Potential Market Segments for General Motors

Posted: January 4th, 2023

Potential Market Segments for General Motors

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Potential Market Segments for General Motors

General Motors Company is a giant automotive manufacturing company based in the United States, which is renowned for brands like, GMC, Chevrolet, Cadillac and Buick. General Motors North America (GMNA) and General Motors International Operations (GMIO) are the two business segments of the company that define its geographical operations. In this respect, the main geographical markets of the company are the United States and Canada in North America (GM North America), and Europe (GM Europe) (General Motors Company, 2020). Notably, the Company has made inroads into the Chinese market through joint ventures. The company’s market share in the United States and North American markets are 16.5 % and 15.9 % respectively. Moreover, the main classes of vehicles manufactured by the company are cars, trucks and crossovers, with trucks having the largest market share of 29.6 % in the United States market (General Motors Company, 2020). The shifts in the customer preferences, the emergence of new trends, and the advancement of automotive technologies are pressuring general motors company to rethink its operational strategy by venturing into nontraditional market segments. The ensuing discussion identifies and justifies new market segments for General Motors Company.

The recommended market segments for General Motors Company are the small cars, economy cars, and used cars considering that it has focused on large trucks with large engines as its bestselling vehicular segment for a long time.

Small Cars

This segment is called GM Small to reflect the small size of the vehicles that target markets with space limitations due to huge congestions and lack of packing space. These vehicles consist of superminis, microcars, and subcompacts (Mohr et al., 2013).

Segment Profile

The demographic targeted by this vehicles segment is the middle class living in high density locations across the world. The targeted market comprises of families wishing to have a first car but live in congested conditions, or need a second car but have limited space at home.

Geographically, the targeted customers are likely to be found in urban dwellings in Africa and Asia where residential areas are congested, the roads are narrow, and traffic density is high. Many large cities in Africa and Asia have underdeveloped road infrastructure that is unable to accommodate the fast growing number of vehicles (Kotler & Keller, 2016). Similarly, the residential areas are highly congested as urban populations rise exponentially.

The psychographics of this segment include a preference for vehicles that can perform several functions conveniently under the constraints of fast growing but largely poorly-planned cities. Although the people desire a modern lifestyle, they are constrained by space and resources. Therefore, the behavioral aspects of this segment include the valuing of space and the need to have more than one vehicle, as the most critical benefits. In this regard, a multifunctional vehicle for regular use that also elevates the buyer’s status matters significantly to this segment.

Targeting Criteria

This segment is large and burgeoning fast due to the rapid population increase in the country over the last three or four decades. It is projected to take up 30 million small cars by 2020 (Mohr et al., 2013). This segment is attractive because it is adopting modern lifestyles as its socioeconomic status improves with the improving economies of many African and Asian countries, comprising 60 % of the global market (Mohr et al., 2013). Expansion into these markets conforms to the company’s ambition of serving and improving communities across the world (Kissinger, 2017). However, General Motors Company will face stiff competition from Japanese manufacturers like Toyota, Mazda, and Nissan, who are churning out millions of small cars destined to these markets.

Economy Cars

This segment is aptly labeled GM Economy to reflect its focus on fuel economy and the low cost of the vehicle.

Segment profile

The demographic of this segment is families that operate on a tight budget due to the developing economics of their countries. The families are likely to have more than one child of school-going age, paying off a mortgage or renting and therefore, has huge expenditures compared to their earnings.

Geographically, this segment is found in emerging and developing economies in which the taxation rates and cost of living are high as the government expend huge resource to finance large development projects. Therefore, the price of new vehicles and fuel are relatively high in these countries. Moreover, the segment is also found in highly developed countries that have been the traditional markets of General Motors but are increasingly concerned about environmental protection and sustainability.

Behaviorally, the people in this segment are price-sensitive because salary levels remain low, denying the population of the disposable income to afford new regular-sized vehicles. They seek out bargains whenever they make purchases to maximize the value and returns on money spent. Moreover, the people in this segment feely duty-bound to use the resources of the world ethically and sustainably without aggravating wastage and pollution.   

However, the psychographic characteristic of this segment is the desire for vehicles that can help them navigate life’s activities conveniently without overstretching their constrained budgets (Kotler & Keller, 2016). This segment is not loyal to any brand as they are open to brands that are cheap and reliable.

Targeting criteria

Many countries in the world are experiencing economic difficulties or slowed economic growth rates. These effects are being felt by the population across the world, leading to increased sensitivity in prices, from the price of vehicles to the price of fuel and spare parts (Mohr, et al. 2013). Moreover, the increasing calls for reduced carbon footprint by the automotive industry are spurring the increasing popularity of vehicles that consume less fuel and in turn reduce greenhouse gas emissions. However, this segment is highly competitive as it is dominated by the Japanese car makers similar to the earlier segment discussed. Like the previous section, this segment conforms to the company’s endeavor to improving the wellbeing of communities where they have presence.    

Used Vehicles

This segment is called GM Reuse to highlight is focus on extending the utility of the vehicles once they have been disposed by their first owners. In this respect, this segment focuses on refurbishing used vehicles and readying them for the market of individuals that cannot afford brand new vehicles.

Segment Profile

The targeted demography is young individuals aged between 18 and 30 years. This segment comprises of the Generation Y cohort also called the millennials because they were born between 1980 and 2000. Currently, this generation is large in many countries including the United States, and its proportion is increasing as seniors and the baby boomers exit the labor market and active life. In addition, this segment is located in advanced economies of North America and Europe where the company has had a longstanding presence. 

The targeted segment believes in the continued use of items so long as they are usable, due their strong feelings about reuse as a sustainable approach of utilizing resources. They believe that resources should not be wasted and therefore making new cars while the used cars are still serviceable, is wasteful and unsustainable.

Moreover, this segment has admired the brand of vehicles used by their parents and national icons and therefore has developed a he brand admiration. Therefore, despite their financial limitations, they need a reliable vehicle they can use to commute to college or their first jobs that perpetuates the brand loyalty of their predecessors.

Targeting criteria

The numbers of the generation Y and Z are attending college and entering the job market in huge numbers owing to their large proportion in the active population. This segment is highly attractive because it is not particularly targeted by any vehicle manufacturers across the world, and therefore is highly attractive to General Motors Company. Moreover, it advances the company’s pursuit for lifetime customers by capturing young clients (Kissinger, 2017).  

Conclusion and Recommendation

Although these market segments share many commonalities, they are unique in the special attributes of the potential customers targeted. For instance, the small car market segment focuses on people with limited space for parking and movement, while the economy car segment targets people with limited financial capabilities yet they desire new cars, and the used car segment targets those who desire a famous brand of a vehicle but are unable to purchase a new one and are environmentally conscious. Despite the overlapping of several attributed of these market segments, it is recommended that General Motors Company developed well targeted marketing campaigns to popularize each vehicle category in the desired target markets, especially in Africa and Asia. These targeted market segments emphasize the aspects of the company’s mission statement that speaks about earning customers for life and serving and improving communities around the world. In this respect, the customers enlisted through these segments are likely to display lifelong loyalty because of being associated with a world-renowned brand. 

References

General Motors Company (2020). Form 10-K: 2019. Retrieved from

            http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_GM_2019.pdf

Kissinger, D. (2017). General Motor’s Vision statement & Mission statement (Analysis). Panmore Institute. Retrieved from http://panmore.com/general-motors-vision-statement-mission-statement-analysis.

Kotler, P., & Keller, K. L. (2016). Marketing Management. London, UK: Pearson Education.

Mohr, D., Müller, N., Krieg, A., Gao, P., Kaas, H., Krieger, A., & Hensley, R. (2013). The road to 2020 and beyond: What’s driving the global automotive industry? McKinsey & Company, Inc. Retrieved from https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Automotive%20and%20Assembly/PDFs/McK_The_road_to_2020_and_beyond.ashx.