Part three: target market selection
Case Synopsis
When you think about the kind of people who buy hybrid and alternative fuel cars, you’re probably picturing a handful of smug, hipster vegetarians tooling around Seattle, San Francisco or Vermont. There’s probably a lot of political bumper stickers on the back of the car. Maybe there’s a kayak or mountain bike on the roof.
A few years ago, you probably would have been right.
When the Honda Insight, the carmaker’s first consumer hybrid car hit the market in 2000, Roger Scholfield, owner of Scholfield Honda in Wichita, Kansas, thought he had it all figured out. For one thing, Wichita isn’t exactly known as the epicenter of eco-consumerism. He’d probably sell a handful of ecofriendly cars to a couple of single twenty-somethings. The thing had just two seats and seemed flimsy with its lightweight aluminum body. With a sticker price of $20,000, it was pricey, too. But the first Insight Roger sold went to a 63-year-old. The second person to buy one was 65.
Although Roger was surprised, those first sales were consistent with Honda’s marketing research. The automaker determined that the typical Insight customer was older and highly educated—people who tend to be very research-driven about such purchases. Nearly a decade later, almost every auto manufacturer has a hybrid car, SUV, or truck on the showroom floor.
Lee Lindquist, an employee at Scholfield Honda, had been interested in technology and the environment. As a member of the Sierra Club, an environmental activist group, he would often speak about the environmental impact of automobiles. He found that audiences were interested not just in the fuel-efficient hybrids, but in alternative fuels as well. Lee did some research and learned that Honda had been selling a natural gas car to the City of Los Angeles since 1998. Because this car ran exclusively on natural gas, it was considered by the EPA to be the cleanest internal combustion motor in the market. Everything about the car was the same as a traditional Honda Civic—except the polluting emissions.
Lee asked Roger if he could bring a Natural Gas Civic GX to Wichita with the intention of selling the idea to large companies as a fleet car and to the City for municipal use. His pitch was simple: once the municipality or company invested in the natural gas fueling station, fill-ups would be cheap—the equivalent of about $1.00 a gallon with the added benefit of limiting their impact on the environment. It was a great value proposition.
Selling the car to the everyday consumers was another matter. The fueling stations cost thousands. Even with the lower prices at the pump, it would be hard to justify that kind of expense.
When Roger heard the news that a tornado wiped out the small town of Greensburg, Kansas, he knew he had to help. Initially, the dealership made a generous cash donation to the relief efforts. When the news broke that the town had decided to rebuild green, Lee saw an opportunity to reintroduce the Civic GX to the people of Kansas. The idea wasn’t as off-the-wall as one might think. In rural farming communities, people are naturally greener than their city cousins; the environment is their livelihood, and the notion of conserving and recycling resources is a necessity, not a mere fad. In fact, it is not uncommon for farmers—large and small—to have propane or other sources of fuel to power their farming equipment.
For Roger, it took a little more convincing. In the end, he decided to go for it. As he drove the Civic GX two hours west on Highway 54 to Greensburg, he started to have second thoughts. Wouldn’t the $25,000 car giveaway be better spent on a few prime-time local ads? What’s a farmer going to do with a little Honda? In the end, he figured that Greensburg’s positive media attention might spill over on his dealership. Roger handed the keys to the natural gas Civic to Daniel Wallach of Greensburg Greentown, and many residents came to check it out. No sales were made that day, but the story was broadcast on Wichita’s ABC news affiliate and was picked up nationwide. Before long, city and fleet managers from around the region were asking about the green Civic GX.
Answers to Questions for Critical Thinking
1. What are the primary markets for the Honda Civic GX?
2. Does it make sense for Scholfield Honda to market its alternative fuel cars to a mass audience? What are the pros and cons to this approach?
3. How important is marketing research in promoting a new product?
4. How might the Scholfield Honda brand have suffered if the Greensburg promotion was a flop?
