Recall from Case 1.2 that 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).

1. “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.

2. “Runabout Sport,” Two-Seat All Electric, 250 miles per charge, estimated MSRP $28,000–$34,000; Fuel/CO2 rating: 10; Smog rating: 10.

3. “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.

4. “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.

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.

Data from case 1.2

Nick Thomas is the CEO of Auto Concepts, a division of a
large U.S. automobile manufacturer that has multiple divisions
representing several auto and truck brands. This company
has been slowly losing market share to competitors.
Auto Concepts was created to develop totally new vehicle
models that are more in tune with today’s changing automobile
market. A primary consideration in its development
efforts is the U.S. Department of Energy’s Office of Energy
Efficiency and Renewable Energy, which advocates the use
of alternative fuels such as propane, natural gas, hydrogen,
ethanol, electricity, and biodiesel. It notes the key benefits
of fuel economy, which include saving money, reducing oil
dependence, slowing adverse climate change, and increasing
energy sustainability. At the same time, it is believed
that the Internet of Things, with its capabilities of safe
mobile connections, self- or assisted-driving, infotainment,
on-board diagnostics, and more will be a prominent part of
future vehicles.
Nick Thomas knows he must come up with some
innovations in automobile design and engineering, but he is
not certain in which direction he should guide his division.
Nick realizes that he needs to find out what consumers’
attitudes are toward global warming and taking personal
responsibility for fuel economy. This knowledge will help
him determine a direction for the company in terms of
automobile design. Nick also needs more data on consumer
preferences. Will they want to stay with today’s standard
gasoline compacts, all electric or hybrid electric models, or
might they be interested in radically different models that
promise much higher fuel economy?
1. In the development of new automobile models, which
of the following should Nick be primarily concerned
with, and why?
a. Engineering and production feasibility
b. The brand image of his division’s parent U.S.
automobile manufacturer
c. Technological innovation
d. Consumer preferences
2. Should Nick Thomas use marketing research?