CASE 1.2

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. ZENs 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 todays

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 ZENs 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 companys 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 ZENs internal reports system, part

of ZENs 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 ZENs

market share of their only large, luxury car brand. ZENs 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, ZENs 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 ZENs 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. Hes read the reports on climate change and is confused

he doesnt know whether to believe Al Gore or Rush Limbaugh. Nick also isnt certain

about the future of alternative fuels. Will the U.S. government really encourage the

reduction of the countrys 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 didnt follow through on this at the time. Nick wonders if todays

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 ZENs marketing information system will Nick Thomas need?