Toyota Camry Hybrid Price Sensitivity Analysis Essay
Toyota Camry Hybrid Price Sensitivity Analysis
1. Ad of a product priced high in its category: Toyota Camry Hybrid 2. Category: Family/mid-sized cars. 3. Prices: ?2007 Toyota Camry Hybrid: $26,200 ?Toyota Camry (non-hybrid): $18,270 – $27,820 ? avg: $23,045 4. Main competition in US (according to Wikipedia. com, prices according to Edmunds. com): ? Hyundai Sonata: $17,195 – $18,445 ? avg: $17,820 ?Mazda 6: $18,930 – $27,800 ? avg: $23,365 ?Saturn Aura: $19,945 – $23,945 ? avg: $21,945 ?Nissan Altima: $17,950 – $28,400 ? avg: $23,175 ?
Ford Fusion: $17,295 – $22,730 ? avg: $20,012. 5 ?Chevy Malibu: $17,155 – $23,410 ?avg: $20,282. 5 ?Mitsubishi Galant: $19,899 – $26,999 ? avg: $23,449 ?Total average for the category: $21,636 Price sensitivity factors analysis 1. Unique value effect There main value emphasized throughout this ad is the fact that it’s a hybrid car, with all advantages thereof: cleaner exhaust, contributing to personal (though not stated clearly) and national economy. Although Toyota is not the only hybrid car manufactured (there are others by Honda and Ford), this ad doesn’t mention it and presents it as a unique value inherent to Toyota Camry.
The fact that a hybrid car is not a widespread phenomenon boosts the influence of this factor. We rank its influence as high (decreasing PS). 2. Substitute awareness effect It’s difficult to compare car prices and benefits just when reading this add, though most of the information is readily available for those interested, on the internet, for example. Because of this we rank the influence as low (increasing PS). 3. Difficult comparison effect Although it might seem otherwise, comparing value for money of different cars is not trivial at best.
Although there are several major factors used in comparison (such as engine capacity, horsepower, physical size), there are plenty of secondary characteristics (ranging from turning circle and engine torque to the model of the internal GPS device and MP3 player) which may be important for some. In our opinion, the influence of this fact is underestimated, and thus some hard-to-compare characteristics are missing from this ad, leaving only the hybrid nature of this car. Though it’s a clear advantage in comparison to the competition, information about any car model can be obtained very easily.
We rank influence of this factor as average (decreasing PS). 4. Total expenditure effect Toyota Camry is mainly a family car, and only one such car will be usually bought per family. Also, the personal fuel economy is not emphasized here at all, so this factor has low influence here (contributing to low PS). 5. End-benefit effect The main end-benefit effect present in this ad is somewhat skewed. Instead of emphasizing personal benefits of buying a hybrid car (such as fuel economy), the more altruistic “heal the world” reasons are presented.
The bottom line message of this ad clearly states: “buy this car, and you will be blessed, as a good soul, caring about the future of our planet and about the US economy. ” This approach may be effective in certain contexts, but that requires further research. In our opinion, the more ego-centric the benefits are presented, the more effective the ad will be. Or, conversely, another way to make it more effective would be to take it to extreme: “buy this car for the future well-being of your kids and grandchildren”, “together we will change the world”, “stop global warming”, etc.
The influence is ranked as low to average (decreasing PS). 6. Shared cost effect By and large, it is missing from this ad. The ad is apparently addressed mostly to private buyers, who usually pay from their own pockets. Also, there are no discount propositions, such as “bring your old car and get a discount”. Influence ranked as none (contributing to high PS). 7. Switching cost effect The switching costs of buying a new car are mainly psychological (giving up the old one if upgrading or giving up other alternatives, such as public transportation) as well as the price of the car itself.
No ways to reduce these costs were offered in the ad (see paragraph 6), and therefore PS stays at a high level. 8. Price-Quality effect The issue of the price is not mentioned in this ad, although as explained above, this car is relatively high priced in its category ($26,200 vs. $21,636, average category price (the difference of $4,564), or $23,045 for average non-hybrid Toyota Camry (difference of $3,155)). Some emphasis might have been put on this, promoting the high price as a sign of luxury, or, on the contrary, as price worth paying for the sake of next generations. Influence is low (thus increasing PS). 9. Inventory effect.
A family car usually stays in the household inventory for many years. Therefore the effect of this factor on price sensitivity is relatively high (increasing PS). It could have been emphasized that Toyota cars are high-mileage cars to help decrease price sensitivity. 10. Fairness effect Not relevant in this case. Summary: In total, overall price sensitivity promoted by this ad is average (some of the factors contribute to its high level and some decrease it), but it’s clear that an effort to decrease the sensitivity was made, mostly successfully. However, more could have been done, as stated in recommendations to each PS factor.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 15 February 2017
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