Week #4 – STDP and the Western United States

This week I wrapped up a vehicle development trip with a few prototype vehicles that had me traveling from Los Angeles to Las Vegas, via Big Bear, CA and Death Valley National Park.  It occurred to me that Las Vegas is a marketing mecca of sorts.  It’s a city in the middle of the desert, and its sole purpose is as a resort destination.  I picked up a pamphlet, and the city officially markets itself as “The Entertainment Capital of the World”, and as “Sin City”.  It’s amazing what the marketing efforts have done to create a world-wide reputation for the city and the businesses that are located there.

But back to STDP – this process is new for me, so I appreciated the readings and video on applying segmentation and targeting a specific faction for a product or service.  I believe the concept of creating a persona is a very powerful tool, and at General Motors we do this for each vehicle (I just didn’t know what we were actually doing until I read the material this week!).  We routinely describe a target customer for a vehicle, along with their typical demographic attributes, interests, hobbies, and preferences.

Segmentation allows a company to break up the market as a whole, and concentrate on the target market it believes it can generate the most interest with (read, sales).  Marketing media can then be specifically tailored to that target market, which helps develop consumer awareness, perceived value for the product, and, if you’re lucky, facilitate consumer obsession with your product.  A company must carefully consider which segment(s) it wants to target by looking at the potential fit between each segment and the company’s overall goals, mission, financial priorities, and capabilities.

Once a segment(s) is chosen, a company must decide how to position itself as a way to differentiate the product or service from those of competitors.  A company’s position must be exemplified by its marketing mix, in order to effectively define that position in the minds of the target customers.

As I just finished traveling through the western United States, let us consider hamburger restaurants - specifically, McDonald’s, In-N-Out Burger, and Red Robin.  All three were within walking distance of my hotel in Los Angeles, but they are quite different from one another.  McDonald’s offers convenient and fast service, a historically well-known and rather large menu, and drive-thru service.  In-N-Out Burger offers a small menu (only 3 different hamburgers, fries, and drinks), an emphasis on quality and taste with never-frozen patties that are locally made and cooked to order, a touch of a 50’s-style dining experience, and drive-thru service as well.  Finally, Red Robin strives to serve “gourmet burgers”, has an extensive menu, and offers sit-down, waiter service only. 

Each of these restaurants attempts to serve a different target segment(s), and consequently, they have positioned themselves accordingly with their approaches to food, service, and quality/taste.  McDonald’s is aiming for the customer who wants fast service, and a quick dining experience.  In-N-Out Burger serves the customer who wants a no-frills, great-tasting, quality burger, with relatively fast service (hence the name).  Finally, Red Robin appeals to the customer who wants to sit down to enjoy a customized, specialty burger.  All three succeed because they have differentiated themselves by positioning their restaurant differently in the minds of customers, and each has created value for their restaurant's “brand”.

As we continue onward, I look forward to learning more about how to market these positioning differences to the customer, and how to create a marketing mix strategy that will create perceived value with the customer.

Week #3: Still Obsessing Over the Consumer - Market Research

Great week!  I really enjoyed the videos, particularly the one by Hans Rosling!  Chapter 3 in the book was also enlightening – I hadn’t thought of defining a market at the five basic levels presented:  potential market, available market, qualified available market, served or target market, and finally, the penetrated market.

Chevrolet Volt

At General Motors, we are a data driven company.  We use enormous amounts of information to drive our decisions.  Whether it’s a high level portfolio decision or a down-in-the-trenches engineering decision regarding a single part on a vehicle, the expectation is to research the choices and present the data to support the decision. 

With regards to our customers, we routinely collect this data from many different sources.  Typically these sources include customer clinics, external surveys such as the New Car Buyers Survey (NCBS) and JD Power Survey, internal surveys of new customers, extensive media reviews (magazines such as Consumer Reports, newspapers, internet reviews, etc.), and most recently, customer profiling.  The real challenge is distilling all of this information down to a meaningful summary so it can be used during the decision making process.  Dr. Rosling’s video addresses just this concern – that obtaining and displaying data is very difficult, yet extremely important.  I was thoroughly impressed with his newfound ways to display data and trends over time.  Having the data is one thing, but communicating it to your audience is another.  Dr. Rosling’s techniques are awesome – his audience is engaged and is immediately able to visualize the data and associated historical trends.

In constructing our marketing plan, I will utilize many different sources of data.  First, sales numbers are readily available on corporate websites.  This will allow me to calculate and understand the current market share results.  Secondly, existing competitors will be explored – both their current/historical products and marketing techniques.  Third, many media outlets will be explored to gain insight into customers in the alternative fuel vehicle market.  These will consist of magazines such as Consumer Reports to obtain important customer feedback and to help profile our typical customers and their expectations.  Important customer data such as household income, geographical location, lifestyle choices, and attitudes is also readily available from internet sources (although the source must be carefully considered).

The video by Malcolm Gladwell reinforced an anecdote from our former VP of Engineering Product Development – Bob Lutz.  I heard Lutz mention this in his internal speeches several times, as well as in his business book, Guts.  He states that customers don’t know what they want, so we have to tell them what they want and give/sell it to them.  Gladwell comes to a similar conclusion in the video, and I really enjoyed the stories about Pepsi and Ragu/Prego spaghetti sauce.  I look forward to watching more videos from both Gladwell and Rosling.



Cadillac Converj Hybrid Concept Car



Lastly, I enjoyed the point about pricing to engage customers.  I would like to research this further, as I think there is merit to understanding this more in-depth and in trying to define where the “tipping point” may be… ie, how high is high enough and how high is too much to stagnate sales.  I do believe that customers can be biased towards a product just by its price point.  Take Old Navy/Gap/Banana Republic for instance – I’m sure most of the clothes are sourced from the same materials and factories, but the higher priced Gap and Banana Republic lines command a thought of higher quality merely by their price point.  In the auto industry in which I work, I think this is true as well with brands such as Lexus (really just Toyota), Acura (Honda), Infiniti (Nissan), and Cadillac (GM) being outlets for re-badged and slightly re-engineered products that produce demand in part because of their higher prices that infer quality and sophistication.

Week #2 - Obsess Over the Consumer

This week’s reading has given me some excellent insight into looking at the internal and external environments in which I operate.  I work for General Motors in Product Development, so I am directly connected to our products (vehicles) and the content, and integration of that content together in the vehicle.  I certainly look at technological trends, and do a great job of benchmarking the competition to stay aware of the competitive landscape.  I’m also always keenly aware of economic trends, as they affect pricing, and therefore content that goes in the vehicle.  However, I don’t routinely keep a finger placed on the pulse of ecological, demographic, social-cultural, political-legal trends.  I aim to research more in these areas and try to integrate them into my daily decisions.

In regards to mission statements, I think it’s very dangerous to have a product-based focus.  Yes, it can result in a great product, but there may not be anyone to buy that product!  At GM, we’ve certainly had some examples of this in the past and it’s easy to see why – throw a bunch of engineers at something and they will optimize it.  But… that optimized product may not be competitive in the marketplace!  General Motors has a mission statement:  “Design, build, and sell the world’s best vehicles.”  This mission permeates throughout the company, and is publicly stated as well.  It gets translated into specifications and documents that shape our vehicles with the competition and customer in mind, so I believe it does work to our advantage as a smart mission statement.

Recently the US federal government imposed new Corporate Average Fuel Economy (CAFÉ) standards for all auto manufacturers that sell vehicles in the US market.  These standards aim to boost fuel economy to unheard of levels.  The new standards will force manufacturers to develop and implement both clean diesel and hybrid technology in all vehicle lines, from small cars to full size trucks.  As a result, the implementation of this technology will increase the cost to build the vehicles, but it remains to be seen if consumers will accept paying higher prices for this technology.  Therefore, the overall effect may be lower profit markets across the board in the automotive industry.

Similarly, the federal government recently mandated the use of electronic stability control (ESC) and measures the performance using a federal motor vehicle safety standard procedure - FMVSS126.  All new vehicles sold in the US must comply.  The result of this legislation was a full development plan for all vehicle lines to include the part in the vehicle, develop and tune the system, and validate that it meets FMVSS standards.  As a result, many new employees were needed to meet this need, as well as increased parts cost that is eventually passed along to the consumer.  In this case, the number of accidents that can be avoided was seen as the driving factor for the National Highway Traffic Safety Administration.

I returned to the Levitt article and re-read it.  The information is definitely still as relevant today as when it was written.  As it applies to General Motors, our customers expect that their vehicles will serve as quality, reliable transportation for years to come.  In addition, many customers aim to satisfy a need or want with their vehicle – be it a mid-life crisis, “green” environmentally-friendly transportation, or as a fashion statement.  Our Cadillac customers exemplify this last characteristic – they are historically driven by fashion more than by other factors such as fuel economy or practicality.

In closing for this week, I think it’s very important to develop a superior product internally, but to always keep an eye on the customer and the trends and regulations that are shaping their buying habits.

Week #1

I’ve always been interested in marketing, as I think it touches all of us on a day-to-day basis.  You can’t go outside of your house, or even turn on the radio or television inside your house, without being bombarded with commercials, billboards, newspapers, magazines, etc. that are trying to establish some sort of relationship between you (the customer) and a business.  My background in engineering has been understandably light in marketing coursework, but I have dabbled in marketing my own photography business and find the topic to be fascinating.  I also work at General Motors, where I have had lots of interaction with our customers.  I’m eager to begin this course and get a more in-depth understanding of marketing, and how I can use it in both my professional and personal activities.

Reading Chapter 1 in the text was an excellent way to get started with the class.  I enjoyed the refresher on the 4 P’s (Product, Price, Placement, and Promotion) and the SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).  The video from Jeff Bezos was, likewise, very good.  I enjoyed his initial comment on their first website mistake – allowing customers to order a negative quantity of books and then crediting the account!  In all seriousness, I wrote down his short-list to keep in my office at work, because I think it can apply to many other aspects of a business in addition to marketing:

1)      Obsess over the customer, not competitors (although keep your eye on the competitors)

2)      Invent

3)      Think long term

4)      It’s always “Day 1”

As an engineer at General Motors, I design, develop, and fine-tune the suspensions in our vehicles.  Therefore, I have the ability to alter the attributes that customers experience every day – how does the vehicle ride, how does it handle, is it maneuverable, does it meet the quality and value expectations for that vehicle class/segment, and how is the long-term durability and reliability?  I do get input from marketing, and I use it when making my decisions.  I think this relationship can be expanded, however, as I have access to quite a lot of customer data.  I’m looking forward to learning more as the semester goes on.

What is Marketing?

Marketing is... the process of creating and executing a strategy to connect businesses and their customers. The connection made via marketing can be either short or long-term, and can benefit both parties involved.
Businesses aim to connect with their customers to sell their products, brands, and to create an identity. Customers seek to connect with businesses as a way to find and obtain the products they need and desire.