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Marketing Strategy Cadillac Escalade EXT. Shivshakti Patki. Pat Stornant. Geeta Pai. Deepa Subbaraman. Esra Adigozel. Keith Klochack. Corporate / Business Unit Goals. General Motors’ Vision

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Marketing Strategy

Cadillac Escalade EXT

Shivshakti Patki

Pat Stornant

Geeta Pai

Deepa Subbaraman

Esra Adigozel

Keith Klochack


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Corporate / Business Unit Goals

General Motors’ Vision

GM's vision is to be the world leader in transportation products and related services. GM will earn customer's enthusiasm through continuous improvements driven by the integrity, teamwork and innovation of GM people.


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Corporate / Business Unit Goals

General Motors' Goals

  • Revenue growth

  • Increased global market share

  • Net income margin growth

  • Top quartile stock price performance


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Corporate / Business Unit Goals

General Motors' Corporate Priorities

  • Innovative products and services

  • E-business leadership

  • Global growth

  • Business results



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Cadillac Introduces New Family Member for 2002 Escalade

  • The Cadillac EXT is one way GM is attempting to reach their goals.

  • According to a J.D. Power and Associates report issued in March 18, 2002, the sporty car, luxury car and pickup segments are seeing strong year-over-year sales.

  • Not only is the EXT an innovative product for GM, it will help with growth goals and priorities.


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Business Unit Strengths and Weaknesses

  • Core Competencies

  • Product lines

  • Technologies

  • Customer base

  • Market share positions


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Core Competencies

  • Manufacturing, Distribution

  • In 2001, GM sold more than 8.5 million cars and trucks - more than any other automaker and 15.1 percent of the world vehicle market.

  • Cadillac is the GM business unit with offerings to satisfy the luxury segments.


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Cadillac Sales In Units

  • While growing sales steadily into the late 1970s, sales have been decreasing since the early 1980s.


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Product Lines

  • CTS

  • DeVille

  • Eldorado (Discontinued after 2002)

  • Escalade

  • Escalade EXT

  • Seville

  • SRX (planned for 2003)

  • XLR (available 2003)


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Technologies

  • GM OnStar

  • A competitive advantage for GM

  • Communications and information service providing a variety of services, including personalized assistance, emergency aid, and hands-free, voice-activated access to Internet-based information, including news, sports, weather, e-mail and stock quotes.

  • The Personal Calling service provides hands-free, voice-activated, cellular phone access

  • More than 2 million subscribers


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Customer Base

  • GM's major markets are North America, Europe, Asia-Pacific, Latin America, Africa and the Middle East.

  • Cadillac, however, is mostly a North American brand.

  • Below is the where luxury car makers sell around the world


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Market Share Positions

  • Compared to other luxury carmakers, Cadillac has fallen behind.

  • In 2000, Cadillac held only 12 percent of U.S. luxury car and truck sales.


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Product Life Cycle

Vehicle History:

  • The Escalade was introduced as a 1999 model in fall of 1998 as the first Cadillac in a multi-year, multi-product plan to establish a presence in the luxury sport-utility market.

  • For 2002, Escalade expands its offerings with four distinct versions: all-wheel drive, two-wheel drive, a Middle East export version and the all-new luxury sport utility truck - the Escalade EXT.

  • Product Life Cycle Diagram…



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Product Life Cycle

  • Although it is brand new, it belongs in the growth phase of the product life cycle.

Extension of the Escalade.

The vehicle was unveiled at the beginning of 2001 and it was not available for sale until much later in the year.


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Product Life Cycle

Implications on the EXT based on this stage are:

  • The market growth rate will be high

  • Changes to the vehicle will be moderate

  • Profitability will be high

  • At this time, the luxury sport utility truck (SUT) market is occupied by Cadillac’s EXT, the Lincoln Blackwood.

    It would be expected that there would soon be many competitors for this segment.


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Buyer Behavior

  • Individuals or groups acquiring, using, and disposing of products, services, ideas, or experiences.

  • Includes acquisition and use of information, influences, sourcing patterns.


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Buyer Behavior – Information Needs

  • Areas of knowledge required in order to make an informed and effective decision.


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Buyer Behavior – Information Needs

  • Consumer Reports / Periodicals

  • Dealer Visits

  • Internet (CarClub.com, GM BuyPower,Edmunds.com)

  • Television Advertising


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Buyer Behavior – Buying Influences

  • Conscious & Unconscious factors which contribute to a decision to buy a given product or service.

  • Social factors, geography, culture, economic conditions all contribute.


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Buyer Behavior – Buying Influences

  • Movies (Matrix II), MTV/VH1 videos (Rappers)

  • Flashy television advertising for Cadillac line of vehicles

  • Super bowl MVP Prize (Tom Brady)

  • Generous lease programs

  • NBA player ownership of vehicles


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Buyer Behavior – Sourcing

  • Relationship between purchaser and seller.

  • Traditional marketing – sellers visit buyers.

  • Reverse marketing – buyers seeks out the seller.

  • Both are common and intertwined today


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Buyer Behavior – Sourcing

  • Traditional & Reverse

    • Flashy television ads, movie-spots, lease deals all can lure in buyers

    • Buyers seek out EXT after seeing one on dealer lot, neighbor’s driveway

    • Buyer influences create sourcing patterns


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Target Demographics

  • Age : 35-55

  • Gender : 80% Male

    20% Female

  • Household Income : $125,000

  • Education : College

  • Occupation : Professional, Managerial, Entrepreneur


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A clear signal to GM

Research shows:

  • About 20 percent of luxury households own a full-size pickup

  • About 23 percent of Cadillac households own a full-size pickup, and most of those get the up level trim

The Midgate was born of customer comments saying, 'I really like having a sport-utility, and I really like having a truck, but I can't afford to have both,' it's nice to have an SUV and truck in one vehicle’


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Comparison test at Pebble Beach in Northern California

Escalade EXT Vs Lincoln Blackwood

  • Go-Getters type A personalities,out to prove that they are king of the hill probably opt for EXT

  • Successful type B personalities will choose Blackwood for its more laid back style.


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Car Maker

AverageAge

% of female Buyers

Median Income

% of college Degree

Lincoln

59

30%

$128,893

49%

Cadillac

63

30%

$130,432

50%

Lexus

52

40%

$155,622

69%

BMW

45

35%

$162,114

74%

Mercedes Benz

52

52%

$181,127

73%

Luxury Demographics


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EXT Club- Access to Stars

  • Actress Rosanna Arquette, left, checks out the Cadillac Escalade EXT at The Standard in downtown Los Angeles. To gain exposure, Cadillac and other automakers loan cars and trucks to celebrities.


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New Ad Campaign aims for boomers and youngers

  • Cadillac bidding to ditch its elderly image and draw a younger crowd

  • The "Break Through" campaign reflects Cadillac's return to its heritage of producing vehicles known for head-turning design and innovative technology.


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Escalade EXT : 2236

Blackwood : 379

U.S SalesFrom Nov 2001 – Feb 2002


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Positioning

  • Positioning Strategy

  • Relevant Brand Set of Competitive Products

    • Lincoln Blackwood

    • Chevy Avalanche

    • Dodge Ram

    • GM Sierra 1500HDGM Sierra Denali Quadrasteer

    • Ford F-Series

    • Toyota Tundra


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Positioning

  • Determinant Attributes

    • Physical

      • Reconfigurable rear cargo and expandable cargo bed

      • Powerful

      • StabiliTrak

      • Road-sensing suspension

      • On Star

    • Prestige

    • Features

    • Converts from SUT to pickup truck


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Positioning

  • Customer perception of products

    • Prestige

    • Eliteness

    • Price

    • Quality

    • Looks


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Positioning

  • Perceptual Map


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Positioning

  • Customers Most Preferred Combination of Attributes

    • Expandable: Mid-Gate allows expansion from 5 feet to 8 feet

    • Powerful engine: 345 hp-6-lt V-8, All-wheel drive, heavy duty 4-speed automatic gearbox

    • Cutting edge technology: StabiliTrak – all types of weather

    • Suspension: Road-sensing suspension adjusts from “soft” to “firm”

    • On-Star


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Positioning

  • Fit between preferences of market segments and current product position

    • Differentiation based Focus strategy

    • Narrow target

    • Upscale, urban market segments


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Positioning

  • Positioning Strategy

    • Statement

      • For upscale American families, the Cadillac Escalade EXT is a vehicle that is both functional and luxurious

    • Value Proposition

      • Target Market – upscale, urban communities

      • Benefits – convertible from luxury sports utility to pickup truck

      • Price Range – High as compared to similar vehicles


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Product – Cadillac Escalade EXT

  • Manufacturer: General Motors

  • Product Type:

    1. Luxury Sport Utility

    2. Consumer good


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Product – Cadillac Escalade EXT

  • Technology level of the product: High

  • Needs satisfied(or aimed to be satisfied):

    - Transportation needs of both people and goods

    - Luxury and comfort for its users

  • Brand strategy: Brand extension strategy


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Product - Safety and Security

  • Front and side passenger airbags

  • AWD stabilitrack: Helps maintain control over the vehicle in various types of weather

  • Ultrasonic rear parking assist: Helps in responding stationary objects behind the vehicle

  • Hydroformed framed sections:Gives additional protection in the event of collision

  • Improved structural rigidity


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Product - Technology and Performance

  • Reconfigurable midgate

  • 345-hp V8 engine

  • 7900 lb towing capacity

  • Road sensing suspension system

  • All speed traction control

  • On star luxury and leisure


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Product -Style and Convenience

  • Bose 200-watt stereo system,

    six CD changer and seven speakers

    with independent controls for two

    sets of earphones

  • Heated power seats.Nuance leather

    surface

  • Programmable seats and mirrors. Heated mirrors


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Pros

Strong engine

Innovative packaging

Passenger and cargo room

Cons

Love it or hate it styling

Poor mileage

Steep price tag

Pros and Cons




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Product – Cadillac Escalade EXT


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Pricing Strategy

  • MSRP: $49,990

  • Pricing Objectives Of The Company:

    - Target return on investment

    - Target market share

    - Maximum long/ short run profits

    - Growth and Stability


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Pricing Strategy

  • Current Pricing Strategy

    - Penetration pricing

    - Market holding pricing

    - Market oriented pricing

    - Multiple pricing for international markets


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Place

  • GM BuyPower: the fast and easy way to buy a car

  • About 75% of GM dealers, almost 6,000 participate

  • (www.gmbuypower.com), the Web site program lets consumers :

    - view the inventory of nearby GM dealers

    - view third-party comparisons

    - find up-to-the-minute rebate deals

    - get price quotes

    - apply for financing


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Place

  • Order-to-delivery cycle:

    • 71 days two years ago

    • 46 days today

    • expects to reduce the time to 35 days this year, and hopes to trim it further, to 15 to 20 days, within a few years


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Promotion

  • Advertising

    Super bowl&Olympics

  • Cadillac the official vehicle of Super Bowl,

    Pro Bowl

  • GM is an OPUS-Partner (Olympic

    Properties of the United States)


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Promotion

  • Advertising

    Cadillac and Led Zeppelin

  • Cadillac is taking a ride with

    Led Zeppelin, the classic rock

    band known for hard-driving music

  • Baby boomers are the target of this new campaign


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Promotion

  • Online Marketing

  • Websites:

    - www.gm.com,www.cadillac.com

    - www.gmbuypower.com

  • Customer database:

    - GM now has a unified database of customer profiles captured at the GM BuyPower site

    - In the past year BuyPower has helped it achieve 60,000 so-called "conquest sales". Better information about customers' buying habits helps GM sway those customers


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Promotion

  • Non-traditional promotion

    Movie-product placement – Matrix II

  • Cadillac Escalade EXT has a starring

    role as the bad guy’s wheels in next

    year’s Matrix sequel

  • The Matrix Reloaded will help provide great

    visibility among a hip, young audience for the

    vehicle that embodies Cadillac's bold new spirit


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Promotion

  • Non-traditional promotion

    Movie-product placement – Matrix II

    • Scenes with Cadillac Escalade EXT from the movie:


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Recommendations

  • Cadillac-specific Interior improvements that more differentiate vehicle from sister vehicle Chevy Avalanche:

    • ‘Unique’ instrument panel

    • Air-conditioned seats

    • Improve highway mileage

    • Entrance into vehicle could be more comfortable – powered step-rails would rock !

    • Interior styling improvements (wood trim looks horrible!)


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Recommendations – Cont’d

  • Rock n roll strategy:

    • Might be good for CTS but buyers of EXT ? Keep them as separate as possible – EXT is the ultimate American-built status machine.

    • CTS appears to be influencing an older, middle-income, *retro* audience (similar to new Ford Thunderbird)

    • EXT is a new, ‘king of kings’, unique status luxury SUT for those insanely-wealthy 20-30 something's living in or near big cities who desire the coolest rig – Los Angeles a huge market


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Recommendations – Cont’d

  • EXT shown in MTV/VH1 rap videos – this is the best advertising Cadillac could ask for – Led Zeppelin is old news – stick with CTS / Eldorado / Seville crowd.

  • Young people really dig “Matrix” and it’s music – EXT in next Matrix movie – more advertising on the ultimate set ! Keep up this trend.

  • Traditional Cadillac buyers in their 40’s, 50’s, 60’s are probably not looking at an EXT – instead luxury sports sedan or HUGE luxury car. The Escalade series is the best thing out of Cadillac since inception.