1. (a) The types of market segments currently existing for the Hummer in the consumer market are generally men with household incomes varying between 200 and 300 thousand dollars per year. Most of these men already own two or three cars. More doctors will purchase Hummers than lawyers. This market segment consists mostly of entrepreneurs as opposed to corporate conformists.
(b) The types of market segments in the business-to-business market are mostly associated with the government / military / US Army fleets. AM General, producer of the Hummer, has also signed a number of licensing agreements for the use of the Hummer name-with Converse to market rugged footwear and with Timex to produce a “Hummer” watch.
2. There are many pros and cons associated with the above market segments. For the consumer market, the demand is created by a very narrowly defined group of consumers. A specific target market is positive thing for producers of a good such as a Hummer, however it is very limiting to the overall demand of the product. In other words, the vast majority of the US population has an annual household income of much less than 200 thousand dollars and is not lead by extremely successful entrepreneurs or doctors. AM General knows which type of consumer to target, but the number of consumers in the market is relatively small. Good news for the business-to-business market! If AM General can continue to satisfy the demands of the US military, then they are pretty much guaranteed a continuously existing market. The market may shrink and expand from time to time, however the US government will continue to demand military vehicles as long as world peace ceases to exist.
With the falloff in demand from the government segment, AM General should target the consumer market more heavily. With e-commerce booming and many entrepreneurs creating new innovative dot-com companies, there are men out there with money to spend! Because Hummers are more of a luxury item to own rather than a conventional form of transportation, the market would be similar to that of the Ferrari or Lotus Esprit – type vehicles.
3. AM General’s marketing mix will differ between that for the consumer and that for the business-to-business segment. For business-to –business transactions, product will meet the specifications requested by the business (their needs). Place isn’t too important. Price is pretty much lacking competition for the most part, and will only be important as to what the government can afford (contracts?). Promotion will not be a huge concern here, either. Am General will need to provide information that will make the government realize that their products (vehicles) are strong, reliable automobiles by which the government will benefit from (they will aid in military defense and development). For consumers, AM General will have to work a little harder in the promotional area. The name and image of the vehicle alone will attract customers who wish to identify with this image. However, the consumers need to believe that a Hummer can actually be driven around easily and safely by any consumer, not by just the military. Price will be of significance. Not many people will be able to purchase such an expensive, impractical vehicle. Place may be of importance as well. The Hummer may be more attractive to those living in certain types of terrain where they feel they can enjoy the luxury of the outstanding performance of a Hummer off road, in water, sand, etc. Does there need to be Hummer dealership on every corner in every city? No. Hummers should be available upon special request because their target market is so specific. If a consumer wants one, they will search for one. They won’t decide to drop by the dealership on their way home from work and work a deal! Buying a Hummer is a major decision (for most of us, anyway).