In 1hr
Introduction
General Motors, Cadillac, is trying to start up a Netflix type car subscription where the members can pay $1,500 per month. This subscription plan is on a month to month basis, with no long term commitments. The Cadillac subscription allows members to drive a luxury vehicle of their choice, they have a selection of 10 different Cadillac models. While reading through the article we see various strategic choices that have been made to make this successful over other competitors in the same industry. In this paper we will discuss some of the choices that Cadillac has made and strategies we recommend for them in the future. The strategies we will analyze and recommend will be in regards to the marketing concept, public relations, branding, benefit segmentation and their positioning through the marketing mix.
Marketing Concept
As we explore the marketing concept there are several key points that we have to hit on. The starting point that needs to be considered with the marketing concept is the actual market the seller is trying to hit. The second is the focus of their strategy, in most cases this is the customer needs. The third thing the marketing concept includes is the means, and this is the integrated market. The final thing that the marketing concept needs to hit on is the ends, and in the GM Cadillac subscription plan, this would be to create profits through customer satisfaction.
The market is a set of the actual and potential buyers of this service that the GM Cadillac subscription is trying to sell to or has already sold their service to. All of these people share a common need or what that can be satisfied through this relationship. The market that the Cadillac subscription plan is targeting are people who live in the metro New York City area that can afford the $1,500 a month subscription plan. People along the lines of business executives would be ideal candidates to market to. In the article Brian Johnson states that, U.S. vehicle sales could decline by 40% over the next 25 years amid the spread of car sharing and self-driving vehicles. The market for a subscription plan like the one GM is providing has the potential to skyrocket if what Brian Johnson states to be true. The market is already there, it’s getting people to accept this new idea as something to prove beneficial to their needs of car and how car ownership has the potential to change over the next 25 years.
There are a variety of customer needs that play into how this can be beneficial to the customers. One way that this is beneficial is that it takes out the hassle of car ownership. People in large cities may not have a need to have a car for their day to day activities so they wouldn’t need to own a car. If a customer needed a car for a weekend or however long they would need one for, this would appeal to them because all they have to do is download and app on their smartphone and then order in the specific model of luxury vehicle that Cadillac has to offer and it’s there the next day. They don’t need to purchase a car to have a car available at the push of a button, therefore this satisfies their need of being able to get a luxury car without all of the extras that go along with car ownership.
The GM Cadillac subscription plan has a lot of different marketing that is going on to make this more successful than other companies. This service is more of a customer-driven industry and reaching the markets that have these customers available is their goal. They have to have the correct placement, price, promotion, and products. Integrating all of these things into their marketing concept is what will make them more successful than the other companies that are trying to make this idea possible and more successful than GM’s. The people in charge of their marketing department have done their research to learn about their customer’s desires, gather new ideas, and then test the service to learn the flaws and make it more successful and appealing to others. People in the metro NYC area are all about the looks and having an on-demand luxury car available for them is something they seek.
The main goal of any company is to seek profits, not always does a company create them quickly. While the GM Cadillac subscription is currently in the starting phase, they haven’t commented on the financial success of this program. They need to create customer satisfaction at this point and make it more appealing to larger groups of people before it can enter any other phase. Analysts believe that so far this program is currently unprofitable. The company still has a lot to learn about their markets and may need to adjust the marketing concept to fit the various groups they are trying to target in the future.
Public Relations
The potential for profit losses of car buying approximated at 40% over the next 25 years is not necessarily a scary thought, but creates a target profit margin to overcome. There are too many successful transportation services of simple lower end vehicles or random vehicles, such as Uber, and high end thrill-seeking exotic car rentals but when it comes to everyday usage of a vehicle that changes size with your needs it’s only a mere few. With GM beginning its new Book Cadillac service the advertising and public relations possibilities are endless. There are several target audiences that ads could be tailored to. For starters, the middle class working mom who may need an SUV on the weekend for kids’ games or family activities but would prefer a smaller, more economical vehicle during the week to get to and from errands or work. Perhaps the weekend adventurer that would love to cruise in the latest Cadillac CTS-V with over 600hp but still maintains the 4-door sedan needs. Maybe the thought of not having to hassle with maintenance costs or dealerships for car-buying would grip a huge crowd into the new idea of not only a simpler approach to having a vehicle they can switch with an app when needed, but upgrading to the luxurious Cadillac to boot. Take any of these with a nice slogan like, “none of the hassle, all of the convenience, and unlimited luxury, because you’re worth it” and you’ve got an advertising campaign. For public relations, GM could pull in multiple NBA or NFL all-stars that own Cadillacs and could testify to the luxury, even with the stars or celebrities that may not own one they could offer them a complimentary spot in the program for some PR work and advertising. Lincoln has done multiple commercials using Matthew McConaughey. This same concept or arrangement could be used to advertise with Cadillac for simple advertising but thrown into a situation of a celebrity watching a middle classman haggle and get frustrated over the price of a Cadillac on a dealer’s lot and chuckles while they tap on their phone’s app and the Cadillac drives up, throw in a slogan and everybody wants the luxury and convenience over the frustration and dealership experience.
If GM is willing to have a large budget for advertising and PR work then this program could potentially catch fire and explode for them. Attacking the higher end luxury cars as ridiculous for lack of storage space, etc. and also telling the middle class they’re missing out on a luxury vehicle that they deserve and can change up every few weeks depending on their needs of an ever-changing life. Cadillac has such a wide variety of 10 different models that there is not a target group that couldn’t benefit from the use of a Cadillac and the convenience of an app. The greatest part about the PR and advertising is it doesn’t have to sell the idea of using an app to get a vehicle. Because of other companies like Uber, which would be a competitor of a sort, clicking on an app to get a ride has become simple, refined, and common. Also, Cadillac has a renowned name for luxury and style, so that doesn’t have to be sold either. The big hurdle for advertising and PR work will be to sell the idea of paying a standard monthly fee to get usage to the entire fleet of Cadillacs at the click of a button and the perks that go with it. Creating value for the customer here should be simple. First, the price may seem a little high at $1500 per month, however when you take into consideration there are no dealership fees or licensing/registration fees, maintenance fees, or switching vehicle fees, all the while having access to 10 different models of Cadillac that I can choose from 18 times in one year, the value to the customer should be straightforward.
A great deal of advertising companies are growing and specializing in advertising as well which GM could benefit from. The top converter of browsers to buyers is Pinterest. Pinterest beats Facebook in “browsing customers” turned into “consumers that buy” over 22% more of the time. Pinterest users get more of a perusing the mall feel and are more comfortable. If there were ads of a new GM Book Cadillac monthly service once in a while, or simply placed on the side of the photo grid layout, it would increase awareness immediately. Also, increasing the chances of a purchase or curious glance by using Pinterest before Facebook is a smart decision. Facebook could still be used but Pinterest would certainly hold priority.
All of this brought together GM should begin its advertising campaign by dividing each category of vehicle they own and creating a TV commercial. For example, begin with SUVs and the working mom who is struggling with a simple low-end sedan that doesn’t have enough room, has maintenance problems AGAIN, and an outrageous monthly payment because of high loan rates. One of her friends shows up stress free at the coffee shop with yet again, a different Cadillac than last time, and as they sit for coffee she gives all the details of no maintenance costs, no dealer experience, no high percentages owed on a loan, just luxury at the touch of a button. Then she throws in “because we’re worth it” at the end. Each of Cadillac’s models will apply to a different target group and I would release these different advertisements spread out over a couple of months each before airing a new one to make full usage and pull of every one. The value to the customer is there, we just have to simply show it.
Branding
When it comes to Cadillac they have a very luxurious brand name making high end luxury cars. Cadillac has a high brand equity because of how they create differentiation, relevance, knowledge and esteem. The way they create a differentiation is by manufacturing luxury high end vehicles. These cars are the elite that everyone wants to own. Cadillac tries to be relevant to the needs of their consumers by making these cars specially for customers. Since these cars are relatively expensive the consumer will want to be knowledgeable about what they are purchasing. Therefore, Cadillac provides ample information about the cars so that the purchaser will have the knowledge. This brand of car gives the owner high esteem because a lot of other companies and consumers respect the brand. Cadillac has done a very good job in having a high brand equity through these four aspects.
Cadillac has a very strong position on their market. Therefore, they can try to branch out and offer a service some other business’ cannot. This GM netflix is a cool idea. Their brand positioning for this service will develop on the attributes and benefits of their audience. I think, in order for them to succeed at this ground breaking service they need to keep on giving their cars the luxurious attributes on every car. This will preserve the Cadillac brand name and might have a diverse effect of having consumers make a purchase if they find a vehicle they really enjoy. Along with the attributes of the car, general motors might be able to reel prospective buyers by capitalizing on the benefits of not having to worry about all the tiresome responsibilities of owning an automobile. After a few years of developing on their approach and getting this service out on the market they might be able to revolutionize the way the American market purchases a car by letting consumers test drive up to 18 different cars in one year.
Brand name’s also sell the product because this is what the consumer will probably see first. Unfortunately, I do not think that calling this service “GM Netflix” will do much onto the market. However, if they were to incorporate the words bounce, switch or change into the name somehow it might be able to isolate the company from Netflix. A few suggestions may be as follows:
CaddyHOP
Whip Switch
Try It, Drive It
These brand names are just a few suggestions. The brand name lets the consumer know that they have a car that they can switch at some point. It has a little bit of ambiguity in it so that it might catch the consumer's attention, making them research more into the service.
Benefit Segmentation
Benefit segmentation is a form of segmenting based on different factors. These factors are usually based on the benefits as well as the rewards that consumers see when purchasing a product. These customers seek certain benefits when it comes to going with a certain product over another product. Marketers and business need to seek out when consumers are looking for in a certain product. The reason companies need to do research is because one reward and benefit in a certain area or city, may be completely different than another city. Once these business understand and know exactly what benefits and rewards the customers are looking for in the different areas, maximum profits can be gained.
GM (General Motors) began from and using a Cadillac subscription plan. This plan uses a variety amount of Cadillacs to let consumers “rent” the cars for a certain period of time. The consumers can use smartphones to order up the vehicles of their choice, and the car would be delivered the very next day. The customers have a choice of up to 10 different Cadillacs and can order and return up to 18 times in a year.
With all this being said, it is very important how General Motors segments their company. They are only located in New York City which is an excellent city for the cars and vehicles they are letting people rent. New York City is a very traffic heavy, small city. Because of that, the cars being loaned out are the best choice. But the company hopes to expand to other cities. When expanding to other cities, GM might need to expand on their vehicle choices in order to fit their customers more appropriately. Cities in more country or farm areas may need larger vehicles and or more durable vehicles.
The more research done on cities and customers, the better prepared the company can be when expanding to different areas. Having an idea of the rewards and benefits that the shoppers are expected will increase sales. Customers may believe that having their own cars might be cheaper in the long run. The benefit segmentation is all about the value the customers see in the product. Different customers will see different benefits. This being said, GM need to do their research. This research may mean surveys and or experiments with their product. The marketer needs to understand what each segment or area is looking for, and expand on that.
Positioning through the Marketing Mix:
Conclusion:
References
Ahmad, R. (n.d.). Benefit Segmentation. Retrieved April 18, 2017, from
https://www.warc.com/fulltext/JMRS/78268.htm
Colias, M. (2017, March 19). GM Tries a Subscription Plan for Cadillacs-a Netflix for
Cars at $1,500 a Month. Retrieved April 18, 2017, from
https://www.wsj.com/articles/gm-tries-a-subscription-plan-for-cadillacsa-netflix-for-cars-at-1-500-a-month-1489928401
Z. (n.d.). Benefit Segmentation Definition | Marketing Dictionary. Retrieved April 18,
2017, from http://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/2544-benefit-segmentation.html
