Impact of Innovation on the 4p's of Marketing

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As a result, the biggest names in the legacy and non-legacy auto industries are developing self-driving vehicles or SDVs. Tesla made its SDV technology available in October 2015, and General Motors plans to offer it in 2017 (Whitaker and Lieberman, 2015).

SDV technology does not work in inclement weather like snow, ice, or heavy rain. Some SDV’s cannot interpret hand gestures from pedestrians. SDVs will require that millions of roads to be mapped in high-definition detail. SDV industry experts call these solvable problems. The SDV industry plans to implement the SDV driving experience in the near future. In fact, today a consumer can buy SDV features that maintain a vehicle in a certain lane, park a vehicle, or drive a vehicle through a heavily congested intersection (Whitaker and Lieberman, 2015).

A “disruptive technology” is defined as a technology with a disruptive impact on businesses, making existing products, services and business models obsolete. Disruptive technologies include substitute products (i.e. SDV technology) that perform or have the ability to perform better than anything previously produced. Companies that are able to create and/or adapt to disruptive technologies will prosper; while other companies may not survive (Laudon and Laudon, p. 87, 2014).

3a. What is a self-driving vehicle (SDV)?

The National Highway Transportation Safety Administration (NHTSA) defined five levels of automation for the auto industry and, required level 1 automation on all models produced after 2011. These standards were formulated in 2013, and are applicable today.

These levels are summarized as follows:

- Level 0 – No automation is defined as a driver that is in complete control at all times. The driver is responsible for safe vehicle operation and driving on the road.

- Level 1 – Function-specific is defined as a vehicle that has one or more control functions that is automated. The driver is still responsible for safe operation and driving on the road, but can relinquish primary control responsibility to automation, or be assisted in some manner under specific circumstances.

- Level 2 – Combined function is defined as a vehicle that has at least two automated primary control functions that work together and relieve driver of control in certain situations. The driver still is responsible for safe operation and for driving on the road and is expected to take control immediately as needed, with adequate notification.

- Level 3 – Limited Self-Driving is defined as a driver that can relinquish full control of all critical safety functions under specific circumstances. The driver can rely on the vehicle to monitor for changes in road conditions that previously required driver control. The driver is expected to be available for occasional control.

- Level 4 – Full Self-Driving is defined as a vehicle that performs all critical safety driving functions. The SDV monitors road conditions and drives for the entire road trip (Lari, et al, 2014).

4. Marketing strategy analysis of non-legacy automakers

4a. Google

Google’s marketing mix is an example of how well designed marketing strategies support the growth of an online business. Google has expanded from being a purely web-based business to providing a variety of products, including smartphones and media players, and is now looking at expanding into SDV technology for autos (Greenspan, 2015).

Google’s global marketing mix reflects an effective combination of product lines, a reasonable pricing strategy, distribution channels, and cost-effective promotions (Greenspan, 2015).

Product

Google’s marketing mix can be grouped into the following products: web-based products, operating systems, desktop and mobile apps, hardware products, services, and now, SDVs.

The diversity of Google’s product-line is a reflection of it’s growth and expansion business strategy. New product development is part of its intensive growth and expansion strategy. This marketing strategy has been successful, and Google continues to develop and launch new products, including SDV products (Greenspan, 2015).

Price

Google’s marketing mix involves different pricing strategies that satisfy the different kinds of products it offers. Google uses four pricing strategies that include: freemium, market-oriented, penetration and value-based pricing,

The freemium pricing strategy offers free products, but its intent is to also sell add-on features for the same product at a premium. Google uses the freemium pricing strategy for products like Gmail as it also offers a premium version for businesses (for a price). The market-oriented pricing strategy sets prices based on current market conditions. Google uses market-oriented pricing strategy for its Chromecast media players. On the other hand, Google uses the penetration pricing strategy to launch new products at low prices to enter a market and gain market share. Google implemented penetration pricing for its Internet products that competed directly with established cable television service providers, like Comcast. The value-based pricing strategy determines prices based on customers’ needs and perceptions of the product’s value. Google uses the value-based pricing strategy for its online advertising service (Greenspan, 2015).

Place

Google’s place or distribution strategy contributes to the success of the company’s marketing mix and its competitive global market competitive advantage. The place element of Google’s marketing mix is its online companies. Online companies use the Internet to distribute their products. Google applications are downloadable from anywhere in the world that an Internet connection exists (Greenspan, 2015).

Promotion

Google’s marketing mix has evolved with minimal promotion efforts. The company’s global market reach and dominance is unprecedented. As Google does not need to initiate (or pay for) intensive promotional campaigns. Only on rare occasions, is does Google promote it products.

The impact of the minimal promotional requirement in Google’s marketing mix has significant positive impacts on it’s financial condition. By spending less money on promotion, Google is able to invest more funds in product research and development, like SDV technology (Greenspan, 2015).

Google introduced its SDV technology to the public in early 2015, and it presented