Chapter 12Repayments and DisclosuresLearning Obj

Chapter 12
Repayments and Disclosures
Learning Objectives
Circumstances when disclosure and repayment might make
sense
Government agencies for disclosures
Legal bases for duty to disclose and repay
Benefits and disadvantages of self-disclosure
Importance of advice of legal counsel
Process for conducting a self-disclosure
Differences between OIG SDP and Stark SRDP
Introduction
Self-disclosure may be indicated by a report of non-compliance,
a routine internal audit, or the discovery of a billing error in the
normal course of business.
Self-disclosure may be directed to the CMS, a CMS
intermediary or carrier, the OIG, the DOJ, the FBI, a state
Medicaid Fraud Control Unit, or a state agency responsible for
provider licensing.
Legal Bases for
Repayment and Disclosure
Patient Protection and Affordable Care Act (PPACA)
False Claims Act (FCA)

Stark Physician Self-referral Law
Anti-Kickback Statute (AKS)
Health Insurance Portability and Accountability Act (HIPAA)
Patient Protection and
Affordable Care Act (PPACA)
Overpayment reported and returned within 60 days of
identification.
Patient co-payments returned as well.
Disclosures and repayments submitted to Medicare “affiliated
carrier”.
False Claims Act (FCA)
Reduce treble damages for false claim to double damages by
disclosing violation within 30 days of learning about it.
“Reverse false claim”: a violation for a person or organization
to make a fraudulent statement in order to avoid or reduce an
“obligation” to make a payment to the federal government.
Stark Physician Self-referral Law
The Self-Referral Disclosure Protocol (SRDP) was created in
2010 and applies only to the Stark Physician Self-referral Law.
It is used to resolve overpayment liability exposure resulting
from a violation.
Detailed information about the violation and the entity’s
compliance program is submitted to CMS.
In response, the CMS “may” reduce any overpayments owed due
to the violation.
7

Anti-Kickback Statute (AKS)
In 1998, the OIG issued a Self-Disclosure Protocol (SDP) to be
used to report overpayments connected with the AKS or both
the AKS and the Self-Referral Law.
Overpayments related to the Self-Referral Law alone are
handled through the SRDP.
Offers opportunity to reduce the severe penalties associated
with AKS violations.
Health Insurance Portability and Accountability Act (HIPAA)
In the landmark ETHC case, federal government brought
criminal charges for failure to refund overpayments related to
HIPAA.
Case involved overpayments from private payors and individual
patients, akong with Medicare and Medicaid.
Benefits of Self-Disclosure
More congenial, less adversarial relationship with the
enforcement officials
More influence over the conduct of the government
investigation
Reduced likelihood of subpoenas or search warrants
Reduced penalties for a FCA violation
Less likely that government will prosecute
Less onerous terms of any settlement
Disadvantages of Self-Disclosure
Violation incident might never be discovered
Many “benefits” are not guaranteed
Other misconduct and violations may be revealed
Minor event may become larger, more serious, and more
expensive

Government may view incident more seriously and impose
harsher penalties, including as CIA
Carrying Out a Self-Disclosure
To which agency to self-disclose
Determine which protocol to use
OIG Self-Disclosure Protocol (SDP)
Stark Self-Referral Disclosure Protocol (SRDP)
Disclosure submission process
Details to be included with disclosure
Possible agency responses to disclosures
HydroPower Electric Cars1
HydroPower Electric Cars, Inc.
Marketing Plan
Spring 2020, Marketing 3100 Section W02
Kennesaw State University
By:
Chanell Daly

Maddie Roberts
Suzanne Martinez
April 22, 2020
Table of Contents
Business Mission3
Internal Strengths and Weaknesses3
External Opportunities and Threats4
Target Market Strategy6
Competitive Advantage8
The Marketing Mix9
Product9
Price11
Place12
Promotion13
Creative Deliverables:15
Objectives16
Conclusion17
References18
Business Mission
HydroPower Electric Cars, Inc. is an American electric vehicle
manufacturer and dealer with a conscious marketing strategy
and mission to move the world closer to zero emissions by
providing working- and middle-class consumers with affordable
and accessible electric car options that suit their every-day
needs. HydroPower started as a used car retailer that sold
previously owned electric cars while providing specialized
maintenance for electric cars. While providing these services
partners Chanell Daly, Maddie Roberts, and Suzanne Martinez
discovered there was an unserved market of people who were
interested in purchasing a zero-emission vehicle but could not

afford the current price tag. HydroPower understands that
environmental sustainability can only be achieved if every
consumer can contribute to the reduction of carbon emissions.
This is why HydroPower is dedicated to helping the average
American to reduce their carbon footprint. Zero-emissions
cannot be obtained if eco-friendly vehicles remain luxury items
for the financially wealthy. When the median income in the
United States $63,179 and 40% of the working adults making
less than $40,000 a year, consumers need viable alternatives to
conventional cars that fit their budget (Rothbaum & Edwards,
2019). HydroPower provides quality electric sedans, small
SUVs, and motorcycles, at prices that are competitive with
conventional vehicles.
HydroPower’s conscious marketing objective is ingrained in
the culture of the organization, and its commitment to
environmental sustainability is demonstrated throughout its
supply chain. In addition to HydroPower’s offices, electric
charging stations, and manufacturing plants being powered by
renewable energy, HydroPower also only partners with financial
institutions and suppliers that are committed to environmental
sustainability. The primary incentive for HydroPower’s
commitment to the environment is its dedication to humanity,
people, and specifically its target market. Internal Strengths and
Weaknesses
Completion of a situational analysis identified that
HydroPower’s strengths lie in its organizational culture,
operational excellence, financial partnerships, and excellence in
customer service. All of which work together to reinforce the
organization's underlying goal of environmental sustainability.
HydroPower’s commitment to the environment and people is
woven into the fabric of their organizational culture. Their
mission to “move the world closer to zero emissions by
providing working- and middle-class consumers with affordable
and accessible electric car options that suit their every-day
needs” is considered in every policy decision and emphasized in

employee hiring and training practices.
Operational excellence is achieved through its commitment to
environmental sustainability. This is demonstrated throughout
their supply chain via a fully integrated system of lean
manufacturing and green supply chain management with
mechanisms for measuring environmental performance.
HydroPower’s lean manufacturing practices encompass
“suppliers, customers, setup times, preventative maintenance,
employee involvement, statistical processes control, and
continuous flow” that are purposefully designed to eliminate all
forms of waste during the production process. Lean
manufacturing processes are combined with green or
environmentally friendly manufacturing. Green manufacturing
is only one element of HydroPower’s Green Supply Chain
Management which also includes “green product development,
green design, green process planning, and green transportation”
(Inman & Green, 2018). Costs are kept low by using recycled
materials whenever possible and utilizing assisted technologies
to keep labor costs low. All offices and warehouses are powered
by renewable energy sources, and excess energy is sold to
public utilities. HydroPower only partners with investors and
suppliers who are committed to sustainable energy. Their
leading financial backer, Aspiration Partners, is a financial
institution that only invests in green companies and underwrites
all in-house car loans offered by HydroPower at reasonable
interest rates. These combined lean and green manufacturing
practices not only lead to improved environmental practices but
also improved operational practices as well, resulting in reduced
operational costs.
HydroPower’s customer relationship management sets them
apart from other car manufacturers. HydroPower is the only
electric car company entirely committed to targeting millennials
and younger generations with a vested stake in lowering
emissions. Although this cohort did not create climate change
problems the world faces, it is the likeliest group that will face
the consequences of the overconsumption of fossil fuels.

HydroPower’s robust customer relationship management
department is dedicated to educating customers about electric
car technology and assisting customers in learning about tax
incentives and financial benefits to owning electric cars.
HydroPower partners with local vehicle recycling programs and
offers competitive trade-in values for conventional and electric
cars. Their partnership with Aspiration Partners, a progressive
financial institution committed to investing in green industries,
enables HydroPower to provide consumers with rewards
programs and in-house financing at competitive rates
(Aspiration Partners Inc., 2020).
Hydropower’s internal weaknesses are found in their low -profit
margins and limited production capabilities. Low-profit margins
are the inevitable result of efforts to keep prices low. Despite
operations practices designed to be economically and
environmentally sustainable, HydroPower will find it
challenging to keep profit margins above 10%. To address low -
profit margins, HydroPower will seek additional investors and
partnership opportunities with industries and people who
believe in HydroPower’s vision enabling a zero-emissions
future so they can increase production capabilities to obtain
economies of scale to meet the anticipated surge in demand for
electric cars. External Opportunities and Threats
External opportunities have been identified in growing social
interest in climate change, international, federal, and local laws
focused on reducing carbon emissions, and a marketing void not
being filled by current electric car industry providers. Public
concern about climate change has been rising in the United
States in recent years, becoming a top priority in the current
election cycle (Popovich, 2020). A 2018 CNBC article reported
the number of electric vehicle owners is projected to grow from
3 million to 125 million as a result of policies that encourage
drivers, fleets, and municipalities to purchase clean-running
vehicles, according to the International Energy Agency’s
forecast. The IEA also sees a potential growth of up to 220

million in that same time frame if the world takes a more
aggressive approach to fight climate change than current plans
(DiChristopher, 2018).
The unserved market of working- and middle-class consumers,
and especially millennials provides an opportunity for
HydroPower to penetrate an untapped target market. Top
competitors in the electric car industry, like Tesla, primarily
targeted wealthy consumers. Tesla’s mission to “accelerate the
world’s transition to sustainable energy” by proving that
“people didn’t need to compromise to drive electric – that
electric vehicles can be better, quicker and more fun to drive
than gasoline cars” takes for granted people who simply want a
vehicle that is affordable, reliable, and dependable enough to
make their daily commute to work or school (Tesla, 2020). The
MSRP on Tesla’s cars ranges between $77,000 and $86,000,
before options, which does not fit into the budget of most
working- and middle-class Americans. Even Tesla’s new
“affordable” model has an MSRP of $41,000, but it is a compact
sedan that would not be optimal for working people with
families (Kelly Blue Book Co, Inc., 2020). HydroPower sees an
opportunity to target consumers who would purchase an
economical Ford or Chevy and wants to offer them an
environmentally friendly option at a competitive price.
Additionally, HydroPower will not have to grapple with
concerns about internal competition, as was the case with Tesla,
who experienced a sharp decline in demand for their more
expensive model when the more affordable Model 3 became
available (Higgins, 2019).
External threats are the production capabilities of competitors,
inconsistent federal priorities regarding climate change that
shift with changes in administration, and lack of perceived
customer demand for electric cars. In addition to the leading
manufacturer in electric cars, Tesla, HydroPower also faces
external threats from traditional car manufacturers. Many
manufacturers including GM, Ford, Volkswagen, Toyota, Audi,
and BMW began producing electric and hybrid cars in response

to stricter emissions standards in places like California. These
seasoned manufacturers have already achieved economies of
scale and have production capabilities that far outweigh the
capabilities of HydroPower. However, unlike Tesla or
HydroPower, these companies’ profits are still tied to the
success of conventional fuel cars, so they are not properly
incentivized to invest in the success of their electric car lines.
Many of these companies prefer to sell the minimum number of
electric vehicles needed to satisfy state mandates and do not
want demand for electric vehicles to exceed demand for
conventional cars.
Many factors contribute to the lack of consumer demand, even
amongst consumers who show an interest in climate change
solutions. One is the price, and the second is a lack of
advertising. After addressing the price issue, HydroPower will
need to tackle the lack of customer awareness with targeted
advertising and a robust customer relationship management
program that focuses on building life-long relationships with
loyal customers. There has been little effort from automakers to
build a market for electric cars. Competing car manufacturers
only invest a tiny fraction of their advertising budget into
promoting their electric car lines, so many potential consumers
are unaware that there are more than 40 electric vehicles
available in the United States (Plumber & Popovich, 2020).
HydroPower will advertise with the same enthusiasm
automakers had in the 1990s when the focus was on building the
demand for SUVs and pick-up trucks. HydroPower’s advertising
strategy will focus on energizing consumers around the idea of
electric cars by getting consumers more emotional and
enthusiastic about electric cars and the positive impact they will
have on the future. Education will be another tactic used to
build demand for electric cars, reiterating to the public over,
and over again that the transportation sector is the largest
source of climate pollution is pivotal to gaining public support.
Most car dealers are reluctant to explain unfamiliar technology
to potential customers, which is why HydroPower’s engineers

are available to our dealerships via satellite video to answer
consumer questions and post weekly videos on social media
aimed at providing information to potential customers.
The last external threat to HydroPower’s success is the ever-
changing priorities of the United States federal government
regarding climate change. As stated in DiChristopher’s 2018
article, government emissions policies are the main driving
forces behind the demand for electric cars. The Trump
administration’s withdrawal from the Paris Climate Accords,
and intentions to scale back federal emissions standards have
and will decrease the demand for electric vehicles. HydroPower
will need to focus on penetrating markets in states like
California and others that have committed to ZEV or zero-
emissions vehicle plans (Center for Climate and Energy
Solution
, 2019). The lack of government action and leadership on
climate change will require private corporations like
HydroPower to carry the torch and lead the way into a zero-
emissions future. Target Market Strategy
HydroPower’s main target market is millennials, ages 19-38.
This age group contains 27.48% of the population which is
about 89 million people. Millennials are the second-largest
generation and often are called the generation of contradictions
with their gender roles and more liberal ideals. The millennials
are the generation that getting married and starting families at a
later age and are more focused on establishing their careers and

personal success first (Marketing Artfully, 2019). Minorities
make up 44% of this generation which means this cohort is the
most diverse of all other age groups. Millennials were raised
during the great recession and experienced how it hurt their
parents and nearby families, meaning that they are more
conscious when making large purchases and they tend to make
fewer committal decisions, such as renting a home instead of
buying one. This generation was born into a world of
technology and frankly do not know how to live their day to day
lives without it (Marketing Artfully, 2019). They believe that
the internet has had a positive impact on society and 93% of
millennials own a smartphone. Millennials are constantly
looking for a way to make a difference and are often super
engaged in their community, politics, and environmental
campaigns (Marketing Artfully, 2019).
HydroPower plans to target larger city areas, such as the
outskirts of Atlanta (Alpharetta or Peachtree City). We chose
areas such as this because of their high population and how
many citizens own a car for their daily commute. HydroPower
sees a need for their product in these areas. This target market
is ideal for HydroPower because millennials have a large impact
on new technology and its success rates because they are
usually the first to buy and try innovative technology for
themselves. While the average electric car is much too
expensive for this age group that is just beginning to start their

careers, an averagely priced electric car with the same cutting-
edge technology will be highly appealing to this market. On
average, around half a million people commute daily to Atlanta
for work, putting large amounts of pollutants into the air.
Millennials living in the outskirts of a large city like Atlanta
that commute daily to their jobs in midtown will be very drawn
to this product because of its convenience, pricing,
environmental sustainability, and it meets a need that they
encounter every day with their transportation. Millennials,
whether they are renting or buying, prefer to live as close to the
heart of Atlanta as they can afford (Atlanta. News. Now., 2016).
With HydroPower being a company that thrives on innovation
and a futuristic concept, millennials have an automatic tie with
the purpose of the company from the very beginning. Studies
show that millennials respond best to online advertising,
especially across social media which is the primary media
HydroPower will use to reach its customers. Communication
and distribution efforts will occur online as well, where
millennials do their shopping and spend their leisure time. With
Hydropower being an innovative company, most sales will be
done online and the car itself can be conveniently shipped for
pickup. This adds to the convenience factor that every
millennial strives in all their consumer transactions. On the
opposite end of the spectrum, HydroPower’s low-opportunity
segments include the older markets that are set in their ways

when it comes to the simple concept of transportation. These
segments include “baby boomers,” born between 1944 and 1964
that most likely have the attitude of, “if it's not broken, why fix
it?” (eLearning Industry, 2016). Hydropower will not focus its
advertising abilities on this market because of the low
opportunity of purchase from this age group.
The biggest evolving need that the millennial segment has that
we can meet is transportation. While this can be met by any
other car company, the advantage that HydroPower has over our
competitors is the environmentally sustainable ideas we strive
for while still being affordable and convenient. According to
Forbes, millennials are committed to implementing sustainable
development goals, including equality, climate change, peace,
justice, poverty, and prosperity (Forbes, 2019). The sustainable
aspect of HydroPower will meet a need that millennials strive
for every day while still staying in the budgets that they have
set for themselves. Hydropower offers a unique product while
still meeting the need of young influential people in a large city
environment.
Because the company is a large, one-time purchase, business
with its main product being affordable electric vehicles,
Hydropower has other lines of profit such as its charging
stations around major cities that keep loyal customers that are
repeatedly involved in the business. In 2015, around 0.66% of
sold cars in the US were electric, meaning the majority of the

public is nonusers while the percentage of electric car owners
would be considered heavy users (Statista, 2019). These users
will typically become customers through online marketing and
will learn about HydroPower through social media
advertisements and/ or word of mouth. The car buying
experience will be a simple one because that is what millennials
are attracted to; we aim for the purchasing to be similar to
Carvana. Customers can go online and completely purchase the
car with simple questions and straight-forward paperwork, then
the car is delivered to the consumer in the next few days. This
way of purchasing will be extremely appealing to our target
market and make us stand out from other competing brands.
While Hydropower will be successful with millennials and
appeal to not only their needs but their lifestyle and wants in a
vehicle, there are of course objections and reasonings as to why
our market might be against the product itself. One of these
reasons might be how large a commitment buying a car is; while
almost everyone has a vehicle or needs one to get by,
millennials in large cities may avoid the commitment of buying
a vehicle by commuting using public transport or rideshare
services like Uber. Hydropower makes the car buying
experience as simple and convenient as possible which
decreases this objection. The affordable price and reasonable
financing options also soothe protests millennials have against
making long-term purchase decisions. Another obstacle that is

faced is the niche market electric cars reach; while millennials
love sustainability and future-forward ideas, there are still
issues with breaking through to any market with such a new
idea. Making HydroPower’s prices comparable to prices of
conventional cars will combat this obstacle while emphasizing
the benefits electric cars have for the environment and daily
life, and making the car buying experience as simple, will
energize the market for this product. Competitive Advantage
What sets HydroPower apart from similar competitors is the
dedication to innovation and understanding of what is desired of
its specific target market. By going above and beyond for the
consumer, such as providing satellite video access from
engineers in dealerships, the customer will have a better
understanding of the technology and features included in the
vehicle straight from the sources that implemented it, which
would not be as easily accessible to them anywhere else. Since
the younger adult audience that HydroPower focuses on is the
group most likely to have a greater concern for the future
effects of climate change, considering this factor will also prove
to be beneficial in the long run as this group will be more
receptive to this type of technology.
What will set HydroPower apart most of all will be the more
affordable price point. By showing to the consumer that it is
possible to be both affordable and sustainable, customers that
may have assumed that electric cars were far outside their price

point will be able to see that the elements in a car that they
desire are more accessible than they may have originally
perceived. Since the target market in question will not be as
financially stable as an older demographic, the cost will play a
major factor in their decision making, regardless of whether or
not all members of the market have a desire to be more
sustainable in their daily lifestyle. While these consumers may
desire advanced technology, they may sometimes make
sacrifices when it comes to what features are available in their
vehicles in favor of a more affordable price point. At
HydroPower, it will be important to show the customer that
advanced technology does not have to be compromised,
especially in such a specialized market like electric cars.
Another element that will set HydroPower apart from the rest is
embracing technology as a tool to further promote not only their
product and design but the overall mission of the company to
eventually reach a zero-emissions future and communicating
how important this future will be to our world. Not only does
the younger target market lead a more technology-centered
lifestyle, but this is also another way to promote the overall
message of sustainability. A more technology-focused method
of advertisement can also create a more interactive experience
that allows the consumer to be further immersed in what the
product has to offer.
While it may initially be challenging to make a significant

impact in the automotive market, once it is established it will
need to evolve as the market evolves. Remaining stagnant in
this type of industry would only prove to be detrimental to the
company, as new advances in safety, sustainability, and
technology are constantly shaping what is in demand in the
automotive industry, and what quickly can become outdated. It
will be imperative to constantly stay aware of upcoming trends
not only in the automotive market in general but also what
changes are coming up in terms of how electric cars can make a
greater sustainable impact. By having an internal team focused
on researching and identifying upcoming trends in innovation,
HydroPower will be able to stay ahead of the curve rather than
adjusting after the fact to catch up to an already altered market.
The Marketing Mix
When HydroPower decided to reposition itself from a retailer of
used hybrid and electric cars to an electric car manufacturer, it
knew it wanted to do more than raise a profit. The company’s
core mission of moving the world closer to zero emissions by
providing affordable and accessible can only be attained with a
market mix that is aligned with HydroPower’s mission and core
values. Each component of the marketing mix: product, pri ce,

place, and promotion, is designed to best serve the firm’s
mission, with the importance of profits deemphasized, and the
focus on how to market electric vehicles so they appeal to the
target market of working- and middle-class millennials.Product
HydroPower’s product breadth consists of four main product
lines: motorbikes, 2-door coupes, 4-door sedans, and mid-size
sport utility vehicles. To keep production costs low, product
depth currently only consists of one product in each line, but
the product lines are expected to grow as HydroPower’s brand
awareness and production capabilities increase.
HydroPower’s 2-weel motorbike, the HP Swift is designed for
the young single person who desires a quick, efficient method
of transportation for their daily commute to school or work.
Though not intended for long commutes, the battery lasts for
200 miles before needed to be recharged. It is ideal for
consumers who commute in congested metropolitan areas like
Atlanta that has experienced exponential population growth
over the last two decades. Public transportation and highway
infrastructure have not been unable to keep up with the rapid
population growth rate in the region, resulting in longer
commute times as the metro-Atlanta region expands outward,
and commuters continue to travel into the city for work.
For consumers who want a compact, quick, option that still
protects them from the elements, HydroPower offers The HP
Sleek which is a sleek, 2-door coup, with options for a moon

roof or convertible top. Its battery lasts nearly 400 miles before
recharging and is ideal for daily commutes, long drives, or
cruising around town on a Friday night. Currently, the 2-door
coupe seats four, but the line is expected to expand to include a
2-seat option. The HP Sleek’s safety rating, driver assist, and
easy handling also make it an ideal first car for teens. For
commuters who like the space and comfort of a mid-sized
sedan, HydroPower offers The HP Style. This car is larger than
The Sleek and seats five comfortably but has the same battery
life. It is ideal for families or individuals who want stylish
transportation for their daily commute.
Finally, designed with the millennial family in mind is
HydroPower’s midsized SUV, The HP Spartan. For parents who
need a little more space for more or older children, the HP
Spartan seats seven, with an adjustable backbench. Offering
more space and utility than the midsized sedan, The Spartan is a
trendy transportation option for their daily commute and with a
battery life that lasts 350 miles, it is also perfect for longer
trips. It is utilitarian in design with a motion-sensor self-lifting
hatch and spacious rear space for groceries, luggage, or sports
equipment. Options include charging ports and TVs, all powered
by solar panels installed in the moon/sun-roof.
In addition to its main product lines, HydroPower offers a full
suite of augmented products and services. Each vehicle comes
with a 5 year/60,000-mile bumper to bumper warranty that

covers everything except “wear items” like tires, brake pads,
and windshield wipers. An extended warranty for another 5
years, can be purchased as an add-on at the time of purchase at
a discounted rate or any point before the first five-year warranty
as expired. The batteries are under a separate 10 year/ 120,000-
mile warranty to comply with electric vehicle standards in some
states, like California (Reed, 2017). To make HydroPower’s
offerings more attractive than conventional vehicles,
HydroPower also offers augmented services that are not typical
for the industry like free roadside assistance, rust and corrosion
warranties, covering tire rotation for the first 3 years (Reed,
2017).
HydroPower’s commitment to building brand loyalty and
generating positive word of mouth is demonstrated by the
associated services offered and their customer relationship
management. Associated services include in-house financing
backed by our financial partners, Aspiration, at rates that will
not burden our target population, even if they have had credit
challenges in the past. For those who qualify, we offer $0 down
with 0% APR, and for those who don’t we have down payment
deferral options, that allow consumers to spread their down
payment out over the first few months of their contract.
Although electric cars require fewer repairs and maintenance
than conventional cars because there are fewer fluids and less
moving parts, HydroPower is cognizant of the fact that 40% of

Americans cannot afford a $400 emergency, so another service
HydroPower offers is repairs and maintenance insurance
(Energy Efficient & Renewable Energy, 2020: Youn, 2019).
These packages allow customers to pay a small monthly fee for
insurance that covers routine or emergency maintenance needed
in the future. HydroPower places collected premiums in high-
yield savings accounts offered at Aspiration Bank, which
enables HydroPower to return portions of unused premiums to
customers after a specified time period.
Finally, in addition to the products and services offered,
HydroPower adds value to its products by providing excellent
customer service. HydroPower’s core goal of zero emissions is
driven by the founders’ dedication to people and humanity, and
the best way to demonstrate that is through commitments to
customer service. Engineering experts are available to answer
questions during the purchase process and offer video tutorials
about the technology of electric vehicles to assuage customer
fears about purchasing a product that is unfamiliar to them.
HydroPower also offers an online forum for questions and
concerns to be answered in real-time by its experts, as well as
an online and phone process for submitting customer service
inquiries and complaints. HydroPower’s user-friendly
interactive website allows consumers to shop, explore, and
design cars to their specifications. HydroPower’s service
resolution process is designed to provide both procedural and

distributive fairness when addressing customer grievances
through an efficient complaint resolution process that empowers
employees to offer discounts and rebates to aid in service
recovery.
The firm and its products are in the innovation stage of the
product life cycle, so low sales and negative profits are
expected in the first five years. HydroPower’s typical
consumers will be innovators who could not afford to enter the
electric car market offered by Tesla and other conventional car
manufacturers. The electric vehicle market itself is still in the
“early adopters” phase of the diffusion of innovation curve with
electric vehicles only making up 5% of new car sales in 2018
(Eisenstein, 2019). HydroPower believes its reliable product
offerings at an affordable price will allow it to catch up and
surpass the rest of the electronic vehicle market by increasing
demand for electric vehicles.
Price
The main factor suppressing the demand for electric vehicles is
the price. HydroPower cannot obtain its main objective: to move
the country towards zero-emissions by providing affordable
electric car options for working- and middle- class Americans,
without taking considerable measures to keep prices low.
HydroPower’s pricing methodology starts with a sales-oriented

objective that keeps prices low to generate new sales by taking
away sales from the conventional car industry, even if it loses
money in the short-term. Setting prices low as HydroPower
launches new products will allow HydroPower to build sales,
market share, and profits quickly. This requires some
competitor orientation as well, as HydroPower must set its
prices against those of conventional cars. Although HydroPower
acknowledges Tesla as a direct competitor, the goal of zero
emissions will not be accomplished by penetrating Tesla’s
market, but by converting Ford, Chevy, and Kia car buyers into
HydroPower customers by offering an electric car at prices that
compete with offerings of conventional models of Ford and
Chevy. HydroPower wants to increase the number of electric
vehicles on the road, by reducing conventional vehicle
purchases.
HydroPower’s product lines are priced to compete with specific
models of Suzuki, Ford, and Chevy as HydroPower believes the
consumers of these cars belong to the same demographic that
HydroPower plans to target. The Swift is priced at$13,995
which is compatible with the price for the Suzuki Katana.
Similar in design and functionality, motor-bike consumers will
have an electric option offered at a similar price. HydroPower’s
2-door coup, The Sleek, is priced to compete with the Ford
Fiesta, but has a superior and more attractive design that does
not look like an economy car; the price without options is

$15,995. HydroPower’s sedan, The Style is priced at $25,595,
which makes it competitive with the Ford Fusion, and Chevy
Impala, and finally, the SUV, The Spartan, is priced at $32,995
making it competitive with any of Ford’s small SUV’s: the
Escape, the Edge, or the Explorer (Kelly Blue Book Co, Inc.,
2020).
A cost-based method was used to establish prices for
HydroPower’s vehicles. Tesla’s “affordable” electric car costs
about $28,000 per unit to produce; $18,000 for materials and
$10,000 in labor (Coren, 2018). HydroPower knew it would be
impossible to make electric cars affordable and maintain a
profit margin with $28,000 in variable costs, however, Tesla’s
location and use of premium materials keep its variable and
fixed costs much higher than HydroPower’s projected costs of
production. HydroPower’s use of recycled materials enables
HydroPower to save 40% on materials. Having its factory in
Atlanta, rather than California, saves HydroPower money on
labor as well as fixed costs like rent, utilities, and state taxes.
In total, HydroPower was able to cut variable costs in half to
$14,000 for the Style; $10,000 for the Swift; $12,000 for the
Sleek and $18,000 for the Spartan. HydroPower also controls
the costs of production through its operational excellence, a
combination of lean manufacturing and green supply chain
management. Additionally, HydroPower utilizes digital
production software that creates a “digital twins” throughout the

value chain and allows engineers to first create a virtual
product, using virtual production, that translates to real
production of a real product via automation. This software cuts
down on production errors and makes design and production
more efficient (Siemens, 2020). Low variable costs enable
HydroPower to set prices at price points competitive with
conventional car manufacturers and helps HydroPower achieve
competitive advantage. HydroPower also considers the
psychological dimensions of price, and prices each vehicle so it
ends in 95, to bargain signal or imply that the price is a great
value (BrainStuff, 2016). HydroPower believes the low prices
will increase the quantity demanded and combined with
strategic advertising and promotion, HydroPower will generate
new demand for their electric vehicles.
As brand awareness and demand grows, HydroPower’s prices
will also need to increase to reach a production capacity that
meets increased demand. HydroPower will have to consider how
sensitive consumers are to changes in price and evaluate how
much increases will impact the quantity demanded. When
examining the price elasticity of demand for cars, it is noted
that demand for cars is somewhat elastic when the customer has
an immediate need and ranges from 1.2 – 1.5. However, because
new car purchases can typically be delayed, and there are many
substitutes available in the market, the demand for a specific
brand can be highly elastic with an elasticity rating of 4

(Anderson et al., 1997). HydroPower must combat this elasticity
and increase demand through a robust campaign that emphasizes
both the environmental benefits of purchasing an electric
vehicle as well as economic benefits in addition to a low price
like tax credits that consumers will be eligible for after
purchasing an electric vehicle; savings on gas in states that
offer incentives that make recharging less expensive than
refueling, and savings on repairs and maintenance (Energy
Efficient & Renewable Energy, 2020). Price elasticity can also
by counter-acted through creating brand loyalty, which is why
the augmented products and services are vital to HydroPower’s
marketing mix.
The other purpose served by augmented products and services is
to provide additional revenue sources at low or no production
costs. Repair and maintenance contracts, in-house financing,
extended warranties are ways that HydroPower generates
revenue without increasing variable costs. Another potential
revenue stream is a 15 day “try before you buy” test drive that
is offered to potential customers the rate of a one-month lease
and is applied to the down payment if the customer chooses to
purchase the vehicle. HydroPower accepts credit, debit,
cashier’s check and money-order for down payments, and
monthly payments can be made online or over the phone with a
processing fee, that covers the expense of accepting credit and
debit card transactions.

Although keeping prices low results in lower profit margins,
HydroPower believes a short-term sacrifice of profit is worth
achieving its mission, and that ultimately the low price will
increase demand and result in higher profits in the future.
HydroPower’s commitment to building brand loyalty will help it
retain customers even after increased demand causes prices to
increase. HydroPower is committed to gradual increases in price
because the underlying mission remains, and that is to provide
affordable options. Although the price is the only component of
the marketing mix that generates revenue, the key to
HydroPower’s success also lies in its advertising and
promotion, because without brand awareness, HydroPower will
not be able to accomplish its mission to provide affordable
electric vehicles and move the world to a zero-emissions future.
Place
The place and distribution for HydroPower are very closely
linked. While most car sales take place at traditional car
dealerships, purchasing vehicles online is steadily becoming a
more normalized method of purchasing within the automobile
sector. As the target market is most likely to continue down a
path towards online purchases, it is also important that
HydroPower is offered in person as well to allow some potential
buyers to get hands-on experience with the product. By offering
purchasing options online, potential buyers can shop at their
convenience. It also allows potential buyers who prefer a

traditional car-buying setting to gather more information about
the product they are interested in before visiting a dealership to
see the cars in person, thus speed-lining the in-person shopping
experience. As for actual sales facilities, the greater Atlanta
area is the ideal location to reach the desired target market. To
determine which areas would be the best for sales and exposure,
it would be imperative to assess which cities in the surrounding
Atlanta area have larger populations of residents who commute
to their workplaces to make the product easily accessible to the
desired customer.
At the actual sales facilities, the atmosphere at the dealership is
specially tailored to meet the desires of the potential buyers.
The millennial market desires a very different car buying
experience than their predecessors, which must be accounted for
at HydroPower locations. Since HydroPower is centered around
innovative technology, it is important to showcase innovation
and technology when buyers visit dealership facilities. By
incorporating technology into the physical setting, it will only
further reinforce the values of HydroPower to those interested
in the product. The overall atmosphere at sales facilities do not
make buyers feel as if all that matters is making a sale, but it is
instead evident to buyers that what is esteemed most is sharing
the values of HydroPower, such as explaining how individuals
can combat climate change in their own lives and the
importance of renewable energy. Sharing the mission and

educating potential customers creates beneficial opportunities to
achieve HydroPower’s mission of moving the world towards
zero emissions by providing affordable and accessible options
to suit their needs. These facilities combined with the online
stores are available year-round, allowing buyers to purchase
cars or even simply learn about the products offered whenever it
is convenient for them.
Initially, some members of the target market must travel a short
distance to visit the sales facilities, but likely no distance
greater than they would travel to any other standard car
dealership. To counter this, online purchasing is an option to
make the shopping experience more convenient for those who
do not wish to or are not able to travel to a dealership. Over
time HydroPower will open more sales facilities throughout the
region but becoming better established among the target market
takes priority over opening numerous sales locations. This can
eventually be improved upon by studying which other areas
would take an interest in the product being offered, and
determining what locations have a dense population of the ideal
demographic that might not have already been introduced to the
type of cars that Hydropower offers. Promotion
A typical customer learns about HydroPower online through
social media advertisements, pop-up advertisements, or even
through email. Because its product is so innovative and targeted
towards the millennial-aged market, it is important to advertise

on platforms that will be reached by that age group.
HydroPower is advertised as being a new concept that is
sustainable, advanced, and reachable with a middle-class
income. The target market must not feel as if the product is over
their heads when it comes to the price tag, so it is marketed as
being reachable with a moderate income. HydroPower vehicles
are advertised as being futuristic and top of the line; using
words such as these appeal to its target market because they are
always looking for the new and best thing on the market. It is
important to address in marketing efforts that this product will
benefit every aspect of a millennial’s day to day lifestyle and it
is not so much a want, but instead a need. Being concise but to
the point with advertising to this target market is especially
important; they want to know what exactly the product is
without having to read too much into it or think for themselves.
Hydropower’s advertising efforts will effectively inform
without being too descriptive and successfully persuade using
the right wording that will make millennials want to get on
board with this new innovative technology. HydroPower needs
to measure the effectiveness of these advertisements to know
what budgets to set aside for promotion itself. HydroPower
spends around 7-8% of their gross revenue for marketing and
advertising (Nuphoriq, 2019) and tracks their effectiveness and
interaction on internet sites to determine if their promotional
budget should increase or decrease for the years to come.

Currently, HydroPower uses social media advertising as their
primary source of promotion to reach its millennial target
market. Other media outlets include emails, mail sent out
monthly, or even magazine ads/ articles. Social media will be
the most effective with this market because 90.4% of
millennials use at least one social media site and 84% of
millennials don’t trust traditional advertising (Mohsin, 2020;
Sagin, 2016). This means that newspaper articles and magazine
advertisements are not effective methods of reaching
millennials; social media is the best and most effective way to
spark attention with this market. Using social media like
Facebook and Instagram to advertise contributes positively to
the brand because it adds to the trendy, sustainable, and
technology-forward brand image that HydroPower is building.
Costs for social media advertisements, like through Facebook,
start $0.22 CPC (cost per click) (Karlson, 2019). Social media
advertisements are most cost-effective because the company
gets the most exposure this way based on their target market
and companies are charged based on the amount of exposure
achieved. So, costs are not extremely high if the advertisement
does not garner much attention. HydroPower schedules their
advertisements to broadcast on social media around 9 pm to
midnight or early in the evening around 6 to 8 pm; these are the
most prominent times that socials such as Facebook and
Instagram have the most users on (Tien & Ansley, 2019). This

ensures that HydroPower gets the most exposure possible to
users on the applications. Several different visuals are used for
the advertisements, so the same user does not come across the
same ad more than once. Each advertisement contains the same
general information: a catchy phrase to draw consumers in; a
website to visit and/ or a link; and a small description of what
HydroPower is; but has a different look. Another simplistic yet
effective way to advertise that will be beneficial to HydroPower
is the use of billboards. Using minimal wordage and images that
leave a lasting impression on these billboards will keep the
consumer interested and willing to go online to get more
information on HydroPower. Billboard advertising is paid
monthly and is relatively inexpensive which makes it an ideal
advertising media for a start-up company. Although billboards
are less expensive than other forms of media, monthly costs
accumulate so HydroPower must be strategic in selecting when
to run billboards. The low cost and broad reach of billboard
advertisements make the most advantageous periods to run
during brand launches and low sales months. Radio advertising
is also a quick, easy, and relatively less expensive way to reach
HydroPower’s target market when placing it on the right radio
station. Using short, 30-second audio advertisements will be
enough to get a consumer interested and willing to look up the
company once they get home. Radio advertisements can also be
broadcast on music streaming services like Spotify and Sirius

Radio. With social media being used as the primary
HydroPower’s primary source of advertisement, billboards and
radio ads will also spark the interest of a broad branch target
market.
HydroPower uses its internal advertising department rather than
hiring an outside advertising agency. This keeps everything
under the same roof, saves money, and ensures that new
advertisements can be produced rapidly and represent the
company well. This branch of the firm is in charge of designing
ads, discussing with different media platforms pricing/ times,
communicating with other branches to stay informed on any
promotions that should be included in ads, and anything else an
outside advertisement agency would be responsible for.
HydroPower will use prominently customer service emails and
an online forum on its website to answer any customer inquiries
and its customer relationship management department works
diligently to answer customer inquiries within 1-2 business
days. If a potential customer submits their contact information
into the website form indicating interest in a product the
customer service branch follows-up via email, thanks to these
potential/ repeating customers, and asks if they are curious to
know any more about the company or get more information.
Public relations are a large part of HydroPower’s advertising
and promotion department; the brand realizes how important it
is to maintain positive relations with other similar companies

and complementary companies to maintain competition and
relationships. HydroPower’s public relations programs respond
to negative publicity by being timely and fact-driven; any
negative comments in the media are most definitely responded
to but in a respectful and humbling manner and facts are used to
dispel negativity. If the negative publicity is something the
company can learn from, that is stated in the response.
HydroPower is a new and innovative company meaning that the
brand itself is still working out kinks for the most part, and it is
important to be completely translucent with your consumer
base. The public relations sector is handled internally, working
closely with customer service and the advertisement/ promotion
branch as well. It is their responsibility to ensure HydroPower
keeps a strong connection with its social media outlets that they
advertise on as well as other online outlets such as Yahoo,
Google, and other social sites that might bring business is by
placing advertisements. This branch is overall very important to
keep HydroPower’s reputation and relationships strong.
The sales force for HydroPower is organized similarly to a basic
car dealership. While the company is mainly based online, with
only one dealership in the greater Atlanta area, there are still
salesmen that work very closely with online and in-person
consumers when going through the full car buying process
through either face to face meetings, email, or even Skype.
Since HydroPower is a national company, it is broken down into

regions. Each region has several salesmen who are led by a
regional sales director who is responsible for distributing
clients, resolving large conflicts and service issues, and
communicating information from corporate headquarters to
subordinate salesmen. Regional salesmen work closely with
customers from the beginning to the end of their car buying
experience and follow-up with them multiple times after the
initial purchase to make sure everything is running smoothly.
Salesmen are compensated with a base wage plus commission of
sales, while the regional sales directors are compensated with a
salary plus bonuses based on the performance of their salesmen.
Performance-based compensation results in eager salesmen who
are motivated to cultivate positive and long-lasting
relationships so satisfied customers ask for them by name when
returning or when making recommendations to friends. When
hiring these vital employees that work closely with
HydroPower’s target market, it was important to make sure they
fit with HydroPower’s corporate culture and that its target
market would be receptive to their sales personalities. Because
of this, personable and upbeat salesmen that are knowledgeable
when it comes to technology and media are more likely to be
hired by HydroPower. This fosters stronger relationships
between consumers and salesmen, and millennials are more
receptive to this personality type when making a large purchase.
Customers are made to feel appreciated by the one-on-one

connection they make with their assigned salesmen and the
frequent follow-ups they receive even after the purchase is
made. Our target market is very receptive to our online
marketing as well as the full sale being made online because
this demographic is most used to making online purchases and
appreciate that it is not outside of their comfort zone. Because
this is a very large purchase and much thought and conversation
are put into purchasing a vehicle, the interactive website is a
useful aid but cannot replace the vital one-on-one connection
between the salesman and the consumer that is significant to the
business model.
HydroPower uses sales promotions such as advertising
abundantly that they provide financing and/ or leasing options.
Affordable financing and leasing options appeal to
HydroPower’s young target market because it reduces the threat
of personal finances hindering consumer purchase ability. The
sales promotion is directly targeted towards the final customer
that will be purchasing the vehicle. The specific purpose of this
sales promotion is to attract the customers who may not have
the best credit or best finances, to show them that they are not
out of the running for our product because of those reasons.
This expands HydroPower’s target market and makes the firm
appeal to a larger consumer base than it would if the promotion
were not offered.

Creative Deliverables:
YouTube Ad: HydroPower Electric Cars Ad
Print Ad: Objectives
As for the objectives of HydroPower, customer satisfaction is
prioritized above reaching as many customers as possible. To
retain customers in the long term and have those customers
recommend HydroPower cars to others, HydroPower knows that
meeting, satisfying, and exceeding the customer’s needs will
prove to be more beneficial than widespread outreach that does
nothing to satisfy what the customer is looking for from its
product.
To achieve this overall objective, the three primary marketing
objectives of HydroPower include increasing the lifetime value
of a customer, increasing brand awareness, and engaging with
the target audience. Each element of these objectives is
supported throughout the marketing mix. Providing a variety of
products that meet the varying needs of customers ranging from
older-aged millennials who have families, or young adults
entering the workforce for the first time. As each of these
specific groups will have their own unique set of product needs,
it is important for HydroPower to recognize what they can offer
that will exceed the expectations of the customers within these
groups, ultimately making these customers more likely to
become lifetime buyers.
HydroPower determined the best way to successfully engage

with the target audience was to saturate areas with the greatest
population of the target market’s demographic. By doing so,
customers would see HydroPower as an easily accessible option,
rather than something that is located too far away to be
obtainable. Both, engagement with the target audience and
increasing brand awareness would also be closely connected to
the promotion of the product, as certain avenues of promotion
such as social media can simultaneously achieve both goals of
engagement and awareness. Ultimately, the main objectives of
HydroPower are in place because of their central focus on the
customer over all else. Educating customers about how their
daily automotive needs can become more energy efficient makes
HydroPower’s goal of a zero-emissions future is more attainable
than many would expect.
According to the Alliance of Automobile manufacturers, there
were 509,087 new car sales in the state of Georgia in 2018 and
96% of new sales were conventional cars, while only 1.29%
were hybrid or electric vehicles (2019). However, according to
the Wall Street Journal, Atlanta is the second largest
metropolitan market for electric vehicles (Ramsey, 2014).
HydroPower’s goal is to achieve 0.5% market penetration in
Georgia in the first year and to reach all innovators by the end
of its 5th year. Based on purchasing patterns of American
consumers reported by the Associated Press and The New York
Times, 0.5% market penetration would require production

capacity and sales of 50 cars per week and would yield 2,545
cars sold allocated between the product lines as follows: the
Swift would account for 3% of sales; the Sleek, 8%; the Style,
29%; and the Spartan would account for 62% of sales (Krisher
2020; Ulrich 2019). HydroPower completed a cash proforma
based on these assumptions that indicated HydroPower would
earn $74 million in revenues the first year, with variable costs
totaling $41 million. Operating expenses were projected at an
additional $9 million consisting of the following: salaries for
nonproduction employees (i.e. salespeople, marketers, and
engineers) estimated at $2 million annually, for twenty
employees. Executive salaries and benefits projected at
$600,000 for the first year. Annual rent is projected at $64,000
for a 16,000 square foot space Fulton Industrial Blvd. in
Atlanta, GA based on an annual rate of $4.00 per square foot
(Akimoto Ventures, LLC., 2019). Utilities are estimated at an
annual average of $2.16 per square foot for $34,560 (Davies,
2019). These operating expenses also include payments on a
working capital loan used to cover start-up costs like production
equipment and enough cash reserves to cover 3 months of
operating expenses. The largest cost, outside of variable
production costs, is allocated to HydroPower’s promotion and
advertising budget. HydroPower has budgeted 8% of gross sales
for advertising and promotion, $6 million. After expenses and
taxes projected at 24% of net income before taxes, it is

projected that HydroPower will end the first year with a 25%
profit margin provided HydroPower reaches its sales goals. The
profits will be invested in increasing production capacity and
advertising for the next year. Conclusion
The founders of HydroPower Electric Cars want to make efforts
today that will ensure a zero-emissions tomorrow by providing
affordable, dependable, and stylish electric vehicles that suit the
needs of the unserved target market of working- and middle-
class millennials. HydroPower’s conscious marketing strategy is
integrated throughout the organization's culture and reflected in
each phase of the marketing mix. It is demonstrated through
HydroPower’s commitment to customer excellence, operational
excellence, and environmental sustainability. HydroPower
strives to keep prices competitive with conventional car
products without sacrificing quality. Its business practices aim
to foster life-long relationships with customers, build brand
awareness, and create the demand for electric vehicles.
HydroPower will engage with its target market via a robust
promotional plan that will incorporate emotional and rational
appeals across multiple mediums including social media, radio,
billboards, and television. This comprehensive marketing plan
will ensure HydroPower achieves its goal of 0.5% market
penetration in Georgia in the first year while maintaining a
healthy profit margin.

References
Aspiration Partners, Inc. (2020). Who we are. Retrieved
fromhttps://aspiration.com/who-we-are
Anderson, P. et al. (1997, Nov 13). Price elasticity of demand.

Retrieved
fromhttps://scholar.harvard.edu/files/alada/files/price_elasticity
_of_demand_handout.pdf
Atlanta, Georgia Population 2020. (n.d.). Retrieved from
http://worldpopulationreview.com/us-cities/atlanta-population/
Alliance of Automobile Manufacturers. (2019). Autos drive
Georgia forward. Retrieved fromhttps://autoalliance.org/in-
your-state/GA/
BrainStuff- How Stuff Works. (2016, April 19). Why do price
tags end in .99? [Video file]. Retrieved
fromhttps://www.youtube.com/watch?v=pvF4kFPE8U4
Center for Climate and Energy

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