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MarketingStrategyfortheHybrid ElectricVehicleTeamofVirginiaTech
GoBig.GoFast.GoGreen

Presented to: Challenge X Outreach Board Evan Gray Outreach Coordinator, Engine Sub-Team Leader Ryan Pawlowski Electrical Sub-Team Leader Hybrid Electric Vehicle Team (HEVT) of Virginia Tech 114 Randolph Hall (MC 0238) Virginia Tech Blacksburg, VA 24061 November 13, 2007 http://www.me.vt.edu/hevt

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TableofContents

TableofContents
Executive Summary......................................................................................................................... 3

Situational Analysis .......................................................................................................................... 4 Product Overview .. ..3 Market Segmentation ... 4 Product Offering .. .4 Market Size 5 Market Share and Competitive Environment 5 Positioning .6 Tactical Marketing Plan.................................................................................................................. 7 .................................................................................................................Organizational Strategies ....7

Virginia Tech 3 Fuel Demographic Overview .7 Placement . .8 Promotion . .8 Evaluation . .8 Summary ......................................................................................................................................... 10

References......................................................................................................................................11

ExecutiveSummary
The Hybrid Electric Vehicle Team (HEVT) of Virginia Tech is one of seventeen colleges and universities participating in General Motors Challenge X Competition. Virginia Tech has participated in Challenge X for three years and hopes to finish out the final year of the competition with a focus on community outreach. The team will interact with the public in order to raise awareness of alternative fuel technologies. As a result of increased technological awareness raised through numerous outreach events, more interest in engineering and environmental concerns will be generated. There is a huge market for outreach and many opportunities to educate the public on alternative fuel and advanced vehicle technologies outside of the universitys community as well. This year, HEVT will focus on marketing the vehicle to the designated target market, as well as relevant political figures and key authorities in the community. The team plans to target a more youthful market, aiming to shape the future by educating the market in the present. HEVTs hybrid vehicle is unlike most hybrids currently on the market 1 in that it does not involve high levels of
GM will be marketing a series of full size, dual mode hybrid, flex fuel vehicles on their 1500 series chassis in late fall 2007
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consumer sacrifice such as a smaller vehicle with less power and decreased cabin space. The marketing strategy that is presented in the following report provides details for the plan that the Hybrid Electric Vehicle Team of Virginia Tech will follow to promote their vehicle. HEVT will attempt to educate their target audience in a way that is both innovative and informative. Specific strategies regarding the target audience and how they will be reached are presented below.

SituationalAnalysis
Product Overview. The Hybrid Electric Vehicle Team of Virginia Tech has spent the past three years developing, building, and refining their hybrid vehicle. The team is currently focusing on refining their vehicle by updating key powertrain components as well as collecting data and validating vehicle performance through this data to assure readiness and reliability for the final year of the Challenge X competition. Three years ago, the team was presented with a 2005 Chevrolet Equinox donated by General Motors for the Challenge X Competition. The vehicle was then completely overhauled and converted it into a hybrid, alternative fuel powered vehicle. The vehicle uses a split parallel architecture structure that relies on an internal combustion engine as well as an electric motor for power assist. The engine is a flex fuel engine that can operate on any fuel containing up to 85 percent ethanol; standard pump gas has roughly 10 percent ethanol, and HEVT normally runs their engine on E85, with an 85 percent ethanol content. The vehicle has all the standard amenities including XM radio and GMs OnStar service. Accessories like HID headlights, LED signals, side curtain airbags, and safety restraint system not only add to the vehicles appearance, but also to its safety and performance. With roughly 250 combined brake horsepower (bhp), HEVTs vehicle will go from 0 to 60 mph in approximately 8 seconds and from 50 to 70 mph in roughly 3.5 seconds. The team has been able to engineer their vehicle systems to support a higher level of performance while using 78 percent less petroleum and a 25 percent increase in efficiency. These performance levels will make HEVT very competitive when targeting the current hybrid vehicle market segment. Market Segmentation. Todays hybrid vehicle market is beginning to expand. As oil prices continue to rise and people become more open to finding alternative fuel sources, greater interest will develop toward hybrid vehicles. There are three consumer segments to consider in the hybrid market: Those who are willing to help the environment at all costs Those who are willing to help the environment until it becomes an inconvenience Those that are not concerned with the idea of hybrid vehicles

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HEVT is interested in targeting individuals who do not mind helping the environment as long as it does not become an inconvenience. Until very recently, the purchase of a hybrid vehicles meant the consumer had to make some sort of sacrifice. The hybrid either had to be smaller, slower, or have other performance restrictions associated with it, but HEVTs vehicle is different. HEVT hopes to market their vehicle to the segment that may consider living green when sacrifices are kept minimal. By providing a higher level of performance without compromising important features, HEVT is appealing to consumers desires. Product Offering. HEVTs 2005 REVLSE Equinox offers all of the features of a traditional, stock vehicle, plus a few added features that set it apart from its class. Their vehicle offers: High intensity definition (HID) headlights XM Satellite radio In dash DVD/computer interface In dash 6-disc CD changer Sliding rear seat 185 hp, turbocharged, inline 4-cylinder engine Five speed manual transmission AWD Electric Assist Mode Flex fuel capable Lightweight, high strength polycarbonate windows LED signal bulbs Back-up sensors

By offering features such as those listed above, HEVT hopes to successfully reach the market segment that is interested sustaining the environment. Vehicle features that increase luxury, capability, and safety will appeal to an audience that is concerned with potential sacrifices that are perceived to come with purchasing from the hybrid market. HEVT can increase awareness and interest in hybrid and alternative fuel technology vehicles by reducing consumer sacrifices. Market Size. Virginia Tech is located in Blacksburg, VA, a small town nestled in the Blue Ridge Mountains at roughly 2000 feet above sea level. Blacksburg is located about 42 miles southwest of Roanoke, VA and about 156 miles northwest of Greensboro, NC. Approximately 39,700 people call Blacksburg home, of these, 60 percent are between the ages of 16 and 24. In an effort to expand market size due to the rural location of Virginia Tech, HEVT may travel and market to surrounding regions and metropolitan areas. Hybrids are not heavily marketed through any media channels in the Blacksburg area.

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HEVT hopes to increase advanced technology vehicles and alternative fuel awareness to the more rural areas of Southwest Virginia. Market Share and Competitive Environment. In a nationwide ranking, Virginia is seventh in the number of newly registered vehicles for the year 2007. 2 Based on this value, HEVT is targeting a state that is becoming one of the most rapidly expanding hybrid markets in the country. According to census data, there are roughly 1.3 hybrids per 1000 Virginia state residents. 3 In the area directly surrounding Virginia Tech, specifically Blacksburg and Christiansburg, the number of hybrids on the road is lower than the state average. Emerging interest in the hybrid market of Virginia will help HEVT announce and showcase their vehicle. However, this high level of interest will also result in a large competitive market. HEVTs market is one of great potential for expansion, but also one that will require focus and targeting in order to spread interest and promote alternative fuel technologies while maintaining a competitive advantage in the hybrid market. Companies with vehicles on the market in direct competition with HEVTs vehicle include Toyota, Ford, and GM. A specific breakdown of their share of the market nationwide is shown in Figure 1.

Figure 1. Competitive breakdown of crossover hybrid vehicle market by vehicle and automotive manufacturer.

There are five other vehicles currently available in the marketplace that HEVT considers to be their key competition and are built on a similar platform. This market segment is built around a crossover vehicle classification. A crossover
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Hybridcars.com Hybridcars.com

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vehicle is commonly built on smaller chassis, but strives to offer much of the same functionality of an SUV without the accompanying size and price. They all share similar chassis sizes, performance, and target markets. Ford currently has 57.6 percent of the crossover hybrid vehicle market with the Ford Escape and the Mercury Mariner. Toyota is close behind them with 40.8 percent secured by the Lexus RX 400h and the Toyota Highlander. Currently GM only carries 1.6 percent of the market with their Saturn Vue Greenline. 4 HEVT plans to differentiate through the advanced features their vehicle offers; innovation may also play a role in the public interest factor. People tend to remain brand loyal if they are satisfied with the overall performance of their previous vehicle; therefore, it is imperative that HEVT considers GM vehicle owners while marketing in order to expand market share and overcome competition. Positioning. The 2005 REVLSE Equinox will enter the hybrid market as a competitor in the crossover vehicle platform. HEVT will position the vehicle as a fully equipped vehicle with many standard features that would be considered options on other vehicles. The car has a split parallel hybrid electric vehicle with a turbocharged inline four cylinder engine. The vehicle has performance characteristics that will allow it to reach 60 mph from resting in 8 seconds and propel from 50 to70 mph in just over three. HEVTs biggest competitor is the Toyota Highlander with aspects comparable to its own. The Highlander has over 270 combined horsepower and will reach 60 mph in 7.5 seconds. The Highlander is the only vehicle that can compete with HEVTs vehicle in performance. Because the target audience expects no sacrifices in performance, HEVT plans to position its vehicle as one hybrid that does not sacrifice features or performance relative to other hybrids in the market. HEVT also expects many performance enthusiasts to perceive the REVLSE Equinox as being a market leader as well as the only hybrid crossover vehicle available with a manual transmission.

TacticalMarketingPlan
Hybrid vehicles save over 100,000 gallons of gasoline per day. 5 In an environment where nonrenewable fuel sources such as fossil fuels are being exhausted, a move toward sustainability is eminent, and HEVT plans to mirror that trend in the marketing of their vehicle. Organizational Strategies. In order to effectively promote their vehicle, HEVT will need to educate their target audience, as well as public officials and
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Hybridcars.com Physorg.com

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policy makers, with regard to the benefits of alternative fuels and advanced vehicle technology. Because Blacksburg is surrounded by a rural area, advanced technology vehicles and alternative fuels still seem unnecessary to individuals living outside of the university community. HEVT expects to develop a plan to bring their local community up to par with the rest of the states hybrid use. Hybrid should be a household name and HEVT hopes to make this happen with an aggressive marketing strategy, and Southwest Virginia provides a large growth potential. Targeting consumers with hybrids is not currently a priority in the Blacksburg area so HEVTs vehicle will target the surrounding communities in an attempt to establish growth in the relatively new hybrid market. Fuel Demographic Overview. The 2005 REVLSE Equinox will target the previously described hybrid market of Southwest Virginia. HEVTs vehicle is competitively placed within this market due to the features it offers and the open ended availability of a virtually uninformed audience. HEVT plans to use the performance characteristics previously described to position their product and target a younger, upwardly mobile population segment that will be willing to help the environment when convenient. With the low number of hybrids currently present in this market, it is not surprising that there is a lack of an infrastructure for alternative fuels. That network is slowly rising, and plans are in the system to bring an E85 supplying station to the Roanoke area before the end of the 2007 calendar year. The closest sources of ethanol to Virginia Tech are currently located in Charlotte, NC and the Washington, DC area. However, Underwriters Laboratory (UL) representatives say that they are finalizing studies on the corrosive effects on E85 and will begin to offer certifications by the end of 2007 6 . The release of E85 certifications is expected to expand the E85 distribution infrastructure which makes hybrid vehicles a more feasible vehicle alternative for the Southwest region of Virginia. The distribution of E85 will also be aided by national legislation, as President Bush is calling for a twenty percent reduction in Americas oil consumption within a decade. Placement. By placing their vehicle in an emerging market, with an emerging support infrastructure, HEVT hopes to use the well established name of Virginia Tech, in conjunction with General Motors and the Challenge X Competition, to introduce and differentiate their vehicle and its benefits in Southwest Virginia. HEVT is going to position their vehicle, first, as a competitor with traditional non-hybrid vehicles not lacking in performance and then as a benefit to the environment. HEVT is targeting people who would not normally consider purchasing a hybrid vehicle. HEVTs performance and luxury features will assist with the of promotion and wow factor to initiate public interest. By

E85 Ethanol Fuel

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focusing on performance, consumers will be confident that HEVTs hybrid will not compromise their vehicle expectations. Promotion. In order to promote the benefits of HEVTs hybrid to their target audience, HEVT will be visiting a number of schools with youth oriented presentations and materials. Youth will have a chance to learn about the vehicle, compete for prizes, and participate in vehicle demonstrations. HEVT will attend several Virginia Tech College of Engineering functions, including alumni tailgates and university donor events. The team recently attended the Virginia State Fair and interacted with roughly 250,000 members of the general public, 16,000 of which were K-12 students. This event also facilitated interaction with local officials and law makers, including Virginia governor, Tim Kaine. The vehicle will also be featured in several local energy conservation awareness events. HEVT will feature articles in an engineering magazine published by Virginia Tech, as well as a campus newspaper, and in local news publications. These publications will include hybrid technology fliers and questionnaires. HEVT has plans to produce a commercial to promote their vehicle on their website and possibly on local television stations. They also plan on expanding their public domain through attempts to receive spots on television and news stations. Virginia Techs vehicle team has hosted several tours of their facility, and plan on interacting with the university and with media thorough ride and drive events. HEVT will also aim to provide some out of state events, either in collaboration with other schools, or independently with various engineering and automotive facilities. Participation in local dealer events to promote hybrid technology at a local GM dealer will also take place to enhance awareness about the availability of some no excuse hybrids introduced this fall from GM. In addition, HEVT will revise its website to include current data and links, as well as pictures and documentation of outreach events in an effort to place the team on a global playing field. Evaluation. In order to evaluate success, HEVT will monitor their performance in several ways. First, the team will distribute a questionnaire to be sent to all event hosts in order to gauge their thoughts on the teams presence and overall impact at the event. Second, HEVT will also monitor website hits and responses to business cards distributed at various events. Third, following media events, requests will be made to receive viewing feedback figures from that specific media channel in order to measure how effective the teams message was. Finally, the most valuable feedback will be emails and comments from younger members of HEVTs target audiencethe youth that the team is specifically targeting in order to promote future interest and acceptance of hybrid vehicles and alternative fuels.

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Summary
HEVT will be focusing on the promotion of their vehicle based on its outstanding performance in the previous three years of the four year Challenge X competition. The excellent track record of the 2005 REVLSE Chevy Equinox will spark a large interest from the general public and will aid in the education for advanced technology vehicles. Once a substantial response is obtained through various modes of feedback, the team will begin focusing on improving the strong performance aspects of the car. HEVT has developed a hybrid alternative fuel vehicle that competes with the current hybrid crossover competitor, the Toyota Highlander. The market in Southwest Virginia will target those who acknowledge the existence of hybrid technologies but require more from their vehicle than just increased fuel efficiency. Despite the strong presence of HEVTs vehicle in the expanding market, some limitations exist in the distribution of the E85 alternative fuel; however, the dual fuel capability of the REVLSE in conjunction with new legislation and presidential promises will aid in the building of an E85 infrastructure. This year, the team will focus on reaching their target market while educating youth and future car buyers of Southwest Virginia. Local and national media spotlights will be utilized to expand their market and reach a new population segment.

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References
US Hybrid Sales for September 2007. (2007). HybridCars.com. Retrieved October 16, 2007, from http://hybridcars.com/market-dashboard/sep07-us-sales

NREL Estimates US Hybrid Electric Vehicle Fuel Savings. (2007, June 21). Physorg.com. Retrieved October 16, 2007, from http://www.physorg.com/news101660099

E85 Pump Certification By End Of Year. (2007, April 25). E85 Ethanol Fuel. Retrieved October 16, 2007, from http://www.e85safety.com/index.php?/archives/44-E85-Fuel- Pump-Certification-ByEnd-Of-Year.html

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AppendixA:Marketing/OutreachBudget
Date 9/15/07 Semester 9/27/07-10/7/07 11/1/07-11/3/07 11/9/2007 Semester Semester Event Description College of Engineering VT vs. Ohio Tailgate Ware Lab Youth Tours Virginia State Fair Association of Energy Conservation Professionals (AECP) Convention Ware Lab Visit with Donehower's (Ware Lab Endowment) and Swiss Embassador to US HEVT Team Polo Shirts HEVT Team Business Cards HEVT Attendance Travel Cost Event Cost Total Cost 4 members N/A $80.00 $80.00 15 members N/A N/A N/A 21 members $441.00* $264.00** $705.00 13 members $60.67 N/A $60.67 6 members N/A N/A N/A 21 members N/A $588.00 $588.00 21 members N/A $25.00 $25.00 Total Cost $1,458.67
*Assuming an average gas price of $2.80 per gallon, and an average fuel economy of 15 mpg, with 4 students per vehicle ** With an average cost per student per day of $22.00, with 4 HEVT team members working each shift, with 3 days per shift

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