Big 3’s Product & Pricing Strategy for Cross over

Last Friday, I had a fatal accident. Miraculously no body was seriously injured. I was waiting (moving slowly 10-15 mph speed) in the traffic on the freeway and a pick truck  rear ended me at the speed of  75-80 mph.  This is the second time (first time, a deer came infront when I was on the freeway)  I had a serious accident and this time also He sent help along with the accident. Immediately (within less than 2 mins) after the accident, a medical doctor,a fire fighter and a moral supporter (he works for GM) were knocking my car’s door and made sure I was fine. They were travelling 2 -3 cars behind me and they noticed the accident live in their naked eye.  All of them were surprised I was alive after the accident.  My cross over and his pick up truck were totaled.  I thought none of our air bag went off. But, when I got the accident report from state police, his air bag went off.  I’m back in the market to buy a replacement car.

I utilized this opportunities to study the big 3‘s brand,product and  pricing  strategy. Generally, I try to reverse engineer a company’s strategy by observing and studying their product line, pricing, people, customer services and etc. I would say, my success in the reverse engineering the company’s strategy is Trader’s Joe.  If you are strategy person, you can easily paint their company’s strategy by looking into their unique product line, people in their store and their key differentiators.  I tried to reverse engineer the big 3 product and pricing strategy for the cross over product and compared it with other major automotive.

When I did this study, I had my consumer hat with strategist eye, architect’s view and  project manager’s approach.  My entire findings very well could become a  M.B.A (Corporate Strategy) capstone project. I summarize it in the blog a high level executive version.

Requirements:
Cross over – 6 or 7 seater with high safety rating, leather seat, dvd navigation, iPod integration, 40 gb Hard disk, Phone,  and decent mileage around 20 mpg in high way.

General Motors:

GM has following major division operated in North America:

and Luxurious product

(I’m ignoring their product line like Holden in Australia , Daewoo in South Korea, Opel in Europe, Vauxhall in UK)

Surprisingly all of their division except Hummer has a cross over product.  I made an assumption, that I decided to buy a GM cross over and explored how GM  product line is helping me (motivated and committed consumer)to make my choice. By going over their cross over product from buick, chevy, gmc product web site, I could find one major differences between all these products. Their product names are different. Other than that, I could not identify any other difference in their features offering. There is no differentiators among these products.  I was so confused. I wanted to compare their pricing

GM Cross Over Pricing:
All of these product pricing are in the same price range. A fully loaded Buick is same as Cadillac. Saab, Saturn price spill over to each other. There are too many choices to the buyer with no differentiators.

It is clear that each division within GM is competing with other divisions within GM. I don’t know when these strategy worked successfully. In this web 2.0 and 3G world, even the enemies in the battle field collaborate on common problems.  I don’t know competing internally really is a good strategy. Wasting their energy fighting internal. Instead focus that energy to fight your real external competition.

Conclusion:

  • GM’s individual brand strategy does not appear to be aligned to the over all GM’s corporate strategy
  • GM Cross over product strategy – Neither it is too cumbersome  to reverse engineer it nor there was no cross over product strategy from GM company stand point
  • GM Pricing Strategy – No differentiators among their products. Their pricing spill over between their products. 
  • Confuses the consumer who decided to buy a GM product.

Ford

After Ford’s recent sale of Jaguar and Landrover division to Tata motors, Ford product line is not as complicated as GM. It has the following division.

  • Ford
  • Mercury
  • Volvo

Luxurious product division:

  • Lincoln

Ford division itself has following cross overs.

  • Flex
  • Edge
  • Taurus X

Mercury & Volvo also have cross overs products.  Volvo is utilizing the web 2.0 for the product marketing. They use youtube, twitter, flicker, for their cross over product to create a user community and make them feel good that they own the volvo product and allow the owners to freely collaborate.  It provides insight to Ford/Volvo that what are the problems being faced by the current owners and can be taken into the future models. It also helps Volvo on the preemptive    by closely monitoring the problems faced by current Volvo owners. Great Concept.

Conclusion:

  • Ford’s brand strategy is better and it will become best if they could find a buyer for Volvo.
  • Ford’s Cross over product strategy – It is not straight forward to reverse engineer it. It appears they have cross over product strategy from Ford company stand point. There is a differentiators  in the style, product feature and appearance. There are lot of room for improvement. They still need to make tough choices to streamline the cross over product within the company. Over all in each product line, there should be only three products. Low end, middle ground and high end. They are not there but close.
  • Ford’s cross over product Pricing Strategy – All the cross over products in Ford is in the same price range.
    • Fully loaded Taurus X price is same as the low end Lincoln. There is a price spill over between products.

 

Chrysler

There are three brands under Chrysler.

Since Chrysler announced that they are stopping Pacifica, Durango and Aspen I’m not taking those products into consideration. It means, there is no cross over product Chrysler Brand within the Chrysler LLC company. Pacificais the piooner in the cross over product space and it is unfortunate it will not be continued. I believe the key reason for pacifica not be successful in the market is due to the initial pricing was too high and product/pricing strategist were targeting agains Lexus. It must be a tough decision for Chrysler to stop the great product. I, personally love Pacifica and when I drew it for couple of years in 2004/5 and I made my own sticker and had it at the back of the car. “Pacifica is great and we love it”

Dodge Journey is the only cross over product in the Chrysler product portfolio. Jeep, Grand Cherokee is close to a cross over but it is a SUV.  Fully loaded Dodge Journey comes around $35K.

Conclusion:

  • Chrysler’s cross over product strategy is the best among big 3.
  • Need differentiator (like fuel efficiency or unique style, uconnect is not enough to differentiate )
  • Chrysler’s cross over product Pricing Strategy needs re visitation.  The base price is in correct range.   The fully loaded Dodge Journey price is high.

When I compared the big3’s product,brand and pricing strategy with Honda’s strategy. It is easy to draw a conclusion. If I decide to buy Honda cross over product, as a consumer, I have three choices with clear differentiator. It has CRV, Pilot and Acura’s luxurious RDX & MDX.  There is slit spill over in the price range between Pilot and Acura. It is easy to pick a product from their line if someone decides to buy Honda.

Performing all this study, I bought the same vechicle I had before and this is the thrid time I’m leasing the same vechicle but this time it is clean diesel bluetec technology.

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One Response

  1. Nice comparison.

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