Marketing plan: cityZENN

Fall 2013

Table of contents

• Executive summary

• Current marketing situation
Market description, product review, competition, and distribution

• Threat and opportunity analysis

• Objectives and positioning strategy

• Marketing strategy and tactics

• Action program

• Budgets

• Controls

Executive summary
“ZENN Motor Company is dedicated to enabling emission-free, energy-efficient transportation.” (ZMC profile, 2012) ZENN Motor Company is planning to launch a highway speed capable, 300km range passenger vehicle, priced competitively with a very low operating cost, named the cityZENN. Zenn Motor Company will be targeting single people, and families who are looking for a second vehicle that live in the urban city and business users that user that use as fleets.
The Success of the cityZENN will be reflected by a sizeable capture of market shares within this market, while strategically carrying the company up to the top spot as the market leader in the Subcompact Urban City car, and electric vehicle market.

Current marketing situation
With the rising cost of fuel, and a higher regard for cleaner transportation, more consumers are moving toward alternative fuel sources and vehicles which take advantage of those fuels. Electric cars have some benefits compared to conventional internal combustion engine vehicles, such as significant reduce of harmful air pollution as they do not have tailpipe. The electric cars throughout the world are mostly low speed, low range, and neighborhood vehicles. The average cost to purchase an Electric car is currently $38,000; this is caused by the high price of the battery packs. The safety of the electricity is assured as Nissan Leaf and Chevrolet Volt are both named Top Safety Picks by the Insurance Institute for Highway Safety of US (Insurance Institute for Highway safety, n.d.). In 2011, 10,064 battery electric vehicles were sold, comparing to 12,734,356 total vehicles sold in US. Battery electric vehicles only counted 0.07% of the auto market. During the first eight months of 2012 in US, this percentage increased to 0.26%. (Electric Drive Transportation Association, n.d.) With this in mind, research shows that around three quarters of American buyers have or would consider buying an electric vehicle.
Market description

The market of cityZENN consists of consumers and business users. The specific targeted segments during the first year include professionals with high disposal income, passionate about the cars, early adopters of technology, and fairly environmentally conscious. The other targeted segment is business market. The business market consists of corporate users, government users and entrepreneurs. The corporate users and government users need fleet vehicle that is less expensive on operating costs, and show social responsible being “green”. Entrepreneurs would benefit from lower cost on operating the vehicle, and easy to drive and park.

Product review
The first product of cityZENN is compact and very easy to drive and park, and is an excellent transportation vehicle for single people or as a second family vehicle who live in an urban area.
The cityZENN will have the following standard features and a few optional features.
• Driving range: 300 km per charge
• Charge time: up to 10 hours when charged from 110/120v outlet, 3 hours when charging from 220/240v outlet (recommend for family), 30 minutes when charging from 440v outlet (recommend for business).
• 0 to 100 km/h in 5 seconds
• Battery lifespan of 250,000km
• Maximum speed of 140km/h
• 5 passenger compact vehicle
Optional features to choose from: Sunroof and Navigation system
Competition review
In North America alone there are currently only 5 highway capable electric Cars: the Ford Focus Electric, The Nissan Leaf, the Telsa Roadster, the Mitsubishi I MiEV(Mitsubishi Innovative Electric Vehicle) , and the Coda, which is currently only sold in California. The top selling highway-capable electric vehicles are the Nissan Leaf, with global sales of more than 37,000 units by September 2012. The Mitsubishi i-MiEV has more than 15,000 sold worldwide.
The Mitsubishi i-MiEV is the lowest priced electric vehicle currently sold in Canada, and the base price is $32,998. The i-MiEV has a driving range of up to 155 kilometres, and a top speed of 130 km/h.
Highway capable cars with a top speed above 105 km/h (Wikipedia, n.d.)
Model Top speed Acceleration
Capacity
Charging time Nominal range
Chevrolet Volt (PIH)
160 km/h 0-97 km/h in 9.2 seconds 4 up to 12 hours when charged from 110/120v outlet; 3 hours when charging from 220/240 volt outlet 56 km before switching to generator.
Nissan Leaf
144 km/h 5 up to 20 hours when charged from 110/120v outlet; 8 hours when charging from 220/240 volt outlet; 30 minutes for 440v "quick charge" (to 80% of battery capacity) 117 km
Tesla Roadster
217 km/h 0 - 97 km/h in 3.9 sec 2 3½ hours using 240V on a 90A breaker. Can go as high as 48hours on 115V on a 15A breaker 320 km
Mitsubishi i MiEV
130 km/h 4 7 to 14 hours when charged from household, depending on the type of power; 30 minutes when charging from a quick charger system (80% charged) 170 km

Other vehicles that will compete with the cityZENN will be: Scion IQ, Toyota Yaris, Toyota Prius C, Honda fit, Honda Insight, Kia Rio, Hyundai Accent, VW GOLF TDI, Ford Fiesta, Chevrolet Spark, Fiat 500, Nissan Versa, Mazda 2, Mini cooper classic and etc, with the price range of $14,000 to $ 25,000. CityZENN will also compete with other transportation options such as public transportation, biking or walking.

Distribution review

CityZENN will bedistributed through dealers in large North America cities with population of over 300,000 during the first year. ZMC will update the information on the website to provide information about the cityZENN and the financial information.

SWOT analysis
Strengths
1. Innovative product: As electric vehicles are low on maintenance costs, produce no emissions and low noise. Electric vehicles have a positive impact on the environment. There are only several cars are high way capable
2. Canadian company: taking advantage of Americans patriotism, a domestic company will have an edge over the international companies as consumers try to stay loyal to their country and purchase goods designed and distributed therein, before going to the imported competition.
3. Partnership with Texas-based EEStor, which specialize in manufacturing long lasting, more powerful, and more environmentally friendly battery technologies.

Weaknesses
1. More expensive than conventional internal combustion engine vehicles: As this market is still in the early stage, electric vehicles are more expensive than conventional vehicles and hybrid vehicles.
2. Lack of brand awareness: Compared to other high way capable electric vehicles, ZMC has not established brand awareness, especially in Canada.
3. Distribution channel: ZMC doesn’t have well established distribution channel for cityZENN that target consumers.
4. Technology: Driving range on a single charge is limited due to the low energy density of batteries compared to traditional vehicles. Electric vehicles also often have long recharge times compared to the fast process of refueling a tank.
Opportunities
1. Government incentives for purchasing electrical vehicles: Government announced billions of dollars in electrical vehicles market. Ontario, Quebec, and British Columbia also announced subsidies towards the purchase of electric vehicles. In B.C., it's up to $5,000 on the vehicle and $500 on the purchase of an Electric Vehicle Charging Equipment. In Ontario, it's more than $8,000. Ontario plans to introduce green-colored licence plate so that these vehicles can travel on carpool lane. The owners are also able to use the charging stations at go transit and parking lots owned by provincial governments. (Wikipedia, n.d.)
2. Rising gas prices: As concerns about increasingly volatile oil prices and the supply disruption due to uncertainty of the global environment, more people are looking for different options. Investing in electric vehicle industry would also means that the country will have less dependence on foreign oil. The operating cost of driving an electrical vehicle is roughly one-third to one-fourth the cost of a gasoline-powered vehicle depending on where the owner lives. (Wikipedia, n.d.)
3. Environmentally friendly: more people are willing to spend extra money to purchase environment friendly products. "BEV emissions are estimated [...] to be 75% lower than the average conventional gasoline-powered vehicle and 55% lower than the average conventional hybrid vehicle" (Electric drive transportation association, n.d.)

Threats
1. Lack of public and private recharging infrastructure: As this is a fairly new market, there are not many charging infrastructure available and the consumers are fear of the batteries running out of energy before reaching their destination due to the limited range of existing electric cars.
2. Intense competition: As ZMC are competing directly with other highway capable electric vehicles, it also competes with hybrid vehicles and other lower cost conventional vehicles.
3. Down turn of economy: Since the 2008 global financial crisis, prolonged unemployment has made people not willing to spend on expensive items.

Objectives and positioning strategy
The first-year objective of the unit sale of the cityZENN is 10,000.
The main issue is to build awareness of the cityZENN among dealers and consumers and then to build brand name. ZMC needs to invest on marketing to create differentiation among other vehicles and measure progress in order to achieve the goal.

Marketing strategy and tactics
CityZENN‘s marketing strategy is to create product differentiation: zero emission, no noise, and highway capacity. The main consumer target market is high income professionals who are willing to pay a premium and fairly environmentally friendly. The business target market is social responsible, and wants to keep operating costs of vehicle low.
Positionging

CityZENN would be positioned as zero emission; no noise and highway capable electric vehicle with long rang of driving distance on a single charge.
Product strategy

ZMC will offer 5 year warranty on cityZENN. ZMC will also offer service on helping consumers install the charging equipment. The service technicians at the dealers will all be factory trained and certified.
Pricing strategy

The wholesale price of the base model of CityZENN will be $30,000, and the MSRP (manufacturer' suggested retail price) will be $35,000 during the first year. As the cityZENN gain more market share and reaches the selling goal of the first year, ZMC can lower the wholesale price of the base model to $29,000 for the second year.
Distribution strategy
ZMC should consider the following:
• Educate the buyers about the benefits of electric vehicles: stress key benefits, both environmentally and financially. It should also prepare to answer questions such as low range, challenges of charge batteries away from home.
• Target receptive buyers: large cities would be key selling area due to residents’ propensity. It should also target buyers who already have a vehicle. These owners would be interested in more energy efficient electric vehicle.
• Appeal to key purchase motivators: cityZENN will likely attract more high income buyers. Buyers may be motivated by unique styling, financial or practical incentives and environmental appeal.
Action program
The cityZENN will be introduced in June 2013. In order to achieve the objectives, ZMC will use the following time line:
March: ZMC will have training to educate the dealers about the features and benefits of the cityZENN.
April: ZMC will start to have TV, internet, newspaper and magazine campaign targeting consumers and business users.
May: ZMC will set up test drive in the targeted larger cities, and provide information and brochure to consumers.
June: As sale begins, ZMC will have sales promotions such as discount on purchasing of charge equipment, offer free small gifts which have the logo of the cityZENN. The dealer will provide plenty of brochures to buyers so that they can pass on to people who are interested in cityZENN.
July: ZMC will hold a sale contest to honor the salesperson and the dealer that sells the most cityZENN.
August: ZMC will collect customer satisfaction surveys to get feedback for product and marketing strategies.

Budgets
The projected unit sales of cityZENN during the first year are 10,000, and the average net selling price is $30,000.
Project profit and loss statement for the 1 year period ended May 31, 2014
Projected revenue ($30,000 X 10,000 cars) $300,000,000
Expected costs of production ($20,000 X 10,000 cars) 200,000,000
Gross margin $100,000,000 Marketing Advertising $50,000,000 Dealer sales promotion 20,000,000 Distribution 20,000,000 90,000,000
General and administrative expenses Salaries 20,000,000 Rent 10,000,000 Other expenses 10,000,000 40,000,000
Projected loss ($30,000,000)
Controls
ZMC will monitor the sales, monthly expenses and customer service satisfaction closely to make sure that the marketing strategy work well as planned. ZMC will also develop contingency plans to meet the ever changing auto industry.