ion battery. Despite this marketing effort, the Volt isusually described as a ―plug-in‖ hybrid. The battery can be plugged into an ordinaryhousehold socket in order to recharge the battery. A full charge of the battery has adriving range of up to 40 miles. GM expects to use the E-Flex drive train as its platformfor all of its future alternative fuel vehicles.

Product Technology and Platform

The major new technologies that have enabled the development of the Volt are the E-Flexdrive train and the lithium-ion battery that is used as the power source for the drive train.

E-Flex Drive Train

The E-Flex drive train system is intended to standardize the platform on which new carsare developed. The ―E‖ denotes that the drive train is based on an electric motor and the―Flex‖ denotes that the motor can use a variety of fuel sources (GreenCarCongress 2008).These fuel sources can range from a gasoline combustion engine to a hydrogen fuel cell.GM envisions that the engine will be able to be swapped out for E85 and E100 bio-fuelor even hydrogen options in the future. Initially for the Volt the E-Flex system will beequipped with a lithium-ion battery and a 3-cylinder internal combustion engine.However, GM plans to use the E-Flex drive train as the platform for all of its futurealternative fuel vehicles.

The following is a breakdown of the key components of the Volt as provided by PopularMechanics in their May 2007 issue:

Gasoline Engine: Three-cylinder, 1.0 liter turbocharged internal-combustionengine.

Generator: 53-kw generator; can recharge the battery in about thirty minutes.

Electric Motor: 120-kw electric motor; 160 horsepower; 120 mph top-speed.

Plug-in: One on each side of car; uses 110-volt outlet; recharges in about 6.5hours.

Battery: 16-kw lithium-ion battery; capacity to drive Volt 40 miles withoutneeding to be recharged.

Fuel Tank: Two tanks with a total of 12 gallons of capacity.Each of these components can be seen as they are configured on the Volt in figure 1.




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Figure 1. E-Flex Drive Train Configured for the Volt

Lithium-ion Battery

The major obstacle that has GM has faced is the development of the lithium-ion battery.Previous battery powered or battery assisted vehicles have used nickel-metal hydride (Ni-MH) battery technology. However, GM has decided to go ahead and develop newlithium-ion battery technology citing its lighter weight and higher energy density over theNi-MH technology. The battery is being jointly developed by A123 systems andContinental A.G. (Atlantic 2008). The objective is to develop a battery that will allow a40 mile range without needing to be charged. The challenges for developing the batteryhave been: weight, energy capacity, and cooling. In order to get the most range out the

battery, weight has needed to be reduced while energy capacity is increased. One of themajor issues with the lithium-ion battery technology is that the dense energy capacitygenerates a significant amount of heat, so developing an appropriate cooling system hasalso been critical.




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Competing Technologies

The chief competing technology for the Volt is Toyota‘s Hybrid Synergy Drive. Toyotahas developed its own hybrid platform on which it is developing its alternative fuelvehicles.

Comparative Assessment

The primary difference between the E-Flex and the Hybrid Synergy Drive is that the E-Flex drive train runs only using the electric motor while the Hybrid Synergy Drive usesboth gas and electric motors to run the drive train. Different battery technologies are alsoused for each approach with considerable consequences in the capabilities and limitationsfor vehicles built on each platform.

Drive Train Technology

Figure 2 shows the differences in approaches to each drive train technology. The redcolor denotes drive train power, while the green color denotes electrical power.

Hybrid Synergy Drive E-Flex Drive Train

Figure 2. Comparison of Drive Train Mechanics

The main difference is that the engine in the Hybrid Synergy Drive drive train can supplydirect drive train power to the wheels, while in the E-Flex drive train, the engine is onlyused to power the generator.

The Hybrid Synergy Drive also has different capacity and power capabilities from the E-Flex drive train. Most notably is the difference in horsepower where the E-Flex has a 50horsepower advantage. The net hybrid horsepower for Toyota‘s Hybrid Synergy Drive is110 horsepower (Toyota.com, 2008). This is compared to the 160 horsepower of theVolt as previously stated above.

Battery Technology

The lithium-ion battery for the Volt is the critical component for the E-flex drive trainplatform and consequently for the entire Volt project. Current hybrid technology utilizesthe Nickel-Metal Hydride (Ni-MH) battery. While the Ni-MH battery is heavier and hasless energy density, it is proven and more reliable than the Lithium-ion (Li-ion) battery.




19

Because of its less dense energy capacity, the Ni-MH battery produces less heat and doesnot have the same cooling issues as the lithium-ion battery. These batteries areconsiderably cheaper as well. The differences in battery technology are broken down inTable 4.

Table 4. Comparative Chart for Battery Technology

While the differences may not seem significant, the combination for the Li-ion battery of high energy density and low weight allow it to run the Volt for 40 miles without needingto be recharged. This capability is simply not possible with the current Ni-MHtechnology nor will it likely be possible with any future development of the technology.Cost and heat issues will become more manageable as the Li-ion battery technologycontinues to be developed.

FAB Analysis

The primary differences in features are the 160 horsepower of the Volt compared to the110 horsepower of the Prius and the ability to plug-in the battery to recharge it. The 50horsepower difference is expected to lead to a large advantage in performance for theVolt. The combination of high energy capacity, low weight, and plug-in capability forthe battery on the Volt allows it to have the huge benefit of having the ability to be drivenwith no direct emissions and no gasoline fuel costs for 40 miles at a time. This capabilityis simply not possible with the current technology on the Prius largely in part because of its older Ni-MH battery technology. However, because the Prius uses older technology,it benefits from economies of scale production and more incremental improvements thatfine tune the technology to be used in automobiles. This leads to a significant costadvantage over the Volt for the Prius. It is expected that as the E-Flex and Li-iontechnology matures, it will benefit from similar advantages in scale economies leading tolower production costs.

The overall features, advantages, and benefits are summarized in table 5 below.

Lithum-ion Ni-MHEnergy Density Good Ok

Heat Bad Ok

Weight Good Bad

Reliability Ok Good

Cost Bad Ok




20

Table 5. FAB Chart for Volt and Prius technology

Features

Chevrolet Volt Toyota Prius

160 horsepower

Plug-in capabilityEngine not connected to drive train,only used to power electricgenerator

Lithium-ion battery technology

110 horsepower

Recharging capability frombreaking

Engine directly connected to drivetrain

Nickel-Metal Hydride technology

Advantages


Newest hybrid/electric technology

Greater performance

Higher battery capacity

More expensive to manufacture

Uses proven and reliabletechnology

Less expensive to manufacture

Benefits


High performance while havinghigher fuel economy and lesscarbon emissions

Can run 40 miles withoutrecharging the battery

Proven and reliable technology inmotor vehicles.

Lower price point for those whowant to purchase a hybrid vehicle

Lower total cost of ownership

Cost Drivers

Significant amounts of research and development is still being invested into the lithium-ion technology and this is by far the largest cost driver. It will continue to be animportant cost as the technology is continually being improved. Even when not includingR&D into the technology cost, major capital costs are being incurred in constructingplants where the lithium-ion battery can be produced. While the basic technology is thesame for small scale batteries such as those used in portable electronic devices, the scaleeconomies has not yet had a significant impact on the cost of producing lithium-ionbatteries that are on the scale of powering a vehicle. Vehicle scale Ni-MH batteries havebenefited from scale economies because plants that produce them have been running for anumber of years and up front capital requirements have already been invested.

Technology Life Cycles

While the lithium-ion battery technology is well on its way in the technology life cycleand is deep into the state-of-the-art stage, the application of lithium-ion technology foruse in powering a vehicle has still not quite proven itself in the market. It is consideredbetween bleeding and leading edge of the market. Ni-MH application in powering a




21

vehicle is further down the technology life cycle, but if the lithium-ion technology provesitself, the Ni-MH vehicle scale technology will likely be moved into the dated category.

Product Life Cycles

The plug-in hybrid is firmly in the market introduction stage. Costs are considerablyhigh, there are very few competitors, and demand needs to be created. However, if theVolt is to be considered as part of the larger alternative fuel vehicle market, especiallyhybrids, then it will be a part of the early product growth stage. The Volt will not be ableto quickly create economies of scale unlike other hybrid models. Because of this, theVolt will have trouble competing on cost.

Disruptive Technologies

The primary foreseeable disruptive technology for the Volt is the hydrogen fuel cell. Thehydrogen fuel cell is fuel cell technology that is powered by hydrogen. Eventually the

hydrogen fuel cell may replace the internal combustion engine as a method of generatingpower in vehicles. However, because of the limitations of producing and distributinghydrogen, the technology is not likely to replace the internal combustion engine withinthe foreseeable future.

Conclusions

The primary technologies of the Volt are the E-Flex drive train and the lithium-ionbattery used to power it. The E-Flex drive train will help to standardize futuredevelopment of alternative fuel vehicles for GM which in turn will lower theirdevelopment costs. Further, potential disruptive technologies such as the hydrogen fuel

cell can be incorporated into the E-Flex drive train making it a versatile platform onwhich to base a new generation of vehicles on. The lithium-ion battery is definitely theright way to proceed given its advantages over the Ni-MH technology, but the drawbacksof the lithium-ion technology will have to be addresses as it is further developed. It isclear that the potential for Li-ion technology is far beyond the Ni-MH capabilities.

The combination of the Li-ion battery technology and the E-Flex drive train allow forcapability that has not yet been seen in a mass produced automobile. This is thecapability to drive 40 miles on a battery without needing a recharge. This capability is asignificant advantage over Toyota‘s Hybr id Synergy Drive which uses older technologythat simply does not have the capabilities or the potential to develop this capability.

The technology utilized for the Volt simply has far more promising potential than thatused on the Prius. The E-Flex is a smart platform for future alternative vehicle fueldevelopment and a large step towards establishing a standard not only for the Volt, butfor GM and potentially other automobile companies as well.




22

Market Analysis

The following is a market analysis of the markets that appear to have the largest potentialfor purchasing the majority of the market for vehicles that possess characteristics andvalue drivers of the Chevrolet Volt. The markets will be evaluated on market size, growth

rates, and profit potential. Also considered, will be the place of purchase, demographics,psychographics, behavioral insights, customer value drivers, price sensitivity, andgeography within these markets.

Potential Market Segments

To find potential markets for the Chevrolet Volt, Mintel reports on green living, greenmarketing, and eco-consumers were evaluated (Mintel 2008). Age groups, buying habits,and preferences were determined. Also, several news articles claim that mainstreamAmerica is beginning to think greener, but many aren‘t willing to give up their carelesslifestyles (Wigder 2008).

The first segments considered were metropolitan businesses, upper class, and supergreens. After extensive database & article research, neither of these markets had nearly asmuch purchasing power and size as the three segments chosen. Metropolitan businesseswere found unlikely to be innovative purchasers because of lack of plug-in capability intheir parking garages (Baker 2008). Upper class citizens are still a part of the eco-elites,but targeting the upper class alone left out other potential consumers that are interested inthe Volt (Who 2008). Super greens and true greens are particularly price (Mintel 2008).

These factors led to three other potential groups: the ―eco-elites,‖ local governmentaffiliated offices, and people who are economically driven and gas-usage weary. Eco-

elites are a hybrid segment of the mainstream green and the Echo Boomers, includingGeneration Y. They are particularly a good fit because of their need to look good and feelgood about their purchases. They like they fit into specific social groupings like eco-aware and high-end fashion.

Local government offices are also capable of having the purchasing power and need to fitinto eco-conscious conspicuousness. This segment was looked further into specificallybecause some local governments already purchase hybrids, Smart cars, and otheradaptations for eco-friendly looks.

Finally, the gas-usage weary are the most likely to make purchases based solely upon

avoidance of filling up at the gas stations. Fuel-weary consumers are a simple target withgas prices on the rise and an economic downturn.

Table 6 below is further explanation about these last three segments.




23

Table 6. Potential Market Segments

Eco-elite concerned and style-weary mainstream green

These are consumers who have disposableincomes, already participate in eco-friendlyshopping, and want to look stylish while doing so.Some of the general groups that are included inthis segment are Echo Boomers, Generation Y, andeven some celebrities, from Cameron Diaz toPrince Charles (Celebrity 2006.)

Local government offices Local governments are as into looking sustainableas celebrities. Their reasons are air quality, less oildependency, and global warming. With the lighttravel of metropolitan area officials, arguments forthe hybrids in government have began to win overtax payers.

Gas mileage- weary andeconomically driven

With fuel prices at an all-time high for the UnitedStates, consumers are concerned that it‘s going toaffect their travel expenses and take away fromtheir purchasing power. One way consumers feelthey can cut costs is to invest in gas-conservativevehicles. Hybrids are known to get between 40 to45 miles per gallon and the waiting list for them isgrowing. These consumers are typically familiesand sports-enthusiasts that would find motor-scooters and mass transit too difficult to deal with.

Segmentation Method

For the segmentation method, Mintel reports, articles from popular news, and informationfrom informal interviews were analyzed. Consumer data from Mintel revealed evidencethat the market for eco-friendly consumers is growing to nearly 50% of the United Statespopulation. In addition, purchasers of green products were most likely to think of themselves as influential, optimistic, politically liberal, and interested in living a healthylifestyle. The segments evaluated were related to price, style, and those that would beinnovative adopters (Mintel 2008).

Segment forecasts

Segment forecasts were developed using multiple credible and most recent data reports.Much of the data within reports used was derived from government documentation.However, like all forecasts, there is an element of subjectivity and estimates andassumptions have been made. Calculations were made with educated assumptions andthey are believed to be moderately accurate. Here will be addressed the market size,growth rates, and profit potential of each segment.




24

Market size

Market size was determined using data from a Research and Innovative TechnologyAdministration (RITA) report. This data included annual new and used car sales through

2007. The full market size was determined to be 7.4 million passenger cars (BTS 2008).It was also necessary to determine the market size for hybrid vehicles. The market sizefor hybrid vehicles was determined through two sources, an article in USA Today and areport from Hybridcars.com. Using these sources, a growth rate was extrapolated and aprojected market size for hybrid vehicles was determined to be 446,000 sales for 2008.

Growth rates

Using historical data provided by a RITA report, it was determined that the growth ratefor the passenger car market was effectively zero (BTS 2008). To determine the growthrate for the hybrid car market, current sales data was used along with a projected sales

number of one million in 2012 (USA Today 2007). From these numbers, an annualgrowth rate of 23% was calculated.

Sales Potential

Figure 3 shows the sales forecast for the Volt based on the Fourt & Woodlock Diffusionequation used within the Pure Innovation Model. It uses market size, market share, andpricing estimates potential revenue over the next three years.

Volt 3-Year Sales Potential

$257,243,767

$496,435,590

$724,360,248

$-

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$700,000,000

$800,000,000

1 2 3

Year

R e v e n u e

Figure 3. Sales Potential




25

Sales potential was calculated using the 23% growth estimate forecasted for years 2011(year 1), 2012 (year 2), and 2013 (year 3). The revenue represented is an approximationof the total alternative fuel vehicle market for years 2011 to 2013 within the UnitedStates. Although, the numbers may appear inflated, there is reasonable support that

alternative vehicles are likely to be a replacement for all fuel-only consumption vehiclesbecause of mandates like the ELV Directive, stringent emissions standards, and currentpurchasing trends.

USA Eco-Elites Gas-Weary Local Govt.

Index 100% 28.0% 55.0% 6.0%

Passenger Vehicle Volume 7,438,000 2,082,640.0 4,090,900.0 446,280.0

Hybrids 6% 11% 3% 9%

Passenger Hybrid Volume 446,280 232,066 129,421 40,165

Average Sales price of

Hybrid $27,000 $27,000 $27,000 $25,000Total Consumer Hybrid

Sales Potential $12,049,560,000 $6,265,771,200 $3,494,372,400 $1,004,130,000

Table 7. 2008 Sales Projections for Each Segment

The 2008 sales projections for each segment are the most significant in choice of thetarget market. It shows that even though the eco-elites purchase nearly 20% fewerpassenger vehicles than the gas-weary consumer segment, the eco-elites purchase 8%more of those vehicles as hybrids. This insinuates that the total sales of the eco-elites willbe approximately more than half of the other consumer segments.

Buying Center

Distribution is expected through retailers that are authorized dealers of Chevroletvehicles. Most retailers in the metropolitan areas are available via the web or at theirspecific locations. Considerations here are that more consumers are moving towardpurchasing vehicles where they do their research — online. Therefore, it is important toconsumers that the most updated and accurate information is available on websites. Also,considering that only 10,000 models will be manufactured for the first release year,consumers beyond those innovative adopters will be added to a waitlist. It would beespecially beneficial if as much information as possible is available to potentialconsumers, especially those that want to have innovative adopter benefits. In addition, theretailers are going to have the most interaction and potential influence on consumers, so it

is ideal that there are incentives to have marketing packages that are congruent to themainstream marketing that takes place.




26

Demographics

Age

In a Mintel report (Green Marketing: Mintel 2008) researchers found that 18-24 year olds

were the most likely to buy green products. People within the 18-24 age group were alsoreported to be more interested in exploring innovative, experimental or cutting-edgemethods of conservation. Next most likely to buy green products were the 65+ age group,followed by 55-64 and 45-54 age groups.

Race

Of people in the green buying sectors, Asian/Pacific Islanders lead with 49% of consumers who always or almost always consumed green products, followed by 40%Hispanic, 35% white and 32% Black. The remaining percentages for each race werefound to sometimes or never consume green products (Green Marketing: Mintel 2008).

Asians seem to be the innovators and early adopters for consuming green products, whileblack consumers are less concerned with environmental circumstances and pollution. TheHispanic population was found to care moderately about recycling but had high concernsabout pollution. Whites were found to participate highly in donating to environmentalcharities (Green Marketing: Mintel 2008). Overall, the among the different racecategories, they are all relatively similar and it would be beneficial to consider marketingtoward all of them.

Education

Current students and those with higher education were found to be more likely to be

serious, practicing environmentalists. Therefore, they more willing to make lifestylechanges that support their beliefs.

Location

Consumers that are residing in urban and suburban metropolitan areas were found to bemore likely to purchase the vehicle. This is due to the fact that the vehicle‘s ability of zero gas and zero emissions is limited to trips of 40 miles or less, primarily people wholive nearby work and other lifestyle activities. This also means that consumers inmetropolitan areas of the nation will be more likely to buy the vehicle due to theproximities.

Psychographics

Green and sustainable consumers hold particular characteristics in common (GreenMarketing: Mintel 2008). Of all the characteristics, traits, and attitudes, four were themost influential in determining a consumer‘s willingness to buy green products. The four characteristics are: influential, optimistic, politically liberal, and interested in living ahealthy lifestyle. These were more useful than income, race, or any other demographic.




27


Eco-elites believe in buying things that make them look and feel good. The bulk of theirpurchases are not price based, but instead depend upon the value they feel they receive

from a product. Image is very important to them and since ―going green‖ has becomemainstream, they want to be seen as caring, eco-hip shoppers.

Local government offices

Spinning off of what has become mainstream, many state officials, police, andconservancy offices want to spread the idea that they are eco-conscious and the rest of their communities should follow suit. To accomplish this, governments have to dress thepart, investing in everything from recycled paper to hybrid vehicles.

Gas mileage-weary and economically driven

These consumers believe that gas prices will continue to escalate and they are veryattached to the freedom of owning a vehicle. They are family-orientated and wouldrather spend money on a vehicle that they feel is safe, saves them gas expenses, and canget them to weekend vacations.

Behavioral Insights

Insights into behaviors such as buying styles, buying motives, and lifestyle choices aremost important to the Chevrolet Volt because of the eco-conscious technology, style, andthe cost. Therefore, when identifying the potential markets, these items are addressed

within each segment.


Style and a notable hybrid body are important to this group. Fewer emissions for theChevrolet Volt are a benefit for this consumer group. These are consumers that alreadyparticipate in buying ecologically-friendly products. These consumers tend to buy moreorganic and natural foods versus processed goods. These are metropolitan-savvyconsumers, who believe looking good is important. They subscribe to many fashion andconsumer magazines and websites. They budget for extra expenses of hair and beautyproducts. They have somewhat high disposable incomes.


These consumers want the public to know that they are working to be sustainable. Thisconsumer is specific to a concerned consumer group with the appearance of their productbuying habits. They want something that ensures that they are making an effort to beeco-conscious and participate as innovators of products. These groups typically buy




28

business vehicles to travel shorter distances. Some examples of this group are: watersafety and preservation, Portland City Works, government office holders, and police.

Gas mileage-weary and economically driven

According to a February 2008 Mintel Report, Green Living, a weaker economy and highenergy prices are likely to drive growth of energy-efficient products. They would notconsider motorcycles or scooters convenient or suitable as transport. They want to beearly adopters because they believe that hybrid and alternative vehicles could run out or,like the Toyota Prius, become in shortage of stock.

Profile of Segment Customers

In this section, personas were given to the top three segments, to better understand howan individual from these segments would behave and react.

Table 8. Market Segment ProfilesEco-elite: This is Jen, she is a successful mother of three in the SanFrancisco area. She likes shopping at the local natural foods storebecause she feels better about purchases that are in her economicvicinity and she likes her family to get healthy foods. She also doesn‘tmind spending a little extra to get organic labels. Jen likes looking goodlike her other soccer mom friends, she used to have a minivan, butupgraded to an SUV. Now she‘s trying to cut back on driving byparticipating in carpools and occasionally using public transportation, but it‘s really inconvenient. Jen also enjoys f ashion magazines,celebrity gossip, and nights out with her friends. She‘s a 20-something

and likes looking good and making purchases that support thisemotional appeal.

Local government office: Tom is a water bureau official in Chicago.He, like many of his co-workers, is pushing for the department to buyeco-friendly cars. He has researched several types, but believes thatthey can really make a difference in the community if they purchasevehicles that aren‘t dependent on fuel. He has already convinced theexpense of getting a couple of plug in outlets for the parking areas. Heis determined to get all government offices around Chicago on board.

Fuel-economic: Jason is recent graduate who just got a job with a local

natural food grocer as an organic produce buyer. His job requires himto look into local businesses around Portland. He wants to appeal to hisclients as eco-friendly and also is invested in saving his company extraexpenditures in gasoline. Jason cares about green house gas emissions,too and wants to make the best of his money by purchasing a vehiclethat suits his needs but produces little waste.




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Customer value drivers

Consumers may decide to purchase the Chevrolet Volt for a variety of reasons. Thesereasons coincide with the particular segments being targeted.

Consumers are attracted to purchase the Volt for reasons of conspicuous consumptionregarding the overall style and appearance of the vehicle. Conspicuous virtue is also adriver for Volt purchases for the desire to appear eco-conscious. There is a growingsocial trend for ―going green‖, the demand for green products and vehicles has increaseddue to the desire to appear eco-friendly. Considering the unique design and production of the Volt, many consumers may be attracted for novelty. Consumers seeking noveltydesire a new and unique product that can create buzz within their social networks andsurrounding community. Purchasers of the Volt may also be attracted to the innovativestyle of the vehicle because of the new components and materials that have beenincorporated into the product that haven‘t been used in others.

Another driver for purchasing the Volt entails country loyalty of an American automaker.With the current circumstances of war, some consumers may be finding Americancompanies more desirable as an attempt to minimize foreign dependence and to stimulatelocal economy. This brand loyalty prevents the consumer from choosing other companiesthat offer competing products.

Chevrolet has been working to become an innovator of sustainability. Like many otherautomakers they have released hybrids and alternative fuel vehicles. This may driveconsumers to purchase through the recognition of their efforts to become anotherinnovator of sustainability and sustain the environment. Consumers often desire to beassociated with certain reference groups, groups they admire and have similar values.

Belonging to a stylish reference group is a customer value driver as well. ―Eco-esteem‖building is another driver for the purchase of the Volt. Consumers want to purchaseproducts that make them feel they are doing something good for the environment. Afactor in driving the consumers to purchase may be the desire to avoid being left behindof new trends and technological advances.

While taking into account the current conditions of the accelerated and increasing gasprices in the United States, consumers may desire the Volt as an attempt to lower theirreliance on gasoline. They also may enjoy taking risks as innovators. Purchasing the Voltwill incorporate a new concept into the vehicle industry as a fuel-powered battery and

electric-performance hybrid car. Purchasers will be taking a risk because of littleexperience with the product. This includes the appearance of unexpected defects andbugs within the vehicle due to its relatively new and experimental status. As a consumerliving in a world where technology is constantly changing and being updated, a potentialcustomer value driver will be the desire for being innovative by being technologicallyaccepted and adapting to technological trends.




30

FAB requirements

For the features, attributes, and benefits, the top two or three were rated within eachsegment for the level of each characteristic (x-axis). Averages are represented in thelegend of figure 4, according to each segment.

Segment Attractiveness

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Fuel Powered

Lithium-ionBattery

Plug-in

capability

Runs 40 miles

without usinggas

50 MPG fuel

economy

Very low

emmissions(especially

when run on

battery)

Little to no fuel

costs

Capability to

use biofuels

American

made

Conspicuous

Consumption(includes Style

and/or

ConspicuiousVirtue)

Availability of

product

SAFs

R a t i n g

Eco-Conscious (0.53)

Fuel Freaks (0.51)

Virtuous Government (0.50)

Figure 4. Features, Attributes, and Benefits for Potential Segments

All three segments are found to be similar in their consumer value drivers. The spikes arerelatively similar as well. The FAB analysis is relatively inconclusive. However, with theforecasted potential sales show that the eco-elite segment has more opportunity to adoptthe Volt as their vehicle purchase. The FAB results reinforce that the other two segmentsmight be later adopters of the Volt and followers of the eco-elites because of their similarneeds.

Price Sensitivity

Important to consider when marketing ―green‖ products, are three reasons that consumers

claim they don‘t buy these products: price, contentment with current product, and lack of distribution awareness. Another factor is that the majority, approximately 86%, of consumers are not willing to go out of their way to buy green products. Just over half of surveyed participants claim that green shopping is just too expensive. The primarybenefit that consumers do buy green is not for the environment, but for health benefitsand to save money (Green Marketing 2008). All of these factors are to be considered, aswell as price sensitivity specific to each of the identified segments.




31


Eco-elites have moderate to high level disposable incomes and while they are concernedwith making large purchases, they are most concerned that they feel their money waswell-spent and that they have very little to zero post-purchase remorse. These consumers

seek out organic foods and eco-friendly products to feel good about there purchases at thesales counter and also in their cupboards. They avoid embarrassment of not looking theirbest and making purchases that might be seen as cheap, therefore this segment is willingto pay the premium price for green products and brand name recognition.


Government offices are sensitive to appearing uncaring about the tax payers‘ money thatthey are allocated to spend. Precautions are taken not to make purely superficialpurchases. They often will go with what appears to be the best to speculations of environmental and political concerns.

Gas mileage- weary and economically driven

The gas mileage weary consumers are concerned with how they spend their dollars at thegas pump and are somewhat price sensitive. However, expenditures apart from the pumpare relatively not of concern and consumers will buy products based on their propensityto be long lasting and sustainable with little to no fuel expense.

Geographic Segments

While it is obvious that buying motives and styles, lifestyle, and earning potential are all

going to have a play in whether consumers can participate in a slightly pricier and morestylish hybrid, it may not be blatant that consumers that live and work within 20 milesmay have more buying potential than other, outside consumer groups. For this reason thefocus will be on the metropolitan markets.




32

New Hybrids - Registrations CYTD February 2008

0

1,000

2,000

3,000

4,000

5,000

6,000

L o s A n g e

l e s

S a n F

r a n c i s c o

N e w Y

o r k

W a s h i n g

t o n , D C

C h i c a g

o

P h o e n i x

B o s t o

n

P h i l a d e l

p h i a

S e a t t l e

S a n D i e g

o

Figure 5. Most Hybrids Purchased by Metropolitan Area

Top 10 markets where the most hybrids are sold: Los Angeles, San Francisco, New York,Washington DC, Chicago, Phoenix, Boston, Philadelphia, Seattle, and San Diego.

New Hybrids per 1000 Households - Registrations CYTD

February 2008

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

P o r t l a

n d , O R

S a n F

r a n c i s

c o

S a n t a

B a r b a

r a , C

A

M o n t e

r e y ,

C A

S a n D

i e g o

L o s A

n g e l e

s

P h o e

n i x

W a s h i n

g t o n , D C

C h a r l

o t t e s

v i l l e ,

V A

L a s V

e g a s

Figure 6. Per capita Purchases of Top 10 Metropolitan Areas




33

The most hybrids per capita: Portland (OR), San Francisco, Santa Barbara, Monterey(CA), San Diego, Los Angeles, Phoenix, Washington DC, Charlottesville (VA), and LasVegas (Hybrid 2008).

Establishing the Target Market

In this segment the three top segments are evaluated through use of a segment contrastmatrix, value driver assessment, and overall sales potential.

Table 9. Segment Contrast Matrix

D e m o g r a p h i c s

P s

y c h o g r a p h i c s

V a l u e D r i v e r s

B r a n d L o y a l t y

P r

o d u c t U s a g e

P r

i c e S e n s i t i v i t y

P a

s s e n g e r C a r

M

a r k e t S i z e

E c o - e l i t e

Age 24-34,upper middleclass, highereducation,urban/suburbanarea

Lookinggood, feelinggood, stylish,eco-hip

Self-image,customerservice, lowemissions

High High Low 28%

L o c a l g o v e r n m e

n t o f f i c e

Age 45-60,middle tomiddle upperclass, highschool diplomato highereducation, anyarea

Eco-conspicuous,eco-friendly,economically-driven,friendly, beinga good globalcitizen,patriotism

Conspicuousvirtue, lowmiles pergallon, lowemissions,overall cost,locally made

Moderate High Moderate 6%

F u e l - e c

o n o m i c

Age 20-45,middle class,high schooldiploma andsome higher

education,urban/suburbanarea

Economically-driven,independence,family-oriented,

patriotic

Low milesper gallon,Americanmade,freedom to

travel

Low Moderateto high

Moderateto high

55%

The segment contrast table shows the range of demographics, psychographics, valuedrivers, brand loyalty, product usage, price sensitivity, and percentage of passengermarket that each of the segments fulfill. In evaluation of each segment, especiallyconsidering passenger car market, the fuel-economic group appears to be the best target




34

market. However, the value curve and projected sales potential reveal a different segmentof interest.

Value Curves

0

1

2

3

4

5

6

7

8

9

10

Economic performance Supplier Buyer Motive BuyingSituation

Value Drivers

R a t i n g

Eco-elites (6.6)

Government (6.4)

Gas-weary (5.8)

Figure 7. Market Segment Value Curves

The value curve shows that these groups‘ value drivers are relatively similar, much likethe features, attributes, and benefits curve. The weighted averages here suggest thatgovernment and eco-elites and only 0.2 rating points apart, but more important is thatthere is a group that is most likely to adopt the Chevrolet Volt.

In the value curve analysis, again the eco-elites on top and the other two segments not farbehind. This is significant to the target market choice and possible expanded scope of marketing when targeting the eco-elites, to reach the other segments as well.

USA Eco-Elites Gas-Weary Local Govt.

Index 100% 28.0% 55.0% 6.0%

Passenger Vehicle Volume 7,438,000 2,082,640.0 4,090,900.0 446,280.0

Hybrids 6% 11% 3% 9%

Passenger Hybrid Volume 446,280 232,066 129,421 40,165

Average Sales price of Hybrid $27,000 $27,000 $27,000 $25,000

Total Consumer Hybrid

Sales Potential $12,049,560,000 $6,265,771,200 $3,494,372,400 $1,004,130,000

Table 10. Reiteration of 2008 Sales Projections for Each Segment




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Now, looking at the potential sales of the different segments again, it is starklycontrasting. The significant difference of the $6 billion potential of the eco-elites trumpsthe government segment. Also of important significance is the runner-up is the fuel-weary, not the government segment.

The eco-elites have the most likelihood to purchase the Chevrolet Volt. Theircharacteristics, psychographics, behavior, and purchasing power match the Volt‘sfeatures and price point. As the FAB analysis reports, specific features, such as lowemissions, more miles per gallon and conspicuous consumption are of importance to thisgroup. Also, with the segment sales projections, the eco-elites are the segment that hasthe most propensity to purchase.

Document the Maximum Opportunity

The total passenger market of over 12 billion dollars and the segment market of the eco

elites at over half of the total passenger market versus the other two segments onlycomparing at fewer than 30% of the total market.

The maximum opportunity is in the eco-elites. Not only are eco-elites the most likely tospend disposable income on a high performance and stylish vehicle, this group has moredisposable income and they are most probable to want an eco-friendly car that isdifferentiated from the other hybrids on the market both in technology and body. Theywant to fit into groups of green consumers, the stylish, and most importantly, innovatorsin the purchases they make. The eco-elites hold high disposable income andpsychological ties to products like the Volt. For these reasons the eco-elite segmentrepresents the maximum opportunity for the Chevrolet Volt.

The eco-elites also have some overlap values with fuel-weary and local government,which have higher potential of reaching the other segments if appealing attributes areshown relative to the eco-elite segment. This relation of groups was a key factor indetermining the maximum opportunity within the segments.

Potential New Markets

With the majority of the population expected to be of close Mexican decent within thenext ten years, it may be beneficial to consider this market. They might have differentexpectations as far as family-friendliness, style, and interior needs.

Also, to be considered are the Chinese and Latin American markets. As these marketscontinue to develop, they represent a large portion of the population. These cultures havebeen known to embrace American culture and meeting their expectations early may bebeneficial for an American company.






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In consideration of ethnic backgrounds, overall Asian/Pacific Islanders are the mostlikely to care about sustainable products, but the percentages of Hispanic, Caucasian, andBlack Americans follow closely behind, so it would benefit to consider all of thesemarkets. Education indicates that higher education individuals and students considersustainable consumption an obligation more often than those of little education and

without a high school diploma or equivalent. For location of consumers, urban andsuburban metropolitan areas are most likely to benefit from the Volt because of its 40mile fuel-free capacity. These were the only demographics that were indicative of significant marketing opportunities (Green Marketing: Mintel 2008).

Beyond demographics, psychographics, behavior, consumer value drivers, pricesensitivity, and geographic segmentation were considered. Within psychographics, themost relevant research reports that green consumers view themselves as influential,liberal, and living healthy lifestyles. The most significant psychographic of all segmentsis based upon conspicuous virtue. Behavioral insights include style, technology, and costsare the matching factors of the Volt and eco-elite consumer buying behaviors. Consumer

value drivers are conspicuous consumption of style, eco-consciousness, and desire to beinnovative. Features, attributes, and benefits are distributed relatively similar across allsegments considered. Price sensitivity suggests that the eco-elites are of the mostdisposable income of the three segments. Geographic segments for marketing shouldconsider the top ten markets for overall sales of hybrid and alternative vehicles.

Although all three of the segments identified have relatively similar FAB analysis results,the potential sales for the eco-elites are greater than the local government or gas-wearysegments. The eco-elites also have financial capabilities and psychological characteristicsthat are likely to lead them to the Chevrolet Volt if marketed as innovative,technologically advanced, liberal, and good choices for healthy lifestyles. Furthermore,top metropolitan markets that are already adopting alternative automotives are morelikely to look into the Chevrolet Volt as another option. As evaluated and reviewed, themost marketing potential lies within the eco-elites.




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Competitor Analysis

The Competitor Analysis for the Chevrolet Volt will examine two other majorcompetitors in the automotive industry including the Toyota Prius and the Honda Civic

Hybrid. An analysis will include the Porter‘s Five Forces Model, the industrycompetitive factors, industry competition, and competitive benchmarks. These tools willbe used to determine the position of the Volt in relation to the market environment and toidentify key competitive success factors.

Industry Dynamics

The automotive industry is known for being highly volatile. Industry dynamics areevaluated through classic models of Michael Porter‘s Five Forces, Competitive factorsmapping, looking at profiles of competitors, and competitive benchmarks.

Porter Model

Porter‘s Five Forces model provides a slightly objective view of the industry as it relatesto the Chevrolet and, parent company, General Motors.

Figure 8. Porter’s Five Force’s overview for the Volt




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The Porter’s Five Model provides some insight as far as other competitors in the

automotive industry and the dynamics they provide. New technologies and changing

markets are all factors that have affected the automotive industry in the past few decades.

With this model, it will help to assist in the competitive advantage analysis that Chevrolet

has over both Toyota and Honda. It will provide information as far as what strategiesare working and what strategies may need to be changed.

Threat of New Entrants

Table 11. Porter’s Five Forces: Threat of New Entrants

The existence of barriers to entry (patents, rights, etc.)

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distributionAbsolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Threats of New Entrants = Low

For the Chevrolet Volt the threat of new entrants is low for several reasons. The barriersto entry makes it difficult for competitors to enter the market and to compete withChevrolet. In consideration of brand equity, automobile manufacturers generally have

well established and valuable names. Also, they have deep resources to boost and defendtheir existing brand equity. The switching costs incurred by the consumer are extremelylow as well. The automobile industry has massive initial capital investment expenditures.In regards to access to distribution, the automobile manufacturers already have wellestablished distribution networks. In the United States, attempts to bypass this dealernetwork have often failed due to the combined powers of the dealers. Expected retaliationby incumbents can be explained by the fact that current automobile firms are likely torespond aggressively to threatening new entrants to the industry. Unless the entrant has asignificant and protected competitive advantage, the established firms will likely use theirsuperior resources to squeeze out the new firm. Also, all new U.S. automobiles mustmeet certain government regulations, both Federal and State. Meeting these regulations

requires high amount of resources and these regulations must be met before anyautomobile can be legally sold.




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Power of Buyers

Table 12. Porter’s Five Forces: Power of Buyers

Weaknesses

Buyers are small portion of the market and few in number

Buyers purchase a small portion of the industry‘s total output Buyers‘ purchases are a minute portion of the firm‘s annual revenues

Buyers have little bargaining leverage

Buyers have little to no ability to integrate backward Strengths

Buyers‘ switching costs are low

High availability of information

Substitutes are available

Power of Buyers = Low

The power of buyers is also low for the Chevrolet Volt. Some of the weaknesses are that

the buyers are a small portion of the market and few in number. Also the buyers‘purchase is a small portion of the industry‘s total output and is a minute portion of thefirm‘s annual revenues. The potential buyers have little or no bargaining leverage withinthe industry and they have little to no ability to integrate backward. Some of the strengthsfor potential buyers are that there are low switching costs. The availability of theinformation is extremely high, meaning the knowledge and understanding of the buyerwill also be high. Lastly, substitutes are available if they are wanted.

Power of Suppliers

Table 13. Porter’s Five Forces: Power of Suppliers

StrengthsSuppliers are large and few in number

Suitable substitute products are not available

Suppliers‘ goods are critical to the buyers‘ marketplace success Weaknesses

Individual buyers are large customers of suppliers and there are few of them.

Suppliers‘ products create moderate to high switching costs

Suppliers do not pose a threat to integrate forward into the buyers‘ industry.

Power of Suppliers = Moderate to High

The power of suppliers is moderate to high. Some of the weaknesses are that individual buyers are large customers of suppliers and there are few of them. Also, suppliers‘products create moderate to high switching costs and they do not pose a threat tointegrate forward into the buyers‘ industry. The strengths around this issue are thatsuppliers are large and few in number and the option of suitable substitutes of productsare not available. Most risky to the auto makers is that supplier‘s goods are critical to theautomotive maker‘s marketplace success.








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GM has source credibility through the corvette and some lower quality products. Olderconsumers aged 60 and older, tend to find GM to be a trustworthy brand (Mintel:Compact Cars 2002). As for innovation, up to this point GM has been moderatelyinnovative by associating with E85 technology, decreasing gas emissions, and increasingfuel economy. Overall GM has been moderately slow in adopting consumer needs and

transferring the needs to the product.

Buyer‘s motivation for the Chevy Volt stems from several needs or desires. Consumer goals are to be considered stylish and eco-conscientious. The Volt embodies and conveysthese perceptions to the population. Also, novelty will be a motivation for those who arelooking to buy the newest green technology. The first Volt owners‘ will be consideredrisk takers, and look to achieve oil independence.

Finally, the buying situations for the Chevy Volt are the buyers‘ task requirements,organizational/social influences, and availability. Buyers‘ task requirements are that theVolt be eco-friendly, safe, comfortable, and stylish. Some organizational influences are

the price of gasoline and government/business intervention. Social influences entailincome level and ecological involvement. Availability of the Chevy Volt will be sparse atfirst manufacturing solely 10,000 vehicles initially and possibly a waitlist for other earlyadopters.

Competitive Barriers

The industry for alternative fuel and hybrid vehicles is still quite young and the marketisn‘t completely developed. Currently the market isn‘t that big but with the growingconcern for the economy and fuel prices, it will be. The cost to enter the market and tobuild the vehicle the way that the consumer will want it is costly but with how the

economy is going, if consumers are planning on spending any money, it is going to betoward a vehicle that is going to save them in the long run. Another concern is the costfor the upkeep of the technology and the battery itself. The battery life is also a concernand the price of the battery is directly affected the price of the vehicle.

Partnership/Alliances

Some of the major partnerships and alliances of General Motors include Buick, Cadillac,GMC, Hummer, Oldsmobile, Pontiac, Saab and Saturn.

Competitive Factors mapping

Key competitive factors

Some of the factors that were analyzed are price, reliability, fuel economy, customerservice, eco-friendly, safety, resale value, performance, and comfort. It will be necessaryto build a scale and then a matrix to weight these factors. These factors are producedfrom the average of each individual‘s rating. Toyota, Honda, and Chevrolet were lookedat differently with regards to reports and first hand knowledge with the products. The




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numbers represent the importance from a scale of 1 to 10 of how each one rated incomparison to the other. After they were added on the matrix, they were graphed whereeach brand was in comparison to the other.

Contrast matrix

These nine competitive factors are considerations when a consumer purchases a newvehicle but also they can be used as metrics to determine their value and where a certainvehicle stands relative to its competitors. These factors are points of parity for theautomotive industry and not just the hybrid market; however, only hybrid vehicles havebeen compared in order to evaluate the target market. The ratings are based frominformation found in online automotive websites and consumer ratings/blogs. In thismatrix the Toyota Prius, Honda Civic Hybrid, and Chevrolet Volt have been rated inorder to analyze the Volt‘s position against these criteria in the market. Hopefully, thesemetrics will be applied to improve the current status of the Volt so that it may excel in allfactors.

Table 16. Contrast Matrix

Competitive Factors Toyota Prius Honda Civic Hybrid Chevrolet Volt

Price 8 5 9Reliability 8 7 8Fuel Economy 9 7 9Customer Service 7 8 6Eco-friendly 9 9 9Safety 8 8 7Resale Value 6 8 6Performance 7 7 8

Comfort 8 8 8




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Analyzing Competitive Factors

Figure 9. Competitive Factor Analysis

Competive Factor Analysis

0

0.2

0.4

0.6

0.8

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1.2

1.4

1.6

1.8

2

P r i c e

R e l i a b i l

i t y

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o n o m

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C u s t o

m e r S

e r v i c

e

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n d l y

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r m a n

c e

C o m f

o r t

Competitive Factors

R e l a t i v e V a l u e

Toyota

Honda

Chevrolet

It has been determined that the core competitive factors are: price, reliability, fueleconomy, customer service, eco-friendliness, safety, resale value, performance, andcomfort. The Chevy Volt is clearly a much more expensive vehicle than the Prius or theCivic Hybrid, but you are getting more by way of technology and style. Reliability is notas strong of a suit for Chevy or any subsidiary and with new technology there will alwaysbe kinks in the first few years of releasing the product. While both Honda and Toyotahave good ratings for fuel economy, the Chevy Volt gets superior fuel economy becauseof its battery and system capabilities. As for customer service, Chevy has the highestratings followed by Honda, which beat Toyota based on ratings provided by consumers.

The Volt is the most eco-friendly because it operates with the least amount of gasolineconsumption and it gets the best mileage but Honda and Toyota are not far behind. Allthe vehicles have an equally high success rate in reducing emissions to low or non-existent. The Chevy Volt is considered less safe because it doesn‘t have crash ratings yet.However, the Prius, Civic Hybrid, and Volt contain the most modern safety technologyand have comparable crash ratings. The Civic Hybrid retains its value well, while thePrius is a bit less and the Volt‘s depreciation drops a bit faster than Honda. The Volt isdefinitely the highest performing vehicle in this group because it has 209hp (gmvolt.com)




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while Civic Hybrid gets 110 hp at 6000 RPM (Honda.com) and Prius gets a small 76hp at5000 RPM (Toyota.com). The dimensions on Prius and Civic Hybrid are comparablegive or take a few centimeters in length or head room so it provides more comfort for theconsumers. The aero dynamic design of the Volt is expected to be on par with itscompetitors based on body design considerations (Nadaguides.com 2008).

Profiles of Competitors

Toyota was originally introduced in 1965 when they came out with the Corona. By the1970‘s, Toyota was the best selling import brand and during the 1980‘s they began tomanufacture vehicles in the U.S. Today, Toyota is the leader in the hybrid vehiclemarket and plans to continue on with becoming the leader in the electric vehicle marketas well. Gathered information from reports, articles, and databases have been compiledto do a competitive analysis. The following table shows an examination of aspectsregarding the company of Toyota and more specifically, the Toyota Prius.

Table 17. Profile of ToyotaProfile Toyota

1. Headquarters andFacility Locations

New York City & Washington, DC

2. Number of Employees 36,6323. Growth Strategy Market their cars to consumers as fuel-efficient, well-built

alternatives to the gas-guzzling, problem prone Americancars.

4. Sales, Profitability &Growth rates

Sales:2.6 million vehicles, up 2.7% from 2006277,750 hybrids, up 44% from 2006

Profitability:Net profit was 458.6 billion yen ($4.26 billion) compared to426.8 billion yen the year before.Growth rate:In 2000: 919,263In 2007: 1,334,160

5. Financial Position Net revenues increased by 813.2 billion yen (15.2%) to6,146.5 billion yen in 2007. Operating income has alsoincreased by 92.5 billion yen (19.2%) to 574.7 billion yenalso in 2007.

6. Market Position Toyota is a leading car manufacturer for both conventional

engine vehicles and hybrid vehicles, offering both safetyand quality among other American made cars.7. Products Some of Toyota‘s products include Prius, Camry, Corolla,

Anensis, Crown, Century, Yaris, Vitz, Lexus, RX330,Tacoma, Tundra, Alphard, Sienna, Estima Hiace, RegiusAce, Noah, Highlander, Voxy.




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8. Technology/Innovation Toyota strives for environmental protection, creating bothclean and efficient products and to conserve resources.Toyota is also aggressively tackling R&D activities toproduce vehicles that will perform at the highest level of

safety and ensure comfortable driving under variousconditions.9. Partnerships &Alliances

GM and Nissan

10. Quality Toyota was the original developers of TQM (Total QualityManagement) and has used its practices in all of its vehicles.

11. Pricing/Cost Structure Pricing for vehicles starts anywhere from $11,550 for theYaris and expands to prices of $64,100 for the Land Cruiser,with all other vehicles falling in between.

12. Market Reach Toyota sells its vehicles in more than 170 countries andregions worldwide. Primary markets consist of Japan, North

America, Europe, and Asia.13. Marketing Objectives Toyota plans on strengthening the relationship with theToyota brand, fully reaching its target market, and educatingand explain to consumers the working of the Prius and itsadvantages.

14. Positioning andBranding

Widely recognized for the value of creating a corporateframework to facilitate customers‘ preference for thecompany‘s products.

15. Industry Expertise Toyota offers a wide array of vehicles, strategicallydesigned to target different markets. With safety, comfortand class in mind, they have positioned themselves as a

leading competitor of the automotive field.16. Distribution Their distribution is through a dealer network.17. Customer Service Customer experience center provides the ability to discuss

comments to a representative. Toyota Financial Services isoffered 24 hours a day. The hold time is long but once onthe line, representatives are helpful.

18. Response Capability Customer experience center is open specified hours andToyota Financial Services are available 24 hours.

19. Disruptive Potential Losing sight of the consumer and their preferences.20. Strengths/Weaknesses Leading in sales of hybrid vehicles, with a high quality

reputation. Their performance in every market is not

strong, specifically Asia.

Honda originally started in 1946 by Soichiro Honda who had produced a small 2-cyclemotorbike in Japan. By 1959, Honda Motor Company had been established and openedits first store in L.A. Today, Honda is known for being reliable and offering a qualityproduct. Now they offer a variety of different vehicles, ranging over a broad market.The following table shows compiled data regarding Honda and the Honda Civic Hybrid.




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Table 18. Profile of Honda

Profile Honda

1. Headquarters Headquarters in Tokyo, JapanAmerican manufacturing in Marysville, Ohio, East Liberty,

Ohio, Alliston, Ontario, Canada, Linclon, Alabama,Greensburg, Indiana, El Salto, Jalisco, Mexico resource anddevelopment Torrance, CA, Raymond, OH, Mojave Dessert,CA, Swepsonville, NC, Grant-Valkaria, FL

2. Number of peopleemployed

Headquarters employs 167,231 people, also there is a globalnetwork of 437 subsidiaries

3.Growth Strategy Honda is expanding its‘ customer base through an ongoingcommitment to efficiently networking its‘ growing globaloperations. Honda operates in six regions: Japan, NorthAmerica, South America, Europe/Middle East/Africa,Asia/Oceanic and China. Since the early 90‘s each location is

focused regionally. They call this their 6-Region GlobalStructure and use it to strategically focus on regionaloperations. This structure allows them to incorporate their keyattributes: speed, flexibility, and efficiency to each region,which has local autonomy to make decisions about customerand community needs. To expand North American automobile,engine and transmission production operations by 2008, Hondawill invest approximately $665 million and increaseemployment by more than 1,900 associates. As a result of thisexpansion, Honda's automobile production capacity in NorthAmerica will increase from 1.4 million to 1.6 million units in2008, using domestic and globally sourced parts.

4. Sales, Profitability,and Growth Rates

Total Vehicle sales for 2007 increased overall 2.5% to a recordhigh of 1,551,542 vehicles sold. This is the 11th consecutiveyear of record sales for Honda. Honda‘s revenues for 2007 inthe automobile division was approximately 75.4 billion USD anincrease of 11% over the previous year with their largest marketin North America accounting for 54.1% of total revenue.Profitability- 2007 Honda profits were 5,018 million USD.

5. Financial Position Even though gas prices are hitting new records every quarter,Honda‘s sales won‘t be falling any time soon and these are thestatistics to prove it. American Honda Motor Co., Inc., todayannounced total June sales of 142,539, up 13.8 percent on adaily-selling-rate basis, setting a new monthly record. Total carsales set a new June record for the first time since 1990 at97,639, up 34.2 percent versus last year. Year-to-date AmericanHonda sales are up 4.8 percent to 798,358.Honda Division salesrose 17.9 percent over last year to a new June record of 130,083, driven by record car sales, which increased 41.4percent to 89,947. The Civic Hybrid hit a new June record, up




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23.1 percent to 39,967.6. Market Position So far for 2008, Honda clocks in top ten vehicles at #4. Honda

Accord and #5. Honda Civic7. Products Motorcycles, automobiles, and power products. Automobiles

include: Accord, Civic, CR-V, Element, FCX Clarity, Fit,

Odyssey, Pilot, Ridgeline, S20008.Technology/Innovation

The low-emission CVCC engine, first to comply with the 1970U.S. Clean Air Act; the VTEC power plant, which uses variablevalve control for high fuel efficiency and high performance; ananti-lock braking system (ABS), which helps maintain vehiclestability in emergency braking; the Supplemental RestraintSystem (SRS) for airbag protection, designed for enhancedoccupant safety; the Collision Mitigation Brake System(CMBS), which assists brake operation to reduce the vehicle'sspeed to help reduce the force of the collision; the E-Pretensioner, which retracts the seatbelt in anticipation of

impact, and the Super Handling All-Wheel Drive (SH-AWD),which enhances the sheer pleasure of driving. Moreover, thereare numerous recent innovations in natural gas, hybrid, and fuelcell vehicles. The Honda commitment to eco-friendly car-making knows no limits, because it's our responsibility to theworldIn 2005, American Honda Motor begins sales of Phill, the firsthome refueling appliance for natural gas vehicles. Leasing of FCX fuel cell vehicle for home use begins. Worldwide sales of Honda hybrid vehicles reaches 100,000. Then in 2006, Sales of Flexible Fuel Vehicle (FFV) models for Brazilian market

started. Performance of next-generation fuel-cell car FCXConcept demonstrated.9. Partnerships andAlliances

Honda, Acura, Honda Racing, Honda Power Equipment, HondaMarine and ASIMO

10. Quality Honda focuses on speed, flexibility and effectiveness. Qualityis conveyed in their mission statement, ―Maintaining a globalviewpoint, we are dedicated to supplying products of thehighest quality at a reasonable price for worldwide customersatisfaction.‖

11. Pricing/coststructure

They aim to provide high quality products at a reasonable price.Their cheapest vehicle is the Honda Fit starting at 13,950 USD

and the most expensive is the minivan Honda Odyssey toppingout at 40,610 USD. The Pilot, Ridgeline, and S2000 also haveloaded options at approximately 35,000 USD.

12. Market Reach Honda‘s market reaches the six continents on which theyoperate: North America, South America, Japan, Europe/MiddleEast, Africa, and Asia Oceanic.






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entrants come onto the ―green scene‖, e.g. Chevy Volt, Toyota will have to become morecreative about maintaining market leadership. The benchmarks are metrics by which willhelp to track the relative competitive position over Toyota and Honda. They will betracked by follow-up research, continuous R&D, surveys, and customer responses.

Conclusions

Competitively, the Chevy Volt may have good standing in the market place because theirversion of an eco-friendly car will have much different positioning than the Prius and theCivic Hybrid. The Volt is more prestigious, and more importantly it doesn‘t look like anegg on wheels. It has newer technology with better mileage and more advanced fuelefficiency capabilities. While the price tag is about double the competition, people will bewilling to pay more because they will be getting more. It taps a higher income marketthan Toyota and Honda. It is a strategic move to tap into a different target market.

There are many different aspects to consider such as the industry dynamics, all the factors

of the Porter Five Model, and the competitive analysis of Honda and Toyota. The PorterFive Model shows that the threat of new entrants is low so Chevrolet should takeadvantage of the fact that they won‘t have large amounts of competition in the electricvehicle market. The power of suppliers is moderate to high and the power of customersis low. The power of substitutes is moderate to high but that is partially due to theintroduction of alternative fuel vehicles other than hybrid and electric. The switchingcosts are somewhat high in this category, however, because the cost of technology isconstantly rising. And finally, the rivalry of competitors is high because each competitoris constantly conducting more R&D in order to tap into the new market of the eco-conscious consumer. Already, Toyota is planning on introducing their version of theelectric vehicle in 2010, when the Chevrolet Volt is expected to release.

The features, advantages and benefits of the Volt are key in the positioning and strategiesused to achieve competitive advantage. These characteristics are the qualities that will beenhanced to market the Volt. The positioning is not quite clear as of yet, but that is dueto the fact that the vehicle has not yet been released to the market. The plan is to positionthe Volt in the mind of the eco-conscious consumer who has disposable income to spendand is looking for an attractive way to display their eco-friendly association. In order totarget this consumer the Volt‘s characteristics and features will be enhanced. Thestrategy to target the consumers mentioned is to market the Volt as stylish and fuel-efficient as well as being the newest, innovative technological design.




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Net Assessment

This section describes Chevrolet as a company in relation to the industry in the SWOT

analysis, the critical findings of the report, and conclusions.

SWOT Analysis

Table 19. SWOT Analysis

Positives Negatives

I n t e r

n a l

Strengths Weaknesses

Innovative Technology

American Brand

Marketing power

Strategic flexibility

Positioned in a niche market Large scale operations

Strong brand portfolio

Brand identity and reputation – productrecalls, failure of another electricvehicle

Declining market share

Declining financial performance New technology = expensive R&D

Price

Third party technology development

Content still being developed(Unknown kinks/long term affects)

E x t e r n a l

Opportunities Threats

Development of new technology (electric,solar)

Growing market of eco-consciousconsumers

Government subsidies - tax credit forpurchase of new no emissions vehicles(Jackson, David)

Developing a well established positionwith a market niche

Better distribution channels thancompetitors for the US market

Growing gas prices (Jackson, David)

Increasing demand for hybrid electricvehicles

Emerging markets (Asia Pacific and LatinAmerica)

Price sensitivity

Economic downturn or instability

Rising raw material prices

Declining demand for light vehicles in

the US Stringent emissions standards

ELV Directive – End of Life Vehiclesmust be dismantled and recycled inspecific areas (Japan - enacted, soon tofollow: Europe, Taiwan, Korea, andChina)

First observations will be an internal view of Chevrolet and GM, as a parent company,the strengths and weaknesses. The next, opportunities and threats, represent an externalview of the auto industry.




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Strengths

Chevrolet, along with General Motors, have large enough operations and strong brandportfolio to be strategically flexible and position itself well to gain market power within aniche market. This extra leverage also allows it to explore innovative technology,

especially within North America.

Weaknesses

Chevrolet is experiencing declining market share and financial performance due toincreased competition with Japanese companies in the American and European markets.Along with flat growth of the overall passenger car market, product recalls of faultymanufacturing has blemished Chevrolet‘s reputation.

With the Chevrolet Volt, the technology has been increasingly expensive to develop. Thispersistence to make it successful has been driving a higher price tag. Additionally, that

the technology is not perfected and the outcome is somewhat in limbo only causes morevulnerability of this specific project.

Opportunities

The changing fuel market has helped drive the increasing market of eco-consciousconsumers, along with the capability to get tax breaks with the purchase of newtechnology and low emissions vehicles. This influx of green consumers has led toopportunistic views of automotive makers and even more demand for the popular hybridvehicles. The Chevrolet Volt, being comparatively stylish to other hybrid electricvehicles, has capability to establish a strong position as a niche market holder. This could

pay off especially well in the United States market, where there are shorter distributionchannels and logistic expenses can be kept to a minimum.

As the US and European markets have become flat, opportunity to exploit developingcountries of Asia Pacific and Latin America will continue to grow with their change indisposable income.

Threats

While the economic downturn and rising costs of raw materials has helped drive need fornew technology vehicles, people are becoming increasingly price sensitive.

Another threat is the declining demand for light vehicles in the US. There has been a3.4% decline in sales in comparison to the total amount of vehicles sold from 2006 to2007, which has been a trend since 2003 (Datamonitor 2008).Further, stringent emissions standards and the ELV Directive have caused automanufacturers to take responsibility for careful construction and need for recyclable andinterchangeable parts. The ELV directive states that vehicles must be made with fewerhazardous waste materials and parts be disposed and recycled as a responsibility of themanufacturer (Tetra 2007). If Chevrolet is successful in standardizing automotive parts








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The ultimate risk is the reputation of Chevrolet to all markets. General Motors is acompany that already gained reputation for ―killing‖ the electric car, if Chevrolet is goingto market the Volt as an electric vehicle with a fuel-powered engine, it could bedetrimental to the existence of Chevrolet and GM.

Success Factors

To ensure success for the Chevrolet Volt, some factors are already in action, such asadoption and demand for alternative fuel vehicles and culture that is embracing theindependent driving experience. A major factor that must come into place is innovativetechnology that has frame of reference consumers identify with.

Table 21. Critical Success Factors

Success Factor Description Leveraging Strategy

Adoption of

alternative fuel cars

by larger segmentof population

Hybrid vehicles have bridged

the mental gap between

gasoline and electric vehicles.America is ―ready‖ for electric

car.

Push the idea that the Volt is

the ―next step‖ in the

natural progression to non-petroleum powered vehicles.

Become technology

leader

Through R&D, become first to

market with technology

critical to success of electric

car (especially batteries)

Change frame of reference.

Work to make new

technology the standard of

the industry

American Driving

culture

American culture is still

largely based on driving.

Driving = independence.

Emphasize independence of

self along with independence

from oil to drive growth of

electric car market.

Research implicates that now is the time for automakers to invest in alternative fuelvehicles. Particularly, for a company known for killing the electric car, this factor couldbe alleviating future electric vehicles by providing a frame of reference and leveragingpoints of parity (Keller 2002).

In addition, in keeping with providing a frame of reference, Chevrolet has the potential tofinally disburden itself of its bad image and reputation by producing a vehicle that haspoints of difference that are compelling. A strong point of difference to emphasize,especially in US culture, is the independence of being able to travel whenever one wants.Also, to tie this to the independence from foreign purchases represents great insight.

Conclusions

The Chevrolet Volt is revolutionary with its innovative technology, plug in capability,and the environment efficiency it offers. It has the ability to successfully market the Voltwith its strong position in the market. Hybrid sales have been projected to reach $1million for 2012 (USA Today 2007) and grew 15% compared to the overall passenger




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vehicle market in 2008 (Hybrid 2008). This is evidence to the change of consumer needsand growth of a new market to exploit.

The aesthetic appeal and sleek design are perfect for the target customer. The targetmarket identified for the product is a segment called, the eco-elites. They have been

identified as the segment to be most likely to buy the Volt considering their lifestyle andpurchasing power. They are also the type of consumer to purchase the newest and latesttechnology with their innovative adopter behavior.

Part of the reason that the Volt can differentiate itself from the rest of the competition isbecause of the technology used to drive the vehicle. The E-Flex drive train will help tostandardize future development of alternative fuel vehicles for GM which in turn willlower their development costs.

The Volt is unlike any other alternative fuel vehicle, offering an array of opportunities.Because the Volt is more eco-friendly than the Prius and other hybrids, it helps contribute

to low fuel costs. The Volt is part of a Blue Ocean Strategy in that it is the first vehicle tobe on the market using lithium-ion batteries as an energy source. It will compete as anelectric car with virtually zero emissions, low cost of gas and fashionable body style.

Some of the main competitors are Toyota and Honda, more specifically the Toyota PriusHybrid and Honda Civic Hybrid. Toyota is already planning on coming out with theirown electric car, while Honda hasn‘t quite made any plans yet. So far, they are focusedon the offering the same benefits the Volt offers, focusing on the same consumers; theeco-elites. Also, the Volt is being marketed as more prestigious and glamorous thanother hybrid vehicles. Advantages for the Chevrolet Volt against competitors are that it isan electric car offering low emissions, eco-friendly, highly fuel efficient, pluggable, andstylish.

Looking at the SWOT analysis has offered insights into critical risk factors and successfactors. Some of the risks involved are the battery technology and the costs involved, oilprice instability, government subsidies, and the vulnerability of the reputation of Chevrolet. Recommendations concerning the battery are two different battery sizes to beoffered to alleviate cost to the consumer, emphasis of low emissions, investment inmarketing the right values to consumers, and investing heavily in the success of the Volt.

The success factors are the mainstream adoption of fuel alternative vehicles, becoming atechnology leader, and affiliation with the independence of the U.S. culture. Toaccomplish this it is suggested that Chevrolet continue investment in the fuel-alternativevehicle market as well as invest heavily in marketing successfully the independence-empowerment of owning a partially electric vehicle. This will enable later modelvehicles to be accepted using the Volt as a ―stepping stone‖ to fully electric vehicles.

In conclusion, the Volt‘s appeal to the eco-conscious consumer will assist in making itthe market leader of electric vehicles. Other factors such as fuel costs and sustainabilitycause the values of the Volt to represent what the market is in need for. The innovative






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Marketing Strategy

Chevy Volt is set to release in 2010. With this deadline in mind Chevy‘s marketingstrategy will soon be plugged into the consumer demand. This next portion develops a

marketing strategy. The marketing strategy section consists of recommendations aboutthe company strategy platform, product plan, sales and distribution plan, promotion planand pricing plan for the Chevrolet Volt.

Strategy Platform

The marketing strategy platform is important to developing and maintaining a viable andsustainable fit for Chevrolet and its dynamic market environment. In this section, thereare six basic components: (1) the marketing objectives dashboard: revenue, market share,return on investment (ROI), and return on marketing invested; (2) growth strategies; (3)market leadership strategies: knowledge, innovation, customer intimacy, time, andoperational excellence; (4) positioning strategies; (5) brand strategy; and (6) transition to4Ps. This section will define the elements of strategy and the relationships between thoseelements for product, sales, promotion, and price planning. All of these elements areessential to the firm‘s ability to create superior customer value.

Marketing Objectives Dashboard

The objectives dashboard below is created from the projected profit and loss statement(more detail is available in the ‗Financials‘ section.) Each of the dashboard metrics

forecasted to measure the added value to the Chevrolet Volt strategic business unit(SBU).

Table 22. Objectives Dashboard Plan Table (2010-2012)

Dashboard 2010 2011 2012

Revenue $ 960,000,000 $4,200,000,000 $4,000,000,000

Market Share 0.27% 1.33% 1.33%

Market Share (Hybrids) 2.96% 12.04% 9.79%

ROI -8.86% 32.51% 40.33%

Return on Marketing -225.57% 916.19% 1684.02%

Revenue

Projected over three years, the Volt is expected to produce over $9 billion in revenue. Inthe first year the projection is near $1 billion. By the second year revenue increases toover $4 billion due to an increase in volume of production and increase in the market of buyers. In the third year, there is a slight decrease in revenue because of the drop in costof the Volt but there is the same volume of production as year two.






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Figure 10. Ansoff’s Matrix

Market Penetration

Market Penetration represents the firm‘s ability to achieve growth with existing productsin their current markets, aiming to increase its market share. It is the least risky because itleverages company‘s existing resources and capabilities. Toyota has the most success in

market penetration strategies. They have been capable of remaining competitively stableeven though general compact cars have declined in sales. Toyota has remained in theevoked set of consumers through recognition in the list of the top ten compact cars forover two years of consumer reports (Consumer 2008). Chevrolet can combat Toyota byseeking additional value added products with safety features, gas-efficiency, and spaciousinteriors. However, market penetration has its limits, and once the market is saturatedanother strategy must be pursued if the company wants to continue growth.

Market Development

Market development is growth through targeting existing products to new market

segments. This works particularly well if the company‘s core competencies are relatedmore specifically to the product than to the experience with the market segment. Honda isstrongest at this because of their ability to reach outside of the physical and psychologicalbarriers of culture. Although Honda began as a primarily popular vehicle with AsianAmericans, it has grown to be embraced by all of American culture because of therelatively safe, reliable, and inexpensive up-keep of the vehicles. The Honda CivicHybrid is a direct response to the change of the marketplace needs with the recognition of a familiar body style — or perfect frame of reference. Toyota has been able to maintain a




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healthy balance of market development with market penetration through its motivation tokeep costs down through just in time (JIT) manufacturing and quick recognition of market changes and capability to react to competitors. However, market development isrisky because the companies are expanding into new markets they may not completelyunderstand or identify with.

Product Development

Product development refers to the firm‘s development of new products targeted to itsexisting market segments. This is most effective when the company‘s strengths arerelated to its specific customers rather than to the product. Toyota has been leveraging itsstrengths by developing a new product aimed at existing customers. While Toyota‘s Priushas been the title-holder of the eco-friendly market, they don‘t appeal to everyone. Theyhave been referred to as odd-looking and egg-shaped. Similarly to market development,new product development carries more risk than attempting to increase market share.Most automotive companies are attempting product development at this point to meet

new customer needs due to environmental changes and awareness changes. The Volt fitsinto this category, but it also is a necessary move to keep up with competitors, whilediversifying itself as well.

Diversification

Diversification is a measurement of the firm‘s capability to gain new businesses throughnew products for new markets. This is the most risky of the four strategies because itrequires product and market development and may be outside of the company‘s past corecompetencies. The Chevrolet Volt also fits into this category. It is a risky move, butagain, also necessary. They can be an American leader in the development of diversehybrid or electric vehicles.

Chevrolet‘s Volt acts as a stepping stone for the fashionable and growingly eco-consciousconsumers. Chevrolet greatly needs to diversify as they‘ve seen their market shareplummet as a result of their product line, reputation, and high gas prices which contributeto the instability of the economy. The classic Chevrolet brand has legs among Americans,yet United States citizens aren‘t buying because they‘ve found their needs better met byforeign automakers. Competitors leverage with their existing markets, low cost products,and market penetration. The Chevrolet Volt is diversification and penetration into newmarkets and development of new products. Foreign automotives are going to be able tohold onto some American market share, but it will be traditional compact car buyers, notthe Volt because it is aimed at the non-traditional and slightly more disposable incomebracket. As these consumers buy-in, the rest of the population will gain momentuminspiring more consumers to purchase plug-in vehicles because of the need to spend lesson fuel and affiliate with eco-conscious and influential social groups.

While building its image, Chevrolet can compete on market penetration and developmentby building this specific market niche and meeting style and eco-recognition needs.Additionally, the Chevrolet Volt is a sporty looking and new version of hybrid that may










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The radar chart below displays current status for the five disciplines with the ChevroletVolt.

Figure 12. Value Disciplines

Value Disciplines

0

0.2

0.4

0.6

0.8

1Knowledge

Time

Operational ExcellenceCustomer Intimacy

Innovation

Chevrolet‘s knowledge discipline is rated highly because of their experience in theautomotive industry and with American culture. Innovation is rated highly because of recognition that the market is now ready for an electrically-integrated vehicle that notonly represents eco-friendly sustainability, but also embraces luxury of style. Customerintimacy was forethought in development of something that was appealing and thatAmerican consumers can embrace. Operational excellence is relatively high for the Voltparticularly because of its innovation and capability to plug into a household outlet, aswell as taking the time to make the model as technically sound as possible beforereleasing to the market. Time is the lacking discipline, but the timing is perfect now thatthe market has bought into frame of reference in hybrid vehicles.

The strongest disciplines, knowledge, innovation, and customer intimacy focus on marketopportunities. Concentration on these enable differentiation without increasing overallcosts, elimination of activities that do not create value, increase of customer satisfaction,creation of barriers to competition, and setting market standards. These lead toimprovement of profitability and market share.




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Positioning Strategy

The American leader in innovation is the market position that the Chevrolet Volt desires.Positioning inspires consumers with the American values of independence, performance,and style, which places the Volt against foreign competitors as distinct and unmatchable.

Primary value drivers consistently important to consumers are buyer motivation & goalsand economic value. Promotion of attributes and benefits of style, fuel independence, and performance are emphasized in the positioning statement: ―Empowering a newgeneration by reinventing the spirit of the American automobile.‖ Through listening to consumer concerns, the Chevrolet Volt meets expectations of change and a move away from primarily gasoline reliant vehicles. Quality, price, andperformance position the product as more than a run of the mill hybrid and not just acookie cutter purchase. There are only 10,000 units to be sold in the first year of releaseto accentuate the customization and style of the car.

Brand Strategy

The brand identity is that of American innovation. The strategy platform and eachindividual strategy are tied to the value proposition for the Chevrolet Volt. The positioning statement also works as the value proposition: ―Empowering a newgeneration by reinventing the spirit of the American automobile.‖ This is effectivebecause the positioning statement emphasizes the values to the consumer as well aswithin the auto industry.

Additionally, effective branding will be ensured through the media channels chosen,high-end magazines, product placement, public relations, and guerilla marketing tactics,

like visiting corporate campuses. These reflect quality and prestige with capability of building knowledge through specific media vehicles (see the Promotion Plan). Brandassets are that of American nostalgia, like the Corvette and Camaro, unique marketappeal, strategic flexibility, large scale domestic operations, and innovative technology — the E-flex drive train. Brand liabilities are previous failure with the EV1, an electric car,physical costs, and dependence on suppliers to come through with battery technology.These are best dealt with through the target market selection, that of American EchoBoomers, the pricing strategy, and internal research and development.

The brand personality is American, independent, energy-flexible, and standard setting.Other key elements to represent the brand are style, sustainability, and empowerment.

These are addressed through the marketing communications, customer service, customerrelationship management, and pricing plan. These elements and strategies will also buildbrand equity. The brand will be leveraged as eco-performance vehicle that reignites thespirit of American built vehicles and gives back a sense of style and independence.




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Transition to 4 Ps

Weak points on the chart below will be the focus of concentration and area to innovate,while strong points are to be maintained. Obviously, distribution innovation and time are

in need of change. These can be achieved through better information to dealershipsconcerning products and standardizing of components for electric vehicles in futureChevrolet models. The standardization would additionally attribute strength to both theprice knowledge and product timing. With attention to production, as done with the Volt,future Chevrolet products will benefit and dealerships. Customer intimacy will as wellbecause of the availability of replacement and maintenance components and products.

Figure 13. Value Discipline – Marketing Strategy Transition Map

Value Discipline-Marketing Strategy Transition

Map

0.00

0.50

1.001.50

2.00

2.50

3.00

K n o w l e d

g e

I n n o

v a t i o

n

O p e r a t i

o n a l E x

c e l l e

n c e

C u s t o

m e r I n t

i m a c

y T i m

e

Product (7.5)

Price (5.9)

Distribution (6.6)

Promotion (7.9)

The ―Four P‘s‖ are addressed further in the following sections: Product Plan, Sales andDistribution, Promotion and Pricing Plans. Distribution, price, and time of product to theconsumer are the areas of special attention.

Product Plan

The product plan will go in depth about product objectives, product life cycles, productstrategy, product cost, and product launch.

Product Objectives

The product objectives consist of the following:




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To create a successful electric vehicle. The EV1 in 1996 was a failure for GM.They want to show that they can do the electric vehicle right. The Volt is thisopportunity.

To create a vehicle that will have extended range capabilities (Lithium-ion

battery). I found that a 1997 Chevy cavalier gets 300 miles per tank (2008, wiki).A 1998 Honda Civic gets 320 miles per tank (2008, answers). Even on a Prius theaverage seems to be about 450 miles per tank (2007, LSG). The Volt is able toachieve 640 miles.

To create a plug-in hybrid. The plug-in on the Volt is an indispensable featurewhich supports oil independence and cleaner air.

Product Life Cycles

Life cycles have a significant impact on business strategy and performance. They candetermine effects of Porter‘s five to the product. There are three life cycles that frame themarket for the Chevy Volt: market life cycle, product life cycle and technology life cycle.

Market Life Cycle

Product life cycles and Industry life cycles have similar stages, so when addressing themarket life cycle for this industry there are two important distinctions. One is thatelectrics are an upgrade from hybrids because they are plug-ins and they have a largerbattery (2006 Argonne). Two, is that Prius and the Volt are in different stages of productand technology life cycles. In general, the alternative energy vehicle industry is in the

early growth stage because more competitors are entering the industry, sales volumes areincreasing and economies of scale are increasing.

The strongest competitor in the industry is clearly Toyota with the Prius. However, thereare only currently 12 model hybrids on the market in the United States and in 2012 thereis projected to be 52 models available (Winslow 2008). So the competition and demandwill continue to rise in this industry. A survey by Ezine posits that 33% of Americanssaid they would consider buying a hybrid as their next vehicle, but less then 1% of allvehicle being manufactured are hybrids. The average American buys a new car everythree to four years. This shows that competition/supply is increasing but possibly not fastenough to meet demand.

Sales volumes of hybrids have overall increased in 2008. In January of 2008, hybrid carsales increased 27% over last year, which totaled 22,392 units. Toyota took most of themarket and Honda Civic actually dropped 2%, but surprisingly Ford and Nissancontributed to the market demand (Hybridreview 2008). So it is clear that the public isaware and willing to accept hybrid vehicles into the market.




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In the hybrid car market, economies of scale are playing a bigger role. Toyota cut theircost of hybrid technology in half from $4000 to $1900 by 2009 where they willincorporate their more advanced, less expensive drive train system (Motorauthority2006). Savings on the 2009 Honda Civic come from simplified architecture, lower weightand smaller size. Hybrid car manufacturers are pumping out hybrids as fast as they can

manufacture them. The fact that economies of scale are more prevalent shows that thehybrid market is in the growth phase of the market life cycle.

Product Life Cycle

One of the distinctions that I touched upon in market life cycle was that the Prius and theVolt are clearly in different stages of the product life cycle. The Prius is in the growthstage because costs have been reduced due to economies of scale, sales volume hasincreased, higher profitability and public awareness, and the competition is progressing.Meanwhile, the Volt is still in developmental or pre-commercialization stage (Fox 2008).As has been stated, I‘m sure, the Chevy Volt is set to be released in 2010. Battery testing

is a major component keeping the Volt in limbo. Chevy wants to ensure, to the best of itsability, that the battery will meet performance, quality and safety requirements (Posawatz2008). Especially after their public relations nightmare with the EV1, they cannot affordto have another electric car failure.

Technology Life Cycle

A technological life cycle is different from a product life cycle in that it describes thematurity of a technology in reference to that generation of that technology. This is theformat for which I will analyze both the Prius and the Volt.

So far, Toyota‘s Prius has had a four -year technology life cycle. Initially, Prius wasreleased in 2001, the next generation, updated model came out in 2004, and the new thirdgeneration Prius is set to market in 2009. According to technology life cycle criteria, thePrius falls in the ascent phase also known as ―leading edge‖ because costs are beingrecovered and the technology is gathering momentum. The timeframe for the new modelsare based on new technology in regards to economies of scale costs and updatedtechnology applications.

On the other hand, the Chevy Volt has been doing all of its technology updates andscaling costs, pre-commercialization. Volt is still in the research and development stagealso known as the ―bleeding edge‖ because the inputs are negative costs and the chanceof product failure is still high at this point. Chances of success increase as Chevy comescloser to its finalization of the Volt. As stated earlier, Chevy has been engaged inrigorous battery testing, they have diverted significant resources towards the developmentof the Volt, 200 engineers, 50 designers, 400 on related subsystems and electriccomponents and over three years (Posawatz 2008). The release of the Volt will mark anew step for hybrid electric technology, which will continue to adapt for many years tocome.






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quickly to Chevrolet‘s performance and technological innovations and make them anindustry norm.

Table 23. Taxonomy

Taxonomy title ClassificationProduct Family Passenger Cars

Product Class Hybrid Electric Vehicle

Product Type Plug-in Hybrid Electric Vehicle

Product Line N/A

Product Mix Trucks, SUVs, Minivans, Compact

Product Development

Currently, there are two major product developments in the alternative energy arena

which include the new, improved lithium-ion and hydrogen fuel cell power.

At Argonne National Laboratory they have created a lithium-ion battery that surpassesthe Nickel Metal Hydride battery in every way. It is lighter, more reliable, safer, longer-lasting and more powerful. This product received the prestigious R&D 100 award in 2008for being one of the two most innovative products of the year (ANL 2008).

The other significant development in the alternative energy vehicle industry is Honda‘snew FCX Clarity which is a zero-emission hydrogen powered fuel cell sedan. FCXClarity runs on only electricity and no gasoline. Benefits include only water vaporemissions and it reduces oil dependence. Some disadvantages are that this car needs to be

refueled at special hydrogen refueling stations. Also, it only gets 280 miles per tank which is about average. Both this hydrogen vehicle and the electric car transform theboundaries for automakers and bring awareness to consumers.

Services and Warranties

Some standard industry services are financial assistance, maintenance and repairs, andwarranties. Chevrolet has 24 hour roadside assistance which entails: 24/7 phoneassistance, towing from a legal roadway, flat tire change, battery jump start, and vehicleunlock service and emergency fuel delivery. I could not find a similar service for Toyota.The Chevy Volt has not yet considered warranties as they are still working on testing the

car, but as a format there are some examples from Toyota hybrids and existing Chevroletvehicles that will help to formulate these aspects.

Toyota hybrids have a basic 36 months or 36,000 miles warranty for all componentsother than normal wear and maintenance. All of the hybrid related components (e.g.hybrid battery, hybrid control module) are covered for 8 years or 100,000 miles. Theengine, transmission, front-wheel drive, etc. are part of the power train coverage whichlasts 60 months or 60,000 miles. Finally, there is rust-through coverage that endures for




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60 months and unlimited miles if there is corrosion of the sheet metal (toyotausersonline2008).

Chevrolet also has a basic plan of 3 years or 36,000 miles. Their power train plan covers5 years or 100,000 miles. Rust-through protection is guaranteed for 6 years or 100,000

miles. So both the power train and the rust-through warranties are better in Chevroletthan in Toyota (Posawatz 2008). However, Chevrolet does not have a special hybridcomponents warranty.

Product Cost Model

Details about cost including: product cost, operating cost, distribution cost, research anddevelopment cost, etc. are derived from Chevrolet‘s 10k financial statements and appliedto the profit and loss statement. (See assignment 23 in the appendix)

Product Launch Issues

Volt was first a concept car at the 2007 at the North American International Auto Show(NAIAS) in Detroit, Michigan. It is set to release in 2010. Why so long? The two majorhold ups on the release of the Chevrolet Volt are testing requirements and lithium-ion battery technology. ―They are focused on getting it right‖ (Cornell 2008). Their main priorities are making sure it‘s safe and that the batteries work.

Product Launch Timeline

Concept car displayed at the NAIAS in 2007.

The Volt‘s working lithium ion battery packs will be ready for vehicles in

October 2007.The car began road testing in Spring 2008.

The Volt will begin mass production late 2010.

Sales and Distribution Plan

Direct distribution to the consumer is constrained by dealerships, however, there remainsa need to communicate with dealers the position and branding of the Volt. Additionally,the application of how the product and pricing should be perceived by the consumer is onthe sales communication agenda. In this section the the sales and channel strategies areaddressed.




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Table 24. Objectives, Sales Strategy, and Channel Strategy

Sales Objectives

To keep communication open between Chevrolet and theconsumers.

To keep an up-to-date database and continuous flow of information between the consumer and Chevrolet VoltSBU.

Sales strategy

Emphasis knowledge within the Chevrolet relationshipwith dealers.

Concentration, also, on relationship between Chevrolet,the dealerships and the consumer in information sharing.

Promotions will be supported with extra incentives for

high performing dealerships.

Channel strategy

Direct - Chevrolet‘s management team works directlywith dealership sales teams.

Insurance that dealers understand the uniqueness of theproduct and treat consumers with the same respect thatregional managers treat salespeople.

Distribution of the product will happen much the way thatit does for standard vehicles, except for the Volt willtravel in covered trucks and trains pending on dealershiplocations.

Sales and Distribution Objectives

The first sales objective is to keep communication open between Chevrolet and theconsumers. The more easily information is accessed, the better connected they will feel tothe impending change in the automotive industry. Therefore, the recommendation is forconsumers that opt to receive email contacts will get full reports of up-to-dateinformation about production decisions of the Volt. As soon as Volts are released to themarket, these individuals will be the first to receive information on how many are goingto specific locations, how many are on the waitlist in their specific area, and what numberthey are on the waitlist, as well as any manufacturing changes such as the release date or

decisions to manufacture more or fewer.

The second sales objective is to keep an up-to-date database of surveys that establishesVolt owners as the Chevrolet elite, those who receive information even before it ispublicized. These surveys will be one factor in the way that Chevrolet develops futuremodels of the Volt, what amenities are most important to consumers, and what theywould like to see changed.




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By keeping consumers involved it empowers them and this is part of the value proposition. Chevrolet‘s goal will be that anyone on the waitlist will receive notice of their ability to receive the Volt as soon as they sign up and deposit, therefore they willknow if they will get one of the first 20,000 or if they will be the first to receive Volt inthe second year of production.

Other options for sales and distribution are to adjust the production rate to the rate of consumer demand. However, this may detract from the idea of each Volt being elite, thisissue is addressed by allowing website customization for individual buyers. ChevroletVolt belongs to the most elite consumers, and then will become more commoditized inyears two and three, but still retaining its recognition and prestige.

Sales Strategy

The sales strategy is similar to most dealer relationships, except these dealers will receivespecial interest sales meetings, where a regional manager will come to the area and give

the dealers specific sales promotion materials and let them know exactly what featuresare to be emphasized. By being a Volt dealer they are up for special benefits. Forexample, if they participate in one of the corporate campus visits, dealers can winChevrolet-specific discounts. Also, dealers are responsible for selling the most Volts andwill get special recognition and awards including a gift for their special Volt sales team.

Sales Force Structure

The sales force structure revolves largely around the dealerships. This is because of thestrict guidelines by which automotive companies and dealers operate, but also it can beindividualized to the consumer. Consumers will feel that they are always getting one-on-

one treatment. The sales force will be well trained about the specific features, attributes,and benefits of the Volt, especially for first time buyers to gain momentum. First ownersare not only one of few, but they also help the innovative process for the next Voltmodels by communicating with Chevrolet. This will require sales force to be extensivelyknowledgeable in what they are selling. Volt is more than a vehicle for just driving, butalso it is something that is going to build a relationship with the consumer for a lifetime.

Consumers will be expected to put down a one thousand dollar deposit, after which theyare given a code that will register online and will give them their survey, waitlist number,and capability to receive immediate information on the latest promotions for the Volt, aswell as ―backstage‖ passes to meet celebrities at promo events.

Sales Force Automation

As more vehicles are selling online, it is important that dealerships continuously updatetheir website information. The Chevrolet Volt website will take consumers directly totheir local dealers where they can view and drive the Volt. Dealers will be expected totake phone calls and make appointments for interested consumers to come in andexperience the Volt.






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Channel Strategy

The channel strategy is direct, in that Chevrolet‘s management team works directly withdealership sales teams. This ensures that dealers understand the uniqueness of the productand treat consumers with the same respect that regional managers treat salespeople.

Distribution of the product will happen much the way that it does for standard vehicles,except for the Volt will travel in covered trucks and trains pending on dealershiplocations.

Channel Design

Volts are indirectly dispensed from manufacturing plants to the dealerships. Trusted trainand truck carriers will deliver Volts to the top 10 metropolitan areas: Los Angeles, SanFrancisco, New York, Washington DC, Chicago, Phoenix, Boston, Philadelphia, Seattle,and San Diego.

Customer Relationship Management (CRM)

Consumer relationship management (CRM) is extremely important considering thehistory of Chevrolet with electric vehicles. CRM will be channeled through customersurveys and using online interactions to create an environment conducive to providinginsights about customer needs and expectations. Additionally, services and warrantieswill be at the highest standard because customer service is greatly valued by Chevrolet.

Channel Management

Channel management will be maintained through monitoring several key performance

indicators (KPIs), including: market coverage, quality of service, and speed of information to the consumer. Market coverage will be addressed through measuring themarket share via comparison of Volt sales versus sales of the passenger car market andsales of the hybrid market. Also, mind share through the surveys and voluntaryparticipation of Volt consumers in the Chevrolet community (both actual and virtual.)Quality of service will also be measured with the surveys and continuous communicationwith Volt owners and potential owners. Speed of information will be evaluated throughadditional surveys voluntary and required for getting on the waitlist for the Volt.

Information will be handled by Nu-Tech Solutions, a long time carrier of General Motorsdistribution strategy software. Nu-Tech has provided data collection, predictive analytics,

and profit optimization through distribution channels. The Chevrolet Volt will continue toextend this relationship with Nu-Tech assuming that Nu-Tech will continue updating itsplatform as e-commerce becomes available for the automotive industry (Nu-Tech 2008).




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Promotion Plan

The Chevrolet Volt needs to be favorably leveraged in consumers‘ minds through variousmarketing communications methods. These methods will help to inform, persuade,remind and reinforce consumers of the marketing message. The marketing

communications will highlight the product‘s eco-performance and aesthetic appeal. Thefollowing contains the promotional objectives, theme, strategy, and campaign plan for theChevrolet Volt.

Promotion Objectives

Market Coverage/Schedule

The product‘s promotion will be concentrated into urban areas that have high potentialfor sales. The following cities are where the most hybrids are sold in the United States:Los Angeles, San Francisco, New York City, Washington DC, Chicago, Phoenix, Boston,Philadelphia, Seattle and San Diego (Hybrid 2008). The following cities have the most

hybrids per capita. Promotions should also be targeted at the following cities: Portland,Oregon; Santa Barbara, Monterey, California; Charlottesville, Virginia; and Las Vegas(Hybrid 2008). The objective within these cities is to create 75% product awareness of the Chevrolet Volt within the first 6 months of the campaign.

Create Awareness

Incorporated into the promotion plan will be the objective to create brand awareness forChevrolet. Considering that the brand is not known traditionally for being innovative inalternative fuel and hybrid technologies, the brand needs to create awareness amongconsumers as an innovative and technology advanced brand. Also, taking into account

that the Volt is an eco-friendly vehicle, Chevrolet also needs to create an association of eco-friendliness with its brand. This will be done by highlighting the plug-in electric car,with virtually zero emissions. With the designated campaign, Chevrolet‘s goal is toachieve 80% brand awareness within 6 months of the campaign.

Create Brand Preference

Chevrolet wants to create brand preference with the Volt considering its numerouscompetitors in the market. While assessing different options, consumers need to considerthe Chevrolet Volt superior to the given alternatives in the market. This will be done byhighlighting the vehicles eco- performance attribute while also addressing the vehicle‘s

superior style. Chevrolet‘s goal is to achieve 12% brand preference within the first 18months of the campaign.

Promotion Theme

The promotional theme will be based on the eco-performance aspect of the vehicle. Thismeans that it is important to display the fact that although the vehicle is eco-friendly it is




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also high performance. Considering that the vehicle contains an electric engine, thisfeature must be exploited as a differentiating aspect between other hybrids. Thepromotions for the Volt should also accentuate the fact that it is American built. The EcoElites will be attracted to the eco-performance and aesthetic appeal of the product. Theads must be hip and stylish considering that this target market desires to look good and

cares about appearances (American Living 2008). Advertisements will showcase theaesthetic appeal of the car and the green aspect associated with it. It is important toaccentuate the fact that the Volt is associated with sustainability, because Eco Elitesheavily support companies that are associated with good causes and are more likely toswitch to such brands (Krotz 2008).

These aspects will be highlighted through a ―Volt Cross-Country Road Trip‖. Thenationwide road trip will involve 3-5 Chevrolet Volts touring the entire countryindividually and promote a ―Green Revolution‖. Each Volt will take customized routes toreach their designated stops in metropolitan areas around the nation. On the Volt‘svarious stops, a local celebrity will greet the driver. Consumers will have the opportunity

to get their picture taken with the local celebrity and the Volt. The picture will be sent toconsumers electronically through gathering their email. The road trip will highlight theeco-performance factor of the Volt, considering that it is able to endure a long distancetrip while producing low emissions. It gives consumers a taste of how the vehicleperforms and will spark a lot of buzz and interest for the product.

―Eco-performance for a new generation‖ is used as the tagline of the advertisingpromotions. This tagline will be beneficial to the campaign because it empowers theconsumer through giving the opportunity to feel that they are making a difference. This isimportant for successfully reaching the target market because in order to capture thisconsumer group, the product must make them feel as if they are making a difference intheir communities (Green Marketing 2008).

This tagline appeals to the target market considering that it aligns with the customervalue drivers of the consumer of being eco-conscious while implying style. The marketwill shift considering that the Volt will be the first high performance vehicle that is eco-friendly. Previously there has not been another product like it; therefore the taglinecreates interest and intrigue for the product by highlighting the differentiating factor of being an eco-performance vehicle.

―Empowering a new generation by reinventing the spirit of the American

automobile,‖ is the value proposition that is associated with the product and will be abasis for the promotional theme considering that it incorporates the customer valuedrivers that have been identified. These value drivers consist primarily of buyermotivations & goals including economic value.




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Promotion Strategy

The media mix for the proposed promotion plan will consist of broadcast, print and

product placement advertising; public relations and publicity, the internet/web, andguerilla marketing. The budget for the media mix is comprised of 40% advertising, 25%public relations, 20% internet, and 15% guerilla marketing. These media types werechosen based on various factors including association with the target market. Consideringthat the level of eco-conscious consumers varies, it is important to remember to targetmainstream media and not target the market too narrowly. It is only a small fraction of the population that is heavily submersed in the green lifestyle (Wigder 2008). Thereforemedia types will be used to target both the mainstream market as well as the niche marketof the Eco-Elite consumers.

Figure 16. Marketing Communications Media Mix

Marketing Communications Media Mix

40%

25%

20%

15% Advertising

Public Relations

Internet

Guerilla

Advertising

TV Broadcast

59% of eco-conscious consumers learn about eco-products through television (Makeower

2007). Considering this, ads for the Chevrolet Volt will be run on select televisionchannels that appeal to the target market and would be aired specifically during populartelevision spots that have many viewers. Television ads would be placed duringprimetime reality programming and sitcoms. Some television programs that thecommercials would be aired during include: ―American Idol‖, ―So You Think You CanDance‖, ―Dancing with the Stars‖, and ―The Biggest Loser‖ are some examples.Consumers in this market segment are attracted heavily to reality television, thus it is




81

beneficial to place ads in the associated timeslots (Getting Inside 2001). These ads will becompromised of 30-60 second spots.

Television ads will also highlight the ―Volt Cross-Country Road Trip‖ by enticing theviewers to visit the website to find out more, and to track the Volt vehicles.

Print Ads

Full color, two page spreads will be placed in magazines that appeal to the target market.Print ads will be placed in magazines that appeal to the mainstream market. These printads would be included in business and auto magazines.

Product Placement

The Chevrolet Volt will be featured in various television programs and movies to gainexposure of the product. The Volt would be shown in programs and movies that appeal to

the mass market. These programs would include the action dramas such as 24, and courtdramas such as CSI. It would be placed in action movies by being driven by a famousactor/actress. Such movies could be a new James Bond, or other movie titles that depict apopular story or star a popular actor/actress.

Dealership Advertising Communications

Chevrolet will maintain strong relationships with dealerships carrying the Volt. Thiswould include various marketing communications and promotions for the product anddistributed to the various participating dealers. Chevrolet will be working closely withdealerships to offer training on the product in order to achieve expertise with itstechnology to be able to promote the product most effectively.

Dealerships will carry brochures containing pictures, speculations and detailedinformation about the Chevrolet Volt. They will be readily available for consumers toview and take and will be given out by salespeople at the dealership.

Public Relations and Publicity

Consumers within the target market view corporations who make a real effort to improveenvironmental practices more favorably and are more likely to be attracted to purchasethe product (Mintel: Green Marketing 2008). Therefore it is important for Chevrolet togenerate positive public relations and publicity that relates to the firm‘s increased effor tstowards becoming environmentally friendly.

Events

Various events will be planned for the Chevrolet Volt including one for the product‘slaunch and other events to promote the product. These will create press and mediacoverage opportunities for the Volt.




82

Press Relations

Chevrolet will arrange various press releases in order to gain more positive exposurepertaining to the Volt and the Chevrolet brand. A press release will be planned during the

pre-launch phase of the campaign announcing the product launch of the Volt. This wouldensure spots in popular publications such as the New York Times.

The ―Volt Cross-Country Road Trip‖ will help to generate press about the vehicle also.Considering that local celebrities will be participating in the event, this will reach a lot of coverage for press considering that local news stations will be interested in the story, aswell as national news stations and various publications.

Event Sponsorships

Chevrolet will sponsor automobile and sporting events, such as the Tour de France to

gain exposure for the Volt. The Tour de France is a highly popular event that incorporateswell known people and consumers with disposable income. Considering that the eventincorporates bicycles is further stressing a sustainable, fuel independent theme which isassociated with the Chevrolet Volt.

Internet/Web

If consumers are able to obtain a product‘s environmental information easily withaccessibility and reliability, the consumer would be more likely to act upon thatinformation therefore it is important to have a website for consumers to accessinformation from (Mintel: Green Marketing 2008). The internet is a powerful tool forreaching the Eco Elites because most of the consumers in this segment spend more timeonline rather than watching television (Wegert 2004).

Product Website

A website dedicated to the Chevrolet Volt will be accessible through the GM corporatewebsite in addition to its own URL. The website will include various information aboutthe product including product specs, waitlist/availability information, and the locations of dealerships that contain the vehicle. The website should include various articlesconcerning the Volt and will also contain an area for consumer comments and questionssuch as a blog. It will also contain an application so that consumers can customize theirown vehicle online, including 360 degree views of the vehicle.

Website Advertisements

Various advertisements for the Chevrolet Volt will be placed on websites that containhigh click through rates and visitors that align with the selected target market. Thisincludes banner ads and other website advertising applications. Banner and buttonadvertisements would be placed on business and auto websites.




83

Viral Marketing

The Chevrolet Volt website will include applications that will allow the consumer tocustomize their own vehicle. This would be constructed of a mini-site that would attract

the target market for the viral campaign. At the mini-site, consumers would be able tocustomize their own Volt through choosing different colors for the exterior and differentstyles for the interior such as tiger striped seats. The customizing feature of the website isattractive for the target market considering that they have diversified tastes andpreferences (Malarchy 2006). In addition, the mini-site will include an interactiveodometer where consumers can calculate how many miles they can get per gallon givingthe length of the trip and to even calculate the emissions they are saving. Consumers willbe able to input their data from the vehicle they are currently using and compare theoutput to the Volt‘s.

Consumers will also be able to track the various Volt vehicles that are involved in the

―Volt Cross-Country Road Trip‖ by viewing interactive maps of the United States thatdisplay where they are currently located. It will also display an agenda of the variouscities where the Volt will intend on stopping and which local celebrity will be availableto take pictures with the Volt. Lucky consumers will also have their pictures posted onthe mini-site.

Consumers will be able to access these applications through the GM corporate website.Viral marketing creates an on-line community for the Volt while spreading the word toother consumers. Creating a community for the target market is effective because itfulfills their desire for community by designing a method for peer-to-peerrecommendations. Many of the decisions made by the Eco Elites come from viralmarketing (Krotz 2008).

Guerilla Marketing

Street Campaign

The Chevrolet Volt will be placed in various areas around metropolitan cities with highsales potential. The vehicles would be placed in high traffic areas such as a popular block or square within the city where it can easily be viewed by many consumers passing by.This creates buzz and interest in the product which provokes an increased desire to obtaininformation about it. The various Chevrolet Volts would be placed in cities such asSeattle, New York City, Los Angeles and Las Vegas. These cities not only contain highconcentrations of hybrids per capita but are also part of the 25 deep which means highefficiency of reach for product exposure (Dickinson, 2008).

Chevrolet Volts will be driven onto corporate campuses throughout the nation, ideallycities with the most sales potential, and left unlocked. This gives consumers anopportunity to experience the vehicle hands-on and allows them to explore the amenitiesand interior of the vehicle.




84

The various guerilla marketing tactics that will be used within this campaign will alsogenerate relative PR. This is due to various local news channels and newspapers withinthe targeted metropolitan areas that would be intrigued and run stories on the product‘smarketing.

A local dealership would be involved in both of these events in order to coordinate andoffer consumers information about the vehicle. This would consist of a salesperson ordealership representative accompanying the vehicle at the specified location while beingavailable to answer questions about the vehicle and distributing brochures. Test ridescould also be given to interested consumers.

Campaign Plan

In order to maximize exposure and reach of the Chevrolet Volt, the following plan andschedule has been devised to accomplish this. The various times and periods of

advertising have been planned through assessing the target market and the product lifecycle. It is based on a pre-launch and product launch.

Media Plan

The following schedule relates to the specifics of the campaign considering whenadvertising should start and the duration of the period. It will be divided into twosections, pre-launch and post launch of the Chevrolet Volt.

Back-ended loading is a good approach for the product considering that it is a newproduct launch. The campaign creates teasers a significant period before the product

launch and advertising increases as the product launch gets closer (Dickinson, 2008).

Schedule and Timeline

The guerilla marketing and internet marketing will start at the same time, 1 year beforethe product launch in January 2009. This provides a spark of interest for consumers andgives them a method for obtaining more information about the product. Productplacements in movies and television programs will starts six months prior to the productlaunch in June 2009. Television and print advertising will start six months after thelaunch of the product June 2010. The goal is to create a lot of buzz and curiosity aboutthe product. Mainstream consumers who see the vehicle around their communities would

be curious about it considering there hasn‘t been any particularly mainstream advertisingregarding the Volt. The television commercials and print ads appearing six months afterthe product launch will inform the general consumer about the product. Public relationsand publicity will start pre-launch and stay heavy until Q3 of 2011. After this period,public relations and publicity will stay constant with less concentration. Promotions willbe heaviest in the pre-launch period and during the launch of the product, than latertapering off. The constants for the Chevrolet Volt campaign will be the television, print,




85

public relations events, dealership advertising communications, and the GM Corporatewebsite.

Pricing Plan

A pricing plan has been established for the Chevrolet Volt based off of the pricingobjectives and a value based pricing strategy. Understanding the pricing strategy andhow it will work for the company is both profitable and strategic for Chevrolet to have acompetitive advantage over its competitors.

Pricing Objectives

The pricing objectives have been established due to an analysis of the current marketsituation. The pricing objectives for the Chevrolet Volt reflect both the product and the

value that it brings to the consumers. The first objective is to enhance the image of thefirm, the brand, and the product. The price should reflect the reputation and quality of Chevrolet in order to attract consumers. The second objective is to use price to make theproduct visible. If the price of the Volt blends in with other competing brands, theproduct may as well. The objective is for the price to be high enough to make it―visible,‖ without losing customers. The third objective for pricing is to create interestand excitement about the product. And finally, the fourth objective is quality leadership.The Volt should have the price that conveys value and quality to the consumer.

Value Based Pricing

The brand of Chevrolet and the product of the Volt brings value to the consumer.

―Buyers make judgments about benefits and prices and choose those products that

Customers

Value

Price

Cost

Product




86

maximize their perceived value. The goal of value-based pricing is to enable moreprofitable pricing by capturing more value. That price should, in turn, determine thelevel of product (development) costs that the company is willing to incur (Harmon).‖With this pricing structure in mind, Chevrolet keeps the interests and concerns of thecustomer first, while the value of the product, the price and cost follow, with the product

being the last concern.

Pricing Strategies

A hybrid pricing strategy of a combination of both penetration and skim pricing has ledto periodic discounting. The penetration pricing process is used in the sense that it helpsto gain entry into a new market. Even though the market isn‘t completely new, becausethe Volt is electric, it is an innovative market. Price skimming is used because it calls fora high price to be placed on the product but the price eventually is lowered.

Periodic discounting strategy creates customer value for sequential classes of

buyers with increasingly low reservation prices. The initial strategy focuses onskimming the inelastic demand of the innovator then reducing prices on apredictable basis as the market matures in order to attract more price sensitivecustomer groups (Harmon).

Basically, with the life cycle of the Volt in mind, every four years, a new version will beintroduced into the market. The initial price of the Volt will be around $48,000. Eachyear after the Volt is introduced the price will be lowered as a discounted rate and aroundthe four-year cycle the price will be lowered considerably when the new model comesout.

Customer Reactions

The eco-elites will be attracted to the Chevrolet Volt‘s quality and ―new-age‖ appeal. Asa result, when the product comes to market, the majority will purchase the Volt based onit‘s new innovative technology, the idea that Chevrolet has the reputation and quality of its products, and because they have the disposable income to spend. Because the Volt isdifferent from others in the market, such as hybrids, the eco-elites will be attracted to the product‘s appeal. The eco-elites will not mind paying the heavier price for the product inthe introduction phase and will be inclined to buy other complimentary products that theVolt offers. When the price gets discounted over time, this will appeal to both the eco-elites and other green consumers who waited to see how the new technological

innovations of the Volt worked out.

Competitor Reactions

The leading competitors in the automotive industry have already started to take action inbuilding their own hybrid/electric vehicles. Toyota is planning on coming out with aplug-in vehicle around the same time that the Volt is projected to come to market.However, for now, they just have the Prius, which is the leading hybrid in the market.




87

Honda hasn‘t quite made any moves to move toward more innovative products, however,it won‘t be long until they do. For now, they are sticking with the Honda Civic Hybrid,which has been profitable to this point.

Implementation

Financials

The financials section includes a three year pro-forma profit and loss statement,marketing budget, and marketing promotions budget for the Volt project. The pro-formaP&L statement include a break-even analysis. The overall marketing budget includespromotion costs as well as the personnel required to execute the project. The marketingpromotions budget will detail funds needed for various marketing promotions over thethree year period. Finally, a discussion of the capital budget requirements will bepresented. From this and the pro-forma P&L, return on investment in the Volt projectwill be calculated.

Pro-Forma Profit and Loss Statement

The pro-forma P&L statement projects revenues and costs of the Volt project. The mostsignificant costs are included. These include cost of goods sold, research anddevelopment, marketing, and general administration. The chart begins in 2010 whenproduction of the Volt is expected to begin and projects revenues and costs over threeyears divided by quarter.

Gross Income

The gross sales figure is derived from demand forecasts previously presented as well assupply forecasts. Supply forecasts are heavily favored due to the limited productioncapacity of the lithium-ion battery that is required for each vehicle. GM productiontarget is approximately 100,000 vehicles per year after the first year of production(Edmunds 2008). It is anticipated that demand will outweigh the production capacity.Because of this, the gross sales figure is based on the hybrid pricing model explained inthe pricing plan section above and the forecasted production targets.

Cost of goods sold is based on the average automotive cost of sales as a percent of grossrevenue as reported in GM‘s 2007 10k and 2008 first quarter report. This isapproximately 88%. It is anticipated that the cost of goods sold will drop significantly as

volume production of the Volt continues, especially as the lithium-ion battery technologyimproves. The cost of goods sold figure in the pro-forma P&L statement is averagedover the three year projection at 75%.

Operating Expenses

The projected marketing expenses come directly from the marketing budget. The budgetis based on a total $50 million allocated to marketing the Volt including pre-launch




88

campaigns through the three year P&L period. The allocation of the marketing budgetper quarter is determined by the campaign plan. Also included in the startup budget forsales and marketing is the budget necessary to hire and train personnel.

The research and development expense incurred to bring the Volt to market is estimated

at $1.9 billion. Most of this will be required before the Volt reaches market. This costwill be amortized over the three year period. This research and development budget willalso be used to fix design and technology issues that arise from the initial production runof the Volt for implementation in later production runs. The budget will further be usedto improve manufacturing technologies that will help bring down the costs involved inproducing key technology; most notably this includes the lithium-ion battery.

The general and administrative budget is derived as 3% of gross revenue as estimated byanalyzing GM‘s 2007 10-k. It is assumed that general and administrative costs for theVolt will be similar to the rest of GM.

Capital expenditures included in the pre-launch column include marketing and directresearch and development. According to GM‘s 10-k, they plan to spend about ninebillion on total research and development. A considerable amount of the research anddevelopment costs include technology that can be used in later generation alternative fuelvehicles, especially the drive train and lithium-ion battery technology. Because of this, itis difficult to determine how much of the research and development costs should bedirectly attributed to the Volt. However, it is estimated that GM has spent approximately1.9 billion (about 20% of total research and development) on the Volt in order to bring itto market.




89

Table 25. Pro-forma P&L




90

T o t a l s

P r e - L a u n c h Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

V o l t P & L ( i n m i l l i o n s o

f d o l l a r s )

G r o s s S a l e s

9 , 1 6 0

$

-

$

2 4

0

$

2 4 0

$

2 4 0

$

2 4 0

$

1 , 0

5 0

$

1 , 0 5 0

$

1 , 0

5 0

$

1 , 0

5 0

$

1 , 0

0 0

$

1 , 0 0

0

$

1 , 0

0 0

$

1 , 0

0 0

$

C o s t o f G o o d s S o l d

6 , 8 7 0

$

-

$

1 8

0

$

1 8 0

$

1 8 0

$

1 8 0

$

7 8 8

$

7 8 8

$

7 8 8

$

7 8 8

$

7 5 0

$

7 5 0

$

7 5 0

$

7 5 0

$

G r o s s I n c o m e

2 , 2 9 0

$

-

$

6

0

$

6 0

$

6 0

$

6 0

$

2 6 3

$

2 6 3

$

2 6 3

$

2 6 3

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

O p e r a t i n g E x p e n s e s

2 , 1 2 1

$

1 , 0

1 6

$

9

3

$

9 0

$

9 1

$

9 1

$

9 3

$

9 3

$

9 3

$

9 3

$

9 2

$

9 2

$

9 2

$

9 2

$

S a l e s a n d M a r k e t i n g

6 8

$

1 6

$

9

$

6

$

7

$

7

$

3

$

3

$

3

$

3

$

3

$

3

$

3

$

3

$

R e s e a r c h a n d D e v e l o

p m e n t

1 , 9 8 4

$

1 , 0

0 0

$

8

2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

G e n e r a l a n d A d m i n i s t r a t i v e

6 9

$

-

$

2

$

2

$

2

$

2

$

8

$

8

$

8

$

8

$

8

$

8

$

8

$

8

$

E B I T

1 6 9

$

( 1 , 0

1 6 )

$

( 3

3 )

$

( 3 0 )

$

( 3 1 )

$

( 3 1 )

$

1 7 0

$

1 7 0

$

1 7 0

$

1 7 0

$

1 5 8

$

1 5 8

$

1 5 8

$

1 5 8

$

T a x e s ( 3 5 % )

4 5 8

$

-

$

-

$

-

$

-

$

-

$

5 9

$

5 9

$

5 9

$

5 9

$

5 5

$

5 5

$

5 5

$

5 5

$

N e t I n c o m e

( 2 8 9 )

$

( 1 , 0

1 6 )

$

( 3

3 )

$

( 3 0 )

$

( 3 1 )

$

( 3 1 )

$

1 1 0

$

1 1 0

$

1 1 0

$

1 1 0

$

1 0 2

$

1 0 2

$

1 0 3

$

1 0 3

$

2 0 1 0

2 0 1 1

2

0 1 2




91

Break-Even Analysis

Given the initial capital expenditures and expected revenue, the break-even point for theChevrolet Volt project is expected to be in the third quarter of the third year, 2012, at $2billion. Figure 17 shows the break-even analysis.

Break-Even Analysis

$-

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

P r e - L a u n c h

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

2010 2011 2012

Gross Income

Operating Expenses

Figure 17. Break-Even Analysis

Marketing Budget

Most of the expenses included in the marketing budget are for the personnel required toexecute the Volt project. The pre-launch budget will be used to hire and train thesepersonnel as well as conduct pre-launch marketing activities. This budget rolls up intothe pro-forma P&L statement as a line under operating expenses titled ―Sales andMarketing.‖ A more detailed explanation of the roles and structure for the personnel areexplained in the organizational structure section of this marketing plan. Also included isa 10% contingency allowance to buffer unforeseen expenses.




92

Table 26. Marketing Budget and Timeline

T o t a l s

P r e - L a u n c h

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

M a r k e t i n g B u d g e t

( I n t h o u s a n d s o f d o l l a r s )

M a r k e t i n g C o m m u n i c a t i o n s

5 0 , 0

0 0

$

1 3 , 2 5 0

$

7 , 2 5 0

$

4 , 7 5 0

$

5 , 4 2 5

$

5 , 4 2 5

$

1 , 8 0 0

$

1 , 8

0 0

$

1 , 8 0 0

$

1 , 8 0 0

$

1 , 8 0 0

$

1 , 8 0 0

$

1 , 5 5 0

$

1 , 5 5 0

$

A d v e r t i s i n g

2 0 , 0 0 0

$

2 , 0 0 0

$

1 , 5 0 0

$

1 , 5 0 0

$

2 , 7 5 0

$

2 , 7 5 0

$

1 , 2 5 0

$

1 , 2

5 0

$

1 , 2 5 0

$

1 , 2 5 0

$

1 , 2 5 0

$

1 , 2 5 0

$

1 , 0 0 0

$

1 , 0 0 0

$

P R

1 2 , 5 0 0

$

1 , 2 5 0

$

2 , 1 2 5

$

2 , 1 2 5

$

1 , 8 0 0

$

1 , 8 0 0

$

4 2 5

$

4

2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

I n t e r n e t / W e b

1 0 , 0 0 0

$

5 , 0 0 0

$

1 , 1 2 5

$

1 , 1 2 5

$

8 7 5

$

8 7 5

$

1 2 5

$

1

2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

G u e r i l l a

7 , 5 0 0

$

5 , 0 0 0

$

2 , 5 0 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

M a r k e t i n g T e a m

4 , 5

6 4

$

6 5 2

$

3 2 6

$

3 2 6

$

3 2 6

$

3 2 6

$

3 2 6

$

3

2 6

$

3 2 6

$

3 2 6

$

3 2 6

$

3 2 6

$

3 2 6

$

3 2 6

$

M a r k e t i n g D i r e c t o r

5 6 0

$

8 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

M a n a g i n g M a r k e t i n g D i r e c t o r

4 2 0

$

6 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

P R M a n a g e r

3 9 2

$

5 6

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

B r a n d M a n a g e r

3 9 2

$

5 6

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

2 8

$

M a r c o m E x e c u t o r s

2 , 8 0 0

$

4 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2

0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

S a l e s a n d C u s t o m e r S u p p o

r t

4 , 6

4 8

$

6 6 4

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3

3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

M a n a g i n g S a l e s D i r e c t o r

4 2 0

$

6 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

C h a n n e l D i r e c t o r

3 6 4

$

5 2

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

R e g i o n a l M a n a g e r s

3 6 4

$

5 2

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

S a l e s T e a m

1 , 4 0 0

$

2 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1

0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

M a i n t e n a n c e / C u s t o m e r S u p p o r t

1 , 4 0 0

$

2 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1

0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

O t h e r G & A

7 0 0

$

1 0 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

P r o d u c t M a n a g e m e n t

2 , 6

7 4

$

3 8 2

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1

9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

M a n a g i n g P r o d u c t D i r e c t o r

4 3 4

$

6 2

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

A s s i s t a n t P r o d u c t D i r e c t o r

2 8 0

$

4 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

E n g i n e e r i n g M a r k e t i n g S p e c i a l i s t s

5 6 0

$

8 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

M a r k e t R e s e a r c h

1 , 4 0 0

$

2 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1

0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

C o n t i n g e n c y ( 1 0 % )

6 , 1

8 9

$

1 , 4 9 5

$

8 1 0

$

5 6 0

$

6 2 7

$

6 2 7

$

2 6 5

$

2

6 5

$

2 6 5

$

2 6 5

$

2 6 5

$

2 6 5

$

2 4 0

$

2 4 0

$

T o t a l s

6 8 , 0

7 5

$

1 6 , 4

4 3

$

8 , 9

0 9

$

6 , 1

5 9

$

6 , 9

0 1

$

6 , 9

0 1

$

2 , 9

1 4

$

2 , 9 1 4

$

2 , 9

1 4

$

2 , 9

1 4

$

2 , 9

1 4

$

2 , 9

1 4

$

2 , 6

3 9

$

2 , 6

3 9

$

2 0 1 0

2 0 1 1

2 0 1

2




93

Marketing Communications/Promotions Budget

The marketing campaign for the Chevrolet Volt will begin in 2009 and will continuethroughout 2012. The pre-launch marketing budget is $13.25 million and the total

marketing budget is $50 million. The recommended media mix for the campaign consistsof 40% advertising, 25% public relations, 20% internet, and 15% guerilla.

Promotions will be heaviest during pre-launch and the product launch in order to create abuzz and interest in the product. Therefore the budget has been allocated to incorporate aheavy pre-launch that will include guerilla street campaigns and internet starting one year before the product launch in January 2009. The ―Volt Cross-Country Road Trip‖ will alsostart pre-launch; ideally 3 months before the product launch and extend until 6 monthsafter the product launch. In addition, public relations and product placement will beincorporated into the pre-launch 6 months prior to the product launch, June 2009. Publicrelations will involve various press releases and events announcing the launch of the

Volt. Event sponsorships will take place during 2010. Advertising communications fordealerships will also be heavy during the pre-launch starting 6 months before the Volt‘slaunch. Television and print ads will be introduced 6 months after the launch of the Voltto inform the general consumer about the product. Promotions will be heaviest prior tothe launch than eventually tapering off in most media types; however there will be someconstants. Constants will consist of television promotions, print ads, public relations,events, dealership advertising communications and the GM Corporate website.

Advertising will consist of $20 million which will be dispersed among the various mediatypes due to the high costs of television commercials. These will include televisioncommercials at $8.5 million; print ads at $3 million which will be dispersed evenly

among the two media vehicles; product placement at $4.5 million, dealership advertisingcommunications which includes brochures at $4 million. Public relations will be allotted$12.5 million which incorporates various events at $1 million, press relations at $6.5million and event sponsorships at $5 million. $10 million will be spent for the Internetwhich includes $2.5 million for the GM corporate website, $3.5 million for websiteadvertisements which will be dispersed evenly among the media vehicles and $4 millionfor the viral marketing campaign. $7.5 million will be spent for the guerilla marketingwhich includes the various street campaigns at $2.5 million and the ―Volt Cross-CountryRoad Trip‖ at $5 million.




94

Table 27. Marketing Promotions Budget and Timeline


Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q

3

Q 4

M a r k e t i n g C o m m u n i c a t i o n s ( I n t h o u s a n d s o f d o l l a r s )


2 0 , 0

0 0

$

2 , 0

0 0

$

1 , 5

0 0

$

1 , 5 0

0

$

2 , 7

5 0

$

2 , 7

5 0

$

1 , 2

5 0

$

1 , 2

5 0

$

1 , 2

5 0

$

1 , 2

5 0

$

1 , 2

5 0

$

1 , 2

5 0

$

1 , 0

0 0

$

1 , 0

0 0

$

T e l e v i s i o n

P r i m e t i m e

8 , 5 0 0

$

-

$

-

$

-

$

1 , 5 0 0

$

1 , 5 0 0

$

7 5 0

$

7 5 0

$

7 5 0

$

7 5 0

$

7 5 0

$

7 5 0

$

5 0 0

$

5 0 0

$

M a g a z i n e s

A u t o

1 , 5 0 0

$

-

$

-

$

-

$

2 5 0

$

2 5 0

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

H i g h - e n d

1 , 5 0 0

$

-

$

-

$

-

$

2 5 0

$

2 5 0

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

P r o d u c t p l a c e m e n t

4 , 5 0 0

$

1 , 5 0 0

$

1 , 0 0 0

$

1 , 0 0 0

$

5 0 0

$

5 0 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

D e a l e r s h i p

4 , 0 0 0

$

5 0 0

$

5 0 0

$

5 0 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

P R

1 2 , 5

0 0

$

1 , 2

5 0

$

2 , 1

2 5

$

2 , 1 2

5

$

1 , 8

0 0

$

1 , 8

0 0

$

4 2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

4 2 5

$

E v e n t s

1 , 0 0 0

$

2 5 0

$

1 2 5

$

1 2 5

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

P r e s s R e l a t i o n s

6 , 5 0 0

$

1 , 0 0 0

$

7 5 0

$

7 5 0

$

5 0 0

$

5 0 0

$

3 7 5

$

3 7 5

$

3 7 5

$

3 7 5

$

3 7 5

$

3 7 5

$

3 7 5

$

3 7 5

$

E v e n t S p o n s o r s h i p

5 , 0 0 0

$

-

$

1 , 2 5 0

$

1 , 2 5 0

$

1 , 2 5 0

$

1 , 2 5 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$


1 0 , 0

0 0

$

5 , 0

0 0

$

1 , 1

2 5

$

1 , 1 2

5

$

8 7 5

$

8 7 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

V i r a l

4 , 0 0 0

$

2 , 5 0 0

$

5 0 0

$

5 0 0

$

2 5 0

$

2 5 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

G M C o r p o r a t e

2 , 5 0 0

$

1 , 0 0 0

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

1 2 5

$

W e b S i t e s

A u t o

1 , 7 5 0

$

7 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

B u s i n e s s

1 , 7 5 0

$

7 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

G u e r i l l a

7 , 5

0 0

$

5 , 0

0 0

$

2 , 5

0 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

S t r e e t C a m p a i g n

2 , 5 0 0

$

2 , 5 0 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

R o a d T r i p

5 , 0 0 0

$

2 , 5 0 0

$

2 , 5 0 0

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

T o t a l s

5 0 , 0

0 0

$

1 3 , 2 5 0

$

7 , 2 5 0

$

4 , 7 5 0

$

5 , 4 2 5

$

5 , 4 2 5

$

1 , 8 0 0

$

1 , 8 0 0

$

1 , 8 0 0

$

1 , 8 0 0

$

1 , 8 0 0

$

1 , 8 0 0

$

1 , 5 5 0

$

1 , 5 5 0

$

2

0 1 0

2 0

1 1

2 0 1 2




95

Capital Budget

The total capital costs required to launch the Volt project will be just under $2 billion.The large majority of this cost is the extensive research and development of the

technology platform on which the Volt is based on. Considerable research anddevelopment has already been put into the E-Flex drive train and the lithium-iontechnology. However, it is estimated that a further $1.9 billion will be requiredspecifically for the Volt in order to being it to market by 2010. A significant portion of these funds will be used to develop the manufacturing process for the Volt and its in-house components. Further, the funds will be used to develop the Volt‘s design andcontinue incremental improvements on the base technologies.

The other component of the capital budget is the pre-launch marketing requirements. Thepre-launch marketing budget is set at $13 million and will be used to generate excitementaround the release of the Volt through targeted marketing campaigns and directed public

relations.

The return on this total investment of $2 billion will be about 17.5% over the first threeyears of production.

Controlling the Marketing Plan

In order to ensure that the marketing plan is being enacted as intended, a marketingtimeline and metrics will be used to monitor its successful implementation.

Timeline

There will be two timelines to follow as the marketing plan is implemented. They are themarketing timeline and the marketing promotions timeline. These correspond with thebudget expenditures discussed in the financials section above.

Marketing

The marketing timeline can be tracked through its expenditures as displayed in table 26above. While there will be considerable pre-launch activity involving market analysisand product testing, much of the expense will be in the post-launch period to ensure thatthe marketing objectives are being met. One of the most important activities will be to

collect customer feedback to determine if customer expectations are being met. Anoverarching task will be to plan how to capitalize on the Volt‘s success to launch futurealternative fuel vehicle products.

Marketing Promotions

The marketing promotions timeline can be followed in table 27 above. Most of the pre-launch activity will come from PR, internet, and guerilla marketing promotions in order






97

Competitor analysis

With the Chevrolet Volt‘s position in the market in mind, it will be important tocontinually monitor competitors. From monitoring competitors, it will be necessary todetermine if marketing strategy should be shifted or reconfigured with the help of this

metric. Again, the goal here would be to meet the market share of 12% in the alternativevehicles of the US.

Sales Revenue

Forecasted top line amounts for 2010, 2011, and 2012 are shown in the pro-formafinancials. These will remain the goals for these years, unless there is anotherbreakthrough in technology and other models are built.

Gross Margins

The gross margins start out low and increase the second year but decrease the third yeardue to a decrease in price. In 2010 it is projected to be $960 million. In 2011 it willincrease immensely to $4.2 billion. And in 2012, it will decrease to $4 billion. Again,these are the goals for the three year release of the first model of the Volt.

ROI

The ROI analysis shows that in the first year 2010, it will be negative at -8.81% but itwill increase in 2011 to more than triple, equaling 32.5%. By the second to last year of production, in 2012, the ROI will be over 40%.

Operating Profit

The operating profit also starts out low but increases the second year and then drops back down slightly the third year due to the decrease in price. In 2010 it will be approximately$88 million. In 2011 it will be just over $400 million. And finally the 2012 target will benear $430 million.

With the increase in customer requirements and the ever changing technologicaladvancements that the automobile industry is in, the help of the metrics and models will be necessary to advance the Volt‘s role in the industry.

Organizational Requirements

In order to be successful in launching the Volt as a revolutionary product, it will benecessary to have an innovative and closely integrated organization behind it. This is ashift from the heavy bureaucratic organization expected from GM and Chevrolet, but theVolt SBU will be working autonomously within the larger GM framework. Because of this autonomy, a structure that will be able to meet the project‘s organizational objectiveshas the space to be created.




98

Objectives

Currently, the Volt project is at a level 4 market leadership position. In the Level-5Market Leadership Model, level 4 indicates strategy is being aligned with market

opportunity (Harmon 2007). The goal is to reach a level 5 position in market leadershipin some aspects of the organization. Most importantly, this includes fully integratedplanning.

It is difficult for companies in the automobile industry to reach level 5 where asustainable market leadership position can be created. This is mostly due to the highcompetition within the industry. However, the Volt has a good chance of creating asustainable advantage through its technology platform as long as the organization behindit can be responsive enough to act proactively. In order to enact this strategy, objectivesfor the organization will be necessary.

The primary objectives are integrated market planning and taking responsibility forcustomer outcomes. With integrated market planning, the goal will be to have a long-term, future oriented organization. Taking responsibility for customer outcomes meansthat the organization will be accountable for the results that customers experience as wellas being aware that it has the power to change unwanted results.

Organizational Plan

To achieve these objectives, especially integrated market planning, a marketing ledorganizational structure will be implemented. This structure is based on theorganizational chart typical of a level five organization as shown in the Level-5 Market

Leadership Model (Harmon 2007). The overall structure is presented in figure 18.




99

Figure 18. Volt Organizational Structure

The Executive Team

In this structure, the executive director, the director of marketing, and the brand managerwork closely together to control the overall direction of the Volt‘s perception. Brandpositioning is immensely important to the long-term success of not only the Volt, but of

all future alternative fuel products from GM. Because of this, the brand manager worksabove the managing directors. Sales, marketing, and product development will beintegrated under the direction of this team.

Sales

Under the managing director of sales, there will be a sales force and a customer supportforce. There will also be a distribution manager who is charged with working closelywith and managing relations with the dealer network.

Marketing

Under the managing director of marketing will be the market development team who willfocus on executing the marketing promotions plan. There will also be a PR manager whowill work with the managing director of marketing to ensure that PR and all othermarketing communications are aligned with each other and the over all marketingdirection.






101

Plan Conclusion

The Chevrolet Volt is a SBU of Chevrolet. It concentrates on the development of theplug-in electric vehicle that uses an E-Flex drive train and lithium-ion battery in order toachieve zero fuel use and zero emissions for trips up to 40 miles. The value proposition

for the Volt is the following: ―Empowering a new generation by reinventing the spirit of the American automobile‖. The brand identity for the Volt consists of being American,independent, energy-flexible, standard setting, stylish, sustainable and empowering.Strengths of this product include aesthetic appeal, eco-friendliness, and low fuel costs.Weaknesses encompass the unproven technology and high price. Chevrolet has anopportunity to revive its brand with the launch of the Volt.

Technological assets of the Volt are developed in the design and the technology. The E-Flex drive train is one feature that will standardize future development of alternative fuelvehicles for GM, which in turn will lower their development costs. Potential disruptivetechnologies such as the hydrogen fuel cell can be incorporated into the E-Flex drive train

making it a versatile platform on which to base a new generation of vehicles. Combiningthe Li-ion battery technology and the E-Flex drive train allow for capability that has notyet been seen in a mass produced automobile which is to drive 40 miles on a batterywithout needing a recharge. This is a significant advantage over Toyota's HybridSynergy Drive which uses older technology that simply does not have these capabilitiesor potential. The release of the Volt will mark a new step for hybrid electric technologyfor many years to come.

Drivers of the Volt would characterized themselves as influential, optimistic, liberal, andinterested in living healthy lifestyles. These characteristics were determined to be themost likely to practice green purchasing, even over age, race, education, income, and

location. Three segments have been evaluated to be the best target markets for the Volt.These groups are the eco-elites, local government offices, and fuel-weary. They are mostprofitable based on the features, attributes, benefits and value drivers which entail eco-conspicuousness, lower fuel expenses, and body style. While the segment attractivenessand value curves have relatively similar quantifications in each of the segments, eco-elites are the top priority. Eco-elites are also forecasted as having much higher purchasingpropensity than the other two groups, by nearly $2.8 billion.

When Michael Porter‘s Five Forces Model is applied to the Volt, new entrants areanalyzed as well as the power of buyers, power of suppliers, competitors, and substitutes.Threat of new entrants is low because the barriers to entry make it difficult for

competitors to enter the market and to compete with Chevrolet., power of buyersweaknesses are that the buyers are a small portion of the market and of the industry's totaloutput. Strengths are that there is an immense amount of information to be found,meaning knowledge and understanding of the buyer will be high. Power of suppliers ismoderate to high. Its‘ weaknesses are that individual buyers are large customers of suppliers and they are few in numbers. Rivalry of competitors is high because there aremany varieties of alternative fuel vehicles, hybrids, and electric cars. Some of thecompetitor's options are more profitable and cost efficient for the buyer and the total cost




102

of value is less in most cases. Finally, substitutes is moderate to high due to the other fueloptions such as ethanol, bio-diesel, natural gas, propane, and hydrogen. Switching costsinclude mechanical repair and it is high as a result from new technology.

Features, advantages and benefits of the Chevrolet Volt were used to determine segments,

marketing strategy, and competitiveness. Features include: fuel/electrically powered,lithium-ion battery with plug in capability that charges in 6.5 hours, extended rangecapabilities. Advantages entail that it has an E85 ethanol fuel capability, plugs into astandard 110 volt household socket, releases 0 emissions and has 0 fuel cost when usingbattery energy, when fuel is utilized, it gets 50 MPG with the support of the battery.Benefits encompass the fact that it is American made, low or 0 fuel costs, low or 0 greenhouse gas emissions, and it incorporates a distinct eco-badge design. The factors onwhich the Volt is competitive are price, reliability, fuel economy, customer service, eco-friendly, safety, resale value, performance, and comfort.

Over the three years following 2010, the Volt is expected to produce over $9 billion of

revenue. Market share is forecasted to reach just over 1.3% in the overall passenger carmarket and 12% in the alternative vehicle market. This is because Volt does three thingswell, that contribute to a blue ocean strategy's success: establishing a frame of reference,leveraging points of parity, and tying in compelling differences. This creates an overalllonger lasting ROI. Volt‘s positioning strategy emphasizes: buyer motive, and goals,economic value, and style, independence, and eco-friendly low emissions. The brandingand value proposition align the same factors of interest to the consumers, but accentuatesbrand assets and puts a damper on brand liabilities. Further, the Volt is branded as a re-invention of the original innovation of American individualism and empowerment.

Volt‘s product objectives are to create a successful electric vehicle, to create a vehiclethat will have extended range capabilities, and to market the first American plug-inhybrid. These goals are all encompassed in the production of the Chevrolet Volt. Lifecycles are integral to the marketing strategy of Volt because timing and market factorsaffect all aspects. The market life cycle for hybrid vehicles is in the early growth stage because of increased competitors, increased sales, and economies of scale. Volt‘s lifecycle will probably run similar to the Prius life cycle, which is coming out with a newer,more updated model every four years. The technology life cycle for the Volt is at―bleeding edge‖ because it is not yet released and they are still finalizing the battery. Twomajor developments that will affect the Volt in the near future are the new and improvedLi-ion battery technology and hydrogen fuel cell power. Both are being integrated intothe market and could serve as opportunities or threats. The Volt will be released into themarket in 2010. It has been put off for more than three years because there are intensetesting requirements for new technologies and the Li-ion technology is catching up to theconcept of the car, Chevrolet has to make it feasible. The product will be completed andbeginning manufacturing in October 2010.

Sales and distribution objectives are: to have open lines of communication betweenChevrolet and the consumers and to integrate a database of surveys and information thatestablish Volt owners as an elite club. By keeping consumers involved it empowers them




103

and it is an integral part of the value proposition. Chevrolet Volt dealers will receivespecial training and information from the Chevrolet Management Team about themarketing strategy of the Volt. This special training will help to establish understandingof the Volt, to convey its‘ uniqueness, and to sell its‘ elite perception. Also there will besales competitions and awards for top performing dealerships. Distribution will be direct

from the manufacturing plants to dealerships in major cities. To continue great CRM,Chevrolet will create an environment that closes gaps between consumer opinions and product modulation. Their goal is to provide services and products that customers‘ desire.

Promotional objectives are: to create 75% product awareness among consumers withinthe first 6 months of the campaign to target promotions to major cities across the USwhich contain the highest sales potential based on hybrids per capita, to create 80% brandawareness within the first 6 months of the campaign including an eco-friendly, fuelefficient, high technology and stylish brand image, to create 12% brand preference withinthe first 18 months of the campaign. This requires consumers to choose the ChevroletVolt among alternatives.

The promotional theme is based on eco-performance and style while highlighting theplug-in/electric feature as a differentiator. The Chevrolet Volt‘s tagline: ―Eco- performance for a new generation.‖ Media channels used in the campaign include:television, print, product placement, dealership advertising communications, PR events ,event sponsorship, public relations, product website, website advertisements, viralmarketing, and guerilla marketing. The combination of these channels will support theachievement of Volt promotional objectives.

Pricing objectives: enhance the image of the firm, brand, and product, use price to makeproduct "visible", create interest and excitement about the product, and qualityleadership.

Strategies: A combination of penetration and skimming. Using hybrid pricing (periodicdiscounting) where the price starts out high and will gradually be decreased incrementallyover the years until the 4 year life cycle comes to an end when the new product isreleased. The break-even point is expected to occur in the third quarter of the third year,2012 at $2 billion. The return on this total investment of $2 billion will be about 17.5%over the first three years of production. In 2010 the Volt is projected to have 0.27%market share in the passenger car market. In 2011 and 2012 market share is expected toincrease to 1.33%. Projections are much higher in the hybrid market. By 2011, the Volt isprojected to capture over 12%, which is completely feasible if this marketing strategy isutilized.

In order to have success in launching the Volt as a revolutionary product, it will benecessary to have an innovative and closely integrated organization behind it. This is ashift away from the heavy bureaucratic organization expected from GM and Chevrolet,but the Volt SBU will be working autonomously within the larger GM framework.Because of this autonomy, a structure that will be able to meet the project's organizationalobjectives has the space to be created.




104

This marketing plan for the Chevrolet Volt is an intensive program which should beenacted immediately to capture ultimate success in sales and to catapult the Chevroletand GM brand into the automotive future.




105

Bibliography

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Appendices

Assignment 1: Team Roster

Course: Mktg 464Term: Summer 2008

Team Number Group #1Topic: Chevrolet Volt

Full Name Voice Mail E-Mail1. (L)Lana Sappa 503-750-1191 [email protected]

2. Emily Rabin 503-997-0579 [email protected]

3. Benjamin Long 503-415-0229 [email protected]

4. Nicole Mallos 503-548-3132 [email protected]

5. Cameron Woelfer 503-481-8078 [email protected]

6.

7.

8.

Please indicate team leader by (L) designation before name.

Assignment 2: Marketing Plan Proposal

Course Title: Mktg 464

Team Number: Group #1

mailto:[email protected]













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Instructions: Use this form to submit your marketing plan proposal. Fill inthe boxes on the right. You should expect the final document to be 3-5pages in length.

1. Project title: Chevrolet Volt

2. Describe the businessopportunity.Include TAM/SAMestimates.

Total car and light truck markets are projectedto reach $490 billion. The volume of compactcar unit sales is projected to surpass 2.5million, fueled by improvement in engineeringwithin compact cars and demographic factors.

3. Describe the potential

segments to betargeted.Who is the customer?

Much of the information that is academicallypublished is somewhat outdated. In

2003, consumers are reported as people ages45+ who are concerned with the environmentand sustainability, college educated, in whitecollar professions, and with annual HH incomeabove $60,000.

However, more recent Mintel reports havestated that there is a newer group known asthe Echo Boomers, age 18-35, whichencompass similar values as Baby Boomers,

45-65 years of age. These consumers are nowentering adulthood, establishing families, andserving the job market. Despite this group'slower early income bracket (starting at$30,000), they spend almost as much as theircounterpart parents (Baby Boomers). It iseasy to assume that as they grow into theircareers, making more disposable income, theywill be the next big wave of consumer groups.Also, not to be ignored, that Echo Boomersrepresent 25% of the whole US population and

it will be important to remain within this group'sevoked set as they are making theirpurchases. We think that by aiming at theyounger demographic, we can also obtain themore mature market.

4. Describe the productThe Chevy Volt feature the new E-flextechnology which permits a vehicle to run on




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and its platform electricity up to 40 miles after which gasolinecharges the battery for up to an additional 400miles. This system decreases gasconsumption and carbon emissions.

5. What is your valueproposition?

The vehicle design is that of conspicuousvirtue. It is known in association with anelectric car that is sporty in style, as well ashaving a eco-conscious persona. A vehiclewith lower emissions and better fuel economythan its standard counterparts. It also standsapart from many of its hybrid competitorsbecause it can maintain 40 miles per trip usingno gasoline whatsoever. Additionally, it canmake longer distance trips estimated at up to600 miles with the fuel-generated battery.

6. Business description:Is this a startup or anSBU?If SBU, name the parentcompany.

The Chevrolet Volt is a SBU and its parentcompany is General Motors. GM hasmanufactured cars since 1897, throughout theyears, GM has noticed a shift in the marketconsidering the high gas prices that have beenoccurring the last few years. GM hadpreviously manufactured an electronic vehicle,the EV1, in 1996. However it was released ata time when gas was still cheap, people wereless concerned about the environment and no

war in Iraq therefore it was unsuccessful. TheSBU focuses on the planning anddevelopment of the Volt - electronic vehiclewhile keeping the goals and values of GMconsistent.

7. Describe the technologyand its importance:

The Volt uses an E-Flex Propulsion Systemthat is different than previous electric vehiclesbecause it uses a lithium-ion battery with a gasand, in some vehicles, E85 ethanol(1) or dieselto recharge the battery while driving. The

importance of this breakthrough is its capabilityto make electric vehicles more sustainable andrealistic for a market like the US, which isexperiencing major changes in their views offuel economy. Further this technology couldempower the rest of the world with thecapability of more economical andindependent travel. This is a very empowering






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9. What is the significanceof this project?

Why should you dothis? What other options didyou consider?

The significance of this project is to worktogether in understanding the research of a

specific product, how it relates to the targetmarket, and development of a marketing plan.We chose the Chevrolet Volt because cars areimportant to United States Culture and notlikely to be forfeited for the increase of gasprices. Beyond the luxury or convenience ofowning a vehicle, this product is changing andthe new technology that is emerging mayaffect Chevrolet’s economic potential.

Another solution that we approached was solarpanels on car rooftops. This concept is not yetworkable as a viable option for fueldependency. In addition, it does not workbecause the conspicuous virtue characteristicis not as prevalent in this product andtherefore, it would create some media hurdlesand be relatively difficult.

10. BibliographyList 5 sources Annotate Use IEEE or APA style

1. Berman, Bradley. (2008, February). Who

might kill the Chevy Volt? 3 suspectscould foil GM's plug-in plans.Automotive News . Retrieved June 24,2008, from NexusLexus database.

2. Brown, Alan. (2008, April). Academy UnveilsGrand Engineering challenges.Mechanical engineering , 8-10.

3. “Imagine: A Daily.” (2008).


4. Lowery, Elizabeth. (2007, August). EnergyDiversity as a Business Imperative. The Futurist , 23.

5. Mintel (2002, December). Compact Cars – US. Mintel Report. Retrieved June 23,






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2008, from Business Source Premierdatabase.

6. Mintel (2008, January). American Living -

The Eco-Echo Boomers. Retrieved April28, 2008, from Business SourcePremier database.

7. Mintel (2008, May). Green Marketing - US.Retrieved June 23, 2008, from BusinessSource Premier database.

8. Muller, Joann., & Stone, Andy. (2008, April).Jump Start. Forbes, 68-70. RetrievedJune 24, 2008, from Business Source

Premier database.

9. Murray, Charles J. (2008, June). GM TestsLithium-Ion Batteries; Automaker saysthe Chevy Volt is still on time for 2010launch. Design News . Retrieved June24, 2008, from NexusLexus database.

10. Pierce, Alan. (2008, April). Seeing BeyondGasoline Powered Vehicles.TechDirections. Retrieved June 24

2008, from NexusLexus database.

11. “Top 10 Best.” (2006).http://www.edmunds.com/reviews/list/top10/ 116743/article.html

12. Welch, David. (2008, May). GM: LiveGreen or Die. Business Week , 36-41.Retrieved June 24, 2008, from Business

Source Premier database.




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Assignment 3: CVD Assessment

Customer-Value DriverAssessment

Project Title Chevrolet Volt

Course Name: Mktg 464

Team Number: Group #1

Team Members: Benjamin Long, Nicole Mallos, Emily Rabin, LanaSappa, & Cameron Woelfer




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ANALYZING YOUR VALUE DRIVERS

STEP 1: SPECIFY MAJOR MARKET SEGMENTS

Key Descriptors

A. Define the major market segments (potential target markets) served.

1. Eco-elite concerned consumers/ Style-weary mainstream green: Style and a notablehybrid body are important to this group. Fewer emissions for the Chevrolet Volt are amajor benefit for this consumer group.

2. Local government offices (that want to appear eco-conspicuous): These consumers want

the public to know that they are working to be sustainable.3. Gas mileage- weary and economically driven (that also want a more stylish hybrid):

According to a February 2008 Mintel Report, Green Living, a weaker economy and highenergy prices are likely to drive growth of energy-efficient products.

B.1. Provide estimate of the TAM/SAM for each segment above. B.2. What criteria will you use to analyze the segments?

B.1. a. TAM (total available market)

Total passenger vehicles sold in 2007: 6,342,000 (BTS 2008).Total hybrids sold in 2007: 348,000 (Hybrid 2008).For the hybrid market in 2005 sales for the year were projected to reach $200,000 and for 2006, aprojected $300,000, and by 2012 projected $1 million. In the first six months of 2007, 187,000hybrids sold, which accounted for 2.3% of all new vehicle sales. This was a 35% increase from2006 (USA Today 2007).Another report claims that gas-electric hybrids are nearly recession proof, as sales for hybrids are3% over that of the total market so far in 2008. Also in 2008, hybrid sales have grown 15%compared to the overall passenger car market that has declined 8 percent (Hybrid 2008).

b. SAM, the forecasted total hybrid sales for 2008: 400,000 (Hybrid 2008).1. Eco-elite concerned consumers / Style-weary mainstream green: 52% of hybrid market/

28% of passenger car market2. Local government offices: 19% of hybrid market/ 3. Gas mileage- weary and economically driven: 29% of hybrid market

B.2.

Buying styles and motives, lifestyles, earning potential, market size and geography.While it is obvious that buying motives and styles, lifestyle, and earning potential are all going tohave a play in whether consumers can participate in a slightly pricier and more stylish hybrid, it




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may not be blatant that consumers that live and work within 20 miles may have more buyingpotential than other, outside consumer groups. For this reason we will focus on the metropolitanmarkets. Top 10 markets where the most hybrids are sold: Los Angeles, San Francisco, NewYork, Washington DC, Chicago, Phoenix, Boston, Philadelphia, Seattle, and San Diego. Themost per capita: Portland (OR), San Francisco, Santa Barbara, Monterey (CA), San Diego, Los

Angeles, Phoenix, Washington DC, Charlottesville (VA), and Las Vegas (Hybrid 2008).

C. Describe the profile of the primary customer for each segment.

C. Who are the innovators and early adopters? (No more than a page.)1. Eco-elite concerned consumers/ Style-weary mainstream green: These are consumers that

already participate in buying ecologically-friendly products. These consumers tend to buymore organic and natural foods versus processed goods. These are metropolitan-savvy

consumers, who believe looking good is important. They subscribe to many fashion andconsumer magazines and websites. They budget for extra expenses of hair and beautyproducts. They have somewhat high disposable incomes.

2. Local government offices (that want to appear eco-conspicuous): This consumer isspecific to a concerned consumer group with the appearance of their product buyinghabits. They want something that ensures that they are making an effort to be eco-conscious and participate as innovators of products. These groups typically buy businessvehicles to travel shorter distances. Some examples of this group are: water safety andpreservation, Portland City Works, government office holders, and police.

3. Gas mileage weary and economically driven (that also want a more stylish hybrid): Theseconsumers believe that gas prices will continue to escalate and they are very attached to

the freedom of owning a vehicle. They want to be seen as innovators and early adoptersand believe that hybrid and alternative vehicles could run out or, like the Toyota Prius,become in shortage of stock. They would not consider mo-peds or scooters convenient orsustainable as transport.

All of green and sustainable consumers hold particular characteristics in common (GreenMarketing: Mintel 2008). Of all the characteristics, traits, and attitudes, four were the mostinfluential in determining a consumer‘s willingness to buy green products. The fourcharacteristics are: influential, optimistic, politically liberal, and interested in living a healthylifestyle. These were more useful than income, race, or any other demographic.In the same report (Green Marketing: Mintel 2008) researchers found that 18-24 year olds werethe most likely to buy green products. Next were the 65+ age group, followed by 55-64 and 45-

54 age groups. Of people in the green buying sector, 35% were white, followed by 49%Asian/Pacific Islanders, 40% Hispanic, and 32% Black. Current students and those with highereducation were found to be more likely to be serious, practicing environmentalists, and morewilling to make lifestyle changes that support their beliefs.People within the 18-24 age group were reported to be more interested in exploring innovative,experimental or cutting-edge methods of conservation.




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STEP 2: PRODUCT DEFINITION

Key Attributes

FEATURES

Your Product Reference Product (Identify)

Chevrolet Volt

Fuel-powered batteryConsidered an electric vehicle (Extended-Range Electric Vehicle - "E-REV")Runs 40 miles without using gasolineUp to 600 miles with gas-powered

battery (Revised estimates are morearound 400)Plug-inLithium-ion battery fully charges in 6.5hrs.

Toyota Prius (3rd generation due in late2009)

Hybrid of gasoline and electric powerPlug-in model due out by 2010

ADVANTAGES

Your Product Reference Product

Advantages:

Can use E85 Ethanol for fuel whenbattery is drainedPlugs in to standard 110-volt householdsocketZero emissions when run on batteryZero fuel costs when run on batteryEstimated 50 MPG fuel economy whenrun on fuel

Lithium-ion batteries (lighter and moreefficient, but runs hotter, does not last aslong)

Disadvantages:High Price ($30k - $45k)Unproven technology / reliability

Advantages:

Proven technology / reliabilityLower price $22,000Plug-in model about $30k Nickel-metal hybrid batteries (Lessefficient, but more reliable and longerlasting)

Disadvantages

Lower fuel economyHigh demand has lead to decreasedavailability (Toyota cannot produceenough batteries, but is building athird battery production plant toovercome this.)




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Product may not live up to hypeLimited availability (only 10k in firstproduction run)

BENEFITS


Perceived as "American made"Low, if any, fuel costsLow, if any, direct green house gasemissionsDistinct design "eco-badge" (conspicuousvirtue)

High expected qualityHigh fuel economy (3rd gen isexpected 50+ mpg)Distinct design "eco-badge"(conspicuous virtue)




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STEP 3: CUSTOMER VALUE DRIVER IDENTIFICATION

a. Economic Value

Refer to Harmon and Laird (1997) and lecture slides. List anddescribe the key economic value drivers for the firm and its majorproducts and services. Do the same for the reference product.


Delivered initial cost: $30k - $45k Total Cost of ownership:

o Purchase price: $30k o Fuel Costs (ideal conditions for

Volt) 12k miles, $5 / gallon fuel, 35 mile round trips (first

40 miles @ $1 perrecharge - electric)

200 mpg (average) (12000 / 35) * $1 = $350 /

year Without discounting: 9.4

years to pay off thepremium of buying a Voltover a Prius)

Switching Cost: missing out on payback time for paying premium for vehicle.Can be built into sale price.Environmental costs:

o Save 240 gallons of fuelconsequence to the environmentannually over the Prius.

o Environmental cost of electricalsource

Delivered initial cost: $22k ($30k for3rd gen plug-in)

Total Cost of ownership:o Purchase price: $22k o Fuel Costs

12k miles, $5 / gallon fuel, 35 mile round trips 50 mpg (12000 / 50) * $5 =

$1200 / yearSwitching Cost: missing out on payback time for paying premium for vehicle.

Can be built into sale price.




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CUSTOMER VALUE DRIVERS (CONT’D)

b. Performance Value

List and describe the performance value drivers for the firm and itsmajor products and services. Do the same for the reference product.


Advantages Volt:

Combines electric motor, lithium-ionbattery, and small gasoline engine

Can run for up to 40 miles on the batterybefore gas consumption kicks in

E-Flex Drive train system hopes tostandardize components of future electricvehicles

Overnight plug-in takes 6.5 hours

No mechanical connection between theengine and the wheels

Disadvantages Volt:

The outcome of the lithium-ion battery is

unforeseen, it has not been tested in massmarket

GM recognizes that bugs will arise forearly adopters, these bugs are not yetknown

Advantages Prius:

Combines gasoline and electricenergy sources

Gas consumption of 44 mpgVoted most efficient car available inthe U.S. by EPA

Easily integrated with proceduresbecause it takes gasoline in the sameway to which we are accustomed.

25% less expensive per mile thanthe GMC Yukon

Fashion statement for liberalenvironmentalists, aka celebrities

3rd least CO2 admitting vehicle on

the road

Disadvantages Prius:

Quiet, blind pedestrians may not beable to hear the car coming; alsopedestrians and bicyclists rely onnoise cues from cars

GPS navigation system cannot inputdirections while the car is in motion

Consumers complained aboutslippery traction on snowy roads

Prius technology is not aging well,components are failing




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CUSTOMER VALUE DRIVERS (CONT’D)

c. Supplier Value

List and describe the perceptions your customers have about yourcompany that may affect their beliefs about the value delivered byyour company and its major products and services. Do the same for the reference company and its offerings.

Your Company Reference Company

General MotorsReputation of not getting things "right"on the first try, i.e. the first productionrun.American - effects consumers‘perceptions as being trustworthy, olderconsumers mainly.Good customer service

Shared Values

Understands consumer low butimproving, considering increasedefforts toward hybrid vehicles and E85technologies

Source Credibility

Relatively high performance throughperceptions of the Corvette, lowerquality products

Poor manufacturing/high occurrencesof defects

Highly trustworthy among consumersage 55-64 and 18-24.

Innovative Problem Solver

Moderately innovative through E85

technology for decreasing gasemissions and increasing fueleconomy

Ability to Meet Specific Needs

Moderate considering slow adoptionsof consumer needs towards fuelefficiency.

Safety/Liability

ToyotaReputation for reliably working withtechnology; has been working withtechnology for many years."Foreign"Fair customer service

Shared Values

Understands consumer

Understands changing needs andwants of consumers regarding fuelcosts and eco-consciousness

Pioneers of hybrid technology -most popular hybrid on the market,achieve real world fuel economyof 44 mpg.

Source Credibility

Reliable brand/product, haspreviously been tested consideringit is already on the market

Consumers know it is safe

Produces high quality products

Highly trustworthy amongconsumers with incomes $75,000

and above.Innovative Problem Solver

Highly innovative when creatingfuel-efficient products - the Priusgets a reported 44mpg, first hybridon the road, pioneers.

Ability to Meet Specific Needs

High considering pioneering of




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Not viewed as manufacturing thesafest vehicles, relatively unreliable

Long-Term Commitment to the Market

hybrid technology for consumerneeds towards fuel efficiencies andenvironmental concerns.

Safety/Liability

Consistently safe and reliable

Long-Term Commitment to the Market

CUSTOMER VALUE DRIVERS CONT’D)

d. Buyer’s Motivations & Goals

Identify and list your buyer’s primary motivations and goalsconcerning the decision to purchase products and services of thetype you provide.

Do the same for the buyers of your reference competitor’s products.

Your Buyers Reference Competitor’s Buyers

Conspicuous consumption - stylishConspicuous virtue - eco-conscious

Novelty seeking - a different type of vehicle that will create buzz

Innovative style

Brand loyalty

Innovators of sustainability

Eco-esteem building

Style belonging

Not as trustworthy

Avoidance of being left behind

Desire to be viewed as non-gas-reliant

Risk-taker

Needs technological acceptance

N/aConspicuous virtue - eco-conscious

Less novelty, more mainstream

First adoptersMaking a safe/reliable decision

Brand loyalty

Innovators of sustainability

Eco-esteem building

Non-style concerned

Trustworthy brand image

Avoidance of technologicallydisadvantages

Desire to be viewed as non-gas-reliant

Makes safe decisions

Needs technological acceptance




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CUSTOMER VALUE DRIVERS CONT’D)

e. The Buying Situation

Identify and list the elements of the buying situation that impactcustomers’ perceptions of the value provided by your firm and itsmajor products and services and their willingness and ability to buy. Do the same for the reference product.


Buyers Task Requirementso Ecologically friendlyo Safetyo Comforto Designo Saves on gas mileageo Time

Organizational/Social Influenceso Price of gasolineo Economy statuso Eco-friendly peerso Government/business

Availabilityo Waitlist (not official)o Only releasing 10,000 models

Buyers Task Requirementso Ecologically friendlyo Safetyo Comforto Designo Saves on gas mileageo Time

Organizational/Social Influenceso Price of gasolineo Economy statuso Eco-friendly peerso Government/business

Availabilityo Waitlisto Hybrid component shortages




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Create Your Company's Value Proposition

Describe the unique value combinations of features, advantages, benefits,and price that are desired by your customers. Identify how the customer perceives the value of your offering vs. thevalue offered by key competitors. Considering your company’s products and services, and the precedingvalue driver discussion, develop a statement to describe your company’scustomer value proposition.

Our Unique Value Key Competitor Value

An eco-conscious vehicle with styleGas-powered battery - 40 road mileswithout gasoline useLithium - ion battery can be fullycharged using a 110 volt householdplug socket in 6.5 hours.

Well-known product

Well established reputation in themarket - consumers know it works andis safe.

Our Value Proposition

We are the latest and most advanced innovation in green, fuel-efficient automobiles.

Tagline: 1. Plug into stylish sustainability.2. Driving toward the future in style.

3. Plug into the future of green. (implies style)

Assignment 4: Market Research Plan

Identify: technologies, market segments, competitors, and industry issues




130

The greatest competitors in the industry, Honda and Toyota, are the best sources for thenewest automotive technology and for determining market segments. Hybrid technologyincludes an electric motor and a gasoline motor that collaborates and transfers an outputof energy between the two. The result is that less gasoline is used and higher demands are placed on the battery. So they added in the lithium ion battery and called it a day. No, I‘m

just kidding but this caused greater fuel efficiency. In addition, there are ethanol E85technologies and diesel fuel technologies.

The Chevy Volt develops the industry technology by utilizing a unique drive trainsystem where the engine is not attached to the wheels, gasoline is consumed moreefficiently, and the Volt has the plug-in option. GM has been extensively testing the Voltin a wind tunnel to make it the most aero dynamic vehicle on the road. Their specialistshave determined that body design is intensely more important to energy consumptionthan the actual weight of the car.

Obstacles that I have observed in this industry include constant and rapidly changing

technology. It is a race to apply this new technology to vehicles. Another obstacle is theexpensive R&D and the variety of viable options for car design and internal mechanisms.With such a diverse market it is more difficult to determine which options are best tofocus upon.

Market Segments that our group has determined for the target market are: eco-elites, gasweary, and government/business needs. Eco-elites are a good market because they havedisposable income and they like the ―eco- badge‖. Gas weary targets are looking for anoutlet to their gas price increases. They want to leverage fuel efficient technology tooffset fuel costs. Government and businesses also see the ―eco- badge‖ to achieveconspicuous virtue. Also, they would embrace an opportunity to decrease oil dependenceand increase oil efficiency.

Potential Sources

Harmon‘s templates, examples and guidelines on his pdx/sba webpageLibrary databases and articles: datamonitor, mintel, business source premier articles, etc.Product websites: General Motors, Toyota, and HondaGoogle searches: auto magazines, reviews, web blogs, and various automotive websitesGovernment Publications: the Bureau of Transportation

Tentative Bibliography of Source Material

1. Berman, Bradley. (2008, February). Who might kill the Chevy Volt? 3 suspects couldfoil GM's plug-in plans. Automotive News. Retrieved June 24, 2008, fromNexusLexus database.

2. Brown, Alan. (2008, April). Academy Unveils Grand Engineering challenges. Mechanical engineering, 8-10.




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3. ―Imagine: A Daily.‖ (2008). http://www.chevrolet.com/electriccar/

4. Lowery, Elizabeth. (2007, August). Energy Diversity as a Business Imperative. The

Futurist , 23.

5. Mintel (2002, December). Compact Cars – US. Mintel Report. Retrieved June 23,2008, from Business Source Premier database.

6. Mintel (2008, January). American Living - The Eco-Echo Boomers. Retrieved April28, 2008, from Business Source Premier database.

7. Mintel (2008, May). Green Marketing - US. Retrieved June 23, 2008, from BusinessSource Premier database.

8. Muller, Joann., & Stone, Andy. (2008, April). Jump Start. Forbes, 68-70. RetrievedJune 24, 2008, from Business Source Premier database.

9. Murray, Charles J. (2008, June). GM Tests Lithium-Ion Batteries; Automaker says theChevy Volt is still on time for 2010 launch. Design News. Retrieved June 24,2008, from NexusLexus database.

10. Pierce, Alan. (2008, April). Seeing Beyond Gasoline Powered Vehicles.TechDirections. Retrieved June 24 2008, from NexusLexus database.

11. ―Top 10 Best.‖ (2006). http://www.edmunds.com/reviews/list/top10/ 116743/article.html

12. Welch, David. (2008, May). GM: Live Green or Die. Business Week , 36-41.

Assignment 5: Segment Attractiveness Analysis



FuelPoweredLithium-

ionBattery

Plug-incapability

Runs40

mileswithoutusinggas

50 MPGfuel

economy

Very lowemmissions(especiallywhen run

on battery)

Littleto nofuel

costs

Capabilityto use

biofuelsAmerican

made

ConspicuousConsumption

(includesStyle and/or

ConspicuiousVirtue)

Availabilityof product

Eco-Elites 5.2 6 7.8 8.2 10 5.8 5.8 3.4 8 6

Fuel Freaks 7.4 7.4 8.4 9 6.6 9.4 6.8 5.6 4.4 5.8VirtuousGovernment 6.6 6.2 8.2 7.4 8.2 7 7.8 7.8 5.6 5.8

WeightedAverages

FactorWeight 0.048 0.064 0.102 0.156 0.18 0.132 0.076 0.052 0.102 0.088 1.000

WtdAvg

Eco-Conscious 0.2496 0.384 0.7956 1.2792 1.8 0.7656 0.4408 0.1768 0.816 0.528 7.236

Fuel Freaks 0.3552 0.4736 0.8568 1.404 1.188 1.2408 0.5168 0.2912 0.4488 0.5104 7.286VirtuousGovernment 0.3 0.4 0.8 1.2 1.5 0.9 0.6 0.4 0.6 0.5 7.184



Segment Attractiveness

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

F u e l P o w e r e d

L i t h i u m - i o n

B a t t e r y

P l u g - i n

c a p a b i l i t y

R u n s 4 0

m i l e s w i t h o u t

u s i n g g a s

5 0 M P G f u

e l

e c o n o m y

V e r y l o w

e m m i s s i o n s

( e s p e c i a l l y

w h e n r u n o n

L i t t l e t o n o

f u e l c o s t s

C a p a b i l i t y t o

u s e b i o f u e l s

A m e r i c a n

m a d e

C o n s p i c u o u s

C o n s u m p t i o n

( i n c l u d e s

S t y l e a n d / o r

A v a i l a b i l i t y o f

p r o d u c t

SAFs

R a t i n g

Eco-Conscious

Fuel Freaks

Virtuous Government




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Assignment 6: Customer Profiles

Target Market: Eco-elite

concerned consumers/ Style-wearymainstream green:

Style and a notable hybrid body are important to

this group. Fewer emissions for the Chevrolet Voltare a major benefit for this consumer group. Theseare consumers that already participate in buyingecologically-friendly products. These consumerstend to buy more organic and natural foods versusprocessed goods. These are metropolitan-savvyconsumers, who believe looking good is important.They subscribe to many fashion and consumermagazines and websites. They budget for extraexpenses of hair and beauty products. They havesomewhat high disposable incomes.

Local government offices (that wantto appear eco-conspicuous):

These consumers want the public to know thatthey are working to be sustainable. This consumeris specific to a concerned consumer group with theappearance of their product buying habits. Theywant something that ensures that they are makingan effort to be eco-conscious and participate asinnovators of products. These groups typicallybuy business vehicles to travel shorterdistances. Some examples of this group are: watersafety and preservation, Portland City Works,

government office holders, and police.

Gas mileage- weary and

economically driven:According to a February 2008 Mintel Report,Green Living, a weaker economy and high energyprices are likely to drive growth of energy-efficientproducts. These consumers believe that gas priceswill continue to escalate and they are very attachedto the freedom of owning a vehicle. They want tobe seen as innovators and early adopters andbelieve that hybrid and alternative vehicles couldrun out or, like the Toyota Prius, become in

shortage of stock. They would not consider mo-peds or scooters convenient or sustainable astransport.




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Assignment 7: Competitive Factors Mapping

Competive Factor Analysis

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

P r i c e

R e l i a b i l i t y

F u e l E c

o n o m

y

C u s t o

m e r S

e r v i c e

E c o - f

r i e n d l y

S a f e t

y

R e s a l e

V a l u e

P e r f o

r m a n

c e

C o m f

o r t

Competitive Factors

R e l a t i v e V a l u e

Toyota

Honda

Chevrolet




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Assignment 8 : Market Sizing

Eco-Elite Fuel FreaksVirtuous

Government Market Potential

Total Buyers 2,082,000 4,091,000 446,000AveragePurchasePrice $27,000 $27,000 $25,000SegmentPotential $56,214,000,000 $110,457,000,000 $11,150,000,000 $177,821,000,000

2008 ProjectionsUSA Eco-Elites Fuel Freaks Virtuous Govt

Index 100% 28.0% 55.0% 6.0%Passenger

Vehicle Volume 7,438,000 2,082,640.0 4,090,900.0 446,280.0

Hybrids 6% 11% 3% 9%PassengerHybrid Volume 446,280 232,066 129,421 40,165Average Salesprice of Hybrid $27,000 $27,000 $27,000 $25,000Total ConsumerHybrid SalesPotential $12,049,560,000 $6,265,771,200 $3,494,372,400 $1,004,130,000

For full forecast charts, see file: 8-MarketSizing_ForecastingModels_2008-1.xls




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Assignment 9: SWOT Chart

Positives Negatives

I n t e r n a l

Strengths Weaknesses

Innovative Technology American Brand Marketing power Strategic flexibility Positioned in a niche market Large scale operations Strong brand portfolio

Brand identity and reputation – product recalls, failure of anotherelectric vehicle Declining market share Declining financial performance New technology = expensive R&D Price Third party technology development Content still being developed(Unknown kinks/long term affects)

E x t e r n a l

Opportunities Threats

Development of new technology(electric, solar)

Growing market of eco-consciousconsumers

Government subsidies - tax credit forpurchase of new no emissions vehicles(Jackson, David)

Developing a well established positionwith a market niche

Better distribution channels than

competitors for the US marketGrowing gas prices (Jackson, David)

Increasing demand for hybrid electricvehicles

Emerging markets (Asia Pacific andLatin America)

Price sensitivity Economic downturn or instability Rising raw material prices Declining demand for light vehiclesin the US Stringent emissions standards ELV Directive – End of Life Vehiclesmust be dismantled and recycled inspecific areas (Japan - enacted,soon to follow: Europe, Taiwan,

Korea, and China)




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Assignment 10: Critical Risk Factors and Success Factors

Critical Risk Factors

Risk Factor Description Mitigation Strategy

Battery Technology

/ Cost

Cost of battery technology is

significant portion of cost of

Volt. Unless cost falls rapidly,

the Volt will not be able to

turn a profit unless GM

charges high price for the car.

Offer an option of battery

sizes. 40 mile range on

battery and 20 mile range

on battery.

Price of Oil If the price of oil falls and

consequently the price of

gasoline falls, the high fuel

economy of the Volt will lookless attractive.

Emphasize marketing on

environmental benefits.

Discount price of Volt. Bet

that gasoline prices willcontinue to rise in the long-

run.

Economic

Downturn

If the economy is in a

recession, consumers may not

be as eager to purchase new

cars, let alone one as expensive

as the Volt.

Hybrid and similar

alternative fuel vehicles

appear immune to economic

downturn. Growth

continues despite economic

conditions.

Dependent on

Government

subsidies (also asuccess factor)

In order to be affordable, GM

is depending on the

government to give tax creditsto those who purchase the

Volt.

Lobby Government

Effect on Brand

Image

If Volt fails, the GM and

Chevrolet brand images could

be further damaged

Unlimited funding to Volt




139

Critical Success Factors

Success Factor Description Leveraging Strategy

Adoption of alternative fuel cars

by larger segment

of population

Hybrid vehicles have bridgedthe mental gap between

gasoline and electric vehicles.

America is ―ready‖ for electric

car.

Push the idea that the Volt isthe ―next step‖ in the

natural progression to non-

petroleum powered vehicles.

Demand for

alternative fuel

vehicles

Demand must continue to

grow rapidly (20%+)

Alternative fuel vehicle

market not mature; market

development /

diversification approach to

encourage growth

Government

subsidies available(also a risk factor)

Government is getting on

board the alternative vehiclemovement and is willing to

give consumers with tax credit

Continue to lobby

government to get bestoutcome of alternative

vehicle tax credit legislation

Become technology

leader

Through R&D, become first to

market with technology

critical to success of electric

car (especially batteries)

Change frame of reference.

Work to make new

technology the standard of

the industry

American Driving

culture

American culture is still

largely based on driving.

Driving = independence.

Emphasize independence of

self along with independence

from oil to drive growth of

electric car market.

Assignment 11: MOA Conclusions

The Chevrolet Volt is revolutionary with its innovative technology, plug in capability,and the environment efficiency it offers. It has the ability to successfully market the Voltwith its strong position in the market. Hybrid sales have been projected to reach $1million for 2012 (USA Today 2007) and grew 15% compared to the overall passengervehicle market in 2008 (Hybrid 2008). This is evidence to the change of consumer needsand growth of a new market to exploit.

The aesthetic appeal and sleek design are perfect for the target customer. The targetmarket identified for the product is a segment called, the eco-elites. They have beenidentified as the segment to be most likely to buy the Volt considering their lifestyle andpurchasing power. They are also the type of consumer to purchase the newest and latesttechnology with their innovative adopter behavior.

Part of the reason that the Volt can differentiate itself from the rest of the competition isbecause of the technology used to drive the vehicle. The E-Flex drive train will help to




140

standardize future development of alternative fuel vehicles for GM which in turn willlower their development costs.

The Volt is unlike any other alternative fuel vehicle, offering an array of opportunities.Because the Volt is more eco-friendly than the Prius and other hybrids, it helps contribute

to low fuel costs. The Volt is part of a Blue Ocean Strategy in that it is the first vehicle tobe on the market using lithium-ion batteries as an energy source. It will compete as anelectric car with virtually zero emissions, low cost of gas and fashionable body style.

Some of the main competitors are Toyota and Honda, more specifically the Toyota PriusHybrid and Honda Civic Hybrid. Toyota is already planning on coming out with theirown electric car, while Honda hasn‘t quite made any plans yet. So far, they are focusedon the offering the same benefits the Volt offers, focusing on the same consumers; theeco-elites. Also, the Volt is being marketed as more prestigious and glamorous thanother hybrid vehicles. Advantages for the Chevrolet Volt against competitors are that it isan electric car offering low emissions, eco-friendly, highly fuel efficient, pluggable, and

stylish.

Looking at the SWOT analysis has offered insights into critical risk factors and successfactors. Some of the risks involved are the battery technology and the costs involved, oilprice instability, government subsidies, and the vulnerability of the reputation of Chevrolet. Recommendations concerning the battery are two different battery sizes to beoffered to alleviate cost to the consumer, emphasis of low emissions, investment inmarketing the right values to consumers, and investing heavily in the success of the Volt.

The success factors are the mainstream adoption of fuel alternative vehicles, becoming atechnology leader, and affiliation with the independence of the U.S. culture. Toaccomplish this it is suggested that Chevrolet continue investment in the fuel-alternativevehicle market as well as invest heavily in marketing successfully the independence-empowerment of owning a partially electric vehicle. This will enable later modelvehicles to be acce pted using the Volt as a ―stepping stone‖ to fully electric vehicles.

In conclusion, the Volt‘s appeal to the eco-conscious consumer will assist in making itthe market leader of electric vehicles. Other factors such as fuel costs and sustainabilitycause the values of the Volt to represent what the market is in need for. The innovativetechnological design sets it apart from other competitors as well as heightens thereputation that Chevrolet offers.




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Assignment 12: Plan Objectives

Dashboard 2010 2011 2012

Revenue$960,000,000 $4,200,000,000 $4,000,000,000

Market Share 0.27% 1.33% 1.33%

Market Share (Hybrids) 2.96% 12.04% 9.79%

ROI -8.86% 32.51% 40.33%

Return on Marketing -225.57% 916.19% 1684.02%




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Assignment 13: Ansoff’s Matrix




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Assignment 14: Value Disciplines

Value Discipline Consensus Score

Knowledge 0.9

Time 0.5Operational Excellence 0.6

Customer Intimacy 0.7

Innovation 0.9

Value Disciplines

0

0.2

0.4

0.6

0.8

1Knowledge

Time

Operational ExcellenceCustomer Intimacy

Innovation




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Assignment 15: Brand Stories

Chevrolet Volt — Brand Story

Lana Sappa

July 31, 2008

When I started shopping around for a car, I asked a couple of my guy friends what wouldbe a good investment, especially with gas prices sky rocketing and the economy in aslump. Plus, I want something that represents environmentalism because I have to beseen as sustainable for work. Of course, most of them suggested a Prius, but my friend,Will, suggested the Chevrolet Volt. He said he saw it at a car show and the car was thenew hybrid, with a fuel-powered battery. Will stated, ―Electric is the future of cars. Noone will be driving gas vehicles anymore.‖

I had seen the Volt once when my boyfriend and I were at dinner and the park across the

street had a crowd circling the silver bullet-looking car. It looked interesting but we wereon our way to another event and had to leave.

I didn‘t know very much about it other than the event signs, which said, ―Plug into thefuture.‖ So I assumed it was a pluggable car. I googled it. The website was really cool, Icould build my own car, right down to the color and inside technology, including andMP3 player and satellite radio. I could even download my own picture into the photo of the car and send it to my boyfriend. He thought it was a riot and sent it to his partner atthe firm, who said that I looked great in it. After that, I pretty much had to have one. Iloved it my favorite car color, Silverstone metallic.

When the dealership called me to pick up my car, I was so excited. It looked fantastic andI couldn‘t wait to show it off to my friends. I had the hot, new car and everyone wantedto know how it handled. Most of my friends had a Prius, but I thought they were reallygeneric looking. Also, the Chevrolet dealer told me that mine actually has feweremissions than a Prius, especially when I only drive it about 10-20 miles a day. He said I probably won‘t ever use the gas, except when I take a weekend trip to the beach, whichmeant no emissions at all. My friends are envious and my grandmother said she‘s goingto buy one! She always said she wouldn‘t buy another car until there were electric andnow she‘s too old to drive one, but she wants one to have her driver put her around in.

Cameron Woelfer

Robert Harmon

Mktg 464

July 28, 2008

Brand Story

Brand Story: Chevrolet Volt




145

Initial EvaluationI was in the market for a new vehicle and had many different options to consider. Takinginto account that I am a consumer who cares about fuel efficiency considering the raisingprice gases, many vehicles came into mind for my information search. While researchingonline, I came across some information about the Chevrolet Volt. This sounded

interesting, considering that the vehicle can achieve zero gas and zero emissions duringtrips of 40 miles or less. Not to mention the aesthetic appeal of the car which looked a lotbetter than any other eco-friendly vehicle I‘ve seen. Another vehicle that I had consideredwas the Honda Civic, which has great fuel economy but is not very eco-friendlyconsidering that is uses gasoline. The Chevrolet Volt used mostly electric energy andgasoline was only used to power the lithium-ion battery. What a concept! I was temptedto learn more so I called the dealership and arranged a time to go see one. Although I wasa bit skeptical considering the price difference between the Civic and the Volt, I wasinterested in seeing what the car was all about.

Purchase

After going to the dealership and talking to the sales people, I was thoroughly impressed!It‘s a plug-in vehicle that plugs into a normal household plug at home! Wow, I‘ve never heard of a vehicle such as this before. Although I was a bit skeptical to purchase the product considering that it is a new product concept that hasn‘t been tested extensively, Iwas swayed by the aesthetic appeal and the coolness factor of owning an electric plug-invehicle. Not only would I be saving a lot of money on gas, but I‘d also be saving theenvironment. I decided to purchase it after a test drive.

Product – UseThe Chevrolet Volt is a great product that runs great. The battery is charged within 6.5hours which is easily plugged in to my power outlet inside my home before I go to bed.I‘ve barely had to spend any money on gasoline considering that the vehicle usesvirtually no gasoline for trips of 40 miles or less. While driving around the Volt,everyone stops and stares at the vehicle. Whenever I come out of a place after parking myVolt in a parking lot, there are always people looking at it and commenting. It‘s definitelya conversation starter and everyone wants to know how it works. Everyone wants to sitinside of it and some people have even asked to drive it!

Customer ServiceChevrolet‘s customer service has been great. Considering it‘s a new vehicle concept, theyhave been very friendly and helpful with answering any questions or problems that I mayhave. There‘s a 24 hour support line that I can call if I ever have a problem. Uponpurchasing the vehicle, the sales people were very knowledgeable about the product andprovided me with the information I had requested for making my decision. There‘s evena service that claims if there‘s any problem with the product and I get strandedsomewhere because of it, I can call the dealership and they will come pick me up to takeme where I need to go. Not to mention the towing of my vehicle would be free. Nowthat‘s reassuring.




146

Nicole Mallos

MKTG 464

Brand Story

I am driving down the street with my window rolled down, enjoying a peaceful, sunny

day. I look down as I drive to realize that my gas light is on and I am in desperate needto get some gas. I pull over to the nearest gas station only to realize that I am practicallypaying an arm and a leg to fill my old, almost useless vehicle. So many thoughts andemotions run through me at the same time. My car is almost older than I am and with theamount of driving that I do, I can barely afford to keep up the maintenance or the cost of gas. This is when I realize, I need to sell my car and buy something more efficient.

I start my research on the Internet, where I can find almost any piece of valuableinformation that I need, including a virtual tour without even having to leave my couch. Imake a list of some of the most important things that I am looking for including comfortand style, but more importantly something that will have a long life cycle and provide

fuel efficiency. Another important aspect is to have as little of a footprint on theenvironment as possible, so my search is now geared toward hybrid/electric vehicles.With the growing concern for the environment and the uncontrolled increase on gasprices, there are more options than ever in this category. My eyes are now set on whatkind of brands I know that are trustworthy.

After doing most of my research on the Internet, I decide to spend a day going to thedealerships to look at the vehicles of my choice in person in order to get the real idea.My eyes immediately set onto the Chevrolet Volt. The look and style of the car isinnovative and sleek and offered everything I was looking for in my new car purchase. Iwalk over to it, looking at it from every angle and as I approach, so does a sales associate.With every question, he shoots back with a knowledgeable answer. I take a seat in thefront, in the back, and take a look at what is under the hood. After I get all theinformation, test drive the car, and get a lesson on what valuable aspects the Volt isoffering me, I drive away in my new car!

As I drive away I feel extremely comfortable knowing that I am getting an electric car(which is exciting in the idea that this is new technology) and that while I am using thebattery I am releasing almost zero emissions into the atmosphere. Even though I driveconsiderable distances, when I am driving short distances of about 40 miles, I am runningcompletely on battery. I feel safe knowing that I am taking part in saving theenvironment as well as purchasing a product that I can trust based on the reputation thatChevrolet offers.

Since the purchase of my car, there have been a few things that I had questions about,only because of the new technology and my lack of knowledge on how to use it. If afterreading the owner‘s manual, I still had questions, all I had to do was call the dealershipwhere I purchased it, and the sales associate or customer service was more than happy toanswer my questions.




147

Emily Rabin

Mktg464 7/31/2008

Chevrolet Brand Story

Being an American child, I have personal experience and understanding of Chevrolet. I

have found their vehicles to be extremely comfortable, but also chinsy and cheap looking.The design of their cars, inside and out, always looks so simple without a lot of bells andwhistles, or more for utility than pleasure. Also, my family grew up driving mostlyToyota and Saturn. So at a young age, through observation, I understood that Americanbrands such as Ford and Chevrolet are in a slightly lower price bracket but in a far lowerquality bracket and so there is more long term value in purchasing a foreign brand. Inmore recent years, my understanding has been that Chevrolet cannot keep up with thesuperior technology or innovation that thrives at Toyota. Overall, Chevrolet‘s productsare perceived to be large and durable but also cheap and simple. They need to reinventthemselves in the marketplace to gain back their market share and customer trust

Chevrolet is a great brand if you need to do something rugged. I would want a Chevytruck if I was driving over rocky terrain, hauling a boat, moving, going muddin‘ or camping. I would not want a Chevrolet for my commute to work, for traveling, or if Iwanted a driving experience. Chevrolet fulfills a very specific purpose. So specific, that itactually hurt their market share. By not addressing these other consumer demands theyended up missing out in the long run.

Chevrolet, ―An American Revolution‖ is their new tagline. Why is it a revolution? Whyis Chevrolet America‘s best? Some qualities that characterize the Chevy spirit from theconsumer standpoint are tough, rugged and rebellious. In the 90‘s Chevrolet created thetheme, ―Like a Rock‖. It was a very tough, cowboy theme that reminded me of Marlboro.Traditional Americans‘ may be considered cowboys and Chevrolet wanted to align withthis perception. Their revolution lies in their attempt to reposition in the consumer mind.They are also considered an American Brand as their tagline suggests. This translates tothe when a consumer purchases a Chevrolet, they feel gratification in the form of nationalism, or spending within their own economy and not guilt for buying overseas products. To Chevrolet‘s disadvantage, being an American automaker has become lesssignificant and more obsolete. People are starting to associate higher quality and valuewith overseas brands such as Toyota and Honda. Additionally, Toyota and Honda havemoved many manufacturing plants and business into the US because of the large carmarket. So they are actually becoming more like home brands. This is going to causeChevrolet to reassess their marketing strategy and their positioning.

Ben Long

July 31, 2008

Volt Brand Story

I‘ve been driving around the same car that I had in college for a number of years. Nowthat I have a good paying job that allows me to live much better than I did when I was a




148

student, I feel that I should treat myself to a new car. There have been increasingconcerns about the environment and I feel now that I can, I should do my part. I can‘tavoid having a car because of my demanding job and active social life, but at least I canbuy a car that minimizes my impact on the world. I‘ve heard in passing reports on National Public Radio during my commute about the recent release of GM‘s electric car,

the Volt, and I am intrigued by the idea of being able to use my car without having to usegas. On the weekend I do some research online about the Volt and similar plug-in hybridvehicles. On a number of car comparison sides and independent review sites, the Volt issaid to far exceed the quality that is usually expected from GM vehicles. The closestsecond option for a plug-in vehicle is the Toyota Prius plug-in hybrid, but it seems to beon a limited release schedule and I would like to purchase a new car within the next fewmonths. While I considered other cars that were lower price and similar fuel economy, Iwas set on the idea of reducing my personal gasoline consumption and overall carbonfootprint as much as I could. I was willing to pay the price premium. Plus, the Voltlooked suave and sophisticated, which was exactly how I wanted to see myself in theworld.

Anticipating that the Volt may not be available everywhere, I looked up online where Icould go to test drive it. The first Google result for ―Volt test drive‖ was the official Voltsite that had a feature that allowed me to input my zip code and returned results of thenearest dealer where the Volt was available. When I arrived at the GM dealership, theVolt was the most prominent car in the show room. I was immediately struck by howadvanced the Volt looked. It was as if it was the new standard for design in alternativefuel vehicles. Next to the Volt was an attractive spec sheet about the new technology thatwas in the Volt. A sales assistant greeted me warmly and was able to answer all of myquestions concerning the new battery technology and drive train that I had previouslylooked up online. The final selling point was a five year warrantee on the battery. Ipurchased the Volt through a financial plan and was able to drive it that day.

Every time I see the Volt in my garage, I feel proud about my purchase. I actually look forward to my twenty minute commute every morning and even wake up five minutesearly so that I can fully enjoy the experience. I feel empowered from my purchase in thatI can enjoy my active lifestyle that depends on me having a car, without feeling like I amcontributing to the growing concern about the environment. Since I drive the Volt from20 to 60 miles a day, I only have to visit a gas station every six weeks or so.

After using the Volt for about a year and a half, I noticed that the gas engine was turningon much sooner than it usually had on my drive home each day. I figured that theproblem was that the battery was not charging fully each night when I plugged it in. Iwas nervous about the problem because of my perceptions of GM as a company. I didnot expect that this problem would be taken care of in a way that I was satisfied with.Regardless, I called the dealer where I purchased the Volt. I was told that the lithium-ionbattery needed to be replaced, but that it would be free of charge because of the five yearwarrantee. It was arranged that I bring the Volt to the dealership to get the batteryreplaced that Saturday which worked well with my schedule. It turned out to take onlytwo hours of my morning and I was even able to keep a lunch date. Even though I had




149

been skeptical about GM and their Chevrolet brand, my perceptions of them had beenelevated to the point where I started telling all of my friends (including the one I met atlunch right after the repair) about how unexpectedly satisfied I was with GM andespecially the Volt.

Assignment 16: Value Discipline / Transition Matrix

Knowledge InnovationOperationalExcellence

CustomerIntimacy Time

Product 9 8 8 6 4

Price 5 6 6 7 6

Distribution 8 4 8 7 4

Promotion 9 8 8 7 6

Weights 0.30 0.20 0.20 0.20 0.10

Knowledge Innovation

Operational

Excellence

Customer

Intimacy Time

Wtd

Avg**Product (7.5) 2.70 1.60 1.60 1.20 0.40 7.50

Price (5.9) 1.50 1.20 1.20 1.40 0.60 5.90Distribution(6.6) 2.40 0.80 1.60 1.40 0.40 6.60Promotion(7.9) 2.70 1.60 1.60 1.40 0.60 7.90

Value Discipline-Marketing Strategy

Transition Map

0.00

0.50

1.00

1.50

2.00

2.50

3.00

K n o w l e d g e

I n n o v a t i o n

O p e r a t i o n a l

E x c e l l e n c e

C u s t o m e r

I n t i m a c y

T i m e

Product (7.5)

Price (5.9)

Distribution (6.6)

Promotion (7.9)




150

Assignment 17: Product Platform Strategy




151

Assignment 18: Sales and Distribution Strategy

Sales Objectives

To keep communication openbetween Chevrolet and the

consumers.To keep an up-to-date database andcontinuous flow of informationbetween the consumer andChevrolet Volt SBU.

Sales strategy

Emphasis knowledge within theChevrolet relationship with dealers.

Concentration, also, on relationshipbetween Chevrolet, the dealershipsand the consumer in informationsharing.

Promotions will be supported withextra incentives for high performingdealerships.

Channel strategy

Direct - Chevrolet‘s managementteam works directly with dealershipsales teams.

Insurance that dealers understandthe uniqueness of the product andtreat consumers with the samerespect that regional managers treatsalespeople.

Distribution of the product willhappen much the way that it doesfor standard vehicles, except for theVolt will travel in covered trucksand trains pending on dealershiplocations.




152

Assignment 19: Communications Mix, Schedule, Timeline, Budget


Q 2

Q

3

Q 4

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

M a r k e t i n g C o m m u n i c a

t i o n s ( I n t h o u s a n d s o f d o l l a r s )


2

0 , 0 0 0

$

2 , 0 0 0

$

1 , 5 0 0

$

1 , 5 0 0

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2 , 7 5 0

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2 5 0

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T e l e v i s i o n

P r i m e t i m e

8 , 5 0 0

$

-

$

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-

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1 , 5 0 0

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M a g a z i n e s

A u t o

1 , 5 0 0

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H i g h - e n d

1 , 5 0 0

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P r o d u c t p l a c e m e n t

4 , 5 0 0

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D e a l e r s h i p

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1

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E v e n t s

1 , 0 0 0

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P r e s s R e l a t i o n s

6 , 5 0 0

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1 , 0 0 0

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7 5 0

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7 5 0

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5 0 0

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3 7 5

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E v e n t S p o n s o r s h i p

5 , 0 0 0

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1

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V i r a l

4 , 0 0 0

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G M C o r p o r a t e

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1 , 7 5 0

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2 0 1 2




153

Assignment 20: Pricing Strategy Spreadsheet Projections

The basic reasoning for pricing the Volt at $48,000 is mostly due to the fact that the

battery is quite expensive. This price will offer the distinction of quality and valueamongst other competitors in the automotive market. Also, there is a differentiationbetween the other competitors that this is not an egg on wheels and that this is aprestigious vehicle to promote an eco-friendly association. There will be different priceoptions available that comes with the options of different batteries so if a consumer is notset on spending the $48,000 amount, they have the option to still buy the Volt, but with asmaller battery and a smaller price tag. The Volt will start at $48,000 but with hybridpricing strategies in effect, it will periodically be discounted about once a year. At yeartwo, the price will decrease to $42,000 and in year three the price will once againdecrease to $40,000. The life cycle of our product is about four years, so the price willonce again drop considerably when the new model of the Volt is released.

Year 1 2 3

Sales $ 960,000,000 $4,200,000,000 $4,000,000,000

Price model $ 48,000 $ 42,000 $ 40,000

Volume 20000 100000 100000

Assignment 21: Level-5 Marketing Plan Outline




154

Assignment 22: Marketing Budget and Plan Timeline

T o t a l s


Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

M a r k e t i n g B u d g e t

( I n t h o u s a n d s o f d o l l a r s )

M a r k e t i n g C o m m u n i c a t i o n s

5 0 , 0 0 0

$

1 3 , 2 5 0

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5 , 4 2 5

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G u e r i l l a

7 , 5 0 0

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M a r k e t i n g T e a m

4 , 5 6 4

$

6 5 2

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$

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M a r k e t i n g D i r e c t o r

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M a n a g i n g M a r k e t i n g D i r e c t o r

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3 9 2

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3 9 2

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M a r c o m E x e c u t o r s

2 , 8 0 0

$

4 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

2 0 0

$

S a l e s a n d C u s t o m e r S u p p o

r t

4 , 6 4 8

$

6 6 4

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

3 3 2

$

M a n a g i n g S a l e s D i r e c t o r

4 2 0

$

6 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

3 0

$

C h a n n e l D i r e c t o r

3 6 4

$

5 2

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

R e g i o n a l M a n a g e r s

3 6 4

$

5 2

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

2 6

$

S a l e s T e a m

1 , 4 0 0

$

2 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

M a i n t e n a n c e / C u s t o m e r S u p p o r t

1 , 4 0 0

$

2 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

O t h e r G & A

7 0 0

$

1 0 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

5 0

$

P r o d u c t M a n a g e m e n t

2 , 6 7 4

$

3 8 2

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

1 9 1

$

M a n a g i n g P r o d u c t D i r e c t o r

4 3 4

$

6 2

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

3 1

$

A s s i s t a n t P r o d u c t D i r e c t o r

2 8 0

$

4 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

2 0

$

E n g i n e e r i n g M a r k e t i n g S p e c i a l i s t s

5 6 0

$

8 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

4 0

$

M a r k e t R e s e a r c h

1 , 4 0 0

$

2 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

1 0 0

$

C o n t i n g e n c y ( 1 0 % )

6 , 1 8 9

$

1 , 4 9 5

$

8 1 0

$

5 6 0

$

6 2 7

$

6 2 7

$

2 6 5

$

2 6 5

$

2 6 5

$

2 6 5

$

2 6 5

$

2 6 5

$

2 4 0

$

2 4 0

$

T o t a l s

6 8 , 0

7 5

$

1 6 , 4 4 3

$

8 , 9 0 9

$

6 , 1 5 9

$

6 , 9 0 1

$

6 , 9 0 1

$

2 , 9 1 4

$

2 , 9 1 4

$

2 , 9 1 4

$

2 , 9 1 4

$

2 , 9 1 4

$

2 , 9 1 4

$

2 , 6

3 9

$

2 , 6 3 9

$

2 0 1 0

2 0

1 1

2 0 1 2




155

Assignment 23: Pro-forma P&L and Capital Budget

T o t a l s


Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

Q 1

Q 2

Q 3

Q 4

V o l t P & L ( i n m i l l i o n s o f d o

l l a r s )

G r o s s S a l e s

9 , 1 6 0

$

-

$

2 4 0

$

2

4 0

$

2 4 0

$

2 4 0

$

1 , 0 5 0

$

1 , 0 5 0

$

1 , 0 5 0

$

1 , 0 5 0

$

1 , 0 0 0

$

1 , 0 0 0

$

1 , 0 0 0

$

1 , 0 0 0

$

C o s t o f G o o d s S o l d

6 , 8 7 0

$

-

$

1 8 0

$

1

8 0

$

1 8 0

$

1 8 0

$

7 8 8

$

7 8 8

$

7 8 8

$

7 8 8

$

7 5 0

$

7 5 0

$

7 5 0

$

7 5 0

$

G r o s s I n c o m e

2 , 2 9 0

$

-

$

6 0

$

6 0

$

6 0

$

6 0

$

2 6 3

$

2 6 3

$

2 6 3

$

2 6 3

$

2 5 0

$

2 5 0

$

2 5 0

$

2 5 0

$

O p e r a t i n g E x p e n s e s

2 , 1 2 1

$

1 , 0 1 6

$

9 3

$

9 0

$

9 1

$

9 1

$

9 3

$

9 3

$

9 3

$

9 3

$

9 2

$

9 2

$

9 2

$

9 2

$

S a l e s a n d M a r k e t i n g

6 8

$

1 6

$

9

$

6

$

7

$

7

$

3

$

3

$

3

$

3

$

3

$

3

$

3

$

3

$

R e s e a r c h a n d D e v e l o p m e n t

1 , 9 8 4

$

1 , 0 0 0

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

8 2

$

G e n e r a l a n d A d m i n i s t r a t i v e

6 9

$

-

$

2

$

2

$

2

$

2

$

8

$

8

$

8

$

8

$

8

$

8

$

8

$

8

$

E B I T

1 6 9

$

( 1 , 0 1 6 )

$

( 3 3 )

$

( 3 0 )

$

( 3 1 )

$

( 3 1 )

$

1 7 0

$

1 7 0

$

1 7 0

$

1 7 0

$

1 5 8

$

1 5 8

$

1 5 8

$

1 5 8

$

T a x e s ( 3 5 % )

4 5 8

$

-

$

-

$

-

$

-

$

-

$

5 9

$

5 9

$

5 9

$

5 9

$

5 5

$

5 5

$

5 5

$

5 5

$

N e t I n c o m e

( 2 8 9 )

$

( 1 , 0 1 6 )

$

( 3 3 )

$

( 3 0 )

$

( 3 1 )

$

( 3 1 )

$

1 1 0

$

1 1 0

$

1 1 0

$

1 1 0

$

1 0 2

$

1 0 2

$

1 0 3

$

1 0 3

$

2 0 1 0

2 0 1 1

2 0 1 2




Assignment 24: Power Point Presentation

For full presentation, see Power Point file: Chevrolet_Volt_Presentation.ppt

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