MARKETING THEATRE

Bigger isn’t better. It’s just harder to park: FIAT

 

Current Market Environment

The car market is a competitive category to enter in the United States. Competitors include Ford, GM, Honda and Toyota, ‐‐ the dominant auto makers with the most market share. And while several smaller brands have disappeared due to the recession, there are still a plethora of brands with a healthy market share, including: Nissan, Acura, Subaru, Chevrolet, Infiniti, Lexus, Mercedes, Audi, Volkswagen, Scion etc.

The current state of the economy has a significant impact on the current market environment as well, as the general population is experiencing lower income levels and, at the same time, increases in food and housing costs. As this directly affects a consumer’s disposable income, fewer households are likely to be in the market for a luxury car with a luxury price tag. Due to the long‐lasting effects of the recent recession, there is also a smaller pool of used vehicles available, and the ones that are available are not as inexpensive as they used to be. However, there may also be fewer customers in the market for a car at all. Another prominent concern amongst consumers is the price of gas, pollution and dependence on foreign oil. Consumers and the government are scrutinizing cars more than ever before based on type of fuel used, mpg ratings, and emissions standards.

Competitive Analysis

The Fiat 500 is positioned to compete against small, fuel‐efficient vehicles, such the Mini‐Cooper, the Prius, the Beetle, and the Scion cars, as it is a small, 2‐door car with an estimated fuel efficiency of 38 mpg’s. It is also priced competitively, at as little as $19,000 bare bones and as much as $26,000 with all of its bells and whistles. This specific category of car includes newly introduced models (within approx. the last 10 years), with perhaps the exception to the Beetle – although the remodeling of the Beetle was drastic enough that it could be considered a new model. As each of these models has successfully gained a strong brand identity and a faithful and converted core consumer group, there are implications that, at least historically, consumers in this product category are open to new brands. Also notable, each of these models’ marketing efforts placed a strong emphasis on style and image. The Beetle is classic and cute, the Prius is green, the Mini‐Cooper is euro‐chic, and the Scion cars are hip and fun. Pricing of these cars varies, but the Fiat is well‐positioned at the lower end of the price range, with the Beetle, the Prius and the Mini‐Cooper all having slightly or significantly higher price tags.

Implications for IMC

These analyses have several implications for IMC. Based on Fiat’s history, they have two major challenges to address. Firstly, Fiat has been absent from the US market, so it has limited brand recall. Secondly, the recollection people have of the Fiat brand from its previous market presence is probably negative. Fiat will need to implement a marketing and advertising strategy that both increases its visibility and changes the beliefs of consumers about what Fiat means.

The countless factors that are part of the decision‐making process for consumers reveals many options for Fiat in how they target their market segment. Fiat should highlight the strengths of the 500 and tailor their market segmentation to consumers who care about these specific strengths. This should be easy to identify, as it is likely that Fiat designed the car to include the special needs and preferences of a specific market segment in mind.

The current market environment analysis reveals even more about how Fiat can tailor their ads for the current environment. The price‐sensitivity of the current market and limited inventory of competitively‐priced used vehicles is a boon to the Fiat as it is an affordably‐priced car. It also has a great advantage with its fuel efficiency and low CO2 emissions. The current market environment reveals that Fiat can leverage these features to reach a broader market segment than they may have anticipated.

The competitive analysis also has implications for the IMC. First, while Fiat needs to establish its brand again, it knows that consumers are receptive to new models, as Scion is a recent entrant to its product category and has had success. Even more encouraging, the Mini Cooper has a European image similar to the Fiat 500 and has also been very successful. But, to Fiat’s advantage, the 500 is a more affordable alternative to the Mini Cooper, and we already know affordability is very important in the current market. Most remarkable, the Fiat 500 offers features that challenge virtually all of its competitors, but packages these benefits into just one car model, so consumers really don’t have to choose between the benefits offered by the other models—a clear advantage.

The current market environment analysis reveals even more about how Fiat can tailor their ads for the current environment. The price‐sensitivity of the current market and limited inventory of competitively‐priced used vehicles is a boon to the Fiat as it is an affordably‐priced car. It also has a great advantage with its fuel efficiency and low CO2 emissions. The current market environment reveals that Fiat can leverage these features to reach a broader market segment than they may have anticipated.

To be continued..

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2 comments on “Bigger isn’t better. It’s just harder to park: FIAT

  1. carlo
    November 29, 2012

    Than you very much for your wel documented article. I just have to question one thing: In my humble opinion, 19,000 dollars for a fiat 500 is not what i would call a competitive price. Us’ Best Cars review ranks the italian “utilitaria” at the 9th place among 43 small affordable cars. Fiat 500 is a tiny sexy car but to spend almost twenty grand for this capriccio is a folly. Where are the REAL cheap, no frills, reliable cars like the good old Honda Civic?

    • sarabaskentli
      December 11, 2012

      Hello Carlo,

      Thank you for your comment. I am sorry it took me so long to respond but your comment was in my spam box so just saw it now. The target market of Honda Civic and Fiat 500-Beetle & Mini Cooper is really different. Therefore, positioning & pricing of the car will differ as well. Marketers expect the target of Honda civic to be people, who are price sensitive, head loyals and in search of a very reliable car, which they can use for a very long time. However, if you check out my second review “on a scale from 1 to 10, it is a 500”, you might see that Fiat 500 targets completely different category. In the bigger picture, Honda civic and Fiat 500 might be competitors as they are in the same industry but when we zoom in we see that the classification is different. Hope I was able to answer your question.

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This entry was posted on November 28, 2012 by in ads, advertisement, brand, brand awareness, Fiat and tagged , , , , .
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