CASE - Automobile Concepts
Nick Thomas is CEO of Advanced Automobile Concepts (AAC), a new division of a large automobile manufacturer, ZEN Motors. ZEN is a multinational manufacturer headquartered in the United States. It has multiple divisions representing several auto and truck brands. ZEN's divisions have been slowly losing market share to other competitors.
AAC was created to revive the aging ZEN automobile brands by either reengineering existing models or developing totally new models that are more in tune with today's changing automobile market. Nick is very familiar with the automobile industry, as his entire adult life has been in the business. He follows trade publications carefully and believes ZEN's most significant losses are due to the growing popularity of several foreign brands, particularly brands from Japan and Korea. As CEO, Nick has been given the authority to do what he believes is needed to revive the company's brands and help return ZEN to prominence in automobile manufacturing. Nick has retrieved company sales data for all ZEN models for the last decade from ZEN's internal reports system, part of ZEN's management information system (MIS). He has accessed the intelligence system to obtain trade industry articles written about the market, including evaluations of top competitors' models. He notices that several highly evaluated models are small and fuel-efficient. He also has recognized that foreign competition has severely eroded ZEN's market share of their only large, luxury car brand. ZEN's brand has been around for many years and now fails to compete with the newer luxury car models on the market. ZEN has been reluctant to move into the very small and highly fuel-efficient market for a couple of reasons. First, historically, ZEN has earned higher profits on larger vehicles. Every ZEN division has a large and extra-large model SUV. Historically these SUV models, ZEN's large trucks, and their larger family cars have been very profitable.
Secondly, as sales have eroded in recent years, ZEN has been reluctant to invest the funds needed to develop radically different designs from those models that have been their "bread and butter" cars for decades. However, in recent months ZEN's sales have plummeted as fuel prices have soared. ZEN management realizes they must innovate and that is why they created the AAC division. Nick Thomas realizes that he must develop innovations in automobile design and engineering, but he is not certain in which direction he should guide his division. He realizes that, for now, oil prices are high and he understands the increases in sales of fuel-efficient gasoline, diesel, and electric hybrids.
However, Nick has seen these environmental changes come and go. He tells his younger vice presidents, "When the crises are over, the car buying public wants big vehicles and we have earned our standing in the industry by giving the market what they want." Nick wonders to himself if this oil crisis is here to stay. He has also been concerned about the prospects of real global warming. He's read the reports on climate change and is confused -he doesn't know whether to believe Al Gore or Rush Limbaugh. Nick also isn't certain about the future of alternative fuels. Will the U.S. government really encourage the reduction of the country's dependence on foreign energy? He vividly recalls this being an issue in the 1970s and President Carter calling for a switch to alternative fuels. He also knows that the country didn't follow through on this at the time. Nick wonders if today's promises by politicians of reducing foreign dependence on energy will be forgotten just as it has in the past. Nick is not sure what will happen but he knows that continued high prices of fuel and increasing evidence of global warming will affect consumer behavior with regard to automobiles.
1. Should Nick Thomas use marketing research?
2. What components of ZEN's marketing information system will Nick Thomas need?