MARKET PLANNING ASSIGMENT PART 1
Armando Vargas, Lourdes Vargas, Maribel Mendoza
Professor Davis
BUS 306-90
October 19, 2014
MARKET PLANNING ASSIGMENT PART 1
Table of Contents
Situation Analysis ......................................................................................................................................... 2
Market Summary .......................................................................................................................................... 2
Market Analysis............................................................................................................................................. 3
Demographic ............................................................................................................................................. 3
Geographic ................................................................................................................................................ 4
Behavioral/Psychographics ....................................................................................................................... 4
The Market .................................................................................................................................................... 4
Market Needs............................................................................................................................................ 4
Market Trends........................................................................................................................................... 5
Market Growth ......................................................................................................................................... 5
SWOT ............................................................................................................................................................ 5
Strengths ................................................................................................................................................... 5
Weaknesses .............................................................................................................................................. 6
Opportunities ............................................................................................................................................ 6
Threats ...................................................................................................................................................... 7
Competitors .................................................................................................................................................. 7
Product Offering ........................................................................................................................................... 8
Key to Success ............................................................................................................................................... 9
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MARKET PLANNING ASSIGMENT PART 1
Situation Analysis
The electric car industry, as a new business has been facing many challenges. A big issue with
electric cars is that they are expensive. “Battery technology is expensive, and because batteries in
electric cars need to hold massive amounts of charge to make the cars practical for most drivers,
they have to be built using expensive materials” (Challenges Facing the Electric Car Industry,
2014). Another issue is that people are worried about the “life” of the battery. Places with
charging stations are limited and each can charge approximately five or six at a time. People
can’t do big road trips because they are scared of being stranded in the road and nowhere to
charge their cars.
That is why Nissan Leaf is offering a second battery that it is going to function as the storage
battery for the car. It takes approximately six hours to charge a car. People leave their electric
charging overnight, meaning that is charging more than six hours. Instead of letting that extra
battery waste, it is going to transfer directly to the storage battery. This ensures having two full
batteries to use. When the battery is running out of charge the storage battery is going to transfer
the charge to the battery.
Market Summary
“Electric vehicles create additional economic development opportunities by improving quality of
life, reducing energy spending, and decreasing reliance on foreign oil” (Analysis of the , 2014).
This has caused an increase in sales for electric cars, especially the Nissan Leaf. Therefore, there
has been a higher demand for charging stations. Adding charging stations can be expensive, “a
dual unit pedestal electric vehicle charging station can cost up to $3,795 excluding the cost for
installation” (EVlink 30 Amp Level-2 Outdoor Dual Unit Pedestal Electric Vehicle Charging
Station with RFID Access, 2014)Not many business are able to install charging stations because
of their cost, and consumers with electric cars can be left stranded in the road needing a charging
station.
Currently, the Nissan Leaf battery charge “lasts up to 126 miles in the city and 101 in the
freeway and combined it lasts 114 miles” (Nissan USA, 2014). This is beneficial when traveling
and not worry about charging stations. The Nissan Leaf it is also affordable which can attract
more customers than the competitors. This makes it profitable for Nissan to look for a better
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feature than can differentiate them from the competitors and to be positioned in a better place in
the market. With Nissan Leaf’s current 30,000 annual customers, can ensure a success by
increasing the miles driven by each electric car with a storage battery.
The market for electric cars with a storage battery falls into the transportation vehicle market.
This is a very competitive market because there are different models of automobiles that can give
better features than others. In 2013, the total market of vehicles in the United States was 16.5
million and of those, 96,000 were electric cars. Of those 96,000 electric cars, “Nissan Leaf sold
22,610, approximately 24 percent of the electric cars market” (Plummer, 2014). Nissan sold a
quarter of the whole electric car market because their prices are affordable and they are looking
for ways to help customers have a convenient way to charge their electric cars at home or in the
go.
Nissan Leaf currently has installed a GPS program in which a customer can program the trip. It
can “give shortcuts and direct you to places that have charging stations, in case the battery is
running low” (Nissan USA, 2014). By installing the storage battery to current customers with a
Nissan Leaf, it can ensure that a road trip can be done with no stress of being worried if the
energy in the battery is going to be enough to last the whole trip. New customers don’t have to
worry about the installation of the storage battery, it is already included in the new model of the
Nissan Leaf. Nissan Leaf is a good car if you are environmentally friendly and like to travel.
Market Analysis
Demographic
Electric cars target buyers who are beyond affluent, environmentally conscious, or technically
enamored. Nissan created the Leaf to target the audience based on demographics. They created it
the Leaf based on demographics because they believe that every car develops around the
demands of the targeted audience. The Nissan Leaf was created for young Baby Boomers who
are around of the age of 65 years old. Who have an average income of $125,000 and is a
homeowner whose house includes a garage in where the Leaf can fit inside as well as having
enough space to fit the Leaf’s charger. Also, these Baby Boomers have a college education level
and so not travel much. Their average travel is around 50 miles per day. 75 percent of who are
considered an average Leaf owner will strive for the SL trim package, which it consists of an
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MSRP of $33,500. The average Leaf buyer would seem like the type of person who does not
like to spend much money and would purchase the Leaf as a replacement of a luxurious and
expensive car. However, this is not the case, the average Leaf buyer has already had experience
owning the more expensive ecologically responsible cars (Just Who Is A Typical 2011 Nissan
Leaf Buyer? We Find Out, 2011)
Geographic
The Nissan Leaf will base its geographic target according to the facilities and demands each
regions is asking for. However, the major themes will be according to the availability of chargers
and the convenience of interoperability. Also, the geo-target revolves around urban area and
surroundings. (Will Nissan’s No Charge to Charge program drive LEAF sales?, 2014)
Behavioral/Psychographics
As for behavioral target, the Leaf targets those drivers who tend to have more frequent; yet, short
trips. The targeted buyers will have more of conservative driving styles, and will be loyal to the
brand Nissan. Under psychographic, the personalities of the buyers are being very
environmentally conscious and are early adopters. (Nissan Leaf, 2011)
The Market
Market Needs
Today electric cars have been very successful in the market. Particularly the Nissan Leaf, it is by
far the most popular electric car in the world. However, with electric cars being a big hit and
many seeking out to buy them. The charging stations seem to be a big issue and there is a great
demand for more charging stations. Sure the most adequate and most affordable way to charge
the vehicles are at home; yet, most drivers still require the access of having public charging
stations.
Charging stations have increased their demand and are becoming a big market need for electric
car owners. Not only are the demands coming from electric car owners; but, the lack of charging
stations are a threat to new potential owners. This is because the new buyers will tend to look at
the positives and negatives and a big negative is not having enough charging stations. With more
buyers purchasing electric cars there is a high demand for more charging stations (Demand for
Electric Vehicle Charging Stations Fuels LilyPad EV’s Growth, 2012).
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Market Trends
Protecting the environment and going ‘green’ has been a trend that has sparked up a lot. Many
people are becoming environmentally conscious and more aware how to keep our environment
safe. Electric cars have been a huge success especially the Nissan Leaf, this is because it is a
great way to protect the environment and overall it is a great example of what going ‘green’ is.
The Nissan Leaf follows this trend of going ‘green’, the Leaf has been known for being the
greenest car on the market. The Automotive Science Group (ASG) ranked the Leaf as the best
environmental friendly car. This is due to its smallest life-cycle environmental footprint. The
ASG stated, “This U.S. assembled, battery electric vehicle with an estimated 84 mile driving
range is the bestselling all-electric car in the world for good reason.” They also, mentioned,
“Now consumers can be confident that the increased environmental impacts of manufacturing
the battery electric technology is more than offset with increased environmental performance
during operational life.” (Nissan LEAF Officially The Greenest Car You Can Buy, Says the
Automotive Science Group, 2014)
Market Growth
The bestselling electric car is the Nissan Leaf and once again its market growth has increased. As
of July 2014, the Leaf has been tremendously increasing its market growth. By the end of July
2014, the Leaf had an overall 11.5 sales increase. The leaf ended with 3,019 deliveries, which
indicates that Nissan sold so far 15, 755 Leaf’s up to July 2014. Also, July was not the only
month of success breaking the 3,000 unit barrier. In the month of May, Nissan had 3,117
deliveries. In the previous year Nissan sold 11, 703 Leaf’s and this year as mentioned before it
sold 15, 755 Leaf’s up to the month of July, Nissan has increased its annual sales on the Leaf by
34.6 percent in just one single year. (Nissan LEAF sales pummel the market with growth, 2014)
SWOT
Strengths
The Nissan Leaf counts with lots of strengths, which include the following: zero emissions,
instant power ride, streamlined construction, and tax credit. Zero emissions means that the leaf is
completely electric and does not need any type of gasoline or diesel to run. The Leaf counts with
instant power meaning that it has a torque of 0 RPM which indicates that the motor will start
instantly. Instant power ride basically means that the car rides smoother and quieter and when the
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speed is low it is almost silent. Electric cars count with less moving parts (streamlined
construction) which means that this requires less visits to any auto repairing shop and over the
time fewer things are less likely to get damaged. As of 2011, any electric car buyer has the
advantage to receive tax credit from the government of up to $7,500 for buying an alternative
vehicle. Also, it is the most economic family car and is 100 percent electric and has a capacity of
fitting five passengers (Strength and weaknesses nissan leaf, 2014). The biggest strength that the
Leaf has is that with the extra battery storage will allow the driver to change batteries whenever
wherever it is needed. Many people can now enjoy long traveling distances without having to
worrying of running out of battery in the middle of nowhere.
Weaknesses
Although the Nissan Leaf was ranked as the bestselling electric car, it counts with some
weaknesses. The following include: limited traveling radius, charging, battery price, and its less
powerful. The Leaf compared to its competitors has the highest mileage rate; yet, not compared
to traditional cars. Compared to traditional cars the Leaf has only a mileage of 100 miles and that
is a fraction of traditional cars with a full tank. Charging, the main problem and weakness that
the Nissan Leaf has. Like previously mentioned, there are not enough charging stations and it is
not convenient for someone who wants to travel long distances. Also, another reason why
charging is a big issue, it’s because charging at home may be the easiest option to charging the
car. Yet, what about the buyers who do not own a house and live in an apartment where there are
no volt outlets to charge the car. Battery price is very expensive, a battery costs approximately
$7,000, which seems too expensive. Buying an electric car would not be convenient for someone
who is on a tight budget because if the buyer can barely afford the car it is going to be much
difficult counting with the money for a battery. Lastly, electric cars count with less power than
fossil fuel engines. (Nissan Electric Car: 5 Advantages and Disadvantages, 2012)
Opportunities
The Nissan Leaf offers lots of opportunities, the following are: growing attention to the market,
technology developing fast, support from government, and people caring about the environment..
Like previously said, electric cars have been a big success in the market. Many are wanting to
purchase electric cars, especially the Nissan Leaf because of all the benefits it contributes to the
environment. The Leaf has allowed technology in cars to develop quickly. The government
recognizes and rewards people who purchase electric cars. Also, as mentioned before, the
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government rewards the buyers by giving them back with the use of tax credit. Now people are
becoming more environment conscious and making more environmentally friendly decisions,
one by purchasing the Nissan Leaf (SWOT Nissan Leaf, 2011).
Threats
Just like there are opportunities, there are also threats within a product. The Leaf counts with a
few threats, which include: technology developing fast, lack of charging stations, and
competitors. Technology developing quick isn’t just an advantage, it can be a threat as well. This
is because Technology may bring dangers to the human body. A vehicle that has too much
technology and is filled with radiation can harm the human body. Lack of charging stations
seems to appear under every topic; yet, it is the main problem of the product. It is a big threat
because when there is no place to charge the vehicle what does the owner do? With the few
charging stations there are and many are crowded, it can be difficult for the driver to charge their
vehicle. Competitors are a big problem as well, this is mainly because there is lots of competition
for electric cars. The competitors can drive away a potential buyer of the Leaf into buying their
car (SWOT Nissan Leaf, 2011).
Competitors
Every product in the market counts with several competitors, some bigger than others. The
Nissan Leaf counts with 14 competitors; yet, the biggest competitors are only 5. They include:
Chevy Volt, Toyota Prius PHEV, Tesla Model S, Ford Fusion Energi PHEV, and Ford C-Max
Energi PHEV. During the month of March 2014 the Leaf was outstanding and beat its
competitors in sales. Although during previous months Toyota had a pretty stellar month.
However, both vehicles from Ford have really good sales, they count with between 600 and 900
sales. Nissan has 2,507 sales, Ford has 1,686 sales, GM has 1,667 sales, Toyota has 1,525 sales,
and Tesla comes in last with 1,267 sales (Nissan LEAF Crushes Competition In March
Electrified Vehicle Sales, 2014).
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(Nissan LEAF Crushes Competition In March Electrified Vehicle Sales, 2014)
Product Offering
The product offered is a second battery for the car that is going to function as a storage battery. A
car is charged for approximately 10 to 12 hours. A battery takes almost 8 hours to fully charge,
so the first battery is charged in the first eight hours and the storage battery is charged with the
four or five remaining hours. One battery can last up to a 100-miles drive and with the extra
battery it is going to make a drive last longer.
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The battery is installed directly in the car, next to the first battery and the installation comes with
a new purchase. If customers who already have the Nissan Leaf they get the installation is free if
they want an upgrade. The storage battery has cables connected to the battery which helps when
the storage battery has to begin charging. The storage battery is going to be made from lithiumions which is the same battery in cell phones. Having lithium-ion battery ensures that the battery
life is going to last longer. They have an extended life cycle and there is less expensive than
other batteries. Once the first battery is fully charged, the storage battery starts charging this
ensures that people are not just wasting energy when charging their cars. This feature is going to
differentiate Nissan Leaf from their competitors because none offer a storage battery which
ensures a longer driving time without a needing to look for a charging station.
The storage battery comes with a five-year or 55,000 mile warranty and Nissan offers a schedule
maintenance “every 3,750 miles or 3 months, whichever comes first” (Nissan USA, 2014). If
there are problems with the storage battery before the warranty, the customer can replace it with
a new one for half price; they just have to recycle the old storage battery. If the customers wants
to extend their maintenance they can buy the premium maintenance which gives them a life-time
maintenance. Nissan Leaf customers have given a “4.7 out of 5 on their overall rating” (Nissan
USA, 2014).
Key to Success
In order of obtaining market share in the electric car industry, Nissan Leaf is focusing on key
factors that can ensure their success. Nissan Leaf main factor of success is that they are going to
be the first to introduce a storage battery. They are going to be able to differentiate from
competitors and gain more market share than other electric car models. Nissan Leaf works with
new customers and current customers. If current customers want to add the storage battery for
their Leaf they can just request it, there is no charge for the storage battery, just the installation
cost. This factor is important because between 2010 and 2014 Nissan Leaf sales are of
approximately 123,613 and the years is not over yet. Nissan Leaf is selling for approximately
2,000 each month.
Another factor that helps Nissan Leaf have a better success than their competitors is that is
affordable for all the market share. “Seventy-five percent of total market share for transportation
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vehicles can afford a Leaf” (Why the Nissan LEAF is Depreciating Quickly — And How You
Can Grab a Bargain, 2014). They are more affordable because they are gaining popularity in the
market place. They dropped their price by $6,000 from the model they sold in 2012; it is the
same model being sold today. If Nissan is selling this many Leafs each month, adding the storage
battery is going to bring more customers because the price is cheaper and has the same features
than the competitors, positioning themselves in more for less.
Critical Issues
Even though, a storage battery has many benefits for the customers, there are also some issues
that can be in the way of Nissan Leaf’s success. A major issue can be the installation costs. The
price of a Leaf is cheaper than the competitors, but the installation of the storage battery can be
costly. Current customers are the ones that are going to suffer the cost for the installation if they
want to have an upgrade. The storage battery is going to be included in the new Nissan Leaf.
The storage battery is a new product going into the market, a major issue with this is that not
many people is going to want to install it in their cars. People usually waits until a new product is
“tested” by adventurous customers who like to try the new products as they come. If those
customers have good reviews of the storage battery than the majority of the Nissan Leaf’s
current customers are going to buy it. This can hinder the production and success of the
storage battery.
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References
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