Lower Division Capstone DB 3
Small v. big cars
The idea to phase out its large, profitable SUV line of automobiles to focus on smaller, more fuel-efficient cars will be a success to the company because currently the demand for small cars is rising. The demand for small curs is increasing in many countries including India, the U.S and many European nations. Increasing gas prices are pushing most of the customers to prefer the small fuel-efficient cars over the larger ones. The demand for small cars has been confirmed by car manufacturers such as Toyota, Ford, Mercedes and Hyundai.
Pros of this marketing idea
The company will increase its sales by focusing on small cars as it is clear that the demand for small cars is increasing in most parts of the world as a result of increase in gas prices. The company will also be able to increase the assortment of the products that it introduces into the market because it is easier and cheaper to introduce new models of small cars compared to the big ones. A new car model normally attracts more customers compared to the new models and thus commands a relatively large market. Another advantage of this marketing strategy is that the company will be able to penetrate the market easily and widely. Marketing of small cars will have a larger target market compared to the larger ones. Most of the customers particularly from the rural areas will rarely demand or purchase the larger automobiles. This is because they will have little use for the large cars. Most of their uses require the small cars.
Cons of the idea
The main disadvantage of phasing out the, profitable SUV line of automobiles is that the company will definitely loose the profits earned through the big automobiles. In the short-run the company will experience a decrease in profits. Another problem is that the company will record a drop in its share of the market commanded by the big automobiles. This marketing idea will however be very profitable in the long-run.
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