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INTRODUCTION /PRODUCT BACKGROUND The automobiles humble beginnings stemmed from a need for a more practical, safer, and economical device than the horse and carriage. The horse and carriage of yesterday was as common as any family car would be today. The horse and carriage was beginning to lose its usefulness. Another device was required and a revolution which affects each one of us ensued.
The inventors of the day created many devices including steam and gasoline powered horseless carriages. The oldest American car company was created by one of these visionaries. Ransom Eli Olds created one of the most well known American car companies, Oldsmobile, over a hundred years ago. Ransom Eli Olds was born in Ohio on June 3, 1864. Olds is often considered the Father of the American auto industry (Rothenberg, 2001). He built and sold his first steam-propelled horseless carriage in 1893 and had constructed his first gas-propelled vehicle in 1896; Ransom Olds sold his first Oldsmobile in 1897.
The Olds Motor Works was built in Lansing Michigan and incorporated in 1899. The facility was home to the first assembly line, producing the Curved Dash and allowing Oldsmobile to become the first mass producer of gasoline cars (web 2001). In 1900 Olds built 4 units; by 1905 it had made more than 10, 000 cars (McGuire, 2000). The Curved Dash model was a landmark design in automotive history. The auto weighed only 700 pounds and was more dependable than any of its high priced competition.
During the early years, Oldsmobile's only major competitor was the horse and carriage. Early ads boasted that the $ 600 Curved Dash ran 40 miles on 1 gallon of gasoline (web 2001). Olds sought to convince people that the Curved Dash was thriftier, safer, faster, more comfortable and more modern than a horse. The Olds Motor Company was a prosperous business; however, Ransom E. Olds resigned from the company in 1904 due to disagreements with his investors. Ransom formed another company named REO (Ransom Eli Olds) which has continued to thrive in modern times as Diamond-REO, building extreme-duty trucks.
In 1908 General Motors purchased the Olds Motor Company. Oldsmobile had been a successful subsidiary of General Motors since its purchase. Oldsmobile's long success stemmed from their ability to create new enhancements for the automobile. For instance, four-wheel brakes were introduced in 1927, and the new F- 28 model sporting a 6 cylinder was also launched in 1927. In 1932, Oldsmobile introduced the first automatic choke and by 1937, developed the Safety Automatic Transmission (4 -speed semi-automatic), forerunner of the fully automatic transmission, available on the 1938 models (Chevron, 2001). One of the greatest achievements in the over one hundred years history of the automobile may be the Hydra-Matic Drive.
Oldsmobile did not invent the automatic transmission, although, they did perfect it. Prior to Oldsmobile producing the product, others had tried but lost interest and abandoned the project. The Hydra-Matic transmission was the first mass-produced fully automatic transmission made by GM and Oldsmobile. By 1964, an automatic gearbox was installed in 81 percent of the cars built in the United States. The figure was 91 percent in 1970 and 87. 5 percent in 1998 (Hydra-Matic, 2000). Other creations by Oldsmobile included the introduction of power brakes and air conditioning in 1952.
The Oldsmobile Tornado was the first American car to offer drivers side air bags. During the 1990 s Oldsmobile presented Guide star, the first on-board navigation system to be offered on a production car. Also, Oldsmobile introduced the Silhouette Premiere, featuring the first on-board entertainment system. In 1998, the Oldsmobile headquarters moved from Lansing Michigan to new GM offices in Detroit. The year 1999 saw the last of the Eighty-Eight models ending its 50 years in existence as well as the last cutlass built 38 years after the name was introduced.
MARKETING MIX Price Price is all around us. Throughout most of history, prices were set by negotiation between buyers and sellers. Price setting is very important in any segment of business. The firm must decide where to position its product on quality and price.
Oldsmobile offers a limited number of products with a standard pricing concept. Current products offered are the Alero at $ 17, 785 to $ 22, 765; Intrigue at $ 22, 995 to $ 27, 115; Aurora at $ 31, 139 to $ 35, 314; Silhouette at $ 26, 920 to 33, 620; and Bravada at $ 32, 335 to $ 36, 895. These prices are compatible with other manufacturers such as Ford, Toyota, and Nissan; however; the prices were not competitive with the other product lines offered by GM such as Buick, Chevrolet, and Pontiac. Price helps to determine the success of the companys products. Throughout history, Oldsmobile used very little markup from year to year in the various models offered. Pricing was set to attract their target markets, which were families and older people.
The prices were more expensive than the other General Motors product lines such as Buick, Chevrolet, and Pontiac; yet, Oldsmobile products were very similar in quality, performance, features, style, and design. Because they were competing with many other GM divisions, Oldsmobile should have used the competitive pricing formula. During the late eighties and early nineties, the drastic demographic changes forced the company to develop a pricing tag method. The target age group was not buying as many automobiles as prior generations. Oldsmobile tried to reinvent the product line and to associate pricing with product line features and brand. The consumers did not respond to the pricing concept; thus Oldsmobile products faced a decline in the market.
Eventually this led to a decrease in sales and dropping the Oldsmobile line by 2005. Product When Oldsmobile planned its market offering, the company management had to consider the five levels of the product - core benefit, basic product, expected product, augmented product, and potential product. The Oldsmobile product was a leader during the introductory phase. The Oldsmobile Company joined with the other General Motors product lines in 1908. During the growth stage of the product life cycle, Oldsmobile joined with Cadillac to produce the overhead V 8.
For the record, Lee Petty won his first Daytona 500 in an Olds. In 1966, Oldsmobile reintroduced the front wheel drive to domestic consumers with the Toronada, and became the first U. S automaker to offer optional air bags in 1974. Oldsmobile sales peaked when the Cutlass was revived and redesigned in 1985.
Approximately 1. 2 million cars were sold. This positioned the Oldsmobile line in the product cycle maturity stage. Oldsmobile attempted to modify the product line during the late eighties and nineties. They tried to target a younger market with models such as the Alero, Intrigue, Aurora, Bravada, and Silhouette. The consumers did not accept the product change. This led to Oldsmobile experiencing the product cycle decline phase.
The yearly sales and profits for the product line were dropping drastically. Oldsmobile's U S sales decreased 17. 9 percent in 2000, to 289, 172 automobiles sold. Most of the decline stemmed from the departure of the Cutlass and the Eighty Eight. Sales of Oldsmobile's remaining five products decreased 2. 7 percent for the year (Cancel, 2001).
Place Most producers or manufacturers do not sell their goods directly to the consumers. Oldsmobile first designed and sold the cars in Michigan. The demand was overwhelming. Oldsmobile had to distribute the products to consumers throughout the United States.
Oldsmobile was using the 1 -level consumer marketing channel distribution process. Not only is Oldsmobile selling the products here in the United States, it has sold automobiles on a global level. The marketing strategy is non-aggressive. A majority of the products were not good sellers in the foreign market; however; the Bravada is a great seller in the foreign market. Oldsmobile had to study its intermediaries. This gave them insight on individual firms who should carry their products.
Oldsmobile originally had 3, 100 + dealers. Currently, there are only 2, 801 dealers. The partnership that developed was one of trust and respect. Because the Oldsmobile product will no longer be sold after the next 3 to 4 years, General Motors has offered the Oldsmobile dealers the option of accepting the financial settlement and terminating their dealership n...
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