Saturn VUE Marketing Strategy
One of the biggest social trends in the automobile industry has been the shift in consumer preferences toward SUV’s. Sales of compact SUV’s are projected to grow approximately 33 percent by 2005. Due to their popularity and explosive sales, SUVs now dominate the industry and come in a variety of configurations. The growth of SUVs has created a challenge for Saturn since it was know for small, fuel-efficient cars. Saturn almost missed the window of opportunity in the SUV market by failing to introduce its VUE before the 2002 model year.
In the fist year the Saturn’s projected its sales of the VUE at 50,000 units sold. In late 2003, Saturn’s year-to-date sales were up by 2.5 percent over the same time in 2002. The VUE continues to lead Saturn models with year-to-date sales with a 50 percent increase over 2002.
Saturn competes in a market segment that has been dominated by imported brands. To win customers from the Honda’s and Toyota’s of the world; Saturn developed a marketing and communications strategy that supports its “the customer comes first” positioning strategy. With marketing and distribution of new cars accounting for 30 to 35 percent of a car’s cost, Saturn plans its marketing and distribution very carefully.
Target Customer Profile
The target market, consumers age 18 to 45, is one that demands much more now than in the past and has, like never before, a wealth of knowledge at its fingertips through the World Wide Web. This highly lucrative consumer group consists of mostly, 60%-65%, college graduates with a median annual household income of $75,000. Due mostly to Saturn’s “No Hassle, No Haggle” purchase policy that is attractive to women, the Saturn VUE’s target market is equally male and female of whom 65%-70% are married. It is a confident, optimistic group that is ready to take on the adventures that lie ahead. They are into gadgets, individuality, and defining themselves. New and unique ideas are highly attractive to them.
The primary need for this target market is a reliable, safe, and price-friendly SUV that caters to consumers with highly active lifestyles. Since they demand individuality, these consumers also want the opportunity to tailor their cars to fit their personality and style. They understand the many product alternatives available to them. This group is looking for low interest rates, discounts, and rebates; and is guarded when it comes to expensive, long-term purchases such as a car. Comfort is essential regarding their purchase, as they want to feel they made the best, safest, and highest value purchase possible. As a result, the friendly and non aggressive purchase experience traditionally associated with Saturn, and the safety ratings of the product itself, are appealing to them.
Saturn automobiles are known for their safety and reliability. Along with that reputation, the unique features of the VUE appeal to the target market. Primarily the VUE comes in two distinct models. The outdoor expression version of the Saturn VUE caters to the more adventurous and is designed to reinforce the VUE’s capabilities as a light-duty off-road vehicle. The urban expression version has a lower, bolder chassis than its outdoor counterpart and caters to the popular trend of urban families to own a SUV as an alternative to a minivan.
In addition the VUE provides its customers with an SUV that is versatile, practical and tailored to merge the dynamic needs of an array of customers. The clean, contemporary design of the Saturn VUE makes it a natural for the growing customization trend, especially among customers with active lifestyles. VUE customers can personalize their vehicles with a choice of more than 40 retailer-installed accessories available at Saturn retailers including an optional sunroof.
Saturn prides itself on its reputation for safety and security with its world-class structural design and other notable safety advancements, including an optional head-curtain air-bag system. The VUE continues this tradition by using Saturn’s spaceframe construction, unique among SUVs, that allows engineers to combine optimum strength with minimum weight. Saturn’s head-curtain side air bags help provide protection from head and neck injuries in side-impact collisions. Among the many other safety and security features standard on VUE are daytime running lamps, child safety door locks, child safety seat system LATCH, and a theft deterrent system that prevents start-up without a proper ignition key.
The cost of the VUE is consistent with Saturn’s desire to provide high quality at a reasonable price. In order to appeal to its target market, the VUE was priced at under $20,000 US for its release 2002 model. With a base price of just over $17,000 US, VUE is less expensive than comparable models such as Honda CR-V, Hyundai Santa Fe, Jeep Liberty, and Ford Escape. This pricing strategy, has positioned the VUE as an entry level SUV for drivers 18 to 45 years old. Of course, Saturn overall no haggle, no pressure sales philosophy adds to the attractiveness of the VUE.
In accordance with its “different” philosophy, Saturn’s distribution system is carefully planned. Saturn dealers are given large territories so that each competes with rival brands rather than each other. This makes it possible for dealers to honor Saturn’s pricing policy instead of undercutting each others prices. Generally there is just one Saturn dealership in a metropolitan area. In addition to traditional distribution efforts, interested customers can explore product options and build a virtual vehicle at Saturn’s web page but ultimately they still must visit a dealership to finalize the purchase.
Saturn’s overall target market are customers of imported cars, the ones that would otherwise not consider purchasing a GM car. Consequently the company set up its first dealerships in areas where sales of imported cars are high; mostly on the East and West Coasts. Great care was given to select dealers who know how to appeal to imported-car buyers. Dealers work to provide a relaxed, inviting showroom environment. Salespersons generally avoid high-pressure sales tactics and financial advisors are on hand to answer questions and provide access to the latest financing options.
Instrumental to the VUE distribution plan was the year long communication campaign Saturn initiated prior to releasing the VUE on the market. Potential customers registered to receive information on the VUE, this provided Saturn with vital information to plan production and distribution. Additionally distribution was decided according to interest by geographic region where the product mix of the outdoor expression version and the urban model came into play.
The name VUE was selected because in Saturn’s opinion it had a positive image and did not constrain customers’ perceptions of the vehicle. A name that already had a specific meaning could have in their opinion limited peoples’ understanding of the VUE’s versatility. The promotion for the VUE focused on the unique and tech-oriented features of the automobile.
To kick off the launch of the VUE, a regular series of communications to prospective customers, detailing the Saturn VUE’s advantages “On the Outside,” “On the Inside,” “On the Safe Side” and “On the Fun Side” was planned. Consumers signed up to participate in the program through response cards at auto shows, Saturn’s 800 number or at the Saturn Web site. A large percentage of this campaign occurred in the year prior to the release of the VUE on the market to attract attention and generate interest with potential customers.
As always with Saturn, the relaxed sales atmosphere, no haggle pricing philosophy, and friendly employees are among its most important promotional tools. This environment not only motivates the sales consultants, it also stimulates a fair amount of positive word of mouth about Saturn and our product lines.
The integrated marketing program used direct mail, auto shows and the Internet to inform customers about the unique features that VUE brings to market. Saturn also took its promotional message to the air with the Saturn Lightship, a blimp that travels across the United States supporting a variety of events. Saturn reported in 2002 that more than 115,000 people had signed up to receive information on the VUE before its release on the market. Over half of those prospective customers have never owned a Saturn.
In order to promote the release of the VUE effectively, Saturn brought VUE to potential customers rather than waiting on them to visit the showrooms. Saturn launched three “mobile event teams” to maintain the momentum created by the VUE’s appearances at auto shows across the USA. These mobile event teams were created to support select corporate and regional events in an entertaining and interactive way. The teams were composed of a transportable display containing a Saturn VUE, supporting audio/visual properties, and an interactive remote control VUE race track supported by a Saturn representative. By taking the VUE to numerous events Saturn created an environment where a greater number of potential buyers become more aware of the new product.
Starting in March 2004 Saturn’s traditional “different” will be missing from its promotional campaign. The slogan will be retired in favor of Saturn’s new tagline, “People First,” which was selected to emphasize the company’s customer focus. The new ad voiceovers say, “When you put people first, you treat them the way you’d want to be treated yourself.” The new campaign will be aired during primetime on a variety of broadcast and cable networks. New print advertising with the “People First” theme will begin appearing in weekly and monthly publications on newsstands in April. The ad for the go-anywhere VUE features “The See Every Monument Dad,” and will run in active lifestyle publications.
Following the launch of the VUE at the Auto show in October 2000 Saturn has succeed to position its VUE in the growing SUV market on three strategic points; price, safety and fuel economy. Saturn’s pricing strategy has positioned the VUE as an entry level SUV for drivers 18 to 45 years old and is considered the Low-Cost Leader in the category. Saturn’s innovative safety features are standard in the VUE and make it the SUV market leader in safety. The VUE’s transmission uses a unique system of pulleys instead of gears. As a result, fuel economy is increased approximately 10% over the same vehicle equipped with an ordinary transmission to 24 miles per gallon. Positioning it as a more fuel efficient car.
Marketing Strategy in Recessionary vs. Expansionary times
In recession times customers do not go away, they become more conservative in their purchasing decisions. They look for more return value for their investment. For potential VUE owners Saturn positioned its vehicle taking that into account. Customers can with a VUE get a comparable SUV with extra safety features for them and their families for a lower price. In addition the VUE is more fuel efficient than its counterparts and therefore takes their future economic requirements into account.
In expansionary times Saturn would have an opportunity to increase its market share of the SUV industry by introducing an additional more luxurious model. This would necessitate additional promotion in publications targeting higher income consumers. Saturn’s pricing strategy should remain the same regardless of general economy times since Saturn created a reputation of a low cost leader in the car industry.