MARCH 26, 2018

MARKETING PHASE 2
SUBARU RESEARCH GROUP

JORDAN BAKER, MICHAEL HSU, LENNY LACOVARA,

SAHAND MANAF, RYAN ONATE, PETER VESELY
TEAM 27
Introduction
Through the course of this research paper, our goal is to analyze the market that Subaru

currently competes in. To do this, we’ll be looking at what products we offer to the market, along

with what our competitors offer. Afterwards, we’re going to determine which market segments

we currently operate in and provide quantifiable data to estimate our actual market size. Lastly,

we’re going to provide a few major issues plaguing our company and offer a couple suggestions

to improve each issue. We’ve also included a SWOTT analysis in appendix II to help show

where our problems and solutions are coming from.

Competitive Environment

Internal

At Subaru, our primary form of business is research, development, and manufacturing of cars,

listed as Automobile Manufacturing via the NAICS code 336111. In the industry, one of our

main target markets is outdoors and adventure lovers. Now that more than 50% of the US

population lives in urban areas, it is a must for these outdoors and adventure lovers to have a

vehicle that is capable of traveling to rural, outdoor areas. With our vehicles like the Outback,

the Crosstrek, and the Forester, we are trying to fulfill this market. Subaru is known for these all-

terrain vehicles however, we are not at the forefront of this market. Internally, Subaru’s primary

issue is its low market share. According to statista.com, Subaru only holds a 3.72% market share,

which is very minimal when compared to major competitors like Toyota’s 14.72%.

External

At Subaru, we produce vehicles for many different purposes and types of people. The main

vehicles produced are performance cars such the BRZ and STI, outdoors cars like the Forester

and the Crosstrek, lastly family style cars such as the Outback and Legacy. When considering the
vehicles we produce at Subaru, we have identified 3 main competitors in the industry: Toyota,

Jeep, and Volkswagen. Subaru has a market share of 3.7%. They only have 600 dealerships

nationwide. These numbers are miniscule in comparison to the competition.

Primary Competitor

We have selected Toyota as our main competitor. They have the largest market share, at

14.19%. They also have 1500 dealerships nationwide, which we believe gives them an edge over

Subaru. Toyota offers a variety of outdoor vehicles such as the FJ Cruiser, 4Runner, Tacoma,

and the Landcruiser.

Secondary Competitor

Jeep, a subset of the Fiat Chrysler Group, is our secondary competitor. Jeep’s primary focus is

on outdoor vehicles suited for rugged terrains. They hold a 12.21% market share and have 2500

dealerships nationwide. The cars that Jeep offers that directly compete with our product line are

the Grand Cherokee, Patriot, and Wrangler.

Tertiary Competitor

Volkswagen has a market share of 3.7% and 650 dealerships in the United States. Volkswagen

offers numerous models that can compete with us at Subaru. VW has performance cars like the

Golf GTI, outdoors models like the Tiguan and Golf Alltrack, and family vehicles such as the

Passat and Atlas.

Market Size

To provide more insight into the market that Subaru is engaged with, we have determined

which segments that Subaru touches with most and have used primary and secondary data to

quantify these segments to find our true market size (See appendix II for better visualization).

The first segment that we determined includes female homo-sexual in the US aged 26-64 with at
least a bachelor’s degree and earn. The final market size we found for this segment is 231,693.

Due to an advertising campaign we ran back in 1990s that was focused on single households

where the head of the household is female. After running the campaign, we found that the

women we were marketing to were homosexual, and Subaru has been known for this ever since.

Our second segment includes sports-oriented consumers and skier athletes with a bachelor’s

degree or higher that earns between $56,420 and $58,170 per year. The final market size we

derived equals 5,926,526. Our current product line consists primarily of outdoorsy vehicles,

making this segment our most important in terms of sales.

Our final segment for this research includes Asian Americans living in California aged 21-32

who have children or are planning to have children and have an income of $80,720 or more. The

final market size for this segment is 379,500. In 2011, Subaru ran an advertising campaign

targeting young Asian-Americans after determining that the racial group had a lot of potential as

future consumers. The number of Asian Americans is growing rapidly, and we need to tap into

this segment before the opportunity passes.

Problems and Solutions

Problems

There are three problems facing our company that we will be offering suggestions for (refer to

appendix I for a chart of problems and solutions). First, the Subaru brand is not very well known

amongst car manufacturers, holding a low level of market-share. Second, we have a poor brand

image due to poor inspection practices, along with using low quality materials. Lastly, we have a

low level of product diversity, which is preventing them from reaching many different

demographics.
Solutions

For each of the problems presented, we have come up with three possible solutions that might

help improve the financial performance of Subaru. Starting with the issue of our poor brand

recognition and low market-share, our first idea is to create a new advertising campaign

focusing on markets that we don’t currently reach. Second, we want to push our current

products by placing our products in current media. Lastly, we want to partner with other

companies to create new products.

When it comes to the poor image that the Subaru brand holds, our first solution is the most

simple of all three, but the most needed; to improve product quality, reliability, and the overall

customer experience. Our second solution is to adjust company policies to prevent future

corrupt practices, while also providing our employees with a more ethical workplace. Third, we

want to drop the low-quality suppliers we currently work with in favor of more reliable and

trustworthy dealers.

For the final problem of low product diversity, our first possibility is to create a luxury brand to

reach new market segments, like Toyota’s Lexus brand. Second, we would like to investigate the

potential of acquiring or merging with other automotive manufacturers and morphing their

brands into ours. Our final suggestion is to branch into different industries such home electrical

appliances to branch out more.

Summary

Moving forward, we will be using the details and solutions discussed here to provide accurate

and rewarding answers of how to improve our company’s biggest issues. By looking at ours and
our competitor’s biggest successes and worst failures, we will be able to make accurate

estimations as to the outcomes of each solution to determine what will make the biggest impact.

The chosen solutions will most likely be very costly to us, because regaining the trust of lost

customers will be a difficult undertaking. In doing so however, we will be able to recoup our

recent losses, and improve our revenue for many years to come.
 Appendix I
Problems and Solutions
Problem(s) Solution 1 Solution 2 Solution 3

Low Brand Create advertising Create major product Local Partnerships

Recognition campaign to reach new placement campaign:
markets. putting our cars in music
videos, tv shows, and
films.

Poor Brand Improve product quality, Improve company policies Only working with reliable
Image reliability, and customer to prevent corrupt and trusted manufacturers to
experience. practices. reduce chance of recall
attributed to defect.

Low Product Exploiting different Acquiring other Branching out to different

Diversity segments of the market, automakers or merging industries; home electrical
coming up with luxury with other automakers. appliances etc.
brand.

Target Market Quantification

Primary Secondary Tertiary

Target Description Homo-sexual women who Sports Oriented Asian -Americans aged 21
love Subaru’s Consumers or skier - 32 who are married with
“dependability, size, and the Athletes children or are going to
brand image” have children
(Age: 26-64)

Initial (N) 463,386 22,971,032 ~3,450,000

Segment Basis 1 ~ 43600 56420 > income > 80720 > income
(income >$50k/yr) 58170

Segment Basis 2 LGBT community within United States California

(Geographic) the U.S

Segment Basis 3 Bachelor’s degree or higher Bachelor’s degree Bachelor’s degree or

(Education level or higher higher
beyond BS)

Final N (True Target 231,693 5,926,526 379,500

Market Size)
 Appendix II

SWOTT analysis

Strengths ● Dominates the markets that they are known for

● Our products are technologically advanced
● Our customers are very loyal

Weakness ● Corrupt practices dissuade customers

● Quality control issues causing recalls

Opportunities ● Industry advancements can be exploited

● Consumers are now willing to pay more for conveniences

Threat ● Many competitors in the industry

Trend ● Poor managerial decisions continually causing issues

 References

https://priceonomics.com/how-an-ad-campaign-made-lesbians-fall-in-love-with/

https://www.carscoops.com/2011/05/subaru-targets-young-asian-american/

https://espnational.org/images/Conference%20Presentations/2016%20Conference%20Presentati
ons/CS-1%20Statistics%20on%20LGBT%20Individuals%20and%20Families.pdf

https://www.census.gov/quickfacts/fact/table/US/PST045217

https://www.kff.org/other/state-indicator/distribution-by-
age/?dataView=1&currentTimeframe=0&selectedDistributions=total&selectedRows=%7B%22
wrapups%22:%7B%22united-
states%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:
%22asc%22%7D

https://www.statista.com/statistics/343162/market-share-of-major-car-manufacturers-in-the-
united-states/

https://www.toyota.com/usa/operations/