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Chapter 3 Assignment
Auto Concept Case 3.2
Case 3.2 Integrated Case Auto Concepts
Auto Concepts is a new division of a large automobile manufacturer that has been slowly losing market
share to its competitors. Auto Concepts was created to reclaim the manufacturer’s highly competitive
position in the auto industry by developing new models that are more competitive in today’s new car
market.
Auto Concepts now has five different models that are feasible in terms of engineering and production.
The CEO, Nick Thomas, has assigned tentative model names to them. Here are their various features
including number of seats, mileage, MSRP (manufacturer’s suggested retail price), fuel/CO2 and smog
rating (1 = worst, 10 = best).
“Super Cycle,” One-Seat All Electric, 350 miles per charge, estimated MSRP: $18,000–$22,000; range 200
miles; Fuel/CO2 rating: 10; Smog rating: 10.
“Runabout Sport,” Two-Seat All Electric, 250 miles per charge, estimated MSRP $28,000–$34,000;
Fuel/CO2 rating: 10; Smog rating: 10.
“Runabout with Stowage,” Two-Seat Plug-in Hybrid (electric and gasoline), 150 miles per charge, 100
miles per fill-up, estimated MSRP $30,000–$36,000, Fuel/CO2 rating: 9; Smog rating: 7.
“Economy Hybrid,” Four- or Six-Seat (stowage converts to 2 seats) Hybrid (electric & gasoline), 100 miles
per charge, 200 miles per fill-up; estimated MSRP $36,000–$45,000, Fuel/CO2 rating: 6; Smog rating: 5.
“Economy Gasoline,” Five-Seat Economy Gasoline, mpg 50; estimated MSRP $38,000–$42,000, Fuel/CO2
rating: 5; Smog rating: 3.
Nick knows that no single model will have universal appeal to a huge market. Rather, different models
will appeal to market segments, and Auto Concepts will be sharing those segments with other able
competitors that are working just as hard to develop car models that satisfy consumer needs in those
segments. In other words, Auto Concepts wants to reach target markets for the models it produces
without wasting promotional dollars on those who aren’t interested in a given model. For example, if
the company decides to produce a model, a decision must be made in terms of choosing among media
types (TV, radio, magazines, newspaper, social media) in which to promote the product. Nick would like
to know each market segment’s media habits. Which TV show types do most people in each market
prefer? Radio genres? Magazine types? Sections of local newspapers? Also, the marketing department
has begun spending large sums of the budget on online promotions. Nick wants to know which market
segments he can reach through blogs, content communities such as YouTube, social network sites such
as Facebook, and online games and virtual worlds.
Knowing that consumers like a medium is not enough. For example, Nick may learn that the target
market for a model prefers one type of magazine over another, but there are many choices of
magazines within that type. Knowledge of the demographic profiles of the target market segments can
be helpful in selecting one newspaper, one magazine, or one social medium for a selected market.
Because all media provide information to potential advertisers on the demographics they reach, Auto
Concepts should have a demographic profile of each market segment it attempts to target. To make the
most of that information, the carmaker needs information on the demographics of those who most
desire each model: gender, age, size of hometown or city, marital status, number of people in family,
education, income, and dwelling type.
Auto Concepts is making a major effort to reduce carbon emissions by moving to electric propulsion
systems of various types; should that effort be a prominent part of its positioning statement in
promotions? Nick gets a lot of mixed information in the general information environment about global
warming. He wants to know what consumers think about two issues: (1) Are they taking personal
responsibility for fuel economy? (2) Are they worried about global warming?
Finally, there is the Internet of Things factor: what connections do consumers expect and desire on the
autos of the future? Do they wish for self- or assisted-driving features, info-tainment (and if so, of what
types?), dashboard diagnostic features, or smartphone driving aids?
Assume that Nick Thomas decides to conduct marketing research and that the marketing researcher
agrees with the problems stated in this case.
1) State the problems.
2) Write the research objective for one of your problems defined in your answer to the first question.
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