What a difference a year makes. It’s 2010 and the auto industry is beginning to recover.
After an incredibly tough 2009, consumers seem to be coming back. For the first time in recent memory, Americans’ perception of domestic automobiles seems to be on the mend (Business Week 4/23). Ford’s bet that Americans will buy smaller, fully featured automobiles looks like it may pay off. GM’s product plan created by soon-to-retire Bob Lutz is leading a resurgence for the General. Hyundai and Kia, supported my excellent product quality, have taken advantage of recessionary sensibilities and grown share of market. Audi , Subaru and Mini have come out of the recession on a tear.
On the other side of the ledger, Toyota continues to struggle with recalls and concerns about quality. This has led to unprecedented incentives by Toyota and the predictable response by competitors to match them. So a good number of consumers who had been sitting on sidelines during the recession have come back to dealerships looking to for a good deal. After 2009, it’s a relief to see traffic in the stores but at the same time if the incentives continue that will not be good for the industry long term. In 2009, some progress had been made at reducing the use of incentives, but the moment Toyota jumped in to defend its franchise, that opened the floodgates again.
So the good news is that customers are returning to the stores, but are they coming back for the right reasons?
Coming out of a deep recession, it makes sense that price point will be critical. But eventually, consumer confidence will return and what, other than price, do we want consumers to consider? What will create preference and support higher margins? This seems a good time to step back and evaluate the current state of our automotive brands and evaluate them against a new generation of potential prospects. Our industry’s brands are not what they once were.
Many once great automotive brands have been allowed to slip into an amorphous state. In the 90’s as manufacturers chased volume and sought a bigger share of the then expanding pie, it was no longer enough to stand for one thing, they needed to be more things to more people. This led to communications that were less clear, less defined and the process of weakening great brands began.
If you doubt the veracity of this statement, look at the luxury segment of the category, Volvo, Mercedes Benz, BMW, Jaguar, SAAB were once clearly positioned brands that stood for something. Many among us can still rattle off these brands’ core values.
- Volvo—safety
- Mercedes Benz—engineering
- BMW—performance
- Jaguar—design and performance
- SAAB—individuality
- Porsche—performance sports cars
For a long time the majority of consumers gave these brands credit for these values despite product and communications that seemed to go in other directions. But now the problem has come to roost, there’s a whole generation of prospective customers that don’t know what these brands stand for, they weren’t alive when the seminal advertising that positioned these brands was running.
What to do? Here’s a suggestion, form a small team of senior level marketing folks (independent consultants, agency partners) who are talented, understand brand building and the automobile business. Make sure they are willing to commit themselves to genuinely understanding your brand in all its glorious detail and let them loose. Tell them you want ideas that will clearly position your brand to a new generation of car purchasers who are a blank canvas. Ask them to execute the idea across all media channels. Ask for ways to use social media to create communities around your brand that take advantage of the enthusiasts who understand your brand so that their knowledge can educate the new generation.
Consumers are coming back into the stores, but most are coming back to get a good deal. Manufacturers and their agencies need to re-build their brands. With younger customers, they need to build them for the first time. Incentives train people to buy based on the deal and consider the products commodity-like.
In a category where it is now difficult to buy a “bad” vehicle, the threat of commoditization is very real. A strong desirable brand is the only thing standing between a manufacturer of differentiated products and a supplier of generic transportation.
Please let me know what you think.
Tags: Audi, BMW, GM, Hyundai, Jaguar, Kia, Mercedes Benz, Mini, Porsche, SAAB, subaru
Gentle Reader:
First: A message to rustem: I believe Mr. McNaughton’s message was “to gather some talented people together who are willing to commit to a brand and let them loose on developing “a” positioning for the brands mentioned. Not sure the intention was to bring back the old “safety” positioning for Volvo, but to create ANY brand position for any number of automobiles versus what we have today…. no true identity for today’s cars in the minds of the younger buyer…or older ones for that matter.
I read, with great interest, Cam McNaughton’s article regarding “What To Do About Automotive Marketing?” This was a resounding question that was heard throughout the corridors of any number of ad agencies and/or manufacturers I worked for in the 70’s, 80’s , 90’s and beyond. I am in complete agreement that a combination of things such as the poor economy, a glutted marketplace and consumer apathy have contributed to “less clear, less defined and ..a weakening of great brands”scenario. The problem, as I see it, is that young people today are skeptical of branding and advertising. They simply don’t buy it unless P Diddy or Gaga drives it. This is not to say that the task is an impossibility, however, an entirely new approach is required and, as Cam stated, a team of totally committed people are essential. Without it, we will continue to simply see cars as transportation and nothing more. This would be sad scenario for both buyers and sellers of cars as the car that you drive is, after all, the American way to project one’s personality. The question: what do you drive? used to actually count for something. Today, it means nothing because we don’t know what all these vehicles stand for. This is where branding and positioning is so crucial. In any event, “cheers” to Cameron McNaughton for giving all of us food for thought and for, perhaps, awakening some giants so that they may do the right thing by their products and give consumers the right reason to buy and to be proud of what they drive.