Sunday, January 24, 2010

Economic Environment

The economic environment consists of factors that affect consumer purchasing power and spending patterns (pg 78).

Dominant categories of cars in the United States in the early 2000s were pick-up trucks and sport utility vehicles (SUVs). America’s big three motor companies, GM, Ford, and Chrysler focused heavily on this segment and produced many trucks and SUVs for their consumers. The market for these categories became so large and popular; they became cash cows for the “Big Three.” Later in the decade though, consumers faced an increase in gas prices, environmental/green-eco agencies raised awareness, and the start of the recession took place, ultimately diminished the demand and consumption of large vehicles. The lasting effects these events brought have changed consumers spending patterns.

With the 2010 North American International Auto Show just wrapping up, the main buzz was all about small cars. Smaller, fuel-efficient cars have been gaining popularity among consumers and many automobile industries have noticed. Paying for a large vehicle and constantly refilling its gas tank is not considered practical anymore. The “Big Three” quickly had to go back to the drawing boards and design smaller cars that not only provided good value and fuel economy, but also appealed to the public.

Ford has been hyping up their new direction of the company, by marketing their new line up of small cars that are appealing in style, yet very fuel efficient. For example, the Fiesta which was originally designed for the European market is finally making its way to the United States; the great success it has had over seas has made Ford realize its possible potential here.

Vincent Nguyen
MKTG 301 G

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