Hummer External Environment

GMC Hummer External Environment

Customers

There are two distinct groups of people who purchase Hummers: those who use it for practical purposes and those who drive the vehicle as a status symbol. The first group of people is those that drive the vehicle for more practical purposes. According to the article Hummer, the hummer was built based on the concept of a High Mobility Multipurpose Wheeled Vehicle (HMMWV or Hum-Vee). The HMMWV were military vehicles that provided aid to troops in rough terrain environments (2006, p.1). Therefore, a segment of the Hummer enthusiast population are the type of people that enjoy driving these vehicles off road, as well enjoy the power the vehicle provides to drive up steep hills, rough terrain obstacles, and even drive it through shallow water. The second group of people is those that drive the vehicle as a status symbol. Gross explains that after the attacks on the World Trade Centre, "Hummers became a cocky symbol of American greatness" (p. 1). The people who drove the Hummer were those that wanted to show there support for the troops in Iraq as well stimulate the economy (2006, p.1). However, people who do not purchase the Hummer in support of the war; purchase the Hummer for the status that the car gives off. For example, these people may want to show how successful they are, to show that they enjoy the finer things in life, to have one of the largest vehicles on the road, or enjoy the rugged look of the vehicle.

Competition

The Hummer has cornered themselves into a niche market from which the design has not yet been explored in the consumer automobile market. When we think about a vehicle that is both large and powerful, the first vehicle that most people think of is the Hummer. However, as the Hummer slowly enters the luxury SUV market with the introduction of the H3, the market becomes very fierce. Almost every major automaker has a SUV vehicle in the market; for example, Land Rovers whom are known for their world class luxury SUV's. As well, Jeep has become a competing force in the SUV market by offering rugged 4x4 vehicles at affordable prices.

Other competitors in the SUV market include Porsche Cayenne; BMW X5, X3; Lincoln Navigator; Acura RDX, MDX; Ford Escape, Explorer, Expedition, Edge; GMC Envoy, Yukon; Buick Rainier, Rendezvous; Cadillac Escalade, SRX; Chevrolet Equinox, HHR, Suburban, Tahoe, Trailblazer; Dodge Durgango, Nitro; Honda CR-V, Element, Pilot; Hyundai Santa Fe, Tucson; Infiniti FX35, FX45, QX56; Isuzu Ascender; Jeep Commander, Compass, Grand Cherokee, Liberty, Wrangler; Kia Sorento, Sportage; Land Rover LR3, Range Rover, Lexus GX470, LX470, RX350, RX400h; Mazda CX-7; Mercedes-Benz GL-Class, M-Class; Mercury Mariner; Mitsubishi Endeavor, Montero, Outlander; Nissan Armada, Murano, Pathfinder, Xterra; Pontiac Torrent; Saab 9-7x; Saturn Vue; Subaru B9 Tribeca, Forester; Suzuki Grand Vitara, SX4, XL-7; Toyota 4Runner, FJ Cruiser, Land Cruiser, RAV4, Sequoia; Volkswagon Touareg; Volvo XC90; Audi Q7; and Chrysler Aspen (2006, p.1). Some of these competitors such as the Porsche Cayenne, BMW X5, Lincoln Navigator, and Land Rover Range Rover are more threatening to the Hummer, because they offer more luxury options than the Hummer and still cost a lower price. The way the Hummer is able to differentiates themselves is in off-road performance, from which none of the competitors are able to compete against.

However, recently Jeep has become an increasingly threatening competitor to Hummer, and the Hummer brand should be concerned about their niche market. In the article Press release, in 2005, at the North American International Auto Show, Jeep showed off their most dynamic concept vehicle, the Jeep Hurricane. The Jeep Hurricane is more stylish, powerful, and innovative than the Hummer H1. For the reason that the Jeep Hurricane is only a concept vehicle, it does not currently affect the Hummer's niche market. However, with the introduction of the Jeep Hurricane, Jeep is definitely moving in the same direction as the Hummer (2005, p. 1-2).

Marketplace Dynamics

The market place is slowly moving towards a more fuel efficient concept: the hybrid. For a number of years, SUV's have been a growing trend and several automotive makers depended on the sales of SUV's to boost up the bottom line. However, due to high gas prices, the gas guzzling vehicles (SUVs) has taken a drop in market share. According to Gross, "The Hummer, like many gigantic SUVs, gets about 13 miles per gallon. With gas prices at about $2 a gallon, and likely to rise further, driving a Hummer is an expensive proposition." However, hybrids, such as the Toyota Prius, claims that they can drive up to "50 miles per gallon" (p.2). Toyota calculates that by "driving 40 miles a day, the annual cost of operating a Prius will be $2,144 less than operating a Hummer." (p.2). As the hybrid trend increases in the automotive industry, we as consumers are seeing more vehicles equipped with the hybrid technology. However, there are still doubts about the benefits of the hybrids. Benton mentions that as hybrid vehicles tend to cost more than gasoline vehicles, and it may take several years to make the difference back. As well, the mileages shown are tested in ideal conditions, which do not exist in the real world, and that we are actually receiving fewer miles than what is stated on the broacher. Despite these allegations, sales of the Toyota Prius tripled as gas prices rose to over $1 per liter (2006, p.1).

Trade Environment

Domestic

When considering the domestic environment,