The American market for automobiles is an example of a market which has avoided the traditional lifecycle and which is comprised of several niche markets, each of which has a different demand curve. A cursory consideration of automobiles suggests that they should be a prime example of a commodity: all automobiles can move goods and people from one point to another, and all use essentially the same technology. But the automobile market has not deteriorated to a commodity state, where products are differentiated solely on price, but continues to be a highly segmented market with entrants from basic economy models to the highly sophisticated (and very expensive) sports and luxury models. There are high levels of profits to be made at the upper end of the car market, and consumers in this segment are interested in appearance and performance, although the vehicle may never be run on a racetrack. This research considers one such automobile, the Lotus Esprit Turbo, the company which manufactures it, and the marketing strategy behind this highly successful product.
Lotus currently employs 985 people, had 1994 profits of $3.2 million on sales of $81.3 million, and produced only 710 cars during 1994 (up from 320 in 1993). The company's recent history has been marked by upheaval, as Lotus was acquired by General Motors, then sold to Bugatti in 1993, then sold by Bugatti to a British investment consortium in 1995 (at a $10 million profit to Bugatti). This purchase price was based on a fiscal 1994 net profit of $3.2 million, which compares to a loss of $16.5 million during the previous fiscal year. Lotus is forecasting a profit of $7.8 million for the 1995 fiscal year.
Like Lotus, Bugatti is a manufacturer of exotic automobiles, and there was some concern when Bugatti acquired Lotus about the possibility of conflict of interest. Lotus dealers in the United States will continue to sell the Bugatti EB 110 sports car as they have done...