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MK1-140-I

LAUNCHING THE NISSAN LEAF IN GERMANY


Original written by Professor Ramon Diaz-Bernardo, Professor of Marketing at IE Business School, and Megan C. Goldin, IE
Business School MBA.
Original version, 16 June 2010, modified 11 June 2015.
Published by IE Publishing Department. María de Molina 13, 28006 – Madrid, Spain.
©2010 IE. Total or partial publication of this document without the express, written consent of IE is prohibited.

It was January 2012, The Marketing Director of Nissan Germany looked out at the night-time city
skyline from his office window at Nissan Motor’s main offices in Nuess, Germany, and rubbed his
weary eyes. He was still jetlagged from his trip to Nissan’s headquarters in Yokohama, Japan and
the weight of responsibility of the project he had been charged with weighed heavily on him.

Nissan was about to launch the world’s first mass market electric car in only a few months time in
Japan and the United States. The car was called the Nissan LEAF, which stood for Leading,
Environmentally Friendly, Affordable, Family car. It was a fully electric vehicle, not a hybrid, with five
doors and five seats. Auto magazine reviewers had described the car as being almost a mid-sized
vehicle. Unlike other electric car models with futuristic designs, the LEAF looked like most other
family cars on the market.

At his meetings in Japan, Nissan’s senior management told The Marketing Director of Nissan
Germany that Germany would be the springboard for the LEAF’s European launch. A successful
launch in Germany would give a firm foundation for Nissan to dominate the electric car market in
Europe. While the electric car market was still emerging, some auto analysts believed that in the not
too distant future, most cars would be electric. The Marketing Director’s job was to devise a strategic
marketing plan to launch the LEAF in Germany, which was Europe’s largest car market but also its
most challenging. The objective was to sell 2,000 units of the car in Germany in the first year of
operation. His authorized marketing budget was 2.5 million Euros.

Nissan’s senior management believed that if its electric vehicle was successful in Germany then the
car could easily conquer the rest of Europe. The Marketing Director of Nissan Germany was given
two months to prepare a marketing plan for the launch of the Nissan LEAF in Germany in early 2012.
As the Marketing Director of Nissan Germany began to collect his thoughts about how best to
introduce the car into the German market, he started jotting down some of the obstacles in Nissan’s
path. He wondered about the best marketing strategy and the best marketing mix to circumvent these
obstacles in order to successfully launch the LEAF in one of the world’s toughest auto markets.

COMPANY BACKGROUND

Nissan Motors was a multinational automotive company with its headquarters in Nishi-ku, Yokohama,
Japan. In 1999, a financially troubled Nissan, almost $20 billion in debt, entered into an alliance with

This material is authorized to be used exclusively within IE Business School’s Coursera course “The Marketing Plan” by prof.
Ramón Diaz-Bernardo. Any other use is prohibited unless granted explicit authorization by IE Business School.


The case was developed solely as the basis for class discussion. The authors do not intend to illustrate effective or ineffective
handling of a managerial situation. The case is based on public sources of information, the characters, situations and
opinions presented in the case are fictional and the information presented reflects the authors’ interpretation of events
and public information and serves merely to provide opportunities for class discussion.

1
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LAUNCHING THE NISSAN LEAF IN GERMANY MK1-140-I

French carmaker Renault S.A. which owned about 44% of Nissan as of 1998. Renault appointed its
own CEO Carlos Ghosn as the head of Nissan Motors and Ghosn immediately embarked on a
campaign to turn the company around with what he termed the “Nissan Revival Plan”. It was based
on findings that had concluded that part of Nissan’s monetary woes were the results of a lack of
sense of urgency and a lack of customer orientation.

The plan worked. By 2005, Ghosn announced that Nissan had enjoyed a record year in terms of
revenues, operating profit, net income, sales volume, and production. Brazilian-born Ghosn, who
started his career as an engineer with Michelin, took on near legendary status within the company
for turning Nissan around.

In, 2010 Nissan sold around 600,000 vehicles in 40 markets in Western and Eastern Europe.
Nissan’s biggest market in Europe was the UK, followed by Germany and Italy. Germany was a fast
growing market, and Nissan sold 209% more cars in Germany in the first month of 201 than it did in
the same month in 2010.12

NISSAN LEAF

The zero carbon emissions LEAF car was intended to be the first in a range of mass market electric
vehicles produced by Nissan. It was a key part of what some industry experts perceived as a high
risk gamble by Nissan whose CEO Carlos Ghosn was betting that electric vehicles would become a
dominant auto technology in the future. He believed electric vehicles would displace ordinary
combustion cars due to rising oil prices, which experts predicted would reach the $200 a barrel mark
in the next few years, as well as growing awareness of climate change and the need to cut carbon
emissions.

While Toyota and other car firms focused on developing lines of hybrid vehicles that ran on a
combination of electric and fuel engines, Ghosn put Nissan’s resources into developing pure electric
cars. If his gamble succeeded, then Nissan could achieve a first mover advantage in electric vehicles
and dominate the automotive industry after years of struggling against competitors such as Toyota,
Honda and Volkswagen.

Some industry analysts predicted that electric vehicles would revolutionize the auto industry and
bring the era of internal combustion engine cars to an end.3 Other experts were not so sure, pointing
to the fact that after years in the market hybrid cars, which were a combination of fuel and battery
powered cars, still only captured about 1-2% of the car market.

Nevertheless, Ghosn pushed ahead with his vision. He has pledged to spend $6 billion on electric
vehicle technology from 2007 to 2012. The amount was equal to the combined annual research and
development budgets at Nissan and Renault.4 He said he expected that electric vehicles would make
up 10% of total car sales by 2020 which would work out to be about 7 million cars a year.

Electric cars are vehicles that are propelled by electricity either in the form of a battery or other
methods that may come into use in the future such as fuel cells or components that store kinetic
energy. They were popular in the early 20th century but fell out of favor by the 1930s once gasoline
cars were introduced. Today’s electric vehicles are powered by onboard batteries and the latest
vehicles use lithium batteries.

This material is authorized to be used exclusively within IE Business School’s Coursera course “The Marketing Plan” by prof.
Ramón Diaz-Bernardo. Any other use is prohibited unless granted explicit authorization by IE Business School.
1
http://europeanmotornews.com/2010/02/04/nissans-market-share-in-europe-highest-for-12-months/
2
http://www.nissaneurope-
newsbureau.com/nissanmedia/front?controller=SubRubrik&id=nissan_europe_press_room_10772091931250/news_an
d_events_10772871591872/presse_releases_10781508884370/corporate_10781511772180&pubId=nissan_s_market_
share_hits____for_third_time_in___months_125993390627148
3
HSBC Global Autos report 13 October 2010
4
http://www.bloomberg.com/apps/news?pid=20601109&sid=aJEVrzt2t.8o

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LAUNCHING THE NISSAN LEAF IN GERMANY MK1-140-I

Ghosn said that in order to change the industry, electric vehicles would need to be “affordable, cool,
attractive and fun to drive.”5 After years of research and a large R&D investment the result was the
Nissan LEAF.

The Nissan LEAF was a 5-seat sedan which was about the size of a Volkswagen Golf or a Renault
Megane. It had an 80 kilowatt electric motor with about 110 horsepower that drew its power from a
lithium-ion battery pack. The lithium battery was very expensive to produce and estimates suggested
that its manufacturing costs were as much as half the cost of the car itself. The battery provided
enough power for the LEAF to achieve a top speed of 140 kilometers per hour, and a range estimated
by Nissan at 160 kilometers, that according to Nissan would cover the driving requirements of 70%
of all the drivers.

The battery could be charged with 440 Volt, 220 Volt and 110 Volt sources. With 440 Volts, it could
be charged to 80% capacity in about 30 minutes with a special quick charger that sends 440/480 volt
direct current to the battery. With 220 Volt, that is the regular voltage in Europe, it could be charged
in 4 hours, and in North America and Japan, using standard household 110 Volt outlets, it could be
charged in 8 hours. This meant that depending on the price per kWh a full charge of the car battery
done in a household in Europe could cost between 1.74€ and 3.89€.

Since electric cars do not make sounds, the LEAF was fitted with a digital futuristic noise to ensure
that pedestrians heard it coming. It also included an advanced IT system that would be connected to
a global data centre that would provide support, information and even entertainment. A dash-
mounted monitor would display the LEAF's remaining electrical power, in addition to showing a
selection of nearby charging stations. A mobile phone could be used to conduct such functions as
turning on the air conditioner and heater and setting battery charging functions. An on-board remote-
controlled timer could also be pre-programmed to recharge batteries. Indeed drivers would constantly
be told how much battery life they had left and how long and to which destinations they could drive
before the car required a recharge.

The LEAF production was planned to begin in 2010 in a Nissan production plant in Oppama, Japan,
with a second production facility being built in Tennessee, USA. Nissan planned to start selling the
LEAF in Japan and in the USA in early 2011 and Germany would follow shortly after.

THE GERMAN CAR MARKET

Germany was Europe’s largest car market with more than 3.8 Million cars sold in 2010. Germany’s
population was about 82 million of which 60% was aged between 18 and 65. The median age was
43.8 years. With a per capita GDP of US$39,442 in 2010 and around 32 million households, Germany
had one of the highest per capita incomes in Europe. Its per capita car ownership was also among
the highest in Europe, with 546 cars owned per 1,000 people.

The home of the world’s leading car makers -- BMW, Daimler Benz and Volkswagen -- Germans
were perhaps not surprisingly loyal to German-made cars and technology. German car makers
controlled about 50% of the German car market. According to 2010 figures, Volkswagen was the
biggest selling car brand in Germany, followed by Daimler Benz, and then BMW/Mini. Opel and Audi
came next followed by Ford. Nissan’s partner Renault & Dacia came in at 7th place. Nissan was in
16th place with just 1.5% of market share, well below Asian car maker rivals Toyota, Mazda and
Hyundai. Nissan sold 45,746 cars in 2010 in Germany. But preliminary figures from the start of 2010,
showed Nissan leaping up with a 3 percent market share following a booming year for car sales in
Germany after the government gave incentives to boost new car sales in a bid to mitigate the effects
of the global financial crisis.

A substantial number of German car owners leased cars either as part of their employment contracts
or through personal financing arrangements. The leasing market in Germany was huge with the total

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5
http://www.msnbc.msn.com/id/34131516/ns/business-autos/

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volume of leasing contracts for vehicles reaching about 11 billion Euros in 2010. Industry experts
said that more than 60% of the value of all investments in new cars was made via leasing contracts
in Germany. This meant about 1 million cars were sold on leasing contracts in Germany in 2010.
Corporate leases for cars were popular also because employees were not taxed on the benefits.
However, company cars were seen as a status symbol and employees were used to driving large
luxury cars that would power along Germany’s Autobahn.

Germany’s government issued a report in August 2009 called the German Federal Government’s
National Electromobility Plan which detailed its commitment towards low or zero emissions vehicles.
The report addressed issues such as the need to set up battery charging infrastructure and the
possibility of subsidies for zero emissions vehicles. The report allocated 500 million Euros towards
promoting low or zero emissions vehicles. The government had already launched a plan to reduce
the country’s carbon dioxide emissions by 40 percent by 2020 compared with 1990 levels. Electric
cars produced zero emissions and with 14% of Germany’s emissions coming from cars, the
possibility of lowering emissions through the widespread use of electric cars was appealing to
Germany which had ambitious targets to lower its national carbon emissions.

This was a good sign for Nissan as it showed there was government support. On the other hand,
The Marketing Director of Nissan Germany worried that perhaps the government’s assistance
towards car battery technology might prompt German car makers, who had so far been slow to
recognize the potential of this technology, to launch their own lines of electric vehicles.

THE COMPETITION

Nissan was not alone in developing its electric vehicles, although it was the first to develop a fully
electric car that looks like a regular family hatchback and that was aimed at the mass market with an
affordable price tag. Other companies were either developing hybrid cars or small, futuristic vehicles
with price tags well above that of ordinary cars and unsuitable for use by a family.

BMW: Planned to launch its electric car called the MiniE by 2012. The car would be a premium
electric vehicle that will sell for 34,000 Euros. It was planned to be a small and sporty car targeted to
the high end consumer category.

Opel: GM-owned German car-maker Opel was planning to launch its own electric car by 2012.

Volkswagen: Planning to launch an electric car by 2013. Volkswagen had not revealed its plans, but
it is perceived as the main competitor to Nissan-Renault in Germany. Some industry experts describe
Volkswagen as the most conservative player in the car industry.

Mitsubishi: The Japanese car maker which had a very small presence in the German car market
plans to release its own electric car called i-MiEV in Japan in 2010. It was expected to retail at around
30,000 Euros and its size was quite small compared to the LEAF.

Peugeot: The French car maker had announced plans to launch its small electric car called Peugeot
iOn in 2010. The iON was a version of the Mitsubitshi i-MiEV for the European market.

Citroen: Plans to launch a mini electric car called the C1 which could seat 4 people at a squeeze. It
was being offered in the UK market, mainly in London, and it could be fully charged for about 2 Euros.
It had a 100 km range and costs about 19,000 Euros.

Chevrolet: The American car maker was releasing the all-electric Chevrolet Volt in 2010 in the USA.
The price was expected to be around US$27,000.

Mercedes Benz: Working on a luxury electric car which would be a mid to large sized luxury car with
a lithium battery that could be charged in two ways. First, it could be charged from an electric plug
and secondly it could be charged with a device that charged the car as it drives. The car had a range
of about 170 km.

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Ramón Diaz-Bernardo. Any other use is prohibited unless granted explicit authorization by IE Business School.
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Tesla Motors: This U.S. made electric car manufacturer sells high priced electric sports cars in the
U.S. and Germany. With price tags ranging from $49,000 for its model S to over $100,000 for its
sports cars, it was an expensive car but with plenty of brand cachet for early adopter green drivers
with money.

Hybrids: Hybrid cars are perceived as substitutes for electric vehicles and any competitor with a
strong range of hybrids could be a threat. The prices of hybrids were significantly higher than the
price of regular cars. The main hybrid players are Toyota with the Prius and Honda with the Honda
Civic Hybrid. Together they have 97% of the U.S. market of hybrids, but hybrids made only about
2% of the total U.S. car market.6

Hybrids sell for around 25,450 Euros (Toyota Prius entry level price in Germany) in Europe and
buyers can get back rebates that may add up to as much as 2,000 Euros plus benefit from lower
taxes, tariffs and charges. Toyota reported selling more than 200,000 Prius cars in Japan where the
Toyota Prius was the bestselling car in 2010. In Europe Toyota reported selling more than 44,000
Prius cars in 2010. In Germany, 4,500 Prius cars were sold in 2010, according to a Toyota
spokesman.

Nevertheless, studies found that hybrid cars cost a premium of about 2,700 Euros compared to
regular cars, yet the annual fuel costs savings were around 150 Euros, meaning that consumers
would rarely make up for the premium they were paying in the car’s lifetime. But industry experts
believed that hybrid cars had helped break the consumer psychological barrier away from all-gasoline
cars and paved the way for electric vehicles which were expected to have greater cost savings in
terms of fuel use and were zero emissions cars.

NISSAN’S LEAF CHALLENGES IN GERMANY

One of the biggest challenges for electric vehicles was the development of infrastructure to charge
the cars. In the future, electric car charging stations in the form of vending machines could be
stationed in parking lots in shopping malls, airports, hotels and offices. They could also be along the
sides of main roads and at other venues so that people could charge their cars while they were inside
going about their business. In addition, company’s such as Project Better Place, a private equity
funded company, were planning to set up charging stations in which leased batteries could be
swapped by an automated system in less time than it would take to fill up a car with petrol. But the
fact was that in 2010 battery charging infrastructure was non-existent in Germany which meant car
owners would have to plan ahead to ensure their cars were fully charged before their trips. The
Marketing Director of Nissan Germany wondered: “Would enough German consumers choose to
purchase a car that did not have a readymade charging system available?”

Another major problem was that German car owners were fervently loyal towards German-made
cars: Germans bought German, and that had always been a challenge for foreign brands. The
preference for German brands by drivers was especially clear among those with leased company
cars which tended to be luxury cars such as BMWs. Would drivers of large, powerful, status-symbol
cars opt for a smaller, less powerful, green company car?

However, The Marketing Director of Nissan Germany thought that the main concern would be the
electric vehicle itself. There was general anxiety among consumers about the range and technology
of electric vehicles. Quite simply, consumers were afraid they would be stranded on the roads if their
car battery died. A successful launch would depend on how effective Nissan was at reassuring
potential buyers about the new technology and its battery charging requirements.

DIFFUSION OF INNOVATIONS

http://www.solsustainability.org/documents/cultivatingmarkets/A%20comparison%20of%20hybrid%20vehicle%20market
ing%20strategies.pdf

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As The Marketing Director of Nissan Germany sketched out some ideas for the launch, he thought
to himself “What should be the pillars of our marketing strategy in Germany?” The launch of the LEAF
was what the marketing books called the introduction of a radical innovation. The Marketing Director
of Nissan Germany began to think about the consumer adoption processes and how the marketing
strategy and marketing mix could move consumers through this process.

Experts7 explained that the consumer adoption process moved through five stages that began with
first hearing about an innovation (an electric car) and ended with finally adopting that innovation. The
five stages were called: awareness, interest, evaluation, trial and adoption. The Marketing Director
of Nissan Germany knew that his marketing plan should facilitate movement through these stages.

The Marketing Director of Nissan Germany also knew that not all the car buyers were the same.
Faced with an innovation like the Nissan LEAF there would be different types of customers depending
on their level of innovativeness. Customers could be classified in five categories depending on their
willingness to try a new product: innovators, early adopters, early majority, late majority and laggards.

The key to success was not only identifying the segment of customers that would be more willing to
buy the Nissan LEAF, it was also identifying what characteristics of the LEAF could help in the
customer adoption process. The Marketing Director of Nissan Germany knew that five characteristics
usually influenced the rate of adoption of a radical innovation:

 Advantage: the degree to which the innovation appears superior to existing products.
 Compatibility: the degree to which the innovation matches the values and experiences of the
individuals.
 Complexity: the degree to which the innovation is relatively difficult to understand and use.
 Observability: the degree to which the beneficial results of use are observable and
describable to others
 Risk: the perceived risk and uncertainty associated with the innovation
 Divisibility: the degree to which the innovation can be tried on a limited basis.

The Marketing Director of Nissan Germany reviewed the list of characteristics and began to analyze
how the Nissan LEAF performed on each of these characteristics.

DEVELOPING A MARKETING STRATEGY FOR NISSAN LEAF IN GERMANY

7
The concepts and classifications presented here about The Consumer-Adoption Process were taken from P. Kotler and
K. Keller, Marketing Management, 2006, 12th edition, Prentice Hall, pages 658 to 660.

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The Marketing Director of Nissan Germany thought that this marketing plan was different from any
other marketing plan he had done before. The LEAF was a very different car because of its
technology and charging requirements. The Marketing Director of Nissan Germany thought that he
needed to target consumers that were not intimidated with the technology and consumers that would
appreciate the cost and green benefits of the LEAF compared with regular cars.

Before going into the details of the marketing mix he needed to clarify what would be the core of his
marketing strategy. He needed to define the best target segment and the best positioning for the
LEAF.

THE TARGET SEGMENT FOR THE NISSAN LEAF

Who would be more willing to buy a Nissan LEAF? That was the question the Marketing Director of
Nissan Germany was trying to answer. After many years in the German car industry he knew there
were two basic segmentation criteria when analyzing car buyers: private buyers and company
buyers.

The private buyer segment was the largest and included all the individuals buying a car for their
personal use. Among the private buyers there was a popular segmentation developed by JD Power
Associates, a research firm, which divided new-car buyers into six groups, according to their attitudes
toward cars and the driving experience8.

 Gearheads: Are true car enthusiasts who enjoy driving and working on their cars themselves.
They are most likely to believe that a car says a lot about its owner. Mostly men, with many
craft workers and blue-collar workers, Gearheads represent around 17% of buyers.
 Epicures: Prefer to drive fully equipped, comfortable cars that seem stylish or elegant. This
group has the second-highest share of women and the highest household incomes. They go
for luxury and sports cars. Represent 26% of the new car buyers.
 Purists: The youngest group, are not brand loyal and are skeptical about auto manufacturers'
claims. Yet they like automobiles, enjoy driving, and are particularly interested in cars with
sport attributes. Represents 4% of new car buyers.
 Functionalists: Lean toward sensible, fuel-efficient transportation and are not highly
influenced by sportiness or styling. These conservative, law-abiding drivers are likely to have
children at home. They buy small and mid-sized cars. Represent 12% of the new car buyers.
 Road-Haters: Are the group most concerned about safety. They don't enjoy driving cars, and
they don't rate themselves as being very knowledgeable about cars. This group has the
highest share of women. Represent 26% of the new car buyers.
 Negatives: View cars as necessary evils that they would just as soon do without. They don't
have much interest in upkeep, colors, or options. This is the most educated group. Represent
16% of the new car buyers.

Another customer segmentation in the car industry that The Marketing Director of Nissan Germany
had used before was a segmentation of car buyers based on life-style and behavior9. This
segmentation classified the car buyers in four different types:

 Sensible Classics: Described as responsible, risk-averse, and traditionalists. Represent 30%


of the new car buyers, 57% are male and 43% female.

8
The JD Power Car Media Report is an annual survey of 10,000 new-car registrants that is used by advertising agencies,
magazine publishers, and cable and broadcast television companies to target car buyers.
9
The new car buyer Life-Style and Behavior segmentation was adapted from “Ford Ka The Market Research Problem (B),
2003, INSEAD Case 503-083-1.

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 No-nonsense Neutrals: Described as brand wary, TV watchers, unenthusiastic consumers.


Represented 26% of the new car buyers, 38% are male and 62% are female.
 Attention Seekers: Described as innovators, opinion leaders, and flashy. Represented 31%
of the new car buyers, 59% are male and 41% are female.
 Freedom Lovers: Described as outgoing, social and active. Represented 13% of the new car
buyers, 50% are male and 50% are female.

The Marketing Director of Nissan Germany was also considering a market segmentation based on
gender. Women, the Marketing Director of Nissan Germany thought, might be deterred by the new
technology but might enjoy the fact that an electric car was cleaner to operate with no gasoline
changes involved. The charging process was not much different from plugging in an electrical
appliance in the house. They also might have a shorter range to drive as they would use their cars
for shopping and collecting their kids from school. He thought that there were very good reasons for
a gender segmentation of the German car market and he recalled a series of facts about female car
buyers10:

 Women purchased more than 52% of all new vehicles and influenced in more than 80% of all
automobile sales.
 Female buyers were the fastest growing segment of new and used car buyers. Female buyers
purchased lower priced cars and were more likely to finance their purchase.
 More than 68% of all women used the Internet to research product information and resources
online, compared to only one-third of female buyers reading print auto magazines.
 Female buyers placed more importance on safety, dependability, functionality and economic
factors. Style and performance ranked last in consideration.
 The number one complaint women had with dealerships is how they're treated as customers.
Online anonymity is the preferred method of new car research until it's time to test drive.

One additional segmentation criteria for the Marketing Director of Nissan Germany was dividing the
market into Nissan buyers / non-buyers. There was a common understanding in the car industry that
having a positive previous experience with the brand would make a customer more willing to buy the
same brand again.

In fact, German consumers showed a high degree of brand loyalty with more than 55% of new car
buyers purchasing the same make of car as their current primary vehicle (defined as the car used
most). But German car buyer brand loyalty dropped for secondary vehicle purchases where only
14% of the car buyers would buy the same brand as their current secondary vehicle. The Marketing
Director of Nissan Germany was wondering whether these statistics of brand loyalty where actually
positive or negative for the prospects of the new Nissan LEAF.

Finally The Marketing Director of Nissan Germany was also considering a geographic segmentation
of the German car market. He knew he had to assign his limited marketing resources to those
geographic target segments where he had the best chances of selling this new car, so he also came
up with a list of potential cities in Germany where he believed the LEAF because they were the cities
with the largest population:

City11 Population

10
Based on Road Travel Magazine Demographics Women Trend Study, 2004.
11
Source: http://www.urbanaudit.org/CityCountryPDFLongList.aspx

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Berlin 3,460,828
Hamburg 1,786,448
Munich 1,353,186
Cologne 998,663
Frankfurt 679,664
Stuttgart 606,588
Dortmund 580,444
The Essen 574,635 other big segment was the corporate buyer. In
Bremen Germany more than 1 million cars were sold via
547,340
leasing contracts every year and many of them were bought
by Hanover 522,686 companies for corporate fleets. The Marketing
Director of Nissan Germany thought that targeting companies would provide the visibility the LEAF
needed: Companies that bought the LEAF for their fleets would get to show off their green/corporate
responsibility credentials and companies would be able to set up charging stations in their parking
lots which would lead to cost savings and allow employees to charge their vehicles while they worked.
But the Marketing Director of Nissan Germany knew that employees at corporations often specifically
chose luxury cars for their company vehicles due to the prestige factor and they might baulk at the
possibility of driving a regular family car. Also, Germans liked to drive fast and even though the LEAF
was a very powerful car for its size, would corporate car drivers settle for a LEAF’s engine power
when they were used to driving a BMW?

Government fleets would fit into the same category, but the Marketing Director of Nissan Germany
wondered if German government agencies would be willing to put a Japanese car in their fleets? The
Marketing Director of Nissan Germany wondered whether the green credentials of the car would
overcome any loyalty towards German auto brands and whether it was possible that consumers
could come to see the LEAF as a global car and not a Japanese car. After all, climate change was
borderless.

The Marketing Director of Nissan Germany felt that he needed to figure out what the target segment
should be; who the innovators and early adopters might be; and also how to create an early majority.

THE POSITIONING FOR THE NISSAN LEAF

The next dilemma for The Marketing Director of Nissan Germany was defining a positioning for the
Nissan LEAF. The question was how should the LEAF be positioned in Germany? And more
specifically, what benefit or benefits of the LEAF should be emphasized for the chosen target
segment? In order to clarify his ideas, the Marketing Director of Nissan Germany developed a list of
the possible benefits of the Nissan LEAF

 Green: A zero emissions vehicle, the LEAF didn’t pollute or make noise. It reduced carbon
emissions that cause climate change.

 Economical: The initial purchase price should not be much higher than a similar regular car
and expected government subsidies of zero emissions cars might help lower the price. Once
purchased, the car was cheaper to run and maintain, especially if fuel prices increased in
the future.

 Convenient: The vehicle was comfortable, reliable and fun to drive. Its performance (160 km
range) was convenient for most car drivers and better than the competitors. The government
and private enterprises were planning to install facilities to charge the battery, but that would
likely not happen in the initial phases of the launch.

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 Easy to use: The vehicle was easy to maintain and recharge. Refueling could be done with
a regular electric socket in the driver’s garage overnight or at recharging stations, much like
petrol stations, once they were set up.

 Performance: The LEAF performed better than many regular cars with a much larger engine.
The ride was very smooth and the car had lots of zip, according to auto reviewers.

 Reliable: A team of the world’s leading engineers had helped design a vehicle and electronic
systems that included updates on fuel consumption to reduce the risk of running out of
battery power. There was no reason why LEAF drivers should ever be left stranded on the
side of the road.

 Look: The LEAF was a modern design that resembled standard autos of the same size aimed
at the mass market.

 Warranty: An extended warranty of 5 years would be provided with the vehicle (as a
comparison, the typical warranty for traditional cars was 3 years). This would help reduce
the perceived risk by consumers and their technological anxieties.

 Savings: Over a year the driver could save as much as 2,000 Euros driving a LEAF compared
to a regular car so it was cost efficient too if the buyer drove above 12,000 km per year when
the “no petrol” cost benefits start kicking in.

The Marketing Director of Nissan Germany knew that the positioning would depend on how he
defined the target segment for the Nissan LEAF. Traditionally the car industry had identified some of
the major needs of different car buyer groups, for example, middle-aged buyers seek reliability, safety
and value; singles look for individuality and personality; families ask for functionality, space and
reliability; while women expected a combination of all factors plus value. But the Marketing Director
of Nissan Germany was not sure if this list of customer needs would be helpful when defining the
right positioning for the all-electric Nissan LEAF.

DEVELOPING THE MARKETING MIX FOR THE NISSAN LEAF IN GERMANY

After defining the target segment and the positioning for the LEAF, the next step in the marketing
plan would be developing a marketing mix well aligned with the marketing strategy. The Marketing
Director’s sales objective for the first year of the Nissan LEAF in Germany was to sell 2,000 units.
He had to figure out the best marketing mix to achieve that goal.

The Marketing Director of Nissan Germany had been assigned a marketing budget of 2.5 million
Euros for the launching of the Nissan LEAF in Germany. This budget was exceptionally high
considering that the sales objective was 2,000 units. The average weight of the advertising,
marketing / promotion item on any Nissan car was around 2.5% of the sales, but in the case of the
Nissan LEAF this ratio was up to around 5% of the expected sales in the first year of the LEAF in the
German market. The Marketing Director of Nissan Germany had to think carefully how to assign this
budget among the different marketing mix tools in order to get the best return on this big marketing
investment.

PRODUCT AND PRICING STRATEGY

Concerning the product strategy, the Marketing Director of Nissan Germany had nothing to say. The
product was designed and manufactured in Japan and Nissan would not do any product adaptations
for the different international markets. The Marketing Director of Nissan Germany had more freedom
with regard to the pricing strategy. In fact, Nissan’s CEO Carlos Ghosn had said that the traditional
business models for cars may need to be radicalized when electric cars were introduced. Some

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experts called electric cars the iPhones of the automobile industry and suggested business models
that could be adopted from the telecom industry. The Marketing Director of Nissan Germany
wondered about the various options for selling the car in Germany.

The Nissan LEAF was basically a car with a battery. They could sell the car outright but then the cost
of the battery along with the cost of the car would make it significantly more expensive than regular
cars of similar size. The main elements that The Marketing Director of Nissan Germany had to
consider to develop his pricing structure were

 Cost of the car: 22,998 Euros (without 19% VAT)

 Cost of the battery: 4,998 Euros (without 19% VAT)

 Total final consumer price including taxes: 33,315 Euros

 Government subsidy and incentives could be around 5,000 Euros

CEO Ghosn felt that hybrid car sales had been affected by their higher price point. But there were
other options afoot. Ghosn had suggested that the battery could be leased. The Marketing Director
of Nissan Germany wondered if people would buy the car and lease the battery. Some consumers
might opt to lease both the car and the battery. But would car owners change the way they bought
cars? The Marketing Director of Nissan Germany felt that he had to be creative when defining and
presenting the pricing strategy of the Nissan LEAF.

DISTRIBUTION STRATEGY

One of the big issues in Nissan´s LEAF marketing plan was the dealership collaboration in promoting
and selling the LEAF. In 2010, Nissan had around 620 authorized dealers in Germany, a figure that
includes main dealers, secondary dealers and authorized repair stations which did not have authority
to make new sales. 12The LEAF was also new for the dealers, a radical innovation, and the Marketing
Director of Nissan Germany recognized that it was important that the dealers were involved in
promoting the new electric vehicle.

The average dealership sales commission was somewhere around 10% of the final car price. The
Marketing Director of Nissan Germany was wondering whether he should add a special incentive to
entice dealer to push the car to customers, or use that money instead to get customers to demand
the car. “Should I use a push strategy or a pull strategy?” he wondered. A push strategy would mean
allocating a part of his already limited budget to giving dealers incentives, such as a higher
commissions or bonuses, to sell the LEAF. A pull strategy would mean putting the budget into various
promotion channels instead. And if the Marketing Director of Nissan Germany did give an incentive
to dealers then how much of his 2.5 million Euro budget should he allocate?

COMMUNICATION STRATEGY

Even though the Germany launch was important for Nissan’s plans in Europe, the Marketing Director
of Nissan Germany was not given an open cheque book for the launch. He had to decide where to
focus his money and what communication tools would be better to support the launch of the Nissan
LEAF in Germany.

He was in a dilemma. Studies13 showed that word of mouth was a much more effective medium to
sell cars then expensive TV adverts and billboards. On the other hand, since he was launching a
new technology car in Germany, the Marketing Director of Nissan Germany felt it was important to
get the highest possible visibility to create awareness and interest among potential car buyers.

12
http://www.vdik.de/fileadmin/files/en/gb_2010/vdik-gb_2010_10_marktdaten_engl.pdf
13
Source: Cars Online 09/10 Understanding Consumer Buying Behavior in a Volatile Market, Cap Gemini Automotive Report

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He thought about a list of possible communication tools that were usually in other new product
introductions: TV ads, billboards, radio ads, magazine and newspaper ads, the Internet and public
relations. Then he called in an independent Media Buying Consultant, for a meeting.

“As we’re talking about a mass market campaign,” said the Media Buying Consultant, “we’re talking
about reaching 14.7 million people, or about 22 percent of the population aged 14 +.” “Now, we have
to decide which tools we need and how much of each,” said the Media Buying Consultant, who
explained that media costs varied based on location for billboards and TV or radio channels and
airing time, as well as various discounts offered for bulk orders.

“To launch a new product you definitely need a big launch campaign to achieve the minimum level
of brand recognition and recall,” said Hoffman. But he added that: “Not every medium qualifies in
transporting the message of the campaign.”

The Media Buying Consultant suggested a possible breakdown of the investment:

 TV advertising = 40%
 Magazine ad = 10%
 Newspaper ad = 10%
 Online ad = 30%
 Billboard = 10%
 Radio advertising = 0%

The problem was that TV advertisements in particular were expensive. The Media Buying Consultant
estimated that one month of intensive TV adverts would cost 5 million Euros alone and recommended
that for a new product introduction it would be best to have one month of intense TV advertising
followed by 10 weeks of less intense TV advertising for a total cost of about 11.5 million Euros. That
would mean the Marketing Director of Nissan Germany would need to ask for a big budget increase
to conduct a proper multi-pronged communications campaign. If Nissan headquarters granted the
increase, what The Marketing Director of Nissan Germany doubted, then this would put the LEAF
deeply in the red in its first year in Germany.

After the meeting, The Marketing Director of Nissan Germany thought that given the budget
constraints maybe Nissan should go for a digital, Internet-based communication strategy rather than
traditional media. He knew that studies had shown that the Internet was a very powerful way of
getting product recognition among consumers aged 25 to 35 and even those in the next age bracket
up. “Since only about 5-10% of people in Germany have an interest in buying a fully electric car,”
thought the Marketing Director of Nissan Germany, “classic media will probably create 90-95%
overspill, costing us a lot of wasted money.”

The Marketing Director of Nissan Germany thought that a social media approach was cheaper and
might be more effective at reaching the early adopters. This strategy had worked for Tesla Motors,
he noted, which was so successful with its use of social networking tools that it managed to get a
waiting list of orders before its first high-end electric sports car was even released.

The Marketing Director of Nissan Germany felt it was important to get a German website for the
LEAF going as soon as possible and also an effective public relations campaign as the media would
surely be interested in covering electric car related stories. He knew that the Internet had played an
integral role in the marketing of hybrid cars and he felt that it would be crucial for the LEAF as well
as people would go to the website to find out about the car and the concept of charging their car with
electricity. He estimated that setting up and running a dedicated website would cost at least 200,000
Euros.

The Marketing Director of Nissan Germany realized that he would have to decide between a
conventional and a digital campaign, or some combination of the two. He also wondered if his budget

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was enough and whether he should ask Nissan’s global marketing director for more money, but
probably the answer will be no.

After many hours of thinking, writing, and crunching numbers The Marketing Director of Nissan
Germany felt that he had the outlines of a strong launch plan for the LEAF in Germany.

Exhibit 1
The German Car Market In 2010

Units sold Market


Position Brand 2010 share Change vs 2009
1 Volkswagen (VW) 615.229 19,9% 1,10%
2 Mercedes Benz 327.965 10,6% 0,10%
3 BMW & Mini 284.767 9,2% 0,00%
4 Opel 258.274 8,4% -9,50%
5 Audi 251.393 8,1% 0,80%
6 Ford 217.305 7,0% 1,60%
7 Renault & Dacia 147.167 4,8% 4,90%
8 Skoda 121.277 3,9% 2,20%
9 Toyota 96.781 3,1% -27,00%
10 Peugeot 94.676 3,1% 1,40%
11 Fiat 88.111 2,9% 19,40%
12 Citroen 73.337 2,4% 0,10%
13 Mazda 56.277 1,8% -14,30%
14 Hyundai 51.677 1,7% 8,70%
15 Seat 49.331 1,6% -6,70%
16 Nissan 45.746 1,5% 10,00%
17 Honda 40.133 1,3% -3,80%
18 Suzuki 36.840 1,2% 1,30%
19 Kia 34.322 1,1% -15,00%
20 Smart 33.805 1,1% 5,70%
Others 5,3%
100,0%

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Exhibit 2
Initial specifications of the new Nissan LEAF

Dimensions
Length: 4445 mm / 175.0 in.
Width: 1770 mm / 69.7 in.
Height : 1550 mm / 61.0 in.
Wheelbase: 2700 mm / 106.3 in.
Performance
Driving range over: 160km/100miles (US LA4 mode)
Max speed (km/h): over 140km/h (over 87 mph)
Motor
Type: AC motor
Max power (kW): 80kW
Max torque (Nm): 280Nm
Battery
Type: laminated lithium-ion battery
Total capacity (kWh): 24
Power output (kW): over 90
Energy density (Wh/kg): 140
Power density (kW/kg): 2.5
Number of modules: 48
Charging times: quick charger DC 50kW (0 to 80%): less than 30 min; home-use AC200V
charger: less than 8 hrs
Battery layout: Under seat & floor

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Exhibit 3
Promotional Media Likely to be Influential when Choosing a Vehicle: The perception of the
consumers, the dealers and the car brands (OEMs)14

14
Source: Cars Online 09/10 Understanding Consumer Buying Behavior in a Volatile Market, Cap Gemini Automotive Report

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Exhibit 4
Media influence on the buying decision by age and by gender. 15()

Age and Buying Information Sources

Car magazine

Brochure

Newspaper ads under 25
25‐35
www
35‐55
Dealer staff 55+

Car Shows

TV Ads

Sex and Buying Information Sources

Car magazine

Brochure

Newspaper ads
Female
www
Male
Dealer staff

Car Shows

TV Ads

■■■

15
Source: New Car Buyer Behavior Research Survey Report: Quantifying Key Stages & Activities in the Consumer Buying
Process, Cardiff University; http://www.3daycar.com/mainframe/publications/library/newcarbuyer.pdf

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