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The Art Of Setting Price Points In The Small, Task-Oriented Vehicle Market

Published: 9/18/2013 Author: Stephen Metzger, Managing Director, Small Vehicle Resource, LLC Category: Marketing

When the market manager, at some point in the premarket planning stages, gets together with his or her team and begins a discussion concerning price points for a new vehicle, what does this discussion include and consider?  Assuming that the new vehicle fills a gap in the company’s line of vehicles already on the market, there is a lot of guidance to go on.  The problem remains, how much is “filling the gap” really worth?  What is the value-added to the market place with regard to this vehicle?

Assessing Product Differentiation

Initially, with respect to the product itself, a realistic assessment of the degree of product differentiation is needed.  Does the vehicle bring added load capacity to the class of vehicles with which it is likely to compete?  Is there added horsepower?  Are there better ergonomics associated with the product?  Are four-wheel brakes on this vehicle, where competitor models generally have two-wheel brakes?  Are there improvements in the drive train, in hours on the job?


            Obviously, there will be a myriad of  things to consider in assessing the value added of the new vehicle.  Note that the emphasis is on “adding-value”.  In almost all situations the gap in the market place demands an upgrade of some kind, even a marginal one.  Conversely, however, it is quite possible that the cost-benefit trade-off is improved; that is, the cost to the buyer is less than the competition, with same level of performance benefits.  Foreign competition thrives on this approach, where new brand entry considerations are foremost.

Assessing Market Needs

Generally speaking in my experience in doing research in the small, task-oriented vehicle market, manufacturers have consistently tried to be responsive to demands of the market.  For the most part their dealer constituency is the principal source of market information.  While dealer experience is clearly important, market assessment should draw directly on information from consumers.  This is not always done, despite the fact that logic would dictate this complementary approach—especially when a manufacturer is reaching out to, what may be, a new or relatively unfamiliar market.  And this sort of outreach is prevalent now in the STOV industry, as manufacturers reshuffle their priorities to put much more emphasis to markets outside their traditional purview.

            If nothing else the STOV, product lines and markets abound in diversity.  Thus, if there is stratification among a wide range of vehicle types on the product side, it is more than matched by diverse needs on the market side.  Take for example the superficial paradox of the different load capacities of the Cushman 1200 X (gas model) and the Polaris Ranger 500 EFI.  The vastly more powerful Ranger 500 EFI (32 h.p. vs. 13 h.p.) has the same load capacity as the 1200 X (1,000 lbs.).  The paradox is easily explained by the fact that the Cushman is sold into a market of relatively sedate landscapes, whereas the Ranger is built for difficult terrain.

            What this basic illustration shows is that the attributes, particularly operating conditions, of the target market are quite important in understanding both the extent of the market, and who the competition is likely to be.


Assessing the Competition

The competitive matrix below is taken in large part from this website, which allows detailed comparisons of vehicles (much more detail than is seen in the table below) across brands and use categories, This a simple example of brand and model comparisons that will aid in picking the price point.

Competitive Matrix for Turf/Groundskeeping Vehicles



Cushman Hauler 1200X

Club Car Carryall 6

John Deere Elec. Gator 4X2


$9,700-$9,995 (est.)



Load Capacity


1,500 lbs.




3.7 (21 at peak)


            Three parameters of price, load capacity, and horsepower are juxtaposed to three vehicle models which fall into the turf/groundskeeping category.  Looking at the two performance categories alone, there are clearly some differences, but the range of prices is quite small.  Any one of the vehicles, if priced at $8,000, would get a serious second look, and, other things equal, would probably dominate the market.  But, of course, none are priced at that level, and it is never the case that “other things” are equal.  The potential buyer would do a lot more research on the SVR website.

            To summarize, three essential steps in setting a price point are required in the planning stage of a new or upgraded vehicle: 

  1. Product differentiation—what is the performance gap among currently available models, which the new vehicle is designed to fill; 
  2. Assessing market needs—from the buyers perspective, what needs are going to be met; and
  3. Assessing the competition—given factors 1 and 2, what specific brands and models will be the closest competitors.
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