Positioning Strategies and Target Market Analysis of NIO Electric Car

NIO ELECTRIC CAR MARKET ANALYSIS/REPORT
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Executive Summary
The electric vehicle business is a prime example of the advantages and challenges of creating sustainable brands. Nio Inc. is a major Chinese automaker with a US subsidiary and a Shanghai headquarters. The company, which began operations in 2014, focuses on researching, manufacturing, and selling electric vehicles. Nio announced a US$5 billion investment in September 2018 to produce and market automobiles in the US by 2020. Among the three electric vehicles, the company plans to offer in its inventory are a high-performance SUV, a mid-size vehicle, and a small vehicle. This report explores Nio's entry into the US market, and its targeting of the upper-class consumer with its luxury and environmentally friendly credentials is a successful move. The report critically analyzes various aspects, including positioning strategies and target market analysis.
Contents Executive Summary. 2 Introduction. 4 Macro-Environment Factors. 4 Target Market Selection and Consumer Analysis. 7 Critical Evaluation of Positioning Strategy Options. 9 Theories Underlying the Creative Design. 11 Conclusion. 13 References. 14 Introduction
A central factor in anthropogenic climate change has been air pollution from greenhouse gas (GHG) emissions which depletes the ozone layer and causes abnormal atmospheric heating. Thus, industries ranging from agriculture to construction to financial services to transportation have been racing toward transforming their business processes and products to be environmentally sustainable (Yuan et al. 2022). The electric car industry is an excellent case in point for the opportunities and challenges of creating sustainable brands. Nio Inc is a Chinese multinational automotive company headquartered in Shanghai, with a subsidiary in the United States. The company was founded in 2014 and is engaged in designing, developing, manufacturing, and selling electric vehicles. In September 2018, Nio announced a US$5 billion investment to manufacture and sell cars in the United States by 2020 (Bradsher 2021). The company also announced its plans to have three electric vehicles: a high-performance SUV, a mid-size car, and a small car. Nio is an important player in the electric vehicle market, and its entry into the US market could significantly impact the growth of electric vehicles (EVs) in the country. The US market is important for Nio because it is one of the fastest-growing EV markets in the world. The US market is expected to grow by more than 23% over the next five years, and by 2027, it is projected to be worth over US$139 billion (Statista 2022a). Nio's entry into the US market could help to drive this growth and stamp the company as a leader in the EV market.
Macro-Environment Factors
The environmentalist agenda has permeated the US political, social, and economic agendas. Individuals, businesses, and the government have responded to this agenda. This has created a complex and multi-faceted political environment that affects businesses, including Nio Inc. Nio Inc.'s performance in the United States will be impacted by many political factors. For instance, the ongoing economic war with China could impact Nio's ability to set up successful operations in the US. The Trump Administration was largely critical of the trade imbalance between the US and China, setting in motion a narrative that could potentially impact Chinese companies' ability to operate in the country (Lee & Zulkefli 2021). According to Lee and Zulkefli (2021), despite adopting a less polarising stance on the issue, the current President has put little effort toward walking back Trump's narrative. Consequently, Chinese companies, such as Nio Inc., could find it more difficult to set up operations in the US, as recent and current administrations appear to have taken a harsh tone toward Chinese business.
On the flip side, Nio Inc. could also benefit from the current political climate in the US by taking advantage of the opportunities created by new and emerging laws and regulations aimed at making the sustainability agenda more mainstream. For instance, the US government has implemented many policies and regulations to reduce greenhouse gas emissions, including the Clean Power Plan. This policy allows Nio Inc. to promote its sustainable EVs in the US. According to the Environmental Protection Agency (2022), many US cities have instituted strict emissions statutes and consumer incentives to encourage residents to shift to new energy transportation. Plans to have 50% of US car sales EVs by 2030 also support the growth of electric vehicles (Bistline et al. 2022; Briefing Room 2021). However, the most important development in the country's political sphere is the recent federal government announcement to build half a million EV charges on US highways (Surico 2022). In this way, Nio Inc.'s efforts to promote sustainability could be rewarded by the government and consumers in the US.
On the sociocultural front, it is important to consider how various macro-environment factors may impact the performance of Nio Inc. in the United States. To begin with, it is worth considering the general attitude of Americans towards Chinese innovation. There is a negative bias, with many Americans viewing Chinese companies as either untrustworthy (regarding intellectual property) or simply not up to the same quality levels as their American counterparts. This sentiment will likely hurt Nio Inc.'s ability to win business in the United States. However, the proliferation of environmentalism among Americans may play into the company's strengths, as its electric cars are seen as being more environmentally friendly than traditional petrol or diesel vehicles. According to Finlay (2022) and Leman (2020), more people, including youth and other groups, are embracing the environmental movement and viewing EVs as a potential deterrent to climate change. Thus, as more Americans become more aware of the dangers of pollution and embrace efforts to preserve the environment, Nio's value proposition will grow and attract more customers (Roberts 2022). In addition, the company's focus on luxury may also resonate in the United States, where consumers are increasingly willing to spend on high-end goods and services.
On the macroeconomic front, it is worth considering the state of the US economy. At present, the Trump administration's tariffs had mixed effects on the US economy, with certain sectors reporting many job losses and others reporting overall improvements (Martin 2022). However, since they did not cause a significant decline in demand for Chinese goods, the tariffs may not affect Nio Inc. too adversely in the short term. The fate of the tariffs remains unclear as the Biden administration recently declined to remove them pending review (Martin 2020). While some potentially negative factors could impact Nio Inc.'s performance in the United States, the company's strengths – its focus on luxury products and its environmentally friendly attributes – should help it weather any potential storm.
Target Market Selection and Consumer Analysis
The segmentation process that led to the choice of United States as a target market selection for Nio Inc. can be broken down into key points. First, the US has a population of over 330 million, making it the third-most populous country in the world. Moreover, the US is the richest country, with a GDP of over $23 trillion, according to 2021 figures (O'Neill, 2022). This wealth and population size make the US an attractive market for companies looking to expand their reach. Second, the US is a global leader in technology and innovation. According to the World Economic Forum's 2017 Global R&D Index, the US is ranked first in overall investment in research and development (R&D) (Hofstede Insights 2017). This high level of R&D activity has resulted in a wealth of technology and innovation available to be used by companies operating in the US market.
Third, the US consumer is highly individualistic. This is evident in the high consumer choice and preference for unique products and services. As a result, companies looking to enter the US market face a difficult task in trying to replicate the success of their competitors. Finally, the US consumer is influenced by several cultural factors. These include a strong belief in individual responsibility, self-reliance, and a strong work ethic. As a result, companies operating in the US market must focus on developing products and services that meet the needs of this consumer base. More importantly, the number of electric vehicle buyers in the US is estimated to comprise half of all US automotive sales by 2027, which presents an enormous opportunity for companies like Nio Inc. to enter the market and compete for consumer attention (Bistline et al. 2022; Briefing Room 2021).
The most important consumer characteristics include the benefit sought, attitude, and lifestyle. According to (Savacool et al. (2018), Americans value quality and performance over other factors when purchasing. The target consumers also seek unique products that offer something different from what is currently available in the market. According to Hofstede Insights (2017) and Migliore (2011), the American culture's emphasis on excellence motivates people to seek out the best goods and to buy ones that reflect their perfection. NIO's product attributes and upscale brand positioning satisfy these target consumer needs for high-performance goods and social acceptance. Nio ES8 autonomous driving AI 'NOMI' system is an excellent example of a product that meets these needs. Moreover, the company has also developed a unique marketing strategy that focuses on delivering an exceptional customer experience. In particular, Nio offers concierge-like services that assist customers in finding the best places to eat and drink and arranging transportation (Kempf et al. 2020). This approach underscores the company's dedication to delivering an exceptional customer experience and its focus on meeting the needs of its target consumers.
The target consumers are also highly motivated to reduce their environmental impact and, as a result, are increasingly looking for electric vehicles that offer these benefits (Broadbent et al. 2017). Besides having a large population of potential customers for Nio's products, the US consumer market is highly affluent and open to new technologies. In other words, the US has a strong consumer culture supportive of innovation. This is seen in the widespread adoption of new technologies across various industries, including transportation (Hofstede Insights 2017). As such, the US population has been open to attitude changes toward gasoline or diesel vehicles, leading to a growing market for electric vehicles (Broadbent et al. 2017). Moreover, the rising fuel costs are affecting the popular American road trip culture presenting an opportunity for EV makers like Nio to provide innovative solutions and develop new markets. Overall, Nio's products are well-suited to the US market because they address many of the key concerns of American consumers.
Critical Evaluation of Positioning Strategy Options
Each positioning strategy (GCCP, FCCP, LCCP, and hybrid positioning) could have potential advantages and disadvantages for Nio in the US market. In this section, the report discusses these positioning strategies in detail and recommends the best one for Nio based on the target segment (the US upper-class consumer).
The global consumer culture positioning (GCCP) positioning strategy is a global marketing approach that focuses on the needs and wants of consumers in different countries (Alden & Nariswari 2017). This positioning strategy is designed to build a strong global brand, connect with consumers across cultures, and create a unique customer experience. GCCP can help Nio create a global brand that can easily connect with consumers in different countries. I can also help the company create a unique customer experience tailored to the needs and wants of consumers in different countries. Ultimately, the biggest benefit of this strategy is the ability to build a strong global brand. However, it could be challenging for Nio to translate its brand message across cultures (Alden & Nariswari 2017). Having a global brand can lead to a lack of differentiation in the US market. Thus, the company would have to invest heavily to deal with greater complexity in the marketing strategy.
The foreign consumer culture positioning strategy (FCCP) is a marketing approach focusing on positioning the co...