|Land Rover Case Analysis |
|Much is Hinging on the Discovery |
I. Problem Statement
Land Rover North America has a few decisions it needs to make which can, as CEO Charles Hughes put it, “Be pivotal to the future trajectory of the firm.” The main ...view middle of the document...
S. market. The reasons against introducing the Discovery are as follows. First of all, Land Rover will not be able to compensate its huge loss due to Japanese vehicles’ competition. Second, Land Rover has to re-design its marketing strategy for existing products to boost sales for compensation and this practice has the risk to lose all original customer targets.
One of the core questions to ask is why is LRNA launching the discovery? Currently LRNA is growing fast and has had strong interest in the Range Rover vehicle. The Range Rover 4.0 SE is planned for launch in 1Q 1995. One alternative LRNA could consider would be to hold off on the Discovery launch and maximize it sales, existing status and prestige with the $500 million Range Rover 4.0 SE redesign and launch. Both of these alternatives are not recommended as LRNA truly has an opportunity to capture higher sales by entering the Discovery in to a new category. The motivation of consumers in the SUV market is changing.
III. Critical Issues
People pay thousands of extra dollars for 4WD capability but most SUVs sold contain 2WD with their owners imagining a sort of "4WD halo" that benefits all vehicles in the category. The majority of SUVs are used as sedans for family transportation, not as off road adventure machines.
Regarding consumer perceptions of major SUV brands, the Land Rover Discovery shared the highest score on quality of 7.4 with the Ford Explorer and Toyota 4Runner. Additionally, the Discovery enjoyed the highest rating of 7.6 on safety. Having the highest score on the two most important factors in the SUV purchase helped position the Discovery very strongly despite its lack of awareness. The Discovery also enjoyed the highest rating of 7.4 on off-road capability, but received the lowest rating on economics compared to all competitors.
Buyers are wealthy professionals (median income $63K versus $31K on average with professionals at 38% versus 13% on average). As the market grows, the buyer profile is changing. Families, arguably the largest potential growth segment, want different things from the SUV, as judged by an index of attribute importance versus SUV segment averages.
Data suggested that the 4X4 leisure sector was comprised of the following two user segments: The first segment is a group of conservative buyers, primarily families, who were more interested in vehicles that were smart and functional than those that made image statements. Also included in this segment were older traditionalists who turned to SUVs as stylish alternatives to traditional luxury cars. The second segment is a group of young, affluent, childless adults who sought products that made visible statements about their owners' images and accomplishments. They wanted vehicles that were unique and different setting them apart from the masses and viewed the 4WD as an exciting product option even though most never actually got off the road to use it. Research suggested that consumers of the 1990s...