Toyota is in deep stuff given the allegations of unintended acceleration, several huge recalls that will cost BILLIONs of dollars, continuing investigation by NHTSA, civil penalties, reduced sales, weakening brand image scores and deflated residual values.
There has already been plenty written about the impact of this on Toyota’s brand reputation. It certainly is going to set them back, some pundits say it’s a “speed bump” for Toyota, others say the situation will effectively “kill” the Toyota brand. I suspect that the “truth” will be somewhere in the middle, the Toyota brand has been damaged, it will take a good deal of time and effort to recover, but it will recover.
Rather than debating the current health of the Toyota brand, I’ve been thinking about the discipline of branding in the automotive category and what its practitioners can learn from Toyota’s experience. Certainly the need to manage the media and to do so in a transparent way is critical. Time is of the essence, the internet can take your reputation and spin it out of control in a heartbeat. Beyond the crisis management learnings, I think that we are seeing the danger of having a brand that is based solely on rational underpinnings.
Toyota’s reputation for bulletproof quality and reliability is a completely rational positioning. Combine that with bland design and you have automobiles that many in the industry deride as “appliances.” Consider your refrigerator. It sits there, does its job remarkably well, demands no attention at all…unless it breaks and then it’s a disaster. Sounds like a Toyota. As long as nothing goes wrong with your refrigerator, you will probably remain likely to purchase the same brand again, if you have problems you will defect to another brand. Ultimately, this is how Toyota will measure the strength of its brand…how many customers defect.
Unfortunately for Toyota, it is very easy for customers to defect from a brand that makes a very rational promise that is subsequently broken. Bullet proof quality and reliability is a wonderful promise until you break it and you have nothing else to act as a backstop while you solve the product problem.
The backstop for some brands is an emotional connection and promise that is made along with a rational promise. Volvo’s safety positioning is a classic example of both rational and emotional components working together. Volvo certainly has all the engineering and technologies (rational) that support the promise of a safe car but it also promises us the peace of mind (emotional) of knowing that we’re keeping our loved ones safe:
Volvo is certainly not immune to product quality problems but their customers don’t immediately defect at the first sign of trouble. Volvo customers will give their brand a break because they believe in their hearts that their Volvo keeps their family safe. Talk to anyone who has owned more than one Volvo and you will feel their commitment to the brand first hand.
Subaru is another example of an automotive brand that is built on both emotional and rational promises. Nothing could be more rational than the benefits of all wheel drive but that’s not all that is at the core of Subaru. Subaru promises to help people live their lives the way they want to and in return they “love” their Subies:
How about this for carrying the emotional promise of the Subaru brand to the retail level:
Subaru has certainly gone though a few rough patches from a product point of view but their loyalists have signed on for something bigger than dependable all wheel drive, they share an emotional bond with the Subaru brand and its community.
There are other automotive brands that have connected emotionally with customers. Mini, and Audi are good contemporary examples.
I think it’s interesting that three of the brands with strong emotional connections mentioned so far (Subaru, Mini, Audi) came through this last recession with strong sales and share gains.
Historically Mercedes-Benz, BMW, Chevy, SAAB, Saturn, Honda, Cadillac and others have had strong emotional components to their positionings. Unfortunately, for these brands it seems less true today.
Toyota has never been a brand that people connected to in an emotional way. Toyota customers aren’t passionate about the brand, they have always been rational about purchasing Toyota quality and reliability. When quality is lacking and reliability questionable, there is nothing left, there is no overriding reason to stay with Toyota. In a category where quality and reliability have become virtually a given, consumers were well aware that they had options and they quickly helped VW, Ford and GM have an excellent January.
Toyota has proven something that many of us responsible for marketing automobile brands have always known…the most powerful and durable automotive brands are those that are clearly positioned with both rational and emotional underpinnings. The brands that stand for something and connect with their owners emotionally create enthusiasts and tribes of loyalists around them. These brands’ customers give them a break when things don’t go quite as planned.
Admittedly, no amount of emotional connection is going to overcome Toyota’s serious product issues, but I do think that it buys you time and gives you a chance to make “good” on your brand promise. It also creates the possibility of your loyalists defending your brand, there seem to be precious few actually defending Toyota.
In the “new normal” US auto industry with sales in the 11MM-13MM range, the successful brands will be those that create an emotional connection with their customers. The lack of this emotional connection has left mighty Toyota vulnerable and opened the door to its competitors, including Volkswagen which has unabashedly stated its goal of being #1.
It will be interesting to watch Volkswagen. In Ad Age on August 24th, as their agency review was getting started, Tim Ellis (VW CMO) said:
“Our goal of rapidly increasing our volume in a mature market requires the Volkswagen brand to evolve into a more relevant mainstream choice,”
I hope that becoming a “more relevant mainstream choice” doesn’t result in VW making more mainstream (sic boring) products and losing the emotional power that the brand has historically leveraged.
After all, no one loves their refrigerator.