Jeep Cherokee Situation Analysis Essay Example

Customers

The Jeep Cherokee is a vehicle that appeals to people in Generation X. Typically, most owners are between 30 and 50 years of age. The gender of most Jeep Cherokee owners remains predominantly male. From a psychographic point of view, most Jeep Cherokee customers believe in the American dream. Considering the cost, most customers have partially attained the American dream, and most of them have children (Foster, 2004). Most of these customers prefer outdoor activities like camping, hunting, and fishing. However, there is a royal fan base of Jeep Cherokee customers.  Unfortunately, the customer base keeps growing older, and soon most of the loyal customers will be retirees. As a result, Jeep needs to remodel the car to start attracting Millennial customers and Generation Z customers (Peng, 2016). Additionally, Jeeps are somewhat more expensive than other vehicles in the same segment. Lowering costs will make the brand more competitive.

Company

The Jeep brand has several strengths. First, it is a reputable brand with a strong image. Second, the Cherokee name is synonymous with people who want a car with powerful off-road ability. The brand is endorsed by the American military, making it appealing to patriotic individuals. Unfortunately, the Jeep brand has some glaring disadvantages like its high price when compared with alternatives. Second is the low global penetration of the brand (Holweg & Oliver, 2015). Finally, it is not appealing to the millennial generation and Generation Z. The Jeep can improve sales by creating low-cost volumes that may appeal to younger price-conscious customers in the Millennial generation. Jeep should also look for strategic partners who can help revamp the drab interior. The growth of the electric and hybrid car segments is an opportunity for Jeep to introduce a new model.

Context

The Jeep Cherokee is in the American automobile industry. Certain macroeconomic factors influence the success of the vehicles. Politically, America has only had one civil war in over 250 years providing relative stability. Additionally, the current administration seeks to reduce some of the regulations thus improving manufacturing jobs. Economically, America has a GDP of $18.561 trillion and a per capita income of $65,874 (Trading Economics, 2015). From an economic point of view, a sizable portion of the population can afford the Jeep Cherokee. Socially, America has a population of 318.9 million people (World Bank, 2015). Additionally, close to 90 percent of American households own a car indicating demand for automobiles in the country is high. Technologically, there is an inclination for most car companies to develop hybrid or electric vehicles due to rising oil prices. Jeep is lagging behind because currently, the brand does not have an electric or hybrid vehicle available. Legally, America has developed stricter EPA rules that require cars to be more fuel-efficient and produce lower CO2 emissions. Cars are now taxed based on how fuel-efficient they are prompting manufacturers to innovate.

Collaborators

Jeep was initially acquired by Chrysler before Chrysler was acquired by Fiat in 2011. Essentially, Fiat Chrysler is the new owner of the Jeep brand. The current partnership is good for the Jeep brand because Fiat Chrysler is committed to rebuilding the Jeep brand (Foster, 2004). Under the partnership, the Jeep Cherokee was re-introduced to the American market.

Competitors

The Jeep Cherokee as a vehicle is in competition with American and foreign brands. The main American competitor is the Ford Escape. However, Japanese manufacturers offer the greatest competition with Mazda CX-5, Honda CR-V, and Toyota RAV4. The Hyundai Tucson is also a serious competitor to the Jeep Cherokee. Unfortunately, the Honda, Mazda, Hyundai and Ford offer better value for customers (Foster, 2004).

Recommendations

The situational analysis has shown that the Jeep Cherokee has some detriments that can be improved. Three recommendations can be made to improve the future of Jeep Cherokee. First, Jeep needs to form a strategic partnership with another vehicle manufacturer. Sharing a platform will allow the company to improve the Jeep Cherokee interior and technology offering that is currently outdated.  The second recommendation is leveraging the Jeep brand to increase sales outside America. The reputable badge and the reliability legacy can be used to spur international sales. However, Jeep needs to increase the manufacture of right-hand vehicles for sale in parts of Europe and Asia. Finally, Jeep needs to reduce the cost of the Jeep Cherokee and redesign it to appeal to the millennial generation and Generation Z. Currently, the aging target audience can maintain sales, but failure to innovate will lead to low performance with future generations.

References

Foster, P. (2004). The Story of Jeep. New York: Krause Publications.

Holweg, M., & Oliver, N. (2015). Crisis, Resilience and Survival: Lessons from the Global Auto Industry. Cambridge: Cambridge University Press.

Peng, M. W. (2016). Global Business. New York: Cengage Learning.

Trading Economics. (2015, December 17). United States GDP. Retrieved from Trading Economics: http://www.tradingeconomics.com/united-states/gdp

World Bank. (2015, January 10). United States of America Population. Retrieved from World Bank: https://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=country:US&hl=en&dl=en

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